Friday, June 29, 2012

Random Thoughts

Basic economics says that the factors of production (land, labor, capital and entrepreneurship) are substitutes for each other and will be used in what proportion can produce the appropriate output at the least cost. So if Obamacare gets fully implemented then the increase in the cost of labor will cause it to be substituted for (more capital – technology). This is why it is called a job killer. If I were an employer I would tell my workers that if Obama is allowed in November to return to work, then they won't. So they can opt for either Obama will be employed or they will be. Choose. I went to a motorcycle rally in Keystone, SD – home of Mt. Rushmore. I ate at a Golden Corral in Rapid City and the young lady who brought the tea was named Nikita. To my amazement she claimed never to have heard of her namesake – Nikita Khrushchev. Rather she said she was named for an Elton John song. Nonetheless, surely she was joking that in her 21 years no one had mentioned Khrushchev. Much has been made from the right about the president golfing for 100 times, attending 163 fundraisers and taking 61 vacation days. Two points come to mind. First it would seem that the Obama detractors would want him to spend more time out of office rather than less. Second, the left points out that at this same point, Bush had taken 180 days on vacation. However the difference is that Bush quit playing golf after 911 to avoid criticism that he was golfing while the country was in crisis. Also Bush’s vacation days were weekends at Camp David and at the Crawford Ranch rather than going to ritzy places hobnobbing with the rich and famous. At least Bush vacationed at places where the president could still work. I worked for 10 years in the federal government and the slackers and less than conscientious were no more numerous than the one’s I have encountered either at universities or in the private sector. However, given that the government has no real budget constraint it is easy to see why federal government employees are higher compensated than comparables in the private sector. What do you think the impact would be if Milt Romney were to say that he will work to see that federal employees would have compensation no higher than the median total compensation (salary plus benefits) of comparables in the private sector? Also, the lack of a profit motive has also caused an excess supply of federal workers. Therefore, what would be the impact if Milt Romney also said that each year he is president he would roll back federal employment in each agency by five percent? Realizing that federal employees are among the most loyal democrat voters (along with blacks, the media and college professors), Romney would not lose any of their votes regardless but the gain on all the other voters would be immense.

Settled Science?

For the past two years I have spoken to bright young high school seniors enrolled in summer programs at the University of Tennessee and at the University of Georgia. This year I told them why I envied them and yet was disappointed in their generation. The reason was accessibility of information. Today the cost of information is minimal. How much effort does it take to google? Yet most of the kids do not even take the effort. There is no excuse to accept anyone's opinion on anything. Nor is there any excuse not to answer any question. Once during the World Cup I asked my students if they were watching. More than a few said yes. I then asked that since it was called the FIFA World Cup, what FIFA meant. Not a one knew or had bother to look it up. I asked if they thought the earth was warming. Most said yes. I asked how did they know? None could cite any source on global warming. I said "shame on you". When I first heard about global warming I was tempted to reject it merely because of its proponents were mainly on the left - and people whose views I categorically rejected. However, I said that they may be right with regard to global warming and I just rejected their solutions for it. So I did my google research and lo and behold I found an impressive literature from scientists who had reached the opposite conclusion. When Al Gore said it was "settled science" I become a full blown skeptic of the then conventional "wisdom". The conflicting literature said that it was not settled science and Gore was trying to silence the growing wave of criticism. As a matter of fact, there is no such thing as "settled science." New species are discovered all the time that make scientists question their existing hypothesis. We see discoveries in physics, astronomy, all the hard sciences all the time. We also see results of medical studies that invalidate previous studies. Is coffee good or bad for you? Is exercise good or bad? Is wheat germ good or bad? Is sugar good or bad. Is alcohol good or bad? The answer is "Yes". Although economists are still arguing over macrotheories that have changed little since I was in graduate school in the 1960s, the closest thing we have come to as settled science is microeconomics. The principles laid out by the founding fathers of economics - Adam Smith, David Recardo,J-B Say, Francois Quesnay, Alfred Marshall, Josef Schumpeter - have met the test of time. Basic supply and demand, the foundation of economics is as true today as it has been since the beginning of humanity on the planet. The reaction to incentives and disincentives is in the main predictable as was codified by Smith. Even the role of government is as true today as it was in 1776. Not many sciences can claim that. So perhaps there is such a thing as "settled science". It is microeconomics.

