g m g D e s i g n . c o m

The French go on massive strikes due to president Sarkozy’s suggestion that the retirement age be raised from 60 to–61 or 62.

This is the kind of spoiled brat mentality that I don’t want to happen to the US. While some believe that capitalism eventually degrades into socialism (to some degree), perhaps Fabian socialism degrades into something like the diseased French economy (or eventually, something far worse).

And what are the negative externalities of a faltering economy? In the case of the French, an inability to absorb millions of immigrants and the car burnings and other crime that results from millions of idle hands.

Brilliant Nobel prize winner and NY Times columnist Paul Krugman writes about how libertarianism simply doesn’t work (a multi-part series, it seems).

I often refer to myself as a libertarian, though I’m not extreme on that point. My standpoint is that the spirit of libertarianism—limited government and “freedom by default”—is something worth preserving. On that point, I think Krugman misses the point big time.

He’s not alone though. I think even many libertarians miss that point as well (or perhaps I grossly misunderstand my own convictions). They seem to believe that libertarianism is about federalism; i.e., that to be libertarian, we need only believe in limited central government, meaning that individual states govern themselves w/ limited federal over-sight.

That seems odd to me. Not that there’s not wisdom in some level of self-governance going to individual states. But it seems odd that libertarianism is all about states’ rights. After all, it doesn’t take a federal government to strip us of our personal freedoms. A state can do that as well. So why define libertarianism such that individual states can rule over us rather than the central government?

Anyway, back to Krugman. He’s a smart guy. So smart, in fact, that everyone else is stupid (he won a Nobel after all… that’s gotta count for something). So, I can only assume that my view is wrong and that his view is right. Then again, many a smart individual has been wrong in the past, esp when their own past success blinds them to the wisdom and viewpoints of others. That’s true of Tea Partiers and Nobel laureates alike.

Al is asking for sustainable capitalism. Analysis…

It’s interesting that he seems to go to so much effort to brandish his “science credentials,” whatever those are. He evokes biological evolution as the reason for short-term thinking and also quotes Albert Einstein (note: he quotes non-scientists as well).

Al Gore isn’t completely wrong in his assessment that we need “sustainable capitalism.” My view, however, is that we already have sustainable capitalism (whatever that happens to be), and his true agenda is the usual suspects: a) relevance in a time of decline for him (his worthless Nobel notwithstanding); b) tying his environmental philosophy to economic prosperity (Thomas Friedman, a guy I like even if I don’t always agree with him, has fallen for the same logical fallacy).

As far as Wall Street “fat cats” (not his quote, I just like the term) using short-term thinking, we could go a long way to solving that by real problem by removing absurd restrictions on executive compensation. Those restrictions haven’t reduced CEO pay (CEOs still get huge salaries that they don’t necessarily deserve), but have instead made it more difficult for boards to align incentives such that executives focus on long-term growth and sustainability. Of course, in Gore’s tangential discussion on evolution, he failed to mention something economists are already aware of: incentives matter, and altering those incentives to fit some political agenda has real consequences.

Implications:

This scandal has real implications. Mr. Inhofe notes that international and U.S. efforts to regulate carbon were already on the ropes. The growing fear of Democrats and environmentalists is that the CRU uproar will prove a tipping point, and mark a permanent end to those ambitions.

The scientific, or possibly pseudo-scientific, basis for the quasi-religious zealotry of the climate change movement has been called into question. Hence, the political will to propose dumb ideas like a cap and trade regime will probably not happen. I’m looking forward to the free market, not bureaucrats, deciding on innovative engine designs and cool new alternative fuels. Having said that, I’m not certain that that will be one of the implications.

In a move to prove how economically inept they are, the Times has editorialized their favoritism toward the much-discussed “public option.”

The last para espouses that, eventually, the “public option” be available for everybody.

I’ve written before about why I think the public option is a bad idea (and no, not because some conservative loud-mouth on “talk radio” told me what my opinion should be). The underlying reason is that our medical system as a whole isn’t very good, and additional activism by government will make it worse – in fact, cementing the current system in place for many more years to come.

We need reform, but the “reform” currently being proposed will further lead us astray if it includes the public option. I have a vested interest in cost control (that doesn’t decrease quality). Hence, my bias in this debate is in favor of real and substantial reform (again, something I’ve written about in the past).

