The Paradox of Government

Posted on 2009-07-07 by David
Paradox of Thrift

Paradox of Thrift

Today I read Paul Krugman writing about the paradox of thrift. As is often the case, I found it interesting to read and to notice the assumptions that Krugman bases his positions on. While anyone can go read what he wrote I’ll give a quick overview of the paradox of thrift – increases in personal savings can have an adverse effect on the economy causing a net decrease in actual savings overall.

The first assumption made by Krugman is that savings come in the form of currency with an assigned value but with no real intrinsic value – paper money. If savings come in the form of debt reduction or in acquiring real goods for future use then a bad economy increases the value of the savings rather than decreasing that value.

The second assumption made by Krugman is that government should be a significant force and substantial contributor to the economy. This is a man who argued that the government was doing the wrong thing and not enough of it when Obama got his stimulus bill passed (ARRA). While I often disagree with his assumptions I absolutely trust Krugman to be able to read the numbers and do his math so I won’t attempt to do my own numbers. I will link to the source of his numbers and then play with his graph to show how things look under new assumptions.

Continue reading →

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Independence Day Observations

Posted on 2009-07-06 by David

I attended the Freedom Festival parade in Provo with my family on Saturday and I found it very interesting to watch. I was proud to notice that there seemed to be more people who actually knew what to do whent he flag passed by. Unlike some years there was no hesitation in the crowd as the flag approached and people stood and placed hands over their hearts. I also took note that when Senator Bennett approached in his car the crowd got silent – I heard one person supporting Bennett but everyone else acted as if the parade suddenly became invisible. When Senator Hatch rode by there was no reaction from the crowd, but everybody began cheering very loudly for the high school band that followed him. I take that as yet another sign that it’s time for both of them to retire – I’ll help in any way that I can.

Overall it was a good parade except for the fact that the first entry was a band which was followed by the many fire engines blaring their horns. The parade organizers really should not place a band in front or behind the fire engines – save those slots for floats that are not displaying their musical skill.

Later in the evening as we were watching fireworks I got talking to my wife and mentioned that I found it somewhat ironic that many people celebrate their liberty and living in a free land by breaking the law – buying fireworks that are clearly illegal in our state. I know the arguments that some people will make that the state should not be regulating our fireworks as much as they do. I stand against the nanny-state as much as anyone else, but I believe in obeying the law even when you are actively trying to change it (so long as its possible to do both). Laura commented that in some ways it might be fitting that people wuld celebrate their freedom by exercising it in defiance of laws they don’t care for – I can see the logic of what she says.

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Economic Recovery

Posted on 2009-07-03 by David

I was listening this morning to a story on NPR about rising unemployment when an interesting thought struck me. The story was talking about the negative feedback loop of rising unemployment leading to lower housing prices and more economic uncertainty. These factors then dampen consumer spending and keep unemployment high and even encourage more unemployment.

I know it’s a very perverse perspective, but my reaction to that news was that maybe there is an outside chance that our economy will actually undergo the correction that it obviously requires despite the best efforts of Bernanke and Geithner to prevent the necessary correction. If the economy continues to defy the stimulus efforts it may yet reach a solid foundation – but I won’t hold my breath on that.

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Lincoln’s House Divided Speech

Posted on 2009-07-02 by David

I had never before read Lincoln’s House Divided Speech. Considering that it came in the very early days of the Republican party it could have been applied to or derived from the split between the Republicans and the Whigs and not simply the nation as a whole. Here is the heart of what most people know of the speech:

“A house divided against itself cannot stand.” I believe this government cannot endure, permanently, half slave and half free. I do not expect the Union to be dissolved; I do not expect the house to fall; but I do expect it will cease to be divided. It will become all one thing, or all the other. Either the opponents of slavery will arrest the further spread of it and place it where the public mind shall rest in the belief that it is in the course of ultimate extinction, or its advocates will push it forward till it shall become alike lawful in all the states, old as well as new, North as well as South.

