Category: Government

Government cares with our money.

Here’s the fundamental flaw in how politician’s think, summed up in the course of discussing the $2,900,000,000,000 budget proposed by Congressional Democrats:

… said House Appropriations Chairman David R. Obey (D-Wis.). “I haven’t had too many people grab me back home and say, ‘Obey, why don’t you come to your senses and cut cancer research?’ That’s what the president’s budget has done for the past two years, and that’s what it would do again.”

Rep. Obey deceives. Accept this budget or you hate cancer research. That’s an unfair assessment. Everyone wants to find cures for cancer. It’s an undeniably “good” cause. But Rep. Obey makes the assumption that something everyone wants will not happen without the point of the government’s gun commandeering money from Americans and spending it on cancer research. He doesn’t trust people to spend their money on the things he wants they want.

Can you spot the phrase meant for Google?

There’s an obvious solution to these types of lawsuits:

A [twelve-year-old] girl and her grandparents have sued the Chicago Board of Education, alleging that a substitute teacher showed the R-rated film “Brokeback Mountain” in class.

Whether or not Brokeback Mountain is appropriate for a twelve-year-old is valid decision for parents. Here, it was probably stupid. Of course, seeking $500,000 in damages is also stupid.

Ultimately, I don’t care about the details. This is more important.

“It is very important to me that my children not be exposed to this,” said Kenneth Richardson, Turner’s guardian. “The teacher knew she was not supposed to do this.”
…

“This was the last straw,” he said. “I feel the lawsuit was necessary because of the warning I had already given them on the literature they were giving out to children to read.”

End public provision of education. Allow parents to educate their children at the private school of their choice and the odds that parental wishes won’t be honored will decrease. I don’t think it’s a big deal if a kid sees an occasional curse word in literature, but I understand that not all parents agree. Different parents want different amounts of cultural scrubbing. So, yeah, one size doesn’t fit all. Let’s have that guide us, not whether or not Jake Gyllenhaal’s ass is educational.

Breaking (Not) News: Politicians are dishonest and hate freedom.

Add Montgomery County, Maryland to the list of governments that doesn’t trust its residents and business owners. Yesterday, it passed a ban on trans fats in “food service establishments”. The story offers the standard fare discussion, which misses how anti-liberty such government intrusion is. For example:

The move comes as health officials across the country decry a rise in bad eating habits, growing waistlines and an increase in heart disease and other ailments. The anti-trans fat bill puts Montgomery in the vanguard of a growing national movement to make it easier to obtain healthy foods in restaurants and grocery stores.

I disagree that easier is the correct word to use in that paragraph. Such anti-trans fat bills seek to make it obligatory to obtain healthy foods. Why bypass that? To make this sound more reasonable? Don’t bother; nothing can make this reasonable.

That doesn’t mean I like trans fats. I avoid them. But I’m not egotistical enough to believe that what I choose for myself is the best, or at least desirable, choice for everyone. We’re all unique human beings with different, subjective preferences and an individual risk aversion not readily apparent to government busybodies. Personal choice is better than institutionalized denial of choice.

Where governments go wrong with that is most apparent in this:

Council member Duchy Trachtenberg (D-At Large), the bill’s chief sponsor, said she thinks the food industry will be able to adjust. Some Montgomery establishments, such as the Silver Diner and Marriott Corp., stopped using trans fats voluntarily.

I wonder what evidence Councilwoman Trachtenberg used to come to her conclusion that the food industry will be able to adjust. Wishing isn’t evidence.

“The goal is to protect the public health,” she said. “People want to know what they are eating.”

And there’s the deceit. Mandatory menu labeling would achieve her stated goal, for customers to know what they’re eating. They’d have the information to make an informed choice. But that’s not the bill Councilwoman Trachtenberg sponsored. What she’s done speaks louder than what she said.

Will Councilwoman Trachtenberg achieve her stated goal?

