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January 15, 2012

In Supporting Bailouts Buffett Was More Bootlegger than Baptist



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Source of book image: online version of the Omaha World-Herald review quoted and cited below.




(p. 9A) Peter Schweizer's new book, "Throw Them All Out" (Houghton Mifflin Harcourt, 211 pages, $26) mostly goes after members of Congress for profiting from inside information and making investments that are legal for them but would be illegal for almost anyone else.

But Chapter 6 is titled, "Warren Buffett: Baptist and Bootlegger."

Buffett is neither an actual Baptist nor a bootlegger, of course. Schweizer's reference is to the alliance of churchgoers and illegal marketers of liquor who both favored laws to limit the legal sale of alcohol, although for different reasons.

Schweizer wrote that during the 2008-09 financial crisis, Buffett pushed for government action and called attention to the problems, looking like a noble Baptist, but profited from the bailouts, like a bootlegger, through investments in Goldman Sachs, General Electric, Wells Fargo and other financial companies.

"Buffett needed the bailout," Schweizer wrote. "He began immediately to campaign for the $700 billion TARP rescue plan that was being hammered together in Washington." Several senators, including Ben Nelson, D-Neb., are Berkshire shareholders, Schweizer wrote, "and they had to know that passing the bailout bill would bring big returns for their Berkshire stock."

"There were many legitimate reasons to support the bill, and it can hardly be said that Buffett's support was the deciding factor," Schweizer wrote. "But his Baptist-bootlegger position was noteworthy for its strength in both directions: a lot of people followed his advice, and he and they made (p. 10A) a lot of money by pushing for the bailout. . . .

"Warren Buffett is a financial genius. But even more important for his portfolio, he's a political genius."



For the full story, see:

Steve Jordon. "Warren Watch: Author Says Buffett Is a 'Political Genius'." Omaha World-Herald (Sunday, November 20, 2011): 9A -10A.

(Note: ellipsis in original.)

(Note: the online version of the article has the title "Warren Watch: A 'Political Genius'.")


Steve Jordan is discussing the book:

Schweizer, Peter. Throw Them All Out. New York: Houghton Mifflin Harcourt Trade, 2011.


Bruce Yandle is the former President of APEE and the author of the classic article on how bootleggers and Baptists often become allies in calling for government action:

Yandle, Buce. "Bootleggers and Baptists: The Education of a Regulatory Economist." Regulation 7, no. 3 (1983): 12-16.





January 13, 2012

Indian Middle Class: "The State Is Preventing Me from Doing What I Want to Do"



NagParthoIndianEntrepreneur2011-11-14.jpg"Partho Nag, a childhood friend of Shubhrangshu Roy's who lives in the same New Delhi suburb. Mr. Nag, who runs an IT service company out of his home, joined Mr. Roy and other friends as they volunteered at the Hazare protests. "We've been told since our childhoods, 'Politics is bad, don't get into politics,'" Mr. Nag said. "But the point is that somebody has to clean it up. We can't just scold people."" Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) DWARKA, India -- Shubhrangshu Barman Roy and his childhood friends are among the winners in India's economic rise. They have earned graduate degrees, started small companies and settled into India's expanding middle class. They sometimes take vacations together and meet for dinners or parties, maybe to celebrate a new baby or a new business deal.

Yet in August, Mr. Roy and his friends donned white Gandhi caps, boarded a Metro train in this fast-growing suburb of the Indian capital and rode into New Delhi like a band of revolutionaries to join the large anticorruption demonstrations led by the rural activist Anna Hazare. They waved Indian flags, distributed water to the crowds and vented their outrage at India's political status quo.

"I could feel that people really wanted change," Mr. Roy, 36, recalled proudly.

It may seem unlikely that middle-class Indians would crave change. They mostly live in rapidly growing cities and can afford cars, appliances and other conveniences that remain beyond the reach of most Indians. Theirs is the fastest growing demographic group in the country, and their buying power is expected to triple in the next 15 years, making India one of the most important consumer markets in the world.

But buying power is not political power, at least not yet in India. The wealthier India has become, the more politically disillusioned many of the beneficiaries have grown -- an Indian paradox. The middle class has vast economic clout yet often remains politically marginalized in a huge democracy where the rural masses still dominate the outcome of elections and the tycoon class has the ear of politicians.


. . .


(p. 10) "This middle class is less about 'what the state can do for me' than 'the state is preventing me from doing what I want to do,' " said Devesh Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania.

The Hazare movement rattled India's political establishment because it offered a glimpse of what could happen if the middle class was mobilized across the country. Professionals and college students provided the organizational spine, and money, that brought hundreds of thousands of people of all backgrounds onto the streets in what many described as a political awakening.


. . .


Mr. Roy and his friends, including Mr. Nag, had grown up in New Delhi in the same government housing development. They were all the sons of government bureaucrats who would later offer similar advice: Get a government job.

"He always insisted," Mr. Nag recalled of his father's prodding. "But we had an idea that a government job was too lousy."

They were teenagers in the early 1990s when Indian leaders embarked on the reforms that began dismantling the stifling licensing regulations that had choked the economy. Private enterprise, large and small, would steadily emerge as the engine of Indian growth and the delivery vehicle of growing aspirations. Mr. Nag would open a small IT service firm. Two other friends would start a textile trading company. Mr. Roy would earn graduate degrees and start a consulting firm.


. . .


On a recent afternoon, Mr. Roy pointed to a crude asphalt scar in the road where workers had installed an underground water connection. The scar extended along the road toward Mr. Roy's house, only to abruptly turn left in the direction of another building.

"You see this?" he asked, angrily. "This is a connection that comes here, but it is illegal."

For Mr. Roy, the scar in the street marks the corruption and collusion and the failure of the state to deliver on its end of India's social contract. His family is supposed to get water from a legal connection for $4 a month. Except that water is unusable. For years, his father had paid a fee to fill large jugs from a private water tanker -- until his father slipped while carrying one of them.

Mr. Roy then spent about $1,000 to build an underground water storage tank beside his home. Now, every week a tanker delivers a $30 shipment of water into the tank, while Mr. Roy also buys bottled water for drinking, bringing his monthly bill to about $160. Mr. Roy suspects that local officials, rather than correcting the situation, allow it to continue in exchange for kickbacks from the owners of the private water tankers. In the end, though, he pays.

These tales of petty graft proliferate across India, but especially in cities, analysts say, for the simple reason that cities now have more money.

McKinsey Global Institute, a consulting group, has estimated that India's middle class could grow to nearly 600 million people by 2030. Today, nearly three-quarters of India's gross domestic product comes from cities, where less than a third of India's population lives, an imbalance that correlates with the divide between middle-class economic and political power.

"For politicians, the city has primarily become a site of extraction, and the countryside is predominantly a site of legitimacy and power," Ashutosh Varshney, an India specialist at Brown University, wrote recently. "The countryside is where the vote is; the city is where the money is. Villages do have corruption, but the scale of corruption is vastly greater in cities."



For the full story, see:

JIM YARDLEY. "INDIA'S WAY; Protests Help Awaken a Goliath in India." The New York Times, First Section (Sun., October 30, 2011): 1 & 10.

(Note: ellipses added.)

(Note: the online version of the article is dated October 29, 2011 and has the title "INDIA'S WAY; Protests Awaken a Goliath in India.")





January 9, 2012

Pedro de Verona Rodrigues Pires Wins Ibrahim Prize for Achievement in African Leadership



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"Pedro de Verona Rodrigues Pires" Source of caption and photo: online version of the NYT article quoted and cited below.



(p. A10) MONROVIA, Liberia -- Pedro de Verona Rodrigues Pires, the former president of Cape Verde, the desertlike archipelago about 300 miles off the coast of West Africa, has won one of the world's major prizes, the $5 million Ibrahim Prize for Achievement in African Leadership.

The record of governing in Africa has been poor enough lately that the Mo Ibrahim Foundation decided not to award the prize for the past two years. In many African countries, leaders have refused to leave office after losing elections, tried to alter constitutions to ensure their continued tenure or gone back on pledges not to run for re-election.


. . .


Mr. Pires served two terms -- 10 years -- as president until stepping down last month. During that period, the foundation noted, Cape Verde became only the second African nation to move up from the United Nations' "least developed" category. The foundation says the prize is given only to a democratically elected president who has stayed "within the limits set by the country's constitution, has left office in the last three years and has demonstrated excellence in office."



For the full story, see:

ADAM NOSSITER. "Ex-President of Cape Verde Wins Good-Government Prize." The New York Times (Tues., October 11, 2011): A10.

(Note: ellipsis added.)

(Note: the online version of the article is dated October 10, 2011.)





December 23, 2011

When a Graph Is a Matter of Life and Death



(p. 72) In her authoritative book The Challenger Launch Decision, sociologist Diane Vaughan demolishes the myth that NASA managers ignored unassailable data and launched a mission absolutely known to be unsafe. In fact, the conversations on the evening before launch reflected the confusion and shifting views of the participants. At one point, a NASA manager blurted, "My God, Thiokol, when do you want me to launch, next April?" But at another point on the same evening, NASA managers expressed reservations about the launch; a lead NASA engineer pleaded with his people not to let him make a mistake and stated, "I will not agree to launch against the contractor's recommendation." The deliberations lasted for nearly three hours. If the data had been clear, would they have needed a three-hour discussion? Data analyst extraordinaire Edward Tufte shows in his book Visual Explanations that if the engineers had plotted the data points in a compelling graphic, they might have seen a clear trend line: every launch below 66 degrees showed evidence of (p. 73) O-ring damage. But no one laid out the data in a clear and convincing visual manner, and the trend toward increased danger in colder temperatures remained obscured throughout the late-night teleconference debate. Summing up, the O-Ring Task Force chair noted, "We just didn't have enough conclusive data to convince anyone."


Source:

Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.

(Note: italics in original.)






December 4, 2011

In Greece's Bloated Bureaucracy "It's All about Who You Know"



GreekGovernmentWorkerProtest2011-11-10.jpg "Police officers, firefighters and coast guard officers protested austerity measures in Athens on Monday." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A5) ATHENS -- Stories of eye-popping waste and abuse of power among Greece's bureaucrats are legion, including officials who hire their wives, and managers who submit $38,000 bills for office curtains.

The work force in Greece's Parliament is so bloated, according to a local press investigation, that some employees do not even bother to come to work because there are not enough places for all of them to sit.


. . .


Some experts believe that Greece could reap significant savings by reducing its bureaucracy, which employs one out of five workers in the country and by some estimates could be trimmed by as much as a third without materially affecting services. But though salaries have been cut, the government has yet to lay off anyone.

