Monday, March 16, 2009

AIG - So what else is new?



On March 9, after the Obama administration announced it would increase the US Taxpayer subsidy of AIG to 80% by pumping in another 30 billion, I wrote in this blog:

"...With all this cash, could AIG actually lose money? Well, friends, they just reported quarterly losses of 61 billion...The appropriate action is to allow AIG to fail, and distribute their clients to well-run companies. There are plenty of healthy, responsible Insurance companies who could and would benefit from taking on AIG's clients..."

Bush and Obama have both been shovelling dollars to AIG. Why? So they could be stabilized in the face of 61 billion losses per quarter? In spite of their best intentions, neither Bush nor Obama "get it." Government intrusion into the Marketplace always creates inefficiencies, always burdens the taxpayer and consumer, and always carries unintended consequences. This time, those consequences were highly visible: Millions of dollars in "bonuses" that were 'contractually mandated.'

Of course, if AIG was allowed to go bankrupt, as I have suggested multiple times before, those contracts would have been voided...and we wouldnt have the mess we have today. But far be it for Obama to listen to an Economist like me....

Monday, March 09, 2009

End Prohibition, End Drug Wars, Reduce Crime...



Reprinted from the March 7-13th edition of The Economist:

A HUNDRED years ago a group of foreign diplomats gathered in Shanghai for the first-ever international effort to ban trade in a narcotic drug. On February 26th 1909 they agreed to set up the International Opium Commission—just a few decades after Britain had fought a war with China to assert its right to peddle the stuff. Many other bans of mood-altering drugs have followed. In 1998 the UN General Assembly committed member countries to achieving a “drug-free world” and to “eliminating or significantly reducing” the production of opium, cocaine and cannabis by 2008.

That is the kind of promise politicians love to make. It assuages the sense of moral panic that has been the handmaiden of prohibition for a century. It is intended to reassure the parents of teenagers across the world. Yet it is a hugely irresponsible promise, because it cannot be fulfilled.

Next week ministers from around the world gather in Vienna to set international drug policy for the next decade. Like first-world-war generals, many will claim that all that is needed is more of the same. In fact the war on drugs has been a disaster, creating failed states in the developing world even as addiction has flourished in the rich world. By any sensible measure, this 100-year struggle has been illiberal, murderous and pointless. That is why The Economist continues to believe that the least bad policy is to legalise drugs.

“Least bad” does not mean good. Legalisation, though clearly better for producer countries, would bring (different) risks to consumer countries. As we outline below, many vulnerable drug-takers would suffer. But in our view, more would gain.

The Evidence of Failure

Nowadays the UN Office on Drugs and Crime no longer talks about a drug-free world. Its boast is that the drug market has “stabilised”, meaning that more than 200m people, or almost 5% of the world’s adult population, still take illegal drugs—roughly the same proportion as a decade ago. (Like most purported drug facts, this one is just an educated guess: evidential rigour is another casualty of illegality.) The production of cocaine and opium is probably about the same as it was a decade ago; that of cannabis is higher. Consumption of cocaine has declined gradually in the United States from its peak in the early 1980s, but the path is uneven (it remains higher than in the mid-1990s), and it is rising in many places, including Europe.

This is not for want of effort. The United States alone spends some $40 billion each year on trying to eliminate the supply of drugs. It arrests 1.5m of its citizens each year for drug offences, locking up half a million of them; tougher drug laws are the main reason why one in five black American men spend some time behind bars. In the developing world blood is being shed at an astonishing rate. In Mexico more than 800 policemen and soldiers have been killed since December 2006 (and the annual overall death toll is running at over 6,000). This week yet another leader of a troubled drug-ridden country—Guinea Bissau—was assassinated.

Yet prohibition itself vitiates the efforts of the drug warriors. The price of an illegal substance is determined more by the cost of distribution than of production. Take cocaine: the mark-up between coca field and consumer is more than a hundredfold. Even if dumping weedkiller on the crops of peasant farmers quadruples the local price of coca leaves, this tends to have little impact on the street price, which is set mainly by the risk of getting cocaine into Europe or the United States.

