Monstrosity

At this point, I’d take Britain’s health care system over the 2,000 page monstrosity in the Senate.  I remember my Grandpa use to say that he was worried about the world because he was afraid what it would be like when the next generation took over.  Looks like he was right.

I never thought I would write this, but at least in Britain, it’s pretty simple.  You pay a tax and you go get your cruddy health care with no fees at the point of service and, I believe they have a private system that you can pay extra for if you care to receive better care.   

We are fools.

Senator Jim DeMint on Dennis Miller

I listened to the podcast of Dennis Miller interviewing Republican Senator Jim DeMint.  DeMint was plugging his new book, Saving Freedom.

While I enjoy Dennis Miller’s show, some of his beliefs remind me of a younger, more naive version of myself.   He said a few things that I would take him to task on.

First, he said that he doesn’t mind giving up some of his money to help the poor.  It’s the clueless he doesn’t want to help.

DeMint responded well in stating that he understands his desire to help the poor, but that government is an ineffective way to do that.  If Miller didn’t have to pay as much money to government, then he could voluntarily give it to the poor how he see fit.

Miller then responded that if he didn’t give some money to the government, then he would be giving the poor money through bars because they would wind up in prison.

Miller should read more from Walter Williams.  He explains how government programs and intervention have unintended consequences that hurt the poor.  He actually explained this rather well in a PBS video series circa early 1980s.

I don’t think Miller has developed the appreciation for the positive outcomes of voluntary activity that I have.  Many good things come from voluntary activity be it voluntary trade in the purchase of goods and services or voluntary contributions to charity.

Voluntary activity encourages profit and non-profit activity alike to run better.  Poorly run businesses and charities will not sell or attract donations and they go away.  The well run organizations that  truly deliver valuable and positive results stick around.

Government is ineffective because it doesn’t have that natural incentive structure of rewarding the outcome.  Government rewards intentions.  Well intended, but poorly run government organizations often stick around and grow so they can “be fixed”, when the best fix of all is to get rid of the poorly run organization.

But, that rarely happens.  It’s easy to sell why well intended program must not be abandoned.  In fact, it’s tempting ever so tempting for politicians to use these very same sales pitches to remind us of all the good they are doing.  The populace buys it.

“We  must have public schools.  We can’t abandon the kids.”  Most people buy that.  They don’t bother to look around at all the goods and services not provided via government that don’t have the problems of public education.

What people don’t consider is the problems with public education are caused by public education – the system.

Excellent Video Series on Keynes and Hayek

This makes the second link I’ve made to PBS Newshour in the past week.  The link will take you to a series of five video segments with economists Lord Skidelsky and Russ Roberts hosted by the Lehrer.  They discuss Keynes, markets, the financial crisis and a host of other topics and, as my previous link to an interview with George Shultz, is hosted by Paul Solman.

In one of the videos, Solman describes himself as a “dispassionate reporter.”  From what I’ve seen of his work so far, I agree.  Journalism needs more like him.  After watching over an hour of his interviews now, I can’t tell if his personal beliefs lean one way or the other.  What’s more, he seems to understand the subject and is interested in getting the real story out, rather than a stylized version of the story meant to fit a predetermined narrative.  Nor does he practice “gotcha” journalism.

One quote from Russ Roberts that I will take with me is, “Capitalism is a profit and loss system.  The profits encourage risk taking.  The losses encourage prudence.”

I highly recommend watching the video series if you are the least bit interested in economics or gaining a better understanding of the the true causes of the financial crisis.

Michael Medved on the Dennis Miller Show

After Lane Meyer turned me back onto the Dennis Miller Show, I went to iTunes and grabbed a bunch of a recent interviews from the Dennis Miller show.

Miller gives a great interview.

One of the interviews happened to be with another radio show host, columnist and author, Michael Medved.  Medved was plugging his new book, the Five Big Lies About American Business.

Medved hit on a concept that Miller didn’t even seem to understand and I’m not sure he understood after Medved explained about two and half times.

Medved said that many people view business people as greedy and not giving back in the way charity to communities.  But, these business people do contribute to society.  They produce goods that other people value enough to voluntarily buy.

That’s very important.

At the root of capitalism is the idea of voluntary, mutual beneficial exchange.  Mutually beneficial means both sides come out ahead.  Win-win.

By providing one side of those transactions – goods and services that people value enough to buy – they are contributing to society.  They are adding value to society.

I’ve said before that in all of the trade that has taken place between myself and Bill Gates, Bill Gates really got the short end of the stick.  Now, I don’t feel sorry for him in anyway, but the point is to recognize that he has added a great deal of value to my life.  Much of my the livelihood I’ve earned over the past couple decades were based on Bill’s products.

