The American Health Care System

Here is a brilliant description of it courtesy of Jim's Blog:

"The American health care system is socialism without a central plan, and capitalism without markets or prices."

Hillary as VP?

That's Krugman's suggestion. This suggestion puzzles me for a number of reasons. Krugman posits that Hillary's inclusion in the ticket will help Obama recapture jilted Hillary supporters and lower/lower-middle income white voters who Hillary has typically won over. On the former, I don't really think there are that many jilted Hillary supporters. I am guessing her conduct at this point has taken care of that. The few remaining people whose noses are bent out of shape over Hillary's failure to secure the nomination are those who had been promised a gig in a Clinton Administration (which makes me wonder if Krugman had been offered some position, say CEA chair, as he has been in the tank hardcore for Hillary on his blog and op-ed pages).

The real question is whether or not Hillary will be able to bring her blue collar white supporters. I doubt it. I think many of those who are supporting Hillary are not so much supporting Hillary but opposing a Black male. I think for many of those voters a Barack-Hillary ticket would be a diversity freak show. For Obama to appeal to these voters he will need a white male, plain and simple. Ideally this potential VIP would also bring other credentials than his whiteness (this rules out John Edwards), such as foreign policy experience or experience in general.

But the other reason Hillary would be an awful choice is that she more anything the Republicans can do themselves, will engergize the conservative base.

Recession

My sense is that we were in a recession before any economists or government agencies were talking about recessions and now that they are talking about us being in a recession we are probably emerging from the recession.

Gas Taxes in Other Countries

Some perspective for the next time you curse at the pump.

PeP Links and Random Thoughts

Bob Barr is running for president on the Libertarian Party ticket. However, Bob Barr is no libertarian. He is a small government conservative. So while he is a critic of the expansion of executive power and the war in Iraq there are areas he is where he significantly departs from libertarian priorities: he is a hardcore drug warrior, anti-immigration, and a social conservative. Actually, Barr represents basically what the conservative coalition candidates have been about until Bush: an unrealistic fiscal plan (heavy on tax cuts/heavy on spending cuts) as a sop to Grover Norquist and business conservatives, skepticism/hostility of government (and military intervention abroad) to entice libertarians, and an emphasis of hostility towards gays and a firm pro-life position to appeal to social conservatives. In a tight election, I think Barr's presence would be a significant problem for McCain, much more so than Nader was for Gore. He cannot be dismissed out of hand as fringe character (he was a significant player in the Republican party till not too long ago). Nevertheless, I think Obama (or in the off chance that Clinton snatches the nomination away) will trounce McCain, thus Barr's impact is likely to be irrelevant.

Go read Cato-Unbound's lead essay. The topic is the resource curse. The author, Leif Wenar, proposes approaching the resource curse as a property rights issue. His premise is that a given country's resource is the property not of the government but of the people. What he is getting at is that every country should have some sort of trust fund like in Alaska where people are reaping the dividends of extracted resources. I think that's a great idea, but his proposal for bringing a resource trust about are troubling on many dimensions and impractical. He presents the scenario of Sudan selling $3billion of oil to China and plowing the money into its civil war/ethnic cleansing. The US would create a trust for the Sudanese people and impose tariffs on Chinese imports till there was $3 billion in the fund. It's one of those ideas that strikes you as novel, sort of an aha moment, and then of a sudden you realize its massive flaws. For instance, how do you get the money to the Sudanese people? What if you actually get money into the hands of actual Sudanese as opposed to the government only to find that they use the money to arm themselves? Should Europe impose tariffs on US imports to fund a trust for Iraqis? What if the Sudanese use the monies received to invest in infrastructure or education? etc. Anyhow, it's an interesting if clumsy attempt to grapple with a very serious problem.

Anne Applebaum makes the case for intervening in Burma. I guess if we are invading Iraq for among other reasons to promote democracy, why not invade a country for strictly humanitarian reasons. This is the dangerous logic that Iraq has spawned. I don't know quite what one does. Do you fly over Burmese airspace and carpet bomb them with food, clothing and medicine? I do think these types of tragedies are situations where the US should be grabbing onto to try to improve our international reputation.

Over at Gristmill they have a good rundown on McCain's cap and trade plan. The takeaway is that it is nowhere near as serious as Obama's plan but does pass the laugh test. A low bar admittedly, but I have low expectations for McCain. For me a cap and trade is clearly inferior to a carbon tax, and a cap and trade that does not auction permits is piss poor. Though, sometimes piss poor is an improvement (which is possibly the case).

