29 April 2012: Be a fool
Lost in the ashes of history is who first said it’s better to keep your mouth shut and be thought a fool than to open it and remove all doubt.
That may be good advice for an individual, but it’s poison for group decisions. Everyone in the group looks at the same foolish proposal, and rather than raise what might be a foolish question, thinks “I don’t understand it, but if nobody else has a problem it’s OK with me,” and the foolish proposal is accepted without question.
The traditional function of the king’s fool (a.k.a. jester or joker) was not just to entertain, but to expose foolishness. Shakespeare made a theme of that. In King Lear, the fool helped the king regain his sanity. In Hamlet, the prince saw the gravedigger turn up the skull of the court fool Yorick. Marcellus had previously remarked that “something is rotten in the state of Denmark,” and what enabled that to happen is that the fool is dead.
As my wisest teachers used to say, there’s no such thing as a foolish question, only foolish answers. Ask the question.
2 April 2012: Support the health care law!
To hear the liberals talk about it, you would think the only way to provide health care for all is to give the insurance companies a captive market, and there can be no doubt whatever that the Constitution gives the federal government the authority to do that. It’s in the commerce clause. Congress has the power to regulate commerce between the states.
You go across the street to your doctor, you go to a hospital in the same town, that’s interstate commerce. There are Supreme Court decisions galore to back that up. There’s one about a farmer growing wheat on his own land to feed his own livestock. That comes under federal regulation because he is affecting interstate commerce, because if he didn’t grow his own wheat he would buy it on the nationwide wheat market. So because some people go to the next state to see a doctor, or go to a world famous hospital—some people go from either coast all the way to Minnesota—your visit to the doctor across the street is interstate commerce.
I never said it wasn’t. I’m concerned about what it means to regulate. To regulate something means to make rules about how you are allowed to do it. It doesn’t include forcing people to do it. Up to now, government could only keep things from happening; it couldn’t make things happen, except what government did itself. Governments can make roads, but it can’t force you to make a road. Oh, maybe if you built a town, government could say you had to make roads in it and into it. But that amounts to saying that you’re not allowed to build a town without roads.
Government says if you drive a car you have to buy insurance. But it’s really saying you’re not allowed to drive a car without insurance. You’re not allowed to employ people unless you pay and collect certain taxes, but the same law allows you to avoid the tax by not employing anybody.
But now here comes a law that says you must, unconditionally, buy health insurance. No way out. Even if you’re not doing anything, you’re engaging in interstate commerce, because by not doing anything you’re influencing a nationwide market. I cannot imagine that the authority to “regulate commerce” really means that.
Well, never mind the Constitution. We need universal health care, and that means everybody has to have health care insurance. Otherwise the government would provide health care, and you wouldn’t want that. The government might end up rationing health care, and you elect the government. If anybody rations health care, it should be a corporation that is owned by stockholders, but is actually controlled by a board of directors that tells the stockholders how to vote their shares. That’s the only fair way.
If you believe that, you just bought a bridge.
22 March 2012: How about a white first lady?
According to recent news stories, Robert de Niro had to apologize for a joke he made at a Democratic fundraiser on March 19. What he said was: “Callista Gingrich. Karen Santorum. Ann Romney. Now do you really think our country is ready for a white First Lady? [laughter] Too soon, right?”
Newt Gingrich was incensed and demanded an apology. De Niro apologized. Why?
The joke was satirical. You have to be careful with satire. It might be misunderstood if you take it literally. But in this case the question was too absurd to be taken literally. I mean, we have always had white first ladies—well, almost always. So the question is not serious. It’s satire.
De Niro was satirizing bigotry. If you’re not bigoted, you laugh. If you are bigoted, you know the joke is at your expense, and you take offense. Now we know where everybody stands.
