Quote of the Week

Comes from Dean at BwD, commenting on the confluence of racialism, radicalism and re-distributionism from the likes of La Raza:

However, the larger backdrop is a set of people who through racial guilt, intimidation and victimization are waging a war of "social justice" against those who hold dear the rule of law, property rights, freedom of speech and a belief that this country is not great because of its diversity but rather this country is diverse because of its greatness.

Thanks Dean, for putting it in perspective. I tend to be a little tone deaf to the political undercurrents of cultural phenomena, so I have mostly ignored controversies like the kids kicked out of school for wearing American flags on Cinco de Mayo (which Dean also skewers.) I prefer to examine issues through the lenses of economics, constitutionality and law. But the cultural phenomena are important, because they are symbols of a broader struggle and capture the public attention and imagination in ways that pure policy discussions do not.

A couple of asides on this controversy. First, I thought kids were supposed to go to school to learn. What the heck kind of dress code allows display of any logos? My youngest son's school has a dress for success code that bans all logos, advertising, of all varieties. That school should prepare students for participation in the work force is a key theory of the school's director. He has a PhD in education, but displays heaps of common sense anyway.

Second, the fuss seems a little overblown. If one school out of hundreds of thousands has a problem on Cinco de Mayo, considering all of the current controversy over illegal immigration, then we're actually doing pretty well. Kudos to the school board, who didn't back the vice principal on this one as well. One guy made a mistake, let's all move along. A statement from the district:

The district does not concur with the Live Oak High School administration's interpretation of either board or district policy related to these actions.

Exactly, if you can wear a Mexican flag, you can wear an American one. Stupid policies have to be content neutral in this great land of ours. Just one more reason to shut down the public school system and fully privatize the provisioning of education.

There Is Still A Difference

Mark Steyn had this to say about the incident in Quincy video'd above:

The same day that Mayor Newsom took his bold stand, I saw a phalanx of police officers doing the full Robocop — black body armor, helmets, and visors — as they marched down the street. Goosestepping? No, it’s actually quite hard to goosestep in those steel-reinforced kneepads. So just regular marching. Naturally, I assumed they were Arizona state troopers performing a routine traffic stop. In fact, they were the police department of Quincy, Ill., facing down a group of genial tea-party grandmas in sun hats and American-flag T-shirts. They were acting at the behest of President Obama’s Secret Service, who rightly recognized a polite knot of citizens singing “God Bless America” as a clear and present danger to the republic.

If I were a member of the Quincy PD, I’d wear a full-face visor, too, because I wouldn’t be able to look myself in the mirror. It’s a tough job making yourself a paramilitary laughingstock.

And there in lies the difference. In the U.S. peaceful demonstrators can still embarrass jack booted paramilitary types into backing down. We know how things ended in China. (No para about those military tanks in Tiananmen Square.)

Times Square Bomber and the Constitution

I have seen some commentary on the right stating that the Times Square Bomber should be handed over to a military tribunal. John McCain, most prominently, seemed to be saying that the suspect, Faisal Shahzad, shouldn't have been given his Miranda rights. The linked article suggests a similarity with the Christmas day bomber, Umar Farouk Abdulmutallab. This is a dangerous road for conservatives to take. Through incompetence or not, Shahzad was a U.S. citizen, who committed his crime on U.S. soil. In my view, this makes the issue a police matter, even if there are international connections. A treason charge wouldn't change his legal status and might be appropriate, but the constitution is clear that until convicted of treason, the suspect loses no rights.

The first danger from this approach is that it undermines pretty decent arguments for military tribunals for foreigners we capture as part of the war on terror, or whatever we are calling it. Conservatives will be seen as willing to suspend the rights of anyone and feed the suspicion of the some that we are closet fascists. We need to clearly make the case that foreigners lack the rights that U.S. citizens retain, in order to maintain public support for a realistic approach against foreign fighters. By lumping all categories of terrorists together, we actually tie the hands of our military overseas, because legal issues become overwhelmingly intrusive on the battlefield.

Even more importantly, we must respect constitutional safeguards if we are to remain a free people. As Glen Beck pointed out last night, the Constitution matters most when it is most inconvenient. Imagine for a moment that you attended a rally that called for the repeal of Obamacare and generally lambasted government excess in general. Of course, a couple of kooks might show up, LaRouche followers perhaps; who start advocating the violent overthrow of the government, in some sort of black hat op. If you were rounded up by the police and charged with terrorism, just because you were there, wouldn't want your rights of habeas corpus, Miranda, and to an attorney to be respected? Our constitutionals rights form a bulwark against tyranny that is perhaps more fragile than we believe.

Conservatives have been sloppy over the last decade on this issue. Even though I supported the military tribunal process while Bush was President, I did not support his extra-legal approach, abrogating powers not granted to him by law or the constitution. Same for foreign wire tapping; I support the effort, if codified into law and given judicial oversight. Our case for our methods are undermined if we fail to support the rule of law and conformance to the constitution. One of the strengths of argument we have against the over reach of the current administration is our adherence to constitutional principles. Let's not fritter away that strength. Go ahead and Mirandize Shahzad.