The main reason is also one of the very reasons that Greece got into trouble in the first place: The government is in many ways an army of patronage appointments built up over decades. When election time rolls around, state workers become campaign workers, and their reach is enormous. There are so many of them that almost every family has one.


. . .


Whether the right workers will be laid off remains an open question. "A lot of people in the government are terrified," Mr. Hlepas said. "They don't think any of those people over in Parliament are going to go. They think the ones that do the work will get cut."

Thomas Tsamatsoulis, 41, who works for the Greek equivalent of the Federal Aviation Administration, said he found himself on an early list headed for the reserve pool, though he had been sent to the United States for electronics training and now has a skill that is rare in his agency. At the same time, Mr. Tsamatsoulis said, the agency, which has just two airplanes, has more than 15 pilots.

"You want to believe the government will do this right," he said. "But it is very difficult. It's not how it has worked in the past. It's all about who you know."

Greece's bureaucracy has been growing steadily since democracy was reinstated in 1974, with each new administration adding its supporters to the payroll -- and wages rising steeply in the past decade, experts say.

"There was really a party going on," said Yannis Stournaras, an economist and the director of the Foundation for Economic and Industrial Research in Athens. "The government kept adding bonuses and benefits and pensions. At election time there was a boom cycle as they handed out jobs."

"Now they need to cut," he added. "But they have already lost precious time."

Stories of excesses abound. Mr. Papandreou told Parliament that one of his ministers found a predecessor's $38,000 bill for curtains when the Socialists returned to power in 2009. Mr. Mossialos said he found that his own ministry, for media and communication, was spending $750,000 a year for office space for just 11 people.

But some experts question whether the culture of bloat and favoritism will ever be conquered.



For the full story, see:

SUZANNE DALEY. "Bureaucracy in Greece Defies Efforts to Cut It." The Wall Street Journal (Tues., October 18, 2011): A2.

(Note: ellipses added.)

(Note: the online version of the article is dated October 17, 2011.)






October 17, 2011

The Lancet Accused Snow of Being "in the Pocket of Business Interests"




(p. 365) It is hard now to appreciate just how radical and unwelcome Snow's views were. Many authorities actively detested him for them. The Lancet concluded that he was in the pocket of business interests which wished to continue to fill the air with 'pestilent vapours, miasms and loathsome abominations of every kind' and make themselves rich by poisoning their neighbours. 'After careful enquiry,' the parliamentary inquiry concluded, 'we see no reason to adopt this belief.'


Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

(Note: italics in original.)





September 26, 2011

Solyndra Debacle Illustrates Why Feds Should Not Pick Tech Winners



The clip above is embedded from the Jon Stewart "The Daily Show" episode that was aired on Thurs., September 15, 2011.



Government "industrial policy" is likely to fail for many reasons. One is that the government decision makers are unlikely to know which future technologies will turn out to be the best ones. Another reason is that even if they know, government decision makers often decide based on what is politically expedient or what is beneficial to their friends.

Solyndra is a case in point, as Jon Stewart hilariously reveals.






September 23, 2011

Navigation Acts, Were "Insanely Inefficient, but Gratifyingly Lucrative to British Merchants and Manufacturers"




(p. 297) Many of Monticello's quirks spring from the limitations of Jefferson's workmen. He had to stick to a simple Doric style for the exterior columns because he could find no one with the skills to handle anything more complex. But the greatest problem of all, in terms of both expense and frustration, was a lack of home-grown materials. It is worth taking a minute to consider what the American colonists were up against in trying to build a civilization in a land without infrastructure.

(p. 298) Britain's philosophy of empire was that America should provide it with raw materials at a fair price and take finished products in return. The system was enshrined in a series of laws known as the Navigation Acts, which stipulated that any product bound for the New World had either to originate in Britain or pass through it on the way there, even if it had been created in, say, the West Indies, and ended up making a pointless double crossing of the Atlantic. The arrangement was insanely inefficient, but gratifyingly lucrative to British merchants and manufacturers, who essentially had a fast-growing continent at their commercial mercy. By the eve of the revolution America effectively was Britain's export market. It took 80 per cent of British linen exports, 76 per cent of exported nails, 60 per cent of wrought iron and nearly half of all the glass sold abroad. In bulk terms, America annually imported 30,000 pounds of silk, 11,000 pounds of salt and over 130,000 beaver hats, among much else. Many of these things - not least the beaver hats - were made from materials that originated in America in the first place and could easily have been manufactured in American factories - a point that did not escape the Americans.



Source:

Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.





September 4, 2011

Political Ideology Matters in Hiring and Tenure



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Source of book image:
http://images.borders.com.au/images/bau/97816025/9781602582682/0/0/plain/compromising-scholarship-religious-and-political-bias-in-american-higher-education.jpg




(p. 34) . . . when a faculty committee is looking to hire or award tenure, political ideology seems to make a difference, according to a "collegiality survey" conducted by George Yancey.

Dr. Yancey, a professor of sociology at the University of North Texas, asked more than 400 sociologists which nonacademic factors might influence their willingness to vote for hiring a new colleague. You might expect professors to at least claim to be immune to bias in academic hiring decisions.

But as Dr. Yancey reports in his new book, "Compromising Scholarship: Religious and Political Bias in American Higher Education," more than a quarter of the sociologists said they would be swayed favorably toward a Democrat or an A.C.L.U. member and unfavorably toward a Republican. About 40 percent said they would be less inclined to vote for hiring someone who belonged to the National Rifle Association or who was an evangelical. Similar results were obtained in a subsequent survey of professors in other social sciences and the humanities.



For the full commentary, see:

LAURA PAPPANO. "The Master's as the New Bachelor's." The New York Times, EducationLife Section (Sun., July 24, 2011): 34.

(Note: ellipsis added.)

(Note: the online version of the commentary is dated July 22, 2011.)


Book mentioned:

Yancey, George. Compromising Scholarship; Religious and Political Bias in American Higher Education. Waco, TX: Baylor University Press, 2011.






July 24, 2011

Bricks-and-Mortar Restaurants Use Police (Instead of Better Food) to Beat Food Trucks



KimImaAndKennyLaoFoodTruck2011-07-16.jpg "Kim Ima and Kenny Lao parked their food trucks on Front Street in Dumbo." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. D4) FOOD trucks, those rolling symbols of New York City's infatuation with haute casual food, are suddenly being chased from Midtown Manhattan. In the last 10 days, the Treats Truck, which has sold cookies and brownies for four years during lunchtime at West 45th Street near Avenue of the Americas, has been told by police officers that it is no longer welcome there, nor at its late-afternoon 38th Street and Fifth Avenue location. The Rickshaw Dumpling truck, a presence for three years at West 45th Street near the Treats Truck, has been shooed away as well.

The police "have told us they no longer want food trucks in Midtown," said Kim Ima, the owner of the Treats Truck, a pioneer of the city's new-wave food-truck movement, who began cultivating customers on West 45th Street in 2007.


. . .


Mr. Lao and other food-truck operators said they suspect that the police are responding to complaints by brick-and-mortar businesses that resent competition. Such was the case last year, when store merchants on the Upper East Side complained about Patty's Taco Truck, which sold tortas, tacos de lengua and cemitas on Lexington Avenue. The truck was towed several times and the operator arrested, prompting the Street Vendor Project, an advocate for vendors based at the Urban Justice Center, to file the lawsuit that resulted in Judge Wright's ruling, which said food is merchandise that can be regulated.



For the full story, see:

GLENN COLLINS. "Food Trucks Shooed From Midtown." The New York Times (Weds., June 29, 2011): D4.

(Note: ellipsis added.)

(Note: the online version of the story is dated June 28, 2011.)






June 7, 2011

Government Administrators Steal Money, Food and Benefits from Poor in India



(p. A8) NEW DELHI -- India spends more on programs for the poor than most developing countries, but it has failed to eradicate poverty because of widespread corruption and faulty government administration, the World Bank said Wednesday.


. . .


One of the primary problems, the World Bank said, was "leakages" -- an often-used term in development circles that refers to government administrators and middle men stealing money, food and benefits. The bank said that 59 percent of the grain allotted for public distribution to the poor does not reach those households.



For the full story, see:

"India's Anti-Poverty Programs Are Big but Troubled." The New York Times (Thurs., May 19, 2011): A8.

(Note: ellipsis added.)

(Note: the online version of the story is dated May 18, 2011, has the title "India's Anti-Poverty Programs Are Big but Troubled," is attributed to Heather Timmons, and is considerably more detailed than the published version.)





May 29, 2011

Georgia Taxpayers Pay for "Go Fish" Museum in Former Governor's Home Town



BassLargemouthGoFishMuseum2011-05-19.jpg "A largemouth bass dominates the hatchery display at Go Fish Georgia Educational Center, a museum financed partly by the state and approved when the economy was more robust." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. A14) PERRY, Ga. -- Every weekend, Michael Morris and his 2-year-old son, Jacob, visit this small town's enormous new $14 million fishing museum. They watch bream and bass swim in aquarium-size tanks. They play with an interactive model of a fishing boat and try to catch fish on a computer simulation using a rod and reel connected to a video screen.

And because the museum, the Go Fish Georgia Educational Center, is primarily financed by the state, their father-and-son outings cost only $5.


. . .


But not all Georgia taxpayers are so thrilled. Even before the museum opened in October, "Go Fish" had become shorthand in state political circles for wasteful spending. Republicans and Democrats alike groaned over $1.6 million a year in bond payments and operating costs. And even supporters concede that the museum would never have gotten financed in 2007 if the legislature knew where the economy was headed.


. . .


And then there is the controversy over the museum's location -- in the home county of its main supporter, former Gov. Sonny Perdue, a Republican who left office this month after two terms.



For the full story, see:

ROBBIE BROWN. "New Fishing Museum Becomes Symbol of Waste in Georgia." The New York Times (Tues., January 18, 2011): A14.

(Note: ellipses added.)

(Note: the online version of the article is dated January 17, 2011 and has the title "Fishing Museum Is Symbol of Waste in Georgia.")





April 19, 2011

To Do Business in India, Bureaucrats Still Must Be Bribed



TataRatan2011-04-18.jpg "In the twilight of his career heading Tata Group, Ratan Tata says he was thwarted in his homeland by arbitrary regulatory decisions and corruption."


(p. B1) NEW DELHI--Ratan Tata has transformed Tata Group into the world's best-known Indian company, the owner of Jaguar cars, the Pierre Hotel in New York and Tetley tea.

