Dean the Frontrunner

From the Washington Post (registration required)

http://www.washingtonpost.com/wp-dyn/articles/A51686-2005Jan31.html

This isn't the first time that Dean's name has been mentioned on this blog (see here and here)

I'll be the first to admit that I was wrong in my prognostication skills. I had thought that Dean's loony leftism would not be a draw to a party that was looking to regain the political center after it was snatched away from them following the 2004 election. Instead the Democrats look like they're going to be heading back towards the anti-war crazies that Dean drew his support from in his abortive election campaign.

However, as mentioned in the Dean's December post, it looks like Dean is centering his campaign on making the state chairs more power and devoting more resources to them. So while it may not work on a national level, it does appeal to the state chairs and as such will appeal to the state chairs especially in states that were not "battleground" states.

As the frontrunner for the DNC chair, it's interesting to see where Dean will take the party. I still believe that the Democratic Party is firmly in the hands of the interest groups that give the Democrats money and resources. (Not to be seen as a partisan hack, the same can definitely be said of the Republican Party as well). So I doubt there will be any kind of shift in the Democrats focus in terms of issues or the candidates that they will run. As seen in the 2004 election, I doubt that the Democrats can run a candidate on the same platform that Kerry ran on, unless that candidate is charismatic enough to overcome the shortcomings of the Democratic platform. Do the Democrats have a candidate that can be that charismatic? The one candidate that comes to mind is Barack Obama, but he might be too young to take the flagbearer of the Dems. Hillary (no last name needed) is also seen as a possible candidate, but she is just as polarizing on the right as on the left, no gain will come from her candidacy.

So the Democrats still have their work ahead of them. The first real test for whoever the next DNC chairman is will be the 2006 congressional elections. Even more than the Presidential elections, these elections will depend greatly on the issues and ideas that the Democratic party puts forth. I don't know if a Dean-led Democratic Party will have a successful enough message to gain support to take back the Senate or House.

Economic Insanity

Here's an article from the Mises Insitute about a new book by Steven Landsburg.

http://www.mises.org/fullstory.aspx?Id=1725

This is the second time that I've come across the name of Steven Landsburg in the past two weeks. The first time was concerning a question in my Public Finance class. The question went as follows:

In his book The Armchair Economist, Steve Landsburg writes: "The only sort of tax that avoids deadweight losses entirely is a head tax, according to which everybody pays some fixed amount that is determined without reference to income, assets, purchases, or anything else over which he has any control." Discuss (a) the constraint(s) of n the imposition of such a tax and (b) the correctness of Landsburg's assertion.

The first part of the question should be obvious to anyone who pays taxes. Simply put, the tax is limited to what the poorest person is able to pay, otherwise the tax will simply put the poorer people in the country in debt to the government perpetually. So that would require some kind of redistributive plan to make sure that people don't end up in debt to the government though no fault of their own, but then the redistribution starts to put distortions in the market place and thus has deadweight losses. As for the idea that the head tax is the only tax that avoids deadweight losses is also incorrect as a tax that is completely unavoidable can also have no distortive effects. The general example is the property tax, which is assessed on land, housing and other types of property. Since it is very unlike to be able to avoid a tax on land or housing, the cost of the tax is built into the price that is charged for the particular piece of land. So Landsburg is incorrect on that level as well.

So Landsburg is back again, this time with the seemingly absurd prospect that in order to limit the spread of AIDS (and presumeably other STDs) people need to have MORE sex with more partners. Now, normally, you'd think that the reverse is true. If you want less STD, then people should stop sleeping around. It's just common sense. But Landsburg sees it a different way, that if the potential pool of people to sleep with, both male and female, increases, then the possibility of getting AIDS or an STD decreases accordingly.

The article does a good job of pointing out the false assumptions that Landsburg makes in constructing his argument, so I won't parrot them here. Instead, I'll mention a couple of things that I disagree with in terms of Landsburg's solution, that is government promotion of sex.

Let's first talk about his suggestion for government to drive down the cost of condoms below zero. And his way of doing that is to pay a bounty for used condoms. Ignoring the public health issues with collecting used condoms, what enables the government to distinguish between condoms used by normally non-promiscuous men and those who sleep around constantly and are at a higher risk for STDs? Presumeably, this could be the same as a deposit that is put on aluminum cans to encourage recycling in certain states (including my home state of Connecticut). Of course, that wouldn't drive down the cost of the condom to below zero, since the cost of producing the condom would still be above zero. Unless the government decides to charge a bounty greater than the cost of the condom, then the cost drops below zero. Of course, then the cost of the condom will increase accordingly since deman will pick up from the bounty on the used condom.

