Free Markets, Free People

Monthly Archives: March 2013

Economic Statistics for 26 Mar 13

Here are today’s statistics on the state of the economy:

Durable goods orders soared 5.7% in February, mainly on new aircraft orders. Ex-transportation orders, however, fell -0.5%.

New home sales in February declined 4.6 percent to an annualized pace of 411,000.

The S&P Case-Shiller Home Price Index rose 1.0% in January, following 0.9% and 0.6% gains in the two prior months.

The Conference Board’s Consumer Confidence Index plunged more than 8 points to a reading of 59.7 for March.

The Richmond Fed Manufacturing Index fell 3 points to a March reading of 3.

The State Street Investor Confidence Index fell to 88.0 on lower demand for equities and rising demand for fixed income products.

In weekly retail sales, Redbook reports same store sales slowing to a 2.6% year-over-year sales growth rate. ICSC-Goldman Store Sales plunged -1.7% from last week, up only 1.0% from last year.

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Dale Franks
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Apologizing for authoritarianism

That’s essentially what Sarah Conely does in a NY Times op-ed. Oh, she cloaks it benignly enough -“it’s just soda” – as he supports the Bloomberg ban on large volume soda sales.  But in essence what she claims is “government knows best” and “giving up a little liberty isn’t so bad if it benefits the majority”.

You see, liberty, in her world, is much less important that security or safety.  And we, as knuckle dragging neanderthals, don’t always know what is best for us or how to accomplish our goals without the hand of government to guide us (how we ever managed to make it to the 21st century without that guiding hand is still a mystery in Conely’s circle).  Sure some can do it, but most can’t and so laws should be designed to protect and guide (coercively of course) those who can’t (or are believed to be unable).

A lot of times we have a good idea of where we want to go, but a really terrible idea of how to get there. It’s well established by now that we often don’t think very clearly when it comes to choosing the best means to attain our ends. We make errors. This has been the object of an enormous amount of study over the past few decades, and what has been discovered is that we are all prone to identifiable and predictable miscalculations.

Research by psychologists and behavioral economists, including the Nobel Prize-winner Daniel Kahneman and his research partner Amos Tversky, identified a number of areas in which we fairly dependably fail. They call such a tendency a “cognitive bias,” and there are many of them — a lot of ways in which our own minds trip us up.

For example, we suffer from an optimism bias, that is we tend to think that however likely a bad thing is to happen to most people in our situation, it’s less likely to happen to us — not for any particular reason, but because we’re irrationally optimistic. Because of our “present bias,” when we need to take a small, easy step to bring about some future good, we fail to do it, not because we’ve decided it’s a bad idea, but because we procrastinate.

We also suffer from a status quo bias, which makes us value what we’ve already got over the alternatives, just because we’ve already got it — which might, of course, make us react badly to new laws, even when they are really an improvement over what we’ve got. And there are more.

The crucial point is that in some situations it’s just difficult for us to take in the relevant information and choose accordingly. It’s not quite the simple ignorance [John Stuart] Mill was talking about, but it turns out that our minds are more complicated than Mill imagined. Like the guy about to step through the hole in the bridge, we need help.

So, now that we have these Nobel Prize winning psychologists and behavioral economists on the record saying we’re basically inept shouldn’t it be clear to you, as Conely concludes, that “we need help”?

That sort of “help” used to come from family, friends and community.  We somehow managed, for around 200 years, to grow and succeed splendidly without government intruding and trying to control our lives.

The basic premise of her piece is much the same as Bloomberg’s more direct assault:

The freedom to buy a really large soda, all in one cup, is something we stand to lose here. For most people, given their desire for health, that results in a net gain. For some people, yes, it’s an absolute loss. It’s just not much of a loss.

Or to quote a more succinct Bloomy: “I do think there are certain times we should infringe on your freedom.”

Notice the arbitrariness of the “I do think”.  His choice, not yours.  Bloomberg picked sodas.  What else could he or those like  him arbitrarily pick next time?  Think government health care for example and your mind explodes with where they could go.

And notice Conely’s dismissal of the loss of freedom as “not much” of a loss.  Incrementalism at its finest.  Pure rationalization of the use the coercive power of the state to do what they think is best for you, because, as her academic colleagues have stressed, “we need help.”  And our betters are always there to “help” us, aren’t they?

