Monday, February 28, 2011

Another Set Of Reminders - On Wisconsin

To clarify a few points on the debate in Wisconsin.
  • Collective Bargaining is not a "right." If it was, federal workers would have the right, they do not.
  • Collective Bargaining is not a "right." If it was, then all state employees in the U.S. would have the right, they do not.
  • Collective Bargaining is not a "right." Nowhere is it enshrined in the Constitution, it was granted by legislation in Wisconsin, by executive order in some other states.
  • State workers are protected from arbitrary firing and have numerous other protections in Wisconsin.
  • Collective bargaining, combined with pay check deductions and public employee union contributions to political candidates forms a taxpayer subsidy to the Democratic party. That is unfair. If I don't like Walmart's political views, I can boycott their stores, but I can't stop paying taxes to slow the flow of my money to a party I intensely dislike.
  • Scott Walker has been criticized for wanting to bust unions. They say that like its a bad thing, it is not.
Cross posted to sdrostra.com.

Just A Reminder - Freedom Coalition Foreign Policy

The Tea Party has been criticized for a lack of foreign policy. I don't care, a movement, unlike a political party or a candidate for national office, doesn't require a foreign policy plank. However, I remind my readers that my Freedom Coalition Agenda, which pre-dates the Tea Party has the following plank:
Support Freedom Abroad. Newly liberated peoples the world over have shown a propensity to embrace freedom and markets when the yoke of tyranny has been lifted. The policy of America should be to actively work against dictatorship in all its forms (Islamic, Socialist, Fascist and Communist). We should seek to advance the cause of freedom, not through force of arms, but through steady pressure. Every piece of foreign policy should be weighed against this end. Further, we are also ready to use force of arms in this cause when defense of our national interest requires it. Americans resonate with the concepts of helping to liberate peoples from tyranny, this is a winner. We especially decry the pathetic kow-towing to dictatorship in our own hemisphere in the shameful treatment of Honduras by the Obama administration.
Clearly, Obama has recently shown that even as they are falling, he isn't averse to kow-towing to dictators in the Middle East as well.

British correspondent Nile Gardiner echoes my sentiments with the headline, "Do Tyrants Fear America Anymore." The answer is a resounding no, because of the timidity of our commander in chief.
It has also become abundantly clear that the Obama team attaches little importance to human rights issues, and in contrast to the previous administration has not pursued a freedom agenda in the Middle East and elsewhere. It places far greater value upon engagement with hostile regimes, even if they are carrying out gross human rights abuses, in the mistaken belief that appeasement enhances security. This has been the case with Iran, Russia and North Korea for example. This administration has also been all too willing to sacrifice US leadership in deference to supranational institutions such as the United Nations, whose track record in standing up to dictatorships has been virtually non-existent.

The White House’s painful navel-gazing on Libya last week, with even the French adopting a far tougher stance, is cause for grave concern
.
Indeed.

Sunday, February 27, 2011

Why the Administration's Failure to Defend DOMA Has Negative Implications for Liberty

I had not previously commented on the Department of Justice and Presidential decision not to put up a constitutional defense of the Defense of Marriage Act (DOMA). Initially, it did not appear to have implications for my main concerns, however, Orin Kerr, writing in Volokh, explains why this is a huge power grab by the executive branch.
If that approach becomes widely adopted, then it would seem to bring a considerable power shift to the Executive Branch. Here’s what I fear will happen. If Congress passes legislation on a largely party-line vote, the losing side just has to fashion some constitutional theories for why the legislation is unconstitutional and then wait for its side to win the Presidency. As soon as its side wins the Presidency, activists on its side can file constitutional challenges based on the theories; the Executive branch can adopt the theories and conclude that, based on the theories, the legislation is unconstitutional; and then the challenges to the legislation will go undefended.
Once again the administration hasn't considered the long term implications of its legal positions. (Dean describes Attorney General Eric Holder as "that miserable hack" with good cause.) First, it is trying to push off Supreme Court review of the Affordable Care Act until after the 2012 election, which it very well could lose. Second, if its theories hold, then a Republican President could nullify the entire ACA by refusing to defend it, and conceding that the individual mandate is unconstitutional and not severable. In one neat stroke an entire piece of legislation is voided without proper political debate. As much as I loathe Obamacare (ACA), this is no way to run a Republic. Executive power has been the chief threat to liberty in my lifetime, adding to executive power is unlikely to advance the cause of freedom.

Wisconsin Poll Results

The poll on whether or not Wisconsin governor Scott Walker should take the issue of removing some collective bargaining privileges as part of his package of budget reforms is closed. A majority of my readers voted to continue this fight, believing it to be central to the long term effort to get the state under control. I agree, but voted no, thinking that given the majority the Republicans hold, they have the ability to make this a separate vote and still win tactically. (The wording of the poll was poor, I promise to do better with my next poll.) I am going to start referring to collective bargaining for government employees as a privilege not a right, since Federal workers lack this right, it must not be a right in the same sense that freedom of speech is. The results:

57% (12 votes) No, Walker should stay the course.
23% ( 5 votes) Yes, tactical mistake, do it later.
09% (2 votes) Yes, it's wrong to take this away from unions.
09% (2 votes) Not sure.

This debate rages on and Scott Walker seems impervious to pressure, but the fleeing state senators are still hiding out and refusing to vote. I still don't understand why the Republicans don't remove this issue from the budget bill, pass it separately as a non-budget matter and get on with life.

Saturday, February 26, 2011

In Case We Forgot What the Budget Fight is About

Keith Hennessey does a great service by graphing the data in the President's budget submission (H/T Greg Mankiw.)



I previously said that the President showed a lack of leadership on his budget submission. After looking at this graph (click to enlarge), I retract that judgment. The President has displayed total political cowardice and cravenly submitted a budget that will cause harm to the nation.

I guess he expects the Congress to save him from himself and produce a good budget. How'd that work out on health care.

The other important point made by Hennessey is that everything to do with government rises. Government spending increases, sucking resources out of the economy. Taxes rise, sucking incentive out of the economy. The budget deficit rises, sucking credit out of the economy. This budget basically. . . , well, you get the idea.

Friday, February 25, 2011

Financial Regulation and Efficient Markets

Mark J. Perry (left) authors the Carpe Diem blog, on my favorite blog list. If you only read one economics blog, that would be the one. He exposes myths that surround economic thought, and is my counterweight to Krugman, along with Greg Mankiw. Recently, he authored an article that takes an approach to financial regulation that I have been advocating for some time. (Yes, I am bragging, but sometimes it's good to get confirmation about one's approach to the issues.) The article argues that what is really necessary for more effective regulation of banks is higher capital requirements. Along with co-author Robert Dell, they discuss the inadequacy of risk assessment in capital markets.

