Posted by Russell Newquist on July 03, 2009 at 02:20 PM in Cars, Economics, Politics | Permalink | Comments (1) | TrackBack (0)
In discussing the role of the an independent Federal Bank in relation to the current economic issues, Megan McArdle today hits on a topic that is very near and dear to my heart:
I highly recommend reading the whole thing, as my small excerpts don't really do it justice at all.
The dilemma that Ms. McArdle is getting at, although she doesn't phrase it in these terms, is that the system that gives us better results now might, in fact, give us poor results over the long term.
The framers of the US Constitution were well aware of this fact, and debated about it at great length. They had lived under a constitutional monarchy in its early days when the monarch still held quite a bit of actual power. Many of them were also quite well educated and had studied quite a bit of history, especially of the classics. They were familiar with the history of monarchs, tyrants, oligarchies and republics all - and knew the shortcomings of each.
In engineering a system is considered stable if it will return to a functional state after a great disturbance in the system. In effect, our founding fathers were attempting to engineer a stable government in the engineering sense, not in the political sense. This is the basis for the checks and balances we see in our government.
Universal democratic rule was deliberately not the goal of our founding fathers. They knew, from their history, that over time a pure democracy would devolve into a chaotic mob rule. Or, as Ms. McArdle phrased it:
Exactly so, which is why the US Government isn't a democracy. Instead, our government was deliberatey designed to foster elements of each of the systems outlined above: democracy (the House of Representatives), oligarchy (the Senate), tyrants, emporers or monarchs (a strong President). As part of this system, certain parts of government were deliberately chosen to remain as appointed positions rather than pushing them for popular election - or even election by the legislature.
The Federal Reserve is in a somewhat extra-constitutional role. The constitution does not explicitly provide for a national bank, and the debate over whether we should have one or not was quite intense in the early decades of our nation. As we see in Ms. McArdle's post, some of those debates continue today.
As we see in many of the examples she brings, however, many of the solutions we propose to deal with current problems have serious long term concerns. To quote her once again:
Exactly. Ms. McArdle ends by extolling the necessity of Democratic oversight of these ideals. My own opinion is less specific: I'm fond of democracy, but I don't think it holds any special status as being the best way to solve every problem. However, in the case of government, every powerful group should have some form of check upon its power - even if that check reduces its effectiveness or efficiency. A 90% solution that is stable and can last for 100 years is better than a 100% solution that will degenerate in a generation - and I don't believe it's possible to have both.
This, again, gets to the heart of my recent arguments regarding the balance of power between our three branches of government. Our system was founded with a strong eye toward posterity and the long term stability of these systems. Since then, however, all parts of the system have been operating with a strong eye toward solving immediate problems. The fact that the system is still so stable is a strong testament to its genius.
But when we make changes, even small changes, to the system it is well worth considering how these changes will work once the people in control are no longer from our favored political party - because inevitably this will happen. Systemic changes must be made with an eye toward the long term and how they will work a generation from now if we are to preserve this great nation for another 200 years.
Posted by Russell Newquist on April 14, 2009 at 01:47 PM in Politics | Permalink | Comments (0) | TrackBack (0)
Over on The Atlantic, Megan McArdle takes a stab at answering that question.
The post is particularly timely for me, as I was just discussing this very problem with my wife last night. As I see it, the problem with health care in this country isn't that people are uninsured or underinsured: it's that health care costs so much that you need insurance or you can't get the care you need - and the costs are going up at an insane rate.
Ms. McArdle takes a valiant stab at the problem, and I think she accounts for some of the extra costs. But I also think there's more to the story, because I just can't make the numbers add up in my head. Specifically, her article covers a lot of points about aggregate costs. But I still wonder why individual procedures often cost so much.
For example, why does getting an MRI cost so much? My wife recently had to have one done, and Blue Cross was kind enough to supply us with a "before insurance" cost of the procedure (read: they wanted us to know just how much money we'd cost them). The MRI examination was $17,000!
