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.

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

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."

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.

George Phillips on Maurice Hinchey

George Phillips has written an excellent article for Poughkeepsie Journal on Congressman Maurice Hinchey's crackpot proposal to establish price controls on gasoline. Phillips reminds us of:

"the long gas lines and fuel rationing of the 1970s, and has seen the disastrous artificial shortages price controls created. Many gas stations were forced to restrict gasoline purchases to a few gallons per customer or only to commercial vehicles. Others closed down entirely, unable to find gasoline for their customers."

Phillips astutely points out:

"supply and demand is a natural law of the land...The plan would effectively shut down oil companies that could lose far less money by simply not selling gasoline."

The bottom line is that America, and New York's 22nd Congressional district, would be better off with Phillips, not Hinchey, as Congressman.