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Tuesday, July 31, 2012

Miscellany: 7/31/12

Quote of the Day
People are always blaming their circumstances for what they are. 
I don't believe in circumstances. 
The people who get on in this world are
 the people who get up and look for the circumstances they want, 
and, if they can't find them, make them.
George Bernard Shaw

Michael Phelps
Win (15), Place (2) or Show (2)
and Counting...
The Greatest Olympian Ever

Michael Phelps
Courtesy of David Gray/Reuters and The Guardian

I watched Phelps' attempt to three-peat in the 200M butterfly: his signature event which he hadn't lost since 2000. His last full stroke basically left him just inches shy of the wall and coasted to the finish--just enough of a hesitation to allow South African swimmer Chad le Clos to touch the wall .05 seconds sooner. As a fellow perfectionist and hard worker, I'm sure that Phelps will probably relive this disappointment for the rest of his life: woulda, coulda, shoulda. Nevertheless, Phelps' second silver of the games tied him with Soviet gymnast Larisa Latynina for 18 medals.

Could Phelps shake off the disappointing loss and anchor his 4 x 200M freestyle team to victory? Of course: that's the mark of a true champion--to move on and win the next contest. Congratulations, champ!



World Champion Gymnast Jordyn Wieber Fails to Qualify
for Olympics Women's All-Around Competition?
Thumbs DOWN!

I realize that this story has been around for a couple of days, but one of the reasons I'm bringing this up in a political blog is because I don't like politically correct quota systems. There is a rule in the Olympics that only the first two gymnasts from any country qualify, even if the third, in this case, the reigning world champion in the sport, has outscored at least one of the other country gymnasts moving on. I think this notion is overtly political and contrary to the spirit of sport: when you win, you want to win beating the best.

The American women today won the team gymnastics championship, including America's sweetheart, Jordyn Wieber! Good job, ladies!

King for the Week: Edward Yardeni: Thumbs UP!

James Pethokoukis quotes Dr. Yardeni solving the world's problems in 70 words or less. I will point out that in this blog, I have specifically and previously been backing the Bowles-Simpson bipartisan deficit reduction plan, pushing public sector pensions to adjusted social security age, splitting the German mark from the euro, and having Greece crack down on tax evaders. So here's what Yardeni, an obviously brilliant fellow, suggests that he would do if he was King of the World for a week:
In the US, I would implement Simpson-Bowles in full. I would mandate that public employees can collect their benefits only when they turn 67, not when they retire. In Europe, I would take Germany out of the euro zone, and let the euro plunge. I would lower tax rates in Europe and enforce strict tax collection. In China, I would privatize state-owned companies. I would outlaw the Communist Party.


The Centennial Birthday of An American Icon
Milton Friedman
"We Are All Monetarists Now"
Nobel prize-winning economist Milton Friedman, 1989.
Milton Friedman - Nobel Prize, Economics 1976
July 31, 1912 – November 16, 2006
Courtesy of Time Life Pictures / Getty Images / American Academy of Achievement
Ten years ago on the occasion of Friedman's 90th birthday, then Fed Reserve Governor Ben Bernanke famously said, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and  [collaborator] Anna [Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.."

Federal Reserve Chairman ‘Helicopter’ Ben Bernanke (right) and Treasury Secretary Tim Geithner appear set to fly in with more help for the ailing US economy.
Fed Reserve Chairman "Helicopter Ben" Bernanke
and co-pilot Treasury Secretary Tim Geithner
Monetary and Fiscal Policy Activists
Raining Dollars All Over the World
Courtesy of the NY Post


In yesterday's post, I was particularly irritated by Wapshott's suggestion that Tea Party conservatives are all tied to the Austrian School of Economics. In fact, I will admit that over the past year or so I have been looking more at the Austrian School as I've transitioned to a more libertarian perspective. There is something instinctively appealing about looking at interest rates as some sort of a thermostat: as interest rates increase: there is more of an incentive to defer consumption, and capital expenditures or various business projects to become less feasible (and vice-versa as an investor flight to low-risk instruments naturally drives down interest rates). And I'm definitely unhappy with the Fed manipulating interest rates. If you accept the concept of lagging effects of monetary policy decisions, it's very easy how to see how persistently artificially low interest rates can exacerbate boom/bust market sector overcapacity or asset bubbles like we've witnessed since the turn of the century.

Of course, I do understand central banker logic: pushing the adjusted interest rate below zero essentially taxes people for saving, providing them more of an incentive to consume or invest. Overextended consumers and businesses are naturally trying to deleverage; this is good as part of a long-term process--but not unduly at the expense of the ongoing economy. I'm a little confused why, if I'm a central banker, I haven't also been looking at deviations from long-term savings rates and considering or encouraging relevant fiscal and monetary policies. For example, it seems to me like there's been disproportionate consumption for years, which would suggest (like many other countries) the need for relevant taxes (e.g., the VAT) and/or otherwise discouraging a spending bias (e.g., raising interest rates or bank reserve requirements, implementing more restrictive lending practices, eliminating or at least capping/reducing interest deductibility).

There are other central bank decisions I don't quite understand either, e.g., paying interest on reserves. It would seem you would want to use that tool to discourage excess lending. If the rationale for pushing nominal interest rates to zero is to encourage spending or investment (note that that's clearly what the Fed is intending--notice how proudly Bernanke accepts responsibility for rising equity markets), why are you then raising the opportunity costs of lending (i.e., I can making money simply by sitting on reserves versus taking on the risks of lending in a sluggish economy)?

Going on with the discussion of a split between the monetarists and the Austrian School,  if you've gone through the history of this blog, during the first 2 or 3 years, I regularly cited the Chicago School (and particularly Milton Friedman), and over the past few weeks, I've been tilting back towards a monetarist perspective. In part, this reflects my perspective as an empirical researcher. There are also a few things that have been bothering me: the lack of pervasive inflation (the billion prices project) and/or loan pickup, despite accommodative actions by the Fed. I'll call this my "Potter Stewart criterion of monetary policy": I know stimulative monetary policy when I see it.

The reader might argue: wait a minute, Ronald: shouldn't you be against activist policy, period? Well, I'm a pragmatic libertarian; I think that we are dealing with a convoluted government regulatory regime, and we in the long term need to restore banking to a true free market. In the interim I live in a world where the Federal Reserve is a fact. I do want to depoliticize the Fed, making it more rule-based, e.g., Friedman's k-percent rule. As a pragmatist and a theoretical central banker, I have to look at the policy tools I have available: I can buy and sell securities, I can modify key interest rates and reserve requirements, etc. If a certain stimulative tool isn't working (e.g., dropping interest rates, lowering reserve requirements or buying securities), maybe my dosage has been too weak: maybe I need to buy magnitudes higher securities (say, problematic mortgage notes, mortgage backed securities) until I see GDP growth pick up and then I fine-tune the process until GDP growth is organic.