Medved’s point is one that we each experience every day, but very few ever recognize it.  On your next purchase, ask yourself why you purchased it.  Was it voluntary?  Why were you willing to give up some of your hard earned money for it?  What value did it bring to your life?  How much would you have willing paid for it?  How much more of it would you buy if it were cheaper?

Miller heard Medved, but he took Medved’s point to mean that the businessperson contributes to society only by providing jobs.  That’s important too.  But, the value the businessperson provides in his or her products or services was Medved’s point and it’s invisible to most people.

It shouldn’t be.

We Should be Ashamed of Ourselves

A few days ago, the fact came to me that we spend about $12,000 per student each year in public K-12 education.

That made me think of a couple more things.

First, I thought that the cost of health insurance for a family is about $12,000 per year and we think that’s expensive, but we don’t seem to think a cost of $12,000 per year for one student in basic education of K-12 is expensive?

Next, I used some math I learned in elementary school to figure out that by the time someone receives a high school diploma, we have invested roughly $156,000 in their education.

Then I thought about of all the excuses that are made for grown ups who do dumb things.  “It’s too hard to understand.”  “Someone took advantage of them.”  “Everybody else was doing it.”  “They just did what the experts told them to do.”

Full disclosure:  I have more than a $156,000 worth of education and I still do dumb things.

But, let me get this straight, most of us are walking around with at least $156,000 worth of education and yet we expect so very little of each other.  When we do dumb things, we make excuses rather than use our $156,000 educations to figure out how not to repeat our mistakes.  The only thing that comes to mind is the phrase my Mom would use on me and my brother when she caught us in the act of mischief, “You should be ashamed of yourselves!”  We should be.

Silver Tongue on Climategate

A new contributor to this site, Lane Meyer, directed me to the excellent December 9, 2009 podcast of the Dennis Miller Radio Show, where Miller interviewed Christopher Monckton, Chief Policy Adviser at the Science and Public Policy Institute.

Unfortunately, I can’t find a link for you to be able to replay the interview directly from the web, but the podcast is available for free on iTunes.  Search for Dennis Miller and look for the Christopher Monckton Interview podcast released on 12/9/2009.

I wish I could do the podcast justice, Monckton absolutely shredded believers in global warming.  Monckton has been challenging Al Gore to a public debate on global warming for two and half years.  Miller gave Gore props for not accepting the invitation.  There is no doubt in my mind (and I bet in Al Gore’s) that Monckton would make Gore look silly, which would put a major crimp into Gore’s livelihood.

If you’ve ever had a hint of doubt about global warming, and suspected that those in the know may be blowing smoke, you need to listen to this podcast.  It’s refreshing.  As Miller put it, listening to Monckton is “cathartic.”

More on why I think it’s cathartic later.

George Schultz on PBS

Frustrated with Tiger Woods banality on the major networks last night, I switched on PBS and caught a segment on the Lehrer News Hour with George Schultz discussing his belief that the financial crisis was due to the government creating a moral hazard with it’s ‘too big to fail’ bail-out nonsense.  He asks, if they’re too big to fail, why not make them smaller?  Great question.

I highly recommend watching the video.  Click here and it should be the first video listed on the left of the screen.

I nearly fell out of my chair.  Finally, some reason in media.  Good job Lehrer.  Getting warmer.

Moral hazard is the unintuitive lingo economists use to describe the idea that if someone or something is there to bail you out, you do things differently than you would if you didn’t have that backup.

If somebody knows they’ll be bailed out, they take excessive risks because they do it [take risks] on the taxpayers dollar.  The whole system is badly damaged when bailouts occur because it takes accountability out of the system and the market system depends on accountability, so we have to design a system so that anybody in it can fail.

The interviewer, who I hope was playing dumb for his audience (I think he was), asks Shultz if this is something he’s seen in the past or “is this a new phenomenon?”   This isn’t new.

This is everyday human behavior  that’s been around since the dawn of mankind.  If someone tells you they’ll pay for your retirement, you don’t save as much.  If you parents got you out of trouble when you were a kid, you got into more trouble.

Schultz explained two examples from the past to illustrate moral hazard.

First was a strike the longshoreman in 1968.  President Johnson enjoined the strike to prevent national emergency.  When Nixon took office and Schultz became his Secretary of Labor, another strike fired up, why not?  The President is going to help them get what we want to avoid a national emergency.

Schultz said Johnson was wrong and Nixon should stay out of it.  It would teach them “they have to take responsibility for their own actions,” kind of like the parent who finally learns they aren’t helping matters by soothing the temporary pain for the child who made a bad decision.  Nixon listened and the strikes died down.

Another example was with the failure Penn Central railroad.  The railroad grossly managed their affairs.  The Federal Reserve Chairman, Arthur Burns, wanted to give Penn Central a bailout to prevent a massive failure of the financial system.  Sound familiar?

