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.
Thursday, June 26, 2008
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?
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.
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
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."
Subscribe to:
Comments (Atom)