Addition to post: Volokh Conspiracy, as usual, has a decent legal analysis of the issue. I am kicking myself for not reading it first. They make the great point that the FBI did not need to Mirandize the suspect under the public safety exception if they needed to get further information about other plots.

Greek Solution - UPDATE

This so obvious, that it won't happen, but I can't believe it took me until today to figure it out. The whole reason for the crisis is that the Greeks can't slowly default by monetizing their debt (i.e. devaluing their currency thereby inducing inflation) the traditional deadbeat and third world way out of this kind of jam. This is because they use the euro as their currency and can't print more. Further, their deficit and debt ratios exceed the thresholds imposed by the treaty that admitted them to the union. Since they lied about their finances, violating the treaty, the EU should just expel them. Then they can do whatever they like. Since that will also put them outside the EU, it will also staunch the bleeding in the EU markets. Further, it will have a salutary effect on any other member nations not getting their act together.

Of course, this won't happen, because the whole world has adopted the paradigm of TBTF.

UPDATE

The Wall Street Journal, (the nation's real newspaper of record, IMHO) addresses the difficulties of my plan. But at least it shows that it is being considered.

From a legal perspective, there is no mechanism to force a country out of the currency area, European Central Bank legal counsel Phoebus Athanassiou argued in a December 2009 working paper. And while the Lisbon Treaty introduced a means for states voluntarily to withdraw from the European Union, it was silent on leaving the euro. Ultimately, that means the only way a country could leave the euro would be to quit the EU, too, according to Mr. Athanassiou. That raises the stakes far higher, since it would affect the rights and obligations of citizens and companies.

Practically, too, leaving the euro would be extremely difficult. Beyond the huge logistical problems in introducing a new currency and untangling the national central bank from the Euro system, a euro exit followed by a devaluation would likely leave a country with a mountain of unserviceable euro-denominated debt, leading to major legal wrangles, mass personal bankruptcies and huge losses for creditors.

Doesn't change my position, but it does show what it would take. Exit question, will the Greeks themselves decide this their best option?

Stupid Headline of the Week

This one is too easy:

Euro market meltdown resumes despite Greek deal

How about because of the Greek bailout? How about what did you expect? The Greeks have shown neither the willingness nor the ability to figure out how to deal with their debts and structural deficit. That 110 billion euro promised? Might as well flush it. And the reason the euro market is melting down? Clearly more bailouts are on the way; in for a dime, in for a euro.

The reporting in the linked headlines isn't near as bad as the editorial writing that came up with the headline. Some tidbits:

In Athens, striking public workers challenged Greece's 110 billion euro ($146.5 billion) bailout-for-austerity deal, starting a 48-hour national strike that shut down ministries, tax offices, schools, hospitals and public services.

While I can get behind the whole tax office shut down; you have to ask yourselves, are these people insane? Where do those public workers think their salaries come from? I guess they don't think. Further, just because there was a bailout, don't think default isn't in the cards anyway. Look who's been signed on to help the Greeks:

News that Greece has appointed debt restructuring specialists Lazard to provide "general financial advice" fueled speculation that some form of orderly rescheduling or payment moratorium may be likely, despite vehement official denials.

Finance Minister George Papaconstantinou told Reuters after news of the Lazard hire: "Any form of debt restructuring is out of the question."

The denials are certainly convincing to me.

And if you thought this was an amusing little comeuppance for uppity euro-trash socialists, guess who's also footing the bill. From W.C.'s column today, quoting John Mauldin of Investor's Insight:

Let me start this week's Outside the Box by venting a little anger. It now looks like almost 30% of the Greek financing will come from the IMF, rather than just a small portion. And since 40% of the IMF is funded by US taxpayers, and that debt will be JUNIOR to current bond holders (if the rumors are true) I can't tell you how outraged that makes me.

To quote W.C., welcome to bailout planet baby.

Here is the picture accompanying the article:


Exit question, why a sign in English and why the commie hammer and sickle? OK that's two questions, but somebody help me out.

Making it Worse in Greece

KT has two updates, here and here, on the Greek bailout situation. Greek unions' violent protests cut off tourists from their hotels. KT points out that one of Greece' main economic pillars is tourism. He also points out the inevitable failure of the bailout as the the Greeks haven't really shown the will to make the changes needed to mend their balance sheets. Further, they've been lying so long, who knows if the approximately $150 billion will be enough.

Tim Cavanaugh at Reason Hit & Run, shows how the bailout is already making things worse. A few of the juicier quotes:

Second, while German Chancellor Angela Merkel is taking credit for bringing in International Monetary Fund support and forcing some tougher fiscal-cleanup conditions on Greece, the bailout does not address the counterproductive elements in Greece's own so-called austerity package, including currency controls and cash-transaction limitations that will only slow the country's economy.
...
Fifth, Marshall's [an Asset Manager] doubts are well founded. As they have shown throughout this crisis, Greece's strong and ancient socialist institutions can only respond to market discipline with violence.