But in the twilight of his career as chairman of the $67.4 billion conglomerate, Mr. Tata, 73 years old, is frustrated that he hasn't been able to expand more in his native India. He says bureaucratic delays, arbitrary regulatory decisions and widespread corruption have thwarted his domestic ambitions in such sectors as steel, power, aviation and telecommunications.


. . .


. . . 20 years after . . . reforms began, New Delhi still exerts tight control over large swaths of the economy. All too often, Mr. Tata and other critics say, regulators are picking winners and losers through their decisions, either by delaying certain projects and green-lighting others or by freeing up natural resources for some companies at the expense of others.

"Economically it is a much more open environment. It's one that fosters a fair amount of free enterprise until you need approvals or some kind of sanction to get something done," Mr. Tata said during an interview at the Tata-owned Taj Mahal hotel in New Delhi. "Then you still have problems, and maybe more acute then you did before."


. . .


As chairman, one of Mr. Tata's first goals was to get Tata back into the airline business. The company's former airline had been nationalized to form Air India. He planned a venture with Singapore Airlines. But, he says, aviation ministry bureaucrats held up his application for years despite his constant prodding. An aviation ministry spokeswoman didn't respond to a request for comment.

In 1998, after seven years of government inaction, Mr. Tata withdrew the application. "We went through three governments, three prime ministers, and each time there was a particular individual that thwarted our efforts," he said in a TV interview last fall. He recalled a conversation with a fellow industrialist several years ago. "He said, 'I don't understand. You people are very stupid.... Why don't you just pay?'"

Paying bribes isn't his style, Mr. Tata says. "Maybe I'm stupid or old fashioned, but I really want to go to bed at night saying I haven't succumbed to this."



For the full story, see:

AMOL SHARMA. "India's Tata Finds Home Hostile; Chair of Nation's Best-Known Company Says Bureaucracy Slows Domestic Growth." The Wall Street Journal (Weds., April 13, 2011): B1-B2.

(Note: ellipses added, except for the one after the word "stupid" which appears in the original.)

(Note: in the online version of the article, the final paragraph quoted above reads: "Mr. Tata says paying bribes isn't his style. "Maybe I'm stupid or old fashioned, but I really want to go to bed at night saying I haven't succumbed to this," he says."





April 4, 2011

Father of Cornhusker Kickback Is Named "2010 Porker of the Year"



(p. 6A) Sen. Ben Nelson can't shake the "Cornhusker Kickback."

This week, a government watchdog group named the Nebraska Democrat its "2010 Porker of the Year," based on an online poll.

Citizens Against Government Waste included Nelson in the poll, citing his role negotiating a pro­vision of the federal health care bill that would have exempted Nebraska from paying the added costs of the law's expanded Med­icaid coverage. That provi­sion was later dropped in fa­vor of relief for all states, which Nelson has said was his goal all along.

Nelson cast the decisive 60th vote for the bill in late 2009.


. . .


Mark Fahleson, chairman of the Nebraska Republican Party, said Nelson was trying to rewrite history. "The fact is he's the fa­ther of the Cornhusker Kick­back," he said.



For the full story, see:

MICHAEL O'CONNOR. "Nelson rejects group's 'Porker of Year' label." Omaha World-Herald (Fri., March 4, 2011): 6A.

(Note: ellipsis added.)





February 26, 2011

How Bacardi Fought Predatory Taxation in Pre-Castro Cuba



BacardiAndTheLongFightForCubaBK2011-02-05.jpg











Source of book image: http://www.nytimes.com/2008/09/21/business/21shelf.html?_r=1





(p. W6) When it comes to chronicling the Bacardi rum dynasty, the best model may be "Buddenbrooks" or some other novelistic attempt to capture the experience of a family business trying to survive across generations. Tom Gjelten's "Bacardi and the Long Fight for Cuba" -- though fact-driven history and far more upbeat that Thomas Mann's tale of dynastic decline -- feels very much in this literary tradition.


. . .


Perhaps the most fascinating figure in the Bacardi tale is José Bosch, called Pepín, a young businessman who also married into the Bacardi family and was an early opponent of Gerardo Machado's corrupt rule in the 1920s. Machado made Bacardi, one of Cuba's most successful companies, a target of predatory taxation, but a proposed rum tax was more than the distiller could stand. Bacardi opened new facilities in Mexico and threatened to move its operations there if the tax was enacted. The Cuban legislature dropped the idea -- and Bacardi soon found itself with a Mexican distillery it didn't need, trying to sell a liquor to tequila- quaffing public that didn't want it.

Bosch was dispatched in 1933 to shut down the Mexican facility, but instead he saved it. "Noticing that Mexicans drank a lot of Coca-Cola," Mr. Gjelten writes, Bosch urged the company to promote Bacardi-and-Coke cocktails. Observing the rich tradition of Mexican handicrafts, he also suggested that the locals would be more inclined to drink rum if it was sold in the sort of wicker-covered jugs often used for it in Cuba. Sales in 1934 doubled.



For the full review, see:

ALVARO VARGAS LLOSA. "The Family Spirit." The Wall Street Journal (Fri., September 12, 2008): W6.

(Note: ellipsis added.)


The book being reviewed, is:

Gjelten, Tom. Bacardi and the Long Fight for Cuba: The Biography of a Cause. New York: Viking Penguin, 2008.





February 16, 2011

UFT "Trying to Deny Poor Parents Choice for Their Children"



SacklerMadeleine2011-02-05.jpg
















Madeleine Sackler. Source of image: online version of the WSJ article quoted and cited below.





(p. A13) 'What's funny," says Madeleine Sackler, "is that I'm not really a political person." Yet the petite 27-year-old is the force behind "The Lottery"--an explosive new documentary about the battle over the future of public education opening nationwide this Tuesday.

In the spring of 2008, Ms. Sackler, then a freelance film editor, caught a segment on the local news about New York's biggest lottery. It wasn't the Powerball. It was a chance for 475 lucky kids to get into one of the city's best charter schools (publicly funded schools that aren't subject to union rules).

"I was blown away by the number of parents that were there," Ms. Sackler tells me over coffee on Manhattan's Upper West Side, recalling the thousands of people packed into the Harlem Armory that day for the drawing. "I wanted to know why so many parents were entering their kids into the lottery and what it would mean for them." And so Ms. Sackler did what any aspiring filmmaker would do: She grabbed her camera.


. . .


But on the way to making the film she imagined, she "stumbled on this political mayhem--really like a turf war about the future of public education." Or more accurately, she happened upon a raucous protest outside of a failing public school in which Harlem Success, already filled to capacity, had requested space.

"We drove by that protest," Ms. Sackler recalls. "We were on our way to another interview and we jumped out of the van and started filming." There she discovered that the majority of those protesting the proliferation of charter schools were not even from the neighborhood. They'd come from the Bronx and Queens.

"They all said 'We're not allowed to talk to you. We're just here to support the parents.'" But there were only two parents there, says Ms. Sackler, and both were members of Acorn. And so, "after not a lot of digging," she discovered that the United Federation of Teachers (UFT) had paid Acorn, the controversial community organizing group, "half a million dollars for the year." (It cost less to make the film.)

Finding out that the teachers union had hired a rent-a-mob to protest on its behalf was "the turn for us in the process." That story--of self-interested adults trying to deny poor parents choice for their children--provided an answer to Ms. Sackler's fundamental question: "If there are these high-performing schools that are closing the achievement gap, why aren't there more of them?"



For the full interview, see:

BARI WEISS. "THE WEEKEND INTERVIEW; Storming the School Barricades; A new documentary by a 27-year-old filmmaker could change the national debate about public education." The Wall Street Journal (Sat., JUNE 5, 2010): A13.

(Note: ellipsis added.)

(Note: the first paragraph quoted above has slightly different wording in the online version than the print version; the second paragraph quoted is the same in both.)





November 17, 2010

Public Employees' Union Was Biggest Spender in 2010 Election



(p. A1) The American Federation of State, County and Municipal Employees is now the biggest outside spender of the 2010 elections, thanks to an 11th-hour effort to boost Democrats that has vaulted the public-sector union ahead of the U.S. Chamber of Commerce, the AFL-CIO and a flock of new Republican groups in campaign spending.

The 1.6 million-member AFSCME is spending a total of $87.5 million on the elections after tapping into a $16 million emergency account to help fortify the Democrats' hold on Congress. Last week, AFSCME dug deeper, taking out a $2 million loan to fund its push. The group is spending money on television advertisements, phone calls, campaign mailings and other political efforts, helped by a Supreme Court decision that loosened restrictions on campaign spending.

"We're the big dog," said Larry Scanlon, the head of AFSCME's political operations. "But we don't like to brag."



For the full story, see:

BRODY MULLINS And JOHN D. MCKINNON. "Campaign's Big Spender; Public-Employees Union Now Leads All Groups in Independent Election Outlays." The Wall Street Journal (Fri., OCTOBER 22, 2010): A1 & A4.





November 10, 2010

Feds Chastise Us for Being Fat AND Urge Us to Eat More Cheese Pizzas



PizzaCheeseFat2010-11-08.jpg "A government-created industry group worked with Domino's Pizza to bolster sales by increasing the cheese on pies." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 1) Domino's Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies.

Then help arrived from an organization called Dairy Management. It teamed up with Domino's to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.

Consumers devoured the cheesier pizza, and sales soared by double digits. "This partnership is clearly working," Brandon Solano, the Domino's vice president for brand innovation, said in a statement to The New York Times.

But as healthy as this pizza has been for Domino's, one slice contains as much as two-thirds of a day's maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.

And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture -- the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.


. . .


When Michelle Obama implored restaurateurs in September to help fight obesity, she cited the proliferation of cheeseburgers and macaroni and cheese. "I (p. 23) want to challenge every restaurant to offer healthy menu options," she told the National Restaurant Association's annual meeting.

But in a series of confidential agreements approved by agriculture secretaries in both the Bush and Obama administrations, Dairy Management has worked with restaurants to expand their menus with cheese-laden products.



For the full story, see:

MICHAEL MOSS. "While Warning About Fat, U.S. Pushes Cheese Sales." The New York Times, First Section (Sun., November 7, 2010): 1 & 23.

(Note: the online version of the story is dated November 6, 2010.)

(Note: ellipsis added.)



PizzaGraphic2010-11-08.jpgSource of graphic: online version of the NYT article quoted and cited above.





August 22, 2010

"Pork Actually Pushes Private Investment Out of a State"



Some West Virginia miners may have faced unemployment due to technological progress. But what they needed to improve their situation was economic growth from private enterprise, rather than Senator Robert Byrd's federal pork.