I understand that an MRI machine is an expensive piece of equipment. After looking it up, I understand that it's an even more expensive piece of equipment than I appreciated. Still, even at the 2 million dollar pricetag that Wikipedia gives as an upper end, this doesn't justify the price. Assume an MRI facility operating at full capacity: say, 4 MRI's a day to be generous (the one for my knee took approximately one hour). Allow 5 days a week of operation, and 4 weeks a year of vacation time and holidays (again, being generous: individual employee vacations could be scheduled in such a way to keep the facility operating regardless). By my estimates, that's $16.3 million per year in revenue.
Even when you include the cost of specialists (radiologists to study the results aren't cheap: their salaries are very high, as is the cost of their schooling), staff, overhead, etc, malpractice insurance, and even the fact that this MRI facility in particular was probably on the extreme end of costs for various reasons... somebody's making out like a bandit here.
And MRI's aren't alone. I've seen a lot of medical procedures done where I just can't figure out why they're so expensive. Like college tuition, it's just plain getting out of hand. All the while, of course, doctors and their staffs are griping that insurance companies won't cover their overly expensive bills.
I would love to spend an afternoon studying the books of a typical medical specialty partnership. Maybe these costs are justified and I'm just blind to it. Or maybe they really are outrageous, if we only knew. But the reality is that right now, I just can't make the numbers add up in any way that makes sense.
Posted by Russell Newquist on April 13, 2009 at 03:31 PM in Economics, Health & Fitness, Politics | Permalink | Comments (0) | TrackBack (0)
OK, seriously - are we trying to bailout the banks, or are we trying to bailout the auto companies?
From the Wall Street Journal:
"The Treasury Department is pushing GM to offer its bondholders, who are owed $29 billion, a small portion of shares in the company. That's a sharp cut from a bond-exchange offer GM made two weeks ago, which included about $8.5 billion in cash and new debt in the company as well as 90% of GM's stock, said people familiar with the terms.
...
But the largest portion of the company's debt is held by banks that have received federal aid, including J.P. Morgan, Citigroup, Goldman Sachs and Morgan Stanley. Michigan Gov. Jennifer Granholm and one of the state's congressmen have suggested lenders that received funds under the Troubled Asset Relief Program should have to write off their debt to ensure the future of Chrysler."
[Emphasis mine]
We have banks that were in danger of failing, so we gave them government money. But now that same government wants to force them to take a major loss on debt in order to prop up another failing company.
This is patently stupid. What was all that bailout money for if we're just going to push the banks even further into risky financial territory?
(via Megan McArdle this morning)
Posted by Russell Newquist on April 10, 2009 at 12:42 PM in Economics, Politics | Permalink | Comments (0) | TrackBack (0)
It should be obvious at this point that the president I'm referring to is President Obama, not President Bush.
One of the most frequent charges leveled at President Bush was that he engaged in an "unprecedented" expansion of executive authority. This charge irritated me to no end, because it shows a clear ignorance of the history of Presidential politics. Almost every halfway competent President has tried to expand the powers of the office.
The notable exception that proves the rule is our first, President Washington. While he is often excessively elevated to near divine status, it truly is remarkable how much power the man could have had and how much he chose to give up. Our first President really and truly could have been our first King, had he chosen it. The fact that he willingly and deliberately walked away from that, while at the same time setting up a model for Presidential authority that was calculated to stay well shy of royal power, is underappreciated by many modern Americans - as is the fact that almost every President since has, in some way or another, increased the power of the office.
In a timely article that one could almost pretend is a reaction to my own post yesterday, Slate Magazine joins the bandwagon today, complaining about "The president's incredibly imperialist wielding of executive power."
Oh, really? You don't say.
Campaign promises aside, this is the nature of the executive branch. Our system of government intentionally puts limits on its powers. Its employees at all levels (top to bottom) find that these limits make it difficult to do their job. That's kind of the point - but naturally, they want to be able to do their job more easily and effectively, so they seek to increase their authority.
And every now and then you get truly blatant power plays, like FDR's attempt to stack the Supreme Court or Andrew Jackson completely ignoring Worcester v Georgia.
