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Friday, July 31, 2009

Not many shows on television piss me off as much as the Law and Order series. Every episode disgusts me in some way from the repeated civil liberty violations. The Special Victims Unit (SVU) franchise seems to be the worst offender. Their best effort to raise concerns on liberty usually consists of someone making a quick comment that is quickly shot down by a police officer as absurd. Advertisement for the shows even poke fun at the ever-present violations.

Instead, I propose a new franchise - Law and Order: Civil Liberties. On this show, the police will not always play the role of the protagonist. The militarization of U.S. police forces will be documented, and to make it realistic, most police abuses will not result in prosecution by a reluctant District Attorney (DA)'s office.

Too bad I already missed pilot season.

Posted by Eleutherian 0 comments

Here's a sign that the U.S. government is over-regulating the nuclear power industry. Bob Metcalfe, with Polaris Venture Partners, recently wrote an op-ed in the Wall Street Journal, stating that his firm (like many others) passed on funding promising private enterprises seeking to build new nuclear power generation plants. According to Metcalfe, five of these start-ups seek to utilize nuclear fission energy (as in traditional nuclear power plants) and two additional start-up enterprises are tapping the power of the sun: nuclear fusion energy.

Polaris and other sources of private funding chose not to invest in this new breed of nuclear power plants despite the following highly appealing characteristics:

These new small reactors meet important criteria for nuclear power plants. With no control rods to jam, they are far safer than the old models -- you might well call them nuclear batteries. By not using weapons-grade enriched fuels, they are nonproliferating. They minimize nuclear waste. And they're economical.
Those are just new nuclear fission plants. Nuclear fusion plants use no radioactive materials for fuel with not risk of catastrophic events. There is only one reason why the private market is not investing in these start-up enterprises: government regulation.
The start-ups estimate that it will cost each of them roughly $100 million and five years to get their small reactor designs certified by the Nuclear Regulatory Commission. About $50 million of each $100 million would go to the commission itself. That's a lot of risk capital for any venture-backed start-up, especially considering that not one new commercial nuclear reactor design has been approved and built in the United States for 30 years [emphasis added].
The private market is producing technology that will reduce the country's carbon emissions, and the government is making it more difficult for them. Instead, U.S. Representative Zoe Lofgren of California has introduced H.R. 3177 to increase government funding for nuclear fusion energy research and development.

The government's excessive regulations of the nuclear power industry has prevented the private sector from investing in its development. As a result, the government has felt the need to spend taxpayer money where the private sector would like to invest.

Posted by Eleutherian 0 comments
Thursday, July 30, 2009

The U.S. government continues to harass the Honduran government for constitutionally removing their former president. The United States, home to the oldest written constitution of any country, should support the Honduran government and its new president, not lead the international attack against political freedom.

The Washington Post reports that the U.S. has revoked the visas of four Honduran government officials. The Post states:

Officials of the current Honduran government say the arrest was legal, noting that Zelaya had defied the Supreme Court in calling a referendum that could have led to overturning the constitution's ban on a second presidential term. But his ouster has been roundly condemned internationally as a coup.
The international community doesn't care about the country's constitution. A mindset exists that leaders of countries should not be removed. (Unless of course the leader is called a dictator and is removed through military force by a coalition of the willing...then it's just fine).

Posted by Eleutherian 0 comments

"If abortion was illegal, what should be done with the women who have illegal abortions?"

This question was asked by Daniel Florien over at Unreasonable Faith, one of my new favorite blogs. Daniel asked this question to protesters attending an anti-abortion rally. The answers (perhaps "responses" is a more appropriate word) are highly amusing. I recommend visiting the site to view the video.

First, let me begin by quoting the 14th Amendment to the U.S. Constitution:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.
The 14th Amendment extends the rights of the Constitution to all persons born or naturalized in the United States. Therefore, I see no reason why abortion should be made illegal. However, if it were made illegal, what is the appropriate punishment? Do they receive life in prison? Do we commit the irony of taking the woman's life?

Fore the record, I am pro-life. I mean, come on, who isn't? I am anti-abortion, but I favor its legalization. You can be both pro-life and pro-choice. These are two separate arguments. The real argument on abortion is pro-choice or anti-choice.

If abortion was illegal, it would be because the government once again chose to legislate the morality of its citizenry - because the government once again chose to limit the freedom of its citizenry - because the government once again chose to make criminals out of otherwise law-abiding citizens. A woman should not be made a criminal for acknowledging that she would not make a good mother or could not provide a safe environment for her child.

Posted by Eleutherian 8 comments
Wednesday, July 29, 2009

Port Chester High School in New York will provide free STD and pregnancy testing for students. Unsurprisingly, the only complaints being raised is that these services will be performed without parent permission and parents will not be informed of the results.

I actually rather appreciate the privacy being granted these students, but we must not ignore the cost. Nothing is free. There are always costs, and the state of New York should understand this by now. New York has the highest per-pupil education spending in the country - $15,981 - 65% above the national average.

According to the Business Council of New York State:

New York spent $37.16 on schools for every $1,000 of personal income in the 2006-2007 school year. That was the highest in the nation and 42 percent above the national average that year. And the state collected more than $5,100 per pupil in property taxes that year -- the fifth highest per-pupil property tax collection in the nation and 60 percent above the national average.
"Free" services come at a cost. In New York, the cost is high.

Posted by Eleutherian 0 comments

The government is trying to fund health care reform. They are desperately reaching, ignoring the hypocrisy of their actions, and it will hurt America.

Taxing food and soda has been touted for months as a means to fund a government-controlled health care plan that is supposed to save taxpayers money. The hypocrisy does not end there.

The LA Times reported on the Urban Institutes's proposal to tax "fattening" foods to handle the "uncontrolled obesity epidemic." Take note of the word "uncontrolled." It is not the government's responsibility to control the eating habits of American citizens.

If you happen to be the 1-in-3 Americans who is neither obese nor overweight (and, thus, considered at risk of becoming obese), you might well conclude that the habits of the remaining two-thirds of Americans are costing you, big time.
If eating habits of other people are costing you, imagine how much taxing the food you eat will cost you. Most states exempt food for home consumption from sales tax. The federal government will take the opposite approach. This may cause states to follow suit, exacerbating the problem.

The Center for Disease Control (CDC) supports taxing both food and soda. CDC chief Dr. Thomas Freiden testified that taxing fattening foods "would be effective" at reducing obesity. Freiden and others compare the proposed 3-cent soda tax to the excise tax on cigarettes. Let's talk cigarettes.

The Urban Institute reports:
Facing the serious consequences of an uncontrolled obesity epidemic, America's state and federal policy makers may need to consider interventions every bit as forceful as those that succeeded in cutting adult tobacco use by more than 50%
The federal tax on cigarettes now stands at $1.01 per pack or about $10.10 per carton. On top of this incredibly high tax, individual states apply their own tax on cigarettes, ranging from $.07 in South Carolina to a high of $3.46 per 20-pack in Rhode Island. With such excessive taxation, it is very understandable that people were financially forced by the government to quit smoking.

However, a 3-cent tax on soda will not cause people to change their drinking habits. If anything, it will cause soda prices to go up by at least 5 cents at vending machines to compensate for the tax and exclude the need for pennies. The government will fail at reducing obesity (a task with which it should not be worried) and increase the profit of vending companies and perhaps even soda companies.

