I just saw this excellent Imprimis interview with Milton Friedman. It took place in 2006, but the issues Mr. Friedman discusses are relevant today. He talks about reforming the Middle East, reforming medical care (which he calls a "socialist-communist system"), and extending school vouchers. My favorite quote: "Self-interest, rightly understood, works for the benefit of society as a whole."
Here is my book review of Capitalism and Freedom, Milton Friedman's short, seminal book on economics and freedom.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Tuesday, January 13, 2009
Monday, January 12, 2009
Republicans v. Democrats
Sunday, January 11, 2009
Chrysler's Promises in December 2000
Automobile companies recently received a bailout from the White House. They promised to restructure, become more efficient, and gave the usual platitudes. These promises aren't new. The only difference seems to be that now, the Big Three are playing with taxpayer money instead of their own. Here are some excerpts from DaimlerChrysler's letter to shareholders, dated December 2000:
Over the last five years, [1995-2000] we have completely restructured and refocused the DaimlerChrysler Group...In the process, we have shed not only a number of loss-making and non-core operations, but we have also considerably improved the cost structure of our automobile operations in Germany... [Great! So things should be fine now...right?]
During the course of the year, we have also taken further important steps to focus our operations on the core automobile business...[But] competitive pressure in the US automobile market increased significantly, as evidenced by the strong rise in sales incentives or discounts which are up by over one third compared with a year ago, and are almost three times what they were in 1997... [Oh, I get it. It's not you--it's your competition. You can't compete on the open market. Got it.]
The management team has a wide-ranging mandate to reposition and restructure the Chrysler business to enable it to regain its strong market position and to become highly profitable again...
In order to restore Chrysler to profitability as soon as possible what is already clear is that we must also restructure the business--this will bring with it a cost. [Sounds like the job of the "car czar" has already been done.] This expenditure however should also ensure DaimlerChyrsler maintains its position at the forefront of the modern automobile industry. [Chrysler was mentioned as the most likely candidate for bankruptcy before the bailout.]
It boggles my mind that our government is using our money to finance companies that can't seem to ever get it together. In a hilarious press release titled, "The $13 Billion Industry Is In No Fear Of Collapse, But Why Take Chances?", Larry Flynt satirized the notion of bailing out troubled industries. Jokes aside, when, if ever, does moral hazard trump "too big to fail"? This question isn't just idle thinking. The bailouts have exposed a core weakness in our political system. Apparently, if you can't compete on the open market, all you need is a bunch of lobbyists to convince your government to give you taxpayer money. Luckily, in this case, the political system actually worked--Congress rejected the auto bailout plan. Even so, the White House, over the objections of the public, provided the bailout money. George W. Bush in bed with the automakers and their unions? Historians will be amused.
Over the last five years, [1995-2000] we have completely restructured and refocused the DaimlerChrysler Group...In the process, we have shed not only a number of loss-making and non-core operations, but we have also considerably improved the cost structure of our automobile operations in Germany... [Great! So things should be fine now...right?]
During the course of the year, we have also taken further important steps to focus our operations on the core automobile business...[But] competitive pressure in the US automobile market increased significantly, as evidenced by the strong rise in sales incentives or discounts which are up by over one third compared with a year ago, and are almost three times what they were in 1997... [Oh, I get it. It's not you--it's your competition. You can't compete on the open market. Got it.]
The management team has a wide-ranging mandate to reposition and restructure the Chrysler business to enable it to regain its strong market position and to become highly profitable again...
In order to restore Chrysler to profitability as soon as possible what is already clear is that we must also restructure the business--this will bring with it a cost. [Sounds like the job of the "car czar" has already been done.] This expenditure however should also ensure DaimlerChyrsler maintains its position at the forefront of the modern automobile industry. [Chrysler was mentioned as the most likely candidate for bankruptcy before the bailout.]
It boggles my mind that our government is using our money to finance companies that can't seem to ever get it together. In a hilarious press release titled, "The $13 Billion Industry Is In No Fear Of Collapse, But Why Take Chances?", Larry Flynt satirized the notion of bailing out troubled industries. Jokes aside, when, if ever, does moral hazard trump "too big to fail"? This question isn't just idle thinking. The bailouts have exposed a core weakness in our political system. Apparently, if you can't compete on the open market, all you need is a bunch of lobbyists to convince your government to give you taxpayer money. Luckily, in this case, the political system actually worked--Congress rejected the auto bailout plan. Even so, the White House, over the objections of the public, provided the bailout money. George W. Bush in bed with the automakers and their unions? Historians will be amused.
Federal Budget Outlays
The Epoch Times had a good chart showing what the federal government projected it would do with our taxes in 2007:
http://en.epochtimes.com/news/7-4-15/54114.html
Social Security is the largest outlay, with 21% of our taxes going there. Next up is Defense, with 19%. Obama may reduce defense spending to shift more taxes towards infrastructure spending. Doing it this way would allow him not to raise taxes.
Defense hawks may disagree with any decrease in defense spending, arguing that it would cause a decline in domestic security. I do believe terrorists will hit the United States again, but much of the current defense spending is on major projects, like stealth fighters. Meanwhile, port security is inadequate. Consider this simple, low-tech scenario: a terrorist pays two dock workers to put an unmarked package on a ship. The dock workers will be told they are transporting drugs and will be paid a few thousand dollars for their discretion. In reality, the box would contain a major bomb or chemical weapon. The bomb doesn't even have to be inside a box. The terrorists could place a bomb inside an imported car, major appliance, or some other product that has many electrical components, making the bomb harder to detect.