Gene Wilkes, owner of Tastee Diners in Bethesda and Silver Spring, said the ban will force him to eliminate certain items, such as lemon meringue pie and chocolate cream pie, which he buys from a supplier. His popular biscuits, made in bulk at the diners from a General Mills mix that contains trans fats, will be a no-no. He said he’ll begin making them from scratch, most likely.

I guess if people in Montgomery County want to know what’s in their lemon meringue pie or chocolate cream pie, they’ll know because they’ll have to make it themselves. Mission accomplished. Right?

Persuasive Doesn’t Mean Complete

I didn’t comment on the recent hate crimes legislation considered by Congress that would’ve included sexual orientation because I hadn’t considered it enough to have anything intelligent to add to my previous thoughts. I’m not saying what I wrote earlier is correct or the final stance I’ll have. I just hadn’t thought about it more.

While Congress considered the recent bill, Kip posted an interesting analysis based on gambling courts and how criminal justice punishes the same crimes differently based on the circumstances. I’m not wholly convinced, although I admit I can’t clarify exactly why. I’m beyond the simplistic view that such laws punish thought, but I’m still not ready to commit to embracing such legislation. I will say that, as long as we have such legislation at the local, state, and federal levels, sexual orientation should be included in every hate crimes law.

That’s a long way of introducing today’s column by George Will, which is about hate crime laws.

Hate-crime laws are indignation gestures. Legislators federalize the criminal law in order to use it as a moral pork barrel to express theatrical empathy. They score points in the sentiment competition by conferring special government concern for more and more particular groups.

That seems mostly correct to me on its surface, but it improves when considering Mr. Will’s opening statement.

Political entrepreneurship involves devising benefits to excite or mollify niche constituencies.

Politicians govern out of a degenerate self-interest rather than an adherence to the Constitution. This is our most significant political problem, and I don’t see anything in the recent debate over this legislation (i.e. President Bush’s threatened veto) to suggest otherwise. That’s getting in the way of the real debate. We should discuss hate crime laws, but not be afraid to accept that, if hate crime laws make sense, any and every hate-motivated crime should be included. If they make sense, we should apply those laws with a fair and equal hand.

Should I get business subsidies?

Because Democrats apparently can’t look at the calendar to figure out when summer months are coming, among other simpler solutions that don’t involve market interference, they find it more expedient to blame oil companies.

Standing in front of an Exxon station near the Capitol on Wednesday with the posted $3.05-a-gallon price for unleaded regular in the background, half a dozen senators railed against the oil industry.

Sen. Charles E. Schumer (D-N.Y.) said Congress would look into breaking up the giant companies. Sen. Maria Cantwell (D-Wash.) promoted her anti-price-gouging bill, which the Senate Commerce Committee adopted on Tuesday. And Sen. Bernard Sanders (I-Vt.) backed a windfall profits tax, pointing to $440 billion in profits over the past six years for the nation’s five biggest oil companies.

“I think it’s time to say to these people, ‘Stop ripping off the American people,’ ” Sanders said.

In order…

  • Good plan. Investment in oil discovery and refining is expensive. Small firms with a smaller capital base are best suited to the task.
  • Right, if the price is “high”, or higher than people want to pay in an ideal world ($0? negative prices?), means that companies are “gouging”. Who needs any context into costs, demand, or other basic economic concepts?
  • Again, “windfall” is an empty buzzword, for it pretends that the laws of economics can be violated. Particularly, as Sanders said, the silly notion that oil companies are “ripping off” American consumers.

For example:

While they haven’t curtailed their driving habits, two-thirds of U.S. adults said in a mid-April Washington Post-ABC News poll that gasoline price increases had caused “financial hardship” for their households; 36 percent said that the hardship had been “serious.”

Rather than first look to strategies individuals can immediately implement, Congress needs to step in and threaten to transfer money from one group (oil company stockholders) to another group (gas consumers). We must make certain to ignore the obvious fact that the former is a subset of the latter.

