Seek respect mainly from thyself, for it comes first from within.
Steven H. Coogler
Alexander T. Tabarrok,
"The Innovation Nation vs. the Warfare-Welfare State":
Thumbs UP!
My Saturday post has attracted some pageviews, which I attribute to a commentary I wrote in a discussion of inventors and innovation. Even though I didn't specifically rant about the effect of government regulation on innovation, it was clear from context:
"I think one of the more interesting points discussed was when DoD went to Kamen to ask about development of an artificial limb; he mentions how he expected a thick specification document, not to mention years of going through FDA approval...A simple Google search reveals references to Kamen's rants about FDA red tape...Most young people at one time or another question authority and/or bureaucracy, and I think that the relevant frame of mind is more likely to come from a libertarian than a communitarian standpoint."Remember DARPA, the agency that recruited Kamen and a principal founder of what would emerge to be the Internet? (One of the classic papers in the history of human factors (and which I used to cite while in academia) is a 1960 paper from JCR Licklider: "Man-Computer Symbiosis" which says in section 5.1: "It seems reasonable to envision, for a time 10 or 15 years hence, a "thinking center" that will incorporate the functions of present-day libraries together with anticipated advances in information storage and retrieval and the symbiotic functions suggested earlier in this paper. The picture readily enlarges itself into a network of such centers, connected to one another by wide-band communication lines and to individual users by leased-wire services." DARPA recruited Licklider in 1962 with a mandate to interconnect major DoD centers. I know...you thought I was going to say Al Gore...) DARPA gets $3B from a budget exceeding $3.5T. In fact, as Tabarrok points out, "Even when we lump all federal R&D spending together regardless of quality it amounts to just $150 billion, a mere 4 percent of the budget: National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion."
Tabarrock's post is worthy, but one item particularly intrigued me as exactly the kind of thinking we don't see from the Obama Administration, which has been more than willing to throw money at boutique energy alternatives, like solar energy, versus proven technologies and solutions:
The U.S. Department of Energy, for example, estimates that small and environmentally friendly hydro-electric projects could generate at least 30,000 MWs of power annually. That’s equivalent to the generating capacity of about 30 nuclear power plants. Moreover, since 97% of U.S. dams are generating zero power today, these projects would not require building any new dams. So what’s the problem? The problem is that building even a small hydro-electric project requires the approval of numerous agencies, including the Federal Energy Regulatory Commission, the U.S. Fish and Wildlife Service, the Army Corps of Engineers, State Environmental Departments and State Historic Preservation Departments. It’s simply too expensive, time-consuming and risky to build these projects when any of these agencies could veto it at any time.No wonder Newt Gingrich wants to go to the moon... It's the only place left not covered with Obama Administration red tape... You know, now that we've licked that problem of getting computers to network with each other, perhaps Obama could have DARPA figure out protocols to govern
Get Well Soon, Bella Santorum!
Let me start out by saying I don't support Rick Santorum's bid for the White House (but it goes without saying that I prefer Santorum to Gingrich, and Santorum is an easy choice over Barack Obama). Issues I have with all 3 men in common have to do with their polarizing rhetoric and lack of executive experience. Obviously Obama is currently getting on-the-job experience, and his inexperience shows in his mediocre performance and record.
Before going on to Bella, I briefly wanted to reprise a dated story about media progressive Alan Colmes. (I should note, in fairness, Colmes apologized to Santorum for unconscionable comments relating to Rick's prematurely born late son Gabriel.) [Please note that the embedded videos below are available at the time of the post and may become unavailable in the future.]
In my book collection, I have owned, for years, a copy of Karen Santorum's moving book, Letters to Gabriel, Here is a shorter discussion of Rick and Karen's son Gabriel. Let me quote Karen's words:
For several years I worked as a registered nurse and dealt with many painful situations. I never dreamed one day I would have to face the silent birth of a child of my own.... The 20 week old baby in my womb was diagnosed with a defect that is always fatal without surgery. Through our immense heartache came the most basic of parental emotions: We had to save our child. After many tests it was determined our son was eligible for the operation that could save his life. It was a success, but an infection developed in the amniotic sac, and I was rushed to the hospital with a high fever, having contractions. I begged the doctors to stop my labor, but they said it would be malpractice, for I would surely die since these infections are untreatable.
Gabriel Michael Santorum was born at 12:45 AM on Friday, October 11, 1996. He was a beautiful boy. He did not give a cry or open his tiny eyes. We baptized him, bundled him, and held him ever so close. We sang to him, held his little hands and kissed him. Gabriel lived for two hours. In those two hours something simple but profound happened. Rick and I became parents to a newborn baby and welcomed him into our family. That was all....but it was everything. His life was so brief, yet his impact so great. In two hours we experienced a lifetime of emotions. Love, sorrow, regret, joy----all were packed into that brief span. To have rejected that experience would have been to reject life itself.
According to Michelle Bauman:
On a Fox News segment on Jan. 2, political commentator Alan Colmes criticized Santorum for “some of the crazy things he’s said and done, like taking his two-hour-old baby who died right after childbirth home and played with it for a couple hours, so his other children would know the child was real.”