Thursday, June 28, 2012

Mission Accomplished

Barack Obama said that he wanted to fundamentally change the United States. With the stunning ruling by the Supreme Court on the healthcare mandate, he can now say "Mission accomplished". I will leave the analysis to legal experts like Stephen Bainbridge, but what occurs to me is that even if healthcare is eventually repealed, the Supreme Court's decision needs to be overturned. For example, assume that like Prohibition, Obamacare is overturned. If it is repealed by the Congress the harm done by the Court will still stand. If I understand it correctly, the court has essentially said that the federal government can tax anything. In making its ruling, it said that the federal government cannot mandate under the commerce clause but can tax what it would have mandated. Understand that this means the most expansion of federal power in our history. What is exempt from the Supreme Court's ruling? I cannot think of anything. Thus, in addition to having to repeal the act, a future supreme court would have to overturn the Roberts court's opinion. Otherwise, this unprecedented incursion of the federal government into its citizen's lives will stand. Need I say that the Founding Fathers who wrote the Constitution to limit the power of the federal government are literally turning in their graves.

Wednesday, June 13, 2012

Municipal pensions are underfunded - now who would ever imagine that?

Fox News is reporting breathlessly a report that JP Morgan did not disclose to purchasers of municipal bonds that state and local governments had unfunded liabilities due to their pension funds to the tune of $4 trillion. Duh. I guess that the next breaking news is to warn buyers of US Treasurys that the US government has massive unfunded liabilities associated with social security. Maybe Fox assumes that buyers of government bonds are stupid. Tell me what fund managers do not know of the unfunded liabilities and I bet the number is zero and if it is positive then that fund manager needs to be fired. Fox’s Neil Cavuto who “broke” the story said that the alternatives were either that the state and local governments would have to dramatically raise taxes or cut back on services. Au contraire. What the governments will do is to cut back on pension and health benefits. Investors know this and investors also know that these unfunded liabilities are not very likely to force a default. This is different from issuing revenue bonds which are dependent upon the monies raised from the use of the project (such as a parking garage or a stadium). So I hate to disappoint Fox but JP Morgan disclosing the obvious would have virtually no impact on the market for municipals.

Tuesday, June 12, 2012

Basketball Rodriguez-Jones?

I would rather watch the Kansas City Royals play the Oakland A’s than any NBA game, including the playoffs. I have always loved professional baseball and used to like basketball as well. But the team-oriented sport of Magic’s Lakers, Bird’s Celtics, Isaiah’s Pistons and Dr J’s 76ers has devolved into a one on one showboating parody of the sport. Shack started backing defenders down in the post literally mugging them with his backside and it wasn’t ever called. Now everyone does it. I have never understood what is a foul and what isn’t. And don’t get me started about travelling. I have actually tried to watch some of the playoffs and only made it through the Boston-Miami game where Rondo got mugged by Wade in the last moments which was not called and Wade driving for a layup kicked Garnett and Garnett was called for the foul. I turned off the TV in disgust. I would have done the same regardless of the team since I don’t have a dog in the hunt. While watching some of one of the games between the Spurs and the Thunder, I noticed that at one point seven players were on the floor who were born outside the continental US. We’ve come a long way from where there were so few foreigners playing US basketball. Remember when Detlef Schrempf was a novelty and when his University of Washington team played at Duke, the Dookies chanted “Luftball”? Well the players on the court in the NBA game were: San Antonio Spurs Boris Diaw – France Tim Duncan – US Virgin Islands Manu Ginobili – Argentina Tony Parker – France Tiago Splitter – Brazil Oklahoma Thunder Serge Ibaka – Congo Thabo Sefolosha – Switzerland What does it mean that at the highest level of the sport, there are so few native born players playing? Sport has always been a vehicle for the lower economic classes to make it. Boxing has been the province first of immigrants, then blacks and now Hispanics. Baseball was first a sport whose stars were lower class southern whites, then blacks and now again Hispanics. Today, the most common names in major league baseball are Gonzalez and Rodriguez. Basketball has been a sport dominated by blacks and is the one sport that has relatively few Hispanics. I guess that there are not many seven foot Mexicans or Dominicans. After the southern universities integrated, their rosters were transformed from all white to mostly black. It still tickles me to see Ole Miss play Mississippi State with 10 blacks on the floor and the TV announcer saying “here come the Rebels!” However, the early entry of players into basketball has deteriorated the quality of the sport at both the college and the pro levels. There are no more fundamentals taught at either level. Do you think that is why suddenly foreigners are now starting to be so numerous among our best players?