(p. A11) . . . mining companies developed more efficient techniques for extracting coal and natural gas, which eliminated the need for many blue collar jobs. Laid-off workers lacked the skills to attract other types of businesses and college students couldn't find jobs after graduation, so they left. Such dramatic changes would be serious obstacles for any politician.

. . .


By contrast, Byrd's solution was to steer federal largess to his state.


. . .


Take Route 50. Thirty years ago, the federal government extended the route from two lanes to four with the hopes of spurring development. But hit the open road today and you'll notice it's just that--open. "You won't see another car for two hours," says Russell Sobel, a professor of economics at West Virginia University. "You can't just build roads and expect that things will happen. People who want to transport goods and services need to be there."


. . .


"We've created this culture of dependency," warns Mr. Sobel, "Our human capital is not good at competing in the marketplace; it's good at securing federal grants."

Federal funding is a shaky foundation for an economy because no one can replace Big Daddy. In their recently released paper "Do Powerful Politicians Cause Corporate Downsizing?" Harvard professors Lauren Cohen, Joshua Coval and Christopher Malloy found that states that lose chairmanships on important congressional committees lose 20% to 30% in earmarks.

Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state's workers and real estate, jacking up prices. Often, companies can't compete, so they flee.



For the full commentary, see:

BRIAN BOLDUC. "CROSS COUNTRY; Robert Byrd's Highways to Nowhere; Government pork hasn't made West Virginia prosperous." The Wall Street Journal (Sat., JULY 10, 2010): A11.

(Note: ellipses added.)


The research referenced is:

Cohen, Lauren, Joshua D. Coval, and Christopher J. Malloy. "Do Powerful Politicians Cause Corporate Downsizing?" NBER Working Paper No.15839, March 2010.





June 18, 2010

Mob Museum Financed from Local, State and Federal Tax Dollars



LasVegasOldFedCourthouse2010-05-19.jpg"The $42 million museum has been financed through a series of state, federal and local grants. It is set to open next March." Source of caption and photo: online version of the NYT article quoted and cited below.


(p. 4) The idea for the Las Vegas Museum of Organized Crime and Law Enforcement was seeded when the city bought the 1933 federal courthouse and post office from the federal government for $1 in 2002, with the strict understanding that the building -- one of the oldest in Southern Nevada -- be used for cultural purposes.

For much of the middle of the last century, organized crime ruled the Strip, developing and managing an array of casinos, skimming their way to success. Federal prosecutors put an end to their reign in the 1980s. The city determined its historical relationship to organized crime -- and the role the courthouse played in it -- made the site a perfect fit.


. . .


The $42 million project has been financed through a series of state, federal and local grants, and the work has progressed a bit glacially as money has trickled in.

The project, once listed as one that could stimulate this city's embattled economy, was attacked by Senator Mitch McConnell, the Republican leader, when city officials suggested that it might qualify for federal stimulus money.



For the full story, see:

JENNIFER STEINHAUER. "'2 Mob Museums in Las Vegas, Ready to Go to the Mattresses." The New York Times, First Section (Sun., April 25, 2010): 1 & 4.

(Note: ellipsis added.)

(Note: the online version of the article is dated April 24, 2010 and has the title "Vegas Mob Museums, Set to Go to the Mattresses.")





May 30, 2010

MidAmerican Energy Gives Ben Nelson a $1.1 Million Ride from Georgia to Omaha



(p. 3B) LINCOLN -- MidAmerican Energy is suing the state after state officials grounded a $1.1 million sales tax refund the company expected on the purchase of a corporate jet.

Under Nebraska's 1987 economic development act, LB 775, companies can get sales tax refunds for such aircraft.

But the Nebraska Department of Revenue rejected the refund because MidAmerican's multimillion-dollar Falcon 50EX jet, purchased in 2004, was used to transport U.S. Sen. Ben Nelson, D-Neb., on a trip between Albany, Ga., and Omaha on Nov. 28, 2006.

Using such planes for fundraising or transporting an elected official disqualifies a company from getting the sales tax benefit, State Tax Commissioner Doug Ewald ruled, citing prohibitions in LB 775.

MidAmerican, an Iowa-based energy firm headed by Omaha businessman David Sokol, is appealing.

The company is asking the Lancaster County District Court to overturn the department's March ruling.

MidAmerican argued that a single trip taken by Nelson should not be enough to deny the refund. It also maintained that the state, under LB 775, should have based its ruling on the intended purpose of the airplane and can test that use only when the plane is purchased.



For the full story, see:

Paul Hammel. "MidAmerican Sues State Over Tax Credit on Jet." Omaha World-Herald (Friday, May 7, 2010): 3B.

(Note: the online version of the article was dated Thursday, May 6, 2010 and had the title "MidAmerica (sic) sues Neb. for refund.")





May 28, 2010

FDR's Logrolling to Pack Supreme Court



The unsavory political practice known as "logrolling" is discussed in one of the public choice chapters of the Gwartney et al text that I use in my micro principles courses. Here is an apt example:


(p. 193) . . . , McCarran was more than ever determined to (p. 194) fight the Court-packing plan, even if he lost all of his federal patronage.

Roosevelt had some success charming more malleable politicians such as young Florida senator Claude Pepper. Roosevelt invited the wavering Pepper into the Oval Office and turned on the charm. It helped even more when he turned on the spigot. "The president," Pepper recalled, "was not above a little logrolling, promising to help me win re-election in 1938 and, in my presence, notifying the army that he wanted to see some favorable action on a Florida canal project that I had been pushing." Pepper ended up backing Roosevelt.




Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipsis added.)





May 26, 2010

Reid on Ben Nelson's Cornhusker Kickback: "He Got This for Him­self; He Wanted It"



(p. 5A) WASHINGTON -- Senate Ma­jority Leader Harry Reid this week defended the now-defunct Nebraska Medicaid exemption that was tucked into the Senate health care bill as Reid sought the support of Sen. Ben Nelson, D-Neb.

Nelson has said that he never asked for the exemption and that his goal all along was to provide relief for all states.

Tagged with the derisive moni­ker "Cornhusker kickback," the arrangement quickly proved po­litically toxic.


. . .


Asked why he didn't offer the same deal to every state from the start, Reid said, "Because I didn't have it for everybody at that time. I thought I could get it as we moved along in the legisla­tion, and I did."

Van Susteren said: "You're telling me that when Ben Nelson got that, when the two of you sat down together, you said, 'Ben, we'll do it this way. ... Nebraska's got it now, but after we get this passed we're going to go for ev­erybody?' " "No, no, no. He got this for him­self. He wanted it," Reid said.



For the full story, see:

JOSEPH MORTON. "Reid thought Nelson should boast of 'kickback'; The Senate leader says it was a "terrific" Medicaid deal that all states now share." Omaha World-Herald (Weds., April 7, 2010): 5A.

(Note: first ellipsis added; second ellipsis in original.)





May 23, 2010

Ben "Kickback" Nelson Seeks More Earmarks



NelsonBenEarmarksGraph2010-05-18.jpg Source of graph and photo: online version of the Omaha World-Herald article quoted and cited below.


(p. 1A) WASHINGTON -- In the battle to secure federal earmarks for Nebraska, Sen. Ben Nelson is feeling lonely this year.

The Nebraska Democrat is seeking 51 earmarks worth $183.1 million. The four other members of the Nebraska con­gressional delegation, all Republicans, have submitted no requests this year, three of them agreeing to a House GOP moratorium.

That's a big change from 2009, when Rep. Lee Terry re­quested 11 earmarks totaling more than $85 million, Rep. Jeff Fortenberry sought 28 earmarks totaling more than $75 million and Rep. Adrian Smith sought two earmarks to­taling $1.2 million.

Sen. Mike Johanns has abstained from seeking earmarks since joining the Senate in 2009.


. . .


(p. 2A) Johanns has criticized ear­marking as a method of direct­ing taxpayer money based on lawmaker clout rather than a project's merits. He said last week that the process would be better if lawmakers had to jus­tify their individual earmarks at hearings.




For the full story, see:

JOSEPH MORTON . "Nelson stands alone on earmark requests; He is seeking $183 million for Nebraska projects while the state's GOP lawmakers sit out this round." Omaha World-Herald (Tues., May 18, 2010): 1A & 2A.

(Note: ellipsis added.)





May 20, 2010

"I Cannot Consent to Buy Votes with the People's Money"



(p. 91) . . . Thomas Gore, . . . was first elected to the Senate in 1907, the year Oklahoma became a state. Gore had a populist streak in him, but he always recognized the protections to individual liberty that came from limited government. In the 1930s, therefore, he strongly opposed the federal government going into the relief business. Interestingly, Gore was made totally blind by two childhood accidents. He still managed to become a lawyer, and as a senator, he had to have family members or staff assistants read bills, books, and newspapers to him. Yet he claimed to see clearly through the political chicanery that would occur if the federal government entered the relief business. No depression, Gore argued, "can be ended by gifts, gratuities, doles, and alms handed out by the Federal Treasury and extorted from taxpayers that are bleeding at every pore." On the issue of relief, especially, Gore argued that state and city officials "have immediate contact" with hardship cases and can best "superintend the dispensation of charity." Soon after the ERA brought federal relief into existence, Gore said, "The day on which we began to make these loans by the Federal Government to States, counties, and cities was a more evil day in the history of the Republic than the day on which the Confederacy fired upon Fort Sumter."

In 1935, Gore helped lead the charge in Congress against funding the WPA with $4.8 billion. After he spoke against the bill, thousands of people in southeast Oklahoma held a mass meeting to denounce Gore. They sent him a telegram demanding that he cast his vote for the WPA and, by implication, start bringing more fed-(p. 92)eral dollars into Oklahoma. Gore responded with a telegram of his own. Your action, he wrote, "shows how the dole spoils the soul. Your telegram intimates that your votes are for sale. Much as I value votes I am not in the market. I cannot consent to buy votes with the people's money. I owe a debt to the taxpayer as well as to the unemployed." Shortly after dictating these words, the blind Senator was led to the Senate floor to cast a lonely vote against the WPA.



Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: ellipses added.)





May 12, 2010

FDR Spent Other People's Money Freely, But Was Stingy with His Own



(p. 75) . . . when Roosevelt was spending his own money, he was sometimes very stingy. For example, when Roosevelt traveled by train from Washington to Hyde Park, he always wanted a private car for himself and his staff: Servicing this private car, which might include providing dozens of meals, newspapers, and various amenities for the president and his staff would require great diligence and attention to detail. But for round-trip service on Roosevelt's private car, he tipped the porter a mere five dollars. The reporters. on their car nearby, combined to tip eight to ten times more than the president did. Walter Trohan of the Chicago Tribune observed the unhappiness this created:

FDR wasn't a heavy tipper at any time, but was less so aboard trains. He gave five dollars to the porter on his car for the round trip from Washington to Hyde Park, which included payment for what guests he might have in his car. In the press car we each gave two dollars for the trip, but there were about twenty of us all told. Sam [Mitchell, the porter] soon begged off the private car; the honor of serving the President faded for a man raising a family and sending a boy to college as well as paying for a home, when he could count on forty dollars in the press car as against five dollars in the private car.



