New Blog Location 
Friday, April 17, 2009, 02:57 PM
I have a new location for my blog. It's here.
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On Stimulating the Economy and the Stimulus Bill 
Tuesday, February 3, 2009, 09:47 PM
... and why the two really aren't the same thing.

Maureen Dowd, the razor tongued liberal columnist for the New York Times, pens:
It took Daschle’s resignation to shake the president out of his arrogant attitude that his charmed circle doesn’t have to abide by the lofty standards he lectured the rest of us about for two years.

Before he recanted, his hand forced by a cascade of appointees who “forgot” to pay taxes, his reasoning was creeping perilously close to that of the outgoing leaders he denounced in his Inaugural Address: that elitist mentality of “we know best,” we know we’re doing the “right” thing for the country, so we can twist the rules.

Mr. Obama’s errors on the helter-skelter stimulus package were also self-induced.


Mr. Obama should have taken a red pencil to the $819 billion stimulus bill and slashed all the provisions that looked like caricatures of Democratic drunken-sailor spending.

As Senator Kit Bond, a Republican, put it, there were so many good targets that he felt “like a mosquito in a nudist colony.” He was especially worried about the provision requiring the steel and iron for infrastructure construction to be American-made, and by the time the chastened president talked to Chris Wallace on Fox Tuesday, he agreed that “we can’t send a protectionist message.”

The macro economist Arnold Kling writes:
1. Most certified macroeconomists support a large stimulus. A smaller number are opposed to any stimulus. An even smaller number support a small stimulus.

2. The main reason for supporting large stimulus rather than small stimulus is that small stimulus efforts have a track record of failure. That's the logic that gave us the Somme Offensive.

3. You can support a large stimulus but still have strong reservations about this bill. Certified economists I would put in this category include Larry Summers (no longer free to say so in public), Alice Rivlin, Martin Feldstein, and Jeff Sachs.

4. The bill serves two purposes. stimulus; and Radical Reconstruction. It's not mostly stimulus, with a little bit of other stuff thrown in. It's mostly other stuff, with a little bit of stimulus thrown in. That means a ginormous amount of other stuff.

I'm far over my head here when it comes to whether or not the Keynesian theory regarding the merits of a large stimulus in times of economic depression hold, but it's hard to ignore when Nobel prize winning economics like Paul Krugman come out strongly in favor of such a plan. Even I, however, can understand that the portions of the bill that are destined for entitlement programs, education, health care, and other Democratic Party wish list items, aren't going to stimulate the economy.

That isn't to say that education or health care aren't important issues that perhaps deserve federal funding (as opposed to state funding), but the abridged timetable we're working on is not the best way to accomplish much needed reforms in these areas. Education and health care are complicated subjects that we've been debating for years. We're not going to solve those problems in a three week time span simply by blowing large amounts of money in their direction, and jamming through spending in those categories certainly isn't going to help the economy.
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On Letting Criminals Go Free 
Saturday, January 31, 2009, 12:29 AM
I'm as opposed to letting the guilty walk as the next guy (actually, as a conservative I'm probably more opposed to this than your average citizen), but I'm not sure I like the Supreme Court's most recent ruling. As the Times details, the Supreme Court appears to be on track to eliminate the exclusionary rule. Briefly, the exclusionary rule holds that evidence conducted through police misconduct, illegal activity, or resulting from a failure to comply with applicable laws and procedures can't be used in court. Hence, the drug dealer found with pounds of cocaine going free because the police busted down his door without getting a warrant.

Now this all sounds quite horrible when you hear cases of a murder going free because the cops made some minor mistake, but I believe it's a necessary check because it's all we have left in our toolbag against police misconduct. Without the exclusionary rule, there's simply no incentive for police to follow the rules: when the break the rules and convict the guilty they are celebrated, and when they break the rules and harm the innocent the police union steps in to protect them.