Jonathan Pollard: The bad penny returns

One of the thorniest issues of our lifetime has reared its head again: the question of a presidential pardon for Jonathan Pollard. With the Israeli president, Shimon Peres in the country to receive the Presidential Medal of Freedom, some congressmen from both parties have introduced a resolution calling for Pollard’s release. Peres, himself, said that he would ask Obama to consider it. To refresh your memory Pollard is the spy who was given a life sentence for spying for the Israelis. It is not clear exactly what Pollard passed to the Israelis or how it was used. Some have contended that the Israelis gave the Russians critical information on US spies operating abroad and information on classified military technology in order to have Russian Jews be allowed to emigrate to Israel.. The problem as to the truth is that Pollard never stood trial but rather confessed to spying and was sent to jail. Consequently, the extent of his crimes and the consequences are classified and probably never will be told. Pollard was granted Israeli citizenship and has denounced his US citizenship. If he were pardoned he would be deported to Israel. One thing that I do know is that the Pollard case inflames many people that I know, especially those who are ex-military, ex-CIA and ex-FBI. Those people have told me that Israel (rightly so) puts Israeli interests above all others. They do believe that Israel is responsible for the loss of American lives, citing the murders of US spies abroad during the Pollard era and even before in the bombing of the USS Liberty during the six-day war in which 34 US sailors were killed and 170 were wounded. The surviving sailors said that the Israeli aircraft were unmarked and it was speculated that the Israelis wanted to deceive the Americans to think that the attackers were Arabs. Whatever you believe, it is hard to deny that the US did engage in a cover up in the Liberty incidence and sought to minimize it. Regardless, the very mention of Pollard’s names opens deep wounds and animosities. People that I know who are fiercely patriotic do not hide their animus toward Israel, toward the Navy establishment and toward Lyndon Johnson for what they perceive as turning their backs on Americans on the front line in the name of Israel, rather than US, interests.

Our zebra president?