Of course, we can see how this would then drive up the bounty needed to keep the cost below zero, which would then drive up the cost of a condom, etc. The costs of the program would skyrocket, leading to calls from economists like Steve Landsburg for the government to start producing condoms itself, basically nationalizing the industry. And we all know what happens when you go ahead and nationalize an industry.

What Landsburg suggest is for the government to step in where there is a market failure. At least that's what he thinks there is a market failure. But I don't see where the market has failed. I don't see him getting all worried about people who have the clap or herpes. AIDS, for whatever reason, is the hot political topic, and therefore, the government must intervene. And that's the trap that today's society has run into, for better or for worse.

In Search Of

That's the name of an article appearing today on the Daily Standard. Here's the link:

In Search Of

Terry Eastland writes that the Democratic Party may finally be starting to moderate their views on the abortion issue. The major source of this possible moderation is that Hillary Clinton made a statement at a pro-abortion rally saying that the Democratic Party needs to open up to voters "beyond traditional core Democrats who support abortion rights". This signals to writers at the New York Times and the Weekly Standard that the Democratic party may be looking to change it's views on abortion. Basically, it would be an attempt by the Democrats to move to the center on this issue.

What I get out of this article is the fact that the Democrats may not use upholding Roe v. Wade as a litmus test for judicial appointees. This would be a huge shift by the Democratic party since upholding the Roe decision, as unconstitutional as it may be, is one of the major issues that the Democrats center around.

However, this might be the first attempts by Hillary Clinton to make waves nationally in an attempt for the White House in 2008. Notice how she never actually waivered from her stand on abortion while offering to bring opposing viewpoints into the Democratic Party. Sounds like she wants to establish herself as a moderate, record or no record.

I doubt however that the Democratic Party will actually open its doors to pro-life supporters. This is despite the rhetoric that the Democratic Party is a big tent party, welcoming people from all walks of life, etc., unlike those Republicans who will only let you into the party if your rich, male and white. The fact of the matter is that the feminist/pro-abortion wing of the Democratic Party is too powerful to attempt any change in the position of abortions-on-demand that the party currently holds. There are other positions that both parties hold that can be considered "core". The real question is whether the Democrats are realistic enough to change their policy when it appears that public opinion doesn't favor them in the polls.

Hybrid Liberalism

Here's an article from the Weekly Standard on another one of those wonderful tax breaks to the rich.

Being the true economist that I am, then there's really no good that can come from this tax break. Ignoring (for the moment) of the regressive income redistribution that comes from the data supplied in the article, the article misses the big picture. The idea that we need to subsidize the consumption of hybrid vehicles is a just another distortion caused by special interest groups. As explained in the article, former limosine liberals are now becoming hybrid liberals. They would buy these vehicles because it's "the right thing to do" not because it's economically sound for them to do so.

What the tax break does is that it takes the price higher than it should be because the subsidy drives up the price of the car. Of course, whether people would be actually driving hybrids if there was no subsidy is a different question (with an answer of yes, most likely). There are already governmental standards in place for fuel efficiency and especially in California, requirements to produce and sell hybrid cars to the public.

The article talks about how GM is regretting its decision not to enter the hybrid market, despite the fact that it is a proven money pit. It's because of the environmentalist pressure on auto manufacturers to be more (environmentally friendly). Now, wouldn't it be more environmentally friendly just to build cars that are more efficient for all product lines? The problem with that is that the market (ie regular people), has already signaled that people are willing to sacrifice efficiency for size, power and capability. That's why so many manufacturers build SUV's. There's high demand for them and it is profitable for auto manufacturers to make them.

The one thing that the article doesn't mention, but I think is important, is that the tax doesn't make a distinction between owning a car and actually driving it. For people mentioned in the article that make on average $130,000 a year, I'm willing to bet that they own more than one car. So the tax says that you can take the subsidy if purchase a hybrid, but doesn't make any distinction about actually using that car. It is just a ploy to get people to purchase cars that they wouldn't buy otherwise (because the price of gasoline is still cheaper today in real terms than it was back in the oil crisis of the 1970's.)

So I guess the moral of the story is that hybrids, which I'll admit I looked at when at an auto show this past weekend, still have a long way to go before they become an economically sound purchase. But that won't stop the government from trying to intervene in the market and throw $330 million to people who probably don't need it.