But I honestly don't think Bush or Obama fall into either category. I just think they're moving to expand their abilities to "do their jobs" more easily. Personally, I think this is because we have come to expect far too much out of the office of President and, more generally, out of our government. Government has its place, and can solve a lot of problems. But it can't solve everything, and even many problems it can solve can be solved better or more efficiently by other means.
Over the next four or eight years, the Obama administration will make further attempts to consolidate more power, and little more than token moves at giving up any executive power. If we want to keep the power of the Presidency in check it us - as always - up to the courts, the Congress, and ultimately the people to ensure that it stays in check.
Posted by Russell Newquist on April 10, 2009 at 11:43 AM in Politics | Permalink | Comments (0) | TrackBack (0)
Blogging has been light both today and yesterday because I've been more than a little under the weather. I slept pretty late this morning, and I haven't gotten a lot of real paying work done today, either. Still, I received an e-mail from a very old, very good friend this morning in response to my earlier post about the Vermont bill legalizing gay marriage. The e-mail raised a lot of good issues, most of which I've seen before, but prompted me to realize that they are worthy of addressing here.
To begin with, I should state clearly my own stance on gay marriage:
I don't think anybody has the right to a state sanctioned marriage, gay, straight, pink, or whatever. State sanctioned marriage is a relic of a past when religious and governmental institutions were often one and the same. My own personal opinion is that legally, all marriages should be classified as "civil unions." Further, civil unions in and of themselves require nothing sexual, merely a social contract between two people. As such, they should be open to anybody. Marriage should be left to the church. If you belong to a church that wants to call it marriage, fantastic. If not, well good on you, too.
The pragmatist in me is well aware that achieving this libertarian ideal is more or less impossible in early 21st century America. Given that, what do I think? I still think that marriage is not a right. It's a responsibility. I've only been married a short time myself, but the experience definitely backs that up.
However, marriage is also demonstrably a stabilizing force. It pushes people to settle down and get serious about their futures, their children's futures, and their community. Stabilizing forces are good for society. Also, in modern America there are legal benefits to marriage: reduced tax rates, health insurance benefits (that should be tied neither to jobs nor to spouses, but they currently are, so it matters), and more.
Given all of that, I think that from the government's point of view the benefits of legalizing gay marriage - including social benefits - are significantly higher than any social cost paid for it.
However, we also live in a nation with a government designed to have thee separate and competing branches of government. The system is deliberately designed for those branches to compete with each other for power, as a manner of checks and balances. And after more than 200 years of operation, I believe that the balance of power in our government has shifted too far toward both the executive and the judicial branches - although unlike many who raise this point against gay marriage, I believe executive power growth is by far the worse problem. Still, I believe that this is a serious issue that has serious long-term consequences for our nation.
Furthermore, I'm convinced that no matter what I or anybody else wants, the social mores of the US are changing. I believe that within a generation - perhaps two, at the most - gay marriage will be legal throughout all 50 states because popular opinion will demand it. Like it or not, this is the way that public opinion is trending, and I think there's very good reason to believe it will continue.
Given all of that, in my own mind, the issue of judicial vs. legislative vs. executive power is the more important issue. Although the consequences are less immediate, over the long term I think they're potentially far more severe.
Giving human beings power is a really bad idea. Give it to them and they use it. Give them a little and they want more. Give them a lot and they'll use it to take even more. Taking it away is almost always an extreme challenge. This is true whether it's an individual or a group.
As more than one person has pointed out to me during this discussion, one of the important purposes of our independent judiciary is to restrict the tyranny of the majority. However, the last 50 years have had a rash of precedent set by the courts - a decent portion of it including overriding legislative decisions - that serve to increase the powers either of the judiciary or of the government as a whole. At times, the courts have nearly invented whole cloth rights that don't exist anywhere in our constitution. At other times, they have completely shut down the clear and obvious intent of the text. Many of these decisions effect things that are very non-controversial - yet they still carry a lot of weight.
Clearly there are cases where using the court system was the correct process. Brown v. Board of Education was unquestionably decided correctly. Yet the precedent set by this case has brought more and more fights into the court systems, intent on following the same process. I love our constitution, and it gives us quite a lot of rights. But, like it or not, there's also a lot of stuff that's just not in there. Merely believing that people should have a right to something isn't the same as actually finding a legal right to it in the constitution. Furthermore, merely believing that people shouldn't have a right to something isn't the same as the constitution not allowing it.
