A few of my favorite books…

I love to read. I’ve always loved to read. I remember reading Encyclopedia Brown, The Hardy Boys, Boy Scout merit badge pamphlets, encyclopedias, magazines, newspapers, yada yada. Usually I’m surrounded by people who love to read, even when I’m doing Army stuff.
I was a little shocked the other day when I was driving along with one of our radio operators and we were talking and I said, “Have you had a chance to read Rumsfeld’s book?”
To which he replied, “Oh I really never read any books. I don’t even read the newspaper.”
It actually took a moment for me to make a graceful recovery from that while the whole time thinking the guy was clearly far dumber than I had given him credit for.

So in honor of that, I wanted to list a few of my favorite books. I’ve tried several times to compile “Jon’s Reading List” but I never feel it is complete and it is always so many books as to be kind of useless.

The Book of Mormon – Another Testament of Jesus Christ
Religion
Simply stated: read it; test it; it’s true and it will change your life.

 

 

 

Basic Economics
Economics
The problem with economic illiteracy, as with historical illiteracy, is HUGE. Without a basic grounding in these principles, the behaviors of people, markets and governments seem random. In this LARGE primer, Thomas Sowell does an amazing job of clarifying and explaining without tedium and without dumbing it all down. Reading this book requires an investment of time, yes, but it is an investment that will be repaid when you see through the headlines with new clarity on economic matters – and really, most matters are economic at their heart.

Nothing Like It In The World
History
I love reading history, so picking just one history book really made me think. I settled in on one of Stephen Ambrose’s probably lesser known books. It tells the story of the US transcontinental railroad from its earliest conception to the epic battle between the Union Pacific and Central Pacific. One of perhaps the most cogent points Ambrose makes when discussing the shady financial dealings whereby the railroad-men reaped huge profits from the construction. He sums it up by saying simply (and I’m paraphrasing), that yes, it happened, but all those warrants for land along the right-of-way would have been worthless had they not succeeded in building the railroad and that for all the money earned, the cost to the Federal government was remarkably low relative to the amazing benefits to the public good.
Bonus points if you read this as a follow on to Ambrose’s Undaunted Courage – which covers Lewis and Clark. It feels like a natural set.

John Adams
Biography
David McCullough, despite his name being larger than his subject’s, provides a rich and well-told story of a life most excellently lived. The amazing blend of stalwart love of family and sense of duty and a sense of personal frustration. I felt sad for John Adams in that he was so attuned to any slight against him personally that he seems never to have appreciated his own value to the country he loved and helped create. And that leaves aside some of the painful and touching family moments. I believe there’s no way you can come away from this book without re-assessing your own life with fresh perspective.

The Inmates Are Running The Asylum
Technology
Alan Cooper’s 2004 cry for sanity is a bit aged for a tech book, but it is still remarkable to read it and see how much we’ve learned – and the lessons that still seem to elude us. Consider that when this book came out, the iOS with its emphasis on smooth transitions between user tasks didn’t even exist.
Whether you are in the tech business or just a victim of it, this book is worth your time.

Jude The Obscure
Classic
In Jude the Obscure, Thomas Hardy spins a tale that makes music by The Cure seem positively upbeat by comparison. If you can survive the trip through its pages, you are bound to feel a whole lot better about your own life. If nothing else, this story reminds the reader that every choice has a consequence, and you can’t pick the one without picking the other too.

 

Patton On Leadership
Leadership
A terrifying title, but an excellent book. It dissects some of the speeches and writings of a man who is arguably the finest combat general in the history of the United States and distills out the intent and application of these principles in a less deadly workplace.
And it has the added side-effect of looking very scary to co-workers when it is sitting on your shelf. Sun Tzu is passé! Patton is where it’s at. 

Well, there it is.
I could go on and on with Science, Politics, etc. but the point was a brief list.

Into Africa–Part 2

(Link to part 1 of this series.)

Thomas Sowell, in his book Conquests and Cultures, addresses some of the unique problems (or at least the unique combination of problems) that face Africa relative to cultural development on other continents. He cites three problems in particular that I wish to summarize here. The suitability of the coastline for harbors, the availability of navigable rivers to the interior, and almost singular impact of disease on man and beast. 

First let me put in a plug for the Hoover Institution economist Thomas Sowell generally. You can find his column at TownHall.com and his personal web site. His books Basic Economics and Applied Economics are personal favorites. Read his stuff – you’ll get smarter automagically.