Nowadays the drug warriors claim to seize close to half of all the cocaine that is produced. The street price in the United States does seem to have risen, and the purity seems to have fallen, over the past year. But it is not clear that drug demand drops when prices rise. On the other hand, there is plenty of evidence that the drug business quickly adapts to market disruption. At best, effective repression merely forces it to shift production sites. Thus opium has moved from Turkey and Thailand to Myanmar and southern Afghanistan, where it undermines the West’s efforts to defeat the Taliban.

Al Capone, but on a global scale

Indeed, far from reducing crime, prohibition has fostered gangsterism on a scale that the world has never seen before. According to the UN’s perhaps inflated estimate, the illegal drug industry is worth some $320 billion a year. In the West it makes criminals of otherwise law-abiding citizens (the current American president could easily have ended up in prison for his youthful experiments with “blow”). It also makes drugs more dangerous: addicts buy heavily adulterated cocaine and heroin; many use dirty needles to inject themselves, spreading HIV; the wretches who succumb to “crack” or “meth” are outside the law, with only their pushers to “treat” them. But it is countries in the emerging world that pay most of the price. Even a relatively developed democracy such as Mexico now finds itself in a life-or-death struggle against gangsters. American officials, including a former drug tsar, have publicly worried about having a “narco state” as their neighbour.

The failure of the drug war has led a few of its braver generals, especially from Europe and Latin America, to suggest shifting the focus from locking up people to public health and “harm reduction” (such as encouraging addicts to use clean needles). This approach would put more emphasis on public education and the treatment of addicts, and less on the harassment of peasants who grow coca and the punishment of consumers of “soft” drugs for personal use. That would be a step in the right direction. But it is unlikely to be adequately funded, and it does nothing to take organised crime out of the picture.

Legalisation would not only drive away the gangsters; it would transform drugs from a law-and-order problem into a public-health problem, which is how they ought to be treated. Governments would tax and regulate the drug trade, and use the funds raised (and the billions saved on law-enforcement) to educate the public about the risks of drug-taking and to treat addiction. The sale of drugs to minors should remain banned. Different drugs would command different levels of taxation and regulation. This system would be fiddly and imperfect, requiring constant monitoring and hard-to-measure trade-offs. Post-tax prices should be set at a level that would strike a balance between damping down use on the one hand, and discouraging a black market and the desperate acts of theft and prostitution to which addicts now resort to feed their habits.

Selling even this flawed system to people in producer countries, where organised crime is the central political issue, is fairly easy. The tough part comes in the consumer countries, where addiction is the main political battle. Plenty of American parents might accept that legalisation would be the right answer for the people of Latin America, Asia and Africa; they might even see its usefulness in the fight against terrorism. But their immediate fear would be for their own children.

That fear is based in large part on the presumption that more people would take drugs under a legal regime. That presumption may be wrong. There is no correlation between the harshness of drug laws and the incidence of drug-taking: citizens living under tough regimes (notably America but also Britain) take more drugs, not fewer. Embarrassed drug warriors blame this on alleged cultural differences, but even in fairly similar countries tough rules make little difference to the number of addicts: harsh Sweden and more liberal Norway have precisely the same addiction rates. Legalisation might reduce both supply (pushers by definition push) and demand (part of that dangerous thrill would go). Nobody knows for certain. But it is hard to argue that sales of any product that is made cheaper, safer and more widely available would fall. Any honest proponent of legalisation would be wise to assume that drug-taking as a whole would rise.

There are two main reasons for arguing that prohibition should be scrapped all the same. The first is one of liberal principle. Although some illegal drugs are extremely dangerous to some people, most are not especially harmful. (Tobacco is more addictive than virtually all of them.) Most consumers of illegal drugs, including cocaine and even heroin, take them only occasionally. They do so because they derive enjoyment from them (as they do from whisky or a Marlboro Light). It is not the state’s job to stop them from doing so.

What about addiction? That is partly covered by this first argument, as the harm involved is primarily visited upon the user. But addiction can also inflict misery on the families and especially the children of any addict, and involves wider social costs. That is why discouraging and treating addiction should be the priority for drug policy. Hence the second argument: legalisation offers the opportunity to deal with addiction properly.