For some major examples:
The text of the second amendment is pretty clear about the right to bear arms. Yet for much of recent history, the courts have upheld a pretty large number of gun control laws that clearly violate the spirit of that amendment, using as their basis a legal splitting of hairs that quite clearly has little to do with what the plain text actually says. This is beginning to change, with the biggest sweep being District of Columbia v. Heller. Still, there's a lot of leftover history here.
The case of Kelo v. City of New London pretty clearly expanded eminent domain authority well beyond what it was ever intended to be. I think it can be pretty clearly stated that this was not a case that defended rich people from the tyranny of the majority. Rather, it enforced a tyranny of the minority on some very poor people. The backlash prompted state and local legislatures around the nation to specifically legislate against the kind of circumstances that happened in New London. Nevertheless, they shouldn't have had to. This is clearly not the kind of "public good" that eminent domain was intended for.
Aside from actual judicial issues, there's a strategic issue. By using the court systems instead of focusing on legislatures, gay rights activists have hurt their own cause. I would estimate that they themselves have set back gay marriage by a decade or more. For those who doubt me, I give you California's Proposition 8, banning gay marriage.
This proposition passed with 52.2% of the vote, a margin of error ridiculously negligable. It was a specific response to a court decision in California that legalized gay marriage. That alone is evidence to support my case. However, look at the margins again. 2.21% of the vote. That's all that would have needed to switch sides in order to defeat this proposition.
The idea of judicial activism has clearly been coopted by some people who simply don't want gay marriage. However, there is, just as clearly, a group who honestly only worry about the judicial activism. Most likely there is also a third group that honestly falls into both categories. How large is each group? It's difficult to say. But in this particular case, it's fair to say that a court decision united these two groups in a common political front. Had this proposition been proposed in the absence of the previous judicial decision, could it have passed? We can't know for sure, and even polling data gives us little evidence, but I think it's unarguable that splitting the two groups would only have helped the cause of gay marriage.
2.2% is not a big number. I'm perfectly prepared to admit that my views are in the minority (they often are), but I wouldn't be surprised if 2.2% of the population agrees with me. Yet that's 2.2% that has been turned against the gay marriage cause by the actions of its own members. Strategically, they've dealt themselves a severe blow.
Likewise, the Vermont decision is a huge strategic win for the same group. It forces people in the anti-judicial camp to make it clear exactly which group they were in all along: the group that just wanted to stop gay marriage, or the group that honestly cares about the power struggle between our branches of government. I'm in the latter group; as such, I applaud the Vermont decision. Not because I necissarily agree with it (it still doesn't get the result I truly want), but because the process is better. The precedent it sets is better.
But it sets other precedents, too, which benefit the gay community. This is clearly, 100%, not a case of judicial activism. The claim can't be used to counter it anymore. It's the will of the people. To many, this is the main show. To me, it's a side show to the main event: a power struggle between 3 branches of government, in which one branch has continually lost power over 200 years - but this week struck a blow to gain back some of that power.
Why do I care so much about this? Because over the next 200 years, the exact year when we finally legalize gay marriage nationwide isn't going to really matter a whole lot. But the balance of power between our three governmental branches could well determine whether the US still exists as a liberal democracy or not, in a very literal sense.
Let us recall our history: every single republic or democracy that has ever existed long enough has eventually collapsed under its own weight or devolved into a tyrannical rule. The US has lasted longer than most, but it still hasn't outlasted the Roman Republic before its own collapse into Empire. How does this happen? One group consolidates power against another. The foundation of our own government is solid enough that it very likely can outlast the Roman Republic. It was designed to account for lessons learned from history. Even so, there comes a point when it requires active participation of the citizenry to prevent that devolution from occurring.
Just as it was imperative for our founding fathers to design a system to such a decay, today it is our own duty to ensure that we look after that system and foster it for the generations to come. We can't remain focused solely on our own problems. We must consider what their problems will be, and do our best to leave them a framework for dealing with them.