For a real life example, consider my current unemployment lack of a contract¹. Rather than complain that my income is dramatically reduced while continuing to spend, I’ve curbed my spending in response to an adverse situation. I deem zero income to be “bad”. My actions reflect that.

American drivers don’t seem to agree that gas prices are all that “bad”.

¹ A situation that appears nearing its end, thankfully. Hopefully.

Pop goes the market.

I’m not surprised:

President George W. Bush’s January, 2006, declaration that the U.S. is “addicted to oil” marked the beginning of a gold rush for corn growers: The government policies the comment helped spur have been a boon for the producers of corn-based ethanol, the all-American fuel that now displaces about 4% of U.S. gasoline supply. Over the past 18 months, farmers have rushed to plant more corn—and are set to produce a record crop this year—while small-time entrepreneurs and agricultural giants alike have built plants to expand capacity. A handful of initial public offerings have fed investors’ desire to get in on the action.

Government sets incentives outside of the market, so the market responds. In this case, farmers plant more (or switch to planting) corn. That’s no surprise. Nor is this:

Lurking behind ADM’s gloomy news are doubts about the future of corn ethanol. A growing number of analysts, once bullish on the product, are warning that an oversupply may be coming as soon as this year. On Apr. 27, a Lehman Brothers (LEH) report projected that production will outstrip demand in the second half of 2007, measuring the domestic thirst for corn ethanol at 420,000 barrels per day but supply at 445,000 barrels a day, mainly because the U.S. lacks the infrastructure to move the product to market.

“There’s tremendous capacity coming online, but the infrastructure isn’t there to keep up with it,” says Michael Waldron, an oil markets research analyst at Lehman Brothers who co-authored the report. “We need a nationwide system to pipe it, and until that happens, we’ll likely have an excess of product.”

Just a quick pause to speculate on who’s going to pay for that infrastructure. You know it’s coming.

Waldron says the problem isn’t a lack of demand for ethanol, which remains high, especially given that the federal Renewable Fuel Standard mandates at least 4 billion gallons, or about 3% of all U.S. transportation fuels, to come from alternative sources today, and nearly double that amount, or 7.5 billion gallons, by 2012. Lawmakers are expected to give the mandate a significant boost later this year. Rather, the problem is getting ethanol to consumers in various parts of the country. Ethanol requires a separate piping system from gasoline, and since Uncle Sam hasn’t appropriated funds to build such infrastructure, ethanol is now primarily transported by rail. But the rail system extends only to major metropolitan areas—not to mention the dual problems of its high cost and carbon dioxide emissions.

So, let’s see, we get energy dependence, if you count only needing oil for 96% of our gasoline, as well as increased carbon dioxide emissions to transport what the government mandates we buy. (We won’t need foreign oil if we choke to death? Is that the plan?) And we’re supposed to accept that this is because the government hasn’t provided the funds to build such infrastructure? I’m not buying that argument. If the demand were truly “high”, private entities would be building a pipeline without government subsidies. That those entities are waiting for the pipeline suggests some combination of insufficient profit motive from the pipeline’s cost structure and market infantilization.

Either way, it implies that ethanol is not ready for prime time, despite the grandiose wishes of politicians. I’m reminded that the facts, although interesting, are irrelevant¹, especially when politicians consider public policy.

Looking at the consequences of this, though, how much economic hardship will result for those who rushed to grow more corn to produce ethanol that can’t be shipped economically? I have little sympathy for those people because they ignored economic signals for the quick buck, but I’m sure a government bail-out will be “necessary” because “the market” doesn’t work. It’s amazing how consistently government creates problems that “prove” how necessary more government is to our well-being and survival.

¹ Was it Einstein who said this?

“Read the track listing” will have new meaning.

Why do legislators hate the environment?

Independent merchants selling and buying used CDs across the United States say they are alarmed by stepped-up pawn-broker-related laws recently enacted in Florida and Utah and pending in Rhode Island and Wisconsin.