Additionally, the Urban Institute ignores the changing social attitude toward cigarettes that greatly contributed to their tobacco use reduction statistic. There is no need to financially force U.S. citizens who want to engage in a certain activity to cease doing so. The social attitude toward healthy eating and drinking is changing now much as it has changed toward cigarettes. The government has no role in legislating morality (or eating habits).

The proposed taxation does not end there. The Senate Finance Committee has touted the idea of a 10% tax on plastic surgery. The tax would apply to procedures such a liposuction, which not only improve a person's appearance but also improves the body's health through reduced stress on joints.

Posted by Eleutherian 0 comments
Tuesday, July 28, 2009

The Akron Beacon Journal recently ran an article on union labor and school construction projects in Ohio. One Akron school project, Leggett Elementary, is running over budget, costing 22 percent more per square foot than other area school projects. The source of the cost difference is easily identified:

Leggett is the only school project to date that has required contractors to pay prevailing union wages and to provide union benefits and working conditions in an arrangement known as a ''project labor agreement,'' or PLA.
In 1997, Ohio's legislature repealed the state's prevailing wage requirement on school construction costs. The Ohio Legislative Service Commission's 5-year analysis on the bill is available here.

Prevailing wage laws were instituted to protect construction workers from out-of-state competition, typically black workers from the southern states. These laws set a minimum wage for the construction industry on projects performed for the state or federal government. In many prevailing wage states, the “prevailing” wage has customarily been set to the regional union wage for each worker classification. This practice continues even though union membership has declined from 39.5% in 1973 to 15.6% in the construction industry nationwide.

Prevailing wage laws proclaim the wages earned by 15.6% of the industry's workers to prevail. Dictionary.com defines "prevail" as "to be widespread or current; exist everywhere or generally; predominate." Unions wages obviously do not "predominate" in the United States. The site offers the following alternative definitions:
  • to be or prove superior in strength, power, or influence
  • to use persuasion or inducement successfully
These definitions are better suited to union influence over prevailing wage laws.

Getting back to Leggett Elementary, city officials support the use of a PLA because it provides work for more residents. However, this increased employment is necessarily funded through increased taxes. The jobs lost by these taxes are incalculable, and therefore, easy to dismiss. Henry Hazlitt states in Economics in One Lesson:
As a character in Bernard Shaw's Saint Joan replies when told of the theory of Pythagoras that the earth is round and revolves around the sun: 'What an utter fool! Couldn't he use his eyes?'

If taxes are taken from individuals and corporations, and spent in one particular section of the country [or state], why should it cause surprise, why should it be regarded as a miracle, if that section becomes comparatively richer?
In Pennsylvania, prevailing wages (i.e. union wages) are 37% higher than market wages for the same work, adding nearly 17% to the total project cost. The Pennsylvania School Board Association (PSBA) has pushed the state’s legislature to exempt school construction from prevailing wage requirements, but proposals are always tabled in committee before reaching the floor for a vote. Using estimates from the PSBA, exempting school construction would have saved $375 million from 2002-2006 or $75.2 million per year.

Using the most recent data available (2005-06), Pennsylvania taxpayers would save over $1.4 billion each year on all public construction projects by repealing the state’s prevailing wage law. According to a Right to Know Law Request through the Pennsylvania Department of labor and Industry, 6,622 predeterminations for prevailing wage projects were issued in 2007 for a total estimated cost of more than $59 billion. Assuming that ten percent would have been covered by the federal Davis-Bacon Act, repealing Pennsylvania’s prevailing wage law would have saved $8.9 billion for construction projects receiving state funding approved in 2007.

Posted by Eleutherian 3 comments
Monday, July 27, 2009

I love to see countries follow through with their constitution (unlike in the United States and Ukraine). However, while abusing the constitution goes largely unnoticed in many countries, the international community has jumped on the constitutionally-sound removal of the former Honduran president Manuel Zelaya, mislabeling it a "coup."

The decision to remove the president came not from the military but rather from the Supreme Court, which was granted the power through a 2003 amendment. Additionally, after the removal, the military never seized leadership control. The country followed the process outlined in the constitution, swearing in the speaker of Congress as president.

Honduras's constitution clearly dictates presidential limitations and the punishments for attempting to return the country to its authoritarian past.

Article 4 states that attempts to violate the alternation in the office of the presidency constitute "treason." Article 42.5 even says that any person who incites, promotes or supports presidential re-election will lose his or her citizenship.
Zelaya was notified and warned repeatedly by the Supreme Court, Congress, and the attorney general for attempting to change the presidential term limits statute. The military was charged with arresting Zelaya but chose to expel him from the country to avoid a violent confrontation with his supporters.

Would the situation be better or worse with Zelaya in a Honduran prison? The military broke with constitutional procedures in their actions. Only time will tell if they chose wisely. In the mean time, the international community should cease their condescending rhetoric toward the Honduran government. Honduras should be cited as an example of political freedom, not criticized for following their constitution.

Posted by Eleutherian 0 comments

Bill Maher ranted over at the Huffington Post last week, proclaiming, "New Rule: Not Everything in America Has to Make a Profit." However, he failed to provide a single example of an enterprise that does not necessarily have to make a profit to justify its existence. If Bill Maher ran America, the following industries from his article would be controlled and operated by the government:

  1. weapons manufacturers
  2. military vehicle manufacturers
  3. private security forces
  4. prison operators
  5. media
  6. health insurance
  7. health care (including hospitals)
Yes, Bill Maher, America does have a capitalism problem. The problem is I can no longer easily recognize the "free" in "free market." Government intervention in the marketplace continues to worsen, which will only cause the list above to grow.

Maher complains "our war zones are dominated by private contractors and mercenaries who work for corporations. There are more private contractors in Iraq than American troops." Maher is actually complaining that there are more private contractors than troops. What ratio would he find acceptable? Who will perform the jobs no longer available to private citizens - more troops? Failing to think through the consequences, this plan would put more troops in war zones and increase unemployment at home.

The privatization of prison operations has grown in popularity as many states have experienced growing budget deficits. If the private sector can operate a prison more cost effectively than the government, then the government should step aside. You cannot complain when a special interest lobbies government to serve their interests. Every special interest lobbies the government. Why doesn't Bill Maher complain when other special interests, like teacher unions, lobby the government? The two largest teacher unions spend more money lobbying the government than the top two defense contractors, the top four oil companies, or the top five lobbying firms.

Accoding to Maher, "Television news is another area that used to be roped off from the profit motive." Really? If television news didn't earn a profit, 24-hour news channels would not exist. The private sector does not create demand; it meets demand that already exists (or anticipates it).

In some countries, the media does not have to earn a profit. However, when the government controls your funding, it controls your actions. No state in the U.S. has had a legal drinking age under 21 since 1984 when Congress threatened to withhold highway funds to states that did not comply.

Maher tells the following story about health care:
It wasn't that long ago that when a kid broke his leg playing stickball, his parents took him to the local Catholic hospital, the nun put a thermometer in his mouth, the doctor slapped some plaster on his ankle and you were done. The bill was $1.50, plus you got to keep the thermometer.