Source:

Folsom, Burton W., Jr. New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America. New York: Threshold Editions, 2008.

(Note: italics in original; ellipsis added.)





March 5, 2010

Arnold on Ben Nelson's Cornhusker Kickback: "He Got the Corn; We Got the Husk"



(p. A16) Senator Ben Nelson, Democrat of Nebraska, has been under fire in recent days for winning some plum provisions for his home state in exchange for voting for his party's big health care legislation.


. . .


In perhaps the most pointed criticism yet, Gov. Arnold Schwarzenegger of California, in his State of the State address on Wednesday, said: "California's Congressional delegation should either vote against this bill that is a disaster for California or get in there and fight for the same sweetheart deal Senator Nelson of Nebraska got for the Cornhusker State. He got the corn; we got the husk."




For the full story, see:

DAVID M. HERSZENHORN. "Prescriptions; Making Sense of the Health Care Debate; Spreading the Golden Corn." The New York Times (Fri., January 8, 2010): A16.

(Note: the online version of the story had the very different title: "Prescriptions; Making Sense of the Health Care Debate; Nelson to Fight for All States" and had the date January 7, 2010.")

(Note: ellipsis added.)





February 5, 2010

Washington's Influence Business is "Booming" Though Fewer Register as Lobbyists



(p. A1) WASHINGTON -- Ellen Miller, co-founder of the Sunlight Foundation, has spent years arguing for rules to force more disclosure of how lobbyists and private interests shape public policy. Until recently, she herself registered as a lobbyist, too, publicly reporting her role in the group's advocacy of even more reporting. Not anymore.

In light of strict new regulations imposed by Congress over the last two years, Ms. Miller joined a wave of policy advocates who are choosing not to declare themselves as lobbyists.

"I have never spent much time on Capitol Hill," Ms. Miller said, explaining that she only supervises those who press lawmakers directly. "I am not lobbying, so why fill out the forms?"

Her frankness makes Ms. Miller a standout among hundreds of others who are making the same decision. Though Washington's influence business is by all accounts booming, a growing number of its practitioners are taking a similar course to avoid the spotlight of public disclosure.

"All the increasing restrictions on lobbyists are a disincentive to be a lobbyist, and those who think they can deregister are eagerly doing so," said Jan Baran, a veteran political lawyer who has been fielding questions from clients hoping to escape registration. "It is creating some apparent contradictions."


. . .


(p. A12) But for all its penalties, the law left the definition of a lobbyist fairly elastic. The criteria included getting paid to lobby, contacting public officials about a client's interests at least twice in a quarter and working at least 20 percent of the time on lobbying-related activities for the client.

Enforcement is also light. Lobbyists suspected of failing to file receive at least one official letter offering a chance to rectify their status before any legal action is taken.

After the rules changed, private companies and nonprofit groups immediately began to rethink their registration.

The Union of Concerned Scientists, which advocates on arms control, energy policy and environmental issues, had previously registered almost anyone who went to Capitol Hill on its behalf, said Stephen Young, a senior analyst for the group. That changed after the new law.

"We thought: 'Hmm, this is now not such an easy thing. Let's see if we are required to do it. We are not? Let's take them off,' " he said. The group terminated the registrations of "virtually all" its former lobbyists, he said.




For the full story, see:

DAVID D. KIRKPATRICK. "Law to Curb Lobbying Sends It Underground." The New York Times (Mon., JANUARY 18, 2010): A1 & A12.

(Note: the online version of the article is dated January 17, 2010.)

(Note: ellipsis added.)





January 8, 2010

Obama's Bigger Government Brings More Lobbyists to Washington



(p. A21) One insight distinguished Barack Obama from the other presidential candidates last year. While he lacked experience or a special grasp of issues, Mr. Obama said he uniquely understood what ails Washington, and what was causing the endless squabbling and bitter stalemate on important issues. If elected, he said he would change the way business is done in Washington, end the partisan deadlock and the ideological polarization.

"Change must come to Washington," Mr. Obama said in a June 2008 speech. "I have consistently said when it comes to solving problems," he told Jake Tapper of ABC News that same month, "I don't approach this from a partisan or ideological perspective."

Mr. Obama also decried the prominent role played by lobbyists. "Lobbyists aren't just a part of the system in Washington, they're part of the problem," Mr. Obama said in a May 2008 campaign speech.

I was reminded of this last statement by a recent headline on the front page of USA Today. It read: "Health care fight swells lobbying. Number of organizations hiring firms doubles in '09." The article suggested that what Mr. Obama had promised to fix had only gotten worse.


. . .


In Washington it's business as usual, except for one thing. The bigger the role of government, the more lobbyists flock to town. By pushing for his policies, the president effectively put up a welcome sign to lobbyists. Despite promising to keep them out of his administration, he has even hired a few. So nothing has changed, except maybe that Washington is now more acrimonious than it has been.




For the full commentary, see:

FRED BARNES. "OPINION; Why Obama Isn't Changing Washington; There is no way he can grow the government without attracting more lobbyists and more political acrimony." The Wall Street Journal (Fri., NOVEMBER 27, 2009): A21.

(Note: ellipsis added.)

(Note: the date of the online version is given as NOVEMBER 26, 2009.)





December 24, 2009

Heretics to the Religion of Global Warming



SuperFreakonomicsBK.jpg















Source of book image: online version of the WSJ review quoted and cited below.



(p. A19) Suppose for a minute--. . . --that global warming poses an imminent threat to the survival of our species. Suppose, too, that the best solution involves a helium balloon, several miles of garden hose and a harmless stream of sulfur dioxide being pumped into the upper atmosphere, all at a cost of a single F-22 fighter jet.


. . .


The hose-in-the-sky approach to global warming is the brainchild of Intellectual Ventures, a Bellevue, Wash.-based firm founded by former Microsoft Chief Technology Officer Nathan Myhrvold. The basic idea is to engineer effects similar to those of the 1991 mega-eruption of Mt. Pinatubo in the Philippines, which spewed so much sulfuric ash into the stratosphere that it cooled the earth by about one degree Fahrenheit for a couple of years.

Could it work? Mr. Myhrvold and his associates think it might, and they're a smart bunch. Also smart are University of Chicago economist Steven Levitt and writer Stephen Dubner, whose delightful "SuperFreakonomics"--the sequel to their runaway 2005 bestseller "Freakonomics"--gives Myhrvold and Co. pride of place in their lengthy chapter on global warming. Not surprisingly, global warming fanatics are experiencing a Pinatubo-like eruption of their own.


. . .


. . . , Messrs. Levitt and Dubner show every sign of being careful researchers, going so far as to send chapter drafts to their interviewees for comment prior to publication. Nor are they global warming "deniers," insofar as they acknowledge that temperatures have risen by 1.3 degrees Fahrenheit over the past century.

But when it comes to the religion of global warming--the First Commandment of which is Thou Shalt Not Call It A Religion--Messrs. Levitt and Dubner are grievous sinners. They point out that belching, flatulent cows are adding more greenhouse gases to the atmosphere than all SUVs combined. They note that sea levels will probably not rise much more than 18 inches by 2100, "less than the twice-daily tidal variation in most coastal locations." They observe that "not only is carbon plainly not poisonous, but changes in carbon-dioxide levels don't necessarily mirror human activity." They quote Mr. Myhrvold as saying that Mr. Gore's doomsday scenarios "don't have any basis in physical reality in any reasonable time frame."

More subversively, they suggest that climatologists, like everyone else, respond to incentives in a way that shapes their conclusions. "The economic reality of research funding, rather than a disinterested and uncoordinated scientific consensus, leads the [climate] models to approximately match one another." In other words, the herd-of-independent-minds phenomenon happens to scientists too and isn't the sole province of painters, politicians and news anchors

.


For the full commentary, see:

BRET STEPHENS. "Freaked Out Over SuperFreakonomics; Global warming might be solved with a helium balloon and a few miles of garden hose." The Wall Street Journal (Tues., OCTOBER 27, 2009): A19.

(Note: ellipsis added.)





November 27, 2009

Incandescent Bulb Defended by Light Expert Who Relit Statue of Liberty



(p. A13) The Energy Independence and Security Act of 2007 will effectively phase out incandescent light bulbs by 2012-2014 in favor of compact fluorescent lamps, or CFLs. Other countries around the world have passed similar legislation to ban most incandescents.

Will some energy be saved? Probably. The problem is this benefit will be more than offset by rampant dissatisfaction with lighting. We are not talking about giving up a small luxury for the greater good. We are talking about compromising light. Light is fundamental. And light is obviously for people, not buildings. The primary objective in the design of any space is to make it comfortable and habitable. This is most critical in homes, where this law will impact our lives the most. And yet while energy conservation, a worthy cause, has strong advocacy in public policy, good lighting has very little.


. . .


As a lighting designer with more than 50 years of experience, having designed more than 2,500 projects including the relighting of the Statue of Liberty, I encourage people who care about their lighting to contact their elected officials and urge them to re-evaluate our nation's energy legislation so that it serves people, not an energy-saving agenda.




For the full commentary, see:

HOWARD M. BRANDSTON. "Save the Light Bulb!; Compact fluorescents don't produce good quality light." The Wall Street Journal (Mon., AUGUST 31, 2009): A13.

(Note: ellipsis added.)

(Note: the online version of the article is dated Sun., Aug. 30.)





August 9, 2009

Democrats Continue Earmarks for Those Who Donated to Their Campaigns



(p. A5) WASHINGTON -- A House panel approved a big Pentagon spending bill this week that included nearly 150 items tucked in by lawmakers on behalf of companies and other entities whose employees donated to their campaigns.

The Democratic Congress and President Barack Obama swept into power on a promise to reform the process of lawmakers trying to dictate in detail how funds are spent, known as "earmarks." When Mr. Obama signed a spending bill for the current fiscal year in March, he said the earmark-laden legislation should be an "end to the old way of doing business, and the beginning of a new era of responsibility and accountability."

But as lawmakers work their way through spending bills for the next fiscal year, which begins Oct. 1, earmarks appear alive and well -- including those written for companies, foundations, and universities whose employees and political-action committees gave money to the campaigns of congressmen doing the earmarking.