In Florida, the new legislation requires all stores buying second-hand merchandise for resale to apply for a permit and file security in the form of a $10,000 bond with the Department of Agriculture and Consumer Services. In addition, stores would be required to thumb-print customers selling used CDs, and acquire a copy of state-issued identity documents such as a driver’s license. Furthermore, stores could issue only store credit — not cash — in exchange for traded CDs, and would be required to hold discs for 30 days before reselling them.

I think it’s reasonable to assume that some CDs that would’ve ended up in a used record store will now end up in landfills. I can assure you I wouldn’t go through the bother, not to mention the Big Brother statism, involved just to earn a few dollars of store credit. I’d find someone I know who wants the CD, or I’d toss it in the garbage. If the goal is to force incentivize people to discard their unwanted property in a sub-optimal manner, mission accomplished.

This perverse incentive to discard used CDs wouldn’t involve rent-seeking, I’m sure.

Meanwhile, [National Association of Recording Merchandisers] says it will try to help shape the pending legislation. In Florida, retailers selling previously owned videos and videogames managed to carve out a partial exemption from the law so that they do not need a permit and have to wait only 15 days before reselling the merchandise.

The article doesn’t state any more than that, but the mere existence of an exemption indicates what’s inevitably going on behind the scenes. It’s shameful.

Link via Hit & Run.

Are we funding computers, as well?

From a few days ago:

Members of a House committee charged yesterday that a five-year, $1.2 billion program to expand broadband Internet services to rural communities has missed many unserved areas while channeling hundreds of millions of dollars in subsidized loans to companies in places where service already exists.

There’s not much shock there, of course, as success is in the details and government doesn’t handle details well, always forgetting the law of unintended consequences. Instead, it’s more fun to follow the words of members of Congress.

“If you don’t fix this, I guarantee you this committee will,” House Agriculture Committee Chairman Collin C. Peterson (D-Minn.) told James M. Andrew, administrator of the Rural Utilities Service at the U.S. Department of Agriculture. “I don’t know why it should be this hard.”
…

Last week, Rep. Stephanie Herseth Sandlin (D-S.D.) introduced legislation to close loopholes that allow areas that “are neither rural nor suffer a lack of service” to collect the loans and loan guarantees.

Congress shouldn’t have created this mess. It did. And now it’s blaming the USDA while implying that somehow the same people who messed this up can fix the problem now that it exists. It’s an absurd but classic move for a politician, demonstrating that politicians aren’t leaders.

Of course, the true discussion here is whether or not this program should be funded at the federal level. It shouldn’t. Broadband access to The Internets is not a public good. Still, for anyone who believes this is a public good worthy of being on the federal dole, consider:

Congress created the rural broadband program in 2002. To date, according to Andrew, 69 loans for $1.2 billion have been approved to finance infrastructure in 40 states. Only 40 percent of the communities benefiting were unserved at the time of the loan, Andrew said.

Forty percent. That’s good if it’s the success rate for a hitter in baseball. With everything else, it’s miserable. And we’re not even analyzing how successful that forty percent has been compared to what would happen with private efforts, assuming that private industry would deem it necessary. Heckuva job.

Catching Up: Miscellaneous Edition

News flash: kids are creative at circumventing the rules. Some are using iPods to cheat on tests, and administrators are pissed enough to ban iPods for all. There’s no need to rehash the details because anyone with a third-grade intellect could’ve predicted as much. Instead, consider a student who’s just a little bit smarter than her leaders in the school system:

Kelsey Nelson, a 17-year-old senior at the school, said she used to listen to music after completing her tests — something she can no longer do since the ban. Still, she said, the ban has not stopped some students from using the devices.