21 March 2012: Deadly force in Florida
At about 7:00 pm on the night of February 26, a black teenage boy named Trayvon Martin, and a white Hispanic neighborhood watch volunteer named George Zimmerman, were both on the same public walkway in Sanford, FL. Both had a right to be there. But Trayvon feared great bodily harm to himself, while George, as a watch volunteer, feared the commission of a forcible felony.
A person who is not engaged in an unlawful activity and who is attacked in any other place where he or she has a right to be has no duty to retreat and has the right to stand his or her ground and meet force with force, including deadly force if he or she reasonably believes it is necessary to do so to prevent death or great bodily harm to himself or herself or another or to prevent the commission of a forcible felony.
That’s section 776.013(3) of the Florida statutes. It says Trayvon and George both had the right to use force, including deadly force. Both, having being met with force, had the right to stand their ground and meet force with force. But Trayvon was unarmed, while George had a gun.
Putting it that way, it was nobody’s fault that Trayvon died. But maybe we should ask whether they “reasonably” believed that force was necessary.
George called 911 because he thought Trayvon looked suspicious. Why did he think so? Because Trayvon was a black boy walking in a gated community wearing a hoodie in the rain? Is that enough reason to think force is necessary to prevent a crime?
Trayvon was on foot, talking on his cellphone, when George got out of his vehicle. Trayvon may have thought George was approaching him in a threatening manner. Was that enough reason for Trayvon to believe he could prevent death or great bodily harm to himself by attacking a larger, older man?
Maybe neither of them had a good reason to use force until one of them used force without a good reason. Then the other has a right to use deadly force if necessary, the attacker has a right to use force against deadly force, and the altercation escalates until one of them is dead. The guilty party, therefore, is the one who used force first. Who used force first? Who do you think used force first?
17 March 2012: When will the future come?
I went to the New York World’s Fair in 1939. We thought then that by the end of the century we would all be living in gleaming alabaster cities undimmed by human tears, and we would all be working shorter hours because technology would take the place of human labor.
That didn’t happen.
A good twenty years after the war to end all wars, as we were coming out of the Great Depression of the Thirties, we were on the eve of the war to start wars all over again. That war, and the recovery from that war, took us through the Forties.
The Fifties was a time of economic growth and general prosperity, but there were ominous undercurrents. Senator Joe McCarthy sacrificed himself to create a diversion. After we rejected his brand of rabid anti-Communism, we felt that routine anti-Communism was normal. Technology gave us the hydrogen bomb. We fought a war in Korea, and when that was over we started fighting a war in Vietnam.
The Sixties was a decade of protest. A hundred years after the Civil War, we freed the slaves again. We continued the war in Vietnam. Technology sent men to the moon.
The protests died away in the Seventies. The war in Vietnam was closed down. In its place came the war on poverty. Stories about “welfare queens” persuaded us that the rich were not rich enough because the poor were taking money away from them.
We began to correct that in the Eighties. Since low-wage workers don’t pay income taxes, but do pay payroll taxes, we cut the income tax and raised the Social Security payroll tax.
Since then we continued to cut income taxes and began to cut away at public assistance programs. The gap between rich and poor kept getting bigger, because we kept thinking that if only the rich were a little bit richer they would create jobs. Technology gave us financial products.
A lifetime ago, we thought the future would be now. But there are no alabaster cities, no shorter working hours. The rich work fourteen hours a day and live in gated enclaves in fear of petty crime and terrorism. The rest of us are lucky to have any job at all.
6 March 2012
There ought to be a national database of telephone numbers that shows that when I resort to the telephone it’s because I need something a machine can’t deal with!
9 November 2011: Save the Tuna
The people we call Native Americans actually came to this continent about 15,000 years ago, give or take a few thousand years. A recent editorial in The New York Times points out that it only took a few hundred years for them to hunt the mastodons to extinction.
How long will it take for us to hunt the tuna to extinction?
Could decent sushi be made with farmed tuna?
5 November 2011: The Willie Sutton rule
Legend has it that when the bank robber Willie Sutton was asked why he robbed banks, he answered, “Because that’s where the money is.”
