Monthly Archive for July, 2005

Quote Of The Day

“Recently I cited Thomas Sowell’s article on judges’ “opinions,” in which he argued that it shouldn’t make any different what a judge believes so long as he knows that his job is to follow the law, not impose his own views on it. ISTM that we’ve inverted the roles of judges and juries. It used to be that the judge followed the letter of the law, and the jury’s job was to decide (no matter what the nit-picky law says) if an honest man would have done the same thing. This is called “jury nullification,” and if it weren’t for jury nullification the underground railroad never would have worked. The people who were helping runaway slaves were clearly breaking the law, but juries refused to convict because they agreed with their principles. That’s why we have juries — so 12 honest citizens can act as a check on lawyers and legislators, who can get too caught up in procedure and legal mumbo-jumbo to see the big picture. When you put the educated elite in charge, you get communism and other stupidities”. —Greg Krehbiel writing at Crowhill blog

Quote Of The Day

“Once we arrived at the factory the tour was fascinating. We practically got a private tour since there were very few tourists that made the journey out to this part of the city. Clearly, for those employed making the cigars this was not an ideal job by U.S. standards. We were not allowed to take photos. Row after row of men and women sat side-by-side rolling cigars in a hot, humid room. Even the Lonely Planet author, who to me comes across as an apologist for the Cuban government, did not hide her displeasure for working conditions in the factories when she stated that these workers were forced to toil making cigars for up to 12 hours a day and it smacks of a “human zoo.””–Peter Mork, a blogger who blogs at Economics w/ A Face, giving his account of a discussion he had with a Cuban family, during his current visit to Cuba

A Note On Comments

About a month ago I updated my website, and with the website update, I installed a somewhat advanced spam filter to help me with all the spam I was getting before. So far the spam filter seems to work really well, since I haven’t had to remove one spam comment since it was installed.

However, on at least two occasions, the spam filter has tagged a frequent commenter as spam, and removed some of their already posted comments from the comments section. On the first occasion, I was able to recover the comments by immediately going into the control center, and reversing what happened. However, last night, after commenting with Observer, the spam filter decided to tag him as spam sometime after I went to sleep and when I woke up this morning, the history had been lost and I was not able to recover the comments. I replaced his comments where I could from emails that are generated when a comment is approved. I also added him to a ‘whitelist’, so hopefully his future comments will not be tagged as spam, and this will not happen again.

On the other hand, this leads me to wonder if there might be people out there who have tried to comment and had their comments marked as spam. If you post a comment on this blog, and it does not immediately show up, please, shoot me an email. I will add you to a ‘whitelist’ so that you are (hopefully) never denied access again.

Things To Keep In Mind When Discussing Social Security

Will Wilkinson writes:

  • * The Social Security tax is regressive.
  • * The overall benefit structure accomplishes, on net, either no downward income redistribution, or a small amount of upward redistribution. (I.e., it is either close to a wash, or regressive, redistribution-wise.)
  • *The system is structured to disadvantage current workers over current retirees, and is thus invalid as a “compact” between generations, if we take the contract metaphor seriously.
  • * Because the Social Security tax hits least wealthy workers hardest, Social Security prevents many from accumulating wealth, and reinforces the divide between investing an non-investing classes.
  • *Social Security makes it impossible for many of the least wealthy to accumulate wealth that they can pass on to their children or grandchildren, thereby helping to perpetuate generational inequality.

It is crucial to note that whatever else it might be, Social Security is not PRIMARILY insurance, if it is insurance at all. The redistribution to the elderly poor it does manage to effect is incidental to the huge volume of transfers back and forth from within the same income bracket. (Net income-related redistribution come to less than 10% of total transfers) There’s a huge amount of deadweight loss in all this pointless churn.

