Free Markets, Free People

Bruce McQuain

Your UN At Work …

Well, here’s one decision the Obama administration can be glad they made – boycotting this mess:

As Iran’s President Mahmoud Ahmadinejad called for the eradication of Israel in his address to the United Nations anti-racism conference which opened it week long event in Geneva on Monday, delegates walked out, hecklers wearing clown-wigs shouted ‘racist’ towards him and were escorted out by security personnel and his speech was continually interrupted.

But hey, let’s sit down and talk with this fool – it’ll make all the difference in the world.

The UN – your third-world debating club at work.

~McQ

Minimal Posting This Week

I’m headed out today on a week of vacation, combined with the Milbloggers Conference Friday and Saturday in DC. I’ll be hosting a panel on Veteran’s Affairs.

We’re going to wander up through Charlottesville VA and the Shenandoah Valley, hit a few Civil War battlefields, hang out in Annapolis for a day and then on to DC. I’ve picked up a new video camera – one that actually works – and am going to try to capture some short vids of what we do and see.

Question to Jason or Bryan – does QandO have a YouTube Channel? If not, could one of you tech savvy guys set it up for us and let us know how we can upload stuff to it? With this new camera I’m inspired to do some Vlogging – making sure to keep my face firmly out of the vids.

Anyway, I’ll be doing more traveling than posting but I’m sure my slacker buddies on the blog will pick up the pace and keep you up to date with the normal governmental atrocities we’ve come so accustomed too these last few years.

Toodles.

~McQ

Podcast for 19 Apr 09

In this podcast, Bruce, Michael, Bryan, and Dale discuss the use of torture on terror suspects, and the week’s Tea Parties.

The direct link to the podcast can be found here.

Observations

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

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 2007, they can be accessed through the RSS Archive Feed.

Let’s Close All The Service Academies

And while we’re at it, let’s close the War Colleges as well.

That’s the prescription the Washington Post’s Thomas Ricks puts out today as a great way to save federal funds.  Why is it the ideas these guy’s come up with to trim the federal budget are always aimed at the military and never at entitlements and the like.

Anyway, here’s what Ricks proposes:

Want to trim the federal budget and improve the military at the same time? Shut down West Point, Annapolis and the Air Force Academy, and use some of the savings to expand ROTC scholarships.

After covering the U.S. military for nearly two decades, I’ve concluded that graduates of the service academies don’t stand out compared to other officers. Yet producing them is more than twice as expensive as taking in graduates of civilian schools ($300,000 per West Point product vs. $130,000 for ROTC student). On top of the economic advantage, I’ve been told by some commanders that they prefer officers who come out of ROTC programs, because they tend to be better educated and less cynical about the military.

Now, I’ll admit it’s been a while but I’m sure the dynamic is pretty much the same now as it was when I was in.

I was an ROTC grad. Anyone who believes I was as well prepared as a West Point grad to function at the same level as them doesn’t know what they’re talking about. In today’s parlance, the West Pointers were “shovel ready” while most of us ROTC grads hadn’t even begun the bid process yet.

Of course I’m talking about my initial entry into the Army as a 2LT (of course our NCOs thought none of us were worth a crap). I had a good idea of what to expect, what was expected of me and what I’d experience, but I was far behind my West Point peers in real actual experience.

In fact, as I observed it, at company grade (the ranks 2LT, 1LT and CPT are considered “company grade” ranks), the West Point grad and the OCS grad were usually the best officers (and with obvious exceptions, I felt most of the OCS grads were a touch better than the WP guys) while the ROTC guys were playing catch-up. Around the 5 year mark, at the rank of CPT, everyone was pretty much even.
west-point
Again, these are my observations, but as we moved into the field grade ranks (the ranks MAJ, LTC and COL are “field grade” ranks), the ROTC and West Pointers began to pull away from the OCS grads. However, at both levels, West Pointers were right there among the best because they’d been taught and taught pretty well to function at both levels.

So I don’t buy this fellow’s two-year informal study at all.

I mean think about it – I went to one drill a week, not a number off them daily. And, in advanced ROTC, I went to ROTC classes three times a week. If you believe that schedule can compete with 4 years of being steeped in the military culture, visiting various military posts and schools, lectures from leaders in your field and having real, actual leadership and command responsibility during that time, then I’ve got a bridge in Brooklyn in which you’d be interested. Not even close.