Chris Rock plays a zebra in the new movie, Madagascar 3. On the Today show he was asked by Ann Curry if he were an animal which one would he be, of course he answered “a zebra”. Then he said that we had a “zebra president” who was black and white. Rock said that “I wanted to be the lion, you know, king of the jungle and all that,” he replied, “but that didn’t work out. Snake is always good. You know, scare people. But I’ll take the zebra.” “In honor of our zebra President. Black and white, white and black. … I love our President, but he’s black and white. He appeals to all. And that’s what I am going for,” the comedian said. Curry wondered aloud how the President might react to such an analogy. Rock laughed and replied, “I don’t know. … We ignore the President’s whiteness, but it’s there. It’s there.” Rock is right. We ignore the president’s whiteness. Why? His mother was white and his father was a black Kenyan making him one of the few true African-Americans. As an aside, I had a white African-American student – he was from South Africa but I have never had a black African-American in my classes. But what about the president? He is black because of convenience. He was raised by his white grandparents, went to mostly white private schools and seemingly only became black when he decided to run for political office. To that end, he married a black woman (also a product of white “elite” schools), moved to Chicago, became a community organizer and adopted blackness for political expediency. Barack Obama is smart. He knew that this was his avenue to political office. Consider the question of would a white radical ever be elected president? If that were so Bernie Sanders would be president not Obama. So for Obama, blackness is a matter of convenience. Unlike the vilified George Bush, you cannot find many blacks in important positions in his administration. He doesn’t even have a black official liar (press secretary). We see Axelrod and Plouffe out front in prominent roles but no blacks. Sure Valarie Jarrett is in the inner circle, but who else of color? Obama is no friend of black people. People of color have been adversely affected by Obama’s policies. If Obama were white, blacks would be rioting in the street. Yet the poverty pimps like Jesse Jackson and Al Sharpton know that their wealth and well being are tied to keeping the masses in line by attacking the so-called one percent (of which they are members) and the republicans rather than the democrats and Obama who are destroying jobs and preventing reforms that would redound to the benefit of their fellow persons of color. A zebra? In another time, Obama would be called an Oreo.

Cops, Firefighters and Teachers: More of the Same

Two things seem certain when politicians want to spend more money: its either for the children or for cops, firefighters and teachers. Well we are once again hearing that we need additional funding for cops, firefighters and teachers. Citing in nationwide layoffs, the president is asking for increased funding to restore these workers jobs. However, gone mostly unsaid is that the federal government is not the funding source for these workers. Rather, they are funded at the state and local levels and have fallen due to the decline in the revenues within the states. Any funding from the federal government will be temporary at best allowing for re-employment for a short period until the funding runs out. Then they will be subject to layoffs again. Remember Bill Clinton and the funding of 100,000 jobs for cops, firefighters and teachers? Well that program was a failure accused of being pork barrel politics that had little impact on crime. Much of the money went into administration and programs such as teaching children how to fish. Indeed, precious few new cops actually ended up walking beats. I am not making this up. Here is a story from Slate (not exactly a right wing journal) published in 2001 condemning the program as mostly wasteful. (see As one account of the program concluded “The Justice Department's own audits of the program alleged millions of dollars were misspent and thousands of jobs funded by the grants were never filled. In one case, a New Mexico tribe got $728,125 to hire eight extra officers. After the department closed in 2002, auditors said it was unclear where the money went or whether anyone was hired.” Also remember that one tactic commonly used by governments in the face of budgetary cutbacks is to layoff high profile workers. Instead of lowering the number of workers in administrative positions (the classic paper pusher), they will instead lay off cops, firefighters and teachers. My city of Knoxville has over 380 administrators in our school system alone. My bet is that these will be the last fired rather than the first.

Saturday, June 9, 2012

Random Thoughts

Why haven't there been any calls for Eric Holder's impeachment over Fast and Furious? By the way, if not an impeachment then why no calls for a special prosecutor? And speaking of a special prosecutor, if one were appointed over the Valerie Plame triviality, then why none for the serious security leaks over Iran's nukes? DOJ has filed lawsuits against the state of Arizona for its immigration law, against Arizona Sheriff Joe Arpiao for enforcing the immigration law, against Texas for its voter ID law, against Florida for purging illegals from it voter rolls - its there a pattern here and did I miss any? All of a sudden, my voice recognition software in my SUV doesn't understand me - must be my southern accent. I said "phone" it said "moving to channel 53" which was some awful stuff called "smooth electric" so I yelled "phone idiot!" Then it called a friend of mine - I am not going to say the name - who is at a meeting in Las Vegas. Can you imagine if in the future the targeting systems are voice activated? We will probably end up bombing ourselves. One of the downsides of democracy is the rule of the majority. I am uneasy about 50.1 being able to expropriate the wealth of the minority through punitive tax hikes. I think that a worthy amendment to the constitution would be for tax hikes to be approved by a supermajority in both houses. There they go again. Jesse Jackson Jr (D-IL) has proposed raising the minimum wage to $10 an hour and linking it to the CPI. He stated that economists have shown that rises in the minimum wage have little impact. Well that is from only two rather isolated studies - one in the UK. In the main, the evidence was so overwhelming that it did cause unemployment that no real research has been done in the past 20 years. Of course it will cause unemployment and linking it to the CPI will deny youth a chance to learn the discipline of the workforce (very few adult heads of household work at the minimum wage). What should be done is to eliminate the minimum entirely and let the market determine all wages - not just those above the minimum. If individuals fall below the poverty line, then they will get subsidies from the myriad of programs out there.