Local Governments Facing Pension Problems

WaPo has an article on the underfunding of state and local government pensions. Anyhow, read the article, this is just another data point in the larger argument as to why defined benefit pensions are such a bad idea.

Walking Away From the Mortgage

There has been some hysteria paired with some sober speculation (courtesy of esteemed minds like Marty Feldstein and Hal Varians) that what is driving home foreclosures, or what will drive the majority of home foreclosures is negative equity. I think this is both obviously correct and patently false. Where Feldstein and the like I think are wrong is they anticipate massive foreclosures brought on by negative equity for home owners who can afford their mortgage.

Background: Mortgages are Nonrecourse Loans
What makes a mortgage distinct from other loans is that it is non-recourse. What does this mean? Well, say I have a $500,000 mortgage and I default within six months of the loan's origination, the bank forecloses on my home and is only able to sell the home for $300,000. The bank can't come after me for the difference. They are stuck with the loss.

Two Scenarios:
Scenario One- the Foolish Speculator

A lot of folks got into mortgages that they couldn't reasonably afford but were banking on being able to take on a line of equity credit based on their home's appreciation. Thus, they're plan to pay for the mortgage was to take out more debt. This actually worked during the housing boom. However, when the bubble burst, homes ceased to appreciate, and thus there was no equity to tap. These folks went into to foreclosure and are going into foreclosure.

Scenario Two- the Solvent Homeowner who walks away

In Scenario two, the homeowner, while he can afford his mortgage, walks away from it because the bursting of the housing bubble has caused his mortgage to exceed the value of his house. I find this scenario unlikely for a number of reasons. The biggest reason, is if a homeowner simply walks away from his house which then goes into foreclosure, his credit will be wrecked. Your credit is vitally important. Landlords will look at your credit as a basis of whether or not to accept you as a tenant (an important consideration now that you don't hava a house). Banks look at your credit if you try to get a business loan from them. And the same applies to credit cards.

If the homeowner can afford the mortgage, he can ride out the housing downturn and wait till prices go up again, all the while, keeping his credit intact. There may be some regions where the downturn in real estate prices is more likely to be a permanent phenomenon (e.g. the rust belt) but for most areas prices are likely to rebound after awhile. Thus, it should come as no surprise that this second scenario, contra the emerging conventional wisdom, does not appear to be occuring.

Congratulation Piper!!!

I big congratulations to our very own PiedPiper who just graduated from law school today!!!!!

Classic Quote

“Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers.” Robert Solow.

Enough With Hillary's “Gas Tax Holiday” Bullshit

I have had enough with Hillary Clinton’s bullshit rhetoric about some asinine “gas tax holiday” for the summer. Anyone who has the most basic understanding of how supply and demand functions realizes what complete crap this idea is.

Here is a quick run down:

1. During the summer gasoline demand is the highest and gasoline production at the refinery level is at its peak.


2. The current high gas prices work to lower demand by detering consumption, dropping the price of gas by 18 cents per gallon (the current Federal tax level) will lower prices thus encouraging people to buy more and raise demand.


3. Since production is already at capacity the increase in demand will not raise the quantity of gasoline available to consumers and will instead raise prices completely cancelling out any savings to consumers.


4. So now instead of using that 18 cents a gallon to build and maintain things such as roads we will just be sending that 18 cents to oil companies.

Summation – Hillary’s plan is complete bullshit political pandering.

On Sunday Hillary Clinton was asked if her plan was endorsed by any economist. She dodged the question but then responded "I'm not going to put my lot in with economists... this mind-set where somehow elite opinion is always on the side of doing things that really disadvantage the vast majority of Americans."

What’s next? Maybe Hillary Clinton wants to start regulating the auto industry and requiring that all new cars receive 300 miles per gallon powered by Care Bear Stares?

But how would this work? Well that’s easy; the collected Care Bears stand together and radiate light from their respective tummy symbols (see above photo). These combine to form a ray of love and good cheer which could be harnessed to power all of our cars of course.

Who cares that those elitist engineers say that it won’t work. Care Bear power is more than capable of handling all of our energy needs, it is just one big elitist conspiracy that is keeping the technology down.

Blogging Hiatus

As you may have noticed, blogging has been light. It will continue to be so thru May. 6th as your humble blogger is preparing for law finals. Wish me luck.

Do Iowa's first-in-the-nation caucuses cause food riots in Mozambique?

So asks Will Wilkinson. I think they do.