In a Jan. 5 interview with MSNBC’s Rachel Maddow, Washington Post columnist Eugene Robinson also ridiculed Santorum and his wife for taking their son home “to kind of sleep with it, introduce it to the rest of the family.”
“He’s not a little weird,” said Robinson, “he’s really weird.”
But Robinson and Colmes were “speaking out of a seemingly bottomless well of ignorance,” according to Peter Wehner, a senior fellow at the Ethics and Public Policy Center.
In a Jan. 5 article in Commentary magazine, he pointed out that health experts often suggest spending time with a stillborn child as a means of grieving.
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| Courtesy Andrew Burton/Getty Images and ABC |
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| Proud Daddy and Daughter Bella |
I don't know if that sweet, beautiful gift from God, Bella (Isabella) Santorum, was named in reference to one of my all-time favorite movies Bella, a powerful pro-adoption choice film. (Don't you just want to hug and kiss that sweetheart? Doesn't her smiling, pretty face just melt your heart?) I can't imagine what it has been like for Rick and Karen to have had to cope with challenges and heartaches involving two of their children, but I don't for a second question their hearts and the fact they are decent, honest, honorable people. There's no doubt that the Santorums (or the Romneys) would bring to the White House a welcome change in leadership, competence, integrity and grace we can really believe in.
Quoting ABC (my edit):
Bella suffers from Trisomy 18, a rare and serious genetic disorder that kills about 90 percent of children before or during birth. Three-year-old Bella was diagnosed with pneumonia in both lungs and had very difficult 36 hours over the weekend; she has “a long way to go,” but has “turned the corner.”
Parsing Obama's 2012 SOTU Address: Part II
In 2008, the house of cards collapsed. We learned that mortgages had been sold to people who couldn't afford or understand them. Banks had made huge bets and bonuses with other people's money. Regulators had looked the other way, or didn't have the authority to stop the bad behavior.First, notice that Obama is up to his same old same old bag of tricks here: he's making excuses for people whom took out mortgage loans and regulators. And dubious victims at that. We don't need to speculate (as Obama clearly does) on some nonsensical, unsupported conspiracy theory involving banks looking to rip off naive borrowers (with no legally recoverable assets to speak of).
Even liberal Keynesian economist Paul Krugman doesn't buy Obama's "predatory lending" argument, noting that the real estate bubble was broad-based, across the home mortgage and commercial real estate market. Arnold Kling made this observation in April 2010 (my edits):
What about predatory lending? As I understand it, the idea of predatory lending is to saddle the borrower with an expensive mortgage so that you can foreclose on the property and sell it at a profit. How many times did that happen? Have you read of a single instance in the past three years where the bank made a profit on a foreclosure?
I know that it's axiomatic that poor people are helpless victims. But in the case of these mortgages, that is a really hard sell. The banks did not take from poor people. They gave to poor people. [If the poor homeowner was lucky to sell in a rising market, he] got to reap a nice profit on his house. [Not so lucky, he] lost...close to nothing.It's not like banks don't understand the risk of holding a nonperforming, low-collateral loan in a falling real estate market. I'm not going to make excuses for banks that failed to exercise due professional care in evaluating applicants. It's not like prospective homeowners don't realize that they are making one of the largest purchase decisions in their lifetime and if you don't have sufficient collateral, sustainable income or a stable credit history, you have to pay an interest premium to the lender for taking on increased risk. Furthermore, mortgage interest rates were below historical norms, and monthly payments for the nontraditional loans were likely to jump at the next planned reset. Everyone also knew that there was, at best, sluggish wage growth.
We don't have to speculate on conspiracy theories here. There was a herd mentality at the time: prices can only go up from here. Besides, I'll have cashed out long before any real estate correction. We had heard some of the same kind of nonsense during the late phase of the Nasdaq bubble: "Profits don't matter... We are in a new, different economy where the old rules don't apply..." I knew that we were in a frothy, speculative market, no doubt enabled by easy money policy from the Fed Reserve, even as early as 2005 when I had read reports of Florida condos still in construction being repeatedly flipped and get-rich-quick-in-real-estate infomercials popping up on late night TV.
Should have we been surprised by a correction? In fact, we know about an 18-year real estate cycle. The economy had pulled out of recession late in GHW Bush's only term in office, fueling the new real estate cycle. By the time I moved to California in late 1999, nearly half-million dollar homes were more the rule than the exception in Silicon Valley. Consider Steve Hanke:
Speaking of economic history, one thing that the purveyors of monetary policy (and all prudent investors) should become well versed in is a piece of business-cycle history that has apparently passed them by – namely the little-known, but essential, 18-year real estate cycle. This cycle goes hand-in-hand with Austrian business cycle theory in which booms and bubbles are created when central banks set short-term interest rates too low, allowing credit to expand artificially.