Through coincidental timing these concepts dovetail nicely with Roman Frydman's (right) concepts advanced in his latest book. Interestingly, Frydman ultimately argues for greater regulation of banks, but I believe that his work can be used to show that while regulation is possible and even necessary, it can be accomplished at lower cost and with greater transparency than accrues to the Dodd-Frank bill.

But a word of caution. For many years, as a libertarian, I subscribed to theories of efficient markets that underpinned my beliefs regarding financial regulation. Events and research have shown that markets are not always efficient in this sense, asset prices do not always accurately reflect all publicly available information. How can this be? There is no incentive for a prospective buyer to pay more for an asset than it is worth, nor for a seller to receive less, so market forces should force prices to equilibrium reflecting known information. Empirically, we have seen that this does not happen. Bubbles exist, the most recent one in housing, before that in technology stocks and the original one in tulips. However, in libertarian thought, there is a strong belief that since markets are efficient, governments should never try to "outsmart" the markets in an attempt to prevent the collapse of bubbles that bring with them attendant economic calamity. If we give up the efficient markets argument, we must make the argument for non-intervention with more subtlety.

As to why markets aren't always efficient, Frydman hypothesizes that investors focus on a subset of all available information because of the uncertainties surrounding the relationships between given information, and more importantly the greater uncertainty of how other investors will respond to new information. He claims that these processes can never be fully modeled. He goes on to argue that central banks and regulators should intervene to limit excessive asset-price swings on the upside, just as they have on the downside. However, it is not explained how the central bank is to understand to any greater degree of certainty than investors as a group, what the correct range for an asset class would be.

Our response to the call for greater market intervention on the part of the federal government is countered not by citing efficient market theory, but only that government is prone to the same forces that cause investors as a class to make mistakes. That would be the end of it except for the fact that we have socialized the costs of asset price bubbles in our country, so we still cannot ignore the issue, even as Tea Partyers. Assets in a bubble are bought with loans from banks, or are used to secure loans from banks that in turn are insured by the public at large. Both the deposit insurance schemes and the operations of the Federal Reserve socialize these costs to the public as a whole through the government. (Even though deposit insurance is paid for by the banks, it is well understood that the government would not let the fund go broke.) This is the real problem addressed by the Dodd-Frank bill. However, the approach is unlikely to be effective because it relies on a shifting set of risk measurements that Frydman has shown might be subject to the same psychological forces that caused the asset bubble in the first place.

Perry and Dell point out that the issue of insolvency of these financial institutions can be easily rectified by strict capital reserve requirements. They show that actual capital reserves have fallen over the last century, despite various standards and treaties. Requiring more adequate reserves prevents bankruptcy and reduces the chance that your tax dollars or even worse, inflation will be used to make up these losses. Further, with reduced complexity of regulation, the cost to banks' operations will go down:One sensible reform is to reduce those subsidies to put debt and equity on a more equal footing.
Another is to substantially reduce regulatory costs, which, for depository institutions, may well exceed the cost of corporate income taxes. For example, the bank-affected provisions of the 2001 Patriot Act have not (to the best of our knowledge) led to the conviction of a single terrorist, but in 2003 raised the average labor costs of opening a new account from $7.75 to $22, according to an industry consultant.
Time does not permit an examination of the role of credit rating agencies in this space, but suffice to say that increased reserves would reduce dependency on this legally protected oligopoly.

Government Employees and Collective Bargaining

Kimberly Strassel weighs in on the public employee union issues in Wisconsin by helpfully comparing their bargaining rights to those of federal workers under Obama. Full disclosure, I am an employee of the federal government, but I do not belong to a union nor to a "collective bargaining unit." Remember how Obama froze federal pay by executive order, without so much as an act of Congress? Under the proposed legislation in Wisconsin, Scott Walker won't even get that power. Like many politicians before him, Obama has been caught in his hypocrisy (which is seems the only sin remaining, according to the left.) More from her excellent summary:
Fact: President Obama is the boss of a civil work force that numbers up to two million (excluding postal workers and uniformed military). Fact: Those federal workers cannot bargain for wages or benefits. Fact: Washington, D.C. is, in the purest sense, a "right to work zone." Federal employees are not compelled to join a union, nor to pay union dues. Fact: Neither Mr. Obama, nor the prior Democratic majority, ever acted to give their union chums a better federal deal.
According to Strassel, this disparity explains why Obama has stopped talking about the issue, but in my opinion, the cat's out of the bag, and this is just one more issue where the President looks silly. Who in America is going to believe that Organizing for America isn't involved at his behest.

By the way, does this mean that Scott Walker should press on with the issue of collective bargaining? Not so fast, just being right on the issue doesn't mean that it is tactically or politically smart to push forward at this time. Personal opinion is that Walker should drop just the collective bargaining portion of the bill, get his budget passed, along with right to work and no union dues removed through the paycheck. Then he should come back on the collective bargaining issue. Hold hearings, make the comparison to the federal government and then pass the bill because you still have the votes.

Only one day left to vote in the poll.

Weekend Music Chill - UPDATE

I got reacquainted with Iggy Pop recently while trolling through my Glam play-lists on my Sonos System. Here are a couple of his best efforts. I especially like all the film clips in the first vid.

UPDATE - I have moved The Passenger by Iggy Pop over to my other blog, along with a poll to allow you to compare it to the cover by Siouxsie and the Banshees. I am substituting another Iggy Pop favorite.



Thursday, February 24, 2011

Kos and His Delusions

I have an account at DailyKos, which I haven't used in ages. I have been occasionally able to get them to rethink their support for some of Obama's positions. But lately they have just lost it, Markos himself posted the following cartoon, which isn't even funny. How childish can you get?

The Tea Partyers I know don't really care about gay marriage, less than half are active Christians, (even if I wish they all were), and I have never seen a hint of violence at a Tea Party rally. I know that I shouldn't have to say this, but occasionally we have to push back on this stupidity and hold it up for the ridicule it deserves.

Wisconsin and Collective Bargaining - Dick Morris' Poll

I previously posted that I didn't find the USA Today/Gallup Poll on American opinion on the Wisconsin situation to be credible, because it showed that there wasn't a majority favoring any course of action to reduce government deficits. Dick Morris commissioned a poll in the state that seems a little more illuminating.
• By 74-18, they back making state employees pay more for their health insurance.
• By 79-16, they support asking state workers contribute more toward their pensions.
• By 54-34, Wisconsin voters support ending the automatic deduction of union dues from state paychecks and support making unions collect dues from each member.
• By 66-30, they back limiting state workers’ pay increases to the rate of inflation unless voters approve a higher raise by a public referendum.
But the bad news is this:
On the issue of limiting collective bargaining to wage and benefit issues, however, they break with the Governor, opposing the proposal by 41-54.
This is a tricky area for Republicans. The more have I thought about it, the more I believe that the bargaining issue isn't core. Removing the requirement to join a union, removing paycheck deductions, and increasing the contributions of the employees to their own benefits seems sufficient to carry the day.

