Friday, April 29, 2005

United for a Fair Economy

United For a Fair Economy (UFE) is an organization with the mission to "raise awareness that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart" and supports and helps "build social movements for greater equality." I don't know why I was so surprised that such an organization would exist, but I was.

The name of the organization is United for a Fair Economy, implying that somehow an economy should be or can be fair. This idea however neglects one of the most important issues in economics, scarcity. Any student of economics will tell you we live in a world of unlimited wants, only some of which can be satisfied with limited available resources. Accordingly, economics is the study of choice and examines how people chose among available alternatives. The way in which people chose those alternatives does not always yield a fair or equitable outcome. Some people will chose more effectively than others and increase their wealth accordingly. The only part of the process that is guaranteed to be fair is the part where everyone has the opportunity to chose for themselves, to make their own decision.

The claim that concentrated wealth and power undermine the economy is really making two assertions. First, concentrated wealth undermines the economy and second, concentrated power undermines the economy. I do not see how concentrated wealth alone can undermine the economy. Concentrated power however that provides favorable policies to one group over another can undermine the economy by interfering with market activity and creating unfair advantages for one group compared to another.

In fact, I don't see how concentrated wealth undermines democracy, or deepens the racial divide, and tears communities apart. I think that concentrated power certainly does though. Because concentrated power allows special rights to be extended to some while denied to others, democracy is undermined, racial divides are deepened, and communities can be torn apart.

That being said it is still the purpose of UFE to strive for greater equality. Their energies then should be focused on ensuring individuals have the same opportunities and are not given special treatment.

Why then do they oppose Bush's Social Security reforms? UFE released a press release highlighting the fact that Social Security payments are capped and that some individuals, especially those working on Wall Street reach that cap within a day of earning wages. UFE advocates it is unfair that individuals earning less income have to contribute a higher annual percentage of income to Social Security. These same individuals want more money back from the government than they ever contributed. They want the stock brokers pay what they do not save. This seems unfair to me.


Here is a story about the proposal Senator Frist made yesterday with respect to the Democrat tactic of filibustering judicial appointments. Of course, the public response by Democrats was N-O.
"This has never been about the length of debate," Mr. Reid said. Rather, it's about constitutional principle of sharing power with the minority in the Senate, he said."
There is a "constitutional principle of sharing power with the minority in the Senate?" Really? I always thought the filibuster resulted from Senate rules. I've been looking through my copy of the Constitution today but so far I can find no reference, direct or remote, to sharing power with a Senate minority. Certainly the part of the Constitution that says the Senate has the power of "advice and consent" with respect to judicial appointments makes no reference to Senate minorities.

And, there is Senator Salazar's contribution to the filibuster flap which includes referring to someone as the "antichrist." Yesterday, Salazar apologized for the antichrist comment. A spokesman for Senator Salazar also made an effort to clarify his position on the filibuster tactic.
"'He said during the campaign that he would prefer an up-or-down vote, but now that Republicans are talking about breaking the rules, he takes issue with that,' Salazar spokesman Cody Wertz said."
I believe it is correct that as a candidate Senator Salazar said judicial appointments should get Senate floor votes, but less than half a year into his tenure as a Senator he has apparently decided his campaign position is no longer correct. Can anyone say "integrity?" I don't think this clarification about rule breaking makes any sense at all. If Republicans decide to pursue the "constitutional option" this will not be breaking the rules. My understanding is that they would be following precisely the rules of the Senate that cause rules to be changed.

Speaking of rules changes, the Wall Street Journal discusses a rule that cries out to be changed. Senate practice apparently allows a single Senator to "veto" any appointment. Wow. The Senate's Constitutional power includes "advice and consent," and the Senate allows one Senator a veto over the Constitutional power of the President? What's up with that?

Thursday, April 28, 2005

Panel readies bill to rid sports of steroids in sports

"House lawmakers have drafted legislation to set uniform testing standards for major U.S. sports as a way of containing the use of steroids and other performance-enhancing substances."
Because the legislation referred to has not been introduced into the House we do not know specifically what might be proposed for Congress to do regarding steroids in sports. Yet, I wonder, on what theory of government can we rely on to decide that any Congressional action is justified?

Economics would ask if there is a market failure to correct regarding steroid use in sports. Is there a reason to believe that steroid use by athletes in professional sports leads to an inefficient allocation of resources to professional sports industries? Typically the sort of regulation likely to be proposed here would fit the idea of an external cost, or a harm to people other than the players, the team owners, and the fans, that would be associated with steroid use by the athletes. I don't think there is such a harm. I think economic analysis cannot be used to justify Congressional action to regulate steroids in professional sports.

I also think that the role of government in protecting individual liberty means that Congress should not regulate steroid use. One asserted source of harm from steriod use by athletes is probably that fans may be turned off by knowing the athletes are so good because they use performance drugs. Even if true, this does not justify Congressional regulatory action because each league can decide for itself what best suits its ability to supply fans the entertainment services they enjoy. The conditions of competition within professional sports should be set by each sport alone.

Another asserted source of harm from steroid use is bound to be that steroids harm the health of the athlete that uses them. A theory of government that would say Congress should regulate/prohibit steroid use by athletes would be paternalistic. Such a theory would have us see government in a parental role. Clearly such a theory of government is inconsistent with individual liberty, and it is a theory of government that I reject.

I'm sure some will argue that professional athletes are role models for kids, and therefore, if kids know professional athletes use steroids then they will want to use steroids. Kids are simply too young to decide for themselves, and therefore, government is needed to stop adult athletes from inadvertently causing kids to use steroids. The line of cause and effect seems pretty lengthy here, and therefore, I grow suspicious that even if I accepted the theory of government behind this reason for Congress to regulate steroid use by athletes, I would have to conclude that Congress is very unlikely to pick a well targeted regulatory policy. The individual liberty of athletes would be sacrificed for an uncertain and limited quantitative impact on kids.