And it all comes back to unions. If we didn't have the union, we'd probably have better policies in place to keep cops under control. At the end of the day this rather uneducated segment of the population exercises a remarkable degree of authority over the rest of us. It's natural that they should be subject to harsher rules and regulations than the average citizenry, much like the military. Unfortunately, unlike the military, cops are allowed to unionize. As has been explained previously, unions have an incentive -- indeed a duty -- to protect all their members, not simply the ones worthy of protection. Hence, the police union's efforts to protect corrupt and worthless cops. The penalties cops are subjected to are remarkably light -- in most cases of misconduct it's simply a reprimand or unpaid vacation time. And so, because we have a union engaged in it's standard campaign against accountability and workplace efficiency, we have to set up a judicial rule that occasionally allows the guilty to go free.
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Who Hates the Children? 
Thursday, January 29, 2009, 11:59 PM
Health insurance for children? What sort of miserable human being could possibly oppose health insurance for children? Do you also hate puppies and laughter? The answer is ME. I'm opposed to the State Children's Health Insurance Program (SCHIP).

You're going to have a rough time sizing this one up because everyone loves children and wants them to be covered by health insurance, but also because the debate occurring in the media rarely mentions the actual dollar figures involved. And I'm not referring to the annual cost or anything like that, which mostly involves a number that the human mind has trouble understanding. The question people should be asking is What is the income cutoff for this program? The answer is three times the poverty level, which according to the New York Times comes out to $66,150 for a family of four.

Now I understand that $66,150 isn't comfortable for a four person family, and in some parts of the country that can be quite tight. But $66,150 is most certainly middle class, and I don't think that government programs should be providing free health care to the middle class -- even middle class children. The problem with health care today is that the person receiving the service (you) is completely disconnected from the actual cost of the service. Not only is your health care covered by an insurance company, but that insurance company is probably paid for by your employer. The result is that nobody cares how much procedures cost because someone else is picking up the tab. And guess what happens when the consumer doesn't care about cost? The service provider charges more and looses any incentive to run efficiently. So the problem with health care today isn't that too many people are uninsured -- that's simply a natural symptom of the problem. The root problem is that health care costs too much. Setting up a massive government entitlement that provides free health care to middle class children further destroys any incentive for hospitals to lower costs and ensures that the cost of health care will continue to rise, until it either bankrupts the government or reaches the point where only the wealthy can afford it.

As a side note, let me bring your attention to the provision that now allows legal immigrants to benefit. Now having come from a (somewhat recent) immigrant background, I have deep respect for immigrants. But I believe that special taxpayer programs should only benefit citizens, not those who choose to make this place their temporary home. Of course, there are those who disagree:
“The bill would end an inequity that we have been trying to eradicate for more than a decade,” said Jennifer M. Ng’andu, a health policy specialist at the National Council of La Raza, a Hispanic rights group.

For those of you who don't know "La Raza" means "the race." I mean, seriously? Your advocacy group is called THE RACE? As in "we're not even going to pretend that we support racial harmony because that would be a big fat lie"? If a white person (or even a half white person like me) were to start a similarly named group they would be lynched.
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Obama and the Arab States 
Wednesday, January 28, 2009, 01:05 PM
An Op-Ed piece by Fouad Ajami in today's Wall Street Journal takes Obama to task on his new Middle East policy under the headline Obama Tells Arabia's Despots They're Safe.
The argument that liberty springs from within and can't be given to distant peoples is more flawed than meets the eye. In the sweep of modern history, the fortunes of liberty have been dependent on the will of the dominant power -- or powers -- in the order of states. The late Samuel P. Huntington made this point with telling detail. In 15 of the 29 democratic countries in 1970, democratic regimes were midwifed by foreign rule or had come into being right after independence from foreign occupation.

In the ebb and flow of liberty, power always mattered, and liberty needed the protection of great powers. The appeal of the pamphlets of Mill and Locke and Paine relied on the guns of Pax Britannica, and on the might of America when British power gave way.