Coastline

Although Africa is the second largest continent (Asia being the largest), it has the shortest coastline of any. Even shorter than the comparatively tiny Europe. How is that possible you ask? Well, grab a map and a magnifying glass – or spend some time with Google Maps – and notice how convoluted the the coast of Europe is with its many inlets and bays. These characteristics not only make the coastline longer but also lead to the formation of natural harbors that are so essential to seaborne commerce. Now consider the relatively smooth (and therefore shorter) coast of Africa – with consequently fewer places for shipping to approach the shore.

Particularly in the age of sail, the coastline and the wind and current patterns around Africa actually made it easier to sail past it to China or India than to stop and engage in trade with African peoples. Of course, there are exceptions – Alexandria, Egypt and Durban, South Africa, for example. But there can be little doubt that Africa has a clear paucity of natural harbors and that has definitely impacted the development of African commerce over time.

For the trade that did happen, it was often required to transport the goods to the shore overland or through repeated river portages, loaded onto smaller boats and then transported to larger ships offshore. Considering the effort required for the transportation arrangements, it is not difficult to imagine that it worked much better for items that compressed a lot of value into into a small package – or better yet, goods that could transport themselves. Ivory, gold, and slaves became the primary exports – lending their names to the Ivory Coast (Cote d’Ivoire), the Gold Coast (Ghana), the Slave Coast (Togo, Benin, and Nigeria).  

Navigable Rivers

The second disadvantage raised by Dr. Sowell is the limited number of navigable rivers leading to to inland. Cities and cultures tend to grow up around rivers and waterways. Consider one of the notable enduring cultures in Africa – the Egyptians, and even in that case, the Nile was not navigable by the largest Roman ships of the day. There is some question about the nature of “navigability”.

“Even the Niger River – the heart of a great river system in West Africa, draining an area nearly twice the size of Texas – is not navigable at all in some places because of rapids. At the height of the rainy season, the Niger may become a ‘20-mile wide moving lake’ but, during the dry season, the average depth of the Niger can in places fall below 4 meters. … The Niger has been characterized as ‘the easiest to navigate in all of tropical Africa.”
-- Conquests and Cultures, p103

Seasonal changes, rocks, waterfalls, and other hazards contribute to this limited navigability, but there are additional topographic challenges as well. The inland area of Africa is essentially composed of a huge plateau area. As geographer Ellen Churchill Semple wrote in Influences of Geographic Environments, Africa is “cursed with a mesa form which converts nearly every river into a plunging torrent” as it approaches the coast.

Compare that to the Hudson River, which is navigable even to modern aircraft carriers for a good distance. And the Yangtze which is navigable by 10,000 ton ships for hundreds of miles.

Disease

Africa is home to a number of indigenous diseases and parasites – schistosomiasis, onchocerciasis (“river blindness”), yellow fever, and trypanosomiasis (“sleeping sickness”). These problems, particularly the tsetse fly, take a toll not only on humans, but on animals as well – severely limiting the availability of beasts of burden. The lack of animal muscle is bad enough in terms of transportation, but one must also consider that where there domestic animals are few in number, natural fertilizer is also missing, reducing the fertility of the land for agriculture.

Of course, at least one disease worked somewhat in Africa’s favor. The threat of Malaria forestalled major colonization by Europeans until the late 19th century when widespread use of quinine offered some protection, helping to end Africa’s reputation as “the white man’s grave” – setting off the “Scramble for Africa”. Historian Clifford Conner wrote, “it was quinine's efficacy that gave colonists fresh opportunities to swarm into the Gold Coast, Nigeria and other parts of west Africa".

Conclusions

Dr. Sowell illustrates just a few of the unique limitations Africa has faced. Many of these problems continue to linger, either in actual fact or at least in the form of the development of the continent being “held back” in the period of 1500-1900.

Into Africa–Part 1

Apologies for the long hiatus. I’ve been busy with stuff.
I’ve taken quite an interest in Africa over these past many months and feel compelled to share a few blog-sized bits of that.

