Tag Archives: incentives

Why you will pay more to subsidize special interest groups (your neighbors)

The following article shows the faulty reasoning that illustrates what Henry Hazlitt described as:

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Essentially,  by placing tariffs on Chinese goods to protect favored US industries everyone else will have to pay the higher costs of goods to subsidize their neighbors who work in these protected industries.

When the trade war begins, these short term benefits to protected industries will be negated resulting in a lower standard of living for all.  Only Free Markets can raise the standard of living and virtually eliminate unemployment.

Story from The Telegraph:

Risk of trade war rises as key US committee backs tariffs on China
The risk of a trade war between the US and China has increased after a key Congressional committee backed a bill to allow US companies to seek tariffs on Chinese imports.

By Richard Blackden, US Business Editor
Published: 11:00PM BST 24 Sep 2010

The adoption of the measure by the Ways and Means Committee on Friday means it will now be voted on by the House of Representatives on Wednesday.

“China’s exchange-rate policy has a major impact on American businesses, and Americans jobs, which is what this is all about,” said Sander Levin, a Democrat from Michigan and chairman of the committee.

China’s determination to shackle the strength of its currency helped turn the country into the world’s manufacturing hub for everything from iPods to T-shirts and, until the recession bit, attracted few critics. But an unemployment rate of 9.6pc in the US, as well as upcoming Congressional elections, is spreading anger across Capitol Hill.

According to the bill’s supporters, a properly valued yuan would move jobs back to the US as exports from China become more expensive. The Peterson Institute for International Economics in Washington argues up to 500,000 American jobs could be created.

The move by the committee is awkward for the White House which has steered clear of officially classifying China as a “currency manipulator” for fear of the repercussions of a trade war. President Barack Obama urged Chinese premier Wen Jiabao to take more aggressive steps when they met at the United Nations on Thursday, but the Chinese leader said that the value of the yuan was not the cause of the $145bn (£91bn) trade deficit the US is running with China.

Underlining the high stakes for China over its key economic relationship, Mr Jiabao said that if the yuan rose sharply he couldn’t “imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs”.

Not every US company shares the committee’s view. Wal-Mart and Citigroup are among companies lobbying against the Bill, fearing it will provoke retaliation in China. If the bill passes next week, the Senate will still need to vote on it.

Schiff Elaborates…

It would be very funny if it wasn’t true…

Disgusting Propaganda from The San Diego Union Tribune

One of our readers received an offer to advertise his business in an upcoming issue of The San Diego Union Tribune (click to download and view .pdf promo).  The text of the promo speaks for itself but you can read his response down below.  First, here is the text of the advertising promo:

Be part of a section that has 75 years in the making!

For 75 years, Social Security has provided an economic safety net that has kept millions of our citizens from indigence in their old age and when they are disabled. Show your support for one of America’s most important programs with an ad in the Social Security 75th Anniversary special section.

The programs Social Security administer are among the most critical and successful in our country’s history, and are vital to our nation’s  economy. For 75 years, Social Security has touched our lives in one way or the other. Here’s your chance to express your thanks and support for the vital national program.

For advertising information, contact your U-T account manager or Linda Willis at (619) 293-1582.

to which he responded:

Hi  [deleted],

Thank you for contacting me about advertising in this special edition of the Union Tribune.  Social Security is the biggest scam/confidence game in American history.  I can’t believe people still buy into this baloney.

By the looks of this promo, I want nothing to do with the promotion of this socialist enterprise where money is stolen from some to benefit others and then stolen again by the government (through inflation and other monkey business) before it even gets to the intended recipients.

I just read the attached promo again “Here’s your chance to express your thanks and support for the vital national program.”  Are you freakin’ kidding me?  Nothing personal, but this is a sick joke!  Did the Communists buy this newspaper????