Incidentally, one could only hope that legislators could learn lessons on the fiscal side. For example, take the inflation-bound health care sector and relevant delusional progressive policies. What is patently obvious is that when the government is doing half the spending in the sector (and that would increase under radical Medicaid expansion under ObamaCare), we are facing the same kinds of decisions like the Federal Reserve in combating inflation, just on the fiscal policy side. If we're trying to lower sector costs, we need to discourage spending--e.g., raise deductibles (just like raising the reserve requirement), reduce government subsidies (pretax basis under employment) and benefit mandates (lowering interest rates), eliminate barriers of entries to the medical profession, etc.

Going back to monetary policy, I've also been intrigued by Friedman's argument that the Japanese were pursuing tight money policies in the "lost decade" of the 1990's, even with interest rates pushing zero, and suggesting other monetary policies, such as quantitative easing (buying bonds on the open market). Why would he suggest that after arguing activist errors by central bankers, lag effects for such policies (e.g., overshooting targets)? This seems curious given Friedman's free market policies--but then former Fed Reserve chairman Alan Greenspan has described himself a lifetime libertarian Republican (just like Friedman).

I do think it's reasonable to distinguish between ordinary recessions and periods of economic shock, like the economic tsunami. Friedman generally prefers rules versus discretionary activist monetarist actions, although I suspect under unusual circumstances that he would recommend some commensurate monetary action (to be assessed for fine-tuning against relevant criteria (e.g., GDP growth)). I've been intrigued by "market monetarist" Scott Sumner's discussions (e.g., see here for his argument Friedman would have encouraged monetary stimulus after the economic tsunami; James Pethokoukis makes a similar point about "too tight" Fed policy here). The nature of the policy would be driven by contextual factors; for example, if loans are low because borrowers have a number of questionable high risk mortgage-backed securities, the Fed could buy these securities.



Milton Friedman and the Great Depression Myth



Musical Interlude: My Favorite Groups

Blondie, "Rapture". This is the last of my series on Blondie. Next up: Frankie Valli and the Four Seasons.

Monday, July 30, 2012

Miscellany: 7/30/12

Quote of the Day
In the end, we will remember 
not the words of our enemies, 
but the silence of our friends.
Martin Luther King

Wapshott, Milton Friedman and Conservatives

Over the weekend Nicholaus Wapshott pushed a Washington Post op-ed entitled "How conservatives misread and misuse Milton Friedman."

I have to say I'm confused here:
The pair concluded that, by imposing high interest rates when disaster struck, the Federal Reserve did not funnel enough money into the economy, turning the crash into a depression. If the Fed had provided plentiful cheap money, Friedman argued, the slump would have lasted a couple of years, not a decade. - NW
It is true that the Fed raised interest rates in late 1931 and 1932, which worsened contraction but two waves of bank failures occurred several months later (around harvest time) after the Fed Reserve dropped interest rates in early 1930. A bigger factor may have been the failure of the Fed Reserve as a lender of last resort during the banking panics, failing to exercise nationalized functions of clearinghouses which had helped to resolve pre-Fed panics. (As Friedman pointed out, the Fed could have purchased government bonds, which would probably have provided the necessary liquidity needed to combat bank runs.) There was moral hazard: why should fellow bankers step in (like they did before)? Isn't that the Fed's responsibility? (You can almost hear Dickens' Scrooge ask "Are there no prisons? No workhouses?") Why wouldn't Big Banks welcome the prospects of thinner competition, figuring that they would get their fair share of new depositors and customers in the process?

"The need for a lender of last resort in the U.S. banking system was due to a systemic weakness caused unintentionally by state and federal banking regulations. But the most important cause of the bank runs that began in October 1930 was bad times in the farm belt, where the banks were especially weak and poorly diversified. The number of bank runs increased exponentially in December 1930—in that single month 352 banks failed. Most of the failing banks were in the Midwest , their failures caused by farmers who defaulted on their loans because they were hit hard by the economic downturn. No sooner did the first wave of bank runs subside than another got underway in the spring of 1931, creating what Friedman and Schwartz described as a “contagion of fear” among bank depositors. Bank crises continued to come in waves until the spring of 1933."

[Among other things, banks, because of misguided, counterproductive regulations, couldn't diversify geographically, across sectors of the economy. Thus, say, if harvests were below par due to weather conditions or farmers got meager market prices for their crops and hence couldn't pay off their loans, farm state banks could go under; a diversified bank across state lines with , say, operations in a robust manufacturing sector Northeastern state, would be better able to withstand shocks in specific economic sectors.]
Indeed, despite their frequent invocations of Friedman, conservatives have long since abandoned the principles of his Chicago School remedies in favor of more stern solutions advocated by Austrian economists Ludwig von Mises and Friedrich Hayek. They want to reduce the size of the state as fast as possible by slashing government spending, paying off public debt quickly, cutting taxes and removing regulations from business. - NW
I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes. - Milton Friedman, John Hawkins interview 9/03
His belief in an ordered, managed economy through interest rates runs counter to prevailing conservative orthodoxies.  He did not adopt absolutist positions on the size of the state and the evils of government- NW
Not even close. Friedman was adamantly opposed to activist Fed action: "Friedman modified some aspects of the classical theory to provide the rationale for his noninterventionist policy recommendation. In essence, monetarism contends that use of fiscal policy is largely ineffective in altering output and employment levels. Moreover, it only leads to crowding out. Monetary policy, on the other hand, is effective. However, monetary authorities do not have adequate knowledge to conduct a successful monetary policy—manipulating the money supply to stabilize the economy only leads to a greater instability. Hence, monetarism advocates that neither monetary nor fiscal policy should be used in an attempt to stabilize the economy, and the money supply should be allowed to grow at a constant rate. Friedman contends that the government's use of active monetary and fiscal policies to stabilize the economy around full employment leads to greater instability in the economy. "

In the words of Friedman himself: "This evidence persuades me that at least a third of the price rise during and just after World War I is attributable to the establishment of the Federal Reserve System... and that the severity of each of the major contractions — 1920-1, 1929-33 and 1937-8 is directly attributable to acts of commission and omission by the Reserve authorities. It is a bad system to believers in freedom just because it gives a few men such power without any effective check by the body politic — this is the key political argument against an independent central bank."

Finally, Wapshott seems to be detached from reality in talking about the Republicans, especially the Tea Party Republicans in Congress, and Mitt Romney, especially in reference to Milton Friedman. Friedman said, "I am a libertarian with a small "l" and a Republican with a capital "R". And I am a Republican with a capital "R" on grounds of expediency, not on principle."