This excellent graphic, credited to Kai Krause, provides some perspective on the scale of the continent. There’s certainly room for a lot of trouble there.
There are many tragedies in Africa – exploitation, illness, poverty, and hopelessness just to name a few. Perhaps the core tragedy of Africa is the lost opportunity for Africans. The continent is rich in resources of almost every type. Inevitably, this leads one to the central question, namely,“Why is it Africa Always so #%$&@ up then?”
A good friend of mine shared this video with me back in October 2011 and it made a big impression on me. Much of the Bono-driven, well-intentioned aid going on in Africa is little more than paternalistic neo-colonialism. We’re often hurting at least as much as we’re helping.

PovertyCure

I believe that two of Africa’s largest problems are too little freedom and too much socialism. There is an interesting cultural-historic perspective in many African cultures that focuses on group success and helping your neighbors (“It takes a village” etc.). This is not a bad thing per se, but it has been used and twisted by Marxist ideologues over the past 70 years or so to push collectivism. This is not unlike the leftist sloganeering gibbrish in the West of “Jesus was the first socialist”. Clearly there is a difference between my choosing to help and share with my neighbors and a government forcing that “charity”.
In addition to Poverty Cure, there’s also some great work being driven by micro-finance efforts like Unitus.
For a truly interesting perspective, I wholeheartedly recommend The Heart and the Fist by Eric Greitens. Mr. Greitens was an international aid worker with experience in a number of trouble spots – including Africa – when he decided on a career as a Navy SEAL as the best way to truly help these people.

“Eric Greitens is exactly the kind of citizen-warrior that America needs to fight our wars abroad and to win our battles at home. A man wise enough to lead, courageous enough to fight, and compassionate enough to care, he has written a glorious book about how to live with purpose that should be required reading for every American.”
-- Bobby Muller, co-founder of the Nobel Peace Prize-winning International Campaign to Ban Landmines

Stay tuned for more thoughts on Africa!

What I learned in the dart booth at the church picnic

And no, it isn’t about religion. It was about economics and the role of the market in moderating demand. In other words, it was about health care.

In our church (the Church of Jesus Christ of Latter Day Saints), we have an administrative unit called a “stake”. It is a group of congregations, kind of like a diocese in scale. Anyhoo, we have an annual picnic and usually something like 3,000 people come and there’s food and a band and stuff. This year, each congregation (called a “ward” for those playing along at home) also had to put together a little carnival type booth – face painting, old time photos, bean bag toss, etc. I was in charge of our effort (or more precisely, I was our effort, by choice, not complaining) and I put together a dart balloon popping thing. And all these booths and activities were free.

A guy in our ward (a single congregation) who is in the toy business had donated some pretty cool prizes. They were samples he’d had sitting around for some time I’m guessing. There were squeezy balls that looked like panda heads. (Ummm…and no, I don’t know why you’d want to squeeze a panda head.) And there were these very cool battery powered fans that lit up in the middle. His one rule about donating these prizes was “don’t bring these back to me”. Both the fact they’d been kicking around awhile and that he didn’t want them back will come into play later.

OK, so the rules of this game were simple.
1) Age 11 and under, throw from the closer line.
2) Over 11, throw from the further back line.
3) Three darts to a turn.
4) Pop a balloon, win a prize.
5) If you miss, you still get a piece of candy.

See? Simple.

I’ve played this kind of game at carnivals and amusement parks. There’s rarely a big line. The odds (for me) of winning a prize are better than most carnival games. And the itinerant serial killer carney working the booth seems to have plenty of time to blow up more balloons and put them up to replace the ones that are popped by suckers valued guests.

So here’s how it worked out for me in the nearly four hours I manned the booth…

A line quickly formed that ultimately extended about the equivalent of a block. That line stayed the entire time and, I’ll add, consisted of many of the same people. The only other booth with a line was face painting. Not even the food line was anything like this in length or duration. This was the Space Mountain of the Bellevue South Stake Picnic 2009. If you can separate Mormons from free food, and it isn’t a multi-level marketing pitch, you’re really on to something!
The lesson some of the organizers tried to take from this was, “Wow! people really like that dart game.”
NO! It wasn’t that they liked the dart game. They wanted the cool prize!
And so it began…

Issue #1
“We need to leave, do you mind if my child gets in front of the line?”
We had several of these in the time the booth was open, and people would just acquiesce and let the person go to the front. I mean, it was a church picnic after all.
But, seriously, what kind of person does this? What a wonderful life it must be to feel like your situation is soooo unique as to go ahead of 100 people waiting in the sun to try to play a free game to win a fan – that they only really think they need because they are standing in the sun trying to win one.