Further, Congress is not the parent of the kids in question. Suppose a high school football player came to his parents and said: "I'm pretty good and I think I could be good enough to get a scholarship to college and even have a good chance at the NFL, but I think that to have a chance at reaching my goals I should use steroids. What do you think? Will you help me pursue my goals in this way?" Many parents would investigate steroid use and conclude that their son should not be allowed to use the drug and they would just say no to steroid use. But, if the parents said yes, on what theory of government should we think it is legitimate for Congress to tell the parents they cannot make this decision for their son? I think government should let each parent decide what is acceptable for their kids.

One more thought occurs to me. Our Constitution expressly grants Congress certain powers in Article 1, Section 8. The theory of government embodied in our Constitution says that Congress may only act within these expressed powers. If Congress seeks to act without an express grant of power in the Constitution, then the resulting legislation would be unconstitutional. I don't think there is a expressed power in the Constitution that gives Congress the power to regulate steroid use by professional athletes. In other words, even if you find a theory of government, perhaps it is paternalism, that would justify Congress regulating steroid use, I don't think our Constitution grants Congress the power to do so.

Wednesday, April 27, 2005


An editorial by Dick Morris has me wondering. His suggestion is that Senate Republicans do not have to "go nuclear" on the judicial filibusters, and that instead they should proceed by actually following the filibuster rule as is. What would that mean?

It seems to me that the filibuster, technically, amounts to the Senate voting to not end debate. That is, there is a matter before the Senate, such as, to consent to the nomination of a Judge. Before voting on that matter the Senate has a debate, and those for and against consenting to the nomination get to state their cases. At some point debate ends and the vote is taken. But, the vote cannot be taken until the Senate votes to end debate. The filibuster, in the case at hand, amounts to the Democrats in the Senate preventing a positive vote on the motion to end debate and vote on the motion to consent to the judicial appointment.

I want to suggest that public debate on the Senate floor is good, and I'll bet you agree. Unfortunately, the Senate is not actually debating the question at hand. Instead the Senate is spending a lot of time discussing its rules. The Senate's constitutional responsibility is, at this point, being effectively hidden from public view. The Senate should be debating the pros and cons to consenting to each of President Bush's judicial appointments. And, then, the Senate should vote to consent or not.

I think Morris is correct. If the Senate Republican leadership follows what one would think would be the principles embodied it the Senate's constitutional responsibility, there will be a debate on the merits of each appointment. If the Democrats decide to adopt the tactic of not ending debate, just how long do you think it will take before the public tires of what inevitably will become the endless repitition of hot air?

What I wonder about is why do we get to the point in our political system where it is decided that rules will be softened, that rules will be weakened relative to appropriate principles and process? Why not simply debate until the Senate votes to end debate and then vote? The responsibility of our representatives is to carefully consider the pros and cons of every issue, and the public debate on the Senate floor is a marvelous mechanism for such careful and open consideration. I personally want to hear both Republicans and Democrats debate the merits of consenting to Justice Brown's appointment. I want each and every Senator to be publicly on record explaining why they vote as they do. I want each and every Senator to publicly speak on the floor of the Senate while the cameras are on and recording their thoughts and principles as they themselves choose to state them. Why have the principles and rules been weakened and/or changed so that the Senators are seemingly being allowed to hide their views from the public debate and public scrutiny?

I seems to me that where we are right now with our political system does not serve our liberty well.

Social Security Economics

Bruce Bartlett explains how the concept of present value can help us understand the financial implications of both Social Security and Medicare .
In short, we would need about one year's gross domestic product in a bond fund somewhere, backed by productive tangible asserts earning a real return, in order to pay all of Social Security's promises without either raising taxes or cutting benefits.
Imagine setting aside this year's entire GDP in productive assets so that over the life of Social Security, as the Trustees currently project that program, we could pay for the choice today of continuing the program's status quo.

As bad as this news is, however, it pales in comparison to Medicare's problems. . . .Adding up all of Medicare's unfunded costs yields a total of $68.1 trillion -- six times Social Security's unfunded liability . . . .
Let's see, I think that means Social Security and Medicare combined would require us to have set aside 7 years of GDP in productive assets to be able to pay for these programs' status quo.

The chilling conclusion is that virtually 100 percent of all federal taxes, on a present value basis, do nothing but pay for Social Security and Medicare. Unless there are plans to abolish the rest of the federal government, large tax increases are inevitable.

You may be tired of seeing posts on social security, but I think it is indeed chilling that today's political discussion seems to be favoring the status quo.

Monday, April 25, 2005

Evidence the U.S. might be Losing the War on Terror

In an article posted today on the Independent Institute's website, Mr. Ivan Eland has stated that evidence exists proving the United States may be losing the Global War on terror (click here). In general, the points he makes are no different than what had been asserted prior to our invasion of Iraq - the Administration pasted together dubious info for a link between Al Qaeda and Saddam, the invasion has had the effect of swelling terrorist ranks rather than lowering them, etc.

However, one thing that is new is the assertion the current administration may be attempting to suppress data showing that we are losing. I'm not incredibly surprised.

What I am surprised at - all of the life and liberty lost (domestically and abroad) during this dangerous "war" and we are still wondering if we could somehow hit a jumper at the last second and win the game? Instead of saying that we "might be losing", can someone tell me how we possibly ever might win?

Favorite Book?

Do you have a favorite book right now on either the topic of economics or individual liberty?

Mine is noted in the post that follows.