Compare this video of lefty Greek protests with any Tea Party event:

Government Monopoly or Private Monopoly - Updated

One of the implicit argument being made by Democrats is that if we're going to have monopoly or heavy regulation over the delivery of a service, then government might as well deliver it, because it will be cheaper and not tainted by evil profits. This has been applied to the take over of student loans and is also implicit in the argument for "single payer" health insurance. Never mind that we could pay for the nation's health bill for about two days on the profits from insurers. However, a personal experience of my wife's brings home the fallacy of this argument. Before reading the rest of this post, you might want to check the background at B-Daddy's Other Blog about Mrs. Daddy's horrible encounter.

We deal with any number of private monopolies in our every day lives, and while they aren't particularly responsive or innovative, they never seem to raise the bar for contempt of their customers the way the DMV and various branches of the City government seem to. My power company is SDG&E. When I had an issue with a gas main, they were very helpful in sending someone out to check it. They encourage energy savings with rebates and seem genuinely happy to answer my calls. My cable provider, no longer quite fits the category of monopoly, with competition from DSL and satellite, but even when they were, they were helpful in setting up new services and repairs.

Meanwhile the bureaucracy of city government just seems to delight in making our life harder with every encounter. Whether it's the inspector for my pool, telling me something that I later proved was false, or the inability to provide a garbage can in a reasonable manner, or heaven forbid if you don't follow just the right procedures at the DMV.

So this is why I absolutely recommend voting against a guy like Steve Hadley in the District 6 election. If you think that government can deliver services to citizens/customers better than the private sector, you need more trips to the DMV.

UPDATE:

Fortuitously, Richard Rider has a story about a bizarre encounter at the post office in Oceanside that only reinforces my point. Rider was trying to get some information about what would happen if he dropped his tax return after 8:30 p.m.. (Even if UPS were a monopoly, I would never expect them to act in the manner described.) Some excerpts:

The first guy I spoke to outside almost immediately went postal on me – in that he was openly hostile, derisive and bullying. He would not allow me to say more than five words at a time.

He proudly announced he was a shop steward and waved his badge in my face. You could see why he was elected steward – he was a bantam rooster, only not quite as bright.

Rider makes the point at the end of the article that this behavior has not been the norm when dealing with postal employees, but even so, in the private sector, anyone who was so combative with a customer would probably lose their job.

Illegal Immigration Incentives

An anonymous commenter got me thinking about further analyzing the illegal immigration situation in term of the incentives of the different players. First the comment was in response to a complaint I had about the health care bill.

>"For example, on health care, wouldn't it have been good enough to just subsidize the lower income brackets to purchase health care and guarantee portability so that pre-existing conditions can be covered? " (from my post) Of course it would, but when was the last time you saw someone elected on such a platform? Either you are for radical reform, or you are against any reform. Pick your team. The blue team loves big government, The red team loves big business. Who loves the little guy?

That's exactly the point of the Tea Party, to bring the pain of the average American taxpaying, crime-wave suffering schlub to the attention of the politicians and put them on notice that they can ignore us no more. With respect to immigration, the incentives to the key players are working against reform. A quick look (by the way, I will oversimplify by assuming that most illegal immigrants are from Latin America who cross into the U.S. southern border, that is often the case, but not the whole problem, more on that some other day.)

Employers of Illegals.
This one is obvious. These guys get workers, often below minimum wage, and certainly for wages that are unattractive to native Americans.




The Hispanic Community.
You would think that since the illegals often compete for jobs held by legal residents in this community, they wouldn't be rallying, but they are? This is an issue of identity politics. Further, I think their is a belief that if the large numbers of current violators are granted amnesty, it will swell their numbers and make them more important politically. Certainly, that is the belief of some Latino politicians and "community organizers." As a result, this community is not in favor of closing the border. They are aware that the deportation of 11 million people isn't happening any time soon.

Democrat Party.
There is a parallel argument that Democrats benefit politically from this issue, and that doing nothing helps them. First, it gives them an excuse to play the race card. Second, they can woo the Hispanic vote without actually doing anything about the problem, blaming Republicans for the lack of progress. However, some in the Latino community are beginning to notice, if you read some "man in the street" interviews from yesterday's protests. Democrats prefer to demagogue rather than offer solutions, because they know that if they keep their amnesty promise, they will really energize the opposition. This is why Obama said earlier that nothing was happening without Republican cover. Enter Lindsey Graham.

