Thursday, June 26, 2008

The Left As Teen-Age Rebellion

The programs that the left advocates have done little to help and instead have harmed the poor. American inner cities deteriorated in response to urban renewal and welfare programs. The socialist revolution in Russia resulted in the starvation of millions of peasants and a wide range of ethnic hatreds. The Chinese socialists have oppressed and murdered Tibetans and the religious as well as millions of politically incorrect businessmen and bourgeoisie. More people have been slaughtered by the left and by socialism than by the advocates of any other creed or belief system. There has not been a socialist economy that has produced economic progress, and the general result of socialism as in Cuba and North Korea have been violent suppression and impoverishment of the poor. Yet, sociopathically, the academic left continues to justify, rationalize and lie about the effects of its programs.

In America, the left advocates a Kafkaesque program of large institutions, big government and centralized control. Its program includes not only the bureaucratization of medicine but also of investment, self-defense, business and political speech. The failure of its programs do not deter its commitment to rigid, large scale enterprises. For instance, the left remains obsessively attached to social security and the Federal Reserve Bank despite dismal benefit/contribution ratios from the former and inflation and corruption from the latter.

The left's recidivist advocacy of failed ideas can be explained in three ways. One, the left might be depicted as religiously obsessed with its ideas, and riddled with power needs, and so habituated to its love of government and centralized power despite seventy years of repeated failure. Two, the left is cognitively limited. Although many on the left are not smart, many are smart enough to grasp the pragmatic implications of its program. So this is at best a partial explanation. Three, the left is economically motivated.

There is a recurrent theme that goes something like, "Oh, isn't it amazing that George Soros or this or that businessman is a billionaire and yet he favors our (left-wing) positions". Conversely, many Libertarians and conservatives conceive of businessmen as supportive of the free market position, and then are astounded when businessmen do not support that view. In reality, the left's views coincide fairly neatly with the views of big business. Big business believes in big government because without it it would not be so big. The political scientist Charles Lindblom in his book on market economies remarks on the "privileged" position of big business, and indeed, since the days of Hamilton big business has relied on centralized government. There is no evidence that government support of big business helps the public in any way. Rather, subsidization makes firms less efficient and less customer oriented. For instance, cable television, telephone, public utilities, health care, banking and insurance firms are subsidized and they are among the least customer-responsive firms. The reason is that government regulation reduces competition.

Chief among government subsidies to big business is first the Fed, which provides interest rate and loan subsidies to business, and second, higher education, which provides training to large firms, to a degree at public expense. Thus, professors' livelihoods are linked to the welfare of big business and they themselves enjoy subsidies just like the ones big business enjoys. Without big business demand for graduates, there would be no demand for universities. So why are academics so often critical of big business?

In fact, university professors are NOT critical of big business where it counts, and their criticisms are not adverse to big business's interests. Big business is not adverse to enhanced central control, socialism, regulation and the mixed economy because such control eliminates competition. Universities have, as well, been the chief advocate of central banking through economics and business programs. Big business would not be so big without the Fed, and without the regulation that historians and sociologists advocate. There are few economists who question central banking, and of all the issues this is the one that big business cares about most.

University professors depend on big business much as teen-agers depend on their parents. Without big business demand for graduates, there would be no demand for universities. Thus, like teen-agers, university professors rebel by criticizing big business's hypocrisy, its lack of "social responsibility", and its selfishness, even as the professors themselves are equally hypocritical, equally irresponsible socially and even more selfish than business executives. But, like teen-agers, the university professors return home to be fed at the end of the day, and find the possibility that they will be thrown out and sent to work unthinkable. Moreover, the upshot of their criticisms, like teen-agers', is a psychological replica of the institutions and habits that they criticize. In other words, they claim to criticize big business even as they advocate systems that are necessary to it. In the end, the university professors are the chief proponents of big business capitalism, helping it by diverting attention to shrill issues like diversity and global warming.

Letter to Senator Joe Lieberman Concerning Oil Speculators

Dear Senator Lieberman:

I contributed to your recent campaign fund because I respect your views on the Iraqi War and your courage to stand up to the left-wing ideologues who have increasingly dominated the Democratic Party. I DISAGREE with your recent proposal to limit commodity speculation by pension funds. While short term price fluctuations over 1-2 years may result from speculation, if there is no underlying demand to support the price increases then the increases will reverse. On the other hand, no one really knows whether the price increases in oil result from speculation or from demand ensuing from general inflation. As you are undoubtedly aware, the Federal Reserve Bank has inflated the number of dollars in circulation around the World by a significant percentage, approximately 8 percent, over the past 25 years. These dollars have reduced interest rates, stimulating economic activity that has not been all that productive. In other words, the Fed has caused the sub-prime crisis, the tech bubble and probably stimulated excessive investment in commodities in the early 1990s. The excessive commodity investment led to low commodity prices in the 1990s (my former employer's stock, INCO or International Nickel, was selling at $10 per share for almost two decades). In turn, commodities firms closed. As well, farm land was used to develop real estate projects. This has led to shortages now in a range of commodities, to include milk, bread, gold and oil. I note that in the recent period of high gasoline prices, the gold price increases of the past 5 years have abated and gold has been below $900 for the past few weeks. If speculation is causing a run-up in oil prices, why isn't it causing a run-up in gold prices?

The correct response to excessive monetary expansion is not to limit speculation but rather to change the institutional structure, which is corrupt, that has led to the creation of large dollar investments in hedge funds, investment banks, Enron, and Bear Stearns. In other words, the Fed is corrupt and it should be changed institutionally. I believe it should be abolished in favor of competitive money supplies. That is, the money supply should be privatized. Illegalizing speculation will not end the problem of increasing gas and other prices. You are attempting to stop water from breaking through the dyke by passing a law against the ocean tides. Your proposal is misguided.