Funny too how the solution is always the same, isn’t it?

And their desire to intrude? Well its wrapped up in their concept of government’s role in our lives:

In the old days we used to blame people for acting imprudently, and say that since their bad choices were their own fault, they deserved to suffer the consequences. Now we see that these errors aren’t a function of bad character, but of our shared cognitive inheritance. The proper reaction is not blame, but an impulse to help one another.

That’s what the government is supposed to do, help us get where we want to go.

No. It’s not. That isn’t at all the function of government as laid out in the Constitution. Not even close. It has always been our job to “get where we want to go”. Government’s job was to provide certain functions to ensure an equality of opportunity (like a fair legal system, stable monetary system, etc), but on the whole we were free to pursue our lives without its interference as long as we stayed within the legal framework and did no harm to others or attempted to defraud them.

Conely’s last sentence is the mask that fronts and justifies/rationalizes every authoritarian regime that has ever existed.  If you don’t believe that, I invite you to look at the title of her last book.  “Against Autonomy: Justifying Coercive Paternalism.”

Kind of says it all, doesn’t it?

~McQ

Is Michael Bloomberg the most dangerous man in America?

At least in terms of your freedoms?

New York City Mayor Michael Bloomberg said on Sunday: Sometimes government does know best. And in those cases, Americans should just cede their rights.

“I do think there are certain times we should infringe on your freedom,” Mr. Bloomberg said, during an appearance on NBC.

Well, he may not be THE most dangerous, but he’s right up there with them.   He’s just more blunt and obvious about it than most of the others.

I’m sorry folks, but this is an attitude that has pervaded our politics for quite some time and it is unacceptable.  Totally unacceptable and should be stomped on like you would stomp a cockroach.

Government rarely “knows best” and has a dismal track record in that area.  More importantly, this was a country founded on the principle of individual freedom (liberty) and heavy restraints on government power.  As someone said, the Constitution doesn’t grant rights – they’re natural.  What the Constitution is is a restraining order on government.  Or was.   It is government via people like Michael Bloomberg who’ve turned that upside down and feel comfortable enough to blurt what can only be considered authoritarian drivel (pick your brand) because he thinks he has the “right” to infringe on yours.  His statement is anathema to all this country once believed in.

Yet, there are a good number of people today who will back his play and agree that he his job entails being big daddy and using the force of government to save you from yourself.

America?

Yeah, not really.

~McQ

GOP Senators prepare to cave on unnecessary gun control legislation

Let me preface this by saying there is absolutely no need for new gun control legislation.  None.  Nada. Zip. Zero.

The claims by the left that gun control legislation will solve problems of violence are nonsense. Period.

But that likely won’t stop the usual suspects among GOP Senators from helping the left in their incremental but determined efforts to limit your 2nd Amendment rights. Apparently “Congress shall make no law” has a different meaning to some people:

Sen. John McCain (R-Ariz.) has emerged as a key player if Senate Democrats are to have any chance of passing legislation to expand background checks for private sales of firearms.

McCain and Sens. Susan Collins (R-Maine) and Dean Heller (R-Nev.) are at the top of a list of Republicans considered most likely to sign on to legislation expanding background checks after talks with Sen. Tom Coburn (R-Okla.) stalled earlier this month.
Sen. Mark Kirk (R-Ill.) has signaled he will likely support the yet-to-be-finalized proposal he negotiated with Sens. Charles Schumer (D-N.Y.) and Joe Manchin (D-W.Va.) to expand background checks to cover private gun sales, according to Senate sources.

Of course we’ve been assured by some that this is really of no big consequence and we should relax and let it happen.

Uh, no.

Like I said in the beginning – there is absolutely no need for new gun control legislation – none. The fact that some in the GOP seem poised to make that happen anyway should tell you all you need to know about certain members of that party and their professed claim to believe in your Constitutional rights all while negotiating parts of them away.

~McQ

Observations: The QandO Podcast for 24 Mar 13

This week, Bruce, Michael and Dale discuss the events of the week.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

Why it is so hard for government to quit spending

It’s hard, in a nutshell, because no one wants to see their favorite programs defunded.  The system encourages politicians to pander to these constituencies for votes.  The result is ever increasing spending while both the public and the politicians claim to be for spending cuts.