By providing honest information about the health risks of different drugs, and pricing them accordingly, governments could steer consumers towards the least harmful ones. Prohibition has failed to prevent the proliferation of designer drugs, dreamed up in laboratories. Legalisation might encourage legitimate drug companies to try to improve the stuff that people take. The resources gained from tax and saved on repression would allow governments to guarantee treatment to addicts—a way of making legalisation more politically palatable. The success of developed countries in stopping people smoking tobacco, which is similarly subject to tax and regulation, provides grounds for hope.

A calculated gamble, or another century of failure?

This newspaper first argued for legalisation 20 years ago (see article). Reviewing the evidence again (see article), prohibition seems even more harmful, especially for the poor and weak of the world. Legalisation would not drive gangsters completely out of drugs; as with alcohol and cigarettes, there would be taxes to avoid and rules to subvert. Nor would it automatically cure failed states like Afghanistan. Our solution is a messy one; but a century of manifest failure argues for trying it.

Saturday, March 07, 2009

Cheshire Co., New Hampshire Republicans offer opinions on the GOP's direction



This afternoon, Republicans in Cheshire County, NH were invited to an open meeting in Keene to voice their opinions about the future of the Republican Party. To be sure, there were many opinions.

Jennifer Horn, last year's unsuccessful candidate for Congress, served as the MC. Those who attended were quickly divided into groups to discuss issues such as voter outreach, party logistics, ranking issues by importance, media relations, etc. Oddly, attendees were not invited to join the work sessions of their choice, but were assigned topics haphazardly depending on their seats. Your truly, of course, defied the established order and participated in two groups: Voter Outreach and Issues. At the end of the hour or so meeting, summations were offered, and some short general discussion ensued.

The results were mixed, I think. Some members clearly understood the need to be technologicaly adept. Others were stuck in the 1950s, believing that phone trees were important, and that telling College students that Republicans supported Civil Rights in the 60s (over 40 years ago!) would somehow win them over...

I spoke up, of course. I believe that the Republican Party needs to do some real soul-searching. Unfortunately, the Elephants appear to be terrified of The Elephant in the Room: the stranglehold on the party by Religious Conservatives.

In spite of Jennifer Horn's stated belief that the GOP does not need to rebrand itself, she is terribly, terribly wrong.

An entire generation of new voters came to the polls believing that the Bush administration and Rush Limbaugh represent Republican ideals. Republicans spent eight years defending sickening deficits, exploding budgets, and “big-government” programs that they would have railed against had they been proposed by a Democratic Administration. We were inexcusably silent as America, the great hope of the world, became represented by images of torture and Guantanamo Bay. Republicans should have been outraged…but instead, we defended “our guy” in the white house, and earned the public’s disdain. They grew tired of the Bush administration’s vision of America.

The GOP must articulate in clear terms positive, pro-active solutions for the problems and concerns that the American people have. Access to health care and secure retirement provisions are national concerns: We cannot simply be ‘against’ universal health care or social security, we must present clear, pragmatic, appealing alternatives.

As these proposals are formulated, we must be careful not to fall prey to the idea that we must choose to side with either the “moderates” or the “conservatives” within the Party. A lukewarm, “me-too” version of the Democrats is not a solution, but neither is cliché-ridden pandering to a shrill religious right. Rather, Republicans must forge a new path, a path that is consistent with both the Republican philosophy and the American spirit, and which resonates with voters of all stripes: we must combine fiscal conservatism and responsibility with social tolerance and liberalism. The Republican Party claims to be the party of small government and maximum personal freedom. It’s about time we reclaimed that heritage in a consistent manner.

As we present our alternatives, we must eradicate the mean-spiritedness, the innuendos, the mud-slinging, and the anger from our speech. We must offer vision, hope, and a future to all. If we want young people, minorities, and immigrants in the party, then we need to really want them, not just tolerate them and accept their contributions.

At the gathering, numerous snide remarks were made about the 'liberal media,' lawyers, teachers, and liberals in general. "Immigration" - a complete non-issue to anybody in Cheshire County, New Hampshire - somehow emerged as an important 'issue' to address. At my table, one religious conservative insisted that gay marriage and abortion were leading us to Socialism (I can't even begin to explain the twisted logic here...) On a positive note, I would say the majority at my table was tired of being the reloigious rights bludgeon.