But like everything else that's good and noble in life, some Wall Street wizard decided that hospitals could be big business, so now they're run by some bean counters in a corporate plaza in Charlotte.
This is not an argument against private health care. The Catholic church was not forced out of the heath care industry. It removed itself from a nonprofitable enterprise where it did not maintain a comparative advantage, moving its limited funds to enterprises where it believed would benefit the most people (or better serve its interests).

Posted by Eleutherian 1 comments
Saturday, July 25, 2009

Last week's post, Free Market at Work - Airline for Pets, inspired me to begin a weekly segment entitled This Week in the Free Market. Each week, I will collect a few stories on products and inventions spurred completely (at least, as far as I can tell) by the free market (i.e. not through government funding). At the end of each week, I will post these stories with a short commentary as to their value.

I encourage readers to submit their ideas for products or their criticism of posted stories if you find they received government assistance. I will credit submissions in the following week's post. You may submit through this post's comment form or by email at eleutherianblog@gmail.com.

1. Hybrid Squared - Energy-Generating Bike Rental System

As a libertarian environmentalist (not an oxymoron), this invention immediately peaked my interest. The bikes are capable of generating and storing kinetic energy. When returned to the bike racks, the stored energy will be used to power the city's hybrid electric buses. Instead of the city's taxpayers subsidizing public transportation costs, the city's residents will power the system through their exercise.

The system provides a built-in incentive to use the bikes by granting credits toward your next bus pass. This also provides an incentive for residents to stay fit and healthy.


2. Contact Lenses for Animals

Continuing the pet theme from last week, the German firm S & V Technologies has started producing custom-made contact lenses for animals. The product is intended to help animals afflicted with cataracts, which often leads to total impairment.

And because animals have short life spans, it means losing quality of life in a greater share of that life.

Although the expense of such an operation and subsequent check-ups can run into the thousands of euros (dollars), the procedure is often worth it for animals that have gone blind -- and for their owners.

Impaired vision can also blunt the sex drive, stopping animals from reproducing.
Chemist and entrepreneur Christine Kreiner recognized a need in the marketplace and developed a product to meet it.


3. Top Products for Smuggling Alcohol into Venues

Even with the worthy choices above, this is my favorite free market find of the week. Personally, I'm not willing to spend $8 for a beer at a professional sporting event. Additionally, as government and segments of society continue to pressure society as a whole to change their values to meet their own, some private enterprises are coerced to make changes.

For example, in April of this year, the
Alcohol and Gaming Commission of Ontario prevented the Blue Jays from selling alcohol at three home games this season. There was also a push by certain residents of California to ban alcohol at Angels baseball games, following the death of pitcher Nick Adenhart by a crash involving a drunk driver. Yes, this was a tragic event, but it does not warrant forcing thousands of law-abiding people not to enjoy an alcoholic beverage at a ballgame.

Additionally, at least some of the high cost of beer can be attributed to government taxation. Beer at Pittsburgh Pirates games topped $7 this year after Allegheny County passed a new 10% drink tax. And when you're a Pirates fan, you perhaps need alcohol at a ballpark more than most fans.

These products are here to help. The smuggling devices include:
  • "beer belly" pouch - 80 oz.
  • "wine rack" sports bra - 25 oz.
  • undetectable, collapsible, durable, freezable, reusable flasks - 6 oz.
  • "barnoculars" (perfect for the upper decks) - 16 oz.
  • flask sandals with bottle-opener soles - 1.5 oz.
  • "sneaky shorts" - 24 oz.
  • "sippin' seat" - 750 ml

Posted by Eleutherian 0 comments
Friday, July 24, 2009

The Internet is a source of free-flowing information. If you don't want to make you information available for free, don't add it to the Internet. The Associated Press (AP) disagrees. Finally moving beyond their harsh rhetoric, the AP is creating a content tracking system to ensure that less people read their content. While I'm sure this isn't their actual goal, it will undoubtedly be the result.

The AP plans to add a "beacon" to their content that will allow them to track where and how it is being used. Apparently, the AP missed the failed attempts by the music and motion picture industries to implement similar projects. The AP even has the nerve to state that this project will be financially self-sustainable after only one year. Good luck, and if by chance the AP manages to implement a successful system, I will no longer be a reader.

Posted by Eleutherian 0 comments
Thursday, July 23, 2009

Earlier this week, I posted on the annual seal hunt in Namibia where an estimated 90,000 seals will be clubbed this year. I want to follow-up on this post, particularly with regard to Francois Hugo, where I stated:

Other activists, like Francois Hugo of Seal Alert South Africa, have taken a more practical approach. Hugo effectively delayed Namibia's seal hunt by one week after his failed attempt to purchase the company that purchases the Namibian seal products. While another company would have seen the opportunity to gain a large market share as a result, this at least represents a private sector approach to the cause.
Seal Alert South Africa issued a press release today, announcing their tactics. Instead of picketing and going through international organizations to increase publicity, Mr. Hugo and Seal Alert-SA are working with the Namibian government, asking what it will take to add seals to their protected species list.

Hugo recognizes that traditional means will only serve to isolate the country (and its resources), "Exposing Namibia to international negative images and boycotts for decades to come." This is an activist organization who looks beyond his goals to the consequences of his means, and he should be commended for that.

While I may be wrong in my perception of this organization, please feel free to check them out for yourself at http://sealalertsa.wordpress.com.

Posted by Eleutherian 0 comments

The LA Times reported today that the Federal Deposit Insurance Corp. (FDIC) has proposed taxing any company which the government categorizes as "too big to fail." The collected money will rest in a "resolution fund" to be used for further bailouts.

There are several reasons why this plan is a terrible idea. First, and most obviously, this plan will punish companies for growing too successful. The United States is not a country that punishes success. In her testimony, FDIC director Sheila Blair proposed taxing companies that pose a risk to the financial system.

This is not a case of government policy having unintended, negative effects on business. Blair clearly stated the intention of this proposal, which President Obama supports: "This system also could provide an economic incentive for an institution not to grow too large [emphasis added]."

Second, Blair lied in stating that taxing large companies to fund future bailouts will come at not cost to taxpayers. In 2005, 50.3% of U.S. households owned financial equities such as stock and mutual funds. This is up from 49.5% in 2002 (which may not seem like much but represents an increase of more than 4 million households). As such, taxing these large companies constitutes taxing roughly half of American households.

Finally, the FDIC's proposal encourages large businesses to engage in risky behavior. The stated purpose of the funds is to bailout these large businesses in the future. If a bailout is guaranteed, it reduces the risks involved in the same activities that caused the current financial recession.

To summarize, the FDIC and President Obama support imposing a new tax on large companies that pose a threat to the financial system for the specified purpose of discouraging companies from growing too large, while encouraging these same companies to engage in risky financial transactions by guaranteeing a bailout -- all at a cost to taxpayers.

Posted by Eleutherian 0 comments
Wednesday, July 22, 2009

A Chinese friend just informed me that Eleutherian Blog is blocked in China. Some of her friends paid money for a DNS to access blocked pages. Free proxies are available, but the speed is not as good.

She also pointed me to a site that covers China's media: danwei.org (which is also blocked in China).

