Monthly Archive for October, 2006

Bush Signs U.S.-Mexico Border Fence Bill

Everytime I hear the news that Bush signed the U.S.-Mexico Border Fence Bill, I think of two things, one is this picture below:

Immigration Fence

…and the second thing is, immigration marches made this more likely, they woke up the wrong sleeping giant.

Quote Of The Day

“Many campuses have speech codes where it is called creating a “hostile environment” if you say things that make various racial, sexual, or other protected groups unhappy. Young people educated at our most prestigious colleges and universities are learning the lesson that storm trooper tactics can silence those who are not in vogue on campus, and honest expressions of opinion about issues involving anything from affirmative action to women in the military can get you suspended if you refuse the humiliation and hypocrisy of being “re-educated.” —Thomas Sowell

Quote Of The Day

“The American system of government is based on spreading out power so that nobody can mess things up too badly. I’m not sure it does the job as well as it should, but it’s founded on the right idea, and we should be using all our cultural influence to spread that idea all over the world”. —Greg Krehbiel

Quote Of The Day

“”Worst economy since Herbert Hoover,” John Kerry said in 2004, while that year’s growth (3.9 percent) was adding to America’s gross domestic product the equivalent of the GDP of Taiwan (the 19th-largest economy). Nancy Pelosi vows that if Democrats capture Congress they will “jump-start our economy.” A “jump-start ” is administered to a stalled vehicle. But since the Bush tax cuts went into effect in 2003, the economy’s growth rate (3.5 percent) has been better than the average for the 1980s (3.1) and 1990s (3.3). Today’s unemployment rate (4.6 percent) is lower than the average for the 1990s (5.8) — lower, in fact, than the average for the past 40 years (6.0). Some stall…President Bush’s tax cuts were supposed to cause a cataract of red ink. In fiscal 2006, however, federal revenue as a share of GDP was 18.4 percent, slightly above the post-1962 average of 18.2. And the federal budget deficit was $247.7 billion, just 1.9 percent of the $13.1 trillion GDP. That is below the average for the 1970s (2.1), 1980s (3.0) and 1990s (2.2)”. —George F. Will

Quote Of The Day

“After all, what is competition? Is it something that exists and has a life of its own, like cholera? No. Competition is merely the absence of oppression. In things that concern me, I want to make my own choice, and I do not want another to make it for me without regard for my wishes; that is all. And if someone proposes to substitute his judgment for mine in matters that concern me, I shall demand to substitute my judgment for his in matters that concern him. What guarantee is there that this will make things go any better? It is evident that competition is freedom. To destroy freedom of action is to destroy the possibility, and consequently the power, of choosing, of judging, of comparing; it amounts to destroying reason, to destroying thought, to destroying man himself. Whatever their starting point, this is the ultimate conclusion our modern reformers always reach; for the sake of improving society they begin by destroying the individual, on the pretext that all evils come from him, as if all good things did not likewise come from him”. —Frederic Bastiat

More On CEO Pay

Xavier Gabaix, a Harvard economist who is now on the Princeton Faculty, explains why CEO pay has increased so much:

This paper develops a simple equilibrium model of CEO pay. CEOs have different talents and are matched to firms in a competitive assignment model. In market equilibrium, a CEO’s pay changes one for one with aggregate firm size, while changing much less with the size of his own firm. The model determines the level of CEO pay across firms and over time, offering a benchmark for calibratable corporate finance. The sixfold increase of CEO pay between 1980 and 2003 can be fully attributed to the six-fold increase in market capitalization of large US companies during that period. We find a very small dispersion in CEO talent, which nonetheless justifies large pay differences. The data broadly support the model. The size of large firms explains many of the patterns in CEO pay, across firms, over time, and between countries.

What does this all mean? Harvard economist Greg Mankiw explains:

In Xavier’s view, CEO’s are earning the value of their marginal product. Top CEOs are paid high salaries because they are directing the fortunes of large enterprises, and even a small amount of extra talent is worth a lot.

Some people on the left have suggested that high CEO pay is a reflection of poor corporate governance, which allows CEOs to, in effect, steal value from shareholders. Xavier tests for this possibility using a measure of corporate governance and concludes, “Poor governance does increase CEO pay, but the effect seems small.”

The paper can be found here. More commentary by Mankiw can be found here.

Quote Of The Day

“I believe that in reality what has helped the less fortunate is economic growth. Today’s elderly are affluent not because of Social Security, but because of all of the wealth created by private sector innovation over their lifetimes. Government involvement in health care and education is an impediment to progress in those fields. Job training and welfare are demonstrable failures. I think that treating a national community like a family is a grave intellectual error. A national unit is an institution that creates a legal framework for a large group of strangers to interact. A family is a small group that interacts on the basis of personal bonds. Strengthening government serves to weaken families and other vital civic institutions”. —Arnold Kling, MIT economist responding to University of Chicago law professor Geoffrey Stone’s list of What it Means to be a Liberal

One Of The Many Reasons Why I Like Wal-Mart

Wal-Mart is doing what it does best – bringing employment to areas that are in desperate need of it:

Bringing Wal-Mart to Chicago was a four-year journey that pitted unions and small business owners against politicians and activists eager to bring jobs to the city’s economically depressed West Side.