Posted by Russell Newquist on April 09, 2009 at 03:26 PM in Politics | Permalink | Comments (0) | TrackBack (0)
James Joyner sums up my feelings on this rather well with his headline: Vermont Legalizes Gay Marriage - The Right Way (remind me to sarcastically thank him for forcing me to choose another title). Whether we like it or not, this is a cultural shift that is happening in our nation, and in 30 years time it's likely that this will be legal nationwide.
Like many, I've had a serious problem with this legalization being court mandated. Ours is a nation of three independent branches of government that are supposed to provide checks and balances over each other - but which are also supposed to operate within their own limits. The balance of power between the three branches is constantly shifting, by design. However, in my own personal opinion, the executive and judicial branches have been gaining power over the last century or more at the expense of the legislative branch and, worse, at the expense of the people themselves.
This shift of power is largely the response of an apathetic citizenry that will willingly give up the rights of the people for short term gain combined with legislators who lack the leadership traits to stand up to strong executive and judicial figures. But today we see the system operating as intended: the people of Vermont, through their elected legislature, have expressed how they feel about this issue. They've expressed it so strongly that it overturned a veto. And they solved the problem the correct way, rather than through the judicial system.
Posted by Russell Newquist on April 07, 2009 at 01:01 PM in Politics | Permalink | Comments (0) | TrackBack (0)
That's what the headline says about her criticisms of Obama's intent to cut spending on missile defense programs, but there's a simpler explanation here. Look, guys - Palin's the Governor of one of only two states in the Union that is potentially within range of North Korean missiles (the other being Hawaii). She has a lot more reason to care about this than most of the rest of the nation, even if the parts of her state within striking range are mostly uninhabited islands. I think it's a legitimate issue for her to raise.
This, on the other hand, is purely a dig for pork:
Like most of the exisitng stimulus package, this is purely pork with no real stimulus effect and little benefit. The number of customers for such a facility is ridiculously small, and I'm betting it will be some time before New Mexico's facility (being paid for mostly by the state, and not the Feds, I should add) even reaches, much less exceeds, capacity. If Alaska wants a commercial launch facility it should pay for it itself.
Posted by Russell Newquist on April 07, 2009 at 12:08 PM in Politics | Permalink | Comments (0) | TrackBack (0)
In the rare case where I actually followed a blog conversation from its original start to its current conclusion, Kevin Drum discusses a new law about dishwasher detergent going into effect in Washington:
But now their hands are being forced. And guess what? It turns out they can do it after all. Imagine that."
Mr. Drum, I think, makes a fair point that sometimes alternative products do exists and can be used, and that sometimes market forces will not push us to use them.
Megan McArdle responds that there's usually a simple reason market forces don't push us to these green products: they suck.
Other than the asthma inhalers, I'm familiar with all of these issues (my dryer works in one pass, but I do have to set it to the maximum run time). Compact fluorescent bulbs are the ones that bug me the most. I tried switching all the lights in my old house over to them, and just couldn't stand the light quality. At a time when I was already having depression issues for other reasons, they just had to go so that I could get help wherever I could. I actually replaced all of my CFLs with fuller-than-normal spectrum incandescents, and I don't regret it at all. I also note that I didn't actually save all that much on my utility bills with the CFLs.
On the other hand, there are green products that have caught on pretty well in their own right via market forces. Given a choice between two equally workable products, one being environmentally friendly and the other not, consumers will choose the environmentally friendly one if they know about it. Indeed, it's become a marketing point, allowing manufacturers to charge a price premium. The reason for this should be pretty clear: nobody wants to live in a trash heap.
James Joyner weighs in this morning with his own addendum:
Yet how do we decide that the tradeoffs are worth it? Sometimes this works via the marketing pressures I just described, but most of the time we have to deal with the negative externalities (ie, environmental damage) of products via social or political processes.
Until yesterday, I wasn't even aware that phosphates in dishwasher detergent caused environmental issues. I'm inclined to be unsympathetic - my dishwasher already produces horrible results, almost never getting my glasses clean and often leaving them with a sediment buildup that wasn't there before I washed them. However, if the problem's really that bad... maybe we do need to change our detergent.