Posted by Eleutherian 0 comments

Here's a quick Stumble find I enjoyed. Funded by an anonymous donor, a "Recession 101" billboard campaign has sprung-up around the country. Here's a picture of the billboard in New York City's Time Square (courtesy of Divine Caroline):

Posted by Eleutherian 0 comments

In recent years, China has eased on its tight-fisted control over Internet access to certain social networking sites. Typically, access would only denied leading up to certain infamous events such as the Tiananmen Square student protests. However, the Chinese Communist Party (CCP) appears to have changed their policy direction. Several prominent social networking sites have been blocked in China since as early as March of this year.

Wikipedia supplies an ongoing list of blocked websites in China. Here is a sample:

  • Chinese Wikipedia (certain articles are also blocked in English Wikipedia)
  • YouTube (since March 2009 - previously blocked several times)
  • FlickR
  • Yahoo
  • certain Blogspot blogs (I am currently unaware if this blog is accessible in China. I will post an update when I know.)
The Associated Press article also lists the following sites as currently blocked in response to the ethnic uprising in turbulent Xinjiang Provence. Apparently, China is willing to take actions that the Iranian government was either unwilling or unable to do during their protests.
  • Facebook
  • Fanfou (Chinese site similar to Twitter - Twitter was recently unblocked)
Thankfully, prominent Chinese bloggers have not remained silent over the increased government invasion into their web access. According to Wen Yunchao, a popular blogger from Guangzhou (a large city in southern China, near Hong Kong):
I am especially pessimistic about this fall and next spring. I expect they will be more and more restrictive because they have yet to come up with a good way to manage the Internet. They are aware that it has this great power and they are afraid of it.
I will post updates on any major developments, but don't expect any kind of uprising in China over this. They are still at least 10-20 years away from the kind of mass-social unrest we saw earlier this year in Iran.

Posted by Eleutherian 0 comments
Tuesday, July 21, 2009

I'm not a big fan of Larry Summers, director of President Obama's National Economic Council (NEC), but I always thought he was still a reputable economist. However, my opinion on him may be shifting for the worse after reading the data he cited in defense of the NEC's charted course for economic recovery.

Summers stated that U.S. citizens are gaining confidence on the government's path to recovery, citing the decline in Google searches for "economic depression." Click here to see the Google Trends data Summers cited.

As you can see, Summers was correct in stating that searches for "economic depression" declined. However, after he made this statement, searches for the term spiked to their highest levels in four months. The reason: people have short attention spans! I'm amazed that the high number of searches continued for as long as they did. People quickly forget history, which is evidence why the government continues to believe increased spending is a good idea.

Summers' statement also had me thinking about why he chose the term "economic depression." After running a few sample Google Trends searches, the answer became obvious. The results look the most favorable for the Administration's economic recovery plans. The decline in search volume for "economic depression" was more than twice as sharp as "economic recession," "recession," or "depression."

Now, I don't honestly believe Summers was paid to promote Google, but it would certainly make me feel better about his economic credentials than if he honestly believes search volume data is a good indicator of U.S. confidence.

Edit: I have learned that people are promoting via Twitter to "Google bomb" the search term "economic depression" in response to Larry Summers' statement. While this may account for the entire recent increase, it does not add credence to the statement.

Posted by Eleutherian 1 comments

I have been intrigued for some time by Amazon's Kindle e-book reader. However, stories like this remind me why I stay truthful to physical books. Hundreds of Kindle users found certain books were deleted from their libraries without permission or notification. Ironically, these books were George Orwell's 1984 and Animal Farm.

Amazon later reported that the publisher who originally sold the electronic rights to these books did not hold the rights in the first place. As a result, the hundreds of Kindle users who were under the (valid) impression that they owned one or both of these books no longer have the right to read them. In exchange, Amazon simply refunded money to the users' accounts without an apology.

While the actual owner of the rights to these books does have a valid claim, Amazon's actions are deplorable. The company has promised not to delete books in the future. However, Amazon's terms of service agreement state that the user owns a "permanent copy of the applicable digital content." If they can't keep their word in a legally binding document, I won't believe their word given in response to angry reactions to their stealing of private property.

Here are some of those angry reactions:

New York Times - Retailers of physical goods cannot, of course, force their way into a customer’s home to take back a purchase, no matter how bootlegged it turns out to be. Yet Amazon appears to maintain a unique tether to the digital content it sells for the Kindle.

Bruce Schneier (British Telecom) - As a Kindle owner, I’m frustrated. I can’t lend people books and I can’t sell books that I’ve already read, and now it turns out that I can’t even count on still having my books tomorrow.

Justin Gawronski (17-year-old student from Detroit, MI) - They didn’t just take a book back, they stole my work [after reading and taking notes on 1984 for his school's summer reading].
I like the statement by Mr. Schneier on how with the Kindle, he really doesn't own the books as he cannot lend or sell the book to other people. Copyright holders want to determine not only who reads their content but also who can sell their content. Thankfully, some authors understand the true nature of copyright laws and the libertarian moment. Cory Doctorow, author or the award-winning Little Brother, states:
I'm more interested in getting more of that wider audience into the tent than making sure that everyone who's in the tent bought a ticket to be there.

Ebooks are verbs, not nouns. You copy them, it's in their nature. And many of those copies have a destination, a person they're intended for, a hand-wrought transfer from one person to another, embodying a personal recommendation between two people who trust each other enough to share bits. That's the kind of thing that authors (should) dream of, the proverbial sealing of the deal. By making my books available for free pass-along, I make it easy for people who love them to help other people love them.

What's more, I don't see ebooks as substitute for paper books for most people. It's not that the screens aren't good enough, either: if you're anything like me, you already spend every hour you can get in front of the screen, reading text. But the more computer-literate you are, the less likely you are to be reading long-form works on those screens -- that's because computer-literate people do more things with their computers. We run IM and email and we use the browser in a million diverse ways. We have games running in the background, and endless opportunities to tinker with our music libraries. The more you do with your computer, the more likely it is that you'll be interrupted after five to seven minutes to do something else. That makes the computer extremely poorly suited to reading long-form works off of, unless you have the iron self-discipline of a monk.

The good news (for writers) is that this means that ebooks on computers are more likely to be an enticement to buy the printed book (which is, after all, cheap, easily had, and easy to use) than a substitute for it. You can probably read just enough of the book off the screen to realize you want to be reading it on paper.

Posted by Eleutherian 0 comments
Monday, July 20, 2009

The Huffington Post has an interesting article on baby seal clubbing in Namibia. Hunters in the annual commercial seal hunt are expected to club approximately 90,000 seals (representing a little over 10% of the country's seal population of 850,000). The article states:

Namibia is one of only a few remaining countries with a commercial seal harvest. The government argues that the seal population needs to be controlled to protect fish stocks....The government has said seals consume 900,000 tons of fish each year, more than a third of the fishing industry's catch, and that the cull is needed to protect fisheries.

Two interesting points are raised in this article (amusingly titled "Seal Sorrow").