Sometimes you have to wonder where people’s heads are. If the U.S. government is spending money faster than it’s taking it in, the obvious remedy is to raise taxes on the rich, because that’s where the money is. But our government isn’t doing that. Why not?
Politicians always need money for their election and reelection campaigns. They won’t raise taxes on the rich because that’s where the money is.
21 October 2011: Wall St. must be another world
If this October 15 story in The New York Times is to be believed, the moguls on Wall St. really don’t understand why people are angry with them. The story says, in part:
As the Occupy Wall Street demonstrations have grown and spread to other cities, an open question is: Do the bankers get it?... A few even feel personally attacked.... If anything, they say, people should show some gratitude.
“Who do you think pays the taxes?” said one longtime money manager. “Financial services are one of the last things we do in this country and do it well. Let’s embrace it. If you want to keep having jobs outsourced, keep attacking financial services. This is just disgruntled people.”
He added that he was disappointed that members of Congress from New York, especially Senator Charles E. Schumer and Senator Kirsten Gillibrand, had not come out swinging for an industry that donates heavily to their campaigns. “They need to understand who their constituency is,” he said.
Okay, let’s take those comments one by one. “Who do you think pays the taxes?” Well, now, who do you think can afford to pay the taxes? Shouldn’t you Wall St. people show some gratitude for the incomes you have the privilege of collecting?
“Financial services are one of the last things we do in this country ...” You know, I thought financial services existed in order to make money available for truly productive activities. If all we do now is financial services, then (a) we’re not doing much that’s really useful, and (b) maybe the financial service sector didn’t do a good job of supporting the other sectors.
“... and do it well.” Do it well? “Heckuva job, people!” Are you ready to tell me that plunging the entire world into an economic slump was financial services done well? I’d hate to see where we’d be if you did it badly!
“If you want to keep having jobs outsourced, keep attacking financial services.” Let me try to understand that. You’re telling me that one of the responsibilities of the financial service sector is to keep jobs from being outsourced? Well, jobs are being outsourced, so it looks as though you’re not doing it well (see above). And exactly how is the financial service sector supposed to keep jobs from being outsourced? One way to do that, according to many experts, is to devalue the dollar. It looks as though you’re trying very hard to do just that, without much success.
“They need to understand who their constituency is.” Now it starts to become clear. Members of Congress are not supposed to represent the voters. They’re supposed to represent the contributors. Not the “taxpayers,” the people who work with their hands, come home with modest incomes, and pay their fair share of taxes, but the “who do you think pays the taxes (and finances the political campaigns)?” taxpayers. That’s not democracy, government by the people, it’s plutocracy, government by the rich. I hope we’re not there yet, but I’m afraid we are.
16 October 2011: Can we afford long term care?
The CLASS Act (Community Living Assistance Services and Supports) is the part of the new health care law that was supposed to provide long term care insurance for everyone. It will not be implemented. The Department of Health and Human Services (HHS) just decided that it’s too costly and won’t work, because the insurance premiums would have to be so high that few people would buy insurance.
Think about that. Insurance premiums are supposed to cover the cost of insurance payouts. Insurance payouts for long term care are supposed to cover the actual cost of long term care. If we can’t afford the premiums, does that mean we can’t afford long term care?
No, that’s not what it means. The CLASS Act was written to fail. Like the general health care insurance provided under the new health care law, it was to be available to anyone regardless of how healthy or unhealthy they were. But unlike the general health care insurance, you didn’t have to buy it.
The “individual mandate” written into the health care insurance law, requiring everybody to buy it, was designed to prevent a situation in which only people who needed the insurance bought it, so the premiums would go up, and then only people who really needed it would buy it, and the premiums would go up again, and so on until nobody would buy it. The long term care insurance provided under the CLASS Act did not have that mandate. The premiums would predictably go up, and up, and up.
