Quips

Both (via JeffreyEllis) that get to the heart of human nature and political realities:

“When you remove the ability of people to fail, you remove their need to have good judgment, to work hard, to plan for the future - in essence, you remove most of the qualities that create successful adults.”
– Peg Kaplan

Putting any part of the economy into the hands of politicians is like putting the space program into the hands of astrologers.
– Don Boudreaux

Heh - Ellis's comment on the second one - "Zing! Two critical thinking-impaired groups, smacked down by a single bitchslap."

Possibly the most disturbing blog I've ever come across...

This blog is probably enough to give anyone thinking about having a kid pause: Raising a Psychopath:

http://raising-a-psychopath.blogspot.com/

I guess I've had something of a fascination of psychopaths for quite some time and have wondered if I'd even recognize one (though I feel fairly confident that I'm not one). Sort of like monsters in the closets except these are real. From another article on Hacker News: "Psychopaths among us - Dr. Robert Hare claims there are 300,000 psychopaths in Canada, but that only a tiny fraction are violent offenders like Paul Bernardo and Clifford Olsen. Who are the rest? Take a look around" (Hare)

Critical Thinking and Politics

I've been evaluating a new blog to add to my blog reader and I'm finding it more likeable more and more. It's called "The Thinker: Swimming Upstream in a Raging Current of Stupid" by Jeffrey Ellis. I like a recent post of his where he not only quotes Hayek but reconsiders his view on the intersection between libertarians and politics:

If politics were just a matter of egalitarianism versus Judeo-Christian traditionalism versus libertarianism, I would say that critical thinking has no judgments to offer. But in practice, this isn’t what politics ends up being about. In practice, it’s the big-government do-gooders versus the morality police versus the libertarians. And as Hayek’s words show, the libertarians are the only ones who seem to get the need for intellectual humility in government.

Mock Outrage or Justified Scrutiny?

Dan Pallota viciously attacks Senator Chuck Grassley for "undermining the humanitarian sector" (via Beata):

Senator Grassley and Wolf Blitzer want to frame this as a moral issue. So I do. It's immoral that in one 24-hour news cycle these leaders have manufactured a massive public relations and fundraising nightmare for the Boys and Girls Clubs, without the slightest effort to evaluate the CEO's compensation in the context of the value she is providing. Any first-year business school student who tried to make a case against an executive salary without a shred of cost-benefit analysis would be laughed out of class. [...]

It is time for us to turn the moral tables. Time to right the moral analysis. Time to call this destructive sanctimony by its real name. Senator Grassley has just dealt a sucker punch to the Boys and Girls Clubs, its CEO, and the millions of kids it helps every day in his own self-interest.

I'm not so sure I'm nearly as convinced or outraged. The problem with not for profit institutions are that in practice they're far more difficult to measure and evaluate. Surely the fact that the US government gave $41M to the Boys and Girls Clubs despite their significant current deficit suggests that Grassley does have a right to question the salaries of the organization just as much as they might for any given defense contractor. Further, Pallota is unfair in not pointing out some of the other objections that were made (AP): "They also questioned why in the same year officials spent $4.3 million on travel, $1.6 million on conferences, conventions and meetings, and $544,000 in lobbying fees."

Grassley also suggested that "changes Congress' original intent--providing initial seed money to providing a perpetual source of funds to sustain the Boys and Girls Club" (WSJ). It should be questioned why the organization didn't reach out to find more sustainable donors for their mission than the government.

While I can respect that you need to pay these people something and that organizationally it is important to attract good people to ensure operational capacity, if they accept funds from government they should accept that their salaries are also subject to political scrutiny. Further, a look at Charity Navigator rates them significant below comparable organizations and gives them only a 2 star rating largely for their organizational capacity though significantly below other comparable organizations.

Happy Pi Day

from Greg Mankiw: "Fun fact of the day: MIT releases its undergraduate admission decisions at 1:59 pm today. (That is, at 3.14159)."

Startups and Growth

While it comes a day late from my little guest speaking gig in my old high school economics class - I've long believed that building businesses that solve problems is the best vehicle for change for those who want to make a difference in the world.

It's a bit of a pet peeve of mine that some people label and elevate certain problems over others with the label of "social" entrepreneurship. Using the label more insidiously also causes some to reduce expectations of performance of their business as if profit must be sacrificed to achieve a social mission when the reality is profit comes from fulfilling a social mission.

My sister (thanks Beata!) forwarded a blog post by Ben Casnocha on entrepreneurs - pointing out that all entrepreneurs are social as he quotes from Carl Schramm in the Stanford Social Innovation Review:

...regular entrepreneurs create thousands of jobs, improve the quality of goods and services available to consumers, and ultimately raise standards of living. Indeed, the intertwined histories of business and health in the United States suggests that all entrepreneurship is social entrepreneurship. [...]

