January 2012

Milton Friedman on Other People’s Money

by Lee Doren on November 16, 2010

in Economy, Property Rights

Milton Friedman always had a way with words. His brilliance in the following video not only explains the moral problem with using other people’s money, but he also explains why it leads to poor results. In order to use other people’s money, one must first take it from them. Then, once that money is taken, it is rarely spent as carefully as the person who earned it would spend it.

This explains the inherent problem with the government spending for the “public good.”

Individuals can work and spend their money for their own good, which becomes in the “public good” in the aggregate. But, third parties, by definition, cannot spend money for the public good because there is no way that any third party is capable of spending other people’s money to meet all individual interests. The video below explains this well:

Pro-Pedestrian Advocates Push Deadly Policies

by Marc Scribner on November 16, 2010

in Mobility, Nanny State, Personal Liberty, Precaution & Risk

One thing that never surprises me is how often anti-car zealots fail to consider trade-offs before blindly screaming for their preferred policies. Take, for example, this puff piece by Streetsblog on walking advocacy group America Walks (could they have come up with a more boring, joyless sounding name? America Schleps, maybe?):

If that’s the future, it’s also the past. After all, as America Walks points out, “In 1969 walking made up 40 percent of all transportation trips, but in 2008 walking trips decreased to 11 percent.” Although walking is good for our heart rates and waistlines, modern road design can make it hazardous to our health: in the past 15 years, 76,000 pedestrians have been killed.

“We need to create places where you feel safe and comfortable walking along the street and even in the street, playing in the street,” says Bricker. “Crossing the street needs to be easy, accessible and safe.” He points to simple additions like crosswalks, raised median islands, and countdown signals as innovations that immeasurably improve the pedestrian experience.

Funding for active transportation has risen dramatically from 0.1 percent of the federal transportation program in 1992 to 2 percent this year. Considering the fact that 11 percent of all trips are by foot, America Walks wants to make sure walking gets its fair piece of the pie.

And though creating a strong identity among walkers can be challenging, Bricker says, “We don’t hear people saying, ‘this is not important, walking is not part of the transportation system.’ People understand that walking is a fundamental part of life.”

Of course, from 1950 to 2000, average American mobility increased from 6,900 miles traveled to 18,000 miles traveled — an increase of 160 percent. This largely had to do with expanded access to air travel thanks to deregulation of the industry and an increase in car ownership. Private auto ownership is perhaps the largest single determining factor in broadening employment opportunities, and has been heralded as one of the most important elements of the feminist revolution. As one would expect, walking plays a smaller role in mobility (and a far less crucial one) today than it did 40 years ago.

But to the eco-apocalypse true believers, obesity obsessed nanny-staters, and smart-growth social engineers, this is bad, bad, bad. To them, any non-auto transportation mode should be pushed at any cost, and driving must be made as difficult as possible. They cite the 76,000 pedestrian death figure, and use that — without caveat — to push for traffic calming measures. But the roads are not solely used by morbidly obese, drunk-driving, speed-freak, single-occupancy evildoers. Forget the commuting advantages, freight moved, and all the benefits that result. What about firetrucks and ambulances?

Several studies of traffic calming have concluded that slower, more congested traffic kills more people than it saves. In Austin, for example, it was estimated that for every pedestrian saved due to cars traveling at lower speeds, nearly 40 people would die as a result of slower EMS response times. Anyone familiar with cardiac arrest knows that seconds count. None of this seems to concern the anti-car set, whose motto appears to have become “livability or death.” Or is it “livability and death?”

Image credit: AntyDiluvian’s flickr photostream.

Time to Privatize? The Economics of Social Security

by Alex Schibuola on November 16, 2010 · 3 comments

in Economy

Government spending reform is not an option. It’s a necessity. Reforming Social Security goes a long way here. The most sensible reform would be to privatize it. To see why, one needs to understand the economics of Social Security.

First: What is saving? When we buy stocks, bonds, and CDs with our money, we call it “saving.” In the economics sense, when we save, we abstain from consuming resources today. Businesses use the saved resources to produce more for tomorrow.