Republican Party.
The incentive for them is not to lose votes. They are playing an entirely defensive game, remembering what they perceive as Pete Wilson's disastrous efforts in the 1990's to deny illegal immigrants state benefits that was widely viewed as racist and turned the Latino vote in California decidedly Democrat ever since. (You can argue if this should have been the outcome, but those are the facts.) Even though their base wants them to do something, they dither because of fear of losing votes nationwid and possibly the harm to the businesses employing illegals. (I have no hard evidence on the latter.)

Unions.
OK, I admit to being stumped on this one at first. The unions, if they were really looking after the interests of their members, should be the one's making the loudest demands to halt the flow of illegal immigrants, because they put downward pressure on wages. However, unions have long since abandoned any pretense at actually representing their members true long term interests. Second, I don't see illegal immigrants working in unionized industries. Most union members work for a branch of the government, where citizenship is usually a prerequisite and the other unionized private sectors (transportation, utilities, telecommunications, groceries, construction) don't have a big illegal presence. More importantly, I think the union leadership has a flat out socialist agenda. Swelling the voter rolls with low wage, relatively uneducated workers advances their agenda of moving forward with a left wing/socialist agenda. (This applies to the Democrat Party as well.)

Consumers.
Let's face facts, some of the benefits of low wages paid to illegals are passed along to consumers in the form of lower prices for goods and services. Restaurant prices, landscaping costs, minor construction and repairs on your house all come to mind. I don't think the general public is totally focused on this fact, but I think it makes people feel a little guilty and helps people buy into the notion a crack down is somehow unfair, because they know they are contributors in some sense. (Yes, this is a broad generalization.)



But the big losers are the Rule of Law and the portion of the population that lives along the border and suffers from the attendant lawlessness. This is why it is Arizona is the state dealing with the problem first. From a benefit/cost aspect, they are probably the biggest losers as the border fence in California drove the immigrants eastward, and Arizona's relatively smaller population means that they don't derive much benefit. Further, the crime wave from the concomitant increase in drug smuggling through Arizona has motivated the public to demand some action. The damage to the rule of law should not be underestimated. Society is much more fragile than we imagine, depending on a broad set of shared agreements about the nature of justice and the relationship between the governed and the government. The alienation Peggy Noonan wrote of yesterday is only exacerbated by the conscious undermining of the rule of law by the administrations of both parties. For this reason, I agree with her that an increased effort to enforce the border is absolutely required. The government must show good faith to the people in restoring a sense of justice and the rule of law. But it will not be enough and as one can see from the incentives of key players, a coalition that brokers a deal will be needed to put this issue to rest completely.

And let's not forget the real casualties in the assault on the rule of law:

Rob Krentz was a lifelong rancher in Southeastern Arizona, 12 miles north of the U.S./Mexico border and 25 miles northeast of the city of Douglas. He was the father of three children. The ranch has been in his family for three generations, more than 100 years – since 1907, and sits on about 35,000 acres with 1,000 head of cattle. Running a ranch is hard work and with the influx of illegal aliens increasing, Rob was at ground zero of the stampede that is destroying the fragile desert landscape. (H/T Bonfire's Blog.)

They're Not Listening

Two editorials reminded me of the need for a Tea Party movement, and a Coffee Party movement as well. Both parties AREN'T LISTENING. Peggy Noonan looks at immigration policy and concludes that both parties let the problem slide towards crisis because they calculated that it was in their best interests to do so, because they could reap political rewards. Never mind what's good for the country.

But while the Democrats worry about the prospects of the Democrats and the Republicans about the well-being of the Republicans, who worries about America?

No one. Which the American people have noticed, and which adds to the dangerous alienation—actually it's at the heart of the alienation—of the age.

....

Instead, our national establishments deliberately allow the crisis to grow and fester, ignoring public unrest and amusing themselves by damning anyone's attempt to deal with the problem they fear to address.

Why does the federal government do this? Because so many within it are stupid and unimaginative and don't trust the American people. Which of course the American people have noticed.

The result of this failure is that Arizona is the kidnapping capital of the Unite States, due to the activities of drug cartels and human smugglers pouring across an undefended border. No matter the party of the President, the lawlessness on the southern border continues. Both parties don't want to alienate the Latino vote, which of course is very short sighted, because effective border patrol has zero impact on anyone who is already present in this country, legally or otherwise. I have been wrestling with the question of whether illegal immigration is an issue for the Tea Party movement and conclude that it is, because the movement exists to give voice to average Americans against the failures of BOTH parties.

Meanwhile, the leader from this month's Reason magazine is "We Are Out of Money" by Matt Welch. He points to the bipartisan failure to deal with ballooning federal and state budget woes.

In March the federal government created the most expensive new entitlement n four decades, even as the bond rating company Moody's Investors Service warned that debt level could soon precipitate a downgrade in U.S. Treasury bonds. The main opposition party fought the bill by decrying "cuts" to Medicare, and it has kept itself at arm's length from one of the few politicians talking seriously about long-term reform (see "Paul Ryan: Radical or Sellout?," page 18).