A system of personal accounts plus a means-tested safety net would:

  • * Be more progressive in every way.
  • * Eliminate most of the unjust intergenerational transfers that are at the heart of the current system.
  • * Almost entirely close the gap between the investing and non-investing classes.
  • * Help the least wealthy workers accumulate inheritable wealth.
  • * Protect the elderly against poverty AT LEAST as well.

Quote Of The Day

“Many people are so preoccupied with the notion that their own knowledge exceeds the average knowledge of millions of other people that they overlook the more important fact that their knowledge is not even one-tenth of the total knowledge of those millions. That is the crucial fallacy behind the repeated failures of central planning and other forms of social engineering which concentrate power in the hands of people with less knowledge and more presumption”. –Thomas Sowell

CAFTA Roll Call

The roll calls were as follows:

In the U.S. House:

Democrats in favor = 15 (7%).
Republicans in favor = 202 (87%).

Totals: 217-215-2, in favor.

In the U.S. Senate:

Democrats in favor = 10 + Jeffords (24%).
Republicans in favor = 43 (78%).

Totals: 54-45-1, in favor.

Information via PoliPundit.

Can A Devout Catholic Become A Supreme Court Nominee?

It seems like some Democrats are saying no:

Senator Durbin of Illinois, fresh from slandering American GIs by comparing them to Nazis, introduced a new slander into the public debate after meeting on Friday with President Bush’s nominee to the Supreme Court, Judge John Roberts. Mr. Durbin, according to several press reports, asked the nominee to the high court whether he had considered potential conflicts between the moral imperatives of his Roman Catholic faith and his responsibilities as a judge.

Mr. Durbin’s press secretary, Joseph Shoemaker, promptly denied that his boss asked such a question. But law professor Jonathan Turley, who reported on the meeting between Mr. Durbin and Judge Roberts in a Los Angeles Times column that appears on the adjacent page, said he heard about the conversation directly from Mr. Durbin – and confirmed the senator’s account with Mr. Shoemaker as well. Mr. Durbin has since clammed up….

Mr. Durbin and his Democratic colleagues, moreover, have a track record in this regard. Two years ago, they launched a filibuster against Judge William Pryor because of Judge Pryor’s “deeply held personal beliefs” regarding abortion. In other words, it was Judge Pryor’s Catholicism that disqualified him. Before the confirmation of Attorney General Ashcroft, Senator Reid announced, “I think that we have a right to look at John Ashcroft’s religion.”…

Mr. Durbin insisted to reporters last week that he wasn’t interested in applying a “litmus test” to judicial nominees. The senator told Judge Roberts, “If you will be honest and forthcoming, you’re going to find a warm reception from our side of the aisle, even if we disagree with you on any given issue.” But two days later, Mr. Durbin went on NBC’s “Meet the Press” to say that if Judge Roberts did not find an implied right to privacy in the Constitution, on which the right to abortion is based, “It would disqualify him in my mind.”

Senator Cornyn addressed the issue in his own meeting with Judge Roberts on Monday. “I hate to see somebody going down this road, because it really smacks of a religious test for public service,” Mr. Cornyn told the nominee, speaking of Mr. Durbin. “I hate bringing this up, but since someone else already has and I know it is going to come up, is there anything about your faith or religious views that would prevent you from deciding issues like the death penalty or abortion or the like?” Judge Roberts, according to Mr. Cornyn’s recollection in a New York Times dispatch, replied, “Absolutely not.”

Yet the Democrats persist. “You wouldn’t run for the United States Senate or for governor or for anything else without answering people’s questions about what you believe,” Senator Bayh of Indiana said this week. “And I think the Supreme Court is no different.” This attitude is the side effect of using the courts to make laws rather than interpret them. But it will be an even greater debasement of the Constitution to see the judicial nomination process tarred by religious bigotry. Forty-five years after America finally elevated a Catholic to the presidency we will see whether Senators Durbin, Leahy, Schumer, Kerry, and Kennedy recognize that Judge Roberts can’t be tested on his “deeply held personal beliefs” in respect of religion.