Economic Prosperity

". . . . no country, communist or capitalist, developing or developed, has the prosperity that it could have." (p. 174)

"Some people argue that the individual behavior required for markets occurs only in societies with appropriate common culture. . . .The argument here is that some types of markets regularly emerge whether or not the participants have anything in common, and sometimes even when participants have antipathy toward one another. These markets emerge spontaneously and some of them are literally irrepressible. I call them self-enforcing markets. By contrast, some other types of markets, which I call socially contrived markets, emerge only when a society maintains certain institutional arrangements. These special institutional arrangements are found on a continuing basis only in the richest countries of the world, but their profound importance is not understood even in these countries." (p. 174-175)

". . .Without the right institutional environment, a country will be restricted to trades that are self-enforcing." (p. 185)

"We can also see why it is no accident that the developed democracies with the best established individual rights are also the societies with the most sophisticated and extended transactions (such as those in futures, insurance, and capital markets) for realizing the gains from trade. They are generally the societies with the highest levels of per-capital income." (p. 187)

"At least when a society has the appropriate institutions and government policies, the overwhelming majority of the firms that make huge profits are doing a huge service to the population. . . .A great excess of revenues over costs means that the enterprise is almost certainly putting more value into the society than it is taking out." (p. 189)

". . . .it was natural to ask how a society can obtain the types of markets that generate the rapid and sustained growth that brings a cornucopia of wealth. If we bring all of the theory and evidence together at once, we see that. . . .only two general conditions are required for a market economy the generates economic success. . . .the first of these conditions is the paradoxical condition of secure and well-defined individual rights. Rather than being a luxury that only rich countries can afford, individual rights are essential to obtaining the vast gains. . . .and to obtaining the bounteous harvests that property-intensive and contract-intensive production can yield. . . .There is no private property without government -- individuals may have possessions, the way a dog possesses a bone, but there is private property only if the society protects and defends a private right to that possession against other private parties and against the government as well. . . . .The second condition required for a thriving market economy is simply the absence of predation of any kind. . . .one other kind of predation can and often does occur even in societies with the best individual rights. This is predation through lobbying that obtains special-interest legislation or regulation and through cartelization or collusion to fix prices or wages. . . ." (p. 195-197)

These insights are due to Mancur Olson and his book Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships .

AARP's Social Security Grades

Check out this interesting analysis of AARP's Social Security Proposals .

Saturday, April 23, 2005

Acquisitiveness & Capitalism

I think some of the critics of capitalism, particularly those from religious traditions, misunderstand its nature because they mistakenly see an immoral acquisitiveness to be necessary for the success of capitalism. Michal Novak, in his book Catholic Social Thought and Liberal Institutions offers deeper understanding:
"This word [acquisitiveness] confuses two quite different motivations. Truly, the miser is acquisitive; he hoards, holds, wants to possess. The miser's behavior is quite different from that of the investor, the entrepreneur, and the inventor. . . . It is not having and grasping that characterize the capitalist spirit, but letting go and venturing, creating and rendering obsolete. . . . .What does define a capitalist order is, rather, the habit of abstaining from consumption and from miserly hoarding, in order to invest in creative ventures." (p. 9-10)

Leave Rap Music Alone Rev. Sharpton

The Rev. Al Sharpton, upset about violence in rap music, asked the Federal Cmmunications Commission on Thursday to punish artists and radio stations connected with violent acts. Artists connected to such acts should be denied airplay on radio and television for 90 days, he told reporters after meeting with FCC Chairman Kevin Martin and two other commissioners. He also urged the agency to fine and review the licenses of radio stations "that encourage a pattern of this, including allowing employees to do on-the-air inciting ofviolence." continued
Rev. Sharpton perhaps needs a reminder that violent acts are committed by individuals, not industries, and it is those individuals who commit violent acts against the person or property of another who must be held accountable for their own actions. And there are laws that make this the social norm. What Rev. Sharpton is suggesting is that additional sanctions be levied against those committing violent acts if they are also part of the rap music industry. This sounds like one group being treated differently than another, AKA discriminatory policy.

Rev. Sharpton also appeared on Nightline Friday night expressing disgust in the rap industry for producing records for convicted criminals currently serving time, like C-Murder who is serving a life sentence without the possibility of parole. Rev. Sharpton's criticism is that those artists are glorifying the "thug life" and that glorification is confirmed by soaring record sales.

Well, I thought the convicted were prohibited by law from profiting from their crimes. If these rappers are indeed profiting from their crimes through music then the law should be applied to them to. Problem solved.

What Rev. Sharpton needs to realize is that rap music is protected by the Constitutional right to free speech. And if rappers want to glorify a life of violence in their music they certainly have that right. And I have the right to listen to that music. Only when the violence moves from glorified in music to a reality in the streets can individual artists be held accountable for their actions.

Beach takings in California

An article in the New York Times opens:
The media mogul David Geffen has agreed to allow public access to the beach in front of his multimillion dollar home in Malibu, Calif., ending along-running battle with the state and nonprofit groups. As part of the agreement, Mr. Geffen will pay the California Coastal Coastal Commission and the State Coastal Conservancy $300,000 . . .

According to state law, all beaches are open to the public up to the mean high tide line. But I thought the Fifth Amendment protected individual's from public taking without just compensation. It seems to me that Geffen is being charged to allow the state to orchestrate a public taking of his beach property, up to the mean high tide line at least. How could this be possible?

Well, thanks to the ruling in Nollan v. California Coastal Commission (1987) the state can do this. Justice Scalia delivered the opinion of the Court and noted that it "has long recognized that land-use regulation does not effect a taking if it 'substantially advances legitimate state interests' and does not 'deny an owner economically viable use of his land.'" Although the Court defended Nollan's rights it noted if the state employs such a law it may do so and is within its rights to do so only if one of the following three purposes or legitimate interests are behind the law. The law was put in effect to (1) Protect the public ability to see the beach, (2) Assist the public is overcoming a perceived psychological barrier to using the beach, and (3) Prevents beach congestion.

This doesn't seem right to me. I think the language of the Fifth Amendment is clear and this is just another example of a Supreme Court blunder. They had the chance to strike the law down in 1987 and instead let one special case out from under it, doing nothing to preserve justice in the future.