McCain's Tax Returns

Or rather Cindy McCain's tax returns. Well, she hasn't disclosed them. Her tax records should be disclosed. I think the public has the right to know such financial information and if there are any potential conflicts of interest. Just as I think Bill Clinton should be releasing donor information with regards to the Clinton library and the Clinton Global Initiative. However, what makes the failure to disclose all the more galling in McCain's case is that he has over the years assumed the mantle of the reformer. He championed that goddawful legislation McCain-Feingold (BCRA) and mentions the elimination of earmarks as his proposed solution to every governance issue.

Obama's New Slogan

"If it ain't Obama, It's Yo Mama!"

That would be a friggin brilliant slogan at this juncture. It exploits the youth votes desire to distance themselves from their aged counterparts by making a slam on their mothers. The Yo Mama bit is highly urban, while the use of "ain't" is an effective sop to rural voters. Further, it manages to subtly convey everyone's greatest fear of a Hillary presidency: her smarmy Mother knows best Nanny Statism. Obama campaign, I will be looking for the check in the mail.

Michael Moore Endorses Obama

Love him or hate him Michael Moore does have a strong following in the liberal epsilon of American society. I would have to say one of the more interesting quotes is when Moore describes Hillary Clinton as sounding like "a bigot stoking the fires of stupidity." Here is what he wrote about his endorsement of Obama:

Friends,

I don't get to vote for President this primary season. I live in Michigan. The party leaders (both here and in D.C.) couldn't get their act together, and thus our votes will not be counted. So, if you live in Pennsylvania, can you do me a favor? Will you please cast my vote -- and yours -- on Tuesday for Senator Barack Obama?

I haven't spoken publicly 'til now as to who I would vote for, primarily for two reasons: 1) Who cares?; and 2) I (and most people I know) don't give a rat's ass whose name is on the ballot in November, as long as there's a picture of JFK and FDR riding a donkey at the top of the ballot, and the word "Democratic" next to the candidate's name.

Seriously, I know so many people who don't care if the name under the Big "D" is Dancer, Prancer, Clinton or Blitzen. It can be Mickey Mouse, Donald Duck, Barry Obama or the Dalai Lama.

Well, that sounded good last year, but over the past two months, the actions and words of Hillary Clinton have gone from being merely disappointing to downright disgusting. I guess the debate last week was the final straw. I've watched Senator Clinton and her husband play this game of appealing to the worst side of white people, but last Wednesday, when she hurled the name "Farrakhan" out of nowhere, well that's when the silly season came to an early end for me. She said the "F" word to scare white people, pure and simple. Of course, Obama has no connection to Farrakhan. But, according to Senator Clinton, Obama's pastor does -- AND the "church bulletin" once included a Los Angeles Times op-ed from some guy with Hamas! No, not the church bulletin!

This sleazy attempt to smear Obama was brilliantly explained the following night by Stephen Colbert. He pointed out that if Obama is supported by Ted Kennedy, who is Catholic, and the Catholic Church is led by a Pope who was in the Hitler Youth, that can mean only one thing: OBAMA LOVES HITLER!

Yes, Senator Clinton, that's how you sounded. Like you were nuts. Like you were a bigot stoking the fires of stupidity. How sad that I would ever have to write those words about you. You have devoted your life to good causes and good deeds. And now to throw it all away for an office you can't win unless you smear the black man so much that the superdelegates cry "Uncle (Tom)" and give it all to you.

But that can't happen. You cast your die when you voted to start this bloody war. When you did that you were like Moses who lost it for a moment and, because of that, was prohibited from entering the Promised Land.

How sad for a country that wanted to see the first woman elected to the White House. That day will come -- but it won't be you. We'll have to wait for the current Democratic governor of Kansas to run in 2016 (you read it here first!).

There are those who say Obama isn't ready, or he's voted wrong on this or that. But that's looking at the trees and not the forest. What we are witnessing is not just a candidate but a profound, massive public movement for change. My endorsement is more for Obama The Movement than it is for Obama the candidate.

That is not to take anything away from this exceptional man. But what's going on is bigger than him at this point, and that's a good thing for the country. Because, when he wins in November, that Obama Movement is going to have to stay alert and active. Corporate America is not going to give up their hold on our government just because we say so. President Obama is going to need a nation of millions to stand behind him.

I know some of you will say, 'Mike, what have the Democrats done to deserve our vote?' That's a damn good question. In November of '06, the country loudly sent a message that we wanted the war to end. Yet the Democrats have done nothing. So why should we be so eager to line up happily behind them?

I'll tell you why. Because I can't stand one more friggin' minute of this administration and the permanent, irreversible damage it has done to our people and to this world. I'm almost at the point where I don't care if the Democrats don't have a backbone or a kneebone or a thought in their dizzy little heads. Just as long as their name ain't "Bush" and the word "Republican" is not beside theirs on the ballot, then that's good enough for me.