Suppose an economy produces a stock of corn. We can either consume it or save it. The saved corn is planted and makes more corn next year. This is saving and investment, in the economics sense. Here’s the link between “saving” and saving: I decide not to spend all my money consuming corn. Rather, I buy a bond from a farmer. I am “saving.” In doing so, I also leave corn on the shelf of the supermarket. This is saving.

The farmer buys the leftover corn using the money from the bond I bought. He invests by planting the corn. In a year, it becomes more corn. He sells it to the supermarket for money which he uses to repay me for the bond, with interest. Now I have the money, and I can consume more corn or save again.

This corny story is an analogy for gross domestic product (GDP), the measure of all final goods and services produced within a nation in a year. It includes all the corn, cars, soda, etc. produced by a nation. The saved portion of GDP becomes investment. Investment creates more GDP in the future.

So is Social Security saving? No. Those paying in today don’t consume it or save it. The government receives the money, but they don’t leave it in a personal account; they transfer it someone else who uses it to consume resources. In other words, the government takes corn from you and gives it to your grandma. Now she can consume it. There’s no real saving because no corn gets planted to make more corn tomorrow.

If there’s extra money in Social Security, government takes it and buys corn to consume itself, e.g., to build corny missiles. It gets replaced with a government IOU, Treasury bonds (aka higher future taxes). Not only is this not saving, but the corn missiles mean there is even less corn for individuals and businesses to consume and invest too.

Identically, imagine you “save” $1,000 of your income, but buy a new TV instead of depositing it with a bank. Since you’re “saving” and not a scheming politician, you write an IOU to yourself, promising to repay yourself $1,000 with interest. Is this “saving” plan stupid? It is. This is Social Security.

If Social Security were privatized, people would deposit their income with a bank. People actually save resources that businesses can invest. We, as true savers, get more resources in the future.

“Lockbox” proposals are equally flawed. In this instance, government doesn’t reach its hand into the cookie jar. It keeps the extra cash stowed aside. This is like putting money under your mattress. Once it’s out of circulation, it serves no purpose. Less money in circulation relative to real GDP means the average price level goes down (deflation). The Federal Reserve would just print more money to offset this.

Remember, the purpose of actual saving is to allow you to consume more in the future — not today. Social Security retards this process whereas privatized Social Security means actual saving. If people defer consuming some corn (GDP) today with a bank that lends it to someone to invest, then there will be more corn (GDP) tomorrow. This is the economics of Social Security.

Online Casino Gambling Moves Forward in New Jersey

by Michelle Minton on November 16, 2010 · 2 comments

in Deregulate to Stimulate, Economy, Nanny State, Personal Liberty

As I reported last week, though federal attempts to legalize online gambling have seen little progress in the last year, states’ efforts have shown much more promise. In particular, New Jersey State Senator Raymond J. Lesniak’s attempt to legalize online gambling in the state has made significant progress. Yesterday his bill, S490 and its companion S11, were approved by the Senate Budget and Appropriations Committee and they await a full Senate vote.

S-490 would authorize the state’s Atlantic City casinos to offer online versions of their games to New Jersey and also to international customers. The bill is meant to bridge the state’s budget gap and support the state’s flailing horse racing industry. The Interactive Media Entertainment and Gaming Association (iMEGA) estimate that New Jersey’s intrastate gambling system could raise up to $250 million in gross revenue and $55 million in taxes per year.

According to the text of the bill, the games that casinos would be allowed to offer online include:

[Roulette] Poker, roulette, baccarat, blackjack, craps, big six wheel, slot machines, minibaccarat, red dog, pai gow, and sic bo; any variations or composites of such games, provided that such variations or composites, and any above listed game or variation or composite of such game to be offered through Internet wagering,

The bill also leaves room for the commission to approve other games in the future so long as the game is found to be “compatible with the public interest and to be suitable for casino use after such appropriate test or experimental period as the commission may deem appropriate.”