Evolving Constitution

From Laura Ingraham's sound bite of the week we have more Justice Scalia:
"If you have an evolving Constitution, somebody's going to have to decide, and I think that what has happened is that after 50 or 60 years of an evolving constitution, people have come to realize what is going on: that the people that they are selecting, not just for the Supreme Court, but even for the Court of Appeals, have enormous policy discretion, and I think that is what is going on. Judges have become political entities much more than they ever were."
Thinking our Constitution is a "living" constitution brings politics much more directly into judicial nominations, and perhaps this means that the Judicial branch of government is not very independent any more.

Thursday, April 21, 2005

Savings & Social Security

Steven Landsburg offers another view of Social Security from an economist's point of view.
". . .If you want to address the Social Security crisis of the future, you must adopt laws that encourage saving in the present. There's nothing else you can do.

Which brings us to the President's proposal for private accounts. I like the proposal for three reasons. First, it will encourage people to save. Second, it will give people choices, and choices are good. And third, it will give more voters a stake in the capitalist system, making them more likely to vote for the sort of pro-growth policies that will improve the quality of life for us in our old age and our grandchildren.

What really matters, though, is not private accounts, It's the saving and pro-growth policies that private accounts will encourage. If we can get the same things in other ways, that's just as good."

Social Security Morality

Walter Williams has some interesting questions .
"There's a moral dimension to Social Scurity that few have the guts to address. What moral principles, consistent with liberty, justifies forcing a person to set aside a certain portion of his weekly earnings for retirement and jailing him if he fails to comply? Retirement isn't the only important item for which we should budget. How about a congressional mandate that we set aside a certain portion of our weekly earnings for housing, food, entertainment or our chilidren's education? Were Congress to propose a measure that would require each American to set aside a portion of his weekly earnings for these items, most of us would see it as tyranny. Pray tell, what's the difference in principle for a congressional mandate that requires setting aside earnings for retirmement versus a mandate setting aside earnings for housing or our children's education?"

Environment & Immigration Policy

A house editorial in the Wall Street Journal today points out that immigration policy issues involve more than homeland security. This editorial specifically notes that a policy debate within the Sierra Club continues, with at least some of the members of the Club supporting reductions in immigration on the grounds of protecting the environment. You might want to check out the web site for Sierrans for U.S. Population Stabilization. Here is a sampling of what you will find regarding this point of view:
"American over-consumption is shameful - and making more Americans just makes it worse. Until we can properly manage American consumption, we owe it to the rest of the world, to future generations, and to other species, to limit the number of Americans."
While this position is taken with respect to environmental protection, it also suggests that there are many economic issues involved in the immigration policy debate today because of the many different trade-offs implied by different policy positions. Many people seem to believe that the status quo on immigration policy is good because of economic advantages. Others believe the status quo is, on net, harmful from the economic perspective.

I hope to spend some time studying the various policy position, and I am not ready to offer my own position on all the tradeoffs. In the mean time, I would be interested in comments regarding other perspectives.

Government & Fighting Poverty

John Fund has some thoughts on government and poverty programs. The idea is that voluntary approaches are better than the compulsion inherent in government approaches. Do you think he is on the right track?

Wednesday, April 20, 2005

Spooner Award Winner

Randy Barnett is the winner of the 2005 Lysander Spooner Award. Barnett's book Restoring the Lost Constitution is called the best 2004 book on liberty. I think the book is fantastic, and well worth your time.

Equal Pay Day

Something called "Equal Pay Day" is being used to make the point that there is a wage gap between men and women such that women are paid 75% of what men are paid. As such, Equal Pay Day is used to suggest that the first 4 months of this year are spent by women in making up for the wage gap of the last year.

I want to suggest that caution is in order. The statistics used to report "wage gaps" such as these are medians and therefore they are aggregations. When you look at aggregated data you are unable to see the differences in the details that are aggregated. No one works in aggregate. People work individual jobs in specific settings. And people make different voluntary choices that result in the specific jobs in the specific settings. A "wage-gap" based upon aggregated information need not be the result of discrimination in the labor market.

The commentary by Carrie Lukas at National Review Online illustrates why caution is in order by telling us about Warren Farrell's Why Men Earn More. For example,
"Not only do women take more time out of the labor force and work fewer hours than do men, women also avoid jobs that require a great deal of travel or relocation. Men assume more high-risk jobs -- 92 percent of occupational deaths occur among men -- and endeavors that require braving the elements outdoors."

". . .Dr. Farrell outlines how women can increase earnings, but notes that higher pay often comes at a price -- be it greater physical risk, more time on the road, or more hours in the office."
It seems to me that "wage-gap" numbers cannot be relied upon as evidence of labor market discrimination.

Brookings on the Federal Budget

There is an interesting commentary by Robert Samuelson. He discusses a recent Brookings Institution study.
"Let me say that, in many ways, 'Restorying Fiscal Sanity 2005' is a swell report. It's a lucid and fact-filled budget primer. It proves, if proof were needed, that an aging society is the central budget problem and that almost everything else is a footnote. Indeed, the report usefully shows that, depending on how rapidly health costs grow, the budget outlook goes from abysmal to catastrophic."

". . . .In 2005, all federal spending -- the entire budget -- is 20 percent of GDP; Social Security, Medicare and Medicaid together equal 8.4 percent of GDP. By 2030, those three programs alone cost somewhere between 14 percent of GDP (lower health spending) and 17 percent (higher health spending). Inescapably, we get one or all of the following: exploding budget deficits; staggering tax increases; draconian cuts in other government programs; and abrupt reductions in services for the elderly."
Not a pretty picture, eh?
"So what does the Brookings study advise? Well, nothing. It presents various budget 'options' -- larger government, smaller government and so forth -- and possible tax increases or spending cuts. . . Asked why Brookings' experts couldn't craft a plan, co-editor Isabel Sawhill said: 'That requires values judgments -- and we don't all agree among outselves.' "
"But if people who think constantly about government -- and don't face elections or angry voters -- won't make the hard choices, why should politicians?"
This seems an interesting and relevant question.