A perfect example of the process can be found in microcosm in Chicago, where, to save money in the wake of intemperate government spending, the school system plans on closing 54 schools.  The constituency affected are not going to let this go quietly.  Even though the plan would save the city $600 million over 10 years and certainly help close the 1 billion dollar shortfall it suffers, the people (voters and teacher’s unions) who don’t want those schools closed are taking their protest to the politicians (aldermen) who depend on their votes.

The problem now being realized with the process described above is there’s a thing called “reality” that intrudes on this system of ever increasing spending to satisfy the demands of ad hoc constituencies.  It’s called economics.  And it has laws that resist being broken.  Laws such as you can only spend more than you have for so long before you can’t get anymore to spend.  And at a local level, where a city government can’t print money, that reality has come to bear on the process that the city of Chicago has indulged in for so long.

It can’t afford the process any longer.  And that means the process and its cycle will, of necessity, have to be broken if the city isn’t to become another Detroit.  In the case of the school closings in Chicago, the only question that remains is whether or not the politicians, in the face of opposition by a coalition of voters/unions/politicians, will do what is necessary or  – as we see on a national level time after time – endeavor to find a way to satisfy the coalition and kick the can down the road?

To the story:

Chicago Public Schools officials ended months of speculation when they released the list of 54 schools the city plans to close, but the pushback against Mayor Rahm Emanuel and his schools chief is likely just starting to ramp up.

As word of the schools on the long-awaited closings list trickled out Thursday, parents, teachers and community members — some furious, some in tears — vowed to fight the closings. One group took a bus of people to protest in front of the homes of school board members, and some parents spoke of a lawsuit. The Chicago Teachers Union already had scheduled a mass protest march through downtown for next week.

"We are the City of Big Shoulders and so we intend to put up a fight," union President Karen Lewis said. "We don’t know if we can win, but if you don’t fight, you will never win at all."

Emanuel and schools CEO Barbara Byrd-Bennett say the closures are necessary because too many Chicago Public School buildings are half-empty, with 403,000 students in a system that has seats for more than 500,000. But opponents say the closures will further erode troubled neighborhoods and endanger students who may have to cross gang boundaries to attend school. The schools slated for closure are all elementary schools and are overwhelmingly black and in low-income neighborhoods.

About 30,000 students will be affected by the plan, with about half that number moving into new schools.

So 30k out of 403k will be effected in a school system that appears to have a declining population.  Any sensible person would understand that even if money wasn’t a problem, at some point adjustments would need to be made. 

But we’re a schizo population who somehow believes – even as our reality  reminds us in our own lives daily that we’re delusional – that we can have our cake and eat it too. 

This problem and the reality aren’t unique to Chicago:

Chicago is among several major cities, including Philadelphia, Washington and Detroit, to use mass school closures to reduce costs and offset declining enrollment. Detroit has closed more than 130 schools since 2005, including more than 40 in 2010 alone.

The problem is, however, pretty unique to cities who’ve followed that process I described above and, for the most part, have been “blue” strongholds for decades.  Reality is weighing in on their misguided governance with a vengeance.

What’s interesting is it is pitting blue against blue (blue city government against teacher’s unions, etc.).  And, it also has a coterie of politicians who refuse to accept reality because, well because it could cost them their jobs and the perks that come with it:

The issue has again pitted Emanuel against the Chicago Teachers Union, whose 26,000 members went on strike early in the school year, idling students for seven days. Chicago aldermen and other lawmakers also have blasted the plan.

Of course they have.  Common sense and reality say the plan is the way to go. 

But we all know, in the world of politics, common sense was killed off decades ago and reality is ignored as long as possible.

And look at the result.

~McQ

Obama’s Middle East policy is a disaster

Do you remember the promises?  When Obama took over, the Middle East would come to love the US again.  As Obama, famously declared in his 2009 Cairo speech, his election meant a “new beginning” with the Muslim world.

The truth, however, is much uglier:

President Obama’s first journey to Israel as president comes amid earth-shattering change in Middle East, much of it for the worse. The Arab Spring, which once raised hopes of freedom and dignity, has diverged onto the dark path of Islamist authoritarian rule. In Syria, tens of thousands of people have died in a bitter civil war that might have recently seen its first use of chemical weapons. And Iran continues its march toward nuclear weapons capability, heedless of international condemnation. Obama’s effort to seek peace between Palestinians and Israelis is in tatters.

And Libya?  One word: “Benghazi”.