Issue #2
“This fan you gave me is broken! I need another one!”
Some people were nicer about this than others, but some were kind of angry about this. I mean, it was a free game, and I was happy to replace the fans, but holy crap.
As it turned out, the fans had about a 30-50% failure rate out of the box. In most cases because the batteries were dead or leaking.

Issue #3
“Our booth ran out of prizes, can we have some of yours?”
I gave them a case of 100 fans.
Then they ran into the failure rate and came back and said, “Hey, a lot of those fans don’t work. Can you give us another box?”
To which I said, basically, “WHAT? Howzbout you get your own prizes for your own #%$^@# booth?!?!” (well, not quite, but that’s what I said on the inside)
Then they started sending people with broken fans to my booth to get them replaced.

Issue #4
People showing up at the booth with three, four, or even five fans dangling from their belt.
On the one hand, I didn’t care because the mandate was to give people something to do and to get rid of these prizes, but it was an interesting experiment that, because it was free, people suddenly developed an insatiable appetite for these fans.
A side observation was seeing kids having “fan fights” where they would stick their spinning fans into each other and the fan that broke was the loser. Then the kid would get back in line and win another or just come and claim that it was broken and get another one.

Issue #5
“Hey the fan you gave my daughter got caught in her hair! YOU should be more careful about the prizes you give out to kids!”
“Dear brother in Christ, YOU should have smarter kids who, oh I don’t know, maybe don’t stick freakin’ motorized spinning things next to their head!”

The Lessons
The Role of Markets
Markets moderate demand. When demand goes higher than can be sustained at a certain market price, the price increases to the point where demand slackens to a more sustainable level.
If each time someone played the dart game, they had to pay a dime, or donate a food item to the homeless, or use one of a rare set of tickets that were provided, or some other currency of the moment, they would weigh their “wants” much more carefully.
THIS is the thing I didn’t anticipate. I had to interrupt the flow of the line to put up more balloons, or find darts in the grass, or whatever. There was never a slack moment in demand.
At the end of the day, I still had a bunch of these fans and I just started giving them away to the people waiting in line and some people would reach in the box and take three or four of them and then ask if I had more.
Demand for the least worthwhile of goods becomes insatiable when the price is zero.

Rationing
I noticed that one of the booths, started putting a dot on kids hands when they did their activity and not allowing repeats. I think it was the cotton candy booth. One kid was sad because they had dropped whatever it was and then couldn’t get more of it. Not that kids need more cotton candy or popcorn or what-have-you, but the only way to limit demand is a strict ration and that can be unrelenting and harsh in the face of genuine need. (or perceived need)
I didn’t do this, although I though of it, because, again, I wanted to get rid of the fans. 
In a market driven economy, the market forces do the rationing by allowing people to choose what is most important to them.
In a centrally planned economy, these choices tend to disappear either by direct government action or through the reactions of market forces to indirect government intervention into that market.

Entitlement
It was genuinely surprising how a control group of unusually nice people at a church picnic could quickly feel entitled to these prizes. “Hey, my dart bounced off that balloon! Is this rigged?” (Yes, sir, I’ve rigged this free game of skill and chance so I can get money, power, jollies?)
Not too mention those people in the neighboring booth who seemed determined to have equal access to the prizes I’d arranged for MY booth.
And when the event was over and the organizers told me I needed to shut down, I still had people coming up wanting prizes while I was cleaning up and being clearly disappointed that they were gone – while they had two or three fans in their hands right before me.

So to end my sermon, brothers and sisters, I’ve spent an afternoon in ObamaCare, and it looks a lot like a dart game booth at a church picnic.
Only we won’t be clamoring for our fifth lame light up fan. We’ll be begging for our first necessary appendectomy while our doctor consults the bureaucracy to see if we should just maybe take the pain pills instead.
Be afraid! Be very afraid!

And, by the way, keep up the fight, we’re winning. Thanks to folks like David Hedrick. Semper Fi Cpl Hendrick. (As we all know, there are no “former” Marines, no matter what Sean Hannity says <g>)

And, all kidding aside, I can’t end this without a big shout out to the H’s, the C’s, and the T’s for all the help blowing up balloons. To P for the prizes. And to my family for their patience while we got through this lame assignment. :-)

Reflections on Tea Parties

I’ve heard so much nonsense written about these tea parties. Let’s leave MSNBC’s homo-erotica totally out of the picture and just talk about reasonably reputable sources.