Wednesday, February 23, 2011

Voting Present - On Libya

Muammar Gadaffi is a brutal dictator involved in the murder of Americans and American service members. He has been known to have a weapons of mass destruction program in the past. Most recently he has ordered mercenaries to gun down protesters in his own country. Obama finally got around to saying something, even though he was much quicker to jump into the Mubarak controversy in Egypt. Thank God, five days from now, he will be sending Hillary Clinton to Geneva to discuss whether the murders might be human rights violations. I'm sure that got Gadaffi's attention.

If you recall, after the Berlin discotheque bombing in 1986 in which we had evidence of Libyan involvement, President Reagan ordered the bombing of Tripoli that almost killed Gadaffi. From Wikipedia:
The air strike killed 45 Libyan soldiers and government officials, and 15 civilians. Forewarned by a telephone call from Malta's Prime Minister, Karmenu Mifsud Bonnici, that unauthorized aircraft were flying over Maltese airspace heading south towards Tripoli, Libyan leader Muammar Gaddafi and his family rushed out of their residence in the Bab al-Azizia compound moments before the bombs dropped. Gaddafi escaped injury but his 15-month-old adopted daughter Hanna was killed, and two of his sons were injured.[8] However, according to Giulio Andreotti and Abdel Rahman Shalgham, it was Bettino Craxi who warned Gaddafi.
Obama could make a real impact if he merely stated that Gadaffi will be prosecuted for crimes against humanity if the carnage continues. Such a threat might reduce the violence, allegedly Obama's goal.

So whatever happened to the whole Obama hearts Reagan thing. Nothing like a real crisis to reveal a leader's true colors.

I don't think so, and what he's learned from him? Nada.

Here is what the great man himself had to say:

Tea Party and Wisconsin - Breakin' it Down

In a great interview on local San Diego TV station KUSI, Leslie Eastman makes the key points about the incestuous relationship between the unions and their recycling of money to Democrats. She also points out the standard anti-democratic tactics of the unions and their supporters.



Click here if the embed doesn't work.

Temple of Mut has the full coverage from the Tea Party and Tax Fighter press conference today.

U-T also had coverage.

Tuesday, February 22, 2011

Wisconsin Update - Gallup Poll, Local Coalition Presser

As I feared, the initial reaction to the specific issue of restricting collective bargaining for public employees is not favorable, according to Gallup, with 61% opposed. This, despite an earlier Rasmussen poll that shows support for Governor Walker's overall approach. HotAir points out that Gallup has not released the details of this poll, so it is hard to analyze the data. However, other data from the poll also seems discouraging:

Image courtesy USA Today.

This data actually causes me to question the veracity of the polling data. If one believes the results, then voters are saying that they don't support any method of reducing deficits. My intuition is that the voters are in fact, more engaged. In fact, it wouldn't surprise me if this was a poll of the general population, not of likely voters. Agree with HotAir that the best course would be to press ahead, as the Governor was elected on campaign promises to tackle the deficit and his previous record as County Executive in Milwaukee made his approach no surprise to voters.

Meanwhile, the Southern California Tax Revolt Coalition based here in San Diego, will be holding a presser to express support for the Wisconsin Republican party approach to its deficits. To be fair, San Diego Tax Fighters is the lead group for this event. Details:

SUPPORT WISCONSIN BUDGET REFORM
11:00 am – Wednesday, Feb. 23, 2011
Kearney Mesa Park
Corner of Mesa College Dr. & Armstrong St.; 3170 Armstrong St, San Diego, CA 92111-5703


The coalition includes longtime sdrostra.com blogger and very longtime San Diego tax activist Richard Rider, lead spokesman for the event.

I think I capture the sentiment of the local Tea Party that we should oppose any attempts by Governor Jerry Brown to extend current tax increases or add new ones until he tackles pensions of the state employees. His failure to put the pension issue on the table is a recipe for disaster and prevents sustainable budget reform. This is why Scott Walker's approach has much to be emulated, pushing unions to contribute more towards their own pensions and health care while taxpayers are suffering is only fair. Funny how the left only talks about fairness when it benefits the unions and recipients of government largess.

Cross posted to sdrostra.com.

Tea Party Presidential Handicapping


Definitely not Tea Party endorsed.


Yesterday, Temple of Mut posted the results from San Diego Tea Party bloggers straw poll for President. Happy to see that Mitch Daniels did well, but this poll had no real meaning, of course. Of more import, are the SLOB's thoughts on unacceptable candidates, and why. First, Newt Gingrich was far and away the least favorite at the table. (Yes, we could all fit at a single, albeit large table at the Yard House.) My key reason for opposing Newt Gingrich is his support for ethanol. I had other reasons for opposing Newt, not the least of which is his lengthy absence from electoral politics and his questionable personal morals, but his support of ethanol subsidies clinched it for me. Ethanol is the great litmus test for presidential candidates, because it forces them to deal with a program that makes no sense whatsoever at a high personal cost because of the momentum they might lose in Iowa.

Here is why ethanol subsidies for American corn make no sense.
  1. They are subsidies. That means the free market has determined that ethanol is not an efficient way to produce fuel for vehicles. Subsidies are almost always a waste of taxpayer dollars, ethanol is no exception.
  2. Ethanol subsidies increase the price of corn, which in turn increases the price of meats. Essentially, we are burning food and driving up its price. World food prices are rising, increasing starvation. Ethanol has been fingered. This is a moral issue as well.
  3. Ethanol isn't good for the car engine of the most fuel efficient car in my family. So any purported benefit is mitigated by the damage it does to fuel efficient vehicles.
  4. Corn is not the most efficient way to produce ethanol. Switchgrass is more efficient.
  5. Drilling for domestic oil reserves would reduce dependency on foreign oil far more effectively than ethanol subsidies. The foreign oil dependency argument is Newt Gingrich's.
However, Iowa holds the first caucus of the Presidential election cycle and is one of the chief beneficiaries of the ethanol subsidy as currently structured, including the tariffs on imported sources. Momentum in Iowa can carry through all the way to November, witness Obama's election. If a politician has the stature of C.O. Jones to stand up to this pressure, then maybe he can stand up to other special interests. If not, I don't wish to vote for him or her.