Lincoln explores the recent history the slavery debate in his speech and I was surprised to find some startling parallels to the gay marriage debate we are currently having in this country. (Some people may not believe me when I say that I started reading this speech with no thought of this issue.)[quote] Here are the parallels I saw from the systematic progress of the pro-slavery movement in the prior four years.

The new year of 1854 found slavery excluded from more than half the states by state constitutions and from most of the national territory by congressional prohibition.

More than 30 states currently prohibit gay marriage by statute or amendment (compared to 6 that allow it) and the Defense of Marriage Act (DOMA) is a congressional action meant to ensure that states cannot be forced to accept gay marriages from other states.

The Nebraska Bill stated:

It being the true intent and meaning of this act not to legislate slavery into an territory or state, nor to exclude it therefrom, but to leave the people there-of perfectly free to form and regulate their domestic institutions in their own way, subject only to the Constitution of the United States.

It was passed without a proposed amendment that would have explicitly stated that the people in a given territory could outlaw slavery within their territorty. Today it is the gay marriage opponents who say “let the states decide” but if the gay marriage advocates get DOMA repealed (as they hope to do) they will be the ones making that argument.

Lincoln sums up the situation of the four years prior to his speech by saying:

. . . when we see a lot of framed timbers, different portions of which we know have been gotten out at different times and places and by different workmen — Stephen, Franklin, Roger, and James, for instance — and when we see these timbers joined together and see they exactly make the frame of a house or a mill, all the tenons and mortises exactly fitting, and all the lengths and proportions of the different pieces exactly adapted to their respective places, and not a piece too many or too few, not omitting even scaffolding, or, if a single piece be lacking, we see the place in the frame exactly fitted and prepared yet to bring such piece in — in such a case, we find it impossible not to believe that Stephen and Franklin and Roger and James all understood one another from the beginning, and all worked upon a common plan or draft drawn up before the first blow was struck.

I believe that Lincoln was right that “A house divided against itself cannot stand.” Today I believe that neither the Republican party nor this nation can endure permanently with part allowing gay marriage and part denying it. I do not know whether to expect the party to fall; but I do expect that if it does not fall it will be because it ceases to be divided. It must fall or become all one thing, or all the other. After the issue plays out in the party it will then have to be resolved in public policy although the chances of the nation splitting and falling over the isue are lower than the chance that the Republican party splits (as the Whigs did in Lincoln’s time) over this issue.

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The Monroe Doctrine

Posted on 2009-07-01 by David

I remember learning about The Monroe Doctrine in history classes – mostly about the interpretation of it called Manifest Destiny. I found it enlightening to review some background surrounding this speech to Congress. In Wikipedia the doctrine is summed up like so:

President Monroe claimed the United States of America, although only a fledgling nation at the time, would not interfere in European wars or internal dealings, and in turn, expected Europe to stay out of the affairs of the New World.

Considering that this nation was not yet 50 years old this would be seen as presumptuous, but the Wikipedia summary missed a key distinction that Monroe specified:

With the existing colonies or dependencies of any European power we have not interfered, and shall not interfere.

While the idea that the United States at that time could interfere with internal European affairs was laughable this was still a world in which proximity was of paramount importance and this “fledgling nation” had already shown that it could – because of distances – become a serious thorn in the side of one of Europe’s most powerful nations. I’m sure that despite the audacity of the statement the powers of Europe were only too pleased to have the United States promise not to interfere with their existing colonies.

What I wish regarding the Monroe Doctrine is that we would remember two other forgotten parts of it:

In the wars of the European powers, in matters relating to themselves, we have never taken any part, nor does it comport with our policy to do so. (emphasis added)

This should not be interpreted as being limited to European powers – it should also apply to out treatment of the rest of the world. Unfortunately throughout the last half century it not only comports with but in fact has been our de facto policy to interfere. In contrast we should be able to say today that:

Our policy, in regard to {other nations} . . .  is, not to interfere in the internal concerns of any of its powers; to consider the government de facto as the legitimate government for us; to cultivate friendly relations with it, and to preserve those relations . . .