While it shouldn’t have taken a budget crisis to move this forward and the state should not be subsidizing the horse racing industry, it is a step toward freedom for individuals who wish to gamble. If other states follow New Jersey’s lead and legalized Internet gambling within their borders, states could enter into agreements that allow residents to gamble online at each other’s online casinos. It isn’t perfect, but it is better than a blanket ban.

Image credit: FamilyofFun’s flickr photostream.

Spitzer, Seoul, and Wall Street

by Brian McGraw on November 16, 2010

in Economy, International, Labor, Trade

Eliot Spitzer, who occasionally publishes over at Slate, wrote yesterday about President Obama’s “disastrous Asia trip” and decried America’s fall from grace as a world leader. The culprit? Wall Street. Pretend you’re shocked.

First, he writes that South Korea rejected a “reasonably standard and straightforward trade pact.” That isn’t quite what happened. Rather than Korea, the U.S. [has, for a few years now] rejected a reasonably standard and straightforward trade pact by failing to approve an already negotiated trade agreement. Obama went to Korea on behalf of the domestic auto industry in an attempt to negotiate increased access to the South Korean auto market on behalf of the UAW, etc. Here is a good summary on why Koreans are unlikely to be buying many American automobiles, and why the KORUS-FTA is a very good deal for the United States.

Ironically, one complaint from the auto industry was that Korean regulatory requirements for auto emissions and fuel economy were too restrictive. Normally the standard union opposition to free trade is that they don’t want to hurt the little guy in foreign countries where labor and environmental standards are often lower. One might think in this case that they’d be thrilled that Korea has more stringent environmental regulations for their automobiles than the United States does. Except that they weren’t thrilled, and Obama still attempted to renegotiate the agreement despite South Korea making it very clear that there would be no more negotiations.

This would seem to dispel any illusion that unions, etc. actually care about the little guy. They care about the American “little guy” (e.g., their dues-paying members, constituents) — where the American little guy is richer and healthier than 90 percent of the rest of the world — and will actively seek policies that do not allow the actual little guy the ability to improve his life.

Back to Spitzer. He is frustrated that the the United States’ alleged fall from grace has led to all sorts of problems, from the failure to succeed in bullying other countries into accepting our one-sided trade terms, to international support for China to revalue its currency, and a failure to get the G20 to “agree to anything more than vapid words about trade.” Spitzer doesn’t elaborate much on this, as the Asia introduction was nothing but another excuse for Spitzer to write an article attacking Wall Street. Read the rest if you’d like to hear Spitzer jump through hoops in order to explain how Wall Street is solely responsible for all the problems America faces today.

Don’t hold your breath on the further liberalization of trade anytime soon, recent polling data indicates that fewer and fewer people believe free trade agreements help the United States. Given the recession and the new understanding in America that some of these other countries are no longer third world watering holes, it seems that Made-in-America might make a comeback.

Photo credit: GreenDominee’s flickr photostream.

Morning Media Summary

by Lee Doren on November 16, 2010

in Economy, Energy, Environment, Legal, Personal Liberty, Regulation

Tech:

2 Dems claim Arianna Huffington stole website idea:
“Two Democratic consultants are accusing Arianna Huffington and her business partner of stealing their idea for the powerhouse liberal website Huffington Post. ”

Government wants to update ADA for cyberspace:
“Emergency call centers could be equipped to communicate by text message. Websites might need to be programmed to speak to blind users. Movie theaters might have to install technology to allow the deaf to read captions on small screens mounted at their seats.”

Global Warming / Environment / Energy:

Western Forests Set to Become Net Carbon Emitter:
“Those dead trees are releasing massive amounts of carbon dioxide, turning the region into a net emitter of carbon rather than a CO2 sponge.”

Insurance / Gambling:

Senate Committee Approves Online Gambling Bill in New Jersey:
“New Jersey lawmakers have been moving quickly on a bill that would make the state the first to regulate online gambling in the US. On Monday, the Senate Budget Committee approved the legislation, paving the way for the bill to move along in the state legislature.”

