Quote of the Day
It is better to light a candle than to curse the darkness.
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New Post in My Tech Blog
Ever since I gave this blog a facelift a few weeks back, I've gotten improved feedback over which posts people are reading; I was really surprised that a number of readers are going to posts where I talk a little bit about my background (e.g., in academics). Over the past few days, I've been working on and finally published a second post describing some personal and professional encounters dealing with computer errors.
Eat 'Em Up, Coogs!
UH Cotton Bowl Champs Over Penn State!
My alma mater Houston beat Penn State 30-14 as quarterback Case Keenum passed for 532 yards and 3 touchdowns in a near perfect season! (One loss: the C-USA Championship to Southern Miss 49-28 .) I'm not even sure I can run 532 yards, never mind pass for that many yards against a nationally-ranked team.
John Cochrane, "Three Kinds of Regulation": Thumbs UP!
(Hats off to MJ Perry of Carpe Diem for suggesting this piece.)
Any reader familiar with this blog knows not only have I been sharply critical of both George W. Bush and Barack Obama; there is a qualitative difference between them, of course, but let me repeat some of the basic points: both significantly raised domestic expenditures; both expanded federal intervention in the economy; both engaged in neo-Keynesian stimulus measures; both appointed Ben Bernanke as Fed Reserve chair; both ran large to huge deficits and ran up the national debt by trillions; both dramatically increased federal regulations; both expanded federal entitlements using what I term "kaleidoscope accounting"; and both expanded the military/foreign intervention footprint. So when Obama makes his trite point scapegoating 8 failed years of policies, it's preposterous. Bush was never a good conservative: for example, Reagan promised to abolish the Department of Education; Bush expanded federal funding by almost two-thirds. It's true that Bush trimmed the top rate to 35%, but let's recall one of the main reasons his father wasn't reelected was because he accepted a budget compromise where the top rate went to 31% from 28% (of course, the Dems never kept their pledge to cut spending)
Obama's idea that the GOP is going to repeal any and all regulations if they win back the Presidency and the Senate is preposterous. It was nontrivial to pass things over the last few decades like allowing banks to open branches across states, trucking, more competition for brokerage stock transaction fees, etc. We still cannot effectively purchase health insurance policies across state lines.. Banking, for instance, is one of the most regulated industries--state, federal, etc.
The problem is, when Obama engages in these intellectually lazy brushes with a single stroke, no Republican is really advocating what he suggests--allowing water to become so polluted, it's undrinkable; air so contaminated, one can hardly breathe or exercise outdoors. It's really about the government not knowing how to pick its battles; remember how the Interior Department's excuse for the flawed oversight on the BP oil spill incident was that the regulation time interval was too short for them to do due diligence in approving drilling permits?
There are a number of core issues here: the increasing complex and unmanageable regulatory process; the net marginal utility of regulatory compliance costs; the ill-defined nature of effective regulation; the difficulty in hiring and training regulators whom must cope not only with the industry reality which is changing under their feet but changes in regulation.
Professor Cochrane here distinguishes among three basic types of regulation: law, rule, and discretion. Law is the most accountable; of course, one could wonder with legislative sausage making, how can any decent regulations come of it? Does anybody really believe that the people voting on 2000-page laws knew exactly what they were voting for? But Cochrane rightly notes: if you vote for a bad regulatory law (say, for instance, if Congressmen were on the record advocating invasive screening at airports), it could become an issue in the next election.
Rule is less satisfactory because accountability is weaker. For example, Congress may realize that it is not feasible to pass laws overnight to deal with new terrorism threats to airline flights. So it may delegate the ability to make rules (which can be reviewed and voided) Rules at least let you know where you stand in terms of acceptable behavior. It is less accountable in the sense we have at best indirect control over TSA bureaucrats.
The third kind, and most dangerous, is discretion. This is the kind of power represented by so-called financial reform, which I have affectionately termed "Dodd N. Frankenstein". You as a company may or may not pose a systemic risk to the global finance system; in essence, this ill-defined collective judgment is made by some independent, unaccountable board, and the finding (with dubious recourse, if any) enables the Fed to intervene in your business decisions. (Doesn't the Federal Reserve have enough on its plate? It has done so well in managing the Nasdaq bubble, the credit bubble, and the real estate bubble.)
Those of us with libertarian leanings are not happy with the Federal Reserve. About the only thing we know for sure is if and when Bernanke ever decides to defend the dollar by raising interest rates, it will always be untimely and have unanticipated consequences
Musical Interlude: My Favorite Groups
Styx, "Rockin' the Paradise" Dennis DeYoung is a rock god. It's hard to say which are my favorite Styx songs; probably the group's signature song "Lady", the moving tribute to their late drummer John Panozzo called "Dear John", and this song. I have an affection for singers' more reflective tunes, like Bread's "Guitar Man", the Carpenters' "Superstar", the Moody Blues' "I'm Just a Singer in a Rock and Roll Band", Neil Diamond's "I Am...I Said", and the Beatles' "While My Guitar Gently Weeps" and "Sgt Pepper's Lonely Hearts Club Band".
Live