Interestingly, Mitt Romney doesn't seem to have high negatives with the group, even though he doesn't have high positives either. The discussion around Romneycare, Massachusetts' Obamacare predecessor, was that it put the Republican nomination out of reach for Romney. The feeling was that his Mormon religion didn't help him with the GOP, but wasn't an issue for Tea Party types. Finally, his likable personality was acknowledged by the group.

It's harder to put my finger on why Huckabee is so disliked by those of us in the Tea Party. An active police officer in our group discussed Huckabee's bad judgment on pardons. We agreed, but my gut instinct is that this isn't the reason for the dislike. My personal belief is that his heart really isn't in the issues that Tea Party types care about and he will use the nomination to push social issues that will distract from the far more important issues facing the nation. But even that explanation is incomplete, I am looking for some help on why he is so disliked amongst Tea Party types. George Will supplies a little in a 2007 column about Huckabee:

Many Iowans think it would be wise to nominate a candidate who, when the Republicans were asked during a debate to raise their hands if they do not believe in evolution, raised his. But, then, Huckabee believes America can be energy independent in 10 years, so he has peculiar views about more than paleontology.

Huckabee combines pure moralism with incoherent populism: He wants Washington to impose a nationwide ban on smoking in public, show more solicitude for Americans of modest means, and impose more protectionism, thereby raising the cost of living for Americans of modest means.



I haven't discussed Sarah Palin, but let there be no doubt, her endorsement of Carly Fiorina over Chuck DeVore left a bad taste with many a Tea Partyer.

Monday, February 21, 2011

Wisconsin, Bargaining Rights and SEIU Tactics

On Saturday, I questioned the wisdom of including "bargaining rights" in the package of reforms in Scott Walker's proposed legislation. Specifically, he has proposed that the right to bargain over benefits and working conditions would be removed from the current legal framework for government unions. Further, he is proposing an end to payroll deductions for union dues as well as instituting right to work, which ends mandatory union participation. Also he is proposing an annual vote of collective bargaining units to maintain certification as a union. The full list of proposals here. I was concerned that the proposed removal of bargaining rights would be seen as anti-democratic by the general public and harm the greater cause of getting union power reduced. This is a tactical not a fundamental concern. I don't think that there is an inherent right of collective bargaining for government workers in the same way that I believe freedom of speech is an inherent right.

The intervening days have brought new information to apply to the problem. First, Rasmussen reports that likely voters favor the governor over the unions by a 48%- to 38% margin in a national poll. (Wish it were a Wisconsin poll.) I was hoping the margin would have been higher, but given the loud and angry protests, this is a great sign that the public isn't ignorant of the underlying issues.

Second, Scott Walker was on the TV over the weekend and made the case that in Wisconsin, the state employees have some of the strongest worker protections of any state. What this means in practice, from my experience in the federal work force, is that it is almost impossible to fire workers except for the most blatant misconduct. Given such protections, where workers cannot lose their jobs, is it fair that they can then hold their employer hostage by striking? It creates a huge imbalance that allows the unions to blackmail the government into accepting binding arbitration where they tend to get their demands met. Explaining these facts could go a long way towards getting voters to approve of such a legal outcome.

Third, Rush Limbaugh today talked about the importance of being on offense, not defense. He brought the following to my attention. According to TPM:
State Senate rules require only a simple majority to pass a non-fiscal law. That means that only 17 Republican votes from the party's 19-vote majority would be needed to end the collective bargaining.

Republicans could strip the collective bargaining provision out of the budget legislation, pass it separately without Democrats present and get on with life. Further, this would remove the reason that the Democrat state senators are on the run, and get the budget passed as they might feel compelled to get back to their jobs. Republicans should take a page from Democrats and pass legislation when they have a majority. As much work as we did to kill Obamacare and rally the country against it, the bill is still on the books. The time to get our legislation passed is when we have the votes.

Ace of Spades has evidence of SEIU's tactics of intimidation (H/T: Temple of Mut). Trying to stop the Pledge of Allegiance? Really? The SEIU has every right to protest, that right is fundamental, unlike collective bargaining. But ever notice how when SEIU is involved, there is a potential for violence, and many times there is actual violence. Every Tea Party rally I have attended has had a police presence, and they act like they have nothing to do, because they don't have anything to do. Tea Party types don't even leave litter at their rallies. Meanwhile, lefty types who define themselves in opposition to the Tea Party movement are calling on their supporters to harass Tea Party coordinators who have nothing to do with so called "infiltration tactics."

I am rethinking my position. Like many conservative positions, there is often a "feel good" slogan used by the left in opposition that turns out to be incoherent when examined. Apparently, the country has decided that the direction of government requires the general public to pay more attention. Thank God.

Sunday, February 20, 2011

Protests the World Over



Protests in Iran, Morocco and China, as protests against repression circle the globe.

With protests now planned for China, it seems that no dictatorship is immune to the protests sweeping the world. The Middle East protests in particular show the power of our ideals of democracy. Concept of human rights and democracy are steadily taking hold even in the Arab speaking world. This has surprised me, but I am not the only one. It shows how little we know about the daily life of peoples throughout the world. Ultimately, I believe that democracy is the only answer to the question of peace. As long as whether there will be peace or war is in the power of a single man or ruling oligarchy, the incentives for war remain high. Further, opposition movements can tout their "purity" and use a platform of war, against Israel and the U.S. in this case, to bolster their memberships. Democracy causes governments to count the cost of war. Throughout history, war has been the great ravager of wealth. Most people understand this, which becomes a built in bias in the electoral system against those who would wage war. (I know there are contra-examples, but this is due to the delusion and promise by politicians that war can be fought on the cheap with benefits that will exceed costs, which is seldom true.)

But their is danger as well. A strong undercurrent of Islamic fundamentalism, long suppressed in some of the secular dictatorships could lead to more theocracies like Iran's with attendant threats to what little peace there is in the region. In such an event we would be trading a dictatorship friendly to our interests to one inimical to our interests. This is why those who profess to practice Realpolitik believe that we should prop up regimes like the Sauds' and Mubarak's. However, that is recipe for long term disaster, because no regime lasts forever, and the people eventually associate the U.S. with repression, not liberty. Why is America wildly popular in the former East Bloc nations? Because we consistently called for and pushed for their release from Soviet hegemony. The opposite is true today in Egypt.

However, I am still hopeful, we see that the public can learn from events. A war would be a disaster for Egypt for example and might take the wind out of the sails of antisemitism. The people there are unhappy with their economic condition, and need tourism to get their economy moving. There are powerful forces of self interest that might prevent a take over by an Islamic fundamentalist movement that is hostile to democracy. However, the fundamentalists seem the most willing to use violent means to seize power, reminiscent of the Bolsheviks in 1917. These are indeed dangerous times, war is by no means out of the question, as a result of these events. Our government needs to be prepared.