Ricks’ tries the usual academic elitist argument as well:

They remind me of the best of the Ivy League, but too often they’re getting community-college educations. Although West Point’s history and social science departments provided much intellectual firepower in rethinking the U.S. approach to Iraq, most of West Point’s faculty lacks doctorates.

Of course, as regulars here have had the opportunity to discover, PhD’s aren’t all they’re cracked up to be as the one who roams the comment section here demonstrates almost daily. Obviously the “intellectual firepower” Ricks notes would seem to be a fairly important to a school of that type. I don’t remember any of the schools with ROTC adding to that process of rethinking our strategy in Iraq.

That’s because you’ll find some of our finest military minds teaching at West Point. They’re also immersed in a culture that inspires and promotes that sort of thinking. What they bring to those schools can’t be bestowed by any sheepskin. Many of them are serving officers who come from a stint in the field to the classroom where they bring a freshness to their teaching which is utterly unlike the stale academic atmosphere found in most traditional institutions of higher learning.

Lastly, the comparison to a community college education is pretty ignorant because it ignores the purpose of the service academies. They do what they are there to do and do it well. And I have never heard an academy grad complain about his or her education. Their ability to earn advanced degrees at elite civilian universities seems to argue that it is much more than the level of a community college (unless we now have community college grands routinely headed to Harvard, Yale and Princeton as WP grads do).

I’d apply the same arguments to the War colleges. They’re there to serve a part of a very important process – to provide the transition from field command to higher command and staff positions involving policy, strategy and international relations for the brightest and best. They’re very selective. They also provide the next generation of the nation’s senior leaders the opportunity to begin networking among those with whom they’ll most likely be serving as general officers.

So, as you might imagine, I find Ricks conclusions based in some fairly poor assumptions based in conversations instead of any real experience. Not that such conclusions are surprising anymore – we’re no longer strangers to journalists who think a couple of years and a couple of conversations somehow bestow a depth of knowledge about a subject which is simply irrefutable.

Personally, I’d much rather Ricks take a look at the massive waste to be found in most of the rest federal government’s spending and tell us why it’s involved in programs that build museums for Liberace, bailing out failing car companies, or paying to research the mating habit of wombats, or sea slugs, or whatever.

Who knows, he might actually know something about those subjects.  If we’ve got to get rid of something, I personally think this is a good idea.

~McQ

A Recipe For Economic Disaster

A level of economic government intrusion is now being contemplated like none we’ve ever seen before.  If you didn’t understand the one of the main purposes of the tea parties, perhaps this will help.

But what Obama rarely says about ending the “cycle of bubble and bust” is this: he’s prepared to intervene to make sure that kind of red-hot growth doesn’t occur.

And he’s willing to do it with added government regulation if needed to prevent any one sector of the economy from getting out of balance – the way the dot-com boom did in the 1990s and the real-estate market did earlier this decade.

According to Austan Goolsbee, a key Obama economic adviser, the president plans to focus on stopping bubbles along with preventing busts. And in an interview with POLITICO, Goolsbee said the administration will be on the lookout for new bubbles, like the tech stocks or housing prices.

If new threats are spotted, he said Obama would use “regulatory oversight to prevent guys who want to make a quick buck from doing real harm to the economy. . .That is what it means to get out of the bubble and bust cycle.”

In other words, government would decide what is or isn’t a “bubble” and move to stop what it determines is a bubble. As CATO points out, one man’s expansion might be another’s “bubble”. Are you comfortable with government calling that shot?

And government would also arbitrarily decide who was or wasn’t entitled to profit from that market – it would be the final determiner of who was or wasn’t making a “quick buck” from the growth.

Any idea what that would do to any market in which the government stepped in to slow down?

Yeah, nothing could go wrong that that idea, could it?

Bottom line: you have a governing elite picking winners and losers.

Thankfully, it isn’t quite as easy as you might imagine to do what Goolsbee and Obama would like to do.

…[T]here’s not much an administration can do in practical terms to burst a developing bubble. The best way to cool things down is raising interest rates, which is the purview of the Federal Reserve. Another option would be for regulators to order banks to curtail lending to buyers of certain kinds of assets.

The lesson here, of course isn’t necessary the plan itself, but the fact that those in a position of power are contemplating this seriously. Those aren’t the plans of a moderate, and certainly not those of a capitalist. They’re the plans of a group who apparently believes that complex economies can indeed be controlled and manipulated successfully from above.