I'm not sure I agree with that last sentence. I understand what he's saying here -- that only in peace secured by power can the ideals of liberty flourish -- but the examples he cites are all of liberty flourshing within an already secure state. Besides, back then liberty and freedom were relatively new concepts being developed and evolved. The problem today isn't that the soil in insufficiently fertile, it's that modern governments are now acutely aware of these ideals and actively oppose them.

Ajami's closing, however, is a potent reminder that there are two parties in any conflict.
But foreign challengers and rogue regimes are under no obligation to accommodate our mood and our needs. They are not hanging onto news of our financial crisis, they are not mesmerized by the fluctuations of the Dow. I know it is a cliché, but sooner or later, we shall be hearing from them. They will strip us of our illusions and our (new) parochialism.

A dispatch from the Arabian Peninsula bears this out. It was learned, right in the midst of the news cycle announcing that Mr. Obama has ordered that Guantanamo be shut down in a year's time, that a Saudi by the name of Said Ali al-Shihri -- who had been released from that prison in 2007 to his homeland -- had made his way to Yemen and had risen in the terror world of that anarchic country. It had been a brief stop in Saudi Arabia for Guantanamo detainee No. 372: He had gone through a "rehabilitation" program there, then slipped across the border to Yemen, where he may have been involved in a terror attack on the U.S. Embassy in the Yemeni capital in September of last year.

This war was never a unilateral American war to be called off by an American calendar. The enemy, too, has a vote in how this struggle between American power and radical Islamism plays out in the years to come.

In another time, the fabled era of Bill Clinton's peace and prosperity, we were mesmerized by the Nasdaq. In the watering hole of Davos, in the heights of the Alps, gurus confident of a new age of commerce pronounced the end of ideology and politics. But in the forbidding mountains of the Afghan-Pakistan frontier, a breed of jihadists that paid no heed to that mood of economic triumphalism was plotting for us an entirely different future.

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Wednesday, January 21, 2009, 04:50 PM
There’s an interesting discussion going on in the comment thread over at McArdle’s blog (I know, her again?) regarding Obama’s order to suspend all trials for personnel held at Guantanamo. If you ignore your normal ideological trolls (Obama is a communist! Bush is a fascist! You're a scum sucking traitor who hates America if you disagree with me!) there are actually some decent points raised.

In particular, I’m concerned about the idea that detainees could be tried in regular federal court – that seems like a completely inappropriate venue to me. Ideally they should be tried under a system that very closely resembles the UCMJ – the same protections that our own soldiers receive. If you look at the current effort, the misconduct has been done by the civilian political hacks Bush put in place. Those really making a difference have been the uniformed attorneys – the defense lawyers asking the hard questions and fighting the system on behalf of their clients, and the prosecutors such as Lt. Col. Darrel Vandeveld who have resigned in protest when they were directed to make prosecutions they felt were unfair. Of course, those getting the glory are the ACLU and the big name firms that have "donated" their time as a way to latch on to all the free PR.

At the end of the day, who better to try a soldier than a fellow soldier? Does anyone honestly believe that a civilian jury, who has never known the horror and confusion of combat, can draw the fine lines on what behavior is and is not acceptable? The idea here should be to set up a trial system that is robust and can be applied to future conflicts, not one that is simply convenient to apply to the current problem at hand. Can you imagine the Nuremburg trials occurring in federal court? Of course not.
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College Loans 
Wednesday, January 21, 2009, 09:18 AM
As someone suffering under $38,000 a year in tuition from UC Berkeley's Haas School of Business, the issue of college loans strikes particularly close to home. Megan McArdle questions the utility of some of the degrees people pay so much money for, and concludes that the only winner in this sad parade often ends up being the school:
The question to contemplate is who benefitted from making it easier to pursue degrees that don't get you very far? Not Ms. Kratzer, obviously, but not the "greedy" loan company [that is loosing money as people default], either. No, the beneficiaries are the schools that take peoples' money in exchange for worthless degrees.