Sincerely,
[name withheld]

“Atlas Shrugged” Movie Update

BigHollywood.com reports:

Exclusive: ‘Atlas Shrugged’ Producer Sets Record Straight On Upcoming Trilogy

by John Nolte

If there’s a production with a longer and more colorful history behind its troubled march to the silver screen than Ayn Rand’s novel “Atlas Shrugged,” the story of that particular episode of development hell has not yet been told. Published in 1957 and a perennial bestseller ever since (the novel sold a half-million copies just last year), the struggle to realize Rand’s sprawling and epic dramatization of her theory of Objectivism as told through a dystopian tale of the world’s best and brightest, feeling they’ve been exploited by an ungrateful society, putting their talent on strike, eluded even the author herself.

atlas-shrugged-book-cover

Throughout the decades, stars from Barbara Stanwyck to Angelina Jolie have expressed interest in bringing the novel to life, but it’s going to be producers Harmon Kaslow and John Aglialoro who finally break the curse. Directed by Paul Johansson, who also stars as John Galt, and co-starring Taylor Schilling as Dagny Taggart and Matthew Marsden as James Taggart, principal photography wrapped this very day. Which means…

Yes, there will be an “Atlas Shrugged” movie. Well, at least a part one.

Big Hollywood has enjoyed two visits to the film’s set, which our own Charles Winecoff will be writing more about soon, but due to the fact that much of what we’re reading in the media regarding the film’s production doesn’t coincide with what we’ve seen and heard for ourselves, I asked producer Harmon Kaslow to help set the record straight.

Much has been made of the film’s reported budget of $5 million, especially for a project major studios have shied away from out of budgetary concerns. Like most smart producers, Kaslow won’t talk specifics, but there’s more to the story than the $5 million:

“The amount expended on the movie is far north of $5 million. The movie is based on Part 1 of the book (the book has 3 parts) … so the film is based on about 27% of the book.”

This is the first I’ve heard that this production is only the first of three films, and while I haven’t read ”Atlas Shrugged,” those who have tell me a trilogy is the perfect way to tell the story on screen. Like “Lord of the Rings,” the natural breaks in Rand’s novel practically demand it be told in three parts, and a single feature film, even a long one with a hefty studio budget behind it, would almost certainly short-change the novel’s legion of faithful fans who, regardless of budget, are most concerned about seeing an adaptation that doesn’t compromise Rand’s philosophy. To that end, Kaslow assures the Randians:

“The movie is a direct ‘adaptation’ of the book included using much of the dialogue written by Ayn Rand.”

Assuming we’re talking in the area of  $15 to $20 million to film the entire novel, with no big star salaries that’s still a low budget but not a ridiculously low budget. As far as the casting of unknowns, as is the case with any film, budget constraints are a reality and when you’re working in the arena of millions as opposed to hundreds of millions, you’re not going to get a Charlize Theron or Angelina Jolie.

taylor schilling
Dagny Taggart (Taylor Schilling)

Kaslow told me, “The talent cast in the movie was selected on the basis of the director’s and producers’ belief in their acting skills without taking on the ‘distractions’ often associated with ‘A-List” talent.’”

I’m sure that doesn’t mean they would’ve turned down the distraction of an Angelina Jolie, Charlize Theron or another A-lister, but as we’ve seen many times before, acting ability, screen presence and the chops necessary to deliver a memorable performance can come from unknowns. After all, like all great actors, at one time Jolie and Theron were unknowns.

In any case, like “Harry Potter” and the “Narnia” films, the real star here is the project itself, Ayn Rand, and Objectivism. If the performances rise to the occasion no one’s going to care that there’s no familiar name above the title.

Warner Bros. Studio
John Galt (Paul Johansson)

In a Sunday piece for Daily Finance, Bruce Watson took some pretty hard shots at the production claiming it’s nothing more than a desperate and cynical rush job using an inexperienced director in order to allow Aglialoro to hold onto the film rights, which were set to expire last month had filming not begun. I asked Kaslow about this directly:

“John Aglialoro finally decided to marshal the production because it was apparent that a studio would not …

“While the rights would revert back to the estate if production did not commence by June 14, 2010, the goal of the producers is to produce a film worthy of epic nature of the novel that will satisfy the millions of persons who have read the book, but also appeal to a wide audience (so as to introduce them to the Ayn Rand’s work).

“During the course of Aglialoro’s efforts to get the film into production, the project had definitely attracted a number of very reputable directors … however, given Johansson’s passion for the material and desire to execute a faithful cinematic vision of the book, the producers believe they found a director that most will believe is a diamond in the rough.”