Entrepreneurs typically generate a surplus benefit above and beyond the profits they reap, finds the...economist William Nordhaus. Nordhaus has calculated that entrepreneurs capture only about 2 percent of this surplus, with the remainder passed on to society in the form of jobs, wages, and value.

To this end, one thing that I worry about is that the US - one of the leaders in entrepreneurship, will kill the seeds of ambition and innovation in the guise of social reforms and regulated rigidity. On the other hand, there are efforts like this: visas for foreign entrepreneurs (BusinessWeek).

The Price of "Doing Something"

It's become a common refrain for those who defend the Democrats and the Obama Administration that one year not enough time to judge their respective performances especially after the mess that the previous administration left behind with wars and bailouts. Didn't Obama have to "do something" after all?

One defense is that it was Bush's budget that was implemented in 2009 though the Obama transition team played a significant role in crafting the response by the government to the financial crisis after the 2008 election (Wall Street Journal). Another argument is that the Bush Administration 'borrowed money to pay for tax cuts to the rich' which has resulted in significant deficits. As of this year, the Bush tax cuts have 'expired' - so presumably the deficits should be gone or at the very least considerably reduced? Besides, how much more could Obama possibly spend more than Bush given that the Iraq war seems to be winding down and the engagement in Afghanistan is much smaller by comparison?

From the Washington Post - Projected Deficits, as of March 21, 2009:

Of course, a lot has changed in the span of a year. From The Hill (emphasis my own): "Annual deficits under Obama’s budget plan would be about $976 billion from 2011 through 2020, according to a CBO analysis of Obama's plan released Friday. [...] The independent CBO and Obama expect a similar amount of government spending over the next 10 years -- about $45 trillion. But the CBO expects Obama's policies to bring in $35.5 trillion in tax receipts, less than the $37.3 trillion expected by the White House." And yes, this data includes all war spending.

But what of "stimulus spending". Presumably that had an effect? Ignoring for a moment the numerous documented bizarre earmarks and spending under the guise of stimulus, at least insofar as 2009 goes, from a study by Joshua Aizanman and Gurnain Kaur Pasricha (Marginal Revolution) - the effect on the economy has been "close to zero":

This note shows that the aggregate fiscal expenditure stimulus in the United States, properly adjusted for the declining fiscal expenditure of the fifty states, was close to zero in 2009. While the Federal government stimulus prevented a net decline in aggregate fiscal expenditure, it did not stimulate the aggregate expenditure above its predicted mean.

Things will only get worse with the mounting unfunded liabilities because of retiring baby boomers and doesn't include any healthcare plan that they're hoping to pass. Definitely not fun times for US taxpayers. Any equivalence to deficits during the times of the Bush Administration (which I also disagreed with and were largely the result of wasteful spending) should and can be rejected on their face and with extreme prejudice. The current administration very much owns their recovery plan and response to the financial crisis upon which I believe they've used as justification for significant spending on a much larger and arguably radical agenda.

Update (March 17, 2010): "Over the last five decades, most forms of government spending have grown. The main exception is military spending, which fell after the end of the Vietnam War and the cold war." (NYT)

Five Lies about the American Economy

Instead of some of the hyperpartisan bickering - from a relatively neutral (libertarian) source: "Five lies about the American economy" (Reason). Of course on the plus side, Americans don't seem to be believing them as evidenced by the, er, popularity of Congress (Rasmussen).

This explains a lot...

"What's our priority for aviation infrastructure? Safety. (Not efficiency)" (Infrastructurist) - I didn't realize that the tradeoff was that great.

Lawyers, Land Rights and Disaster Recovery

Underscoring the need for land rights in the aftermath (not to mention during the recovery) of a natural disaster from Marginal Revolution:

Haiti right now has a massive scarcity of land -- in the legally usable sense -- and is facing a massive recalculation problem as a result. Keep in mind that in relative terms, land is a more important part of the Haitian economy than almost anywhere else. After food, land is arguably the most important market in the Haitian economy and that has ceased to work.

As much as it might sometimes pain me to say this (some times more than others), lawyers can indeed play an important role in development. One of sad truths of extreme poverty is that it's self inflicted by bad governments and compounded by bad policies.

Economics Exemplified in a Picture

For a laugh - from Greg Mankiw:

Boone Pickens on US Energy Policy: 'We're the Dumbest People in the World'

Governments distort markets even when they favor one technology over another - in this case, wind and solar over natural gas. This, despite the fact natural gas could mean that the US could become energy independent and dramatically reduce greenhouse gas emissions not to mention dramatically cheaper (h/t Paul Kedrosky) - imagine filling your car up for under $1 a gallon:

Too Awesome for Words

There's something amazing about Rube Goldberg Machines - I can't even imagine the number of hours of resetting to get it to go right - from OK Go's new video:

Oh, and the music ain't half bad either. Imagine the efforts to get the timing let alone everything to work out right. (And if you're curious, the outsourced the production of the machine itself to Synn Labs).