Amazing hubris. Even more amazing arrogance. Most importantly, incredibly dangerous economic thinking.

~McQ

They’ll Be Workin’ On The Railroad

Well here we go – the government apparently plans on getting further into a business in which it has no track record of success. Yes friends, if “Amtrak” doesn’t remind you of why this isn’t a good idea, how about doubling down on it?

You remember Amtrak:

In FY 2007, Amtrak earned approximately $2.15 billion in total revenue and incurred about $3.18 billion in expenses. Amtrak relies on an annual federal appropriation, which in FY 2007 totaled $1.294 billion, including $521 million in operating funds, $495 million in capital and $277 million for debt service. While Amtrak relies on federal appropriations to support its operating and capital needs, the federal government’s investment in Amtrak was less than 2 percent of the entire federal transportation budget for FY 2007.

Only 2%? Well, we’ll take care of that:

The president’s plan identifies 10 potential high-speed intercity corridors for federal funding, including California, the Pacific Northwest, the Midwest, the Southeast, the Gulf Coast, Pennsylvania, Florida, New York and New England.

It also highlights potential improvements in the heavily traveled Northeast Corridor running from Washington to Boston, Massachusetts.

Of course Amtrak runs service in all of those places.

The president cited the success of high-speed rail in European countries such as France and Spain as a positive example for the United States.

And, of course, Spain and France are physically so much like the US it is frighting:

US –  9,161,923 sq km

Spain – 499,542 sq km

France – 545,630 sq km

For comparison:

Texas – 691,030 sq km

Travel by train has been a part of the culture of both France and Spain for literally centuries. Not so in the US. This is not an “if you build it they will come” moment.

“My high-speed rail proposal will lead to innovations that change the way we travel in America. We must start developing clean, energy-efficient transportation that will define our regions for centuries to come,” Obama said at an event near the White House.

You can read the plan here. It can pretty much can be summed up by Obama’s statement. Not a single bit of analysis about whether there is a demand, whether or not it will be profitable, and, frankly whether it’s economically viable at all.  It’s all about social concerns, not how much it costs.

This is government betting your money that it can change your habits. It isn’t a business plan that’s been produced, it’s a social engineering plan.

Is this the role you’ve imagined for government? As most who understand economics would tell you, if there is a market and it is a profitable market, some entrepreneur or entrepreneurs will enter that market. But you can be assured that won’t enter a market unless there is a profit to be made – which should tell you all you need to know about this boondoggle.

And whether or not you ever board a single one of these trains in your lifetime, you will pay for it.

~McQ

Taxes – They Have To Go Up Say Economists

For those of you who believe that you can spend yourself out of debt and enjoy the same level of taxation, a little dose of economic cold water is in order, appropriately on the day after tax day.

Many economists, including some who voted for Obama, do not believe that he can indefinitely avoid imposing tax increases much further down the income scale — on the middle class.

“You just simply can’t tax the rich enough to make this all up,” said Martin A. Sullivan, a former economic aide in the Reagan administration who said he backed Obama last fall.

“Especially just for getting the budget to a sustainable level, there needs to be a broad-based tax increase,” said Sullivan, now a contributing editor at Tax Analysts publications. “If you want to do healthcare on top of that, almost certainly, it just makes [a middle-class tax increase] all the more certain.”

And toss a little “cap-and-trade” on top of that, and whoa Nellie, the sky is the limit when it comes to the taxation necessary to support all of that.

How about those that believe that taxes should be used for “income equality” (also known as “tax the rich”)?

But even economists sympathetic to tackling income inequality say it will be difficult to avoid other tax hikes.

“There’s no way we’re going to be able to pay for government 10, 20 years from now without coming up with a new revenue source,” said Leonard Burman, director of the Tax Policy Center, during a forum on Obama’s tax proposals earlier this month.

Burman said a value-added tax is “inevitable.” Burman, deputy assistant Treasury secretary during the Clinton administration, said Obama should consider using revenue from the broad-based VAT to fund his healthcare plan. That would give middle-class and lower-income people incentive to keep taxes and health costs low, he said.