Kalsow also took exception to Watson’s description of Johansson’s directing experience as mostly confined ”to the set of the teen-oriented soap opera.”

Director Paul Johansson’s inaugural feature film (The Incredible Mrs. Richie – 2004) won a [Daytime] Emmy as Outstanding Family Special, plus he has experience directing a substantial amount of television.

Johannson did win a Daytime Emmy for writing the “Mrs. Ritchie” screenplay and was nominated for his direction that won Gena Rowlands an Emmy and James Caan a nomination.

Avco Cinema
James Taggart (Matthew Marsden)

No one, including the ”Atlas” producers, can predict how a project will ultimately turn out, and that’s true whether your budget is $5 million or $200 million. And no one would argue that the challenges involved in bringing such an ambitious and epic story to the screen aren’t made that much more difficult with with limited resources, including taking a chance on a director making his theatrical feature debut. However, from all we’ve seen and from our discussions with the producers, director, and cast, there’s no doubt that everyone involved is passionate about telling this story and most importantly, dedicated to remaining true to Ayn Rand’s philosophical vision — which would’ve likely have been compromised bigtime by a major studio.

As of now the plan is to release part one of “Atlas Shrugged” in theatres sometime during the second quarter of 2011 and start production on the second part the following fall.

Unintended Consequences: Will New Regulations on Cribs Improve Safety?

From Justin Ross:

Unintended Consequences: Will New Regulations on Cribs Improve Safety?

This is a concern of mine, like it is for all parents of young children. I pray that this doesn’t make my list of deadly unintended consequences. From CNN:

In addition to eliminating drop-side cribs, the new rules will mandate better mattress support, sturdier hardware and better quality wood for crib construction. Between November 2007 and April of this year, there were 36 deaths associated with crib structural problems, according to Commission Chairwoman Inez Tenenbaum.

Ok, so the benefits would come from lowering the number of crib quality deaths, which recent data has at 36 deaths over about 2.5 years. However, these mandated features make it sound like it will also make cribs more expensive. What if some people are on the margin between letting the infant sleep in the bed with them or in a crib?* As cribs become more expensive, will some people bring their infants to bed with them at night? How safe is that? Here is a story from WSJ in 2009, where most of it has experts claiming an association between bed sharing and strangulation:

Shapiro-Mendoza and her colleagues found that the rate of accidental strangulation and suffocation deaths increased from 2.8 to 12.5 per 100,000 live births during with the 20-year study period, increasing the number of deaths from 103 in 1984 to 513 in 2004.

[...]

The findings prompted several experts to call for increased efforts to discourage parents from sleeping in the same bed with their babies or in other unsafe places, such as couches, and to educate parents about how they can sleep near their children safely.

The cause of 513 fatalities in the most recently available year is certainly more concerning than 36 over 2.5 years. If this association is true (and it certainly seems logical), then hopefully there are not that many people on the sleep-in-bed vs crib margin or else that the cost increase is sufficiently small.** I certainly would not want to bet on the odds that the regulation will reduce total infant fatalities.

*Not just new cribs, mind you, as more expensive new cribs will also increase the price of used cribs.
**Also worth considering are the relevant wealth effects. With more disposable income going to cribs, will less be devoted to other relevant family resources?

A Good Reason To Read Playboy Magazine…

Subject:   Spooner’s “No Treason”

Lysander Spooner (1808-1887) was a Massachusetts lawyer noted for his vigorous and brilliant opposition to the encroachment of the State upon the liberty of the individual. His writings on the unconstitutionality of slavery influenced pre-Civil War thought.  His challenge to the postal monopoly (he set up a thriving private post) resulted in an Act of Congress sharply reducing postage rates.  Unfortunately, he was so successful that Congress finally outlawed his enterprise.

The following is Spooner’s “No Treason VI: The Constitution of No Authority”, which Playboy magazine described as “[possibly] the most subversive document ever penned in this nation.”

Click Here to read “No Treason”

“If you don’t like it here, why don’t you leave?”

Socialists often respond to libertarian objections to the encroachments upon individual freedom by saying “if you don’t like it here, why don’t you leave?”