The question might not be so relevant if WE THE PEOPLE tended to elect true leaders as our representatives in Congress. Instead we elect people who seem more like followers since so many seem comfortable trying to run from tackling needed social security reform. It seems too many members in Congress hide from the hard choices that good governance requires.

In any case, while Samuelson's criticism of Brookings is justified, if you want to learn more about the Federal Government's budget the report by Brookings is worth looking at.

Tuesday, April 19, 2005

Open Space and Limousine Liberals

What is a limousine liberal? Thomas Sowell explains:
"Much of this exclusionary agenda is pushed by people who inherited great wealth and are using it to by a sense of importance as deep thinkers and moral leaders protecting the environment. The foundations and movements they spearhead are driving working people out of areas dominated by limousine liberals, who are constantly proclaiming their concern for the poor, the children and minorities."
While you are reading about limousine liberals you can also learn about some of the economic results of open space laws.

Social Security: Black and White

The featured article at Opinion Journal today is worth a look.

Monday, April 18, 2005

Is a Hovercraft Responsible Spending?

When I think about taxes they don't really bother me in theory. I pay government to protect my property rights and uphold my contracts. I am better off to pay those taxes than I would be if I didn't pay them.

Taxes also don't bother me since an income tax is constitutional. But I also have a constitutional right to property. This means to me that government can tax me if they use that money to make me no worse off than I would be had I employed my tax payments myself.

This is why when I read an article in the New York Times about a hovercraft being built in order to prevent a dirt road from being built through the Izembek National Wildlife Refuge for ambulance and other emergency vehicles only for $8.8 million out of a $35 million transportation plan I was disgusted. Doesn't Congress have a responsibility to spend tax funds in a reasonable manner?

I am pretty sure a cost benefit analysis of the situation would yield results confirming the benefits to such a road far outweigh the costs endured by the wildlife refuge. I can think of huge military debt that might use the $8.8 million more effectively than the eelgrass beds or sea geese called brants will. After all, these wonders of nature are using the money for a hovercraft.

Democrats & Republican Government

Mort Kondrake has a good point.
"There is a way out of all this: Have real debate on each nominee. If they are really 'extreme,' as Democrats claim, let them prove it."
Democrat Senators are employing the filibuster rules of the Senate to prevent floor votes on several judicial appointments by President Bush. With respect to these appointments, not only is the Senate failing to vote for or against the appointment, but the Senate is even failing to have open debate in this most august of deliberative bodies. Is this republican government?

I have to ask what the Democrat party is afraid of? Is the Democrat party afraid of debating judicial appointments it asserts are "extreme?" Is it afraid of explaining in open public debate on the Senate floor what it means by "extreme?" Perhaps it sees too much risk that what Democrats think is "extreme" is instead widely accepted in the body politic? Perhaps it is even worse, perhaps the Democrats don't respect and value republican government? Perhaps they would prefer not to have the majority in the Senate express its views in support of President Bush's judicial nominees? If we respect and trust our republican form of government, then wouldn't we want open public debate, followed by a Senate vote of each of our Senate representatives, and then embrace the outcome of our republican government processes?

Is there a reason to require a super majority vote in general? Perhaps the requirement of a super majority vote provides some protection for the rights of those in the minority. This might make some sense if the issue was, for example, whether government should tax wealth. If those with wealth are a minority in number, then requiring a super majority vote for passage of such a tax measure would provide greater protection for those in the minority than would be the case under a simple majority vote. The super majority might reduce "tyranny of the majority."

There seems to be a flip side, which would be "tyranny of a minority." A minority of individuals might prevent the majority from acting in the broader interest of the community. When the issue involves something like wealth taxation, the super majority rule protects the individual rights of the minority while at the same time it does not really harm the rights of those in the majority.

If this makes some sense, then how might we look at the Senate Democrats using the filibuster rule to stop specific judicial appointments by President Bush. Would it be fair to argue that this harms the rights of those in the majority? It seems to me that each Senator has a constitutional duty, and perhaps this means also a right, to publicly vote for or against judicial appointments by the President. I know that I want to have each of my Senators vote and represent my interests in the matter of judicial appointments. On the flip side, if the Senate democrats end their efforts to use the filibuster rule, then they have given up no rights, nor have they acted in a way that gives up the rights of any of their constituents. Senators have the right and the responsibility to represent their consituents by voting on judicial appointments, it seems to me that no Senator has the right to a specific result.

Does this make sense?

Social Security: Ownership & Liberty

Ed Crane of Cato Institute recently wrote to Karl Rove offering the suggestion that President Bush should talk up the opportunities for ownership and freedom that can result from Social Security reform. I think this is important, and it fits well with the several posts I've offered with respect to Social Security.