Saturday, February 19, 2011

Wisconsin and Bargaining Rights - A Bridge Too Far?

Protesters by bused in union supporters in Madison, WI with attendant violent rhetoric and imagery remind us that those currently getting the largess of our tax dollars will use those dollars to maintain the status quo. Dean has coverage here and here. The LA Times is reporting that Tea Party supporters have joined the counter protest, telling the public employees "Do Your Job." This is a watershed moment for the Tea Party, we have said that government employee unions are ruining the ability of state and local government to deliver basic services. This is why removing automatic pay check deductions for union dues is important, as is passing right to work legislation.

But I question if going after collective bargaining is the smart move, as it has energized the opposition, and made it look to the public as if some fundamental right is being violated. During the 1980s when Lech Walesa was organizing Polish workers to fight back against Soviet hegemony, we applauded his efforts and part of our criticism of communism was that workers lacked the right to organize independent unions. Granted, public employee unions are in a bit different category than those in the private sector, but that seems a difficult case to make. The most important goal should be to break their power to continue to elect politicians who do the bidding of the union overlords. To do so, right to work and no paycheck deduction for union dues are sufficient to deprive them of the cash needed to influence elections.

The proposed removal of bargaining rights seems secondary and not efficacious towards achieving the main goals of the Tea Party. It has energized the unions, and brought them some measure of public sympathy. I would propose that Governor Scott Walker take that issue off the table and propose a statewide referendum on the issue. It would also have the effect of putting the unions on defense, having to spend millions to defeat such a measure. In the interim, the state of Wisconsin would be putting money in workers pockets and taking it out of the hands of union bosses by removing the pay check deduction.

If I am wrong with this analysis, I would like to hear from other Tea Party organizers.

In fairness, hear is what the Governor himself has said (in context of his previous experience as Milwaukee County Executive):
Walker argued that collective bargaining was the biggest hurdle to balancing the budget and that unions had little incentive to give ground because they almost always prevailed in arbitration. He said that the cuts he proposed were intended to prevent layoffs and accused union leaders of being uninterested in compromise.
Perhaps a better answer is to remove binding arbitration. Meanwhile, going for the jugular seems to have won the Governor a nice set of concessions.

Wisconsin public employees have agreed to the financial concessions pushed by the governor in exchange for retaining their basic organizing rights, Democratic Sen. Jon Erpenbach said in a statement released Saturday.

“I have been informed that all state and local public employees — including teachers — have agreed to the financial aspects of Governor Walker’s request,” Erpenbach said. “This includes Walker’s requested concessions on public employee health care and pension. In return they ask only that the provisions that deny their right to collectively bargain are removed. This will solve the budget challenge.”

He is standing firm. I really like him. Please take my new poll.

Friday, February 18, 2011

Change You Can Believe In

From the Skeptical Inquirer, but I can't find the exact link. Seems like something Temple of Mut would be down with.

Weekend Music Chill

We lived on the western side of Puget Sound for few years in the early 1990s. During this time the Supersonics were a decent team, but lost in the first round of the 1995 playoffs to a clearly inferior Laker team that featured Nick "the quick" Van Exel at point guard and Vlade Divac at Center. It was sweet to hear the wailing on Seattle radio.

Also, much heard on the radio was the explosion of the Seattle or grunge sound. Two of my faves from the era are featured below.




Bay Bridge Poll Closed

The poll on whether to rename the San Diego-Coronado Bay Bridge for Ronald Reagan is closed. An almost majority, 50%, favored keeping the name the same for the sake of tradition, only 20% favored making the change. I voted "not sure," for the record. Time to look for a freeway to name after Reagan, which seems to be more our tradition.


Regardless, all my readers seem pretty fond of the former President and great American.

Over at sdrostra.com Vince Vasquez is claiming momentum for the change.

Thursday, February 17, 2011

Wisconsin Update - The Battle Against our Union Overlords Has Been Joined

Wisconsin has become ground zero in the battle over outsized union pay scales for state and local government workers. The latest developments have been widely publicized, with Wisconsin State Senate Democrats fleeing to Illinois to avoid posting a quorum that would result in a vote on measures to strip government unions of collective bargaining rights, except over pay. Dean and Temple of Mut have some great coverage, which I will not repeat, so please take a look at their updates. But fleeing the state, when you get paid to do a job?

Meanwhile, in Ohio another front has opened up, where the state Senate is considering SB-5 which would:

- Eliminate collective bargaining for all state workers, including unionized faculty and staff at Ohio colleges and employees of higher education institutions.

- Eliminate salary schedules and step increases and replaces them with a merit pay system.

- Allows public employers to hire permanent replacement workers during a strike.

- Weaken binding arbitration for police and firefighters, who cannot strike.

- Limit a local union’s right to bargain for health insurance.

- Strip teachers of the right to pick their classes or schools.

- Extend the time a factfinding panel for making end-of-contract recommendations from 14 to 30 days.

- Require union employees to pay at least 20% of their healthcare costs.

It's time for the Tea Party to step up and support those lawmakers that are making these changes which will reduce the power of the public employee unions to dictate terms of pay and compensation.


The unions are out in full force opposing these changes, good to see our side out there as well.

In California, I believe we should go for a ballot initiative to make the same changes. Even if it lost, it would drain unions of needed resources to campaign for leftists in 2012.

Wednesday, February 16, 2011

Odds and Ends

Lorie Zapf makes good on another campaign promise to focus on ways to strengthen public safety without increasing spending. She calls for changing the working hours of firefighters in recognition of the fact that there are almost no calls for firefighting between midnight and 7:00 a.m.
As the City wrestles with ending the brownouts at two engine stations, the City should consider staffing one engine with normal 3/24 hour shifts and the second engine should be alternatively staffed with firefighters who are on 4/10 hour shifts or some similar type of alternative staffing. The city could leave the second engine idle from the hours of midnight to 6 a.m. on weekdays and 2 a.m. to 8 a.m. on weekends.
Stand by for major gas from the firefighters union, as this would cut into overtime pay, as I understand it. (Looking for anyone with more knowledge of union staffing rules to correct me, if necessary.)

Darrell Issa is the new bĂȘte noire for liberals, because he, gasp, wants to investigate wrongdoing by government officials. The left's response, full on smear attack, of course, with professional smearers. We should expect nothing less.

Walmart is a global force for good, so how do you explain Boston Mayor Tom Menino's unrelenting hatred of an organization that deserves the Nobel Peace Prize (it's been awarded for far less than Walmart has accomplished.) From Michael Graham:
Effete Boston liberals hate Wal-Mart, the unions hate Wal-Mart, and so Menino does, too. And if that means poor families struggle to find work or buy food, well .  .  .