A classic example is in the comments section of a recent post by Robert Wenzel entitled The Economics of “Predatory Lending”.

I encourage you to read this excellent post now.

This article prompted the following comment by the Socialist posting as “Anonymous”:

All of this economic theorizing works just fine, until it runs into the reality of low IQ menial laborers, who, from time to time itch to go get properly drunk at a bar or the like.

I am somewhat baffled that someone can claim, apparently with a straight face, that people risk going hungry in a country of food stamps and food banks for all who qualify. Do you honestly believe this yourself, Mr. Wenzel?

To which I responded:

@Anonymous#1 above:

Please read “Economics in One Lesson” by Henry Hazlitt.

Your logic is faulty when you cite the person of “low IQ” because they will pay the high rates regardless of whether or not there is a cap.

When you assume the fatal conceit of believing you know what is best for other people, you seal your own fate because you accept the belief that some men have the right to tell others how to live.

Please do your self (and the rest of us) a favor and read Mr. Hazlitt’s book – it’s available for free here:

http://freedomschool.org

Incidentally, food stamps/banks are typically funded by stolen (via taxation) money – in case you didn’t know…

The Socialist then responded:

Sorry a person who purports to value freedom,

YOUR logic is faulty, and horribly so.

First of all, as long as you VOLUNTARILY live in the United States, that is unless PHYSICALLY prevented from leaving the United States, you pay your takes of your own assent, and any talk of the taxes being “stolen” is utter nonsense.

Your second claim is also nonsense. I harbor no fatal conceit that “some have the right to tell others how to live;” what I believe, and what has been the case since our existence as cave men, is that when humans live together, they have agreed to the parameters of their co-existence or left their group.

Ever since 1776, real Americans have used the electoral process to determine who these rules were to be made (a few stolen elections notwithstanding.) I don’t believe they get everything right, but I believe that someone has to make the rules, and that if I don’t like the rules, I should either get involved inthe political system, or move somewhere else.

If you reject the Americna tradition, may I urge you to move to a more congenial political system?

As for paycheck loans, many of them are impulse decisions by low IQ people. Banning them won’t make the disappear, but will make them rarer, and harder to enforce.

The fact of the matter is that America has a fair number of functional illiterates on the bad side of the bell curve who can barely take care of themselves, even if one of them was recently president. The snotty bastards are not those who talk about this fact, but those who couldn’t care less.

To which I responded:

In response to Anonymous above:

You wrote:

“Your second claim is also nonsense. I harbor no fatal conceit that “some have the right to tell others how to live;” what I believe, and what has been the case since our existence as cave men, is that when humans live together, they have agreed to the parameters of their co-existence or left their group.”

To which I respond:

Essentially, what you are saying is that if the gang of the majority decide to take your life, liberty, or property then you have to move if you don’t agree with their vote.

You also wrote:

“If you reject the American tradition, may I urge you to move to a more congenial political system?”

To which I respond:

This is a continuation of your argument and it fails because you are essentially saying “It is okay to kill, enslave, and plunder and, if you don’t like it, you are welcomed to leave.”

Just because someone makes – in your opinion – a poor decision, you feel that you have the right to override their free will and make the decision for them. This is spoken like a true Socialist – one who has good intentions but whose actions result in evil perversions.

This is a common argument put forth by Statists and Socialists which can often leave you at a loss as to how to respond.  This is also an argument these people put forth in order to justify to themselves their own violent actions.  Be careful not to fall into this trap of lazy thinking!  If you have not done so already, read Lysander Spooner’s No Treason VI: The Constitution of No Authority.

Internet Kill Switch – Bruce Schneier

Internet Kill Switch

by Bruce Schneier

Last month, Sen. Joe Lieberman, I-Conn., introduced a bill that might — we’re not really sure — give the president the authority to shut down all or portions of the Internet in the event of an emergency. It’s not a new idea. Sens. Jay Rockefeller, D-W.Va., and Olympia Snowe, R-Maine, proposed the same thing last year, and some argue that the president can already do something like this. If this or a similar bill ever passes, the details will change considerably and repeatedly. So let’s talk about the idea of an Internet kill switch in general.