The $636.3 billion 2010 defense-spending bill passed Wednesday by the House Appropriations Committee includes more than 1,100 earmarks, totaling more than $2.7 billion.

Members of the Defense Appropriations Subcommittee -- the 18 members of Congress who wrote the bill -- secured a total of 148 earmarks worth $461 million for entities whose employees have given $822,765 in campaign donations to those lawmakers since 2007. The data were compiled by the nonpartisan Taxpayers for Common Sense, which analyzed nearly 400 earmarks.



For the full story, see:

JAKE SHERMAN. "Bill Shows Earmarks Are Alive and Well." Wall Street Journal (Sat., JULY 25, 2009): A5.





March 11, 2009

80% of Officials Base Infrastructure Decisions on Politics


GovernmentInfrastructureGraph.jpg












Source of graph: online version of the NYT commentary quoted and cited below.

(p. B1) It's hard to exaggerate how scattershot the current system is. Government agencies usually don't even have to do a rigorous analysis of a project or how it would affect traffic and the environment, relative to its cost and to the alternatives -- before deciding whether to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited a project's potential (p. B6) benefits.

There are monuments to the resulting waste all over the country: the little-traveled Bud Shuster Highway in western Pennsylvania; new highways in suburban St. Louis and suburban Maryland that won't alleviate traffic; all the fancy government-subsidized sports stadiums that have replaced perfectly good existing stadiums. These are the Bridges to (Almost) Nowhere that actually got built.



For the full commentary, see:

DAVID LEONHARDT. "Economic Scene; Piling Up Monuments of Waste." The New York Times (Weds., November 18, 2008): B1 & B6.




January 25, 2009

A Salute to the Sudanese Medicine Men


One might expect that the Sudanese medicine men mentioned below, might have undermined the British physicians, as potential competition. So either there is more to the story than is sketched below, or else these Sudanese medicine men in 1939 placed the mission of saving lives, above their own narrow short-run self-interest. If it was the later, then they deserve our belated salute.

(p. 236) Meningitis was a vicious disease. The death rate had always been high, and nothing they did had much effect. The British physicians concentrated on nursing the sick and trying to limit the spread of the disease. The only thing different this year came in the form of three small sample bottles of sulfa that had been sent to their clinic for the treatment of strep diseases and pneumonia. Strep diseases were not the problem of the moment in Wau. This meningitis was caused not by strep but by the more common cause, a related germ called meningococcus. Still, they had the new medicine, they had nothing else, and they had nothing to lose. Someone decided to try it on a meningitis patient.

. . .

(p. 237) . . . There were twenty-one patients in the first group. The doctors hoped to save at least a few of them.

A few days later, all but one were still alive. The physicians immediately wired for more sulfa. Once it arrived, one of the British doctors stayed at the hospital while the other two went village to village, administering sulfa to every meningitis patient they could find. They asked the help of local "medicine men," as they called them, tribal healers whose dispensation was needed before the natives would accept treatment. The Sudanese healers knew how deadly the disease was. They told their people that the physicians had "magic in a bottle." They told them to take the shots. The physicians traveled day and night, injecting patients in grass huts, under trees, and along roadsides, The results, they wrote, were "spectacular." Within a few weeks, they treated more than four hundred patients. They saved more than 90 percent of them. They knocked out the epidemic before it could get started.



Source:

Hager, Thomas. The Demon under the Microscope: From Battlefield Hospitals to Nazi Labs, One Doctor's Heroic Search for the World's First Miracle Drug. New York: Three Rivers Press, 2007.

(Note: ellipses added.)




December 5, 2008

75th Anniversary of End of Prohibition



(p. W8) "Prohibition went into effect on January 16, 1920, and blew up at last on December 5, 1933 -- an elapsed time of twelve years, ten months and nineteen days," H.L. Mencken wrote shortly after ratification of the 21st Amendment to the Constitution eliminated the 18th Amendment. "It seemed almost a geologic epoch while it was going on, and the human suffering that it entailed must have been a fair match for that of the Black Death or the Thirty Years War."

The demise of Prohibition, 75 years ago . . . , is something of a cause for celebration, and it will be treated as such with Repeal Day parties in Washington, Chicago, New Orleans, San Francisco, New York and elsewhere. . . .

. . .

Temperance advocates had argued Prohibition would usher in an era of sober moral rectitude. When it didn't quite work out that way, public opinion began to turn against the drys. They joined those who opposed Prohibition because it had handed new and oppressive powers to the federal government. Charles Lindbergh's father-in-law, Dwight Whitney Morrow, won a Senate seat from New Jersey in 1930 running as a Republican against Prohibition. He argued that it had caused Americans to "conceive of the Federal Government as an alien and even a hostile Power."

And yet, it was finance that finally did Prohibition in. As the nation sank into the Depression, tax revenues dwindled. The prospect of capturing all the liquor excise taxes that had for a decade been missing (and, in effect, had gone into the pockets of bootlegging mobs) was alluring to Democrats and Republicans alike. Pierre du Pont lobbied his fellow plutocrats to support repeal in the vain hope that liquor taxes would replace income taxes. But the New Dealers saw repeal as creating a vast pile of money with which to fund expansive new government programs. Not only did Prohibition and its enforcement increase the size and scope of the federal government, but so did Prohibition's repeal.



For the full story, see:

ERIC FELTEN. "HOW'S YOUR DRINK; Celebrating Cinco de Drinko." The Wall Street Journal (Fri., NOVEMBER 28, 2008): W8.

(Note: ellipses added.)





December 3, 2008

Consumers Bear Costs of Global Warming Policies


CarbonCutsCostsGraph.gif













Source of graph: online version of the WSJ article quoted and cited below.

(p. A10) Leaders of the Group of Eight major industrialized economies, meeting in Japan, issued their first long-term target for cutting global-warming emissions. But their pronouncement failed to address the two toughest questions: How will the world do it, and who will pay?

The answer to the money question is clear: Consumers will pay -- at the gasoline pump, at the car dealership and on the monthly electric bill. If the campaign against global warming gets serious, it will transform today's esoteric environmental threat into a fundamental pocketbook issue for people from Boston to Beijing.



For the full story, see:

JEFFREY BALL. "As Climate Issue Heats Up, Questions of Cost Loom." The Wall Street Journal (Fri., July 10, 2008): A10.




August 14, 2008

Obama Beholden to Ethanol Special Interest Groups


ObamaIowaCorn.jpg "Senator Barack Obama last July in Adel, Iowa. His strong support of ethanol helped propel him to his first caucus victory there." Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) When VeraSun Energy inaugurated a new ethanol processing plant last summer in Charles City, Iowa, some of that industry's most prominent boosters showed up. Leaders of the National Corn Growers Association and the Renewable Fuels Association, for instance, came to help cut the ribbon -- and so did Senator Barack Obama.

Then running far behind Senator Hillary Rodham Clinton in name recognition and in the polls, Mr. Obama was in the midst of a campaign swing through the state where he would eventually register his first caucus victory. And as befits a senator from Illinois, the country's second largest corn-producing state, he delivered a ringing endorsement of ethanol as an alternative fuel.

Mr. Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.

. . .

(p. A19) Many economists, consumer advocates, environmental experts and tax groups have been critical of corn ethanol programs as a boondoggle that benefits agribusiness conglomerates more than small farmers. Those complaints have intensified recently as corn prices have risen sharply in tandem with oil prices and corn normally used for food stock has been diverted to ethanol production.



For the full story, see:

LARRY ROHTER. "Obama Camp Closely Linked With Ethanol." The New York Times (Mon., June 23, 2008): A1 & A19.

(Note: ellipsis added.)




May 27, 2008

Democratic Representatives Drive Gas-Guzzlers at Taxpayers' Expense


CarsCongressGraphic.jpg Source of graphic: online version of the NYT article quoted and cited below.

Seven of the eleven representatives in the table above are Democrats. Look at the gas mileage of the cars, and recall that it is the Democrats who are given to lecture us on how we need to do more about the environment.

(The four Republicans on the list are Reynolds, Fossella, Walsh and Saxton.)

(p. A1) Charles B. Rangel, the chairman of the House Ways and Means Committee, is not so caught up in the question of gas mileage. He leases a 2004 Cadillac DeVille for $777.54 a month. The car is 17 feet long with a 300-horsepower engine and seats five comfortably.

"It's one of the bigger Cadillacs," Mr. Rangel, of Harlem, said cheerfully this week. "I've got a desk in it. It's like an airplane."

Modest or more luxurious, the cars are all paid for by taxpayers. The use of a car -- gas included -- is one of the benefits of being a member of the House of Representatives.

. . .

(p. A19) Mr. Rangel said he frequently offers rides to constituents so they can discuss their concerns in the luxurious confines of his DeVille.

"I want them to feel that they are somebody and their congressman is somebody," Mr. Rangel explained. "And when they say, 'This is nice,' it feels good."


For the full story, see:

RAYMOND HERNANDEZ. "What Would You Drive, if the Taxpayers Paid?" The New York Times (Thurs., May 1, 2008): A1 & A19.

(Note: ellipsis added.)


RangelCadillac.jpg "Representative Charles B. Rangel says his leased Cadillac DeVille projects an image of success." Source of caption and photo: online version of the NYT article quoted and cited above.




May 22, 2008

Voting with Your Feet in the Middle Ages


An application of the 'voting with your feet' technique for comparing consumption bundles is made by Rosenberg and Birdzell to compare life on the medieval manor with life in the medieval town:

(p. 51) The path of escape was from manor to town, not from town to manor. Stadluft macht frei, as the German proverb went.

Source:

Rosenberg, Nathan, and L.E. Birdzell, Jr. How the West Grew Rich: The Economic Transformation of the Industrial World. New York: Basic Books, 1986.

(Note: italics in original.)




May 20, 2008

Great Example of Stigler-Kolko Capture Theory of Regulatory Agencies


George Stigler and Gabriel Kolko are associated with the theory that eventually, govenment regulatory agencies come to be captured by the industry that the agency is charged with regulating.

At the time of the exchange documented below, Wendell Willkie was the head of an electric utility, and Lilienthal was one of the heads of the TVA, which was in the process of taking customers away from Willkie's utility. Willkie's argument to Lilienthal is consistent with the capture theory. (But that Lilienthal pushed ahead with his plans, might be seen as inconsistent with the theory.)

(p. 182) Lilienthal set up a meeting in early October 1933 at the Cosmos Club in Washington, the club being, in Lilienthal's words, "about as neutral a ground as we could think of."

. . .