Voting Present - As Usual

President Obama doesn't lead. There, I said it. I don't know if he can't lead or won't lead, he just doesn't. He threw health care reform over the fence to Nancy and Harry and look at the execrable result. It goes back to his days as state senator where the record showed that he liked to vote present, like 130 times. The latest case in point is his budget. After getting pilloried by both left and right alike for its failure to make any significant progress against the debt, Obama held an "emergency" press conference this morning.

President Barack Obama defended his budget proposal Tuesday against criticism that it was too timid, as a bipartisan group of senators moved on their own to address the long-term spending issues the White House budget ducked.

Mr. Obama said he was confident the political parties would come together to find a bipartisan way to rein in the growth of Social Security and Medicare, and to overhaul the tax code.

But speaking at a news conference, he offered no details about what measures he could support, or about how talks between Republicans and Democrats might come about. He said he expected these matters to be addressed in the coming months.

That's right, he had zip, nada, zilch to say about what he would even support, much less what he would push for.

From Stephen Moore:

The overarching problem for Team Obama is that the budget contains trivial cost savings. In the first two years the deficit is actually worsened. Democratic deficit hawks are upset about the total absence of savings in Medicare, Medicaid and Social Security. Mr. Obama explained his whiff on entitlement reform by saying it should "be a negotiation process" and that Republicans and Democrats need to get "in that boat at the same time so we don't tip over." It was hardly Harry Truman saying "the buck stops here."

Tuesday, February 15, 2011

My Newest Hero - UPDATE

. . . after Mutnodjmet is Wisconsin Governor Scott Walker, pictured at left in a photo from his successful gubernatorial campaign. He has taken aim at the public employee unions in his state, and outrage has ensued. If only Jerry Brown would follow suit.Walker has taken the sensible stance that public employee unions should have limited bargaining rights and should contribute to their own pension and health plans. According to the American Federation of Teachers web site his proposals include:
  • Limiting collective bargaining to the base pay rate; and requiring approval by referendum of any wage increase that exceeds the Consumer Price Index .
  • Requiring an annual vote of collective bargaining units to maintain certification as a union.
  • Rescinding the right of faculty and academic staff in the University of Wisconsin System to collectively bargain.
  • Prohibiting employers from collecting union dues through payroll deduction.
  • Increasing the amount state, school district and municipal employees pay toward their pension benefit under the Wisconsin Retirement System. State employees, for example, currently contribute about 0.2 percent of their gross pay, says Art Foeste, chair of AFT-Wisconsin's State Employees Council. Under Walker's proposal, workers would pay 50 percent of the monthly contribution amount. For 2011, Walker estimates the contribution would be 5.8 percent of gross salary. Foeste, a member of the AFT Public Employees program and policy council, says the increase "would be equivalent to a more than 6 percent pay reduction."
  • Upping state employee health insurance premium contributions. Currently, employees pay approximately 6 percent of the annual premium, or $78 a month for the family plan. Walker wants to increase worker contributions to "at least 12 percent of monthly premiums."
Sounds like a great template for states across the country. Unbelievably, the AFT web site describes these measures as a sign of disrespect to the workers. I know of no other retirement plan where workers contribute a paltry 0.2% of their pay for their own retirement and only 6% of their health insurance premium. In return for concessions, the governor has said their will be no furloughs (layoffs), and still the unions are stirring up huge trouble. Here is a picture of union protests from the WSJ:



And let's not forget the real import of the plan to reduce union power and therefore curb state deficits: it might harm Democrat electoral chances.

Proposals in Wisconsin and other states have "great ramifications" beyond the damage to union coffers and membership, said Gerald McEntee, president of American Federation of State, County and Municipal Employees, the nation's biggest public-sector union.

Unions have told the Obama administration that the state fights could affect the 2012 presidential election by draining unions' political resources, especially in states like Wisconsin and Ohio. "I think it can put him in some [political] danger," Mr. McEntee said of the president.

Good.

Cross posted to sdrostra.com. Don't forget to take our poll on renaming the Coronado Bay Bridge after Ronald Reagan, at right.

UPDATE

sdrostra.com commenter Michael A. Schwartz provides the following additional love for the Packer fan who is the governor of Wisconsin.
Gov. Scott Walker has also said he will sign legislation to turn Wisconsin into a “shall issue” state meaning that all law-abiding, sane, trained citizens will be able to obtain a concealed weapon permit for the purpose of self-defense. Wisconsin will join the 40+ other states that will choose not to trample Second Amendment rights. (California NOT being one of those 40+ and San Diego County having one of the worst track records in the state when it comes to issuing CCWs)

Monday, February 14, 2011

Are You Kidding Me?

The President's irrelevant budget submission to the Congress for fiscal year 2012 is a plan to increase the national debt another $13 trillion over the next ten years, almost doubling its current size. So much for this from the state of the union address:
We need to take responsibility for our deficit and reform our government. That's how our people will prosper. That's how we'll win the future. (Applause.) And tonight, I'd like to talk about how we get there.
You used to have to search years back to find youtube video of Obama contradicting himself, this must be a new record, less than a month.

The real issue is the entitlement spending; which we still don't have the stomach to touch. I doubt that the Republican budget will reduce the size of the debt either, although there should be hell to pay if it doesn't attack it far more aggressively than Obama. The real battle lines are over finishing out the current fiscal year and the debt ceiling. The Republicans should be able to get some legislative movement in their direction if they are willing to use the debt ceiling as a negotiating tool. Let's see if our guy is up to the risk and the challenge.

When Free Really Isn't

Imagine a valuable service, that is being given away for free, that people are willing to travel across international borders to pay for the privilege of getting that same service elsewhere. What horrible miscegenation of economics would this be? If you guessed universal health care as practiced by our Canadian friends, you would be correct. On a tip from Carpe Diem, I read some of the following in the Victoria Times Colonist (got to love the old school newspaper name)

Cross Border Access has been helping Canadians book appointments and negotiate fees for a variety of procedures in upstate New York since May. . . Among his competitors is B.C.-based Timely Medical Alternatives — one of the first and most successful brokers — which makes its money by charging a mark-up and has recently waded into the controversial area of paying physicians for referring patients. “A lot of our business comes from doctors who refer their patients to us because their hands are tied as far as being able to get them surgery,” he said. “It’s in the patient’s best interest that they get speedy surgery almost always and ... we’re happy to pay for that.” Baker said he’s helped thousands of people secure treatment since opening for business in 2003, most of them from Alberta, B.C., Ontario and Saskatchewan. Noting business last year has more than doubled over 2009, he’s not surprised to learn another company has emerged with a new twist on the medical brokerage model, but insists his service is tough to beat.
I believe this is a cautionary tale for Obamacare. With or without the individual mandate, the system is designed to create a demand health care that will not be met because prices will not be allowed to rise to remunerate those who are providing medical care. Simply put, Obamacare tries to defy laws of physics as immutable as the laws of physics, increasing the demand for a service through subsidy while imposing price controls and expecting the delivery of more of the service. A secondary market in medical services is bound to spring up, prompting another liberal call for more "reform" of a system that they have already poisoned.