In fact, the federal government also got swept up in the herd mentality. Democrats and the "compassionate conservative" Bush Administration were thrilled that the percentage of homeowners was at unprecedented high levels (which others as well as myself regarded as unsustainable).The government specifically wanted banks to make loans. One way they could do that was the GSE's purchase of loans from banks. We were not talking about your grandfather's 20-percent down, 30-year, fixed-rate mortgage loan. Basically we had exhausted the conventional mortgage pool of qualified applicants:
Between 2005-2007, few of the mortgages acquired were conventional,fixed-interest loans with 20% down. By December 2007 [the GSE's were] responsible for 90% of all mortgages. Fannie Mae's loan acquisitions were:
- 62% negative amortization
- 84% interest only
- 58% subprime
- 62% required less than 10% down payment
Freddie Mac's loans were even more risky, consisting of:
I'm not arguing that CRE/GSE policies caused the real estate market crash, but clearly risky loans were enabled by government policy and/or a failure in competent regulatory oversight. Making money available to risky applicants bid up prices, and the magnitude of the GSE exposure using government guarantees to the real estate market exacerbated taxpayer losses.
- 72% negative amortization
- 97% interest only
- 67% subprime
- 68% required less than 10% down payment.
In the six months before I took office, we lost nearly four million jobs. And we lost another four million before our policies were in full effect.This is just flat-out intellectually dishonest. Consider the following:
September 2008 – 280,000 jobs lostNBER claims the recession ended in June 2009. A May 2009 New York Times report indicated nearly 3 months after the so-called then $787B stimulus, just $45.6B or 5.8% had been spent. In the context of roughly a $14.6T economy? (Well, of course, Obama was responsible for the nation's first trillion-dollar deficit... And second... And third... But after all that spending over 14M unemployed and underemployed from one of the slowest job recoveries in American history. Of course, Obama doesn't want you to think it has anything to do with his reckless, irresponsible threats to raise tax rates on investors, a huge power grab by the federal bureaucracy, globally uncompetitive business income tax rates or playing games with temporary versus permanent tax policy.
October 2008 – 240,000 jobs lost
November 2008 – 333,000 jobs lost
December 2008 – 632,000 jobs lost
January 2009 – 741,000 jobs lost
February 2009 – 681,000 jobs lost
March 2009 – 652,000 jobs lost
April 2009 – 519,000 jobs lost
May 2009 – 303,000 jobs lost
June 2009 – 463,000 jobs lost
Take, for example, the latest economics-challenged proposal from Obama to double Mitt Romney's tax rate to 30 percent. Since most of Romney's income is from CAPITAL GAINS, not WAGES, Obama is really suggesting DOUBLING TAX RATES ON INVESTMENT. Obama KNOWS (or should know) doing this would KILL the economic recovery, but he can grandstand, knowing it's dead on arrival in the House of Representatives. It's the political equivalent of a "free play" (defensive offside in football). And it's ineffective, as even Obama should realize. Capital gain realizations are triggered by sales events. Wealthy individuals don't have to sell relevant assets: they can wait until a more accommodating legislature and President are in power. And as I've constantly mentioned. Wages and short-term capital gains are taxed at the same rate; the special rate reflects long-term investments--and the gains are NOT inflation-adjusted so you're really taxing phantom income--the nominal gain may not even cover your loss in purchasing power, so taxes add to your "real" capital loss.
It's bad enough that the Democrats are materially misleading Americans on the nature of income by suggesting that middle-class Americans are paying twice Romney's tax rate. That is knowingly false. The top tax bracket on wages is applied INCREMENTALLY, and middle-class investors are taxed at the same rate as Romney.
But let's go back to Obama's disingenuous use of job loss statistics, and this is a point I made in a recent post:: the indisputable fact is that job losses accelerated AFTER OBAMA AND DEMOCRATIC-CONTROLLED CONGRESS WERE ELECTED in November 2008. One has to be in a state of denial to think businesses cut jobs because of a lame duck President's policies. The Democrats controlled the Congress during and after the lame duck session. The only weapon Bush had was the veto, and the Democrats knew they could just wait until Obama was inaugurated to pass anything they wanted without having to worry about a Presidential veto.So even though Bush had almost 3 months left in his term, for all practical purposes, he was powerless. Businessmen were not thinking in terms: let's take on new hires; we'll just fire them as soon as Obama is in office. As I mentioned earlier: past performance is not indicative of future results.
Obama can try to scapegoat Bush all he wants--he's 3 years into his Presidency and he's still Bush-bashing, but the indisputable fact is that the Democrats took control of Congress nearly a year before the start of the Great Recession in December 2007 and 20 months before the tsunami and TARP. Didn't the Democrats pass a stimulus bill that Bush signed in his last year? Yes. So Obama is intentionally misleading people here wanting to pass off as many job losses he can to Bush. Everybody knew that Obama was going to sign a huge stimulus bill before he even took his oath. He signed it less than a month in office. This is the same Congress that took over a year to pass ObamaCare.
Musical Interlude: My Favorite Groups
Queen, "Another One Bites the Dust"