In the end, he didn’t bail them out because they had retained Burns’ former law firm and a bailout would look too suspicious.  Penn Central failed.  There was no ripple effect.  The economy kept chugging.

While Schultz said a lot of good things in the interview, that wasn’t the part that fascinated me.  What fascinated me was that there was no yelling.  He wasn’t chastised for challenging today’s conventional wisdom that markets failed.  He was allowed to state his case and rationale in a calm manner and the interviewer tried to understand his points, rather than stuff him in the face with populist lay-ups.

I could imagine Matt Lauer conducting the same interview.  When Schultz said that staying out of the strikes would teach them they they need to take responsibility for their actions, I could envision Lauer cutting him off and asking him in his condescending tone something like, “but don’t you think the longshoremen need the muscle of the government behind them, because the companies have all the bargaining power?”  Or, “shouldn’t we have bailed out Penn Central?  X thousands lost their jobs.”

Then Lauer wouldn’t have given Schutlz a chance to explain that the end result of the actions that weren’t taken were far away better than what would have happened after the temporary soothing of the government action, much like the parent who finally decides its time for their kids to learn a lesson.

Thomas Jefferson

Leno and Conan O’Brien took cheap shots at McCain’s age.  Very clever.   I believe it was Leno who said that they recently found some letters from Thomas Jefferson thanking McCain for his support.

Those jokes reminded me of this quote from Thomas Jefferson.  Timeless and yet it seems to be very timely at the moment:

The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite.

“Seven Presidents Have Failed…”

On 60 Minutes last night, Barack Obama claimed that seven presidents have tried and failed to reform health care.  Follow-up questions I would have asked:

1.  Didn’t President Bush sign the Medicare Prescription Drug, Improvement and Modernization Act in 2003?

2. Wasn’t part of that act a provision to add pretax health savings accounts for working people so that people can control more of their health expenditures?

3. If you were to analyze this major health legislation, what parts would you say are having a positive impact and which negative?

4. Do you think the parts that expanded government’s role in health care are positive or negative and why?

5.  Do you think the HSA’s are having a positive or negative impact and why?

6.  If I were Steve Kroft and I had just implied that the 2,000 page health care reform bill was a monstrosity and the President changed the subject by essentially saying, “seven Presidents have failed, but we’re close,” I might have asked, “Is this monstrosity better than failing to pass something?”

I understand there are a couple of dynamics at play.  You can’t upset the President too much or he won’t come on your show and you won’t get ratings.  Also, there is still a halo of infallibility with this guy, so journalists are having a hard time coming to grips with the fact that he is a human after all, and maybe, just maybe, it’s a bit much to expect someone to go from junior senator to legendary world leader in a year’s time.

Tick, tick, tick, tick

Ricky Gervais, creator of the television show The Office, and Andy Rooney both lamented about how much money they have on this evening’s 60 Minutes.  Ricky said that he doesn’t work harder than a lot of other folks, but earns many multiples of their income.  He said that a large part of his success was due to luck.

I agree.  Nassim Taleb, author of the Black Swan and Fooled by Randomness, educated me on how much luck plays in the success of successful people.  As Taleb says, we always hear about the successful people but never about the just as talented people who aren’t as successful because they just haven’t had their lucky break.  Sometimes it’s as simple as meeting the right person at a party.

But, I will give Ricky something, he does have talent.  He makes me laugh.  I enjoy his humor, acting and writing.  Not to say that others aren’t as deserving, but any dollars Ricky has of mine in his pocket were well earned.

Rooney seemed bothered by having more than his share, but comforted by the fact that he doesn’t have as much as others.  He referenced the Forbes 400 list of the richest 400 people as proof.

What bothered me: C’mon guys.  Rather than feel down about being wealthy, celebrate it.  Encourage others.  Tell us how awesome it is that we live in a world where you can follow your dreams, work hard and be rewarded.  Acknowledge, as Ricky did, that there is some luck to it, but one thing is for certain – they wouldn’t have been successful if they hadn’t tried.

And, if you don’t have a dream but can still live a decent, comfortable life as a nurse, engineer, electrician or some other chosen profession, that’s awesome too.  Compared to how people lived a century ago or how people live in other parts of the world (some within a day’s drive for most of us) – we are all rock stars.  That something that we should feel good about it.

We should be asking ourselves why that is.  What are the root causes that allow each of us live better than royalty in the past in exchange for an honest day’s work?  We should want more of that.

They showed an 80s video of Ricky taking a stab at the music business.  Apparently it didn’t work out.  He wasn’t bothered by it.  He seemed to recognize that all things don’t work out, but trying matters.