Odds and Ends

Thanks Pratt for carrying the load here. I have been so busy I have been unable to take the time to post anything. I have seeral points to make here. First, I am retiring from ASU. The university offering me a deal I could not refuse even though I love teaching. The university said retire and we will give you a year's salary. Don't retire and we will require you carry a heavier load. Duh. Second, the nonsense from Washington continues. This administration and many in Congress have no understanding of what private property rights are. Obama decides to invade a country without any sense of national defense or private property rights. Lives are and will be lost -- don't those people own their own bodies? Not only do the constant unconstitutional wars violate private property rights, they cost enourmous amounts of money (estimates of Libya are $1b a day), and further encroach on the PPR and liberty of U.S. society. As Robert Higgs says, each crises (each war for instance) leads to larger government. Government in the U.S. today is about 40% of the economy. As Pratt notes below, a study shows that safety net spending in the U.S. is not much different from the socialist states of Scandinavia. In addition to the safety net spending, the U.S. has a huge military budget.

In the next few days Congress will be debating whether to lift the debt ceiling above the current $14.3 trillion to allow the government to borrow more and thus either print more money or raise taxes now or in the future. Obama's budget proposal under the most conservative estimates will increase the debt by $2 trillion a year for as long as can be seen. The argument against not raising the ceiling is that it will shut down the government, hurting the poor, the old, the infirm, and the military. That is just not true. The government will still be collecting $600 billion in revenues; it is spending that will have to be cut. Government will have to decide whether to cut across the board, eliminate departments, reduce the military spending, eliminated duplicative programs, and so on. It is merely a choice of whether to allow the government to grow further or to stop its growth at the current ridiculously high level. The ceiling should not be raised.

California just passed a law that requires one third of all energy to come from solar and air by 2020 (I think it is 2020, it could be 2015). What does this mean? It means a significant increase in electricity bills. Instead of allowing the market to determine how electricity is generated, government do-gooders decide to raise taxes on everyone. Who does this hurt the most -- the poor. The very people these do-gooders always claim they are trying to help.

While the screaming and ridiculous rhetoric that will be called upon by the democrat party and some republican party members as well to argue against revising Medicare, Medicaid and Social Security, if they are not revised people 45 and younger will be paying massive FICA taxes and not get anything in return. In fact, at some point the U.S. will have to default. But, revision need not mean harm to anyone. Allowing people 45 and younger to invest in mutual funds or other instruments of their own choice -- with some type of safety net restriciton -- will generate more funds for them. Raising the retirement age to 68 or 70 over the next 20 years will mean very little to those who retire in 20 or more years. Providing block grants to states will eliminate huge bureacracies in Washington and eliminate a great deal of waste, and will allow 50 different laboratories for experimenting with medical care provision and funding.

Well, enough for now.

Public choice and the budget

Boyes pinpoints the obstacle to meaningful reform - whether fiscal, regulatory or scope/scale of government. The tenacles of public sector has spread throughout much of society.

Reason points to the recent appearance on Letterman by Rand Paul. This interview is indicative of two major components that will certainly block meaningful change (reduction) in the scale and scope of government in our life. First is the rent seeking behavior that is explicated in public choice thinking, the second the evolution in informal institutions that tend to support statist thinking.

As to rent seeking - a rational process that is facilitated in a participatory demoncracy by log rolling:

Anyway, here is the map of the vote (blue is a vote opposing ethanol, red a vote favoring ethanol), followed by a USDA map showing corn production and ethanol plants:






Back to the current Reason - Brian Doherty cites Tom Woods:

Rand explains, again correctly, that spending more money on education has not improved educational outcomes. Letterman's response? Well, education is important, so we've got to try something -- how about spending more money? But by the time of George W. Bush's term, per-pupil spending, adjusted for inflation, had already doubled since LBJ....

Letterman wonders why we can't just loot the "rich" some more. Well, if we'd like to make still more firms leave the U.S., that'd be a good start. Want to strangle the growth on which everyone's welfare depends? By all means pursue this strategy....

Rand points out, correctly, that the compensation package for Wisconsin teachers is extremely attractive, amounting to over $80K annually. Letterman, to general applause, says that figure should be doubled. Isn't education important? This is the level of reasoning people appear comfortable with.

Click here to view the Paul/Letterman exchange - illustrative of the challenge of confronting unexamined but deeply held belief with analysis and data.

http://www.youtube.com/watch?v=cB00uJMGIDk

Budgetary Issues

The scene in Wisconsin is truly troubling. Adults in Amerca, the wealthiest nation in history, acting like destitute people in the Mideast struggling for freedom, for what? They are entitled to more pay and better benefits by working for government than they would get in the private sector. Teachers are entitled to their salaries and generous benefits and pensions even though they have not improved edcuation one whit. I wonder if when Social Security and Medicare are cut, if seniors will be manning the lines with signs about Hitler. I hope not, but this is an entitled world. The government has created a society that is less independent, less innovative, less free by providing virtually everthing the public wants. Thomas Jefferson said, "A government big enough to give you everything you want is strong enough to take everything you have."

I was discussing the university situation with a senior administrator last week. I was asking why the university does not simply cut programs that are not worthwhile or have insufficient student demand. I suggested the first to go should be the Education School. It produces poorly educated graduates who know little more than how to prepare lesson plans. I was immediately told that that school will never be cut because it brings in lots of grant money. That made me wonder how much the federal government provides universities in terms of grants. A quick Google search suggested that the federal government, through the NSF, NIH, Dept of Energy, Dept of Agriculture, and on and on, provide anywhere from 50% to 80% of university grants. The budget is not going to be an easy thing to cut substantially. Every federal bureaucracy has extended its reach to many many constituents. I had one environmental economist tell me that the EPA is his full employment act. He raises millions of dollars in grants to work on public goods and externalities. He wouldn't be supportive of a reduction in EPA funding. The educators are not going to support reductions in the Department of Education.

Stay Tuned