Quote Of The Day

“Today we are drawing these people from across our borders. They come here quite freely, and not on slave transports. All of us reap the advantages of their cheap labor and their hard work, but many of us want to pretend that, somehow, they are not necessary to us and that we can get along without them. Our educated class has deluded itself into thinking that the problem of hard labor no longer exists, simply because they and their children don’t have to do it anymore. But someone does, and always will. What President Fox was trying to tell us, in his awkward way, was that those who argue that we can get along without illegal immigrants are living in a fantasy world, and that the sooner they wake up, the sooner Americans can begin working out a realistic solution to a problem that faces both our nations”. — Lee Harris, author of Civilization and Its Enemies, writing in Tech Central Station

A Victory For Underdeveloped Nations

…and a victory for the United States.

The House (narrowly) approved CAFTA:

After an all-day, full-court press by the White House, the House early Thursday narrowly approved the controversial Central America Free Trade Agreement, avoiding a potentially embarrassing political defeat for President Bush on an issue he championed for months.

The final vote to approve the pact was 217 to 215. House leaders held the vote open for an hour — well past the normal 15-minute voting time — as they rounded up enough votes to win.

In the end, 25 Republicans defied their leadership, and their president, to oppose CAFTA, while two others didn’t vote. Only 15 of the House’s 202 Democrats broke ranks to support it….

Supporters said the agreement will improve the economies of those countries, increase the living standards of workers and strengthen fledgling democracies in a region awash in armed conflict 20 years ago.

“These freely elected presidents came to us and said, ‘Help us,'” said House Ways and Means Committee Chairman Bill Thomas, R-California. “We help them by voting yes on CAFTA.”

Thomas, concluding the night’s debate, also chided Democrats for abandoning their traditional support for free trade.

“They have urged, all night, protectionism. They have urged fear. They have urged that we don’t do what’s right,” he said.

Of course Democrats, being the anti-economic party that they are, came out with their usual arguments against CAFTA:

But House Minority Leader Nancy Pelosi, D-California, insisted that Democrats were opposing the pact not because they oppose free trade but because they were against a flawed agreement.

“It is a step backward for workers in Central America and a job killer for here at home,” she said….

But Democrats charged that CAFTA didn’t do enough to protect the environment and workers’ rights and would further erode America’s manufacturing base.

Yeah, yeah, yeah, and the sky was supposed to fall with NAFTA as well, and we all know how that turned out. Why don’t Democrats just admit precisely why they are against CAFTA? They are bought and controlled by unions.

For those of you who still think Democrats understand economics, please read the article above, and tell me which parties statements are more likely to hold water in an economics 101 course. Because from here, the answer seems obvious (Hint: It’s not the Democratic Party)…

Update: For those interested in the economics of free-trade, read this, this, this and this.

Why We Should Support CAFTA

The Wall Street Journal details CAFTA’s benefits:

Start simply with the appeal of greater two-way trade: The vast majority of Cafta-made products already enter the U.S. duty-free under the Caribbean Basin Initiative. Cafta opens the way for more U.S. products going south. The agreement also boosts intellectual property protection in Cafta countries, as well as competition in financial and other services in which the U.S. excels. American farmers alone expect to increase exports to Central America by some $1.5 billion a year. All that goes away if Cafta fails.

We are also told that Cafta can’t work because the North American Free Trade Agreement of 1994 didn’t work. And while it’s true that Nafta didn’t cure cancer or turn Mexico into Switzerland, those who argue that Nafta failed are ignoring the evidence.

In Nafta’s first decade, annual two-way trade between the U.S. and Mexico almost tripled, to $232 billion from $81 billion. During that same period the U.S. created 18 million net new jobs and, even after the dot-com implosion and the recession of 2001, the current U.S. jobless rate of 5% is lower than it was (6.4%) when Nafta became law. U.S. productivity and wages have all climbed steadily. Ross Perot’s prediction of a “giant sucking sound” proved to be a fantasy.