(p. 183) Willkie tried yet another tack. No one, he argued to Lilienthal, went into government without the intention of going into the private sector later. The private sector, after all, was where the business lived. If Lilienthal was too nasty, then he was not likely to find work at private utilities companies. Lilienthal was, by his own admission, "pretty badly scared" by the time he left the Cosmos.


Source:

Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.




May 16, 2008

"The Black Hole of Agriculture": "People Love Free Money"


(p. A17) WASHINGTON -- Americans are in sticker-shock over grocery prices, while people in developing countries are rioting over food shortages. And across the heartland, American farmers are enjoying record incomes, but losing sleep over rising expenses and turbulence in the commodity futures markets.

Here on Capitol Hill, though, it is pretty much farm politics as usual.

As Congress works toward final passage of the farm bill, it is poised to continue most of the existing farmer subsidy programs, including about $5.2 billion a year in so-called "direct payments" that will be disbursed even as net farm income is projected to hit a historic high in 2008.

The farm bill, which comes along once every five years and will cost upward of $300 billion, in fact will do little to address many of the most pressing concerns. It will not change biofuel mandates that are directing more corn to ethanol and contributing to a global rise in food prices.

. . .

But even strong proponents of the bill, like Senator Tom Harkin, Democrat of Iowa and chairman of the Agriculture Committee, concede that farm interests are deeply entrenched and that there is little appetite for change among many farm state lawmakers, especially when it comes to the direct payment program.

The direct payments are based on the amount of land that certain farmers own, and Mr. Harkin, who has sought to eliminate the payments, said that many recipients of the money then use it to acquire more land and qualify for more payments.

"It's like the black hole in space that astronomers talk about: everything gets sucked in and nothing ever comes out," he said. "This is the black hole of agriculture. It doesn't make sense, but farmers continue to get it."

Mr. Harkin said there was not much he could do because "I don't have the votes," adding, "People love free money."


For the full commentary, see:

DAVID M. HERSZENHORN. "NEWS ANALYSIS; Farmers' Income Rises, as Do Food Prices, but It's Mostly Politics as Usual." The New York Times (Thurs., April 24, 2008): A17.

(Note: ellipsis added.)




February 17, 2008

Puzzle: Entrepreneurial Silicon Valley Donates Mainly to Democrats

 

    Source of graphic:  online version of the NYT article quoted and cited below.


Entrepreneurship thrives when government is small, so it puzzles me when the entrepreneurs in Silicon Valley embrace the Democrats, who generally advocate bigger government.

Of course, my Wabash professor Ben Rogge used to point out that there are always cross-currents that go in a different direction from the mainstream. And among the Democrats, there are what used to be called "new Democrats" who appreciate Schumpeter, and entrepreneurship, and dynamism.

Plus, some Democrats are more respectful of personal, lifestyle choices, and in Silicon Valley, that may be what is given the most weight.

Or, more cynically, maybe there's a public choice explanation---that Silicon Valley donates to Democrats as a form of 'insurance,' in the hope that if the Democrats are elected, they will refrain from over-regulating and over-taxing Silicon Valley. (Even more cynically, compare the case of Florida's sugar-subsidy-rich Fanjul brothers, one of whom donated huge bucks to the first Bush, while another donated huge bucks to Bill Clinton.)

(Another factor is that, alas, entrepreneurs often do not pay much attention to what conditions encourage entrepreneurship.)


(p. C4)  In a flip from the primary season for the 2000 presidential election, 60 percent of the contributions so far from people in the technology field here are going to Democrats. The Democratic candidates raised $1.4 million from the industry in the first half of this year, while Republican candidates raised $890,000. That total is up from $1.2 million in the first six months of each of the last two presidential primary races.

 

For the full story, see: 

LAURIE J. FLYNN.  "In Primary, Tech's Home Is a Magnet." The New York Times  (Fri., August 24, 2007):  C1 & C4.

 




January 20, 2008

Qaddafi's Nomadic Defense of Socialism

 

   Inside a nomad tent near Kabul.  Source:  online version of the NYT article quoted and cited below. 

 

(p. A4)  In some instances, politicians seek to use nomadic traditions to justify their policies, just as American politicians try to exploit nostalgia for America’s rural past to justify farm subsidies, said Robert Rotberg, a professor at the John F. Kennedy School of Government at Harvard, who studies failed states in Africa and Asia.  “Take Qaddafi in Libya,” he said, referring to Col. Muammar el-Qaddafi.  “He would say, you Westerners don’t understand us because we have a nomadic ethos that is essentially socialist, and so we have to nationalize our country’s oil industry to be true to our tradition.”

 

For the full story, see: 

ILAN GREENBERG.  "Memo From Almaty; Ancient Nomads Offer Insights to Modern Crises."  The New York Times   (Weds., August 8, 2007):   A4. 

 




January 13, 2008

"The Tender Ship" is a Great, but Unknown, Book

 

TenderShipBK.jpg   Source of book image: http://www.amazon.com/gp/product/081763312X/ref=cm_rdp_product

 

Many years ago, I presented a paper on polywater at a conference at VPI (now called "Virginia Tech").  An old man in the audience came up to me afterwards, and told me about a book he had written called The Tender Ship.  It sounded intriguing so eventually I bought a copy and read it.

It is well-written, creative, and rich with examples.

The central thesis is that the government usually is not very good at directing technology.

 

The book reference is:

Squires, Arthur M.  The Tender Ship: Government Management of Technological Change.  Boston, Massachusetts:  Birkhauser, 1986.

 




January 5, 2008

How to Wrangle Tax Breaks from Rangel

 

   "Charles B. Rangel, House Ways and Means chairman."  Source of caption and photo:  online version of the NYT article quoted and cited below. 

 

(p. A23)  The chairman of the House Ways and Means Committee has proposed legislation that would effectively halt some current tax audits of people who get a tax break for living and operating a business in the United States Virgin Islands.

Many beneficiaries of the tax break are campaign contributors to the lawmaker, Representative Charles B. Rangel, Democrat of New York, according to data collected by CQ MoneyLine, which tracks political contributions.

At least one of them, Richard G. Vento, is currently under audit, according to court filings. Mr. Vento gave $4,400 last year to the Baucus-Rangel Leadership Fund, which supports Mr. Rangel and Senator Max Baucus, the Montana Democrat who heads the Senate Finance Committee.

Beneficiaries of the tax break including Michael W. Masters and Richard H. Driehaus, money managers, accounted for more than half the $51,900 that individuals in the Virgin Islands gave last year to Rangel for Congress, the chairman’s campaign organization. Mr. Rangel raised almost three times as much from such donors last year as in any other year in the MoneyLine database.

 

For the full story, see:

STEPHANIE STROM.  "Tax Proposal From Rangel Could Benefit His Donors."  The New York Times  (Thurs., November 8, 2007):  A23.

 




January 2, 2008

Schumer Defends Rich Hedge Fund Democratic Donors, While Criticizing Selfish Republican "Plutocrats"

 

   Hedge fund defender, and recipient of hedge fund donations, Democratic Senator Charles E. Schumer.  Source of photo:  online version of the NYT article quoted and cited below.

 

The story quoted below, reminds me of a story I told earlier about the famous democratic economist John Kenneth Galbraith ridiculing the wealth of Republicans.

Schumer's behavior exemplifies the "public choice" theory of economics that suggests that the motives of politicians will generally be similar to the motives of the rest of us.  In other words, incentives often matter. 

 

(p. A1)  WASHINGTON, July 29 — June was a busy month for Senator Charles E. Schumer. On the phone, at large parties and small gatherings around the nation, he raised more than $1 million from the booming private equity and hedge fund industries for the Democratic Senatorial Campaign Committee, of which he is chairman.

But there is another way Mr. Schumer has been busy with hedge fund and private equity managers, an important part of his constituency in New York. He has been reassuring them that he will resist an effort led by members of his own party to single out the industry with a plan that would more than double the taxes on the enormous profits reaped by its executives.

Mr. Schumer has considerable say on the issue. In addition to being the third-ranking Democrat in the Senate leadership, he is the only Democrat serving on both of the major committees, Banking and Finance, that have jurisdiction in the matter.

He has long been a pro-business Democrat and a fund-raising machine for the party, as well as a vociferous supporter of Wall Street issues in Washington, much the way Michigan lawmakers defend the auto industry and Iowa politicians work on behalf of corn farmers.

But in the case of the tax proposals, the strategy behind Mr. Schumer’s efforts is putting to the test another set of principles he is known for. He has regularly portrayed himself as a progressive politician who identifies with the struggles of the middle class and is sharply critical of the selfish “plutocrats” who he says control the Republican Party.

 

For the full story, see: 

RAYMOND HERNANDEZ and STEPHEN LABATON.  "In Opposing Tax Plan, Schumer Breaks With Party."  The New York Times  (Mon., July 30, 2007 ):  A1 & A14. 

 




December 28, 2007

Earmarks Often Promote Lawmakers' Personal Fame and Fortune

 

  "A Kennedy-era tray and a Laura Bush mask at an Ohio library honoring first ladies. The library received a $130,000 earmark."  Source of caption and photo:  online version of the NYT article quoted and cited below.

 

(p. A23)  WASHINGTON, Nov. 12 — Buried deep in the largest domestic spending bill of the year is money for a library and museum honoring first ladies. The $130,000 was requested by the local congressman, Representative Ralph Regula, Republican of Ohio. The library was founded by his wife, Mary A. Regula. The director of the library is his daughter, Martha A. Regula.

Other “namesake projects” in the bill include the Charles B. Rangel Center for Public Service at City College of New York, named for the chairman of the House Ways and Means Committee; the Thad Cochran Research Center at the University of Mississippi, named for the senior Republican on the Senate Appropriations Committee; and the Thomas Daschle Center for Public Service at South Dakota State University, honoring the former Senate Democratic leader.

The bill also includes “Harkin grants” to build schools and promote healthy lifestyles in Iowa, where Senator Tom Harkin, a Democrat, is running for re-election.

Namesake projects are not new, but the appetite for such earmarks appears to be undiminished. The items illustrate the way in which lawmakers funnel federal money to projects in their home states, despite promises to rein in the practice. House and Senate negotiators last week approved a modest reduction in pet projects for health care, education and other domestic programs. But more than 2,200 hospitals and clinics, schools and colleges, museums and social service agencies get money for specific projects, including health information technology, teacher training and the promotion of sexual abstinence. Rather than making hard choices, negotiators accepted almost all the earmarks recommended by either chamber.

Senators John McCain of Arizona and Tom Coburn of Oklahoma, both Republicans, cited the first ladies library as one of the more egregious. Mr. McCain said it illustrated the “many wasteful items tucked away in this bill.”