Mike's New US Government

Dan already gave his version in the previous post, so I figure it's my turn to write on this topic as well.

I too would prefer to have a government that is much smaller than the one that is currently in place. My model government would keep the same basic features that are currently in the Constitution. That is, I wouldn't make any changes to the constitution except for the ones listed below.

1. Term Limits: I would make a universal 12 year term limit for any elected or appointed position in the government. That would mean 3 terms for the President, 6 terms for Congressmen, 2 terms for Senators and one 12 year term for Supreme Court Justices. If you can't get done what you want to have done in 12 years, then you're just leeching onto government.
   
2. The Executive Branch: There are quite a few changes to be done here. First of all, all executive orders are only good until the end of the term of the president who made them. If the president wants them to be permanent, then go through the process of making them law. And then there's the slash and burn that will be the departments. I would reduce them to:
   
   
   • State Dept.
     
   • Dept. of Defense and Homeland Security (merged into one department)
     
   • Dept. of Treasury, Commerce, and Transportation (merged into one department)
     
   • Dept. of Justice
   
   Basically, these are the only functions that are best served on a national level. This cuts the deadweight, such as Agriculture, HHS, Education, and Veterans Affairs.
   
3. The Legislative and Judicial Branches: Nothing I would change here except for term limits.
   
4. The Constitution: I would repeal the Income Tax amendment. That would mean that the government would have to raise revenue by other means, such as excise taxes or a consumption tax such as a National Sales Tax. Otherwise, the Constitution stays the way it is.

That's how I would run this country. Ideally, power would be shifted back down to the states as the Federal government would have things like Education taken away from it. I do like Dan's idea of having all tax increases and borrowing requiring 3/4ths of the states approval. I would also toy with the idea of making borrowing possible through referendum, but as California shows us, that's not always a good idea. Nothing like having the states required to tack on spending and borrowing. It would also force the government into keeping a balanced budget, unless there is a time of crisis. That would be fine by me.

It would be interesting to see how this would turn out, but I seriously doubt that this would ever get past the drawing board, since there are way too many factions with an interest in keeping the status quo. There's also the question of what to do with entitlement programs such as Social Security, Welfare, and Medicare. I would just rather do away with them, but we all know that's not going to happen.

So that's my dream government, with all the fat cut off. I know there's a snowball's chance in hell of it coming to pass, but you never know.

The Conservative Case for South Park

Tonight's episode of South Park had a meaning behind it. To summarize shortly, people from the future arrive in South Park looking for jobs because the future is so overpopulated and there are no jobs for these people. As a result, they'll work for much lower wages, that they hope to save and then have available in the future for their families. The people from the future take all the unskilled labor (and some of the skilled labor), which turns the displaced workers against the new arrivals. There was even a debate on The O'Reily Factor (fake of course), that pitted a redneck conservative against a hippie liberal. In the end, Stan, one of the child characters on the show, comes up with an idea to get rid of the travellers from the future. His idea was to make the future better so that they wouldn't want to come back to the past.

The reason I bring an episode of South Park to the forum is that there's a very obvious parallel drawn between the people from the future and Mexican immigration. And the ultimate solution that Stan comes up with is to make the living situation in the future better so that the people of the future wouldn't want to leave. That sounds very much like the conservative case for free trade as a solution to the immigration problem. That case is that we can prevent immigration into the US from Mexico, or at least slow it down by building up the Mexican economy.

There are other aspects of South Park that would definitely make conservatives cringe, like the massive homosexual orgy, but the subtile message that it delivers shows that you can't put Trey Parker and Matt Stone as strictly liberal either.

UPDATE: Dan reminded me that I didn't stick my neck out and comment on what I thought the correct policy for the US should be. Simply put, I do favor free trade. That much is obvious. The real question is what I think about immigration. I think legal immigration is just fine. It's the illegal stuff that I oppose and wish the government would get a handle on actually enforcing the laws on the books. That would serve as a further deterrant to illegal immigration, which would make law enforcement easier. But like I mentioned earlier, free trade and the improvement of living conditions in these countries would serve as a discouragment for people to attempt to move here illegally. That's my two cents on immigration.

Bush's Tax Reform Committee

Dan gave me the link below and said that I should be the one to comment on it, since I'm the economist of the duo. And I'm not one to back down from a challenge.