More than 15,000 people applied for the 400 jobs at the new store, where an estimated 98 percent of workers live in the neighborhood, said store manager Ed Smith.

The store’s opening comes two weeks to the day after aldermen failed to override Chicago Mayor Richard Daley’s veto of the city’s so-called “big-box ordinance.”

The measure would have required large stores like Wal-Mart to pay workers at least $10 an hour — plus $3 in fringe benefits — by mid-2010. The rules would have applied only to companies with more than $1 billion in annual sales and stores of at least 90,000 square feet.

At the time, Wal-Mart officials cheered the measure’s defeat, saying the aldermen who voted against it were supporting “valuable job opportunities and increased savings for the working families of Chicago.”

On Wednesday, Smith said the lowest paid person at the store makes $7.25 an hour, and only two workers make that.

Daley and other opponents of the ordinance said it would have jeopardized the city’s ability to draw and keep large retailers.

Residents like Edwards echoed the sentiments of many Wal-Mart supporters who said a job that pays minimum wage is better than no job at all.

“I want to see them make $10 an hour, but if they can’t, at least they can make something,” Edwards said. “They’re creating jobs for our community.”

Yes people, you read that right, 15,000 people applied for 400 jobs. What Chicago needs is alot more Wal-Marts and alot less politicians that claim to ‘care’ for you.

Quote Of The Day

“From a perspective founded on sphere sovereignty, the progressive communitarian’s basic flaw is his willingness to invoke the coercive power of the state in ways that deny the right of mankind acting individually or collectively through voluntary associations to order society. In contrast, conservatives are unwilling to sacrifice ordered liberty at the altar of community. A conservative properly insists that individuals be left free to define for themselves what conduct shall be deemed trustworthy or honorable, rather than being forced to comply with, say, Geoffrey Stone’s definition of what makes for a good community”. —Steve Bainbridge, discussing the difference between modern day liberals and classical liberals

A Governor Worth Voting For

Michael Munger, an online acquaintance of mine and a professor of political science at Duke University, is running for Governor of North Carolina under the libertarian banner. In one of his speeches, he lists a core platform of his campaign:

It has become customary to bash public education, and the state of our educational system in general. I want to sound a positive note; there are a lot of good things happening in North Carolina education, and I would want to continue that advance, to guide continued improvement. And the path to continued improvement is to foster choice. School choice would be the central premise of the education policy of a Munger administration.

We already know that it works. Both of my sons go to public schools. Now, my wife and I could easily afford elite private schools for my sons, but the excellence of the public school choices in Raleigh make it unnecessary. My sons went to Magellan Charter School in north Raleigh, and now attend Raleigh Charter High School downtown.

Newsweek magazine, in its May 16, 2006 issue, ranked the top 1,000 high schools in the United States. NC has 4 of the top 50, 9 of the top 100, and 17 of the top 200. Let me say that again: NC has 4 times as many top high schools as you would expect if all state public education systems were equally good.

Why is NC doing so well? Choice. NC has an educational system that welcomes innovation and individual initiative. The high school my sons attend, Raleigh Charter, is ranked 9th in the U.S., among all public high schools. That’s in the entire U.S., mind you: number 9 overall, among all U.S. public high schools. A group of private individuals put together a plan, formed an organization, and use public funds to run a public high school under a charter. And even though Raleigh Charter is one of the top ten high schools in the nation, its cost per student is less than half that of the average for NC high schools. Facilities costs are less, administrative costs are less, and janitorial services are either provided by the students (they take out their own trash), or by contracting out to private firms that clean the bathrooms and mop the floors. In spite of only spending 50 cents on the dollar compared to traditional state-run schools, students are still better off because they had a choice.

Now, it is true that not all charter schools are so successful, though it is also true that even the worst charter schools are no worse than the lowest-performing public schools. But think about it: what happens to a charter school that parents aren’t satisfied with? It closes, because its enrollments fall below the level required to secure sufficient funding to continue. What happens to a traditional public school that parents aren’t satisfied with? Nothing, because public schools are not just the last resort, they are the only resort for parents who are denied a choice.

Now, you can say that everybody has a choice. After all, there are private schools. And there is home-schooling. Both of these options have been selected more and more often in the past decade. Those choices are not enough, however. Private schools are not plentiful, and they are very expensive. Home-schooling is expensive too, in its own way, and not everyone is able to teach bright students the challenging material they need to know to succeed in the 21st century workplace….

Most people in government, particularly those in the state-sponsored parties, got there by making some variant of the same promise: “Vote for me, and I will give you other peoples’ money.”