Rather than focus on large-scale projects, such as the next generation of aircraft, which always seem to run over cost, the U.S. should shift more money into intelligence work. More specifically, Obama should hire more workers to 1) supervise America's major ports (e.g., Los Angeles, Miami, etc.); and 2) more effectively monitor the contents of packages before ships on-load and offload them. I realize modern ports have automated systems, but having more hi-tech automation doesn't necessarily lead to higher security.
If you're interested in reading more about Obama and defense spending, here is an interesting article:
http://www.cfr.org/publication/17793/
http://en.epochtimes.com/news/7-4-15/54114.html
Social Security is the largest outlay, with 21% of our taxes going there. Next up is Defense, with 19%. Obama may reduce defense spending to shift more taxes towards infrastructure spending. Doing it this way would allow him not to raise taxes.
Defense hawks may disagree with any decrease in defense spending, arguing that it would cause a decline in domestic security. I do believe terrorists will hit the United States again, but much of the current defense spending is on major projects, like stealth fighters. Meanwhile, port security is inadequate. Consider this simple, low-tech scenario: a terrorist pays two dock workers to put an unmarked package on a ship. The dock workers will be told they are transporting drugs and will be paid a few thousand dollars for their discretion. In reality, the box would contain a major bomb or chemical weapon. The bomb doesn't even have to be inside a box. The terrorists could place a bomb inside an imported car, major appliance, or some other product that has many electrical components, making the bomb harder to detect.
Rather than focus on large-scale projects, such as the next generation of aircraft, which always seem to run over cost, the U.S. should shift more money into intelligence work. More specifically, Obama should hire more workers to 1) supervise America's major ports (e.g., Los Angeles, Miami, etc.); and 2) more effectively monitor the contents of packages before ships on-load and offload them. I realize modern ports have automated systems, but having more hi-tech automation doesn't necessarily lead to higher security.
If you're interested in reading more about Obama and defense spending, here is an interesting article:
http://www.cfr.org/publication/17793/
Saturday, January 10, 2009
Battle of the Sexes
I was going through some old articles, and I found this one that reminded me of the battle of the sexes. Here are some quotes from the article:
Using hyperbole and humor that became infamous then, and sound far more awful today, Newsweek said those 40-year-olds were "more likely to be killed by a terrorist" than land a mate... Meanwhile, new research suggests that women today who are highly educated are actually more likely to find husbands.
At least we know what can knock the gender wars off the front pages: terrorism, a real war, and a recession.
Deflation--and Why It's Harmful
This PLI "Pocket MBA" article summarizes deflation so well, I had to share it:
http://inbrief.pli.edu/2009/01/deflation-ii-deflation-in-the-real-world.html
Before reading the above post, I didn't understand why deflation could lead to a Depression.
PLI also provides a link to another blog, Debtwatch, which may interest some readers:
http://www.debtdeflation.com/blogs/
http://inbrief.pli.edu/2009/01/deflation-ii-deflation-in-the-real-world.html
Before reading the above post, I didn't understand why deflation could lead to a Depression.
PLI also provides a link to another blog, Debtwatch, which may interest some readers:
http://www.debtdeflation.com/blogs/
Friday, January 9, 2009
Reason #2536 You Might Reconsider Law School
From the California Lawyer magazine (January 2009, page 34):
[L]awyers, as a group, have their own unique set of characteristics. For one thing, they are famously prone to depression. A frequently cited Johns Hopkins University study from 1991 found that among more than 100 occupations surveyed, attorneys topped the list for having major depressive disorders, suffering from depression at a rate 3.6 times higher than the general employed population..."You see figures that 20 to 25 percent of lawyers have an alcohol problem," says [Carol] Langford [who practices state bar defense]. "I think it's more like 40 percent."
When I went into law, I thought I could change the world. My thinking proved to be naive, as I learned about insurance, bankruptcy, overloaded court dockets, and procedure over substance. Hearing about my initial desire to change the world, one of my friends, also a lawyer, told me, with a kind laugh, "The world changed you." There's a lesson in there somewhere, but knowing I'm a positive agent in most of my clients' lives keeps me going. Like everything else, the legal profession is what you make of it.
_____________
As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough. -- Abraham Lincoln
Thanks to the Hon. Judge Morgan of the United States Bankruptcy Court (Northern District of California) for posting Lincoln's "Notes for a Law Lecture" outside her courtroom, where I and many other lawyers have discovered the above words.
[L]awyers, as a group, have their own unique set of characteristics. For one thing, they are famously prone to depression. A frequently cited Johns Hopkins University study from 1991 found that among more than 100 occupations surveyed, attorneys topped the list for having major depressive disorders, suffering from depression at a rate 3.6 times higher than the general employed population..."You see figures that 20 to 25 percent of lawyers have an alcohol problem," says [Carol] Langford [who practices state bar defense]. "I think it's more like 40 percent."
When I went into law, I thought I could change the world. My thinking proved to be naive, as I learned about insurance, bankruptcy, overloaded court dockets, and procedure over substance. Hearing about my initial desire to change the world, one of my friends, also a lawyer, told me, with a kind laugh, "The world changed you." There's a lesson in there somewhere, but knowing I'm a positive agent in most of my clients' lives keeps me going. Like everything else, the legal profession is what you make of it.
_____________
As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough. -- Abraham Lincoln
Thanks to the Hon. Judge Morgan of the United States Bankruptcy Court (Northern District of California) for posting Lincoln's "Notes for a Law Lecture" outside her courtroom, where I and many other lawyers have discovered the above words.
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