CNN says they are “anti-CNN”. Wow! Narcissist much? These are the kind of guys that Tweet, “I’m eating a really good sandwich right now” without realizing that even their friends don’t care.
This is the ranting of a network that has no idea how irrelevant they are in their own marketplace. <cough cough> ratings <cough>

Fox News says they are “anti-Tax” (same page, scroll down a little). Well, at least they aren’t saying they are “pro Fox”. They are a little anti-Tax, but not in the sense that we don’t think we should pay taxes.
In fact, I think 9 out of 10 party goers would agree that MORE people need to be paying taxes. A fundamental problem with our system now is that only about half the people pay anything at all and the top 2-3% of income earners pay the lion’s share. Everyone should be a stake holder in America. No one group should get a tax cut or tax increase. That is the epitome of fairness and avoids the built-in danger of all democracies.
Somehow Fox News has seized for itself some sort of credit in this movement. I’m not sure how that happened. We all know that this idea is straight from Rick Santelli on CNBC.

Republican party leaders seem to think this is an event supporting them. Hold on there guys. Please reference the Congressional Record from 2001-2006 and tell me why we’d be looking to you for leadership. I heard of some tea party events where Republican politicians were booed off the stage.

People everywhere are saying they are “anti-Obama”. I’ll concede there is a heavy thread of this but ONLY because he’s the current driver of this policy. Virtually all of the people at these tea parties were just as upset at the Bush-Paulson plan, which Obama has extended and continued. Virtually all of the people at these tea parties were just as upset at the Bush stimulus plan of 2008, and it was a mere shadow of the current one.
And Obama’s not alone. Pelosi and Reid are right up there on the anger list.

The key to “getting it” on these tea parties is to realize that what people are upset about are fundamental changes to the fabric of our culture and society that will have a starkly negative outcome. This isn’t a guess. You can look at many examples, the UK comes to mind. As Margaret Thatcher said, “The problem with socialism is that eventually you run out of other people’s money.”

So the tea parties are not about throwing Obama out. They're not about cutting taxes per se. They are about stopping our trip down this change in our economic system. Consider:

• For the first time ever, the Federal government has replaced a CEO, effectively by order. (GM)
• For the first time ever, the Federal government has forced healthy banks to accept money they didn’t want. (Wells Fargo, and others)
• AND they won’t let them pay it back despite their desire to do so.
• Because the VA hospitals work so well, they want to take over the entire medical system.

There are two choices facing us: “trickle down prosperity” (AKA the way economies actually work, like it or not) or “trickle up poverty”.
We newly dubbed right wing extremist tea party goers prefer the former.

You can point fingers all you want, but the entire mess we are in right now has its roots in government intervention in the housing market that forced institutions to loan money to people who shouldn’t have gotten loans. In response to that level of risk, these same institutions created all kinds of securitization to protect themselves from that injection of business risk.
Further, the government institutions Fannie and Freddie have been piggy banks for politicians (primarily Democrat ones) and pretended to be both private and public institutions depending on what suited them in a particular instance.

Capitalism and free markets didn’t fail. The thumb of government was on the scale the whole time and markets were trying to react and protect themselves as best they could until it all came down.

There are solutions for all this. “Bankruptcy” (sorting good assets from bad ones and getting the value from the good), “foreclosure” (removing you from property you don’t own and aren’t keeping your word in paying for), and “renting” (the place you live when you can’t afford a house). Just let it happen and it will all get better a lot more quickly.

Extremist chatter: A report from the Tea Parties

As a new member of the Homeland Security watchlist, I went to two Tea Party events yesterday. One in Bellevue at lunch time and one in Seattle in the evening.
Thanks for the idea Rick Santelli.

Bellevue

The Bellevue event was on the lawn at City Hall and was really well attended for a mid-day event. Using the technique of counting a section of the crowd and then multiplying that across the area, I came up with about 1200 people. There were some empty pockets here and there though, so let’s call it about a thousand. I’ve not seen an estimate of the attendance in any of the press reports.