On top of that, the law required that the CLASS Act could not be implemented unless the Secretary of HHS could certify that the program would be solvent for the next 75 years. Of course no such certification could be made. And that’s the end of what should have been a good idea, but wasn’t.
15 October 2011: Can courts do medical research?
An article in The New York Times yesterday says that people with eating disorders like anorexia are fighting insurers, through claims and court cases, to pay for stays in residential treatment centers. The insurers argue that residential treatments are not only costly but unproven. The trouble is that there are few studies proving that residential care is effective.
In any rational universe the next step would be to do the studies that would decide how effective residential treatments really are, instead of expending resources in court cases based on inadequate data. In fact, in a really rational universe, further studies wouldn’t be needed, because in a really rational universe there wouldn’t be any reason for people to hide the fact that they’re getting medical treatment, and therefore there would be a complete database of how many people got residential treatment, how many got other kinds of treatment, and what the outcomes were.
But of course the United States is not a rational universe. It’s a special place where marvelous things happen that happen nowhere else.
9 October 2011: Speculation: service or theft?
Speculators provide liquidity. They keep the market moving. Suppose you have something to sell and nobody wants to buy it at the time you want to sell it. A speculator will buy it from you and hope to sell it later when there is somebody who wants it. The speculator makes a profit because you, the seller, want to sell now and are willing to take a little less than the “market price,” while the buyer who comes along later wants to buy now and is willing to pay a little more than the “market price.” The speculator earns money by providing a service.
Flash forward to the brave new world of high frequency trading. You have something you want to sell, and there is someone who wants to buy it. High speed traders make their profit by buying from you, the seller, a fraction of a second before the buyer who wants it even knows you have it for sale. You want to sell now, but now means “today” or maybe even “right this minute,” but not “before I have a chance to meet the buyer.” High frequency trading does not provide a service. It’s like walking into a store and grabbing the change when you pay the cashier. It’s theft.
20 September 2011: Taxes on the “average worker”
David Brooks, in an Op-Ed in The New York Times this morning, wrote that “People in the richest 1 percent pay 31 percent of their income to the federal government while the average worker pays less than 14 percent, according to the Congressional Budget Office.”
Excuse me, but aren’t Social Security and Medicare part of the federal government? If not, federal budget hawks can stop complaining about “entitlements.” The average worker gives the federal government more than 14 percent of income just for Social Security and Medicare, plus federal income tax.
Where did I get that from? The combined Social Security and Medicare tax is 7.65 percent each from the employer and the employee. Both those amounts really come from the employer, and it doesn't make any difference to the employer whether they go to the government or to the worker (except that if they went to the worker the bookkeeping would be easier and cheaper).
Just to make things simple, suppose the worker’s “income” is $100,000 a year. The employer calculates $7,650 “from the employer” and $7,650 “from the employee,” sends $15,300 to the government and gives the worker (ignoring other taxes) $92,350.
The employer pays out a total of $107,650 on behalf of that worker. If it were not for that tax, the worker would get the whole $107,650 with no change to the employer’s budget. The tax costs the worker $15,300 out of what would otherwise be $107,650, which comes out to 14.2 percent.
That’s not even counting income tax or FUTA (Federal Unemployment Tax Act) tax, not to mention state and local taxes.
19 September 2011: Fix the roads!
There’s an ad in yesterday’s New York Times Magazine that says:
The roads are underfunded by $450 billion.
With the right car, you may never notice.
The fix, according to the ad, is to buy “the highly intelligent new Audi A6.”
We have about 250 million cars in the U.S. and the average price of a car is about $30,000. The lowest priced Audi A6 (with the fewest options) is about $40,000. Sooner or later, everybody needs a new car. To buy the “right car” instead of an “average car” would cost an additional $10,000, on average, for every one of those 250 million cars. Multiply that out: it comes to $7.5 trillion.
Wouldn’t it be cheaper to fix the roads?!!!!