In case that is not perfectly clear to anyone I would say “hint, hint – think Honduras.” Instead of denouncing the removal of a dictatorial president we should treat the interim (read de facto) president as the legitimate leader of the country. Our relations with that nation should be no different today than they were last week (when their government was less secure than it is today).

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News on the Honduran Coup

Posted on 2009-06-30 by David

When I first heard about the military coup in Honduras I noticed some reference to the extra-constitutional activities of the ousted president and the attempts by their legislative and judicial branches to check his actions. Soon however I noticed a shift in the news coverage as a party line began to develop. First Hugo Chavez was condemning the coup and then others joined the chorus – including the U.S.  Soon the news coverage had been dumbed down to exclude any mention of the real reasons for the coup while focusing on the ideal that “there should be no military coups in the modern world.” (That came from an analyst on NPR.)

[quote]I began to wonder what to do or say as I began to feel that we were being misled but feeling powerless to say anything meaningful because I don’t consider myself to have any expertise on Honduras. Thankfully today I stumbled onto a good analysis at NO QUARTER by Larry Johnson. (Warning – there is one instance of Language I Would Never Use™ in the article.)

Johnson reminds readers of the facts of the case:

For starters the ousted President, Zelaya, had become close buddies with Chavez of Venezuela and was pushing to over turn the Honduran Constitution that limited Presidents to one term. This was not your typical military coup. This had the backing of the legislature and the judiciary. But Zelaya is doing a good job of playing the victim.

My first reaction had been that the United States should not get involved but after reading Johnson’s recommendation that the U.S. needs to engage [quote1]I would clarify my position to say that the U.S. should not get involved internally in Honduras, but that we should also make it very clear that expect others (Chavez and cronies) to not meddle internally in Honduras either. The Hondurans started this on their own and should be allowed to finish it on their own. The only way that any other nation should be involved is if the Honduran’s clearly seek that external assistance.

I was impressed with how accurate Johnson’s assessment seemed to be (and it seemed very consistent with the perceptions of some other people I know who have firsthand experience of living in Honduras), but perhaps I should not be surprised considering that he has intelligence experience specifically in Honduras:

I was the Honduran analyst at the CIA from 1986 thru 1989. I also lived in Honduras running a community development in the campo back in 1978.

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Political Football

Posted on 2009-06-29 by David

At a time when we have two senators and one senate candidate from our one party state all trying to insert politics into college football (and all three claim to be conservatives – go figure) it seems appropriate to use a football analogy to describe the dangers of having one-party domination within the state or the nation.[quote]

Think of the worst NCAA Division 1A (FBS) football team in the country. Now imagine that team playing the best team in the NFL. It should be a no-brainer to figure out which team will win the game (or every game if they were to play multiple times). Now imagine that we make one minor rule change – the NFL team can only play defense – the only way they can score is a safety or an interception returned for a touchdown. Anytime they get the ball and don’t score they would be required to let the NCAA team play offense and keep trying to score. In that scenario it would be very rare for the NFL team to win the game.

The point that this should illustrate is that with such a rule change the football games would never give any indication about which was the better team or even how good each team was. So long as those rules were applied between teams more fairly matched than a middle school team vs professional athletes the outcome would be almost completely determined by which team was allowed to play offense.

[quote1]Living in a one-party state has the same effect on our political system. So long as one party has no opportunity to play offense the outcome of every political scrimmage is practically predetermined. Sadly the Democratic party in Utah seems resigned to a permanent minority status where all they can do is play defense and hope for some spectacular interceptions. (I don’t mean to imply that there are no democrats trying to play offense, but the party as a whole seems to have accepted the idea that they can’t win.) The result is that the values espoused by the Republican party as well as the values espoused by the Democratic party are never really explored or tested in our political arena. People who would otherwise be Democrats participate in the Republican party in order to influence the politics of the state and moderate members of the Republican party can be ignored by party insiders as they pander to more vocal and extreme elements of the party which are not representative of the core values of the party as a whole.