How about the much anticipated and promised love fest that would occur after that mean old George W Bush was retired and The One waved his mighty hand and blessed his own Middle East policy?  Yeah, it hasn’t quite worked out that way:

According to the latest survey by the Pew Research Center’s Global Attitudes Project, confidence in Obama in Muslim countries dropped from 33% to 24% in his first term. Approval of Obama’s policies declined even further, from 34% to 15%. And support for the United States in Egypt, Jordan, Lebanon and Pakistan is lower today than it was in 2008 in the closing year of George W. Bush’s administration.

Israel, our closest and most important ally in the area isn’t much enamored with Obama:

Of all the strained relationships in the Middle East, the partnership with Israel is the most important and potentially the most easily repaired. Obama is not popular in the country. A poll released last week showed he had a scant 10% approval rating in Israel, with an additional 32% saying they respect but don’t like him.

And, if the tactic of stiffing Israel had the intent of winning popularity among Palestinians, that too hasn’t worked:

If Israelis don’t like Obama, Palestinians are even less favorable.Washington’s perceived failure to take a harder line with Israel over the final status of Jerusalem, and U.S. opposition to President Mahmoud Abbas’ successful campaign for higher Palestinian status in the United Nations, have engendered a deep sense of frustration. Passions spilled over in Bethlehem this week, when young Palestinians defaced a billboard with Obama’s image and burned pictures of him in the streets. Obama’s symbolic nods to Israel’s history are likely to raise Palestinian ire even further.

In fact, none of the administration’s policy initiatives have had any positive impact, or, for the most part, any impact at all (despite a fawning media telling us how wonderful a SecState Hillary Clinton was, this is her legacy too).

So, what will Obama do today in Israel?  What he usually does.  Make a speech:

The hope that Obama will say the right things in Thursday’s speech at Jerusalem’s convention center is negated by doubts he will follow through. The president has to assure Israelis and Palestinians that he is still engaged if the peace process has any chance of moving forward. In part, this means convincing them that he still matters.

Key point emphasized.  If you’ve watched Obama even casually over the past years, you can’t help but have noticed that he’s very strong on “talking the talk”, but hardly ever “walks the walk”.  He doesn’t know how.

And there’s absolutely no reason this particular issue will see him even attempt it now.  Oh, he’ll say the “right things”. That’s what he does. His problem is he never then does the “right things”.  Rhetoric is his action.  It’s for the history books, not as a guide to leadership.  He’s not a leader.

But you know that.  And the results of that lack of leadership are evident for all to see in the Middle East.

~McQ

Economic Statistics for 21 Mar 13

Here are today’s statistics on the state of the economy:

Initial jobless claims rose 2,000 to 336,000. The 4-week average fell 7,500 to 339,750, while continuing claims rose 5,000 to 3.053 million.

The Philadelphia Fed Survey jumped 14.5 points in March, to a positive reading of 2.0.

Existing home sales rose 0.8% in February, to an annualized pace of 4.98 million, thanks to a rise in the supply of available homes.

The PMI Manufacturing Index Flash fell 0.3 points in March, to a still-positive 54.9.

The FHFA House Price Index rose 0.6% in January, up 6.5% on a year-over-year basis.

The Bloomberg Consumer Comfort Index fell 2.3 points to -33.9 in the latest week.

The Index of Leading Economic Indicators, which indicate economic conditions six months from now, rose a better-than-expected 0.5% in February.

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Dale Franks
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I’m live on Medium!

The guys who created Twitter and Odeo have moved on to a new venture, which, based on their track record, may show us the way to the future of online writing and publishing. It’s called Medium.Com, and it really is a different model of online writing that aims to promote better writing to more eyes.

I’ve been following Medium from it’s beginnings, and I finally received my invitation to start writing on medium.  I’ve got two articles up. One attempts to answer the question "Is Star Trek socialist?" and the other looks at what I’m learning as I start looking for a new car. Both are a bit tongue and cheek.

The way it works is that you can recommend articles you like. The more recommendations an article gets, the more visible it becomes to readers. Good articles get promoted to the top.

It’s a fascinating idea, and the track record of the guys who created it is pretty good. It may be a glimpse into the future of online writing.

By the way, if any of you like to write, and are a car person, I’ve created a collection called The Joy of Automotion that anyone can contribute to.

~
Dale Franks
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