Last Chance For US Online Gambling Bill As Lame-Duck Session Begins:
“Millions of online gamblers across the US will watch patiently over the next couple of weeks as the lawmakers in Washington take one final stab at making changes to US laws in 2010. The lame-duck session began in Congress on Monday, giving online poker players one final hope.”

Health / Safety:

Food-safety bill worries some smalls farms:
“All 65 of the free-range turkeys raised at White Gate Farm this year had their destinies decided weeks ago by the local families who reserved them for their main course this Thanksgiving.”

Economics:

The U.S. Chamber’s depressing new board game:
“In the genre of congressional office handouts, it’s a pretty clever marketing ploy. Player avatars labeled “CEO,” “entrepreneur” and so on battle their way from a taxed-to-death “Main Street” to “Prosperity Park,” hoping to avoid traps like “Lawsuit Lake” and the dreaded “Red Tape Zone.””

It Begins… Democrat Politicians Calls Cops on Kids Selling Cupcakes:
“Politician Michael Wolfensohn called the cops on two kids in a park selling cupcakes.”

Bachmann: 111 waivers means Obamacare is a failure:
“Well, thank goodness House Republicans kept Michele Bachmann out of the leadership, because Bachmann says crazy things — like offering 111 waivers for ObamaCare indicates a big problem in the bill.”

Legal:

Author of DOJ report targeting NJ Government Chris Christie has history of using position for political purposes, sources say:
“The Daily Caller has learned that the author behind the recent report from the Department of Justice that targeted five former U.S. attorneys for excessive travel expenses has had, according to our sources, a troubled history in the DOJ and attempted in the past to use her position to smear conservatives.”

Smoking e-mails?:
“E-mails newly obtained by Judicial Watch strengthen contentions that politics motivated the Obama Justice Department’s dismissal of a voter-intimidation case despite video of a nightstick-wielding New Black Panther Party member at a Philadelphia polling place.”

In-state tuition for illegal immigrants is preserved with California Supreme Court ruling:
“The California Supreme Court decided unanimously Monday that illegal immigrants may continue to be eligible for in-state tuition rates at the state’s colleges and universities rather than pay the higher rates charged to those who live out of state.”

TSA to investigate body scan resister:
“The Transportation Security Administration has opened an investigation targeting John Tyner, the Oceanside man who left Lindbergh Field under duress on Saturday morning after refusing to undertake a full body scan.”

Tobacco commission reforms needed, Baliles says:
“Former Gov. Gerald L. Baliles says it’s time for Virginia to act on reforms his blue-ribbon panel recommended for a state commission that was defrauded of $4 million in tobacco-settlement money meant to improve education in the state’s struggling tobacco belt.”

Labor:

Los Angeles County Federation of Labor, AFL-CIO, plans to endorse the IATSE strike, now its second week:
“The Los Angeles County Federation of Labor, AFL-CIO, will hold an emergency meeting Tuesday to sanction the strike by IATSE and the crew of NBC’s The Biggest Loser.”

Transportation/ Land Use:

China Leads Other Nations In High-Speed Rail Tracks:
“China already has thousands of miles of railroads — including the world’s longest network of high-speed rail which is 4,000 miles long. And that total is set to double within two years, giving China more high-speed rail tracks than the rest of the world put together.”

Pat-Downs or Full-Body Imaging? TSA Airport Security Backlash

by Ryan Young on November 15, 2010 · 2 comments

in Nanny State, Personal Liberty, Precaution & Risk

The TSA has crossed a line. Its new security procedures require employees to either touch passengers’ genitals or take pictures of them. The public backlash is loud and growing. My colleagues Michelle Minton, Brian McGraw, and Ivan Osorio have all covered the issue. Here are what other people around the country are saying:

Tim Carney reports that the CEO of Rapiscan, a scanner manufacturer, is an Obama donor and accompanied the President on his recent trip to India.

A group of activists has declared November 24 to be National Opt-Out Day. November 24 is the day before Thanksgiving, and will be one of the year’s busiest travel days. Since pat-downs take more time than full-body scans, the goal is to clog security until TSA removes full-body scanners from airports. I will be participating.