And no one ever yells at the schools--or the presumption that we should shoehorn every eighteen year old into college, rather than structuring an economy that comfortably accomodates those who are not academic.

This is one offshoot of our society's healthy valuation of education. Unfortunately, it's possible to take all good things too far. The ship repair contractors I deal with are constantly lamenting the lack of good welders and pipefitters in the San Francisco Bay Area. Here's some hourly wage data for the San Francisco Bay Area from the Bureau of Labor Statistics:

Welders, Cutters, Solderers, and Brazers$20.70
Plumbers, Pipefitters, and Steamfitters$29.08

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Union Inefficiency 
Thursday, January 15, 2009, 11:31 PM
I recently attended a dinner party (with delicious grilled ribs) with an acquaintance of mine who works for PG&E. Apparently at PG&E there is an active drive to unionize the white collar workers -- the salaried employees earning $70k+ per year who generally aren't considered typical union targets. As my friend explained to me, the benefits of unionization include: no performance reviews, a mandatory 8.75% annual raise, and a pay scale solely based on seniority with a prohibition on using performance to adjust pay or as a consideration for non-management promotions. Pay and promotions are strictly tied to the seniority scale. "I barely put in six hours a day" he explained to me, before offering to set me up with a job once I got out of the Coast Guard.

WTF? Does anyone seriously think this is a good idea? How is these even defensible? The only reason PG&E is able to survive with such horrible work rules is because they have a monopoly -- customers can't simply jump ship and get their electricity from another company. Any costs incurred are simply passed on to consumers.

This is the ultimate manifestation of any union. From autos to teachers to white collar workers, virtually every union writes their contracts this way -- they all attempt to ensure salary is tied to seniority and not to performance. How is this ok? Why do people continue to support this?

Just like with the auto workers, I don't begrudge anyone their salary -- I oppose the horrible work rules. I'm not suggesting that unions don't have their place. Just study the working conditions at WalMart and you can see what happens when labor has no representation. But does unionization have to be so very extreme? It seems to me that if organized labor didn't work so hard to promote inefficiency and sloth -- and instead focused on raising standards of living -- the labor movement would be more popular and more powerful.
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Our Congress 
Wednesday, January 14, 2009, 01:42 PM
A friend forwarded me this joke the other day:

An Indian walks into a cafe with a shotgun in one hand pulling a male buffalo with the other. He says to the waiter, "Want coffee."

The waiter says, "Sure, Chief. Coming right up."

He gets the Indian a tall mug of coffee. The Indian drinks the coffee down in one gulp, turns and blasts the buffalo with the shotgun causing parts of the animal to splatter everywhere, and then just walks out.

The next morning the Indian returns. He has his shotgun in one hand, pulling another male buffalo with the other. He walks up to the counter and says to the waiter "Want coffee."

The waiter says "Whoa, Tonto! We're still cleaning up your mess from yesterday. What was all that about, anyway?"

The Indian smiles and proudly says "Training for position in United States Congress: Come in, drink coffee, shoot the bull, leave mess for others to clean up, disappear for rest of day."

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Let's Drive Away People Who Can Make This Country a Better Place 
Monday, January 12, 2009, 11:18 PM
A classmate of mine in my MBA program at Berkeley is afraid that when one of the six people in her group at Barclay's Global Investors are laid off tomorrow, the casualty will be her. At class we suggested that this would give her the opportunity to transfer into the full time MBA program and avoid paying the higher evening MBA tuition.

She responded that her immigration status didn't allow her to enroll as a student full time -- this despite the fact that she's been in this country for 12 years. She even raised the possibility of going back to Korea. Here we have a 12 year resident, one of the smarter people I've met, an incredibly decent human being, and someone who adds tremendous value to our society. And our immigration system is on the verge of sending her packing.
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