“You can just thread the earbud up your sleeve and then hold it to your ear like you’re resting your head on your hand,” Nelson said. “I think you should still be able to use iPods. People who are going to cheat are still going to cheat, with or without them.“

I’m not advocating a policy open to cheating, merely stating the obvious. As we learned with prohibition, and we’re (not) learning with the drug war, people looking to do what’s prohibited won’t stop just because it’s prohibited. Mostly, prohibition just harms the innocent from going about their innocent ways. Duh.

In light of one Michigan legislator’s recent plan to use taxpayer funds to purchase an iPod for every student in the state (now defeated), what can we conclude?

Next, this story on the likelihood of regulatory approval for the proposed Sirius-XM merger provides an elementary but useful finance lesson.

“The merger faces a very tough road at the FCC, where the public interest test applied by the commission is inherently subjective,” [Craig Moffett, a senior analyst with Sanford C. Bernstein] said. “In Washington, ‘subjective’ is codeword for ‘political.'”

The decline of the companies’ stock, analysts say, has less to do with the merits of the merger than with its prospects. They cited the political climate in Washington, where lawmakers have grilled Sirius chief executive Mel Karmazin about antitrust concerns during four hearings on Capitol Hill, as the driving force behind Wall Street’s pessimism.

When the two companies announced the merger, both share prices inched up. As time has gone by, and the process rent-seeking kicks into gear, expectations of success declined. This has brought the share prices below the pre-merger levels. Pre-merger, the likelihood of an unannounced merger held prices at one level. The benefits of a merged company improved the analysis, providing better information in the process. Now, the prospects of two companies without any chance of merger takes that piece out of the shares.

As much as I hate what’s happening to the Sirius share price, markets are efficient.

Catching Up: Food Edition

I didn’t expect to be away for this many days. I’ve been pre-occupied, so Rolling Doughnut has taken the hit. You know the rest, so I’ll just get to a recap of some news items of interest lately.

I first read about proposed changes to chocolate standards via this entry at A Stitch in Haste. From a few days later than the original story Kip linked, the Washington Post summarizes the changes, which would allow “chocolate” to include other vegetable fat in place of cocoa butter and still be called chocolate. (There’s a story in the FDA’s regulation of such, and the politics of this apparently rent-seeking change, of course.) If enacted, this change doesn’t bother me because I like dark chocolate exclusively, even before I limited myself to it through veganism. It simply tastes better. And I care enough to look at ingredients. To the people like me who care, this change will mean little.

For example, it doesn’t harm me as a chocolate lover/buyer if Hershey’s can start calling Whoppers “chocolate”, even though they already contain no cocoa butter. I’m not their customer. I’ll venture a guess that most chocolate buyers don’t have an especially refined palette for the difference. I’m not judging in that; I don’t have a refined palette for many things, so little nuances escape me.

We’re all different. The market for fine chocolate, or real chocolate, will determine how important this change is if it’s implemented. That’s enough. Besides, I’m more up in arms about the fact that companies like Hershey’s advertises its products as “dark” chocolate when it has milk in it.

Next up, following the recent pet food scare, several thousand hogs destined for human consumption appear contaminated with the same chemical (melamine) because they consumed the contaminated pet food. The risk to humans is allegedly small. I don’t eat pork, so I don’t care, mostly. I do find this fascinating:

A maximum of about 300 of the animals may have already entered the human food supply, but the rest of the hogs have been quarantined and are slated to be euthanized, Agriculture Department officials said.

It’s good to know that if animals become tainted, they’ll be euthanized. Humane treatment for the sick is decent. What about the millions of hogs who aren’t sick? Here’s an example showing how hogs are slaughtered. (Warning: Link has graphic pictures.)

Officials emphasized that the human health risks of eating pork from animals fed the contaminated food are very low. The decision to keep those animals off the market — and to reimburse farmers for the losses — was made in the interest of extreme prudence, they said.

If the hogs ate contaminated feed, that sounds like a tort in which whoever bought the tainted feed could sue the feed producer for the damage done to the hogs. Why should the government taxpayers foot the bill for such negligence?