Wednesday, June 6, 2012

Happy D-Day

Today marks the 68th anniversary of the landing at Normandy. I have read the account by Stephen Ambrose and an exception to my not going to movies was going to see Saving Private Ryan. That is because my beloved Connie's dad was a D-day veteran, landing in the first wave at Omaha Beach. He was a Bedford Boy and was a genuine hero. It therefore saddens me and alternatively infuriates me that the President did not deign to commemorate this day of supreme sacrifice. Instead he is fund raising (what else?) in California. It is puzzling that this president and his advisers are so tone deaf. Surely someone in the Obama camp must know that this day is important to so many Americans. It would take little time and less effort to issue a presidential proclamation. Yet nothing but silence. This is another confirmation as to why people like Artur Davis, a black former congressman from Alabama has left the democratic party. Davis said that Obama had the rare opportunity to unite Americans, yet at every turn he has done the opposite. The Pew research center has said that this country is more divided than ever. That division has to be put at the feet of Obama. He has deliberately governed to the far left. He has not made a single attempt to bring us together but has instead helped drive us apart. Interestingly, the division has not been along racial lines but instead along ideological lines. Indeed, Pew has found that there are deeper divisions now amongst Americans by ideology than by race, gender or religion. So I guess Obama has in a sense united races, genders and religions that share the same ideology. Regardless, ignoring D-Day is a sad continuation of a sad presidency.

Friday, June 1, 2012

P Diddy's son: Liberal racism on display

In case you missed it Sean "P Diddy" Combs son Justin is a highly recruited high school football player. Justin plays for a prep school in New York and has a 3.75 GPA. When he accepted a football scholarship to UCLA the websphere blew up with loud criticisms that P Diddy should give back the money to UCLA so that some needy kid could have the scholarship. Here is an example: At the NBC News opinion website, blogger Jay Anderson asked whether paying for his son's education should be the obligation of the elder Combs."By taking a scholarship that he earned, but could likely afford on his own, (Justin) Combs is taking a spot away from a player who might elect to go elsewhere ... which in theory would hurt the team as a whole," Anderson wrote. Excuse me? Anderson is a fool. Can that needy kid play corner? Can that needy kid pass the coursework at UCLA. With all the football scholarships out there its hard to imagine that the needy kid could not get a scholarship somewhere. So I was stunned by the avalanche of criticisms but frankly not surprised. What we have here is a textbook example of liberal racism. I bet that all these criticisms come from those on the left. Where were the criticisms of Archie Manning letting his three boys accept football scholarships? Or Joe Montana? Or Mike Golic? Or any wealthy high profile white person whose son (or daughter) excelled in a sport? However, it is also interesting that certain blacks get spared from being criticized. An icon like Michael Jordan is spared when his son is on a basketball scholarship at Central Florida. Louis Farrakhan and Ralph David Albernathy's grandsons are on Division I football scholarships. However, it is the up from poverty, work in black culture self-made mogul who doesn't need the government father who gets criticized. This is a merit based scholarship and this is one time that the son can say that he earned it through his own initiative and hard work. His father was not on the field, or in the weight room. I bet Sean is proud of his son and ashamed for all the fools out there who obviously do not have a life.