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ThrutchBlog

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  1. This is a very illuminating article on GDP numbers and shows how their very calculation skews the numbers toward more government spending: Yet even this correction implicitly assumes that government spending is the source of all recovery. The logic, as with Bernanke's and Zandi's analyses, is that government spending cuts reduce overall demand in the economy, which affects growth and then employment. This argument ignores the fact that the government has to take its money out of the economy by raising taxes, borrowing from investors, or printing dollars. Each of these options can shrink the economy. All these analysts also systematically ignore the fact that GDP numbers include government spending. When the federal government pumps trillions of dollars into the economy, it looks as if GDP is growing. When government cuts spending—even cuts within the most inefficient programs—aggregate GDP shrinks. But that's misleading. If Washington spends $1 a year on a bureaucrat's salary, for example, GDP numbers will register growth of exactly $1, whether or not the employee has produced any value for that money. By contrast, if a firm pays an engineer $1, that $1 only shows up in the GDP if the engineer produces $1 worth of stuff to sell. This distinction biases GDP numbers—and the policies based on them—toward ever-increasing government spending. Automatic cross-posted from the ThruthBlog
  2. I'm hoping / planning to begin blogging regularly again. As a first piece, here's an excellent editorial by Alex Epstein. Just to reiterate, when thinking about monopolies, it's crucial to differentiate between those created by government force (which are the only real form of monopoly) and those who win market share by competitive practices. The latter can maintain their market share only by continuing to serve the consumer, and as such should be appreciated and lauded by all who gain value from them. It's also relevant to think of the many impressive companies who weren't able to maintain their market share, either because others directly out-competed them or, more frequently, because someone came up with something completely new that radically changed the productive landscape. Automatic cross-posted from the ThruthBlog
  3. An excellent editorial on Earth Hour in the Vancouver Sun. From it: The whole mentality around Earth Hour demonizes electricity. I cannot do that, instead I celebrate it and all that it has provided for humanity. Earth Hour celebrates ignorance, poverty and backwardness. By repudiating the greatest engine of liberation it becomes an hour devoted to anti-humanism. It encourages the sanctimonious gesture of turning off trivial appliances for a trivial amount of time, in deference to some ill-defined abstraction called “the Earth,” all the while hypocritically retaining the real benefits of continuous, reliable electricity. People who see virtue in doing without electricity should shut off their fridge, stove, microwave, computer, water heater, lights, TV and all other appliances for a month, not an hour. And pop down to the cardiac unit at the hospital and shut the power off there too. Read the whole thing. And two good primers on radiation, see in particular the charts: xkcd Ellen's page Automatic cross-posted from the ThruthBlog
  4. This article presents some interesting facts about Social Security, including: Similarly, Congress has repeatedly altered benefits. From 1950 to 1972, it increased them nine times, including a doubling in the early 1950s. In 1972, it indexed benefits to inflation. People didn't complain when benefits rose, but possible cuts now trigger howls that a "contract" is being broken. Not so. In a 1960 decision (Flemming v. Nestor), the Supreme Court expressly rejected the argument that people have a contractual right to Social Security. It cited the 1935 Social Security Act: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to Congress." Congress can change the program whenever it wants. Automatic cross-posted from the ThruthBlog
  5. Men's Journal just ran a fascinating feature on echo-locator Daniel Kish. What he (and others) are able to do is mind-boggling, but so is one of the impediments they face: He's regarded by some in the blind community with deep veneration. Others, like a commenter on the National Federation of the Blind’s listserv, consider him “disgraceful” for promoting behavior such as tongue clicking that could be seen as off-putting and abnormal. Kish is thankful that his parents raised him "with almost no dispensation for his blindness. “My upbringing was all about total self-reliance,”" As an illustration of the difference between his upbringing and most other (blind) children's: Kish can hardly remember a time when he didn’t click. He came to it on his own, intuitively, at age two, about a year after his second eye was removed. Many blind children make noises in order to get feedback — foot stomping, finger snapping, hand clapping, tongue clicking. These behaviors are the beginnings of echolocation, but they’re almost invariably deemed asocial by parents or caretakers and swiftly extinguished. Kish was fortunate that his mother never tried to dissuade him from clicking. “That tongue click was everything to me,” he says. He has a vivid recollection of sneaking out his bedroom window in the middle of the night, at age two and a half, and climbing over a fence into his neighbor’s yard. “I was in the habit of exploring whatever I sensed around me,” he writes in his journal. He soon wondered what was in the yard of the next house. And the one after that. “I was on the other side of the block before someone discovered me prowling around their backyard and had the police return me home to completely flummoxed parents.” Automatic cross-posted from the ThruthBlog