Wednesday, June 25, 2008

Bowen's Boondoggle

According to Sarah Garland of the New York Sun, in 2006, the New York City schoolteachers negotiated a contract that will expire in 2009. The contract gave the teachers a 7.1% annual raise over 2008-2009.

The Sun quotes the United Federation of Teachers' President Randi Weingarten:

"Pointing to a total increase in teacher salaries of more than 40% since 2002, Ms. Weingarten said, "Finally we are making real progress."

In contrast to 40% gains in teacher salaries, the Professional Staff Congress (PSC), the union that represents the faculty of the City University of New York, in the last contract that ran from 2004 to 2007 negotiated a 6% increase over three years.

On June 23, 2008 Barbara Bowen, the PSC president, released a letter describing a new contract that runs from 2007 to 2010. It includes the following increases:

****3.15%, effective September 20, 2007
****4.00%, effective October 6, 2008
****3.00%, effective October 20, 2009

In other words, the Barbara Bowen and the PSC negotiated increases at about half of what New York City's schoolteachers received. And this on top of increases less than half of what the schoolteachers received in the last contract as well. In comparison to the 40% from 2002-9, the PSC has won 16% from 2004-10, about 40% of what the teachers have won.

Despite this dismal performance President Bowen writes in her letter:

"The tentative contract is a principled, creative settlement that combines increases throughout the salary scale with special increases at the top and the bottom. It includes a breakthrough on parental and family care, introduces a system for sharing sick days with those in need, adds a hundred new Lecturer lines reserved for experienced part-time faculty, and holds the line against management's agenda of corporatizing the University. The tentative settlement also includes new equity features, such as a salary differential for College Laboratory Technicians and Assistants to HEO with relevant masters or doctoral degrees, and an extra increase in each step of the Lecturer title. The tentative agreement comes with the strong support of the PSC negotiating committee."

Just a few days before the deal's announcement, the indomitable Sharad Karkhanis in his Patriot Returns newsletter expressed dismay at the union leadership's performance; its inept management; and governmental officials' indifference to the union leadership. He exhorts Bowen:

The PSC's propaganda paper (Clarion) boasts of your trips to Albany and your meetings with the mighty and powerful. But it seems to us that all this is baloney. Neither the New York media nor government authorities consider you relevant or powerful. You can be safely ignored, laughed at, forgotten. We wouldn't care, except that also forgotten, as a consequence, are the people you represent. No wonder you cannot get a good contract for CUNY faculty. Your tactics have deemed you irrelevant to the real media and those in decision making positions in the state. You are a failure in the eyes of the membership. They will not return you to that office again next year, Barbara.

For how long will the CUNY faculty be willing to tolerate the PSC leadership's incompetence?

Tuesday, June 24, 2008

Time Preference and Political Ideology

Government has a short time preference. Budgets are annual. Current political reality drives decisions. Neither history nor future projections determine choices. In this way the state is different from corporations. Stock prices reflect anticipated earnings. Corporate executives may think short term, but decisions that might impair long term performance will reduce current price if the market is able to grasp the long term effects. Citizens vary as to their time preferences. Some prefer to defer gratification and so earn greater rewards in the future, while others prefer instant gratification. In general, short time preferences are more common than long ones among the general population, but if you weight population by individual wealth, since wealthier individuals have longer time preferences than the average person, the economic return that the market demands for investment is well below the return the average person demands to save. Therefore, in a free society, wealth tends to concentrate in the hands of those who have longer time preference. However, the reaction of short time preference citizens to wealth disparity is often resentment or a sense that there is inequity because of the wealth disparity. In turn, there is demand for taxation of property, inheritance and capital gains.

Skeptics argue that there is no way to prove that one view is fair and another unfair. Is it right that someone who saves for many years and deprives themselves of luxuries should be taxed on gains from the savings? Is that more right than someone who borrows heavily to enjoy themselves should benefit from the saver's wealth through tax transfers? Should the minority that saves support the majority that does not save?

Perhaps the answer is yes, perhaps it is no. Why can't there be room for choice? Why not permit states to determine levels of property, inheritance and capital gains taxes rather than the federal government. Then, Americans could choose what state to live in based in part on preferences for taxation.

Monday, June 23, 2008

Stop Eminent Domain Abuse: Support the Institute for Justice on Kelo Day

Kelo Day - June 23, 2008

The Institute for Justice is memorializing Kelo Day, the third anniversary of the decision that permitted rapacious politicians to seize private homes in the interest of sub-prime mortgage lenders and the inept real estate developers whom they finance. The Republicans, led by Bill Frist, the Duke of Bloat,dropped the ball in the Senate on passing legislation that would have limited federal subsidies to states that permit private-use eminent domain. Now, the Republicans cannot understand why they are not receiving much public support. According to Suzette Kelo on behalf of the Institute for Justice:

"On this, the third anniversary of the U.S. Supreme Court’s dreadful decision, I’m asking for 10,000 people to join me in donating to the non-profit legal foundation that stood by me all the way to the Supreme Court, and continues to stand by heroic individuals fighting to keep the homes that are rightfully theirs.

"Eminent domain abuse continues coast-to-coast! Despite tremendous gains in state courts and state legislatures since the Supreme Court’s ruling, eminent domain abuse is still rampant. Click on the links below to read more."

Kelo Day - June 23, 2008

Sunday, June 22, 2008

Barbecue 6-21

Pamela Hall took a number of beautiful pictures of our barbecue on 6-21 in West Shokan. Here are a few of her pictures.