Commenting on Paul Ryan's plan to cut specific programs and entitlements, Reason points out that Paul Ryan is too radical for his own party.

In the current political climate, Ryan's plan will never pass. It is not merely too radical for the Democrats; it is too radical for the Republicans. But to be too radical for the party that championed an unfunded prescription drug benefit in 2003 and rang up massive deficits while in power, one need not be radical at all.

The good news in these and similar articles is that the nature of our problems are understood by more and more people, even if stupid MSM articles talk about draconian budget cuts. But the two parties have to start paying a price for their failure to look after the basic interests of the people as a whole. I would have liked to see more Tea Party primary challenges in both parties, because the only thing that motivates politicians is fear of defeat. Not to worry, even if the Republicans make gains this fall, the depth of both the hypocrisy and these problems mean they aren't going away soon. We will need a Tea Party for quite some time to come.

VAT Poll Closed

My VAT poll closed. Exactly half of you so hate the income tax that you were willing to go for the value added tax if it meant that we could scrap the income tax. KT keeps making the point that we need to pay for the size of our government, so additional taxes are necessary because the alternative is eventual default on our debt, with attendant catastrophe. I think that we should try shrink the two decades of growth in government at all levels before we start adding taxes. Ultimately, the efficiency of the tax system matters. The less distortion of normal economic behavior imposed by a tax, the better, because it allows the economy to run most efficiently. In this sense the VAT is the way to go. Right now, we penalize investment and saving, Obamacare's taxation of dividends only making that worse. A VAT taxes consumption, so it would have the salutary effect of encouraging savings. Chances we will get a repeal of the income tax to go with that VAT? Slim.

TBTF Hits the Euro Zone - Acropolis Now

I am close to canceling my subscription to The Economist. Today's leader (not yet online) calls for swift and decisive action to bail out the Greeks despite their obstinate refusal to do anything about the root cause of their massive (115% of GDP) debt. I am typing the money quote (can't link it yet):

What then is to be done? The mounting crisis - and the fact that Greece will almost certainly not pay everybody back on time - will renew some calls to abandon it. That would spell chaos for Greece, European banks and other European countries: the effect would indeed be Lehman-like. hence the necessity, even at this stage, of a show of financial force, linked to the construction of a stronger firewall between Greece and Europe's other shaky countries. The priority for European policy-makers is to do the same as governments eventually did with the banks: to get ahead of the crisis and to convince investors that they will spend whatever is necessary.

In other words, invoke To Big Too Fail, again. The leader goes on to argue that for the Germans, this is not an act of charity, but of self interest. I say hogwash, because the crisis is that of moral hazard. Unless some nation or some large bank is allowed to fail and suffer the consequences, we are doomed to permanent bailouts. The Greeks to date have refused to take any significant action that would prevent a recurrence of their current predicament. KT is again spot on with today's analysis:

Greece has borrowed money until they can't service their debts. Also, they aren't competitive in the world market - their wages are too high relative to what they have to sell. You can tell this because they have huge trade imbalances. Greece is insolvent - that is, it's not that they need a loan to carry them through bad times, it's that they don't make enough money to make their loan payments. Bailing them out now will just sign you up for another bailout later.

Here in America we see this thinking in the supposed financial reform introduced by that paragon of fiscal rectitude, Chris Dodd. Dean points out the institutionalization of TBTF in the U.S bill in his excellent recap of the Heritage Foundation analysis. A snippet:

Creates a protected class of “too big to fail” firms. Section 113 of the bill establishes a “Financial Stability Oversight Council,” charged with identifying firms that would “pose a threat to the financial security of the United States if they encounter “material financial distress.” These firms would be subject to enhanced regulation. However, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk.

When are we going to get it. The bailouts just keep coming because .... we just keep doing bailouts. STOP!

Weekend Music Chill

Because I'm in a certain mood:

About That Tax Promise

Hows' that working out for you America?

1. Senate Dems plan to raise taxes on seniors depending on dividend checks for their income. (Actually on everyone, but I can outdo lefty dufus' with heart-wrenching headlines.) With the expiration of the Bush tax cuts in 2011, the tax rate on dividends for middle class Americans in the 28% marginal bracket is set to increase from 15% to 28% and all the way to 39.6% for those in the highest bracket. Not only is this a broken promise, what a way to encourage investment in the economy.

2. Dems now calling federal ObamaCare mandate a “tax”. Admittedly, this is so that the Obamacare mandate can pass constitutional muster in the Supreme Court, but hey, if they're going to call it a tax....

3. Dems to Allow Millions of Middle Class to Drift into Alternative Minimum Tax bracket, as previously reported in these pages. By not indexing the Alternative Minimum Tax for inflation millions of middle income Americans will be subject to the AMT. This happens when you have many otherwise legitimate deductions, such as charitable giving, that reduce your tax bill, but Uncle Sam wants his cut anyway. In years past, Congress has shielded middle class from these effects by raising the income level at which the tax kicks in. Their failure to do so now is surely a tax increase, because ordinary folks like myself will be paying more in taxes.