But what about “the trade deficit”? Well, the National Association of Manufacturers (NAM) reported last week that, since the birth of Nafta, U.S. exports to Canada and Mexico have grown 55% faster than they have to the rest of the world, while imports from Mexico and Canada have only grown 20% faster. NAM says that Nafta partners make up just 10% of the U.S. trade deficit in manufactured goods.

“Those who cite experience with Nafta as a pretext to oppose the U.S. Central America-Dominican Republic Free Trade Agreement are substituting emotion for reasoned judgment,” says NAM President John Engler (who recently joined the board of Dow Jones, which publishes this newspaper).

Nor have Nafta’s benefits been limited to dollars and cents. When a rebel uprising, two political assassinations and a financial crisis hit Mexico in 1994, Nafta arguably helped to prevent the kind of political lurch to the authoritarian left that has been common in Mexican history. Nafta created economic and political interests in Mexico that had a stake in relations with the U.S. and global integration.

The economic competition induced by Nafta pushed Mexico’s political system forward toward fuller democracy, helping to end 70 years of one-party rule. Compare this progress with isolated Argentina’s reaction to its 2001 financial crisis, which has revived the authoritarian Peronism of the 1970s in Buenos Aires. Given Central America’s own history of authoritarianism, this is no small point for Cafta. Venezuela’s Hugo Chavez will be overjoyed if it fails.

Protectionists are also trotting out another old reliable, the “sovereignty issue,” claiming that U.S. regulatory powers will somehow be ceded to Cafta arbitration panels. But Nafta’s panels have hardly obliterated Congress’s powers, and Cafta’s couldn’t overrule any U.S. health or safety rules. All Cafta does is insist on “non-discriminatory policies,” which means that U.S. laws and regulations must be transparent and can’t be disguised trade barriers. If a Cafta country challenged a U.S. rule and won, the U.S. could refuse to change and the only Cafta recourse would be to deny comparable trade benefits to the U.S.

With so much to recommend Cafta, the shame is that the Bush Administration has had to hold a vote-buying bazaar to pass it. These include the usual courthouses and nominations, but also payoffs for the sugar, textile and cotton industries. If Cafta still loses, we hope the White House is already exploring ways to pay them back with free-trade regulations, among other measures.

Cafta opts for integration over isolation, for building bridges rather than walls. Killing Cafta would signal to the world that America is afraid of competition and in retreat, both commercially and politically. That can’t be good for U.S. workers or consumers, nor for spreading prosperity to the developing world.

Update: Sebastian Mallaby has more and the editors of the Washington Post have more.

Quote Of The Day

“What other advanced democracy would radically legalize abortion by judicial decree rather than by democratic will expressed through legislatures or referendums? What sane democracy allows four unelected robed eminences in Massachusetts to revolutionize the very definition of marriage, the most ancient institution in society?

This is not just deeply undemocratic. It is politically crazy. Democracies work as stable social entities because when people are allowed to settle issues themselves by debate and ballot, they are infinitely more likely to accept the results when they lose. To deny them that participation is to risk instability and threaten social peace”. —Charles Krauthammer

The United States And Aid To Foreign Countries

Tim Worstall puts the United States aid to foreign countries in perspective:

Estimated U.S. Total Economic Engagement with Developing

Countries in 2003

$US Billions % of Total

U.S. Official Development Assistance 16.3 13

U.S. Other Country Assistance 1.5 1

U.S. Private Assistance 62.1 47

Foundations 3.3

Corporations 2.7

Non Profits and Volunteerism 6.2

Universities & Colleges 2.3

Religious Organizations 7.5

Individual Remittances 40.1

U.S. Private Capital Flows 51.0 39

U.S. Total Economic Engagement 130.9 100

The part that currently gets counted is the $16.3 billion of Official Development Aid (ODA) and the US is the largest provider of such aid in the world, twice the number two, Japan. Perhaps not that much of a surprise, given that it is by a long way the largest national economy in the world (no, whatever people’s desires the European Union is not a national economy). But what people have been complaining about is that this is only 0.15% of GNI when other countries give a much larger portion of a much smaller number.