Sadly, the real problem is that I don't know, and worse, it's pretty likely that neither do the members of the Spokane or Washington legislatures. Regardless of the actual merits of the case, it's very likely that these laws are being passed as a quick emotional response to the issues. "It's for the environment" is quickly becoming a catch all that justifies nearly any action, no matter how economically absurd or, you know, effective it actually is.
To my point, I note that his post that kicked this all off, Mr. Drum provides absolutely no suporting evidence for his assertion that phosphates are a real environmental issue, no evidence that this problem is particularly bad in Spokane. The original LA Times story that he links to provides only minimal and indirect evidence for this claim, stating that:
And then proceeding to give us a rundown of all the rules and technology being used to clean phosphate out of the river, with no mention of whether phosphate itself is the biggest problem. Somehow the mining pollution in the river seems kind of unrelated to my dishwasher, I'm just saying.
I'm not saying this law is a bad idea. I'm not saying it's a good one. I'm saying it's time to stop having these arguments on the basis of abstractions and misdirections, and time to get more specifics and details into debates like this. This style of debate is rampant throughout our entire spectrum of political discourse these days, and it's leading us to make stupid decisions.
Can we please make an effort to return our debates to the relevant facts?
Posted by Russell Newquist on April 07, 2009 at 10:36 AM in Economics, Environment, Politics | Permalink | Comments (0) | TrackBack (0)
"I'm altering the terms of our agreement. Pray I don't alter them any further." -- Darth Vader, The Empire Strikes Back
Let's pretend for a moment that you're a big time executive. Your industry is getting hit by a bit of a crisis, but your particular company is actually in a decent - not great, but decent - position to weather the storm. However, the crisis hitting your industry is so bad that the government has decided to step in and help out. They worry, though, that if they identify the companies in the worst shape, due to the psychology and economics involved, that they'll actually cause those companies to fail rather than helping them. So they come to you, quietly, and ask you (and every other businessman in your field) to take a little bit of government money as well, so that nobody will know who's really in trouble.
As we said, your company is probably OK. However, if the rest of the industry goes down, it's going to have repercussions for your own company as well. And on top of that, hey, this is your chance to do something a little patriotic and help your country out. And maybe, just maybe, the government will owe you a favor after all of this and help will come around when you need it. I'm not talking corruption here, just karma. What goes around comes around, right?
So you agree to the plan and go along with it. After all, even though you don't really need it, you can find profitable things to do with that money.
Then a few months later, the public notices that some of the companies in the worst shape have been paying huge bonuses to the very people that got them into their current predicament. Outrage ensues, elected officials decide its time to cover their own butts, and they retroactively impose a lot of crazy conditions on accepting that money. "You took our money?" they ask. "Then you deal with our conditions." [note: this is a common occurrence when you start letting somebody else foot the bill, and a good reason to pay your own way]
But wait, you think. We didn't really need their money in the first place. And now they're telling us that we can't use it to reward the people who kept us in strong enough shape to actually weather this mess. Oh, and they're imposing other conditions that are mucking about with our business model. Forget this mess - I was trying to help, but now I think we'll just give the money back.
Sounds like a good plan, right? Until the President comes along and tells you that you're not allowed to. Like a devil's bargain, once you sign, they've got you for life.
If you haven't already figured it out, this hypothetical situation is exactly what's happening to at least one of our nation's banks.
What a wonderful mess our so-called leaders have gotten us into. Let's start with an ill-conceived bailout, pass emergency legislation for it without bothering to read it, get upset when the fine print comes back to haunt us (the legislation explicitly allowed the "bad companies" to pay the bonuses in question), pass even worse legislation to "fix it", and then flounder about when it turns out that the banks who were trying to help us decide, "no thanks, we don't want any part of this mess anymore."
I'm going to put this down here loudly:
There is no situation so bad that it can't be made worse by bad legislation.
And the corollary:
There is no legislation so bad that it can't be made worse by the Executive Branch.
Note those down and remember them well.
Posted by Russell Newquist on April 06, 2009 at 04:41 PM in Economics, Politics | Permalink | Comments (0) | TrackBack (0)