4. Obama Signs Federal Cigarette Tax Hike. Who do you think is paying this tax?

And what's on the horizon? The number of hints from the administration that they will propose a Value Added Tax are overwhelming. And will it come with the elimination of the income tax? (Don't forget to take my poll at right.) And what is cap and trade but a new tax on every American.

I'll close with this video about all the new taxes on Obamacare impact not just small businesses (most of whose proprietors make much less than $250,000) but how we are all hit with higher taxes.



So that's my answer to the left, when they ask how my taxes have increased under Obama as they sling epithets my way. That civil enough for you coffee partyers?

Greek Update and a California Question

And no, I don't mean a frat party at UCSD. KT has been keeping up with the Greek debt situation and alerted us to the fact that the interest on Greek two year debt has shot up to 26%, "...26% is what you would pay on your credit cards if you missed a payment." My question is to what extent is California going to go the way of Greece? California can't print its own money, just as Greece can't print euros. California apparently lacks the political will to tackle its structural deficit, a la Greece. California will inevitably ask the feds for a bailout, much as the Greeks have done with the EU. And the promise of a bailout may come too little, too late to help. Bottom line, I wouldn't be holding California debt if I could help it, and that includes waiting on an income tax refund check, like I'm doing right now. There's a name for chumps like me that paid too much in taxes to the state and are now waiting for that check, Unsecured Creditors. Last in line for you, pal.

Some Practical Financial Reform

Temple of Mut has an excellent piece on the "financial reform" proposed by Democrats and some practical proposals to actually implement some reform that is minimally intrusive. She also points to the best headline I have seen on the subject (from BizzyBlog):

‘Financial Reform’ Is a Massive Power Grab

Her practical reforms include limiting the oversight of financial derivatives to credit default swaps (not to instruments that have served markets well, such as cocoa futures) and limiting the amount of borrowing against the appraised value of a home, to limit the financial exposure. The money quote:

It matters much less to me who is responsible for the problems, because there is plenty of blame to go around. It matters to me that the problem be fixed on a permanent basis as best we can, in order to eliminate risk going forward for everyone involved. I think one thing we have learned from the financial crisis is that what happens on Wall Street impacts the average American much more than previously imagined. Financial liquidity freezes mean loans are not made and businesses fail. A credit crisis is not a good thing. Having unsold homes is not a good thing. Losing your job is not a good thing. Losing confidence that you are being told the total situation about a financial product is not a good thing. And especially ballooning our federal deficit to bail out selected companies at the expense of hard-working American taxpayers is not a good thing.

Immigration Conundrum

The immigration law in Arizona is a conundrum for me. We shouldn't fool ourselves into believing this doesn't energize the left and hurt our chances to remove deficit busting Obamacare loving Democrats in the fall. As I said yesterday, the law itself is fairly mild; but the political repercussions are large. This is particularly true because I strongly believe that Latino voters could easily be split away from the Democrats, not least because Democrat policies are resulting in their children getting pathetic education.

Since the federal government won't enforce the law and the steady trek of illegals through the backyards of Arizona residences seems likely to continue unabated; I am sympathetic to a law that merely reiterates the federal law. But at the same time, Republicans have refused to put forth an agenda to tackle this issue. Once again, we can blame Bush, who had an opportunity but failed. However, we need some kind of solution to dispel the notion that mere border enforcement is an adequate cure.

At the same time we need to push back on the notion that this law is somehow an example of racism run amok. It is not. It is very important that the state of Arizona make clear the manner in which they intend to enforce the law.

But I think that the energy this brings, especially the energizing of identity politics, hurts the GOP in the long run. I think the only silver lining is the foolish overreaction on the left; like boycotting Arizona Tea (bottled in New York), San Francisco banning city workers from traveling to AZ (who cares) and an Arizona congressman who calls for a boycott of his own state (only some serious gerrymandering can keep him in office.)

Systemic Thinking About Illegal Immigration

The Arizona law that seeks to enforce established U.S. law on immigration through the agency of the state law enforcement has put the spotlight on illegal immigration again. Solving this problem is in the best interests of Republicans, because it will continue to be used by the Democrats in their attempts to make the party look racist, which it is not.

The issue requires a realistic view of the incentives driving the current problem. For the businesses that employ the illegals, such as restaurants, poultry and meat packing, landscapers, and janitorial firms, the illegal immigrants are a source of cheaper labor. To say that native Americans are not willing to do these jobs is not technically correct; they are unwilling to do these jobs at the wages on offer from these businesses. Often, these businesses are able to employ the illegal immigrant at below the prevailing minimum wage, either directly or through not paying social security and withholding taxes for the worker. So there is a large incentive on the part of businesses to provide a magnet for people to cross the border illegally or overstay a visa, the other main source of illegal immigration.