The bottom line is this. Although government can make promises, such as liability acceptance for millions of people (via the provision of insurance), that does not mean that the government can guarantee outcomes. The government can promise that people will get insurance (and, by extension, medical care), but that doesn’t make it so. Government can’t guarantee that its own market interventions won’t augment the already-high level of market inefficiencies, leading to higher aggregate costs associated with medical care and treatment. Even if government covered everyone in this country, that does not mean that a) medical coverage would truly be affordable – imagine if income tax rates went up to 60% for most Americans, or that b) quality would be higher or as high as what we have now (imagine waiting months for time-sensitive surgery, or years for “optional” surgery).

Government can’t guarantee outcomes even though government can accept liability with the stroke of a pen. The role of government at various levels has rendered the medical insurance (“healthcare”) market less efficient, with aggregate costs much higher (and far less transparent) than they otherwise would be.

Greater inefficiency and higher aggregate costs (with likely lower quality of service) is a future worth avoiding.

Wow, great editorial. Excerpt (emphasis added), plus some comments…

Yet, one thing we do know: Many Americans now believe many things about their government that are false, and they expect much from the government that the rulers cannot provide. The public at large embraces myths about what the government can do, what it actually does, and how it goes about doing it. Only people enamored of such myths can support, for example, a gigantically expensive health-care “reform” at a time when the present value of the government’s promised future Social Security and Medicare benefits alone amounts to several times the current GDP. (I am disregarding here the interested parties who expect to reap short-run pillage from an intrinsically doomed system.) Until more people come to a more realistic, fact-based understanding of the government and the economy, little hope exists of tearing them away from their quasi-religious attachment to a government they view with misplaced reverence and unrealistic hopes. Lacking a true religious faith yet craving one, many Americans have turned to the state as a substitute god, endowed with the divine omnipotence required to shower the public with something for nothing in every department – free health care, free retirement security, free protection from hazardous consumer products and workplace accidents, free protection from the Islamic maniacs the U.S. government stirs up with its misadventures in the Muslim world, and so forth.

Points made by blog entry (my paraphrasal):

1. therapy and diagnosis are different – if you want a support group for your ideology, consult the relevant right- or left-wing news source (depending on your bias); if you want a diagnosis, don’t be upset when one is given
2. the general public disagrees on “the problem”
3. the general public disagrees on “the solution”
4. the (US) public is increasingly replacing belief in formal religion with the (informal) quasi-religious belief in government as the provider (rather than God)
5. there is no immediate, “magic bullet” solution
6. we should be incredulous of “magic bullet” solutions (flat tax, “public option” in healthcare, etc)

This corresponds with an observation of mine that the US is heading toward Fabian socialism (philosophically): in practice, social democracy. Western Europe is ahead of us in this regard (“ahead of us” is bad, in this case). Think of social democracy as a mix between democracy and socialist ideals. It’s the idea that “communism didn’t work out, but the underlying ideas were valid.”

Of course, that’s false. The irony in all this is that when countries are “converted” into socialist-style democratic systems, the people don’t get to compare such systems with what things would have been like absent those systems. Some people might think of the good ol’ days, but others will naturally prefer the system that “takes care of them” (absent God, someone’s gotta do it!), and while the non-socialist alternative might be substantially better in practice, there’s no way of 1) proving it cogently to the public, or even 2) returning to such a system, since governmental systems win constituencies that prevent such systems from improving over time (Social Security can’t be reformed for this reason).

So we’re left with a deeply flawed system that’s trending worse toward a maddeningly avoidable fate. Well, at least we get eloquent speeches out of all this.

No offense to Barak Obama, but he does not deserve the Nobel Peace prize, nor will that make his job any easier. The Nobel committee, at least for Peace, seems to have a proclivity toward making very good choices some years and awful choices other years (i.e., 2007’s choice of co-winner Al Gore or, of course, this year’s choice of Obama). Which year takes the cake for the worst decision by the luminaries on the Peace committee: 1994, for co-awarding Yasser Arafat with the Peace prize. I mean, how stupid are the Peace prize judges? By comparison, I should point out that Obama and Gore are much more peaceful than Arafat, but the lack of judgment is still very obvious, years later.