Sunday, April 17, 2005

Rock the Vote Loves Social Security

Rock The Vote has a new "I Love Social Security" campaign. Unfortunately, this campaign seems to rely on inaccurate descriptions of the present social security program. Consider, for example, their answer to the question "What Is Social Security?"
"It's a giant fund that pays benefits to 30 million retirees as well as 15 million members of families where a parent has died or become disabled due to injury. The benefits are different from the kind that you get in an investment program because they are guaranteed -- they don't depend on your skills or luck. They are also adjusted to provide a safety net for the middle class and to lift lower income Americans out of poverty. Your employer sets aside 6.2% of your income, matches that same amount, and sends the whole thing to Social Security. You get a benefit when your time comes. Through that mechanism, Social Security is basically a promise from your government that when you get old, after a lifetime of hard work, you won't end up in poverty."
Calling social security a "giant fund" seems just a bit inaccurate to me. There is certainly a "trust fund" related to a pile of paper called Treasury securities. But there is no pile of money stashed somewhere to pay off those securities. At the present time, the social security tax takes more money from current workers than is paid out as benefit checks to those currently retired. The extra is used to "purchase" Treasury securities. The extra which is now revenue from the sale of Treasury securities is then spent by Congress. What is purchased by the extra social security tax revenue is the promise by Congress to pay off the securities at some future date when the Social Security Administration asks. When the promise to pay becomes due where will Congress get the money? It might borrow the money by selling other people new Treasury securities, it might increase the income tax, it might reduce spending on other government programs (perhaps education, or transportation, or national defense), or it might do some combination of all three. In other words, this "giant fund" spoken of by Rock the Vote is actually a promise by Congress to, starting around the year 2017, increase borrowing, increase taxes, or decrease spending, or all of the above. Some fund, eh?

And perhaps something should be said about the idea that "your employer sets aside" a pile of money for you and sends it to social security. What your employer does is withhold from your salary a TAX payment. That tax payment is then used by government in the way I've described just above. It is spent on paying benefits to those currently retired and it is spent by Congress.

Saturday, April 16, 2005

Immigrant policy and liberty

Immigration policy in the U.S. has been ineffective and is in need of reform. But, as Mark Krikorian argues an immigrant policy should also be instituted. Link to article here
The American people, in every survey taken, say they prefer less immigration and tighter controls-and with good reason, given the economic, fiscal, social, and political problems caused by mass immigration. At the same time, we can be proud of the fact that we are at least xenophobic society in human history, making Americans out of people from every corner of the earth. This recognizes two parts of any approach to this issue: immigration policy and immigrant policy. The first governs the conditions we place on admission of newcomers, the second governs how we treat them once they’re here. Thus the answer: a meta-policy that combines low immigration and no-nonsense enforcement with an enthusiastic embrace of lawfully admitted newcomers. In other words, a pro-immigrant policy of low immigration-fewer immigrants but a warmer welcome.

Immigrant policy sounds a lot like Americanization policy to me. The practice of Americanization however has been attacked and immigrants, who before the 1960s were subject to Americanization programs, are instead encouraged to retain their country of origin’s cultural heritage and values. Such promotion widens the gap between immigrants and Americans and serves to undermine the values this nation was built on. Immigrant policy on the other hand serves to promote American culture and values in immigrants, thereby aligning immigrant’s culture and values with those of American’s.

However, I think that immigrant policy may violate personal liberty. If this is true, how then do immigrants integrate into American society and absorb its culture and values? Or should we ignore the issue of liberty for immigrants until after they have been Americanized and are citizens?

Thursday, April 14, 2005

More Scalia, Please

Here is an essay by Margaret Talbot about Justice Antonin Scalia. I like this guy.
Scalia said, "People ask me, 'When did you first become an originalist?,' like they're saying, 'When did you first start eating human flesh?' 'But originalism used to be orthodoxy, he said. Only in recent times, he added, have judges become enamored of an approach based on-'Oh, how I hate the phrase!'-a'living Constitution.' Scalia uttered these last words with exaggerated disdain, as if he were holding up some particularly noxious leftovers extracted from the back of the fridge.
Scalia recited the words in the honeyed singsong voice of a well-indoctrinated child, then offered this mocking gloss: 'Every day in every way we're getting better and better. Societies only mature.' He paused. 'They never rot.'
'In 1791, the death penalty was a punishment for a felony. It was the only punishment for a felony! It was the definition of a felony!. . . .It was legal for two hundred years and nobody thought it was unconstitutional.!'
'If the Constitution is an empty bottle into which we pour whatever values-the evolving standards of decency of a maturing society-why in the world would you let it be filled by judges? I don't know what the standards of decency are out there. I'm afraid to inquire!' Scalia got a big laugh. 'Why you would want to leave these enormously important social questions to nine lawyers with no constraints, I cannot fathom.'
On 2nd thought, I LOVE THIS GUY.

Wednesday, April 13, 2005

Advice and Consent

Article II, Section 2 of the Constitution tells us about some of the powers of the President:
"He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for . . ."
I like to think that we can understand the meaning of the Constitution in terms of the plain meaning of the words. I have two questions about the plain meaning of these words with regard to the President's power to appoint Judges of the Supreme Court.

First, the President's power to make treaties and to appoint Justices seems to be similar, with one difference. In either case the Senate gives "Advice and Consent." But, the difference is that there is specific Constitutional language that 2/3 of the Senators must concur with respect to Treaties, while that specific language is missing from the clause regarding Judicial appointments. It seems to me that the plain meaning of the words here are that "Advice and Consent" in the Senate requires only a simple majority of Senators to concur regarding Judicial appointments. Does this reading make sense? Is there another plain meaning of these words that makes sense? If so, is there another plain meaning of these words that makes more sense?

Second, I wonder what "Advice and Consent" means? My dictionary defines "advice" this way: "words given or offered as an opinion or recommendation about future action or behavior." Let's emphasize this word as offering an opinion or recommendation. As such, a Senate vote against a Judicial appointment would only be the opinion or recommendation of the Senate. The "advice" of the Senate would seem different from the "approval" of the Senate. My dictionary defines "consent" this way: "express willingness; give permission; agree." Given the meaning of these two words, what does the use of the two words together in the phrase "Advice and Consent" mean? It seems a bit like the two words are at odds with one another. To give an opinion or recommendation about a Judicial nomination doesn't seem easily consistent with giving permission. So, I'm wondering if the plain meaning of these words in combination might be something other than:
"the President nominates and the Senate either confirms the appointment or the appointment is denied."
It is not clear to me why these two words in combination clearly have this meaning. Would it make sense to say this phrase means that the Senate reviews Judicial appointments and gives advice to the President, either in favor or against, but then if the President chooses to proceed with the appointment the Senate shall agree or consent? Perhaps this is too far-fetched. But, why include the word "advice" if the meaning of this Presidential power is really:
". . . and he shall nominate, and with the Consent of the Senate, shall appoint . . . .Judges of the supreme Court. . ."
We certainly have acted as though these were the words of the Constitution. But these are not the words of the Constitution.