This sounds like a recipie for political decay.

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Inside Politics

Posted on 2009-06-22 by David

When I read about the results of the Utah Democratic party chairman’s race I had an interesting thought pop into my head. (Although this article originally ran in the Salt Lake Tribune I am linking to a copy at UtahAmicus because tribune articles eventually expire and disappear.)

First, some background. The race for chairman was between the incumbent, Wayne Holland, and Jeff Bell. Wayne’s website essentially advertised this message – “I’m the incumbent” – while Jeff’s advertised a message of “this is the direction the party needs to go and here is how I will make it happen.” The result:

the party delegates elected Holland with 87 percent of the vote.

When I saw the 87% figure I started to wonder – considering how much the state Republican party has been accused of being an insiders game – if the state Democratic party might be even more of an insiders game.

It’s something to ponder.

P.S. I’m going out of town for a week long road-trip of rest and relaxation, in case anyone would have wondered why I don’t post for the remainder of the week. I expect to be back to my regular schedule next week.

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The Healthcare Issue Simplified

Posted on 2009-06-19 by David

DownsizeDC has a post entitled Complexity, Simplified that promises to make our national issue with health care reform understandable. And they deliver on that promise. They say more than this, but it all boils down to these few statements:

But we think the complexity can be simplified to two simple questions:

    • For whom does your doctor work?
    • Do you pay for your health insurance directly?

If your doctor tailors his or her care to the policies of your insurance company, or some government program, then you don’t really have a doctor who works for you, and health care hasn’t really been reformed.

You’ll know health care has really been reformed when the following things are true…

    • You and your doctor deal with your health insurance provider as rarely as you currently do with your car insurance company
    • Doctors post their prices, and compete with each other based on price and quality

It’s really that simple. As long as insurance policies and/or government programs fund most of your health care, doctors will work for them and not for you.

The same holds true for health insurance. As long as our health care coverage comes mostly from employer controlled insurance or the government, we won’t have a competitive health insurance market, and the cost of both insurance and health care will grow constantly.

When Americans care about the impact that their use of health care has on their insurance premiums in the same way that they care about the impact that speeding tickets and minor scrapes have on their car insurance, you’ll know that our health care system has really been reformed.

There – in two questions to ask, two systemic changes to watch for, and two paragraphs decribing what real reform would look like – is the entire health care issue.

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The Star Spangled Banner

Posted on 2009-06-18 by David

Francis Scott Key witnessed a battle in 1814 during the War of 1812 as a captive on a British naval ship. He was so inspired by what he witnessed that he wrote the Star Spangled Banner which was eventually be adopted as our national anthem.

Today the song is often sung as an artistic piece in ways that ignore any patriotic meaning associated with it. It makes me wonder how many people still recognize the feelings of love for his country that Key was capturing in his poem. As I was looking at this I realized that I had never noticed the third verse – I don’t think I’ve ever heard it sung.

And where is that band who so vauntingly swore
That the havoc of war and the battle’s confusion
A home and a country should leave us no more?
Their blood has wiped out their foul footstep’s pollution.
No refuge could save the hireling and slave
From the terror of flight, or the gloom of the grave:
And the star-spangled banner in triumph doth wave
O’er the land of the free and the home of the brave.

I suspect that Key had heard British sailors boasting that they would wipe America out of existence during that war before they began the attack. Considering the power of the British navy at that time he might well have expected them to succeed – no wonder then that he was so moved when he saw that the flag still flew over Fort McHenry after the bombardment. Personally I think that anyone who cannot recognize the power of that song and the love of country that it conveys should not bother to participate in the political process because without that love of country we are certain to make poor political decisions.

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