I stated openly that we need to stop blaming immigrants, young people, gays, and the 'liberal media' for our problems, and was cut off by Horn, who insisted that the party does not 'blame' those groups for anything. And yet, that appears to be more of a political 'talking position' (the media was present) than the reality, as understood by the millions of Independents - and Republicans - who abandonned the GOP in the last election.

To be sure, there was a definite contingency present who agreed enthusiastically with me. We will not go away. But it will be a long hard fight - a fight that the GOP leadership seems very, very eager to avoid at all costs. But if they do not address it, one of those costs will be their own electoral success.

Monday, March 02, 2009

More Funds for AIG...



The U. S. Treasury Department announced today that another 30 billion dollars would be headed for troubled Insurance giant AIG. This is on top of the 150 billion already sunk into this Insurance Titanic, including 26 billion in loans from the Federal Reserve Bank.

This would put the US Government ownership of AIG at 80%.

It also would convert the stock that the US Government (Read: U S Taxpayers) has in the company from Preferred to Common Stock: and that means that if the company loses money, the U. S. Taxpayer gets socked first.

Now, with all this cash, could AIG actually lose money? Well, friends, they just reported quarterly losses of 61 billion.

The appropriate action is to allow AIG to fail, and distribute their clients to well-run companies. There are plenty of healthy, responsible Insurance companies who could and would benefit from taking on AIG's clients: companies like Guardian Life, New York Life, and the American Financial Group, all of whom have refused taxpayer bailout funds because they have operated their companies responsibly and profitably.

Which are the companies that are taking taxpayer funds?

- Banks that sold and traded in irresponsible sub-prime mortgages (required by Democratic President Carter, to 'help' low-income areas, and strenuously enforced by Democratic President Bill Clinton).

- Insurance Companies that invested in subprime mortgages and irresponsible banks after Banking Deregulation (signed by Democratic President Bill Clinton in 1999) permitted it. (See a pattern here?)

Meanwhile, healthy insurers that should be the focus of the public's purchases are put at competitive disadvantage by having the Irresponsible Government Favorites kept afloat with tax dollars. We are rewarding the inept, and hurting the wise.

Why? Why would Obama want 80% government control of an insurance Company?

Ah, lets just wait for his new Health Plan Initiative Wouldn't it be amazing if AIG suddenly became the US Government-funded Universal Health Insurer?

Hmmmm....

Friday, February 27, 2009

District of Columbia representatives: an Entirely Unconstitutional Process.



This country continues, at breakneck pace, to destroy its Constitution and eviscerate the Rule of Law. Under Bush, it was done in the name of "National Security." Under Obama, it's done in the name of Populist Mob Rule.

The House of Representatives has voted to permit the non-voting representative from Washington, DC to have full voting rights as a member of Congress. It is argued that it is unfair that the District of Columbia's 592,000 people have no voice of their own in Congress.

I do not argue that point. However, granting these citizens a Representative requires more than Congressional Mob Rule in a fit of moral outrage: it requires a Constitutional Amendment.

Article I, Section 2 of the U. S. Constitution states:

"The House of Representatives shall be composed of Members chosen every second
Year by the People of the several States, and the Electors in each State shall have the Qualifications requisite for Electors of the most numerous Branch of the State Legislature.

No Person shall be a Representative who shall not have attained to the Age of
twenty five Years, and been seven Years a Citizen of the United States, and who
shall not, when elected, be an Inhabitant of that State in which he shall be chosen."


The Constitution is clear that STATES have voting representatives in Congress. Not Districts, Not cities, Not territories.

If Washington DC, with 592,000 people, why not New York City with 8.3 million people? Why not Puerto Rico, with 4 million people?

When the District of Columbia sought the right to vote in Presidential elections, everyone understood that the Constitution only permitted Electors from the States to cast ballots for President. Appropriately, the nation adopted a Constitutional Amendment (the 23rd Amendment) in 1961 to permit DC residents to vote for President.

This is no different. If the residents of DC want to be represented in Congress, there is a clear process: Amend the Constituion, don't just ride roughshod over it.

Wednesday, February 25, 2009

Barack Obama as Eva Peron Reincarnated...