Patriot Act Title III, The Bank Secrecy Act and Liberty

Today on, Richard W. Rahn wrote an excellent piece directed at financial rules requiring banks and other financial institutions to "know their customers". While this may initially seem a good idea, Mr. Rahn points out that in practice it has hampered the ability of many to obtain bank accounts. Click here for the article.

The rules that he discussed come directly from two sources - the USA Patriot Act Title III and the Bank Secrecy Act. If you do not know about these, allow me to give you some brief highlights:

-Banks and other financial businesses are forced to implement programs to report suspicious activity to the gov't. What suspicious activity means exactly is quite ambiguous.
-"Other financial businesses" include savings and loans, credit unions, casinos, car dealers, check cashing businesses and eventually insurance companies.
-These businesses must know their customers and verify their identities or face stiff penalties.
-Any financial transaction over $10,000 will be reported to the gov't.
-Smaller transactions may also be reported if the business has any reason to believe it involves money laundering.
-The definitions of all the terms used are sufficiently vague that compliance has become an anybody's-best-guess game. A web site had to be set up to take Q&A on compliance issues, and most of the answers are also vague.

Who bears the costs of these programs? WE ALL DO. The financial institutions must set them up, monitor them daily, assign a specific person for accountability and train their staff to recognize possible suspicious activity. Do you think that translates into higher fees, premiums, and service charges? Absolutely.

What we do not know is how much of this information is actually used in the curtailment of terrorist activity. Every article I can find on the subject indicates a high amount of information reported to the gov't but a small percentage actually used for the intended purpose of "fighting terrorism."

My question - "Who are the terrorists wreaking havoc on domestic financial businesses?" It appears to me that it would be the Secretary of the Treasury.

Next time you visit the bank, remember, you are being watched.

Tuesday, April 12, 2005

Social Security USAction

One of the interest groups apparently organized to fight social security reform is called USAction. I wonder if those who run this organization choose to be inaccurate, or if they simply don't understand how Social Security is presently structured? Take a look at the following where you will find:
"Social Security must remain a public insurance program that serves the interests of all Americans, rather than a business venture that serves the interests of the corporate elite."
What is not accurate in this sentence? Social Security certainly is called Old Age Insurance, but the program is not structured as insurance at all.

We insure against the risks that an event will occur that we want not to occur. For example, we insure against damage to our homes from fire. What risk would Old Age Insurance be insuring against? The risk of retiring? Surely not. It seems to me most of us, perhaps all of us, hope to live long enough to be able to choose to retire.

The Social Security program sends monthly benefit checks to people who are retired. There is no untoward event that these benefit checks pay for in general. Note that the Social Security Administration also administers the Disability Insurance program. The Disability part of Social Security is structured like insurance. People don't want to become disabled and be unable to work. They benefit from insurance that will pay them an income should they become disabled. In the case of this program there are monthly checks paid but only to those workers who have unfortunately experienced some event that has caused them to become disabled.

The Old Age part of Social Security is NOT IN FACT structured as an insurance program would be structured. If we want to accurately characterize Social Security today, we should point out that the monthly benefit checks sent to those who are retired are paid for out of the payroll tax paid by those currently working. Social Security is a transfer program that transfers income from those who are working to those who are retired.

This is not to say that Social Security should not be an insurance program. If our Social Security system were truly an insurance program, how would it be structured?

Sunday, April 10, 2005

Mandating Employee Benefits

A Washington Post editorial discusses a proposed Maryland statute that would force Wal-Mart to spend more on health insurance for it's workers. The editorial suggests the state legislature is likely to pass the bill. One of the concerns voiced by the editorial is that the statute would force only this one employer, Wal-Mart, to increase spending. This seems a valid concern.

Whether only one employer is forced to increase specific employee benefits, or all employers are so coerced, what might economics tell us about the consequences of such a law? The state legislators who support the proposed bill are likely to tell us they seek to make things better for the state's workers by helping them to be better able to obtain health insurance. Do we expect their goals to be achieved? Are there likely to be unintended consequences that should lead the lawmakers to doubt the wisdom on the proposed statute?

Doesn't it seem that forcing employers to pay more for employee benefits is very much like imposing a minimum wage? After all, the statute would seem to be increasing what an employer has to pay to hire another hour of labor. If this makes sense, then wouldn't we predict that the results of making this proposal a law would be that Wal-Mart would want to reduce the amount of labor employed? And, wouldn't Wal-Mart hiring less labor mean that while some workers might be better able to afford health insurance, there would be other workers who were less able to afford health insurance? Would you predict other inintended consequences? What might happen in the long run? Would Wal-Mart want to decrease payments to other types of employee benefits? Could there be an impact on the ability of Wal-Mart employees to be successful in their efforts to unionize?

Friday, April 08, 2005

Constitutional Amendment?

There is a conference tomorrow at Duke University Law School on Reforming the Supreme Court? In a commentary in the Wall Street Journal today, Steven Calabresi and James Lindgren discuss one possible reform which is ending life time tenure for the Justices. Specifically they discuss an amendment to the Constitution that would limit the terms of Justices to 18 years. The terms would be staggered so that one Justice's term would expire every 2 years. I think such an amendment has merit. What do you think?