First, there are two instances of how the natural market forces of supply and demand influence the seal clubbing industry around the world:
  1. Due to the economic recession and changing consumer tastes, hunters in Canada clubbed less than one-third of their alloted quota. Without adequate demand for seal products, less seals will be hunted each year. This involves economic considerations and cultural preferences - NOT government mandates. It is not the proper role of government to legislate morality.
  2. In Namibia, seals are clubbed because they threaten an important human food supply. The real problem here is not the seals but rather the lack of fish. Fishery populations are declining around the world from the over-harvesting that occurs under traditional systems. In the United States, the National Oceanic and Atmospheric Administration has proposed instituting individual fishing quotas (IFQs), which gives fishers an incentive to increase the size of their resource. Reason Magazine previously covered and supported similar IFQ systems that have prospered in New Zealand, showing the effectiveness of private sector ownership as an incentive.
The second notable point from the article is the response by animal activists. Some groups continue to work through governments to try to ban the industry and their products. However, they have only succeeded in making felons out of hunters and creating black markets for their goods. Other activists, like Francois Hugo of Seal Alert South Africa, have taken a more practical approach. Hugo effectively delayed Namibia's seal hunt by one week after his failed attempt to purchase the company that purchases the Namibian seal products. While another company would have seen the opportunity to gain a large market share as a result, this at least represents a private sector approach to the cause.

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Friday, July 17, 2009

Having just read this report, I wanted to put out a quick post before the weekend. I will come back next week with more depth on various health care topics.

According to CQ Politics, Director Douglas Elmendorf of the Congressional Budget Office (CBO) has stated that the health care plans thus far proposed will not reduce the government's long-term health care costs. Members of Congress, particularly Democrats, are scrambling in committees to address these concerns.

Michael Kinsley with the Washington Post wrote last week, "
...keep in mind that health-care reform is supposed to save money. Its premise is that the current path is unaffordable." Anything less is unacceptable, and the CBO, led by Elmendorf, agrees with this conclusion.

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Government attempts to legislate morality has been an all-too-common theme around the world. No country seems immune to the unwarranted desire to dictate the morality of its citizens, including the United States, United Kingdom, Ireland, Russia, and now Ukraine.

The Ukrainian ministry of culture (read: censors) voted 9-5 to completely block the release of 'Bruno' in the country. They stated, "The film contains unjustified showing of genital organs and sexual relations and shows homosexual acts and homosexual perversions in an explicitly realist manner." They fear the movie's themes "could damage the morality of citizens [emphasis added]."

Ignoring the fact that bootleg copies of the film are likely already available throughout the country, after reading Ukraine's constitution, I see no statute that gives the government authority to legislate morality in the country (same as in the United States, et. al.). In fact, Article 4 states:

Human rights and freedoms and their guarantees determine the essence and orientation of the activity of the State. The State is answerable to the individual for its activity. To affirm and ensure human rights and freedoms is the main duty of the State.
Additionally, Article 15 declares, "Social life in Ukraine is based on the principles of political, economic and ideological diversity," and, "Censorship is prohibited [emphasis added]."

In the U.S., 'Bruno' topped the box office in its opening weekend, grossing over $30 million (while being shown in approximately half as many theatres as the Transformers and Ice Age sequels, but this is a result of private sector censorship - NOT public sector censorship - Fahrenheit 451, anyone?).

In China, films cannot promote sex, crime, violence, or gambling in order to pass government censorship requirements. However, they have shown a willingness to ease these restrictions, as China was the only country to show the 2007 film 'Casino Royale' completely uncut (no sex, crime, violence, or gambling there!).

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Thursday, July 16, 2009

The U.S. House of Representatives is currently pushing legislation (H.R. 2743) to require GM and Chrysler to restore all dealers currently scheduled to close. Let the hypocrisy begin.

First, President Obama offered the gem that this legislation risked setting a "dangerous precedent" to "intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point." It's difficult to believe the president was able to keep a straight face making this statement. After all, it was his dangerous precedent by intervening in an open judicial bankruptcy proceeding that led to the current situation.

On to the legislation, at least some (perhaps only the Republicans, but some nonetheless) of the bill's cosponsors have argued that closing the dealers constituted unwarranted government interference in the private sector. Without going into any merits of this argument, forcing GM and Chrysler to take certain actions (again, regardless of the merits) through legislation also constitutes government interference in the private sector.

The government caused a problem, and then those supposedly with principles abandoned them in an attempt to solve it.

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Following up on Tuesday's post about police checkpoints and license plate cameras, here's a new story on speed cameras in the Washington Examiner. D.C. police chief Cathy Lanier has publicly denounced the use of technology, such as certain iPhone applications, that alert drivers to the location of speed traps, red light cameras, and DUI checkpoints, referring to such use as a "cowardly tactic."

This stance puts Chief Lanier at odds with 9o% of the country's police departments. She has previously stated that these cameras reduce traffic deaths. This is an interesting statement, as drivers only learn of their infraction after receiving their ticket in the mail. However, with devices that alert drivers to the location of cameras, drivers can reduce their speed prior to approaching locations the police department identified as needing additional coverage.

Therefore, by denouncing the "cowardly" use of such technology, D.C. police chief Cathy Lanier has indirectly admitted that she cares more about the revenue earned from traffic cameras than the lives they supposedly save.

Posted by Eleutherian 2 comments
Wednesday, July 15, 2009

Here's a more lighthearted story than what is usual for this site. A new airline has started with a unique clientèle. Pet Airways offers flights to five major U.S. cities, exclusively to pets. A husband and wife started the company four years ago with flights from their five modified aircrafts beginning recently (and seats on all flights are booked for the next two months). That's enough to make any airline jealous.

Pet Airways will fly a pet between five major cities—New York, Washington, Chicago, Denver, and Los Angeles. The $250 one-way fare is comparable to pet fees at the largest U.S. airlines.

For owners the big difference is service. Dogs and cats will fly in the main cabin of a Suburban Air Freight plane, retooled and lined with carriers in place of seats. Pets (about 50 on each flight) will be escorted to the plane by attendants that will check on the animals every 15 minutes during flight. The pets are also given pre-boarding walks and bathroom breaks. And at each of the five airports it serves, the company has created a "Pet Lounge" for future fliers to wait and sniff before flights [emphasis added].

I mention this story to highlight the brilliance of the free market. The United States allows anyone (even a husband and wife team) to enter into (almost) any industry. When you hear of the "free market", the "free" means the market can be "freely" entered and entrants are "free" from coercion (yes, other definitions exist).

There was no government authority trying to create demand for an all-pet airline. Rather, an average American couple recognized the existing demand in the market and set out to meet it through competitive pricing and improved services.

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Tuesday, July 14, 2009

In the small, posh town of Tiburon, located near San Francisco, has plans to install an "electronic border gate." Due to its geographic location, only two roads provide entry/exit points to the relatively small town of 8,800 residents. The police want to install cameras with character recognition software to immediately notify police if a license plate matches a database entry.

"If someone burglarized a Tiburon home at 3 a.m. one morning, [Police Chief Michael Cronin] said, detectives could consult the devices and find out who came to town in the hours before - and who rolled out soon after." This makes anyone unfortunate enough to make a quick stop in the town a suspect and encourages criminals to stay in-town longer. I'm sure that is exactly what these residents want.

But then again, I wouldn't put it past these residents. "Cronin called it a sound investment. He pointed to a frustrating twist in Tiburon crime: Residents feel so safe that they don't lock their cars and homes." According to Cronin, "It's much more efficient than having an officer sit on the boulevard, watch passing cars and guess who might be a burglar." (i.e. profiling)

Let's process this information. The police blame the crime problem in the town to residents feeling too safe. Therefore, they must install privacy-invading cameras that record data on all vehicles entering and exiting the town in order to make the residents feel safer.