In general, I’m really opposed to Republican politicians glomming onto these events. Let’s not forget that they spent like drunken sailors while in power and that the first round of bailouts was a product of the Bush administration. (And, as someone at the event said, at least the drunken sailor is spending HIS OWN money.)
However, a Bellevue City Councilman, Conrad Lee, spoke. Mr. Lee is an immigrant (a legal one, thank you Mr. Lee) who came to the US 15 years ago. He said that at the time he was just looking for economic freedom and opportunity. He found that but he found something more that he hadn’t expected in the political freedom and the opportunity to make a difference. It was a great story and I love hearing from first generation (legal) immigrants.
Another speaker was Toby Nixon. Toby is also a Microsoft employee and happens to be an LDS guy. He is a former state legislator and now the head of a policy group. In his talk, he said, “There are four boxes that protect our freedom. The soap box. The ballot box. The jury box. And the ammo box. Preferably in that order.” (insert wild applause and hoo-uhs) He elaborated on each of the first three and one of the things I appreciated was his call to stop trying to get out of jury duty. I’ve never been sure why people do that. Do we want juries left in the hands of complete morons?

My hastily made sign read “Pay your own #!?@~$">#!?@~$ mortgage!” on one side and “Dude, where’s my country?” on the other.

I had to leave a little early to get back to work for a 1pm feature review meeting. Good time though.

Seattle
This was a family affair for us (except our oldest who is at college). We got to the event a little late. I was puzzled why the woman MC’ing was dressed as Alice (from Alice in Wonderland). As I write this, I’m just remembering the tea party scene, so I suppose it makes some kind of sense.
There were more people at the Seattle event, but still less than two thousand. I haven’t seen any estimates, but it was much more organized in the sense that they had sign up lists to stay involved going forward and “official” people in little yellow hard hats who were moving through the crowd doing various “official” things.
And it was in Seattle, so there were a few nuts. There was one anti-Walmart guy and one guy who was either for or against bioengineering, but we couldn’t really tell. He was dressed in a black facemask and goggles and had a cape made from a UW Huskies flag. <head scratching> Not sure what was up with that.

The worst part is there were a couple of people with really offensive signs. One depicted a Barak Obama figure with strings going up to a Star of David and a stereotypical “evil Jew” controlling him. That doesn’t even make any sense. I don’t think Obama has shown himself to be even a friend of Israel. In addition to being anti-Semitic and evil, it just doesn’t make any sense at all.
The other sign was a single “counter-protestor” with a reference to sexual activity that is the current way of talking about the Tea Parties on MSNBC. I would wager that more people saw this guy’s stupid sign at the Tea Party than were watching MSNBC in that same 2 hour timeslot nationwide.

Anyway, great energy in the crowd and a fun family event. Here we are being escorted away by the horse mounted riot police.*

* OK, not really, we just happened to be walking in front of them on the way to the car, but seemed funny they were there.

I think daughter #2 was hoping for some window smashing and car burning and may have felt a little disappointed when we all dispersed peacefully at the end.

So how about you? How’d you spend your April 15th?

It takes a federal government to raise a parking lot

Fresh on the heels of the senate's passage of their version of the "stimulus" plan comes this delightful piece at Newsbusters.org.
When Laura Ingraham pressed RINO Arlen Spector (R?-PA) on the job creating ability of the package, he included this little gem:

"And I talked to the mayor of a major city this morning that has a parking plot
going up, which is out of money and the work can go forward this afternoon."

There you have it folks. This is the kind of project that municipalities, states, and the private sector just can't handle alone. This is the kind of project that we can look toward to get Americans back to work. Building parking lots.

Nice one.

Now, you might say, "Hey, I know unemployed construction workers. Maybe this isn't so bad."
Aha! But remember that Robert Reich said at the Economic Recovery Plan Meeting in January:

"if construction jobs go mainly to white males who already dominate the
construction trades, many people who need jobs the most -- women, minorities,
and the poor and long-term unemployed -- will be shut out."

So we not only want to build a grand federal ediface of a parking garage, but we want to build it NOT with people who already know what they are doing, who already "dominate the construction trades", but with people who are not employed in the construction field today.

Honestly, I'd prefer to park my car in a building constructed by the people who "dominate the construction trades."

Lest anyone take the wrong emphasis from this, I'm scoffing at the idea of non-construction workers being first in line for construction jobs - regardless of race or whatever.

Hey, I've never dominated the brain surgery field. Will this stimulus plan make me first in line for a job in that trade?

Why doesn't economic stimulus work?

"If people would say to me, 'Would you rather recover or be stimulated?' I think I'd rather be stimulated." - Rep. Barney Frank, Department of the Treasury Office of Thrift Supervision National Housing, December 8, 2008.