If you look, for instance, just at renewal of the Patriot Act, very few Republicans voted against it (in the House: "Among the Republicans objecting to extending the measures were libertarian Rep. Ron Paul and eight tea party freshmen. They included Bobby Schilling, an Illinois pizza parlor owner who favors smaller government, and Justin Amash, a Palestinian-American from Michigan who has "serious reservations" related to protecting civil liberties.") Rep. Ron Paul is the only GOP legislator I've heard discuss Austrian School economics. The Wikipedia article on libertarian Republicans lists a dozen federal legislators in both houses, and it lists Rothbard (Austrian School) and Friedman (monetarist). I have repeatedly identified with this group.

So I can't understand where the author is coming from, unless he is buying into the progressive talking points on the Tea Party. The theme of limited government goes beyond fiscal conservatism or targeting morally hazardous domestic policies: for instance, it also refers to government scope creep at the expense of our privacy. The Tea Party in reality attracted a coalition of people whom shared some but not necessarily all limited government concepts (e.g., Big Defense conservatives).

As for Mitt Romney, I have often noted my differences from him on immigration, China (trade), and foreign policy (among other things). Don Boudreaux of Cafe Hayek is so irked by Wapshott that he wrote two letters to the editor over the post (here and here). (I think Don forgot to mention Romney's immigration policies.)



Speaking of Milton Friedman: 
Happy Centennial Birthday Tomorrow!

Don Boudreaux of Cafe Hayek has written a fine tribute here.



Musical Interlude: My Favorite Groups

Blondie, "The Tide is High"

Sunday, July 29, 2012

Miscellany: 7/29/12 Happy Fourth Blogiversary!



When I recently praised the fetching Maria Bartiromo whom dismissed Elmer Fudd Barney Frank in a widely circulated CNBC clip, I celebrated her performance with a clip of  "Maria" from "West Side Story". As my profile notes, I LOVE movie musicals. And so I celebrate this blogiversary with some of my other favorite selections. Why don't they make legitimate musicals like this (or, say, anything Rodgers and Hammerstein) anymore?

HT Father Lonergan (OLL), whom loved Leonard Bernstein. I first decided to become a professor when I visited him in his office--his office was delightfully cluttered, classical music blared in the background, and aromatic pipe smoke filled the air... (The only thing missing was a wonderful woman to share it with...)

PS. I've never smoked anything. But there is just something about the smell from someone's decent lit cigar or pipe.







Quote of the Day 
Never stand begging for that which you have the power to earn.
Miguel de Cervantes

Another Progressive Myth Bites the Dust

It's somewhat amusing to see another kerfuffle pop up over Obama's now infamous Roanoke speech, this one involving Obama's claim on the government inventing the Internet. I had this to say in my July 19 post:
As for Barack Obama's argument about the Internet, it is partially true, but the inference Obama intends is false. The Internet, or something like it, was INEVITABLE. The concept of a decentralized network is hardly novel (in fact, if Obama really understood the Internet, he would never have used the example: the idea that the states could operate independent of a central planning authority in the federal government, our ideal of limited government and federalism, is something Obama would never knowingly promote)
It is true that the government had a specific use: worried about a centralized hub being knocked out by say a USSR attack, the Pentagon wanted a mechanism for communicating flexibly about sites independently of each other. A government subcontractor from Rand Corporation designed the basis of the original ARPANET among 4 universities by the Nixon Administration. It soon developed in unexpected ways, e.g., for electronic messaging. Obama would not care for Klein's assessment: " It is only thanks to market participants that the internet became something other than a typical government program: inefficient, overcapitalized, and not directed toward socially useful purposes."
Gordon Crovitz wrote a controversial WSJ  July 22 column "Who really invented the Internet?", intended to debunk Obama's claim (For some odd reason, WSJ often keeps its op-eds behind a paywall but at the time of this post, it's openly available.) I winced when I read the opinion; there are many published histories of the Internet (e.g., here) paying homage to government programs, and some of Crovitz's points are anecdotal and dubious in nature. Some key players behind the historical development, like Vint Cerf (e.g., behind the TCP/IP protocol), have been dismissive of Crovitz' claims as revisionist and politically motivated. 

To be honest, Cerf and others have a vested interest in their place in history, so I don't think they will admit that others could have independently devised alternative, superior protocols. Industry competitors often agree on standards (e.g., for computing languages). Why didn't they? I'll speculate here that perhaps one reason is because the government started phasing in commercialization/privatization (e.g., regional but not national) access to its network infrastructure and hence use of its standard protocols. It may also be that certain applications (e.g., integration with vendors or customers) became more feasible with the propagation and improved functionality of microcomputers and network bandwidth, and businesses chose not to reinvent the wheel but to go with an existing standard.

Obama is simply repeating (as usual) what other incompetent progressives have been repeating for years, e.g., see Brian Carnell's writeup here, also cited by Tyler Cowen here): 
"Maybe that will change--as, for example, people notice that it is the federal government and not the Chamber of Commerce that tends to organize disaster relief and that has brought us such innovations as the Internet. But for the time being, we're not going to get anywhere with a progressive agenda consisting of wonderful new government initiatives." - Barbara Ehrenreich in a 1997 piece in The Nation
The irony almost nobody points out is that social liberals like Ehrenreich and Obama, whom have hardly been supportive of Defense spending and/or research and development efforts, are ironically selling Big Government based on the kind of government spending they oppose on principle.

Let us be clear: almost nothing of what most people think of in terms of the Internet today (web content, applications, browsers, etc.) has to do with the government involvement, which mostly consisted of some networking infrastructure and standards. If anything, we could argue that arbitrary government restrictions on privatizing commercial access to the Internet delayed its explosive growth and technologies. Carnell points out (some minor edits):
Prior to the early 1990s almost nobody outside of governments and universities had home access to the Internet while several million had logged on to a BBS at one point or another for email, file-sharing, and other applications. The main problem with the BBS system was a lack of standards for interconnection. As the 1990s approached and computers became more powerful and modems supported more bandwidth there were several competing proposals for graphical interconnection standards, but those were wiped out by the Internet tsunami. What caused the change? Privatization. The floodgates of the Internet came open only after key resources became privatized and companies and individuals could operate on the Internet. For much of its existence, commercial activity on the Internet had been forbidden or restrictedThe Internet, in fact, reaffirms the basic free market critique of large government. Here for 20 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished with almost no added benefit other than to the military and academia. In less than a decade [mid 1990's-mid 2000's], private concerns have taken that protocol and created one of the most important technological revolutions of the millennia.