For the workers, even the reduced wages on offer are a significant improvement over the wages available in Mexico or other third world nations. Their desperation for income drives them to the very dangerous undertaking of crossing into the United States. Because they are outside of the law, they also become prey for the unscrupulous. For the "coyotes" that guide them across the border and often abuse the illegals, they provide a steady income.

The border between the U.S. and Mexico is the primary entry point for this illegal immigration. The length of the border makes it very expensive to adequately patrol and prevent the immigration. Further, while one might infer that a person in the country illegally, i.e. without authorization, has committed the crime of "improper entry by an alien," that is not necessarily self evident. As a result, the actual violation is "illegal presence" and is not technically a crime. The civil sanction is deportation, not any criminal prosecution. This puts the Arizona law into a different light. Essentially, the police are being asked to perform a check for a civil violation while they going about enforcing Arizona's criminal code. One might view that as fairly benign or as overreach. For example, would we like the police to check the status of child support payments of everyone they arrest? One might argue this either way. Conversely, it puts the outcry against the law in a different context. What rights are being violated? However, as a libertarian, suspicious of state power, I have to ask what constitutes suspicion that an individual is an illegal alien and therefor subject to having to produce papers. Let's say I was jaywalking after going swimming at a community pool and have no identification on me and am detained. How do the police determine reasonable suspicion of my alien status? I think this is a tough one. I would have much preferred if the law had been limited to persons taken into custody, because then there is really no additional penalty for an immigration status check, they are already detained.

We find a situation with huge economic incentives driving behavior. Conservatives and libertarians often point out the folly of Obamacare and other government efforts by a similar analysis showing how stupid legislation drives behavior. The current example being the lack of enforceable penalties means that healthy people won't buy health insurance until they are sick, driving up insurance rates. With regards to illegal immigration, the only solution is to remove the economic incentives to cross the border illegally in search of work. This leaves these options:

1. A massive crackdown on employers who employ illegals to dry up the demand. This would involve massive increase in the policing and enforcement of existing law. We are already perhaps seeing a test run of this option in the San Diego prosecution of the French Gourmet restaurant. The federal DA is seeking forfeiture of the property of the restaurant as a means of leverage to settle the case. I personally have eaten there and had them provide food for catered events, so I am distressed. We see the heavy hand of the state and it makes me nervous.

2. A much more massive guest worker program that we currently have. If every worker who wanted to search for work in this country were allowed to enter the country after being fingerprinted, having a records check and being issued a green card; there would be no need for the trek across the Arizona desert. Further, such a program would probably require a sub-minimum wage to remove all the incentives to work illegally. Further, such a program would have to require workers to return to their country of origin when no longer working and prevent them from becoming citizens to be palatable. Such a program would be good for the economy, but would probably rouse organized labor to vehemently oppose it.

3. Vastly increase the budget to enforce the border with Mexico. I don't think this will solve the problem by itself, the economic incentives are too powerful. I know this is what most of my readers would like, but frankly, we should be realistic about how effective this will be. The East Germans couldn't stop the steady leakage of people out of that country even with a massive police apparatus and much less economic incentive. What are we going to do?

Ultimately some compromise among these three options will have to be made. As you may have guessed, I favor mostly option 2, because I believe that we are economically better off the more work that is performed in our own country. But we need to offer some solutions. Total intransigence just looks like nativism.

More Picking Winners and Losers

If there was any doubt as to why corporations and unions contribute large sums to political campaigns, today's news should dispel any doubt.

1. Ben Nelson (D-NEfarious) quietly introduced a change to the current financial reform legislation that would hugely benefit Berkshsire Hathaway, Warren Buffet's conglomerate investment vehicle, headquartered in Omaha. Berkshire Hathaway has large exposure to derivative contracts that the bill, as previously written, would have required reserves against potential losses against to be set aside. Now the bill will only apply to new derivatives. This probably makes sense, but why does it take lobbying by a firm led by one of the nation's wealthiest to make a change. Because it's about who wins and loses. No amount of campaign finance reform could stop Buffet from influencing this legislation. All he would have to do was to drop a few lines in his newsletter about what an idiot Ben Nelson was, and Nelson's opponent would be showered with cash. Unless were going to totally end free speech in America,.... (never mind, I don't want to give the left any ideas.)


2. Meanwhile the WSJ editorial pages discuss UPS latest attempt to compete with FedEx, by saddling FedEx with the same Teamster problems that plague UPS. What does Congress have to do with this? The rules for organizing unions at airlines and railroads are different for trucking companies. Under the Railway Labor Act, unions must organize nationally, which has been an impediment to unionization of FedEx. Meanwhile the teamsters strikes have often caused havoc at UPS including the infamous 1997 strike. The Chair of the House Transportation Committee, James Oberstar (D-mORalizing) has tried to change these rules to favor the Teamsters and UPS. So why wouldn't FedEx, UPS and the Teamsters all be pouring cash into key elections? For FedEx, their very survival as a company might be threatened.