I really wanted to like this President. But from an Economic perspective, the man is an unmitigated long-term disaster.

As I listen to his speeches, and observe his techno-proficient crowd of groupies, entertainment-style pop-star performances and class-warfare compatriots, I could not help but think of Eva Peron. And being a Broadway nut, I googled a few phrases from the musical "Evita' to get them right for this entry. And in the process, I found someone who had the exact same thoughts as I did. So, rather than reinvent what has already been said quite well, I present Jim Boulet Jr's take on Obama and Eva, from www.americanthinker.com:

"When it comes to Barack Obama, fans of "Evita" have seen this show before.

Tim Rice and Andrew Lloyd Webber's popular musical, "Evita," tells the story of how Eva "Evita" Peron rose from obscurity to become the first lady of Argentina.

Remarkably, many of the lyrics of "Evita" apply equally well to Barak Obama, beginning with the Messianic adoration neither discouraged: "I'm their savior, that's what they call me," sang Evita. Or as the children's choir sang to her (just like they do for Obama):

"Please, gentle Eva, will you bless a little child? For I love you, tell Heaven I'm doing my best I'm praying for you, even though you're already blessed"

Evita was all about inspiring emotions and creating moods, not describing policy details:

"Instead of government we had a stage,
Instead of ideas, a primadona's rage
Instead of help we were given a crowd
She didn't say much, but she said it loud."


Similarly, Obama supporter David Frum said of Obama's July European tour: "Obama has risen to power by using a soothing cloud of meaningless words to conceal displeasing truths and avoid difficult choices." Evita was not ashamed of taking money from the wealthy and giving it to the needy:

"I promise you this:
We will take the riches from the oligarchs
Only for you, for all of you. And one day, you too will inherit these treasures."


Since Argentina's rich were not a limitless source of funds, Evita seized considerable sums from the middle class in order to sufficiently spread the wealth around:

"Eva's pretty hands reached out and they reached wide
Now you may feel it should have been a voluntary cause
But that's not the point my friends
When the money keeps rolling in, you don't ask how
Think of all the people guaranteed a good time now...."


"And the money kept rolling out in all directions
To the poor, to the weak, to the destitute of all complexions
Now cynics claim a little of the cash has gone astray
But that's not the point my friends
When the money keeps rolling out you don't keep books
You can tell you've done well by the happy grateful looks
Accountants only slow things down, figures get in the way
Never been a lady loved as much as Eva Peron."


ACORN will love Barack Obama for the same reason Evita was loved: he will be the man who will keep their nest well feathered.

Both Evita and Obama proved willing to use intimidation tactics in order to ensure their nation benefitted from their leadership whether a majority agreed or not:

"How annoying that they have to fight elections for their cause
The inconvenience, having to get a majority
If normal methods of persuasion fail to win them applause
There are other ways of establishing authority"


When the National Rifle Association attempted to run television ads in Ohio and Pennsylvania accusing Barack Obama of wanting to ban certain guns and put a tax on others, the Obama campaign sent out a letter threatening to challenge the FCC license of any station which dared broadcast the NRA's ads.

Evita reached high office on the basis of style, not substance. Similarly, Barak Obama's resume is remarkably short for a potential U.S. president. Yet if the polls are correct, Barak will soon join Evita as "high flying adored." But "for someone on top of the world, the view [will not be] exactly clear."

Jim Boulet, Jr. owns all three versions of "Evita."

Right on Jim....here's one more quote to add, as Che describes the results of Eva's folly:

"What's new Buenos Aires? Your nation, which a few years
ago had the second largest gold reserves in the world, is
bankrupt! A country which grew up and grew rich on
beef is rationing it! La Prensa, one of the few newspapers
which dares to oppose Peronism, has been silenced, and
so have all other reasonable voices! I'll tell you what's
new Buenos Aires!"

Wednesday, February 18, 2009

GM, Chrysler, Homeowners: they all want MY money.





Frederic Bastiat, writing two centuries ago, said it best:

"The law has come to be an instrument of injustice....the law defends plunder and participates in it...The present day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it."

Today's News item #1: "General Motors Corp. and Chrysler LLC summoned the prospect Tuesday of their collapse unless they get $7 billion in federal aid within six weeks -- part of a dramatic plea for a total of up to $39 billion to survive the worst economic crisis in the history of Detroit's signature industry."