Obama's New Political Ad: "The Choice"
Thumbs DOWN!

Are we finally past the Obama campaign ad hominem attacks on Romney? At least I finally heard a different commercial during today's early Olympic coverage (I think I finally heard the first GOP ad of the general campaign, an RNC one during yesterday's coverage). I'm sure that we haven't seen the last of negative attacks from the Obama campaign: when you are holding a weak hand in the economy, as the trite saying goes, "the best defense is a good offense" ("The principle is echoed in the writings of Machiavelli and Sun Tzu.")

This was totally predictable, of course: the Romney campaign had wasted many resources carpet-bombing Gingrich in Florida and elsewhere while Obama, running unopposed although drawing some embarrassing competition along the way, conserved his cash. Don't ask me how the incompetent Romney campaign didn't see this happening: I mean, McCain was ahead of Obama in Florida by 10 percent earlier in 2008, and then the Obama campaign just flooded the state with unanswered ads and by the time of the economic tsunami had completely flipped the lead.

And, for reasons I still don't understand, Romney ended up whining about the Obama attacks and demanding apologies. This is like Playground 101: you don't give the other kid the satisfaction of knowing that he's getting to you. It's very poor campaign tactics: you never let the other side define you or set the rules of the game. If and when you do so, you are playing on his home court, and he has the advantage. The man has to defend an abysmal record of 4 years

If you are a GOP strategist, you have got to know the weaknesses of Obama, e.g., his ultra-defensiveness. There are endless ways to tweak Obama on that score, e.g., "President Truman said, 'the buck stops here'. Under President Obama, the publicly-held national debt has doubled in less than one term, one-third of US debt is owned by foreign countries like China and Japan, and we pay hundreds of billions in interest every year, including over $70M each day in interest payments to China."

Or, say, "Under President Obama, we've expanded our meddling in the affairs of other countries, including Egypt, Libya, Yemen, Syria, and Afghanistan. Instead of imprudently spending American blood and treasure in being the world's unwanted, unappreciated, unpaid policeman, isn't it time we have a President whom puts America first?"

Or "President Obama named Ben Bernanke to a second term as Federal Reserve chairman. Under Bernanke, savers and others on fixed income receive less in interest income than general price increases in the economy-- and then the federal government taxes the same interest! We found out in the first audit of the Federal Reserve that the Federal Reserve has lent out over $16T to big domestic banks and international banks without our knowledge or consent.

"Yet President Obama and the Senate Democrats are saying 'NO' to full audits of the Fed and long overdue reforms of the Federal Reserve. In fact, during financial reform, they expanded the role of the Federal Reserve. When the Federal Reserve prints dollars out of thin air, it lowers the value of the dollars you've saved for the future and your spending money. Isn't it time for REAL reform?"

I could write these things ALL DAY LONG

The President's new ad is unusual because it comes across as a paid commentary from the White House. I'm sure that regular readers of the blog recognize one of this blog's trademark sayings: "If there's one thing Barack Obama knows, it's symbolism." I think the real story behind the ad is that Obama is reminding the viewer in a latent fashion that he is President--and Romney isn't, i.e., Romney is an unknown quantity, whereas the voters know what they're getting with Obama.

The overall theme has been telegraphed for weeks now, so I'm not at all surprised: he's been arguing that the voters need to make an unambiguous decision in this fall's election. Obama attempts to make his case:
Over the next four months you have a choice to make. Not just between two political parties or even two people. It's a choice between two very different plans for our country.
Governor Romney's plan would cut taxes for the folks at the very top, roll back regulations on big banks, and he says that if we do our economy will grow and everyone will benefit.
But you know what? We tried that top-down approach. It's what caused the mess in the first place.
I believe the only way to create an economy built to last is to strengthen the middle class. Asking the wealthy to pay a little more so we can pay down our debt in a balanced way. So that we can afford to invest in education, manufacturing, and homegrown American energy for good middle class jobs. Sometimes politics can seem very small. But the choice you face, it couldn't be bigger.
The Romney campaign has started to respond, e.g., Shawn McCoy here). But let me provide an initial independent reaction here (I am not part of the Romney campaign, I have not contributed to it (and have no plans of doing so),  I've detailed several policy differences with Romney, and I've criticized his campaign):

First, the President is correct that voters have a stark difference this fall. We have the President whom is asking us for another 4 years of  letting Big Government tax future generations for money it doesn't have--and trusting this time the results of spending it will turn out differently. We know the results of this administration: the highest general unemployment rate since the Great Depression, the worst long-term unemployment picture in memory, and  the lowest labor force participation rate in 3 decades. The average household net worth has dropped by over a quarter. Job growth and economic growth (roughly a third of the normal rate) have been the weakest of any recovery since the Depression, despite record low interest rates and record levels of spending.

We have the most anti-business administration in the history of the country which completely ignored the supplier side of the economy, which has the highest income tax rate (nearly 40% or more federal, state and/or local) in the developed world and suffers a regulatory burden over somewhat over $1T (an often cited 2008 SBA commissioned study put the cost of regulations then at $1.75T, or 12% of GDP), and the Obama Administration has vastly expanded regulation (among other things, through financial and health care "reform") in an uncertain way (since a number of regulations remain unpublished).

We have the most spendthrift administration in history, with Obama adding more to the national debt than Bush (over 2 terms and bookend recessions); the national debt has exceeded the GDP for only the second time in American history (the first time being WWII). Our debt has been downgraded for the first time in history; the Senate Democrats continually fail to come up with a viable budget, and Obama's budgets have been dead on arrival, even rejected unanimously. In the meanwhile, Obama has failed to address over $40T in unfunded senior entitlements and refused to back the bipartisan majority supporting his own deficit reduction commission recommendations.

We have a President whom continues to insist on divisive class warfare tax hikes (in disingenuous double speak, he refers to extending EXISTING tax rates as a "tax cut"). Obama is disingenuous here in a number of respects: first, the goal is not a serious answer to over $1T deficits: even if enacted, it would amount to less than a dime on each deficit dollar. Three-quarters of the Bush tax cuts are for the middle class.

But, according to this morally bankrupt President, we are giving tax cuts for those "whom didn't ask for them and don't need them": spoken like any other self-righteous, self-justified thief, a parasitic legal plunderer with his hand in some other man's pocket! This is not "his" money: he hasn't produced any widgets or performed any necessary service in the real economy (other than delivering boring, repetitive polarizing speeches no one ever listens to anymore). [Of course, I will concede that he does his fair share of keeping golf courses afloat (over 100 rounds of golf, e.g., during the BP oil spill crisis) and supporting Hawaii's and Martha Vineyard's tourist economies while on his numerous vacations during the economic malaise.] The only thing this busybody windbag knows how to do is waste other people's hard-earned money and incompetently meddle in the internal affairs of individuals and businesses.