This also poses the very real risk that this will become nothing more than a high-tech traffic checkpoint. A recent DUI checkpoint in Florida failed to find a single DUI, but the police took the following actions with the 1,131 unnecessarily delayed vehicles:

--Two arrested on outstanding warrants.

-- Seven arrested on felony charges, including six on drug-related charges.

-- One arrested for misdemeanor drugs.

-- 104 traffic citations issued.

-- 10 faulty equipment warnings were issued.

-- 10 warnings were issued.

"But if that justifies having a checkpoint to check every single vehicle and driver, ostensibly for DUIs, doesn't it also justify just having random checks for no reason at all?"

Posted by Eleutherian 0 comments
Monday, July 13, 2009

CNN ran an article last Friday on 'Greening the Internet.' While I found the title amusing, the article raised a few issues I would like to illustrate.

1. Accountability - Who do you hold accountable for carbon dioxide emissions caused by "the Internet"? Additionally, who do you hold accountable for reducing these emissions? The end users? ISPs? data centers? Microsoft? Policy without accountability is useless at best, and harmful to competition through unjust application at worst. This further shows the inability of policymakers to understand the nature of the Internet, demonstrating their failure to grasp the libertarian moment.

2. Secondary consequences - I just finished my long-overdue reading of Henry Hazlitt's Economics in One Lesson (a MUST-read for anyone seeking a better understanding of economics, regardless of your politics), and he focuses heavily on looking beyond the immediate consequences. The author of the Internet article falls for the all-too-common fallacy of looking at one entity in isolation. In this case, she (and the researchers she cite) look only at the carbon emissions caused by the Internet but completely ignore the emissions reduced by our utilization of the Internet.

For example, due to the Internet, many people no longer subscribe to printed media such as newspapers and magazines. This eliminates emissions in producing these products, including the paper and ink used to make them. (For a popular example, check out I, Pencil by Lawrence W. Reed courtesy of the Foundation for Economic Education).

As a bigger bonus, the Internet reduces the need to cut down as many trees, which, in turn, reduces the amounts of carbon dioxide in the air. Ironically (but unsurprisingly), many policymakers want to bailout these very printed media outlets even though their contraction reduces carbon emissions.

3. Imperativeness - The article passes the following statement off as scientific fact:

"Scientists are saying to us that we have 10 years to take some serious action to avoid the most catastrophic effects of climate change so taking some sort of initiative is absolutely vital."
Really? 10 years? Where are the figures that show our current level of carbon emissions will cause a an irreversible atmospheric imbalance? No such findings exist.

I agree with Keith Hennessey, in his discussion on the need for a carbon tax:
If we knew with certainty that Earth would warm 10 degrees over the next 20-30 years, I would be screaming for an immediate big carbon tax. If instead we think Earth is likely to warm one degree over the next century or two, then climate change is a trivial concern and we needn’t worry about it. The problem is that nobody knows where we are between these two extremes. This uncertainty matters a lot, and it makes the problem hard.

...And so I am willing to consider significant and effective policy actions to slow the growth of greenhouse gas emissions to reduce that risk [emphasis in original]. I do not, however, believe that risk is so great or so certain that we must immediately commit to drastic changes in our economy, or that we must ignore the costs of those policy actions [emphasis added].

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Friday, July 10, 2009

I became a fan of Reason Magazine back in 2007 after reading "The Secrets of Intangible Wealth" by Ronald Bailey. It has remained one of my favorite pieces, but the inspiration for this post came from a more recent article by editors Nick Gillespie and Matt Welch, "The Libertarian Moment."

To quote the article, "Understanding the Libertarian Moment is fundamental to understanding the 21st century." This got me thinking of the U.S. presidency (thanks largely to my former American Presidency professor, Paul Rego). I mention my former professor 1. for his libertarian leanings and 2. for his close emphasis on the United States's first president elected in the 20th century, Theodore Roosevelt (His book on Roosevelt's presidency is available here).

Yes, Roosevelt was the first president elected during the 20th century. However, he was not the first 20th century president. Historian Lewis L. Gould bestows the title on William McKinley (thanks largely to his assistant secretary George B. Cortelyou). Together, according to historian Richard Norton Smith, McKinley and Cortelyou "anticipated much of the modern chief executive's role as newsmaker, agenda setter, public educator, and uber celebrity."

We have had two presidents, Bush '43 and Obama, elected in the 21st century. However, Bush served and Obama currently serves with a 20th century mindset. The United States has yet to have a 21st century president.

Let's get back to the quote by Gillespie and Welch, "Understanding the Libertarian Moment is fundamental to understanding the 21st century." The first U.S. president of the 21st century will be the man or woman who understands the libertarian moment.

They define the libertarian moment:

...the power to swarm in the direction of freedom is the new technology fueling an idea that is as old as the American republic itself: No central government shall interfere with our life, liberty, and pursuit of happiness. The Libertarian Moment is taking these self-evident truths and organizing them into a comprehensive approach toward living. It started where it always does, in business and culture, where innovation is rewarded. Statist politicians—it’s not fully clear that there is any other kind—will ignore that epochal shift at their peril.
An important step toward electing a libertarian (not necessarily Libertarian) president is instilling in the American public that libertarians are the true progressives in the United States. Big government approaches are the oldest, most reactionary policies available. Limited government policies are revolutionary. The word "liberal" may be lost forever to the statists in the U.S., but "progressive" is still within reach.

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Blasphemers beware! Ireland's House of Representatives (Dáil Éireann) has joined most Middle Eastern countries in passing legislation criminalizing blasphemy. The UK's Guardian asks the appropriate question, "Who asked for Ireland's blasphemy law?"

The short answer: no one. As far as I can tell, the politicians have taken it upon themselves to pass legislation no one wanted in an effort to prevent the kind of outcry seen in other European countries over religion. However, like efforts to legislate morality, it is not the proper role of government to prevent members of any religion from taking offense or becoming outraged.

Micheal Nugent with Atheist Ireland explains that the legislation updates the 1961 Defamation Act, which was stricken down by the country's Supreme Court in 1999. The Dáil has argued this new legislation is necessary to fill a "void". Free expression is not a void. Liberty is not a void. Liberty is a boundary, marking the grounds where government must not extend its reach.

Nugent details some of the problems with the new legislation:

The proposed law does not protect religious belief; it incentivises outrage and it criminalises free speech. Under this proposed law, if a person expresses one belief about gods, and other people think that this insults a different belief about gods, then these people can become outraged, and this outrage can make it illegal for the first person to express his or her beliefs.
Furthermore, if convicted under the new blasphemy law, the 'victim' (because anyone convicted under this law is certainly a victim) will be fined €25,000 and his/her home and office will be searched for blasphemous material which will subsequently disposed of by the government.

HT: Paliban Daily (full text of the legislation available here)

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Thursday, July 9, 2009

I reported earlier on the continuing encroachment on freedom in Europe. I now have the pleasure to write that the UK has, at the least, postponed its march towards a more authoritarian form of government. (I will have more on the ideological spectrum in a later post).

The UK's new home secretary, Alan Johnson, will not make ID cards mandatory for UK citizens. However, the long-term contract to produce the ID cards has only been delayed, not canceled, with production now scheduled to begin in 2011 or 2012.