Looking at the fuller numbers, as this report does, changes the picture a little. The amount that churches and non profits, for example, send is equal to the official number. There is no way that this cannot be considered as aid, as helping countries to develop. The spending by colleges is what they provide in scholarships to students from those poor countries. Education of the poor is typically bandied about as the most important thing we can do for the destitute areas of the world so this must be aid as well….

When we add all of these together we get to some 0.67% of GNI being spent upon alleviating the griefs and sorrows of the destitute in other countries.

Well, actually, not quite so fast. For there are three more things to consider. The first is that line of private capital flows. This is, in fact, the one piece of spending that does more to alleviate poverty than anything else. This might be portfolio investment but most of it is what is known as Foreign Direct Investment (FDI) and it is this that lifts the poor up by providing them with jobs, a factory to work in, machines to raise their productivity, in short, makes them rich as it did us. Those people sending their hard earned money abroad to invest in sweatshops, for example. The reason the people of Cambodia, Indonesia, Swaziland, flock to these factories is because they get twice the prevailing wage in the wider economy. If you’re going to try and spend money on eradicating poverty, doubling people’s real wages sounds a pretty effective way of doing that.

The second is that portion of US military spending that helps poor countries. Some of this is indirect, like the protection of the sea lanes, the general but unquantifiable benefits that come from having someone acting as a global policeman. There are more direct effects too, like the interventions in Bosnia, the garrisons in the Gulf and at Diego Garcia protecting the flow of oil. Under the rules by which aid is counted these are not to be mentioned, not included in what benefits the US provides.

The third is one that you might find more controversial and I don’t mean to use this as a justification (or condemnation) of the system, just wish to make an observation. The US pays higher prices for pharmaceuticals than most other places in the world and it is those very higher prices that pay for most of the research into new such drugs. At minimum, when such drugs go off patent and begin to be manufactured by the generics companies this benefits the poor world and so the high domestic prices can be seen as a subsidy. What more often happens is that the pharma companies look to the US market to recoup their investments and are willing to sell drugs into the Third World at something closer to marginal cost, again a way of using the US consumer to subsidize the provision of health care in poor places.

He concludes with some very interesting observations:

So why have we had all this fuss about how little the US spends on aid if Americans do in fact spend a great deal? Ah, there is the very point. In our wonderful international system it is only what the US Government spends (and only limited classes of that) that counts. If the money is not raised at the point of a gun (which is the basis of all taxation, if you don’t pay eventually someone with a gun comes after you) and filtered through the bureaucracy it doesn’t get included. How much Americans send or spend is irrelevant, only what the authorities do matters.

I mean, really. What would happen if people were simply free to spend their own money in their own way? Not only would they be rich and happy themselves but it looks as if they would spend more than the official targets! We could never have that now, could we, things proceeding along nicely without a bureaucracy to administer it? Anyway, we all know private spending doesn’t work, it isn’t really money unless it has been processed through the system, unless the form fillers have said the magic incantation…we’re from the government and we’re here to help.

Good Grief! We might almost be talking about charity here, people acting both individually and collectively in a moral manner without having to be forced into it! Where would the international system be if everyone did that?