The President's agenda is blatantly full of moral hazards, e.g., in many cases, it pays better to take unemployment rather than accept a part-time job; if you earn "too much", you lose lucrative government-paid benefits. Heavily-subsidized health care insurance does not vest consumers in lower costs; half of American workers do not pay a single penny towards government operations (i.e., through income taxes).

We have a President whom makes deals with the special interests like unions, green energy companies, and others (some of which have gone bankrupt) and wants to raise taxes on everybody else to pay for his giveaways.

Yes, we have a demagogue for  President, one whom is all too eager to add to the tax burden of the economically successful by raising tax rates and/or investment taxes, even as economists tell us this not only lowers the tax base but adversely impacts economic growth. Since many small business owners operate through a special corporation structure tied to individual marginal tax rates, this has the effect of raising business taxes in a discriminatory and counterproductive fashion.

What is the alternative? We have a candidate, Mitt Romney, whom knows a rising tide (economic growth) lifts all boats, that playing political games with tax rates as economic growth sputters yet again, down to 1.5%, increases uncertainty, adversely affecting business and job growth.

We have a man:
  • whom built a successful private equity company from the ground up, has gone through multiple expansions and recessions, and had to make tough decisions
  • whom has dealt with financially troubled companies, inherited a state with a large deficit and employment free fall, and turned around a floundering winter Olympics
  • whom, unlike his opponent, has had to work across the aisle with a state legislature dominated by the opposing political party
  • whom, as governor, vetoed tax and spending increases, cut taxes and spending, and balanced the budget
  • whom believes in a smaller federal government that can live within its means and believes in delegating responsibilities to the state and local government
Second: "roll back regulations on big banks"?  Banks have been regulated during the history of the US, and somehow government regulation always seems to miss the mark: regulations are only as good as the bureaucrats enforcing them. More regulations, such as in the Dodd-Frank law, tend to REDUCE market competition; competition is a much better check on a bank than incompetent bureaucrats and regulators whom have shown an inability to cope with existing regulations. We reduce moral hazard by allowing bad banks to fail and lowering taxpayer exposure by reducing or eliminating government guarantees. The pushing-on-a-string Dodd-Frank law is hopelessly convoluted, has raised uncertainty in a fragile economy and expanded the mandate of the Federal Reserve, which has enabled massive stock, credit, and housing bubbles over the past 20 years.

Third: "We tried that top-down approach. It's what caused the mess in the first place." Actually, significant cuts in upper-income tax rates under Harding/Coolidge, JFK/LBJ, Reagan, and G.W. Bush, resulted in greater government revenue, reduced deficits and/or higher economic growth.

The private sector did not "cause the mess in the first place". A number of factors were involved in the economic tsunami, most prominently government/regulatory failure, progressive laws pushing  home mortgage loans for at risk applicants with  little or no money down and lax underwriting standards at the expense of taxpayers, a Federal Reserve feeding into the real estate bubble with loose money policies, etc.

Fourth: "I believe the only way to create an economy built to last is to strengthen the middle class. Asking the wealthy to pay a little more so we can pay down our debt in a balanced way. So that we can afford to invest in education, manufacturing, and homegrown American energy for good middle class jobs."

Obama, as usual, has the cart before the horse. The private sector already exists: government is NOT the solution--it's the problem.  The economy works best  when government lives within a limited budget focusing on core competencies of a common defense, public safety and a judicial system guarding unalienable rights. The economy improves with government spends less of the income of individuals and businesses, leaving them free to spend and save/invest more of their own money.  What we don't need is the federal government throwing money at public education monopolies, whose performance benchmarks have been flat for decades. We don't need a President playing winners and losers in the economy: let the market be the market. Jobs do not result from delusional progressive tax gimmicks or mercantilist policies; they come from a free market and economic growth.

Musical Interlude: My Favorite Groups

Blondie, "Atomic".  It's amusing reading other people's interpretations of this song, which has spartan lyrics which singer/songwriter Deborah Harry suggests were written on the fly. There's definitely an apocalyptic context (doomsday weapons, etc.) I will simply suggest that to me there's an implied message of survival of the human race, which is tied to procreation (e.g., a darker variation of the Hollies' "The Air That I Breathe"). I just love the overall sound and the brilliant vocals; at the time it was released, the song wasn't like anything else I had ever heard on the radio.

Saturday, July 28, 2012

Miscellany: 7/28/12

Quote of the Day
Do not throw the arrow which will return against you.
Kurdish Proverb

Congratulations, Gold Medalist Ryan Lochte!

Sports Quote of the Day:
"[Ryan Lochte] works hard and he’s not afraid to throw up!"
- Strength Coach former Strongman competitor Matt DeLancey
There is something awesome about the Olympics, and I relish watching the spectacle. The US Women's basketball team found itself rattled by the inspired second and third period play of unlikely Croatia, the same team that just days earlier in Turkey got beaten nearly 2-1 at 109-55. They finally broke the game wide open going away in the fourth period 81-56, but there was a stretch where the Croatian women seemed to continually knock down 3-point shots while the US women were making one unforced error after another. Then the equally strong US women's volleyball team got an unexpectedly strong challenge from South Korea, losing a set before closing out the victory. Earlier in the day I followed the men's cycling road race where British Mark Cavendish was expected to win gold, but failed to place

What really surprised me about the widely hyped 400 IM battle of defending world champion Ryan Lochte and record Olympic medalist Michael Phelps. I think the story was that Phelps initially leaned against making the commitment to repeat in this event. In a stunning development, Phelps, the defending Olympic champion who seemed to be conserving energy for the final in his heat, just barely made the final cut. 

I am still confused why NBC didn't cover the final live (I was watching the event via Youtube and my ISP on my PC and had NBC muted on my cable TV; I think NBC was running some interview segment at the time). I know that they wanted to save the final for prime time ratings, but given the fact of the Internet, I got at least one email notification about the results.

Perhaps not being in the center of the pool near Lochte affected Phelps' performance; during the first 100, Phelps was a strong second to Lochte, but as Lochte started his second 100 (one of his stronger strokes of the medley), he began stretching his lead on Phelps, and Phelps was clearly struggling as other swimmers began challenging him for the second spot. It was clear at that point, short of a collapse, Lochte was going to win and the only question was who would place after him. In fact, he won by over 3 seconds, just behind Phelps' record. And his coach thought Lochte could have done better on his freestyle leg...
"A lot of people say that Michael is inhuman," Lochte said. "But you know what? He's just like all of us. He trains harder, though." Not anymore. Lochte — a born-again health nut who eats right and tosses tires in his strongman routine — worked harder in the last four years.
I have to say--there's nothing more all-American than a good work ethic... Congratulations, champ!