While the argument on the constitutionality of the individual mandate is important because a favorable ruling would help preserve our liberties, I actually don't think it changes the calculus of the PPACA significantly. The penalties are set too low with too little enforcement to be effective anyway. The real issue is whether the Supremes will give Congress a pass on severability, even though it was not placed into the original law. Highly likely they will, based on past behavior.

That means that the current Congress must start the repeal by starving the commissions and bodies necessary to implement the bill. Darrell Issa must investigate chicanery like moving some of the organizational locations of commissions into unrelated parts of the bureaucracy associated with medicare to protect them from defunding. The states should refuse participation in the exchanges. Karl Rove has an interesting article in the WSJ about how Republicans can kill most of the rest of the legislation without 60 Senate votes after winning the Presidency and the Senate in 2012. They should campaign on this issue.

For example, under reconciliation the Senate Budget Committee could instruct the Senate Finance Committee to reduce mandatory spending on insurance subsidies and Medicaid expansion. These two items make up more than 90% of spending in ObamaCare. All the changes from all the committees are then bundled into one measure and voted upon. Because reconciliation is protected by the rules of the budget process, it doesn't take 60 votes to bring it up and it requires only a simple majority to pass.


Sunday, February 13, 2011

Too Much CPAC

I'm low on blog topics today, because I spent too much time pouring over reporting and analysis of the recently concluded CPAC. I came to the same conclusion as MacBeth "And then is heard no more: it is a tale Told by an idiot, full of sound and fury, Signifying nothing." I quoted extensively from Mitch Daniels speech yesterday at CPAC, but the straw polls and all the other hoopla and analysis strike me as neither predictive nor prescriptive.

It reminds me of B-Daddy's Book of Management Rule#2: The commodity in shortest supply is management attention. Better to pay attention to the key problems and issues and not fritter one's time on asides. Especially, when that frittering results in no blog output. Which brings me back to Mitch Daniels. I think his real strength is that he recognizes what is important. He has a great record on abortion, for example, but thinks today is not the day to push that issue. Not that abortion isn't important, but is it more important than the debt and regulation strangling the country? I think not. Further, not all victories come purely from the ballot box, and it occurs to me that abortion is an issue best won over the long haul by creating a climate whereby it becomes morally repugnant. But the debt and regulation issues can only be solved through the legislative and executive processes.

Even the President appears set to announce budget cuts, even while he promises "investments" in green jobs, shiny trains,... snooze. We'll see how he does. For his own political survival, he needs to produce something, or he is destined to a single term. Unfortunately, he might pull off re-election.

By the way, have you ever noticed that the technologies loved by the left seem to constrain our choices?

Saturday, February 12, 2011

All In for Mitch Daniels

I am endorsing Mitch Daniels for President. I read and listened to most of Mitch Daniels at CPAC, Hat Tip: HotAir, where the entire text and a link to the video can be found. I was blown away. He walks the walk, has the right emphases, and slams Obama by comparison without displaying any mean spirit. Let me be clear, this is not a Tea Party endorsement, only my own. But for my Tea Party readers, how can you not like what this man says.

Some key quotes.
Spending: We believe it wrong ever to take a dollar from a free citizen without a very necessary public purpose, because each such taking diminishes the freedom to spend that dollar as its owner would prefer.

Health Care: We designed both our state employee health plans and the one we created for low-income Hoosiers as Health Savings Accounts, and now in the tens of thousands these citizens are proving that they are fully capable of making smart, consumerist choices about their own health care.

The Debt: I refer, of course, to the debts our nation has amassed for itself over decades of indulgence. It is the new Red Menace, this time consisting of ink. We can debate its origins endlessly and search for villains on ideological grounds, but the reality is pure arithmetic. No enterprise, small or large, public or private, can remain self-governing, let alone successful, so deeply in hock to others as we are about to be.

Education: . . . we intend to become the first state of full and true choice by saying to every low and middle-income Hoosier family, if you think a non-government school is the right one for your child, you’re as entitled to that option as any wealthy family; here’s a voucher, go sign up.

Tax code: . . . it’s time we had, in Bill Simon’s words “a tax system that looks like someone designed it on purpose.” And the purpose should be private growth. So lower and flatter, and completely flat is best. Tax compensation but not the savings and investment without which the economy cannot boom.

Regulation: The regulatory rainforest through which our enterprises must hack their way is blighting the future of millions of Americans. Today’s EPA should be renamed the “Employment Prevention Agency.” After a two-year orgy of new regulation, President Obama’s recent executive order was a wonderment, as though the number one producer of rap music had suddenly expressed alarm about obscenity.

Entitlement reform: We know what the basic elements must be. An affectionate thank you to the major social welfare programs of the last century, but their sunsetting when those currently or soon to be enrolled have passed off the scene.

Our Core Belief: All great enterprises have a pearl of faith at their core, and this must be ours: that Americans are still a people born to liberty. That they retain the capacity for self-government. That, addressed as free-born, autonomous men and women of God-given dignity, they will rise yet again to drive back a mortal enemy.

The whole speech is worth a listen, even if a little long. In this speech has captured both the historic context and a master of the details necessary to restore our nation. I know that he has a reputation for being an establishment Republican, but his record in Indiana and the policy positions he espouses make him the best candidate, in my opinion. I close with a great video, (H/T Dean and Left Coast Rebel):




The picture of Mitch Daniels with his Harley is posted to ensure that he gets Mrs. Daddy's endorsement as well.

Fall of Mubarak

I don't have much to add on the transition of Egypt to military rule. But it is a very dangerous time for our interests, which are served by a transition to democracy. However, I don't know that a true democracy will be the outcome in Egypt. There are many examples throughout history of democratic revolutions devolving into brutal dictatorships, from France in 1789 to Iran in 1979. Egypt's army is well respected, but the groups that organized Mubarak's defeat aren't going to be appeased unless they gain power.

Friday, February 11, 2011

Weekend Music Chill

Mrs. Daddy is on a road trip this weekend, so it got me thinking about my favorite road trip themed music. Here are two of my favorites.