Picture Of The Day

Legislate

Quote Of The Day

“It is tempting to believe that social evils arise from the activities of evil men and that if only good men (like ourselves, naturally) wielded power, all would be well. That view requires only emotion and self-praise – easy to come by and satisfying as well. To understand why it is that ‘good’ men in positions of power will produce evil, while the ordinary man without power but able to engage in voluntary cooperation with his neighbors will produce good, requires analysis and thought, subordinating the emotions to the rational faculty. Surely that is one answer to the perennial mystery of why collectivism, with its demonstrated record of producing tyranny and misery, is so widely regarded as superior to individualism, with its demonstrated record of producing freedom and plenty. The argument for collectivism is simple if false; it is an immediate emotional argument. The argument for individualism is subtle and sophisticated; it is an indirect rational argument. And the emotional facilities are more highly developed in most men than the rational, paradoxically or especially even in those who regard themselves as intellectuals”. –Milton Friedman in the introduction to the Fiftieth Anniversary Edition of “The Road To Serfdom

Why Health Care Is So Expensive And What Can Help Make It Cheaper

The Wall Street Journal details some of the reasons behind Health Cares high cost:

Right now Americans who aren’t lucky enough to get insurance from large employers or poor enough to qualify for Medicaid find themselves at the mercy of the legislators and insurance commissioners of the state in which they happen to live. This can be OK in states that exercise this regulatory function judiciously. But in others, the young and working poor find themselves effectively priced out of the market by special-interest regulations dressed up as consumer protections.

New York requires every insurance policy sold there to cover podiatry. Acupuncture coverage is mandated in 11 states, massage therapy in four, osteopathy in 24, and chiropractors in 47. There are an estimated 1,800 or so such insurance “mandates” across the country, and the costs add up. “It is always the providers asking for the mandate; it is never the consumer,” says health policy guru John Goodman, who has testified before legislatures considering such rules.

What’s more, states like New Jersey and New York add two more ultra-expensive requirements: “Guaranteed issue” allows people to wait till they are sick and then buy insurance; “community rating” prevents insurers from charging different prices to people of different ages and health status. These may sound like compassionate ideas, until you realize they make insurance so expensive that millions of people are exposed to financial ruin because they aren’t allowed to buy basic policies focused on catastrophic costs.

How expensive? A 2004 study by eHealthInsurance.com found that a typical insurance policy ($2,000 deductible, 20% co-insurance) for a family of four could be had for as little in as $172 per month in a reasonably regulated locality like Kansas City, Missouri. But in New York that family’s only option–managed care–would run $840 per month, and in New Jersey family policies run a whopping $1,200-plus. We bet Democratic Representative Frank Pallone’s constituents in New Jersey would be interested in his view that insurance in his state is only “slightly” more expensive than elsewhere.

So what can be done about it? Here is something that will help:

Last week the House Energy and Commerce Committee approved a bill that could dramatically reduce the ranks of the uninsured and spur general economic growth–all without costing a dime to the Treasury.

The idea behind the legislation, sponsored by GOP Representative John Shadegg of Arizona, is disarmingly simple: Allow Americans to buy health insurance from vendors in any one of the 50 states. …

As a major side benefit, interstate commerce in health insurance would remove a huge barrier to the efficient allocation of human resources in our economy. Right now untold numbers of Americans fear moving, switching jobs or starting their own businesses for fear of losing their health insurance. That would change if they were able to shop nationwide for policies that would follow them wherever they go.

But the most important issue here is justice. It is simply immoral that millions should be exposed to the possibility of financial ruin because of the all-or-nothing choice offered by the insurance regulations of states like New York and New Jersey. Amazingly, we hear the entire GOP delegations from both states are leaning against the bill, which may come before the full House in September. Their names belong on a dishonor roll should they end up letting the special-interest lobbies mentioned above determine their vote. We hope President Bush–who supports the Shadegg bill–is prepared to twist arms as he did on the Medicare vote.

It’s no exaggeration to say this could turn out to be the most humane and consequential domestic achievement of the Bush years.

The article also responds to some of the objections raised against the bill.

Quote Of The Day

“It was said of liberal legend Senator Hubert Humphrey that he had more solutions than there were problems. But today’s liberals seem to have no solutions to anything, just carping, spin, and character-assassination”. –Thomas Sowell