The proprietor of Our Little Chatterboxes, a blog about child development issues, recounts her encounter with the TSA’s new pat-down procedures. She writes, “[The TSA employee] felt along my waistline, moved behind me, then proceeded to feel both of my buttocks. She reached from behind in the middle of my buttocks towards my vagina area… She then moved in front of my and touched the top and underneath portions of both of my breasts… She then felt my inner thighs and my vagina area, touching both of my labia.”

The blogger at Insert Title Here tells his story, with video. He was threatened with a $10,000 civil suit.

The Chicago Tribune’s Steve Chapman wrote an excellent column, noting that “The U.S. Marshals Service recently admitted saving some 35,000 images from a [full-body scanning] machine at a federal courthouse in Florida. TSA says that will never happen. Human experience says, oh, yes, it will.”

Art Carden calls for abolishing the TSA. “The airlines have enormous sums of money riding on passenger safety, and the notion that a government bureaucracy has better incentives to provide safe travels than airlines with billions of dollars worth of capital and goodwill on the line strains credibility,” he writes.

The Drudge Report posts a picture of a TSA agent fondling a nun’s private parts.

Photo credit: cjdavis’ flickr photostream.

Afternoon Links: November 15, 2010

by Nicole Ciandella on November 15, 2010

in Zeitgeist

1. Call of Duty: Black Ops lets you pretend to kill Fidel Castro.

2. Fish and Wildlife Conservation officers are using a remote-controlled “Robo-Deer” to catch off-season hunters in Florida.

3. Did you know that cheese contains small amounts of morphine?

4. Three soldiers were arrested when they accidentally locked themselves the medical marijuana dispensary they were trying to rob.

5. Quote of the Day: “We were being entrepreneurs, but now I feel a little defeated.”

Photo Credit: Marcelo Montecino

Tobacco Control Hysteria Goes Global

by Christine Hall on November 15, 2010 · 1 comment

in Nanny State, Personal Liberty

The wars on tobacco and smokers have gone global, as evidenced by international bureaucrats from the World Health Organization meeting in Uruguay this week to debate anti-smoking initiatives.  A New York Times news story on government efforts to regulate cigarette packaging and advertising reveals the vast geographic scope of such campaigns:

Companies like Philip Morris International and British American Tobacco are contesting limits on ads in Britain, bigger health warnings in South America and higher cigarette taxes in the Philippines and Mexico. They are also spending billions on lobbying and marketing campaigns in Africa and Asia, and in one case provided undisclosed financing for TV commercials in Australia.

The industry has ramped up its efforts in advance of a gathering in Uruguay this week of public health officials from 171 nations, who plan to shape guidelines to enforce a global anti-smoking treaty.

Now, smoking may be a simple pleasure, but it is clearly full of health risks. But it’s interesting that international bureaucrats resemble a simple tool — a hammer — with a tendency to regard all problems as nails.  That is, there is a presumption that the peoples of the world are incapable of deciding for themselves whether or not to smoke. How else to explain the proposed ban on flavored cigarettes, which the U.S. FDA has already done, and plans to envelope some 80 percent of cigarette packaging in warning labels,which the U.S. FDA has scheduled for next year? One doesn’t need to be pro-smoking to wonder where it ends: at what point does government stop trying to save us from ourselves?

Photo credit: dsevilla’s flickr photostream.

CEI Podcast — November 15, 2010: Free Speech and Video Games

by Ryan Young on November 15, 2010

in Culture, Legal, Nanny State, Personal Liberty, Podcast, Regulation, Tech & Telecom

Associate Director of Technology Studies Ryan Radia gives his take on a Supreme Court case concerning California’s ban of violent video game sales to minors. Keeping such things away from children is traditionally a job for parents. Have a listen here.

The case has implications that reach far beyond video games. Because censorship is such a subjective thing, allowing it could have a chilling effect on forms of expression from art to music to film. The First Amendment specifically prohibits the government from sanitizing culture. That is up to the people themselves.

Photo credit: bhschenker’s flickr photostream.

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