 

For the full story, see:

ROBERT PEAR. "One Lawmaker’s Waste Is Another’s Namesake." The New York Times (Tues., November 13, 2007): A23.

 

   Source of map graphic:  online version of the NYT article quoted and cited above.

 




December 24, 2007

Earmarks Increase Wasteful Government Spending

 

   Source of table:  online version of the NYT article quoted and cited below.

 

(p. A1)  WASHINGTON, Nov. 3 — Even though members of Congress cut back their pork barrel spending this year, House lawmakers still tacked on to the military appropriations bill $1.8 billion to pay 580 private companies for projects the Pentagon did not request.

Twenty-one members were responsible for about $1 billion in earmarks, or financing for pet projects, according to data lawmakers were required to disclose for the first time this year. Each asked for more than $20 million for businesses mostly in their districts, ranging from major military contractors to little known start-ups.

The list is topped by the veteran earmark champions Representative John P. Murtha, a Pennsylvania Democrat who is the chairman of the powerful defense appropriations subcommittee, and Representative C. W. Bill Young of Florida, the top Republican on the panel, who asked for $166 million and $117 million respectively. It also includes $92 million in requests from Representative Jerry Lewis, Republican of California, a committee member who is under federal investigation for his ties to a lobbying firm whose clients often benefited from his earmarks.

The House speaker, Nancy Pelosi, requested $32 million in earmarks, while Steny H. Hoyer, the majority leader, asked for $26 million for projects in the $459.6 billion defense bill, the largest of the appropriations bills that go through Congress.

As promised when they took (p. A27) control of Congress in January, House Democratic leaders cut in half from last year the value of earmarks in the bill, as they did in the other 11 agency spending measures. But some lawmakers complained that the leadership failed to address what it had called a “culture of corruption” in which members seek earmarks to benefit corporate donors. Earmarks have been a recurring issue in recent Congressional scandals, most recently the 2005 conviction of Representative Randy Cunningham, Republican of California, for accepting bribes from defense contractors.

“Pork hasn’t gone away at all,” said Representative Jeff Flake, Republican of Arizona, an earmark critic who cites the “circular fund-raising” surrounding many of them. “It would be wonderful if this was a partisan issue, with Republicans on the right side, but it is really not. Many of these companies use money appropriated through earmarks to turn around and lobby for more money. Some of them are just there to receive earmarks.”

Congressional earmarks are for programs that are not competitively bid , and the Bush administration has complained that they waste taxpayer dollars and skew priorities from military needs, like the wars in Iraq and Afghanistan and the global war on terror.

Thomas E. Mann, a Congressional scholar and senior fellow at the Brookings Institution, though, sees the costs of earmarks as less of a problem than their potential for abuse.

“The fiscal fallout of earmarks is trivial,” he said. But they can lead to “conflicts of interest, the irrational and unconstructive allocation of resources, or their use by Congressional leaders as carrots and sticks to buy votes for larger measures that clearly lack majority support on the merits.”

 

For the full story, see: 

MARILYN W. THOMPSON and RON NIXON.  "Even Cut 50 Percent, Earmarks Clog Military Bill."  The New York Times, First Section   (Sun., November 4, 2007):  1 & 27. 

 




November 2, 2007

Michael Powell Provides Support for the Capture Theory of Regulatory Agencies

 

The following brief story would seem highly compatible with the "Capture Theory of Regulatory Agencies" that is associated with the names of economist George Stigler, and historian Gabriel Kolko.  That theory suggests that regulatory agencies are frequently captured by the industries that they are intended to regulate.

One kind of evidence for the theory is that members of regulatory agency boards often are recruited from the industry, and often return to working for the industry after their terms are over.

 

The efforts of federal regulators to curtail cronyism on corporate boards have led to some odd outcomes. The case of Michael K. Powell, a new director of Cisco Systems, is a prime example. 

Mr. Powell, the former chairman of the Federal Communications Commission, happens to be a son of Colin Powell, the former secretary of state. Cisco happens to have paid the senior Mr. Powell more than $100,000 to deliver two speeches in 2005.

Under guidelines established by the Nasdaq stock market, that connection disqualifies the younger Mr. Powell as an independent director, so he cannot sit on the company’s audit, compensation or governance committees. But by the same definition, Richard M. Kovacevich, the chairman of Wells Fargo, is an independent director of Cisco, even though his company has promised to lend Cisco $120 million.

The difference is that Cisco’s line of credit is deemed too small a part of Wells Fargo’s overall business to present a conflict of interest, while the payments to the senior Mr. Powell exceeded the allowable annual limit of $100,000 to any family member of an independent director.

 

Source of story: 

PATRICK McGEEHAN.  "$100,000? Too High. $120 Million? Fine."  The New York Times, SundayBusiness Section (Sun., September 30, 2007):  2.

 

The key Kolko book is: 

Kolko, Gabriel. Railroads and Regulation, 1877-1916.  W. W. Norton & Company, 1970.

 




October 21, 2007

Labor Unions Endorse Hillary and Edwards

 

   Source of graphic:  online version of the WSJ article excerpted and cited below.

 

Union endorsements could provide a big boost with next year's early, front-loaded primary calendar. Half of all 15.4 million union members live in six states -- California, New York, Illinois, Michigan, New Jersey and Pennsylvania -- and all but Pennsylvania will have voted by Feb. 5.

Major unions have already split their endorsements between three Democratic candidates: Sens. Hillary Rodham Clinton and Christopher Dodd, and former Sen. John Edwards. Union leaders are loath to repeat the division of support that marred the 2004 election, where major unions endorsed Richard Gephardt and Howard Dean, wasting resources on losing candidates. Only one Republican candidate, former Arkansas Gov. Mike Huckabee, has picked up a major union endorsement.

 

For the full story, see: 

NICK TIMIRAOS.  "HOT TOPIC; U.S. Unions: Still a Political Power?"  The Wall Street Journal  (Sat., September 29, 2007):  A7.

 




July 29, 2007

A Public Choice Theory of "Taxonomic Inflation"

 

The excerpt below is from a WSJ summary of an article that appeared in The Economist on May 19, 2007.

 

Scientists have taken to upgrading animals once thought to be subspecies into full-fledged species, in what the Economist says is an overzealous attempt to boost conservation of seemingly rare animals.

Sometimes, the reclassification of animals into their own species category is warranted, as new research reveals once-obscured markers that differentiate certain beasts. But lately, the weekly says, primatologists have been suffering from "taxonomic inflation."

. . .

. . .   One reason is that by fragmenting animal groups, the number of rare species increases, boosting animal-conservation claims.  At the same time, having a greater number of species boosts the chances that a habitat can pursue a legal designation as a protected area.

 

For the full summary, see: 

"Informed Reader; NATURE; Species Inflation May Infect Over-Eager Conservationists."  The Wall Street Journal  (Sat., May 19, 2007):  A6.

(Note:  ellipsis added.)

 




June 13, 2007

A Public Choice Theory of the Absence of Evidence of the Exodus of the Israelites

 

   The excavation of a fort from roughly the time and place of the biblical exodus of the Israelites from Egypt.  Source of photo:  the online version of the NYT article cited below.

 

The economic theory of public choice is often viewed as having begun with Buchanan and Tullock's The Calculus of Consent.  The theory seeks to explain the behavior of government, and government officials, as arising from the same self-interested motives as are used by economists to explain the behavior of free markets, firms, and consumers.

 

It didn’t look like much — some ancient buried walls of a military fort and a few pieces of volcanic lava. The archaeologist, Dr. Zahi Hawass, often promotes mummies and tombs and pharaonic antiquities that command international attention and high ticket prices. But this bleak landscape, broken only by electric pylons, excited him because it provided physical evidence of stories told in hieroglyphics. It was proof of accounts from antiquity.

That prompted a reporter to ask about the Exodus, and if the new evidence was linked in any way to the story of Passover. The archaeological discoveries roughly coincided with the timing of the Israelites’ biblical flight from Egypt and the 40 years of wandering the desert in search of the Promised Land.

“Really, it’s a myth,” Dr. Hawass said of the story of the Exodus, as he stood at the foot of a wall built during what is called the New Kingdom. 

. . .  

Recently, diggers found evidence of lava from a volcano in the Mediterranean Sea that erupted in 1500 B.C. and is believed to have killed 35,000 people and wiped out villages in Egypt, Palestine and the Arabian Peninsula, officials here said. The same diggers found evidence of a military fort with four rectangular towers, now considered the oldest fort on the Horus military road.

But nothing was showing up that might help prove the Old Testament story of Moses and the Israelites fleeing Egypt, or wandering in the desert. Dr. Hawass said he was not surprised, given the lack of archaeological evidence to date. But even scientists can find room to hold on to beliefs.

Dr. Mohamed Abdel-Maqsoud, the head of the excavation, seemed to sense that such a conclusion might disappoint some. People always have doubts until something is discovered to confirm it, he noted.

Then he offered another theory, one that he said he drew from modern Egypt.

“A pharaoh drowned and a whole army was killed,” he said recounting the portion of the story that holds that God parted the Red Sea to allow the Israelites to escape, then closed the waters on the pursuing army.

“This is a crisis for Egypt, and Egyptians do not document their crises.”

 

For the full story, see: 

MICHAEL SLACKMAN.  "North Sinai Journal Did the Red Sea Part? No Evidence, Archaeologists Say."   The New York Times  (Tues., April 3, 2007):  A4.

(Note:  ellipsis added.) 

 

 A female skelaton buried near the fort (above).  Source of photo:  the online version of the NYT article cited above.

 




December 29, 2005

Nebraska Congressman Opposed Government Supporting Agricultural Prices

 

(p. 85) ". . . in March 1911 Nebraskan Representative George W. Norris sponsored a congressional resolution asking the Attorney General to investigate "a monopoly in the coffee industry."  Wickersham replied that he indeed was conducting an ongoing investigation.

(p. 86) In April, Norris lambasted the coffee trust from the floor of the House, summarizing the valorization loan process.  He concluded that "this gigantic combination [has been able] to control the supply and the sale of coffee throughout the civilized world.  [They] sold only in such quantities as would not break the market."  Frustrated by Brazil's involvement, he observed that when a conspiracy to monopolize a product involved a domestic corporation, it was termed a trust and could be broken.  "But if the combination has behind it the power and influence of a great nation, it is dignified with the new term 'valorization.'  Reduced to common language, it is simply a hold-up of the people by a combination."

 

Source:

Mark Pendergrast. Uncommon Grounds: The History of Coffee and How It Transformed Our World. Basic Books, 2000. (ISBN: 0465054676)

 




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