That Shiny New City Hall - The Financial Analysis


In a previous post on the folly of building a new City Hall, sdrostra.com commenter Phil Rath called me out on the issue of the return on investment of the new building. He linked to a Financial Analysis by the Center City Development Corporation, Implementing Downtown’s Redevelopment on Behalf of the City of San Diego [their tag line] and chides for me not reading it before commenting on the advisability of building a new civic center. Fair enough. Frankly, I was not aware that such a document existed. Mayor Sanders did not refer to this study when he complained that the public was unaware of the benefits of the new building. But thanks for sharp readers like Phil, who knew more or dug deeper into the issue and pointed out relevant material of which the author was unaware.

However, after briefly perusing the supporting documents, I stand by my original assertion that the new City Hall should not be built even though the documentation in the financial analysis purports to support that conclusion. First, and most importantly, the time frame for which the cost of operations is analyzed is 50 years. Under this scenario, building a new structure is the most economical option. In my view, 50 years is too long a period because too much can change in that time frame. 50 years ago was 1961, think about how much has changed since then. The internet wasn't even an idea then, for example. The City Hall development proposes to house 3,000 city employees. I would hope that we could find ways to significantly shrink that work force over the next ten years, much less the next 50, so planning an edifice that leaves the size of government the same merely perpetuates our current problems.

The study also admits that over a 15 year capital planning period, the cost of maintaining the current facilities are less:
In the first 15 years, scenario 5, which proposes no renovation and has the City absorbing latent risk of current facilities, is the lowest cost alternative to the City at approximately $381 million.
Now all of this assumes that the supporting documentation is adequately written. Since I am by nature a skeptic, the first document I started reading was the peer review of the financial analysis written by independent auditors, in this case Ernst & Young. Here are some objections they made to the analysis. Here are some relevant quotes from that review:

Ernst & Young believes that certain assumptions utilized by JLL are not supported by current market evidence or are not documented in the JLL Reports. Some of the assumptions have changed over the past nine months due to declining market conditions. It should also be noted that EY found market support for many of JLL’s assumptions.

EY identified certain JLL cash flow assumptions which were not supported by current market evidence or were not documented in the JLL report.

Office rental rates have declined since the JLL field work was completed in early 2008. We believe their growth rates over the near term are too aggressive.
EY is Ernst & Young. JLL is Jones Lang LaSalle, the company that prepared the analysis.

Bottom line for me is that the financial analysis is not adequate for such a large capital outlay. Further, the city incurs significant risk when it owns its own buildings; a closer look at long term lease options seems more appropriate. The 0ther advantage of leasing office space is that it will continue to push efficiencies in the city government. Every reduction in the number of employees will result in decreased office costs. Encouraging more telecommuting and other space saving measures will result from having to pay for every square foot of office space consumed. It seems that a decision to delay building a new City Hall is the wisest course, given the insufficient case for a $294 million capital outlay.

I also question why the city isn't pursuing a public-private venture, where by a private firm builds the new city hall, and the city proposes to lease it on a fixed schedule of increases tied to the rate of inflation, with the option of reducing the amount of space leased, which could be recycled to the private sector. Such an arrangement would offload the risk, and frankly cause the private firm to keep construction costs under control. Further, the city would not have to make the capital outlays that we lack funding for anyway.

Thursday, February 10, 2011

What Ails Us - Part II

Would he rather work in America? Does our freedom still attract? Why do we need to import this man?

In his State of the Union speech the President alludes to the challenges facing the nation due to globalization and rightfully calls on our nation to rise to the occasion. He then proceeds to lay out small beer as to how to meet the challenge, with government "investment." He skirts the real issues facing our nation. He share the left's fascination with 19th century technology - trains, as if that's the wave of the future, our "sputnik" moment. The fact is, government investment is not what made this country great, nor will it cause us to meet the current challenges. Our problems are not easy to solve, but they are simple to diagnose.

Education

Our schools are being strangled by 19th century methods of instruction and 20th century unionism. In spite of computers and multimedia technology, little has changed in our schools curricula for over 100 years. We have not applied scientific knowledge about brain function with new technologies to change the way our children learn. Why? Because innovation is stifled by massive government control of our schools and union resistance to any innovation.

But just like telecommunications innovation didn't really start until the AT&T monopoly was broken up, so education must be freed of government control. But without government standards, we can't guarantee a quality education for our kids, some argue. Really? The inner city schools of our country have already lost a generation that we may never retrieve. Internationally, kids taught with the same techniques that we have used for decades, but with more intensity, are of course doing better on standardized tests. I don't think those tests necessarily prove that any particular group is more ready to face new challenges, because the tests are necessarily backwards looking. But if they are the only measure, what does it mean that we are falling behind? Innovation will only come from competition. Time to make huge changes to our school system.

Human Capital and Freedom (Personal and Regulatory)

Traditionally, many of our greatest innovators have been immigrants. Why do they come to this country? It isn't because of our love of diversity, but because our way of life, with its greater freedom that so many foreigners have come to call Americans home. Further, the immigrants are much more likely to start up new businesses than the native born. Even now, our nation is still much less regulated and less corrupt than most of the rest of the world. It means that entrepreneurs can keep the fruits of their labors. It means that immigrants won't be jailed for criticizing the President, unlike Russia for instance. Immigrants with drive and education are a source of strength.

To continue to attract immigrants, our regulatory regime must be simple and understandable. This administration is moving in the wrong direction, granting the Secretary of HHS vast new law-making powers under Obamacare, for instance. I grant that some regulation is desirable to prevent harm from coming to individuals, but our approach is out of control. We opt for the complex when the simple will do. Some easy examples:
  • To deal with the less than 15% uninsured, we overhaul everyone's health insurance, rather than just dealing with that group.
  • We perform elaborate "stress tests" rather than just saying the larger the bank, the larger its required capital reserves.
  • We license professions, like those who braid hair, for which there is no rational basis.
  • We propose an elaborate cap and trade system, rife with potential fraud (or actual fraud in Europe) rather than a straightforward carbon tax.
Immigration Policy

We desperately need skilled immigrants to counter the deficiencies in our education system and to balance our demographic profile. But because we haven't secured the border we actually have large numbers of unskilled workers as our actual immigrant population. You can argue whether low skilled illegal immigrants a net positive or not, but who would argue that we wouldn't be better off if those were replaced with engineers with advanced degrees or doctors?

The failure of our immigration policy prevents a rational discussion about opening up programs like H-1B, that would increase the inflow of accomplished individuals. Further, by increasing these inflows, we would halt outflows of jobs due to offshoring, because it makes more sense for the other members of project teams to be colocated with the most productive members of the team.

That's most of it. I also agree with KT that lack of intact families is an even more fundamental cause of our problems, but that isn't tractable by government policy. But the President didn't really address any of it. Judging by the snoozefest, no one was excited by trains either.