  6. I haven't been following the recent events and turmoil in Egypt, but nonetheless I found Caroline Glick's column thought-provoking. Automatic cross-posted from the ThruthBlog
  7. Two interesting articles have appeared recently in the NY Times. The first describes how state governors across the country are looking to downsize government and take on public unions. To me it suggests that now is a great time to arm these people with actual principles (foremost the principle of individual rights with all its underpinnings). The second examines the call for legislation to make it possible for states to declare bankruptcy. I'm very much in favor of this as it might result in real justice, i.e. for residents in states who have been fiscally responsible not to be saddled with the costs of bailing out citizens of the irresponsible and profligate states. Automatic cross-posted from the ThruthBlog
  8. Though I don't always agree with his economic analyses, I very much enjoyed Richard Salsman's latest editorial in Forbes. Here's an excerpt, but be sure to check out the whole thing. What explains this seemingly abrupt shift in the world’s estimate of capitalism from only a couple of decades ago? After all, a political-economic system, whether capitalist or socialist, is a broad and persistent phenomenon that cannot logically be construed as beneficial one decade yet destructive the next. These systems simply are what they are, for good or ill. Yet while capitalism was being credited as “victory” over socialism a mere two decades ago, it now stands convicted without a trial, amid a revived eagerness for socialist schemes. Not even today’s Tea Party movement seems committed to capitalism in any deep sense. In short, where have all the capitalists gone? The beginning of an answer might be found in the curious phenomenon that a “socialist” today means an advocate for the political-economic system of socialism as a moral ideal, yet a “capitalist” means a Wall Street financier, venture capitalist or entrepreneur–not an advocate of the political-economic system of capitalism as a moral ideal. Automatic cross-posted from the ThruthBlog
  9. In several of my editorials I recommend abolishing the regulatory state. A key component of the argument is that the function of regulation would emerge on a free market without requiring government force. Here's one excerpt of this type of argumentation: But if ceding our minds to the government isn’t the way to protect ourselves against ignorance, what is? The free market. For here, knowledge is efficiently shared, and authorities and standards naturally emerge. Yet everyone retains the freedom to follow their own ideas if they so choose. Looking once more to the computer industry, we see that there are computer magazines (PC Mag, Macworld), computer rating and standards groups (CNET, IEEE), and countless online message boards and forums where experts, aficionados, and neophytes alike congregate and share information. Knowledge is valued, but it’s not forced on anyone. This makes disagreement, dissension, and often breakthrough innovations possible. and here's another: In a free, unregulated market, anyone who is highly risk averse can—and always could—refrain from using new products or adopting new ideas. Indeed, on a smaller scale, this is what differentiates technology late-adopters from first-adopters. Those worried about the latest cancer drug can limit themselves to treatments that have been on the market for 15 or 20 years. Those who don’t understand the stock market or distrust corporate leaders can invest elsewhere, or keep their money in a safe. Those who find planes too risky can drive rather than fly, or spend extra for a premium airline with a sparkling safety record. (As discussed elsewhere, there are many free market mechanisms to convey knowledge and help with such choices.) Moreover, in a free market, the regulatory “geniuses” who now rule our lives could still try to persuade us of the best course of action—they could even set up shop and charge us for their knowledge. The only thing they could no longer do is forcibly impose their judgments on us. (I’ll leave it to the reader to decide what it says about regulators’ confidence in their own edicts that they so vehemently refuse to go the route of persuasion, preferring instead to rule by government force.) There are many historical examples which bear out this line of reasoning, but here's one that I wasn't familiar with until reading this NY Times story. Turns out that many businesses voluntarily adjusted their