My promise is a little different, when it comes to education: “Vote for me, and I will let you keep more of your own money, money you yourself have earned.” I would offer each parent in the state of N.C. an education voucher, financed by lottery proceeds, of $1, 250 per child in their household. This voucher could only be spent at a state-accredited school, or be credited to the household in the case of home-schooling. But I would make the accreditation process streamlined and simple, fostering the growth of charter schools, religious or theme schools, or any other kind of innovative educational program that can attract the children of parents who want to exercise their choices as parents.

Importantly, I would put a floor on public school spending at its existing level. Our schools need a lot of work, a lot of physical plant improvements, and better textbooks. A voucher/choice program cannot work by starving the traditional public schools of revenue. And I don’t want the General Assembly to be tempted to cut education dollars and use them for pork barrel spending in their districts, hoping lottery money will make up the difference.

What would be the effect of this voucher/choice program? In many counties, particularly in the beginning, this would simply mean that children would continue to attend the existing public schools, since there is no effective “choice” there. But at worst this would mean that there would be large infusion of funds into those school districts, representing a more effective settlement to the issues in the Leandro court case than anyone else has proposed. And over time, private schools, charter schools, and public schools that deliver good educations at low cost would find their enrollments increasing. Ultimately, “accreditation” would simply mean that voluntary choice of private parents resulted in enough enrollments to stay open. Schools that satisfied parents would be accredited by something like a market process: people value the service being provided enough to spend their voucher money there.

Because parents would be empowered to make a choice, many parents would investigate those choices and make the one that best suits them and their child. Because enrollments are a means of increasing school funding, students and their needs would start to count again. The public schools bureaucracy of our state seems to think it is doing us a favor by educating our children, because each child is an additional burden. Under my program, each student is a way of attracting more revenue.

If I was a North Carolina resident he would certainly get my vote. The full speech, along with many other great parts, can be found here.

Quote Of The Day

‘The minimum wage is a blunt instrument for reducing overall poverty, however, because many minimum-wage earners are not in poverty and because many of those in poverty are not connected to the labor market. We calculate that the 90-cent increase in the minimum wage between 1989 and 1991 transferred roughly $5.5 billion to low-wage workers…. an amount that is smaller than most other federal antipoverty programs, and that can have only limited effects on the overall income distribution.’ —Card and Krueger in Myth and Measurement (p.3).

Quote Of The Day

“Is there any reason for the United Nations to stay in New York? The combination of its affluence and celebrity-driven culture draws in an odious international cadre, one that hates the United States (witness the applause for Chavez) as much as it enjoys living here. Surely it could move to Nigeria, Dafur, Cuba, or Venezuela, where its sensitive membership would be closer to real problems, well away from the television studios and five-star restaurants? Once again, privilege and left-wing piety are a bad combo”. —Victor Davis Hanson, Stanford Historian writing in his blog, Works And Days

Quote Of The Day

” The most that can be said for the current Republicans is that they want to throw away less money than the Democrats. In general, Democrats are the only real reason to vote for Republicans”. —Thomas Sowell

Quote Of The Day

“On foreign policy, Democrats continue to argue as if talking with our enemies is the magic formula. We should keep talking with Iran while they keep building a nuclear bomb, just as the western democracies kept negotiating with Hitler while he kept building up his war machine in preparation for starting World War II. Today, people ignorant of history — which includes graduates of our most prestigious universities — have no idea how close the western democracies came to losing that war and what an unending nightmare it would have been for the world if Hitler and his Japanese allies had won”. —Thomas Sowell

Democrats Vs. Blacks

Thomas Sowell writes on the opposing interests between Democrat special interest groups and Blacks:

All the most powerful groups within the Democratic Party — the teachers’ unions, environmental zealots, lawyers who make big bucks off frivolous lawsuits, and the American Civil Liberties Union — have interests diametrically opposed to the interests of blacks.

The teachers’ unions fight any attempt to allow parents to pull their children out of failing schools and no one needs to do that more than black parents who want their children to get a decent education — without which they have little chance for a better life.

Severe building restrictions imposed by environmental zealots make housing prices skyrocket, forcing blacks by the tens of thousands out of San Francisco and other places dominated by green limousine liberals.

Huge damage awards or out-of-court settlements won by frivolous lawsuits force up all prices, with special impact on low-income groups, such as blacks.

When the American Civil Liberties Union and liberal judges are able to get criminals freed on flimsy grounds, or prevent hoodlums from being expelled from the public schools, the community most likely to be harmed is the black community.

The full article can be found here.

Quote Of The Day

“Weak-kneed members of both parties have been calling for a timetable to be announced for withdrawal from Iraq. No other war in thousands of years of history has ever had such a timetable announced to their enemies. Even if we intended to get out by a given date, there is not the slightest reason to tell the terrorists that. It is frivolous politics at its worst”. —Thomas Sowell