Follow-Up Odds and Ends
  • Miscellany: 7/19/12: Mark Perry of Carpe Diem posted a video follow-up on the Nathan Duszynski story, the 13-year-old whom tried to start up a hot dog stand to kick in some money into the family budget and/or save money for a future car and college. There really aren't any new developments on the story, i.e.,  Duszynski  is still selling his cart. There's additional context; we meet his parents and hear about their medical condition; there is an empty city hall suit talking about how a 13-year-old selling hot dogs constitutes "unfair competition" for brick-and-mortar restaurants a couple of blocks away (now do you understand why I talked about food trucks?) There is a nice little comment in there about crony restaurant connections on the city council. Nathan is talking hopefully of getting some economic liberty reform legislation passed through the state legislature. (Presumably he thinks that he can't get the issue resolved locally.) I have zero patience with "rules are rules" people standing behind restrictions AGAINST the benefit of consumers. You pass a corrupt law, and you claim virtue because you discriminate equally against all portable competition?
I used to watch Letterman during the early Leno/Letterman late night wars (I stopped watching late night years ago; Letterman's political jokes, almost always at the expense of GOP politicians, have a nasty, insulting edge to them. Leno tends to be more even-handed and funnier.) The reason I'm mentioning Letterman is because (at least while I was watching) he routinely did jokes about hot dog vendors (he loves to joke about how often they change the water). I've been in NYC on 2 or 3 occasions; I think the last time was when I think NYU was hosting ICIS (International Conference on Information Systems, an academic conference in MIS). I don't recall seeing any street vendors, but I was curious about what it takes to be a street vendor in NYC. I found this tidbit
Vendors on city streets (as opposed to outside park areas) don't have to pay rent for specific spots; their only real estate expense is the cart permit the city requires them to buy. Theoretically, that'll put you back just $200 a year. But since the city caps the number of food vendor permits at 3,100, far below demand, there's an extensive black market. Some companies buy up the permits for dozens of carts and then lease them to individual vendors at highly inflated prices. Average vendors make $14,000 to $16,000 a year after they've paid for their (likely illegal) permits and received a few tickets. They can be fined anywhere from $250 to $1,000 for being parked on the wrong street, being stationed too far from the curb, setting up illegal cart "extensions" that increase their shelf space, or any number of other violations. The city doesn't regulate where vendors can set up shop, as long as they're on streets where vending is allowed. 
 "To sell food on the street you must obtain both a food vendor license and a permit for the Food Unit (Cart or Vehicle) from the Department of Health."  
 The Slate article goes on to talk about the black market in permits because of the artificial shortage (some parties scoop up available permits and resell them at an inflated price). As a free marketer, I just have to shake my head in disgust.
Here's this interesting discussion from the Street Vendor Project: "We encourage you to join our community, which has a great tradition of bootstrap entrepreneurship. But we recommend you first do a lot of research into what is involved. There is a reason most vendors are recent immigrants with few language skills. Vending is very hard work and you will likely not make much money. For every beautiful day when the streets are teeming with people, there are many days of rain or cold when you will be lucky to break even."
But here's the point: other than a more complicated permit process and finding an available street spot, it would be easier for Nathan to operate his cart in NYC than in Holland, MI! And take my word for it--there are a lot of restaurants in NYC that manage to survive the onslaught of food carts. 

  • Miscellany: 7/25/12: "HR 459 Audit the Fed Passes": Anthony Wile / Daily Bell, "Auditing the Fed Is a Sideshow: Who Audits the Auditors?". I have to say that reading Daily Bell columns at times is an acquired taste; for example, I am a natural skeptic when it comes to conspiracy theories. I tend to adopt Ockham's Razor ("Pluralitas non est ponenda sine neccesitate"), or more specifically, Hanlon's Razor, i.e., never attribute to malice that which can be adequately explained by stupidity.
Ron Paul's op-eds are often published by the Daily Bell, so I find it interesting that the columnist  would question arguably one of the most significant legislative accomplishments of Congressman Paul's political career. 
"An audit of the Federal Reserve would be nice but really it wouldn't change anything. In fact, it would likely prove a kind of sideshow from reality, which is that monopoly central banking should simply be abolished." It's more like turning on the light at night to expose any bugs in the kitchen: you have to expose the problem to motivate the reason for a change. Ron Paul has made no secret of what he thinks about the Fed in his book "End the Fed". Milton Friedman and every free marketer (including myself) believes the same. But given the fact that Fed Reserve chair "Helicopter Ben" Bernanke calls the bill a "nightmare scenario", as the Daily Caller quotes, suggests that this audit has teeth in it.
"The reason to audit the Fed is to find out what "they" are up to. But we already know that. A limited audit examined transactions during 2008 when the world's financial system froze up. It found the Fed had loaned out more than 16 trillion dollars, almost interest free, to the "too big to fail" banks." No. The purpose of an audit is to independently attest to the statements of Fed's operations, including comprehensive disclosure of all salient facts. The first audit was, as mentioned, limited. I think there are serious issues of the Fed meddling with international banks, which go beyond legislative mandate. Audits also promote accountability.
"Eight co-sponsors of the legislation actually voted against the bill and most of them, when contacted, refused to explain why." It's no secret that the Senate Democrats and President Obama dislike the bill. None of them want to risk the Fed's existing loose money policy.
Musical Interlude: My Favorite Groups

Blondie, "Call Me"

Friday, July 27, 2012

Miscellany: 7/27/12

Quote of the Day
This is the worst pain a man can suffer: 
to have insight into much and power over nothing.
Herodotus

Reflection on Today's Quote

Plus ça change, plus c'est la même chose.

I don't mean to borrow fellow Franco-American Don Boudreaux's (Cafe Hayek) signature tagline, but it's so true. I've had to battle office politics in academia and in the private sector to do the right thing; I've rarely had formal authority, within an organization or with a client, to compel others to my point of view. 