3. As previously discussed on these pages, the current financial reform bill makes permanent the idea that the federal government will become the permanent Bailout King. Obama says otherwise, but why would his bill include a $50 billion dollar "resolution" fund, if it wasn't intended to be used to bail out companies that are in trouble. Obama says this won't cost tax payers a dime, because it will be paid for by taxes on financial firms. But how are those firms and their shareholders not taxpayers? And how is it that those expenses won't be passed along to consumers, since they will be a cost of doing business for every financial firm?

Obama wants to make this guy look small time.

4. Closer to my home of San Diego, a $228 million dollar redevelopment project downtown has been stalled, again, by the Coastal Commission. If you were a developer, spending money putting plans together, and having bid a project, wouldn't you be tempted to spend a little coin to influence the membership of the commission? I would think so.

None of this is to say that regulation is always bad, or government has no role. But we can see that the side effects of regulation and picking winners is to cause financial capital to be converted into political capital in our economy. That should cause us to regulate cautiously and minimally. It should mean that we try to limit the size and scope of government. It means, we should adopt the Tea Party agenda.

My Enemies List - Public Employees Unions

The blogosphere and the conservative and libertarian press have come alive lately reporting and documentation of how the public employees unions are buying off state governments and creating an unsustainable welfare state. The size of state government budgets accrues not only to the amount of "services" delivered by the state, but the cost per employee of delivering same. Included are burgeoning retirement costs, and generous health care benefits. To provide my readers with a little background on this subject and to remind us of why the Tea Party is so desperately needed by the people of this state and the country as a whole, I have a little round up.

Back in January, Reason magazine got me tuned in to the magnitude of the problem with their cover article, Class War, How Public Servants Became our Masters. From things as small as running red lights with impunity, to rigged retirement rules that lets public employees live of taxes for half their adult lives after they quit work, it dives into the whole entitlement mindset and the unions who enable it. They followed with this quick hitter, also posted on YouTube (also read the article):



The most blood boiling article was this one from Steve Malanga, The Beholden State, in City Journal. He focuses on the unions' highly successful in the California to increase their own pay, and specifically points to the methods behind their success. As previously noted, this got my blood boiling so bad, I needed a med check, and had to read it in small doses.


Meanwhile, union marches continue unabated to squeeze more tax dollars out of you. TempleOfMut linked me to this article where union marchers demanded $40 billion in tax hikes in California, that's right, in the middle of 12% unemployment in the state. Dean has some great video from Illinois, where the lefty political unions are demanding more tax hikes. Taken together, we see a movement that can only be compared to the communist party of the old Soviet Union, where membership confers privilege and wealth not available to the average member of society. I do not make such comparisons lightly.

Given this extraordinary level of self serving by these unions, and the fact that their heavy influence over politicians comes from campaign cash and get out the vote efforts, I think that the Tea Party members must never vote for candidates with public union endorsements; including police and firefighters, maybe especially. I know that police union endorsements used to mean a candidate was tough on crime, but it is safer to say that is no longer true. From Malanga:

Even cops who run for office have felt the wrath of public-safety unions. Allan Mansoor served 16 years as a deputy sheriff in Orange County but angered police unions by publicly backing an initiative that would have required them to gain their members’ permission to spend dues on political activities. When the conservative Mansoor ran successfully for city council several years back in Costa Mesa, local cops and firefighters poured resources into helping his more liberal opponents. “I didn’t like seeing my dues go to candidates like Davis, so I supported efforts to curb that,” Mansoor says. “Union leaders didn’t like it, so they endorsed my opponents by claiming they were tougher on crime than I was.”

This is why I can't bring myself to endorse Howard Wayne in San Diego Council District 6, even though he was the most knowledgeable at the debate I covered.

So as the unofficial chief ideologue, I am asking the Tea Party movement to not vote for those candidates endorsed by the public employees unions. Along those lines, I would ask that Democrat readers of this blog give serious consideration to supporting Mickey Kaus for U.S. Senate against Barbara Boxer. Nice article on Kaus at Politico.

Disclaimer: I am an employee of the Federal Government, though not represented by a union. The opinions I express in this blog are my own and not that of any agency of the federal government.

New Poll - VAT

I have put a poll about the Value Added Tax, since this will be on Obama's agenda in the future. B-Daddy's very short take on the idea of a new tax. Hell No. Now what if we threw in the same bill, the total elimination of the income tax? Now you're talking. Unfortunately, that is unlikely to happen, but I want to hear from the readers anyway. The other drawback of the VAT is that it is even less visible than the income tax and payroll tax, at least I can look at my pay stub and see what those are costing me. The VAT is so well hidden it really allows government to grow, but only when the private sector grows. Since it is simple, it will distort the economy far less than the income tax. Regardless, please take our poll. I'd like to hear from the Coffee Party on this issue, especially in the comment.