Well, no. Think again. The ad is directed toward people who not only can afford to spend the extra money, but who want to be more comfortable than other people; who want not only their own comfort, but want to deny that comfort to other people so they themselves can feel superior. The idea is for the fortunate few to be able to ride comfortably while everybody else feels the potholes.
Audi sells about 100,000 cars a year in the U.S., all models included. Over ten years that would be a million cars, costing about $10 billion more than the same number of “average cars.” That would barely make a dent in the $450 billion shortfall in road maintenance.
Comfort is for the elite.
12 September 2011: Ten Years and a Day
When people have experienced a personal tragedy we tell them to put it behind them and get on with their lives. Why, as a nation, are we still remembering 9/11 after ten years?
Osama bin Laden is dead. We have “closure.”
It’s time to make peace with the people of Afghanistan, Iraq and Pakistan and get on with our lives.
9 September 2011: Creating Jobs
You want jobs? Then by all means ignore environmental safeguards. You will not only get immediate job growth in dirty industries, you will also get future job growth in sectors like cleaning services, bottled water, decontamination, and above all medical care.
Shorter life spans could mean fewer workers, hence fewer unemployed workers. On the other hand, there’s the possibility that older people will die younger, leading to a loss of jobs in care for the elderly. Or more elderly people will be disabled, leading to a gain in jobs for elder care.
But on the whole, disasters create jobs. Go for it.
ADDENDUM: Just in case you might not have noticed, that was irony.
The purpose of an economic system is not to create jobs. It’s to create and distribute wealth; to produce goods and services for people to use. Disasters are bad because they destroy wealth. Degrading the environment destroys wealth.
Ask not how many people you can keep busy. Ask how many people you can supply with the necessities they need and the luxuries they enjoy.
25 August 2011: What is the Government Doing?
I’m looking at this article in The New York Times about estimating the amount of gas that can be extracted from the Marcellus Shale—a geological formation that extends from Virgina through New York State. Nine years ago the U.S. Geological Survey estimated it had 2 trillion cubic feet of “technically recoverable” natural gas. This year the federal Energy Information Adminstration gave an estimate about 200 times as high: 410 trillion cubic feet. Now the U.S.G.S. has a new estimate, somewhere in between: 84 trillion cubic feet.
According to the article, “Accurate estimates are important for lawmakers who are making long-term decisions about subsidies and policies relating to the nation’s energy mix.” What do those lawmakers think they’re doing?
Rather than go into a long list of the “proper” functions of government, I can tell you one thing most of us agree that government can’t do: direct the economy. We know that because socialism is based on a planned economy directed by the government, and we’ve seen socialism fail. We’ve also seen how our own government fails at the simpler task of just keeping the economy from going through its seemingly inevitable “bubble and bust” cycle.
Agreed, then: one thing our lawmakers should not be doing is making long-term decisions about the nation’s energy mix. Economic theory asserts that the market will efficiently determine that mix through the interaction between supply, demand, and price. Technologies that turn out to be too costly will be abandoned in favor of technologies that are economically feasible. Subsidies only distort the relative costs.
The article goes on to say, about “accurate estimates,” that “They are also essential for landowners and investors as they decide where and whether to lease their land to drillers or invest in gas companies.” But they’re the wrong estimates.
These are estimates, as we saw, of “technically recoverable” amounts: how much could be extracted regardless of cost. The article points out that this is different from “reserves”: the amounts that “can be profitably extracted.” When you’re buying or selling land for the natural gas that can be got out of it, you want to know what it’s worth. You don’t care about gas that costs more to extract than it can be sold for, because it won’t be extracted. The value of the land depends solely on how much gas can be extracted at a profit, and what the total profit on that gas will be. In fact, economists will tell you that the total expected profit is the value of the land.