I'm an optimist by nature, but there are a few things that are fairly clear:
  • We will never close $40+T in unfunded senior entitlement liabilities; the GOP never will have the stomach for the kinds of politically tough decisions necessary because the Dems will argue to seniors that they are for "saving" the unsustainable programs.
  • We will never pay off the national debt. It's difficult to see economic growth robust enough given the ongoing regulatory regime. I don't see the political will to impose across the board spending cuts, strip out tax preferences and expenditures. I suspect that the Fed Reserve will try to monetize the debt and destroy the dollar in the process.
  • The government spending bubble, the college cost bubble, and the health care bubble are unsustainable. 
  • Individual liberty is permanently impaired
I won't go into a long explanation here, but let me point out a few examples to make my points:
  • Even Paul Ryan's more "Draconian" approaches phase e.g., in entitlements, phase in serious cuts over time. 
  • Mitt Romney is talking about increasing, not decreasing, the 20% or so of federal spending for DoD. Furthermore, he's not talking about cuts in senior entitlements. When 80% of the budget is off-limits, it's difficult to see where the cuts are coming from.
  • Fear-mongering continues to drive us down the road to serfdom. If you look at recent votes on the Patriot Act and cybersecurity, pro-liberty Congressmen votes run to maybe a dozen or two out of hundreds.
Is there a way to turn things around? Yes. But it would require new leadership that is less preachy, more optimistic and more pragmatic, able to build a winning coalition, sort of a new age libertarian-conservative Ronald Reagan.  (I mourn the fact of President Reagan's handlers and what might have been given Reagan's professed libertarian/conservative principles.)

I think just like Obama's personality soft-sells his dubious progressive philosophy, Reagan's charisma, optimism and trademark humor soft-sold the conservative message better than his ideological predecessor, the dour Barry Goldwater. But there are flaws to Obama's selling of progressive philosophy: he initially made his sale on his optimism ("Yes, we can!") but then he had--and continues to have--a blindside to the toxic, unattractive aspects of his personality, e.g., the unprecedented attacks on his predecessor and the Supreme Court, his condescending attitude towards people whom disagree with him (e.g., the "cling to their guns and Bibles" moment), his ultra-defensiveness and unwillingness to accept responsibility (except for killing UBL),  etc.

Gary Johnson comes across as this generation's Barry Goldwater--good on principle and performance, but rather judgmental and not inspirational. There are some things that Ron Paul and/or Gary Johnson have said that have been unduly provocative and divisive (e.g., foreign policy in the lead up to the 9/11 tragedies).  I think it's enough to simply note that foreign meddling is expensive, is unsustainable, and has unintended consequences, not unlike counter-productive government invention in the economy. Speculation about specific events is unnecessary and unhelpful.

What does a new libertarian leadership need to have? A gifted orator with unfailing optimism, speaking of the possibilities of individual liberty, freed from the tyranny of meddlesome self-sustaining stealth empire-building crony government.

What is Wrong With Mitt Romney?

On paper, Mitt Romney may well be the smartest guy to run for President over the past 60 years. Very few people hold both a Harvard Law degree (with honors) and a Harvard Business School MBA (graduating in the top 5% of his class). 

In fact, I would say right now, despite what many polls say (with Romney behind in almost every electoral projection I've seen and slipping a bit in battleground state polls after saturation anti-Romney ads), the Presidency is Romney's to lose. Why? We've seen 3 incumbent Presidents defeated for reelection over the past 4 decades: Gerald Ford, Jimmy Carter, and G.H.W. Bush. In each case, we saw a recession within a year or so of the election.

We aren't in a recession technically: we have had, as any Dem talking head will dubiously remind you, an unbroken string of private sector job gains (since September 2010: see below). (You want to see a Democrat sweat? All it takes is a single month to break that streak--and many months in that streak have been below growth in the labor force.) Looking at the data, we see a familiar pattern--a trio of reasonably strong months--March through May 2010,  February though April 2011, and December through February 2012--only to see job growth slump to slump to 3 or more consecutive months of sub-100K job growth. It's almost like a sputtering engine with a weak battery; the engine strains to turn over but eventually stalls; you repeat and the same result. You know the battery is dying and maybe the next time you turn the key, all you'll hear is the dreaded click, click, click.

BLS Total nonfarm
YearJanFebMarAprMayJunJulAugSepOctNovDecAnnual
2002-129-146-24-84-947-100-11-551218-163
200395-159-213-49-9025-4510919714119
200416244337249310814612216134863134
20051372401413601702433741936680334160
20062833162831811476209183157-9204171
2007236931907213975-40-18737911289
200841-84-95-208-190-198-210-274-432-489-803-661
2009-818-724-799-692-361-482-339-231-199-202-42-171
2010-40-35189239516-167-58-51-27220121120
201111022024625154849685202112157223
20122752591436877(P)80(P)
P : preliminary
I think under ordinary circumstances that the power of the incumbency would be almost impossible to overcome, particularly with a personally popular incumbent, like Obama. But the other side of the coin is the unemployment rate, and Bush's worst month prior to Obama's election in 2008 (which I hold is the relevant point because at that point employers were factoring an Obama Presidency) was 6.5%. Obama's best month since he took office is 8.1%--and that was achieved only through a statistical gimmick, because a large number of discouraged job seekers left the official labor force. During all this time, Obama has set a record for government expenditures, and the Federal Reserve has maintained an unprecedented stretch of near-zero interest rates--during the ENTIRE stretch of the Obama Presidency. Even the most ardent Obama fan has to wonder: what is Obama going to do in a second term that he hasn't already done? Certainly he would have implemented relevant policies, especially when he carried almost unprecedented majorities in both chambers of Congress. What is he going to argue? He has a "secret plan" for the economy that he's been waiting to implement after the election? His only plans have been to spend and regulate more and more...

YearJanFebMarAprMayJunJulAugSepOctNovDecAnnual
20014.24.24.34.44.34.54.64.95.05.35.55.7
20025.75.75.75.95.85.85.85.75.75.75.96.0
20035.85.95.96.06.16.36.26.16.16.05.85.7
20045.75.65.85.65.65.65.55.45.45.55.45.4
20055.35.45.25.25.15.05.04.95.05.05.04.9
20064.74.84.74.74.64.64.74.74.54.44.54.4
20074.64.54.44.54.44.64.74.64.74.74.75.0
20085.04.95.15.05.45.65.86.16.16.56.87.3
20097.88.38.78.99.49.59.59.69.810.09.99.9
20109.79.89.89.99.69.49.59.69.59.59.89.4
20119.19.08.99.09.09.19.19.19.08.98.78.5
20128.38.38.28.18.28.2
So I think that Romney has a powerful story to tell as a highly successful businessman whose company was involved in a number of different areas of the economy, whom has dealt with struggling businesses and a struggling state. The Obama campaign is desperately trying to impeach that story, attempting to cast doubt on Romney's job creation credentials at Bain Capital or Massachusetts (where Gov. Romney had to deal with an 85% Democratic state legislature and a high tech state which was particularly affected by the Nasdaq stock collapse in 2000-2002.). However, the fact of the matter is that Obama didn't have ANY private or public sector administrative experience--and the economy has struggled over the entirety of his term.