Thursday, April 07, 2005

Papal Economics 101

Robert Sirico has an interesting essay in today's National Review Online.
"Where did Pope John Paul II stand on economic issues? The same place he stood on all other issues involving the well-being of the human person. He favored the rights and dignity of all people, their freedom to work and create, an environment of society that permits the flourishing of families and communities of faith. He had faith in freedom and no love for the grand secular faith in the state. Thus did this pope understand something that a surprising number of pundits and intellectuals have yet to fully understand, namely that human dignity implies non-socialist political and economic structures, which are commonly known as the business economy."

Wednesday, April 06, 2005

Social Security's Startling Plan

Economist Robert Samuelson notes a little noticed tidbit in the recent report of the trustess of Social Security:
". . . .Here's one startling fact that emerges from a close examination of the reports: by 2030, the projected costs of Social Security and Medicare could easily consume -- via higher taxes -- a third of workers' future wage and salary increases. We're mortgaging workers' future pay gains for baby boomers' retirement benefits."
I've got an idea. Let's figure out how we can talk the country's young college graduates into wanting to be a part of a government program that plans to take from them a 1/3 of their future salary increases. If we can do that, then we don't have to worry about reforming Social Security any time soon.

Constitutional Justices

Here's an economist's view on the Constitution and the judiciary. Walter Williams writes:

"Many law professors, and others who hold contempt for our Constitution, preach that the Constitution is a living document. Saying that the Constitution is a living document is the same as saying we don't have a Constitution. For rules to mean anything, they must be fixed. How many people would like to play me poker and have the rules by 'living'? Depending on 'evolving standards,' maybe my two pair could beat your flush."

Tuesday, April 05, 2005

More Social Security

Check this essay by Arnold Kling. He wonders how you would convince a young worker to either voluntarily contribute to social security or to vote to coerce all workers to participate. Jefferson might like this essay as well.

Secular Founding?

In a show April 1 Bill Maher said: ". . .I don't feel like anybody is speaking out for secular America. You know, the one the founding fathers wanted?" You can check the transcript if you're interested. I guess I'm not sure what he means to say because I don't think the founding fathers wanted a secular America.

Consider the words of the First Amendment: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . " This fundament right, listed first in the Bill of Rights, doesn't sound like the founding fathers were seeking a secular America since the language here suggests they respected the individual's free exercise of religion. They certainly did not want Congress to pass a statute saying that there would be an official United States Church, but this was not because they wanted a secular America. Rather, because there were different church denominations, they wanted government to be "blind" to religion, so to speak.

In his book On Two Wings Michael Novak writes about the views of James Madison (described by many as "the father of the Constitution"): ". . . . Madison wanted the church to pass through society invisibly, never being touched by any notice from the state . . . . His motive was not secularism. On the contrary, he thought the churches would be stronger the freer they were from government assistance . . . . Indeed, Madison boasted in later years that the American model of separation -- even if not as pure as he had wanted it -- had led to an unprecendented vitality in the churches, especially when compared with Christianity in Europe." (p. 57)

Or consider John Adams (later to be President) in 1798: "We have no government armed with power of contending with human passions unbridled by morality and religion. Avarice, ambition, revenge, or gallantry, would break the strongest cords of our Constitution as a whale goes through a net. "Our Constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other." (p. 71 in Novak's book)

Perhaps it is sufficient to add just one more quote from one of the founding fathers. In 1789 President George Washington issued his first Thanksgiving Day Proclamation: "Whereas it is the duty of all Nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favor. . . . Now therefore I do recommend and assign Thursday the 26th day of November next to be devoted by the People of these States to the Service of that great and glorious Being, who is the beneficient Author of all the good that was, that is, or that will be. That we may then all unite in rendering unto Him our sincere and humble thanks, for His kind care and protection of the People of this country previous to their becoming a Nation, for the single and manifold mercies, and the favorable interpositions of His providence, which we experienced in the course and conclusion of the late war." (p. 23 as cited in Novak's book)

Mr. Maher apparently wants a secular America. I don't think we can say the founding fathers had such a goal.

I suggest Senator Lieberman is a better source on these issues. On the Meet The Press show of March 27 Senator Lieberman said it well: ". . . Look, I want to say generally, very briefly, that the mix of God and government, of religion and politics, is quintessentially American, and it was there at the beginning. The fact is that in the first American document, the Declaration of Independence, the founders of our country said that they were forming the new government to secure the right to life, liberty and the pursuit of happiness that they saw as the endowment of our creator. So this government, this country was not neutral about God right at the outset. . . ." And just a bit later he said: ". . . .But I think that the public square is greatly strengthened and enriched when people are prepared to speak, not just about secular notions of justice, but about the moral sense that our faith gives us. . . . And again, I want to say that to me that is not un-American, that is very American. We are -- our Constitution says we don't establish a religion, but it also says everybody has freedom of religion, and everybody has the right to speak their mind. And if your mind is faith-based, God bless you. Speak your mind."

I would add, if your mind is not faith-based, that's your business. Speak your mind.

Saturday, April 02, 2005

US/Mexico Border Policy - the "Minuteman Project"

One day into our experiment and we already have our first special request! Reader monterey63 has asked:

"I would like to post a blog on the volunteers watching the American/Mexico border for illegals."

Other readers can click here for a brief article from about the matter. This is very interesting to me. I happen to live in Phoenix, AZ which has become an epicenter of Mexican migration since the border security between California and Mexico was tightened in the early 90's. Before I weigh in on the matter - I'll throw it out to monterey63 and the rest of the audience - what do you think can be done or should be done about the issue.

Hang on to your hat's folks - this one should be good...

Friday, April 01, 2005

What Minimum Wages Mean

There is a political cry in the air these days to increase the minimum wage. Most any student who has ever taken a course in Principles of Microeconomics has heard that the demand and supply cross of the economist shows that a minimum wage decreases the amount of labor employed and leads to unemployed workers. But the graphical models of the economist may lead students to not truly understand how a minimum wage works in the real world. If you want to get your hands dirty with the economic reality of an increase in the minimum wage, then you need to click right here.