Fortunately, the resurgent Conservative Party has publicly promised to abolish the program altogether if they win the next general election. The Liberal Democrats (completely different meaning in the UK) also reject the mandatory ID cards but lack the popular support to win the next general election.

While this is a positive step, everything may not be fine if the Labour Party remains in power. The Party will be unlikely to completely scrap a program for which they publicly lobbied and supported. Additionally, the Financial Times reports:

Mr Johnson said on Tuesday he was an “instinctive” supporter of ID cards and announced plans to extend a voluntary scheme in Manchester to the rest of the north-west. The cards would be useful for young people to provide proof of age and for tackling antisocial behaviour [emphasis added].
The British spelling of "behavior" aside, it is not the proper role of government to legislate morality.

Posted by Eleutherian 1 comments
Wednesday, July 8, 2009

This post will focus largely on the effects of a so-called "public option" in health care. You can read my previous posts on health care here, and I plan to post comprehensive talking points on the health care debate in the future.

Here are the three takeaway points from this post:

  1. Taxpayer subsidies or the expectation of subsidies will give a government-sponsored public option an unfair advantage over private providers.
  2. A public option will primarily reduce costs through monopsony power.
  3. The government will not set appropriate reimbursement levels to cover the costs of research and development, discouraging future investment.
From his past public comments, it is clear that President Obama wants any new health care legislation to include a public option, reasoning that consumer choice and economic competition will benefit. According to Harvard economics professor N. Gregory Mankiw's piece in the New York Times, a public option will have quite the opposite effect. Consumer choice and competition are typically achieved without a public choice. For example, a government option was not needed to create choice and competition among grocery stores, gas stations, or auto insurance providers.

Robert Reich, on the other hand, argued in the Wall Street Journal that a public option will act like any other not-for-profit health care plan, so there is no need to "coddle" the for-profit plans. However, Reich is a former Secretary of Labor in the Clinton administration, and I find it difficult to trust anyone in that position who wasn't smart enough to call for an end to the federal Davis-Bacon prevailing wage law.

As such, there is no way that a government option will act as a private nonprofit health care plan. Mankiw stated, "The public plan would have to stand on its own financially, as private plans do, covering all expenses with premiums from those who signed up for it." In other words, it wouldn't have access to taxpayer dollars. Even if this was the case (which it likely will not), the plan will still have the 'Fannie Mae/Freddie Mac benefit'. Mankiw describes this issue:
Fannie Mae and Freddie Mac, the mortgage giants created by federal law, were once private companies. Yet many investors believed — correctly, as it turned out — that the federal government would stand behind Fannie’s and Freddie’s debts, and this perception gave these companies access to cheap credit.
The mere expectation of taxpayer support will give any public option an unfair advantage against private health care plans. These taxpayer subsidies will prevent the honest competition Obama and other supporting politicians claim they desire. In other words, because mandating a single-payer system is not politically possible in this country, "...a public option that uses taxpayer funds to tilt the playing field may be an attractive second best," stated Mankiw. Reich either overlooks or ignores this aspect.

Reich points to the success of Medicare and Medicaid at limiting administrative costs. However, in a Wall Street Journal rebuttal, AEI's John Calfee stated that Medicare actually outsources many of its administrative services to private sector providers (I was unable to confirm this statement. If anyone has a source, please forward it to me or comment on this post). Additionally, we shouldn't be looking to Medicare and Medicaid as examples. They are a large reason as to why our country's health care finances are in shambles.

As for economies of scale, Calfee notes:
Aetna currently serves about 18 million subscribers, UnitedHealth Care serves between 25 million and 30 million, and WellPoint more than 35 million. That is more than is served by the health-care monopoly of Canada (population 33.6 million), and more than the entire health-care systems of most European nations. Once a plan reaches a few million subscribers, there may not be a lot of economies of scale left that can enable public plans to provide lower prices [emphasis added].
A government-sponsored public health care option will primarily control costs through monopsony power. According to Mankiw:
A dominant government insurer, however, could potentially keep costs down by squeezing the suppliers of health care. This cost control works not by fostering honest competition but by thwarting it....a monopsony — a buyer without competitors — can reduce the price it pays below the competitive level by reducing the quantity it demands [emphasis added].
Calfee adds that other nations' governments achieve lower prices through "monopsony, not superior skill [emphasis added]." Reich responds to such criticism by asking if a monopsony in health care is such a bad thing. Besides, Reich asserts, "no one has to choose it." This is a complete lie. The Congressional Budget Office (CBO) has already stated that a public option would force approximately 10 million people from their current, private insurance providers to the public "option". They will not have a choice.

Of the most dangerous effects of a public option in health care, monopsony power will reduce the number of doctors, health care professionals, and perhaps most importantly, research and development (R&D).

The United States accounts for approximately one-half of the worldwide profits that make continued medical R&D economically feasible. According to Calfee:
When other nations construct their health-care systems, they ignore the impact of their pricing policies on R&D incentives. As the dominant R&D funding wellhead, [the United States does] not have that option [emphasis added].
Since Reich and others want to look to Medicare as an example, we shall. Medicare takes a "destructive approach" to cost reduction by squeezing health care providers until too many refuse to accept Medicare patients. The government doesn't even attempt to set appropriate reimbursement levels to cover R&D costs.


Shifting gears, I would like to point you to an article by David Brooks in the New York Times. He covers the insufficiently covered, yet laudable, Wyden-Bennett bipartisan health care bill. Senator Bennett is by far my favorite current member of Congress, and this bill removes the tax exemption for employer-provided health care plans. Spread the word.

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Tuesday, July 7, 2009

I read a disturbing headline today (what else is new): US Agency May Impose Limits on Energy Futures. (Although its search engine lags behind Google, Yahoo! Finance is still a good source for quick financial headlines). The "US Agency" refers to the Commodity Futures Trading Commission (CFTC). Before I continue on this recent development, let's go over a little history.

Last summer (2008), Congress made a push to regulate (or in some extreme cases, eliminate) speculation in the oil commodity market. However, Congress was unable to pass the proposed legislation because oil prices dropped over $100, falling below $40 per barrel.

If Congress would have listened to the experts in 2008, they would have saved themselves the embarrassment of proposing pointless (and costly) legislation. The Wall Street Journal found 89% of surveyed economists attributed the rise in energy prices to "fundamental market conditions" driven by supply and demand. The Economist added:

There is no clear correlation between increased speculation and higher prices in commodities markets in general [emphasis added]. Despite a continuing flow of investment in nickel, for example, its price has fallen by half over the past year.
Jeffrey Harris, chief economist of the CFTC, has stated that the voices demanding increased regulation of oil futures trading are confusing the cause with the effect. It is likely that the rising prices are spurring the increased investment, rather than the other way around. In testimony before a House subcommittee, Mr. Harris stated:
Our studies in agriculture and crude oil markets have found that speculators tend to follow trends in prices rather than set them...Simply put, the economic data shows that overall commodity price levels, including agriculture commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand. These fundamental economic factors include increased demand from emerging markets; decreased supply due to weather or geopolitical events; and a weakened dollar [emphasis added].
Back to today's announcement, CFTC Chairman Gary Gensler (an Obama appointee) is allowing Congress, led by Senator Carl Levin, to influence the supposedly independent institution's mission. From the CFTC's website, "The CFTC's mission is to protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets [emphasis added]."