(This, of course, is 14 billion more than they ASSURED us all that they needed a few months ago)

Today's News item #2 (With breaking details from ABC news, who, apparently, claims an 'in' with Democratic policy makers): "...Government subsidies for lenders to modify loans to homeowners who are struggling to make payments. The government would subsidize the difference.... A program through Fannie Mae and Freddie Mac for homeowners to refinance their mortgages if they owe more than their homes are worth..."

So, in a nutshell:

1) *I,* (like the majority of Amertican consumers) chose NOT to buy GM or Chrysler cars, but to purchase cars that met my needs as a consumer. Because I chose better cars by better manufactureres that offered me what I needed and wanted at a price I could afford...my government will now force me, via taxation, to keep afloat poor competitors whom I specifically did NOT choose on my own to support.

2) *I* chose to purchase a tiny house that i could afford, and refinanced when appropriate, to make sure that I was a responsible homeowner. Eight of us lived in an affordable two-bedroom house. I subdivided the living room to create a third bedroom. When my teens needed more room, i moved to sleeping on an unheated porch - because it was the responsible thing to do.

However, for all those who bought houses beyond their means, who threw caution to the wind in terms of adjustable rates, who lied on their applications...and for all the banks who make money on these loans...these people will keep their houses and their banks will continue to make money...because my government will now force ME to subsidize THEM through taxation.

Yes, I'm disgusted.

Monday, February 16, 2009

Attack on Free Speech in Los Angeles...

Jonathan Lopez, a student at Los Angeles City College, was in the process of giving a speech in a speech class when he offered his opinion that, based on his religious beliefs, marriage should be reserved for heterosexuals. He was cut off by the instructor, who justified his actions because two students were 'upset.'

Ooh, poor babies....This is COLLEGE folks...people dont lose their right to free speech when they walk in the doors of a college! (And for those who suggest this was 'hate speech,' save your breath. There is no such thing. That speech which is MOST offensive is precisely that speech the first amendment is meant to protect.

As the the American Civil Liberties Union (ACLU) stated in its Dec. 31, 1994 paper "Hate Speech on Campus" :

"The First Amendment to the United States Constitution protects speech no matter how offensive its content. Speech codes adopted by government-financed state colleges and universities amount to government censorship, in violation of the Constitution. And the ACLU believes that all campuses should adhere to First Amendment principles because academic freedom is a bedrock of education in a free society...

Where racist, sexist and homophobic speech is concerned, the ACLU believes that more speech -- not less -- is the best revenge. This is particularly true at universities, whose mission is to facilitate learning through open debate and study, and to enlighten. Speech codes are not the way to go on campuses, where all views are entitled to be heard, explored, supported or refuted..."


Lopez, is appropriately, suing.

Bishop Robinson and Gay Marriage in NH



This past Sunday Bishop Gene Robinson officiated at my home parish, St. James Episcopal Church in Keene, NH. It was the first time I had met the man, and he proved to be everything his supporters claimed, and more: warm, scholarly, humorous, articulate, spiritual...I am proud this man is my Bishop.

Afterwards, we had some time to chat with him. He had recently testified before the NH State Legislature concerning the issue of marriage...and, just as I had suggested in my own testimony several years ago, he asked for a seperation of the civil 'rights' from the ecclesaistical 'rites.' In other words, he asked the state to grant 'recognition' (and you can use any word you'd like for that) to any two people desiring state recognition, while the churches would issue their own blessings (or not) based on their own traditions and canons. The distinction between the civil and the ecclesiastical is precisely what I have been arguing for all along here.

We forget that two different processes are happening because they 'collapse' into one at most wedding ceremonies. The Bishop has proposed that churches within his diocese lead the way for making this clear: He has suggested that a Justice of the Peace perform the 'civil' ceremony at the back of the church for all couples (gay or straight), and then have the couple proceed to the altar area where the ecclesisastical rites are engaged.

Makes a heck of a lot of sense to me.

Saturday, February 14, 2009

"Stimulus."


$13.00 tax cut per paycheck.

Spending bill cost, with interest: $17,000 per person.

YOU do the math.