It’s a bad one.

Security is always a trade-off: costs versus benefits. So the first question to ask is: What are the benefits? There is only one possible use of this sort of capability, and that is in the face of a warfare-caliber enemy attack. It’s the primary reason lawmakers are considering giving the president a kill switch. They know that shutting off the Internet, or even isolating the U.S. from the rest of the world, would cause damage, but they envision a scenario where not doing so would cause even more.

That reasoning is based on several flawed assumptions.

The first flawed assumption is that cyberspace has traditional borders, and we could somehow isolate ourselves from the rest of the world using an electronic Maginot Line. We can’t.

Yes, we can cut off almost all international connectivity, but there are lots of ways to get out onto the Internet: satellite phones, obscure ISPs in Canada and Mexico, long-distance phone calls to Asia.

The Internet is the largest communications system mankind has ever created, and it works because it is distributed. There is no central authority. No nation is in charge. Plugging all the holes isn’t possible.

Even if the president ordered all U.S. Internet companies to block, say, all packets coming from China, or restrict non-military communications, or just shut down access in the greater New York area, it wouldn’t work. You can’t figure out what packets do just by looking at them; if you could, defending against worms and viruses would be much easier.

And packets that come with return addresses are easy to spoof. Remember the cyberattack July 4, 2009, that probably came from North Korea, but might have come from England, or maybe Florida? On the Internet, disguising traffic is easy. And foreign cyberattackers could always have dial-up accounts via U.S. phone numbers and make long-distance calls to do their misdeeds.

The second flawed assumption is that we can predict the effects of such a shutdown. The Internet is the most complex machine mankind has ever built, and shutting down portions of it would have all sorts of unforeseen ancillary effects.

Would ATMs work? What about the stock exchanges? Which emergency services would fail? Would trucks and trains be able to route their cargo? Would airlines be able to route their passengers? How much of the military’s logistical system would fail?

That’s to say nothing of the variety of corporations that rely on the Internet to function, let alone the millions of Americans who would need to use it to communicate with their loved ones in a time of crisis.

Even worse, these effects would spill over internationally. The Internet is international in complex and surprising ways, and it would be impossible to ensure that the effects of a shutdown stayed domestic and didn’t cause similar disasters in countries we’re friendly with.

The third flawed assumption is that we could build this capability securely. We can’t.

Once we engineered a selective shutdown switch into the Internet, and implemented a way to do what Internet engineers have spent decades making sure never happens, we would have created an enormous security vulnerability. We would make the job of any would-be terrorist intent on bringing down the Internet much easier.

Computer and network security is hard, and every Internet system we’ve ever created has security vulnerabilities. It would be folly to think this one wouldn’t as well. And given how unlikely the risk is, any actual shutdown would be far more likely to be a result of an unfortunate error or a malicious hacker than of a presidential order.

But the main problem with an Internet kill switch is that it’s too coarse a hammer.

Yes, the bad guys use the Internet to communicate, and they can use it to attack us. But the good guys use it, too, and the good guys far outnumber the bad guys.

Shutting the Internet down, either the whole thing or just a part of it, even in the face of a foreign military attack would do far more damage than it could possibly prevent. And it would hurt others whom we don’t want to hurt.

For years we’ve been bombarded with scare stories about terrorists wanting to shut the Internet down. They’re mostly fairy tales, but they’re scary precisely because the Internet is so critical to so many things.

Why would we want to terrorize our own population by doing exactly what we don’t want anyone else to do? And a national emergency is precisely the worst time to do it.

Just implementing the capability would be very expensive; I would rather see that money going toward securing our nation’s critical infrastructure from attack.

Defending his proposal, Sen. Lieberman pointed out that China has this capability. It’s debatable whether or not it actually does, but it’s actively pursuing the capability because the country cares less about its citizens.

Here in the U.S., it is both wrong and dangerous to give the president the power and ability to commit Internet suicide and terrorize Americans in this way.

The Dr. Zhivago Option

The Dr. Zhivago Option

By Robert Ringer

The other day, one of my son’s friends, who had just come home from college for the summer, stopped over to say hello. We chatted briefly, and I asked him if he was still planning on becoming an entrepreneur/businessman after he graduated from school next spring.