However, Sen. Levin has chosen to ignore this mission, stating:
It is a relief to know that the Obama administration does not plan to stand by silently while inflated crude oil prices top $70 per barrel despite ample oil supplies and low demand. Excessive speculation is distorting prices, undermining our commodity markets and hurting our economic recovery.
The CFTC has previously stated that speculators do not set market trends. Senator Levin continues to confuse the cause with the effect. As such, since making his statement, the price of oil has dropped to a 5-week low of under $63 per barrel.

In 2008, the following predictions were made about the long-term price of oil:

Tim Evans, energy futures analyst at Citigroup's Futures Perspective: $60-70

Michael Lynch, President and Director of Global Petroleum Service at SEER: $60-70

Akira Yanagisawa, Senior Economist at Japan's Energy Data and Modeling Center: $50-60

J. Stephen Simon, Executive Vice President, Exxon-Mobil: $50-55

John Hofmeister, President, Shell Oil Co: $35-65

First two predictions via Reason, second three via Econbrowser.

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Monday, July 6, 2009

Health "insurance" isn't really insurance. That may sound confusing, so I intend to clarify the subject by comparing it to auto insurance, a rather easy-to-comprehend policy. Generally, insurance protects the covered individual(s) from unexpected costs. This post will focus on that point.

Before I begin, I would like to draw a distinction to limit the number of comments that because auto insurance is mandatory, health insurance should be mandatory, too. This is a flawed argument. Driving is a "privilege," living is a right. A mandate to own auto insurance for everyone who drives is therefore different than a government mandate to own health "insurance" for everyone who lives.

According to Wikipedia, "Insurance, in law and economics, is a form of risk management...defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium, and can be thought of as a guaranteed small loss to prevent a large, possibly devastating loss [emphasis added]." The third principle of insurance is accidental loss. As such, health insurance started as an early form of disability insurance (or "accident insurance").

If auto insurance was like health "insurance," then your employer would decide from which plans and from which providers you may choose. You would no longer see advertisements on television for such companies as Geico, Progressive, and Nationwide, competing for your business through lower prices and innovations in services provided.

The government would also pass legislation (undoubtedly outside the scope of their federal powers) to mandate auto insurance plans carry certain minimum services, increasing the cost of premiums regardless if the customers want these services or not. Obviously, the government knows what's best for you.

However, we would also expect out auto insurance to cover certain non-accidental (expected) costs. Just as we expect our health "insurance" to subsidize our purchases of birth control pills and prescription allergy medicine, we would expect our auto insurance to help pay for our gasoline and oil changes. Who cares if this increases the cost of your insurance premiums (even if you drive less miles than the average driver and thus would face a disproportionately higher increase), you'll feel better every time you fill your gas tank, right?

This brings us to charging higher premiums for risky behavior. The Kennedy-Dodd health care bill would prohibit charging higher premiums to individuals who smoke, use drugs, and engage in other unhealthy behaviors. If that were the case, auto insurance providers could no longer charge higher premiums to males and young drivers (perhaps a positive development) but also that terrible driver who doesn't take care of his/her car, reguarly receives speeding tickers, and has totaled three cars in as many years (we all know at least one of these drivers). If auto insurance was like the Kennedy-Dodds health care bill, every driver would pay higher auto insurance premiums because of undoubtedly poor drivers.

Posted by Eleutherian 2 comments
Friday, July 3, 2009

Researchers at the University of Iowa are currently conducting field tests on technology to replace the current gasoline tax with a by-the-mile road tax. These tests utilize GPS devices installed in vehicles to log the number of miles driven. Before I get into the complications that arise from such a move, officials endorsing the road tax believe:

...the traditional by-the-gallon fuel tax, struggling to keep up with road building and maintenance demands, could fall even farther behind as vehicles' gas mileage rises and more alternative-fuel vehicles come on line.
Basically, their argument is that because vehicles are becoming more fuel efficient (at least partly as a result of government mandates), the established tax on gasoline no longer provides enough money to "properly" fund road maintenance. (I'm sure you can deduce why "properly" in is quotations).

I decided to list complications of this switch in list form. If you think of anything I missed, comment, and I may choose to add your suggestion.
  1. Privacy - I don't know about you, but I don't want the government lojacking my vehicle for any reason. Even if the bill's language includes specific references to the use of the information, simply having the device already in place makes it easier for the government to go further with the collected information in the future.
  2. Environment - Presently, the gasoline tax serves a dual purpose. It funds road maintenance and discourages consumption (thus promoting research and development into alternative fuel sources). Switching to a road tax adds a new tax to owners of electric vehicles (and increases taxes for owners of more fuel efficient vehicles). The government may also be pressured to institute a separate excise tax on gasoline, effectively making this tax shift into a new tax.
  3. Stolen Vehicles - The road tax adds a new complication to victims of vehicle theft. Not only will the victim be left without a vehicle, but may also potentially have to pay a tax on the miles driven by the thief.
  4. GPS Capacity - I am no expert on this subject, but will the current Global Positioning System (GPS) have the capacity to relay information from every vehicle in the country?

Posted by Eleutherian 2 comments
Thursday, July 2, 2009

This week, Russia's Prime Minister, Vladimir Putin, has ordered the closing of all gambling facilities across the country (except for specialized zones in four remote regions). The economic effects are staggering: 500,000 jobs and $1 billion in tax revenue lost.

According to the general manager of Metelitsa, one of the closed casinos, "We were hoping with the current financial crisis that there would be some leniency for two or three years, but they didn’t do it. It’s hard to understand why this decision was made in the first place." One gambler at the casino stated, "It's a stupid law."

Putin insists that the measure is meant to control Russians' gambling problem. This is just another case of a government attempt to legislate morality. In this matter, the economic costs are quite clear. The $1 billion that once flowed into Russia's coffers are now crossing boarders to casinos in the relatively freer countries of Kazakhstan, Armenia, and Georgia.

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Wednesday, July 1, 2009

The AP reported today that the federal government will seize six state parks from California if they continue with the governor's plan to close 220 state parks. With several states threatening to close their parks, it makes me think: Why don't states just privatize their parks?

Here are excerpts from two blogs on state park privatization in Pennsylvania that I posted previously at the Commonwealth Foundation's PolicyBlog:

[PA] SB 850 will reduce funding for state parks by only 17 percent from 2008-09 and only 14 percent from the governor’s proposed budget. However, despite this relatively small reduction, John Quigley, acting secretary of the Department of Conservation and Natural Resources (DCNR), continues to proclaim that up to 40 state parks will have to close due to lack of funding. That amounts to 34 percent of named state parks.

How does a 17 percent cut in funding close 34 percent of the state’s named parks?
Pennsylvania should consider privatization of state parks. Similar proposals exist in Michigan and Washington State. Pennsylvania currently maintains and operates 117 parks across the state. Not only will privatization reduce taxpayer spending, but privatizing Pennsylvania’s state parks will provide a windfall profit from their lease or sale. The local communities will also benefit from property taxes on the newly privatized land.

Patrick Henderson, director of the Senate Environmental Resources and Energy Committee, has also proposed increasing the amount of state park land open for natural gas drilling. In 2008, Pennsylvania received $190 million in leasing fees on 74,000 acres of state land.

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