“Landowners and investors” haggling over the price of land for its natural gas don’t want to know the “technically recoverable” amounts. They don’t even want to know how much could be “profitably” extracted. They want to know how much the profit will turn out to be. Nobody is publishing estimates of that.
23 August 2011: The trouble with socialized medicine
Quoting from a story in The New York Times:
I was coming back from Seattle after working on a project.... It was a late-night flight and I had a horrible sinus infection.... The next morning I tried to get an appointment with an ear, nose and throat specialist, and everyone I called was booked for weeks.
And they say the trouble with socialized medicine is that you would have to wait for a doctor.
21 August 2011: The “Individual Mandate”
The new federal health care law includes an “individual mandate”—a provision requiring everybody to buy health insurance. It’s not the first such provision. An article in Wikipedia points out that there was in U.S. history one previous individual mandate: a provision in the “Militia Acts” of 1792 requiring individuals to have weapons and ammunition. It was never enforced.
The individual mandate to buy health insurance has at least two reasons to justify it:
- Uninsured people will be treated at public expense if they become ill or injured, and they should not be allowed to get such benefits without paying for them if other people pay.
- Insurance companies will be required to accept all applicants regardless of their health, and without an individual mandate healthy people will not buy insurance, raising the cost of insurance until only the sickest will want it.
The supposed authority for the individual mandate to buy health insurance is the “commerce clause” in the U.S. Constitution, which empowers Congress to regulate interstate commerce. Some federal courts have upheld this logic; others have declared the mandate to be unconstitutional.
Can you really believe that the authority to regulate trade includes the power to compel people to engage in trade? I don’t. I have to believe that those courts that upheld the mandate have done so in the belief that the Constitution must be bent, or ignored, if it conflicts with what the judges deem to be a public need.
There really is no necessity to bend the Constitution. There’s a way to compel everybody to pay for health care at reasonable cost that’s completely consistent with the Constitution. It’s called—well, I don’t think you will like the word—it begins with ‘t’ and ends with ‘x’ and has an ‘a’ in the middle. Legend has it that it’s as sure as death and even more unpleasant.
19 August 2011: Email is Back
The email contact page I shut down a few months ago is back up and working.
12 August 2011: The So-Called Lock Box
I’ve been busy, but I’ve still been angry. I just haven’t been putting it here.
Some of my friends make a big deal of the idea that Social Security is “off budget.” They insist that the “Unified Budget” is a fraud, and that the deficit and the debt should really be calculated without including Social Security and similar trust funds. But you know? It doesn’t really matter.
The Social Security payroll tax now goes into a “lock box,” and whatever isn’t needed for administration, or distributed as benefits, is used to buy special Treasury securities. In other words, the U.S. government borrows it. Now the government takes a certain amount of money to operate. It operates using money from
- general taxation,
- money borrowed from the Social Security System, and
- money borrowed from the general public.
Suppose the Social Security payroll tax went into the general U.S. Treasury fund. Some of it would be used for administration and distributed as benefits, and the surplus would be available for the government to use. The government still takes a certain amount of money to operate. It would operate using money from
- general taxation,
- the Social Security surplus (which is the same as the amount it now borrows), and
- money borrowed from the general public (the same as it borrows now).
But now, you say, there’s a difference when the money has to be returned, when the Social Security payroll tax is no longer enough to cover administration and benefits.
As it stands now, the Social Security System would redeem enough of its special Treasury securities to cover its shortfall. The government still needs a certain amount of money to operate. It takes in
- money from general taxation, and
- enough borrowed money to cover the rest of its own expenses plus
- the amount the Social Security System took by redeeming special Treasuries to cover its shortfall.
If there were no “lock box,” if the Social Security payroll tax had gone into the general Treasury fund, the government would still need the same amount of money to operate. It would take in
- money from general taxation, and
- enough borrowed money to cover the rest of its own expenses plus
- the Social Security shortfall (which would come directly out of the general Treasury fund).
The amounts are the same. So what does the “lock box” really accomplish?