business practices in order to meet a third party's recommendations and evaluations: When Weight Watchers introduced its points plan to Americans in 1997, it captivated a generation of women, propelling the company into a $1.4 billion empire. Weight Watchers points became a cultural touchstone: Restaurants like Applebee’s distributed special Weight Watchers menus; food companies like Healthy Choice listed points on their soup cans; and members bought Weight Watchers cookbooks, scales and points calculators. Members pay $12 to $15 a week to attend one of 20,000 weigh-ins and pep talks across the nation, or $65 to use the company’s Internet-monitoring program for three months. Were we to restore our freedoms by ending government regulation, all manner of third party -- private -- advisers, standard setters and auditing groups would help provide us with the knowledge and information that's needed in modern life. But, just as we're not obliged to heed Weight Watchers' advice, we wouldn't be forced to pay for, or adhere to, any of their evaluations or opinions either. Automatic cross-posted from the ThruthBlog
  10. A telling and depressing graphic from John Mauldin's latest eletter: Automatic cross-posted from the ThruthBlog
  11. I enjoyed this story about the unconventional business practices of a successful local brewery. There are several interesting ideas in it, but this one I think can be most easily replicated -- making the work environment one where employees remember why they were drawn to their jobs in the first place: First, the tiny company spent a small fortune sending staff to beer festivals across the country. Second, they humored Arthur. “Everything he wanted to do, they’ve backed up,” said Tom Nickel, then Arthur’s assistant and now owner of O’Brien’s Pub in Kearny Mesa. Arthur wanted to create sour beers with cherries and wild yeasts; unfiltered farmhouse ales; deep, spicy abbey ales. In 2006, the Marsaglias, Arthur and a fourth partner, Jim Comstock, opened Port/Lost Abbey in San Marcos. There, Arthur bottles his work — the brewpubs’ beers are only available on tap. But in brewery or brewpubs, the Marsaglias urge brewers to experiment and create. “That’s the only way you can be passionate about something,” Vince said. “Otherwise, it’d be ‘I’m coming to work today’ instead of ‘I’m going to make my beer today.’ ” Automatic cross-posted from the ThruthBlog
  12. Anyone who saw the Velasquez - Lesnar fight knows how great a fighter Velasquez is. But to amplify that knowledge, and to appreciate how hard he's trained across the board, consider these stats: He was tested by Sports Science prior to the fight with Lesnar, where it was discovered that he had the cardiovascular endurance of a marathon runner. He punched harder than any boxer they’d ever tested and the force he applied on a takedown was similar to the kind that Indianapolis Colts defensive end Dwight Freeney applies coming off the edge to blast a quarterback. Knowing that, perhaps it shouldn’t have come as a surprise that he was able to handle Lesnar so easily despite giving up three inches in height and perhaps as much as 35 pounds in the cage that night. Automatic cross-posted from the ThruthBlog
  13. I've never understood why people think it's a good idea to subsidize uneconomic activity in the name of economics (e.g "we just have to give them enough money so that they can get over the hump"). This is always the result. Automatic cross-posted from the ThruthBlog
  14. This is a great editorial, but imagine how much better it would be if Mr. Langone added the moral dimension. Instead he ends by essentially conceding the altruist premise -- a premise which ultimately underlies and explains all of the welfare state's gains over the last century. Here's the editorial's byline which I think is perfect: If we tried to start The Home Depot today, it's a stone cold certainty that it would never have gotten off the ground. And here's my favorite section: If we tried to start Home Depot today, under the kind of onerous regulatory controls that you have advocated, it's a stone cold certainty that our business would never get off the ground, much less thrive. Rules against providing stock options would have prevented us from incentivizing worthy employees in the start-up phase—never mind the incredibly high cost of regulatory compliance overall and mandatory health insurance. Still worse are the ever-rapacious trial lawyers. Meantime, you seem obsessed with repealing tax cuts for "millionaires and billionaires." Contrary to what you might assume, I didn't start with any advantages and neither did most of the successful people I know. I am the grandson of immigrants who came to this country seeking basic economic and personal liberty. My parents worked tirelessly to build on that opportunity. My first job was as a day laborer on the construction of the Long Island Expressway more than 50 years ago. The wealth that was created by my investments wasn't put into a giant swimming pool as so many elected demagogues seem to imagine. Instead it benefitted our employees, their families and our community at large. Automatic cross-posted from the ThruthBlog
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