I've been thinking on this for a long time. Stimulating the economy in rough times clearly used to work. It worked somewhat in the Depression (although the tax cuts were quickly erased when Hoover tripled the tax rate to 63% in 1932) and it worked in the Reagan era, particularly in the 1982 recession. G.W. Bush has tried both direct checks and tax cuts and, with the exception on the cut in the tax on dividends and capital gains, they haven't done much. Let's look at this a little more.

Economist John Maynard Keynes proposed his approach to stimulating the economy by increasing demand through the injection of money at the "bottom". (called "Keynesian Economics" or "Keynesian Theory", in case you want to look smart at your next block party)

It seems that every politician of every stripe the world over accepts this theory, without paying much attention to the fact that it seems not to work. For people ambivalent to government spending at least, it seems like a sound idea. Why doesn't it work?

Here's my primary theory, and I'll follow that up with an alternate theory. Just in case.

In a factory economy, things were produced and consumed within the borders of a nation. Stimulating demand would give people money to buy those products, which translates into increased orders at the factories that provided employment.

In a post-industrial economy, where global tranportation systems and multinational trade agreements, more and more consumer products are imported. This means some of that stimulus money goes to "locals" - the guy at the TV store, the guy at the car dealership, etc.

This is a natural evolution of economies. I'm not arguing that we need to preserve the factory economy of old. But it does seem to indicate that pumping money into people's hands is just not going to have the intended effect. It simply create a double-speed money pump to move US wealth overseas. (by both selling bonds to get the money for the stimulus and from the money leaving the country)

Alternate theory

Most Americans live live's full of debt. You have people rolling in car loans and credit card debt into their mortgage refi - which means they are paying for the Taco Bell lunch from a couple months ago for 30 years! Insanity. So if they get a few extra dollars, they pay a bill with it. Paying old bills is better than NOT paying them, but it won't stimulate the economy. The extra money simply vaporizes immediately.

Discussion topic #1

"The United States has moved faster towards socialism in the past 90 days than in the previous 30 years." - David Keene, Interviewed in December 2008. Sorry, couldn't find an online source for this interview, but I have the paper copy.

Agree? Disagree?

Is it a good or bad thing? Does it even matter?

I found this article by Dick Morris (who I find an odious individual) about Bush introducing European Socialism to the US as his final "contribution". It's pretty good and sums up my feelings pretty well. I can't imagine what the left would have against Bush; he's given them their fondest dream.

The Forgotten Man

I think one of the foremost problems in our country is the level of indifference and ignorance to history. When you don't understand history, every change in the wind can look like an unprecedented crisis.

Since "they got this depression on", I'm reading The Forgotten Man: A New History of the Great Depression by Amity Shlaes.
The title comes from an 1883 essay of the same title by Yale professor and sociologist William Graham Sumner. Quoting:

"The type and formula of most schemes of philanthropy or humanitarianism is this:
A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man."

In other words, when things look bad for somebody, you can count on two other people getting together to solve it and stick someone else with the bill.

The book was originally published in 2007 and predating the sudden "crisis" of 2008 so there is no taint of foreknowledge. So it is amazing at the similarities not just in the events, but also in the political situation and the personalities of the people involved.

In particular, the comparisons between Hoover and Bush are very interesting. Both brought "firsts" to the presidency. Hoover was the first trained engineer and Bush the first MBA - which means both were men of their times. Both men carried ideologies that were heavily colored by deeply held religious beliefs. And both were Republicans who did not hold to Conservative principles.


I'll be sharing more on this book over the next several posts, but it in the meantime, consider that it is interesting that Ben Bernake, who, along with Henry Paulson, is in charge of central planning for the US economy right now, said in his remarks on Milton Friedman's 90th birthday regarding the Federal Reserve's role in making an ordinary recession in the late 20's into the Great Depression: "You're right. We did it. We're very sorry." Ummmm......

Ready... Fire... Aim...
We should all be a lot less worried about the US economy weathering down cycles than I am about the government stepping in to try to "fix" it.

I think it is curious that the financial crisis suddenly erupted six weeks before the Nov 2008 election and then it was necessary for a bunch of politicians to "solve" a complex situation years in the making over a long weekend with little to no input from actual economists - who clearly opposed it - saying basically - "We're not sure what the right answer is, but this is definitely NOT it."