Anyway, here's the article that Dan sent me:

http://www.townhall.com/columnists/brucebartlett/bb20050112.shtml

I've also come across a post by Larry Kudlow on the same topic. Here's the address for that as well:

http://lkmp.blogspot.com/2005/01/bushs-choice.html

So the basic idea is that the President has put together a panel to explore different options for changing the tax structure. Basically, I'm inclined to agree with Bruce Bartlett on this one. I really don't see any kind of meaningful reform coming out of this commission. The fact of the matter is that if Pres. Bush has already told the members that they can't cut mortgage deductions or charitable contribution deductions, then there really isn't going to be anything groundbreaking that comes from the commission's findings.

What I predict will probably be the end result of this is something that comes relatively close to rubber-stamping the Bush tax cuts from his first term. Not that this is necessarily a bad thing, but it will be much ado about nothing in the end.

Book Review: State of Fear

For Christmas, I received Michael Crichton's new book, State of Fear. I am a big fan of his work, but I didn't have any idea of what to expect with this novel. I didn't know how much of a scientific bent the book would make or that it had to deal with enviromentalism at all.

If you want to know about the characters and a basic idea of what the plot of the book is, then here are some links to other reviews I've found on the web:

HoustonChronicle.com - 'State of Fear' by Michael Crichton

USATODAY.com - Crichton fans will embrace 'Fear'

OpinionJournal - Leisure & Arts

New York Times review by Michiko Kakutani

All of these reviews give a basic outline of who the characters are and what the story is about. So basically I'll say that the story is about global warming specifically and the environmental movement in general.

The story itself is described as fast paced, since the story takes place in many separate corners of the world. And as a thriller, it does a good job of keeping the plot suspenseful, but at the same time, a smart person can fit the pieces of the puzzle together and figure out what the evil masterminds are up to.

But what I was most surprised about while reading the book was how much Crichton puts into making the book scientifically sound. While some critics write off the scientific basis as being boring or ideologically driven, I see as being an important piece of the story that he is trying to tell.

And it becomes important because the idea of global warming being overhyped is something that comes as a surprise for me. On topics of the environment, I'm skeptical, but still more or less accepted that global warming does occur. Now, I'm not quite so sure about that and having the data on hand helps to give the story creedence that it wouldn't normally have as being a fiction book.

This compares greatly to one of Crichton's more famous novels Jurassic Park. In that novel, he goes through all of the scientific aspects with respect to genetics and the creation of new life. Jurassic Park even manages to be a pretty good thriller for a book with such scientific overtones. State of Fear manages to be more of a text book at times, which might not come off so well for people who are reading for the fictional thriller part of the story, but works very well to educate people like me who only know their environmentalism from what was drilled into us during elementary school.

Overall, I would have to say that if you're already a fan of Michael Crichton, then there's nothing to be worried about with this book. He does a good job of combining science with drama. And it's believable as well. As for people who have never read anything by him before, this is an ok place to start, but books like Jurassic Park and The Andromeda Strain are better books that combine both science and suspense.

Also, I would like to comment on a part of the New York Times review. In the review, the reviewer mentions similarities with "The Day After Tomorrow" a movie with the same apocalyptic concerns with the environment. Here's what the reviewer had to say:

The novel itself reads like a shrill, preposterous right-wing answer to this year's shrill, preposterous but campily entertaining global warming disaster movie "The Day After Tomorrow." In that special effects extravaganza, global warming (its dangers ignored by a Dick Cheneyesque vice president) is the enemy, leading to deadly climate changes and disturbances in the weather that leave New York flooded and frozen, and Los Angeles beset by swarms of killer tornadoes.

Having read the book based on the movie (but not seen the movie itself), I would have to say that State of Fear and "The Day After Tomorrow" are nothing alike. I guess that would lend creedence to the idea that Crichton's book is nothing but right-wing propaganda. However, I see the book as not taking any stance one side or another. Because Crichton is bashing one of the environmenal lobby's sacred cows, that must make him a conservative stooge. However, in reading this book, I find that he provides a truthful look at the excesses of environmentalism, and what people as a whole should do to take an honest look at what should be done in terms of the environment.

The last thing I would like to comment about is the last sentence that Crichton writes and that most reviewers jump on. Specifically, he writes that "Everyone has an agenda. Except me." I was suprised by this comment, but I see it as more tongue-in-cheek than a serious statement. Even so, people seem to jump all over it as if it invalidates the previous 600 pages of work. It doesn't. State of Fear is a good book for a person who wants to think about the issues, and be entertained at the same time.