To my surprise, he said that because of the economy, he had changed his mind about pursuing a business career. He told me that he now planned to apply for a job with the CIA. Surprised, I asked, “What in the world made you decide to go to work for the CIA?”

Without pause, he responded, “It’s so tough to get a job nowadays that I figured I’d just go to work for the government, because there’s much more security in a government job.” I immediately thought to myself that standing right in front of me was a new Barack Obama voter!

It’s simple: Get as many people as possible working for the government – which can always meet its payroll by taking money from entrepreneurs and small businesspeople who create private-sector jobs – and thereby assure winning a majority of votes in every election.

It reminded me of a conversation I had many years ago with a brilliant, ultra-pragmatic, narcissistic acquaintance who had a hugely successful economic consulting business. One day we were having a discussion about the United States’ relentless move toward collectivism, and I asked him, “Given how you’re addicted to the material things in life, what would you do if the United States ever became a full-fledged communist country?”

Without so much as a pause, he answered, in a matter-of-fact tone, “That wouldn’t be a problem. I’d just become a member of the Communist Party and work my way into the inner circle.” His response evoked a nervous chuckle from me, but the chuckle quickly faded as I realized he was deadly serious. His answer bothered me then, and it bothers me even more today.

The first thing that went through my mind after that conversation was the movie Dr. Zhivago and Rod Steiger’s character Viktor Komarovsky. Komarovsky was a member of Russia’s elite class that dined on caviar and expensive vodka while the masses lived on the edge of starvation in abject poverty.

But when it became clear that the Bolshevik Revolution would succeed, Viktor Komarovsky simply cozied up to the revolutionary hierarchy and proclaimed himself to be a communist. He was well aware that revolutionary rhetoric was a fantasy, and that in every revolution, it’s the toughest and wiliest thugs who emerge as the new royalty.

For the masses, of course, things stay pretty much the same, though under communism they usually end up even worse off than they were before the revolution (as was certainly the case in Russia following the Bolshevik Revolution).

Today, the Komarovsky mind-set is a serious problem in the United States. I keep saying that Obama and Co. know they are going down to massive defeats if there are elections in 2010, but maybe I’m wrong. Perhaps I’ve underestimated their determination to get enough people on the government dole and government payroll to mathematically assure victory.

I continue to say that most of the big stories in the news are nothing more than distractions – distractions that take people’s focus off the biggest problem Americans are facing: an irreversible loss of their liberty. That includes the BP oil spill, illegal immigration, and even Obama’s attempt to buy off Joe Sestak to get him out of the race so he could pay back Arlen Specter for his open conversion to the progressive cause.

It’s not that some of these issues aren’t important; they are. But they are not as important as Americans unthinkingly submitting to servitude. And that is what the Obamaviks don’t want the masses to think about.

When it comes to the mid-term elections in 2010, Republicans are running a race against the clock, because it’s only a matter of time until the government has a large enough percentage of voters on its payroll and on the dole to assure a permanent majority in the House and Senate, not to mention permanent control of the White House.

Worst of all, the Republican Party itself has a whole army of Viktor Komarovskys in its ranks, ready to support the Obamaviks at the drop of a vote. Names like Mitt Romney (the de facto architect of Obamacare), John McCain (“I was in favor of illegal immigration before I was against it.”), Lindsey Graham (an unabashed hard-core progressive), Mike Huckabee (the slickest – and possibly most dangerous – man in America), Orrin Hatch (a deeply entrenched member of the go-along-to-get-along club), and Mitch McConnell (another deeply entrenched member of the same club) come quickly to mind.

These men have conclusively demonstrated that they are more than willing to support the progressive’s notion of “social justice” if that’s what it takes to get elected and reelected. Their greatest threat comes from names like Bachmann, Ryan, DeMint, Rubio, and Paul & Paul.

Over the next five months, you can be sure that much Republican blood will be spilled in the war between the Viktor Komarovskys of the Republican Party and those who refuse to go along with the business-as-usual Dr. Zhivago Option. And you can guess which side the socialists in the Democratic People’s Party will be cheering for.