The point is: the 2010 elections didn't go far enough: the Democrats are playing defense in the Senate and White House. The country knows that the stimulus didn't work as claimed; is the electorate really going to blame the GOP when their policies have been stymied by the opposition? I think it all boils down to whether they think Obama will do something different in a second term than a first term; in the meanwhile, long-term unemployment hasn't improved; our national debt now exceeds the size of our economy for the only time since WWII; the credit rating bureaus have already started downgrading our debt for the first time ever; the retirement tsunami of Baby Boomers has already started, and already we have scores of cities and states dealing with chronic pension problems.

I think every voter out there knows that if they have to watch their budget during tough times, so must the government. The budgets submitted by the President and the Senate Democrats have been a joke. They haven't even proposed something as simple as a 3% spending cut across the board. We are paying hundreds of billions in interest payments--with record low interest rates.

Will voters really reelect Obama because of an executive order here, another empty promise there or attack ads on Romney? In fact, despite Obama's waves of negative ads, Romney has continued to split national head-to-head polls, with a large number of Americans whom really don't know much about him. This will change over the next 4 months.

But I've been absolutely baffled by Romney's campaign, political posturing, gaffes and stumbles. Let me be specific:
  • Romney has been utterly clueless in symbolism and unforced political errors. For example, he was recently quoted questioning London's preparations for the Olympic games and in the process started a kerfuffle. I have no idea why he would even go there. Next, Romney knows that the Obama campaign is trying to stereotype him as having been born into wealth and privilege: why in the world would you have photo opps on jet skis? Multiple homes, cars, elevators for cars, etc.? Jokes about plant closings? Now, granted, Obama has stepped into it himself with the "you didn't build that" sound bite, the "spread some wealth around" moment of the 2012 campaign.  (I haven't reviewed Romney's response, but I would have had a Lloyd Bentsen moment like, "Mr. President, I was there when we started Bain Capital from an initial seed investment of $X million and YY employees and no clients--and I built the business to XXX clients, YYY employees, and ZZZ millions of dollars of business; the government didn't do that: I did it with the assistance of a number of other professionals.") You should never have a contradictory message coming out of the SCOTUS ObamaCare decision, given the fact the Dems are trying to link ObamaCare to RomneyCare. A lot of this is just plain common sense--and I'm not even a politician. If you're going to get your picture taken, do it at a state fair, throw out the first pitch of a baseball game (but, for God's sake, don't let the Dems catch you singing "God Bless America" during the seventh-inning stretch), go to a Boy Scout jamboree, go deer hunting, etc.
  • Romney has failed to posture himself effectively. Romney is a successful businessman, a capitalist. From a first principles perspective, he should be similar to me: a commitment to free trade and free markets, against crony relationships between business and government, for immigration. Instead, he's out there bashing China and taking a hardline on immigration which is absolutely lethal in terms of outreach to Latinos.(You would have figured that he's seen what has happened to the GOP in California over since Pete Wilson's scorched earth policy on immigration...) There are ways to criticize Obama on the issue (I've outlined some steps) without making it seem like the GOP wants to crack down on nannies, maids and gardeners or split families apart. Romney could talk about American universities training young professionals to compete against us, because they can't stay in the country after they graduate. Romney could talk about farmers unable to get migrant worker labor they need because unions block visiting worker programs.
But it goes beyond that. For instance, Romney could position himself against Obama by arguing for a more restrained foreign policy, he should contrast himself from the Bush/Obama legacy of low economic growth, government interventionist policies, foreign meddling and nation building, etc. Romney could take a position critical of the Fed--recall, Obama renominated Ben Bernanke. Romney had to notice how Ron Paul drew strong, almost fanatical support; he should trying to forge a coalition with Ron Paul supporters rather than to maneuver to the right of Rick Santorum populism.
  • Romney needs a simpler, consistent message.  Romney had a hard time putting away a fairly weak field in the primaries (his strongest competitors were a senator whom lost reelection by a landslide in a purple state and a former Speaker reprimanded by the Congress and with ties to the GSE's) and comes across as unprincipled. Voters' eyes are going to glaze over when he talks about a 59-point plan. He needs to wrap himself around themes like: individual responsibility, not government responsibility; Obama talks bipartisan--I deliver bipartisan; simplify taxes; the government should think before it spends; stop taxing the next generation with deficits; no more government deals for businesses and unions; etc.
Maria Bartiromo v. Barney Frank: 
Democrats and Half-Baked Policies

I think one of the most amusing consumer product categories out there are half-baked goods (pizza, pies, etc.) (as if baking for several minutes in your own oven makes it your own!) What is utterly amazing is how the 111th Congress managed to pass two bills with thousands of pages between them (ObamaCare and Dodd N. Frankenstein) and you STILL have bureaucrats pumping out regulations not in them. "Let the HHS Secretary decide this, that, and the other thing." Simply OUTRAGEOUS! Congress shouldn't be delegating SQUAT!

I have to say: does life get any better than watching a beautiful, smart woman like Maria Bartiromo put Barney Frank in his place? Be still, my beating heart...  Barney probably went home crying on the shoulder of his newlywed husband...

So here's Russ Roberts of Cafe Hayek on the situation:
The entertaining part is the arguments they get into. The illuminating part is that TWO YEARS after Dodd-Frank passed, its provisions are not completely specified. Frank resents the claim that it’s not even half done, but that’s quibbling. The point is that two years after this legislation passed, its provisions remain incompletely unspecified. What the heck is that about? There is no way to measure the impact of this kind of uncertainty on the economy in the middle of a recession with any precision, but it’s not a good thing. We’re not talking about the uncertainty of what the consequences are of the legislation. We’re talking about the uncertainty over what’s in the legislation.
So we wait a while to see, along with Nancy Pelosi, what's in the legislation. The key question is: how can a politician ethically vote for blank check legislation?




Political Humor 

"President Obama hasn't met with his jobs council in over six months. You know the reason? They're all out looking for jobs." –Jay Leno


[They still haven't found anything for him to do after the election this November.]

 Germany has opened a new hotline that lets people call in and yell curse words at strangers on the other end. We have something similar in America. It's called Time Warner customer service.  - Jimmy Fallon


[So THAT'S why all those Germans have been calling and screaming at me in the middle of the night... I should have known better than to criticize Chancellor Merkel in my blog.]

Musical Interlude: My Favorite Groups

Blondie, "Dreaming". I can still remember driving on a San Antonio freeway at night, playing this tune full volume with the windows down.... Brilliant vocal and I love the driving percussion in the arrangement. One of my two favorite Blondie tunes (the other being "Atomic")