Obama might deserve the Peace prize at some point in the future, but that time hasn’t arrived, not by a long shot. Further, winning the prestigious award will almost certainly make his job much harder, as every action he takes is critically evaluated for its “Peace-ness.” Perhaps the Peace prize judges are trying to strategically effectuate an outcome that they find appealing; however: 1) that is not the point of the prize, making the prize seem disingenuous, and 2) that approach is likely to backfire.

The willingness to take bold, direct action (against vile dictators, terrorist-supporters, or Somali pirates) will likely drop, as Obama already has his Peaceful legacy to consider. Bush Jr may have been too flippant about going to war, but Obama will be the opposite: too contemplative, weak, and unthreatening.

I know the conservative circuits have been abuzz with commentary about Van Jones and his extreme viewpoints. But is it true? (check out this clip from Glen Beck’s show.)

I don’t want to rush to judgment, but it’s not looking good for Van Jones, or for the Obama administration. I mean, what were they thinking?

Also, what were Jones’s qualifications? Does a law degree from Yale mean that someone is qualified to steer our economy toward “green jobs,” a position normally associated with someone with extensive managerial experience? (I’m putting aside the idea that government ought not engage in such populist central planning, of course.)

Great editorial on medical care (“healthcare”) and insurance here in the States. Editorial is very long, but worth reading, regardless of what side of the healthcare war you’re on (and, apparently, there are only two sides, both diametrically opposed to the other).

My summary of editorial (basically corresponding with my existing opinion):

The current system of medical care in this country is already broken. Notwithstanding all of the hyperbolic debate, the government is already deeply entrenched in medical care, from arbitrary regulations defined at the federal and state levels, to insurance regulations, to the government-operated medical insurance behemoths Medicaid and Medicare. The government-sponsored market distortions would be worse with “ObamaCare” (to use the admittedly more pejorative title), but the market distorting mechanisms already exist in our current system, hence reducing innovation and greatly driving up costs to consumers.

The system is broken, and the government-sponsored initiatives (namely a “public option”) would cement our broken system rather than reform it.

Read the article for more insight, including his proposed solution, which he admits would have to be phased in over a period of many years (decades, really). I’m personally very skeptical that his (reasonable) solution will get adopted. I don’t think fears of “socialist-style medicine” will happen either, at least in the short or intermediate term. I think there are too many people tied to the status quo for any substantial reform, so for now we’ll have our current (awful) system, only to be replaced with a more socialized system (a la Britain) in the years ahead, as people really reject personal accountability (“developed world complacency,” I call it) in favor of nanny-statism. So, enjoy the current system while it still exists, and stuff money into that HSA; you’ll need it.

… at least according to the WSJ. The idiotic wealth re-distribution plan might be running out of monetary backing to go on much longer.

Kristof has an excellent editorial on China & why the Chinese don’t demand democracy (hint: it’s the economy, stupid).

Kristof also alludes to the possibility that China will inevitably become a democracy (I agree with him):

In Taiwan in 1986, an ambitious young official named Ma Ying-jeou used to tell me that robust Western-style democracy might not be fully suited for the people of Taiwan. He revised his view and now is the island’s democratically elected president.

Latin America has had plenty of wealth-destroying, freedom-reducing revolutions. But the WSJ reports on a revolution that’s actually for good. Final para:

ProReforma [pushing the “good” revolution in favor of human rights and individual freedoms] needed 5,000 petition signatures for its proposal to be introduced into Congress for debate; it has collected more than 73,000. Now the ideological left has begun a campaign of its own, marked by vituperative and personal attacks against ProReforma’s promoters. The proposal might be defeated, but the good news is that ProReforma’s civic education project has already succeeded. Today, more Guatemalans are aware of their inalienable rights. The question is how they can wrest those rights from the collectivist left.

I’ll take personal freedom and economic prosperity over the leftwing alternative that’s all the rage in Cuba and Venezuela.

Esquire has a piece by Tom Barnett on the “war against Robert Gates.” The war against the Secretary of Defense concerns Gates’s efforts to re-allocate spending to where to belongs: 21st century threats rather than the threats of the 20th century.

In case you’ve been sleeping under a rock, the US hasn’t had any “near-peer competitors” since the cold war. That threat was the USSR, and that threat was toppled both by efforts to beat the US in defense spending and on its own inefficient, marxist model for sustaining that weapons development. The drop in the price of oil broke the USSR’s back, causing their idiotic system to implode.