I, like the majority of Americans, have been pummeled senseless for 8 long years. That's why I will join millions of citizens and stagger into the voting booth come November, like a boxer in the 12th round, all bloodied and bruised with one eye swollen shut, looking for the only thing that matters -- that big "D" on the ballot.

Don't get me wrong. I lost my rose-colored glasses a long time ago.

It's foolish to see the Democrats as anything but a nicer version of a party that exists to do the bidding of the corporate elite in this country. Any endorsement of a Democrat must be done with this acknowledgement and a hope that one day we will have a party that'll represent the people first, and laws that allow that party an equal voice.

Finally, I want to say a word about the basic decency I have seen in Mr. Obama. Mrs. Clinton continues to throw the Rev. Wright up in his face as part of her mission to keep stoking the fears of White America. Every time she does this I shout at the TV, "Say it, Obama! Say that when she and her husband were having marital difficulties regarding Monica Lewinsky, who did she and Bill bring to the White House for 'spiritual counseling?' THE REVEREND JEREMIAH WRIGHT!"

But no, Obama won't throw that at her. It wouldn't be right. It wouldn't be decent. She's been through enough hurt. And so he remains silent and takes the mud she throws in his face.

That's why the crowds who come to see him are so large. That's why he'll take us down a more decent path. That's why I would vote for him if Michigan were allowed to have an election.

But the question I keep hearing is... 'can he win? Can he win in November?' In the distance we hear the siren of the death train called the Straight Talk Express. We know it's possible to hear the words "President McCain" on January 20th. We know there are still many Americans who will never vote for a black man. Hillary knows it, too. She's counting on it.

Pennsylvania, the state that gave birth to this great country, has a chance to set things right. It has not had a moment to shine like this since 1787 when our Constitution was written there. In that Constitution, they wrote that a black man or woman was only "three fifths" human. On Tuesday, the good people of Pennsylvania have a chance for redemption.

Yours,
Michael Moore

Obama and Affirmative Action

I think one of the things that goes unremarked upon is the significant shift the Obama proposes for affirmative action. Granted, I may be imputing policies where none exists, but he seems to suggest an intermediate step away from race-based affirmative action and in the direction of a class based system. Naturally I would prefer neither and instead to try and remedy racial or class based disparities on the spending side. All that said, I find a program that discriminates on the basis of class as opposed to race more just.

The Credit Crunch is Nothing...

Compared with rising commodity prices. We will weather the housing crisis and the credit crunch, the same cannot be said for those of poor nations who are struggling with rising commodity prices. Worldwide we are seeing honest to goodness food riots. I think maybe we can scale back those ethanol subsidies now.

The University of St. Thomas...Really Good At Making Stupid Decisions, Final Round

Some of you might remember my series of rants back in October about the asinine decision that was made by UST administrators to not allow Archbishop Desmond Tutu to speak at a Peace Jam event scheduled to be held at UST and subsequent demotion of a department head because of the controversy.

Well the speech that was too controversial to be heard at UST was rescheduled and held at Minneapolis North High School instead. Tutu spent most of his speech praising the young people in attendance for being the ones who are going to change the world and discussed God’s dream for humanity and how he is excited for these young people to assist God in realizing that dream. He went on to say:

“God says ‘I have a dream that one day all of my children will know that they belong in one family. I have a dream that my children one day will know war no more. I have a dream that children everywhere will have clean water to drink, will have enough food to eat, will have a decent home. I have a dream, please help me to realize my dream’.”

I now understand why the University of St. Thomas would not want such controversial topics to be discussed on their campus, for a university who claims their mission is to educate “students to be morally responsible leaders who think critically, act wisely and work skillfully to advance the common good” this type of hateful speech should have no place on campus.

Kudos to Obama on Taxes

Every once an awhile you'll hear the ditty about how Warren Buffett pays has a lower effective tax rate than his secretary and what a travesty this is. I agree that it is a travesty but Democrats then use it as a rallying cry to raise income taxes. There is only one problem with this, it wouldn't do a blessed thing to Warren Buffet's effective tax rate as most of his income is derived from capital as opposed to labor (which are taxed at different rates: 18% v. 35% for the highest income tax bracket). Obama correctly noted this in conjunction with the Buffett story and argued that the story presented a rationale to raise capital gains taxes not income taxes.

Gas Tax Break?

McCain is proposing a gas tax holiday for the summer. McCain has confessed that he doesn't quite get the whole economics thing and this is further evidence thereof. This is a brain dead proposal. Tis the season for pandering, this is just an especially crass example.