Translation for those who didn’t pick up on Burman’s last point – the “incentive” provided by the VAT (or Value Added Tax) is it will discourage “middle and lower income people” from using the medical system thereby keeping “health costs low”. If you want the real short version – rationing by price, the price being the cost of a visit plus the tax. Naturally, as a percentage of income, that would hit the middle and lower income levels much harder than the higher income levels.

And that 95% tax cut for Americans?

The president’s overall tax proposals, including perpetuating most of Bush’s tax cuts rather than allowing them to expire, will lead to $3 trillion in lost tax revenue over the next decade, according to an estimate by the Joint Committee on Taxes, which provides independent projections to congressional tax writers.

So $3 trillion in lost tax revenue, but an increase in the debt and debt service requirements:

More revenue will be needed to service the growing national debt. Because annual deficits are expected to remain above $500 billion for the next decade, Sullivan expects debt payments to more than double, from about 1.2 percent of GDP to more than 3 percent.

What does that mean for that “permanent” tax cut for the 95%?

The usual:

Obama’s budget proposed that his signature Making Work Pay tax credit be made permanent, but it was not included in either the House or Senate budget blueprints, partly because doing so would have increased the size of the deficit on paper.

Lies, damn lies and “permanent” tax cuts.

All the promises are BS, folks – and that’s not because I want them to be, its simply how the law of economics works. We will end up paying for all of this fiscal profligacy somewhere in the very near future. And anyone that says differently or promises otherwise is blowing smoke up your skirt.

~McQ

Fiat CEO Says Chrysler Deal Up To UAW

A fairly clear statement of intent if you ask me:

Fiat would walk away from a tie-up with US carmaker Chrysler unless unions agreed to a new, lower wage deal, Sergio Marchionne, the chief executive of the Italian motor manufacturer, said.

In an interview with Canada’s Globe and Mail newspaper, Mr Marchionne said he would scrap the deal unless Chrysler unions agreed to match the lower costs of Japanese and German-owned plants in Canada and the US.

“Absolutely we are prepared to walk. There is no doubt in my mind,” Mr Marchionne said in comments published online. “We cannot commit to this organisation unless we see light at the end of the tunnel.”

So, UAW and associated unions, job or no job?

Your choice.

~McQ

And Now, The Diplomatic Pirate Solution

One of the things that seems peculiar to the left is the belief that diplomacy is the solution to everything. While I prefer that problems that are conducive to being solved by diplomacy receive the full diplomatic treatment, there are some problems, at least as they are defined, which don’t have a diplomatic solution.

That category would most likely include pirates in a failed state. That, however, is apparently not going to deter our new Secretary of State. Fresh from presenting a red “overcharge” “reset” button to the Russians and assuring the Chinese not to worry about us stressing those pesky human rights violations, Hillary Clinton has decided she’ll solve the Somali pirate problem – diplomatically.

Says Clinton:

“We need to bring 21st-century solutions to bear,” she said.

Her 21st solutions include:

Clinton said it may be possible to stop boat-building companies from doing business with the pirates.

Hmmm. Now I may be mistaken here but I was under the impression pirates were pretty well known for hijacking boats, not paying for them.

One element of her initiative, she said, is to “explore ways to track and freeze pirate assets.”

Again, I may be way off base here, but I was under the impression pirate ransom was paid in big, old, whopping bags of cash dropped on the deck of the ship from helicopters. I’m not sure how she plans on tracking, much less freezing that cash as I’m pretty sure the pirates most likely don’t seek out or use banks.

And her third 21st century solution? The good old 19th century meeting, talking and coordinating event:

The other element of the initiative include calling for immediate meetings of an international counterpiracy task force to expand naval coordination against pirates. She said federal agencies would meet Friday to review the problem and consider potential responses.

Yessiree, I feel all 21st century about these initiatives, if you define 21st century solutions as those which address problems they don’t seem to understand with “solutions” which don’t address them at all.

Oh wait, one more sure fire 21st century solution:

The administration plans to send an envoy to a Somali donors conference scheduled for next week in Brussels and will attempt to organize meetings with officials of Somalia’s transitional government as well as regional leaders in its semiautonomous Puntland.

Because that government and those regional leaders have been so successful in keeping piracy under control to this point.

So, let’s review – keep boat companies from doing business with pirates, track and freeze the pirate cash assets, talk amongst themselves and talk to powerless Somali leaders/government.

Impressive. [/sarc]

~McQ

[HT: Scott Jacobs]