The reason the US and the Soviet Union never went to war is because both sides had too much to lose since the development of the nuclear bomb. Suddenly, entire countries could be taken out in a single, multi-warhead attack. The survivors who don’t die of radiation poisoning live in miserable condition absent infrastructure and electricity. This stalemate is called MAD, or mutually assured destruction.

Members of Congress probably know this, security neophytes as they are. But they ignore this reality. Rather than favoring the sorts of monetary re-allocations—money taken from the “future combat” budget and sent to the “current warfare” budget—they deny US troops better equipment and resources for the sake of keeping jobs in their own congressional districts. It’s the ultimate smack in the face to our troops.

Barnett cites Saxby Chambliss as an example of such a senator. Chambliss claims its naïveté to believe “big state warfare” is going away, yet he ignores the reality on the ground today. Summing it up (some emphasis added):

America hasn’t fought a war against another great power since 1945, coincidentally the year we obtained and first used nuclear weapons. Since then, no two great powers armed with nukes have ever gone to war — one of the longest droughts since nation-states were invented. Since the Cold War, meanwhile, our global-security environment has witnessed a serious ratcheting-up of transnational terrorism, failed states, internal strife, and all the accompanying interventions by outside great powers and international organizations.

Frankly, given the profound financial interdependence among the world’s great powers today, the prospects for great-power war — conventional or otherwise — are arguably dimmer than they’ve ever been in modern history. Layer on additional environmental interdependencies generated by climate change, and the case against America being drawn into great-power war over the next fifty years seems all the stronger.

So is big-state warfare a thing of the past? I suspect it is in the normal sense of the word. I imagine trade wars, while still destructive and hurtful, being the new warfare of choice. Proxy wars are still likely: we had those with the Soviets on such battlegrounds as Afghanistan and Vietnam, and more recently Israel fights proxy battles with Iran, typically in Lebanon. If (or when) Iran gets the Bomb, they would almost certainly be less aggressive against Israel, as those countries would both be nuclear powers and would both have greater incentive to avoid cataclysmic misunderstandings.

Don’t try telling all this to members of Congress: they have jobs in their districts to keep. Don’t try telling this to the “cold warriors”: they have big war fantasies to imagine (US vs China, anyone?). Don’t try explaining all this to ideologues who lack Robert Gates’s obvious capacity to see the larger picture. It’s rarely productive to thoughtfully explain a broad, strategic vision to people bent on greed, stubbornness, and stupidity.

Tom Barnett refers to what he believes is excessive hatred of Obama, to the point of hysteria.

The top-selling book in America is Levin’s Liberty and Tyranny (guess which side he comes down on regarding Obama?) and Glenn Beck’s bizarre clown act on Fox reigns supreme (claiming we’re on the road to fascism).

And so the recent trend of absurd, over-the-top hatred of the president continues in America . . ..

Seems like it’s the polar opposite of the Obama-mania that swept over America (now somewhat tempered), thanks in part to the folks in the MSM who were so gushy over him, for no apparent reason.

Of course, this is reminiscent of the liberal anti-Bush hysteria, is it not?

Enjoyable read from tdaxp.com.

On pirates, he writes:

Currently, insurance companies reward pirates, and punish crews that want to protect themselves from pirates.

Insurance companies reward pirates by paying ransom. When a pirate receives ransom, he and all his friend know a way to get more money: take more ships hostage.

Insurance companires punish crews who try to defend themselves. Premiums go up if ships are armed….

On politics:

Under Geithner, the only way a politically powerful company loses money is by not having enough friends in Washington. Likewise, the best way for a politically powerful company to make money is by having friends in Washington. [He goes on to cite Lehman Brothers, Citi, and Goldman Sachs.]

And now the tie-in (of Geithner and piracy):

As long as Geithner is Treasury Secretary, insurance companies would be foolish for looking at the actual profit-and-loss actions of their consequences. Far more important, under Geithner’s watch, is doing the politically popular thing.

Tim Geithner is so bad at his job, that he is a national security threat… when it comes to pirates, at least.

It’s a stretch, methinks. But still an enjoyable read.

FYI – per the FP blog site:

Most interesting of all, though, is Feingold’s reference to the last time that piracy was notably halted in Somalia — under the Islamic Courts Union in 2006. That regime, later ousted by Ethiopian troops (with U.S. support…) brought the only calm to the seas that the country has seen in recent years.