Saturday, January 31, 2009 - Foreign Aid and Bad Government - Opinion: Foreign Aid and Bad Government

Entrepreneurship, not aid, is essential to rejuvenate markets in the developing world and, in turn, help America prosper.

During the Cold War, the U.S. instituted a policy of sending money to governments in poor countries to buy their political loyalty. While studies show that sending aid to foreign governments creates allegiance, it does not lead to economic progress. Instead, it makes governments in poor countries dependent on the U.S. rather than their citizens' taxes. 

Tragically, the Cold War aid approach actually preserves suffering in poor countries. Aid empowers bureaucracies, promotes statism, and weakens government incentives to boost tax revenues through growth. Economic assets are often kept in the hands of the state, leading to monopolies, stagnation and extortion. All of this hurts entrepreneurs, who have the potential to create wealth and promote governmental accountability.

The history of Western economic and political advancement illustrates that it is the economic strength of citizens -- not governments -- that gives rise to checks and balances. 

Friday, January 30, 2009 - Look at the Time

In Congress and the boardroom, failure to recognize a new era.
The party-line vote in favor of the stimulus package could have been more, could have produced not only a more promising bill but marked the beginning of something new, not a postpartisan era (there will never be such a thing and never should be; the parties exist to fight through great political questions) but a more bipartisan one forced by crisis and marked by—well, let's call it seriousness.

The final bill was privately agreed by most and publicly conceded by many to be a big, messy, largely off-point and philosophically chaotic piece of legislation. The Congressional Budget Office says only 25% of the money will even go out in the first year. This newspaper, in its analysis, argues that only 12 cents of every dollar is for something that could plausibly be called stimulus.

What was needed? Not pork, not payoffs, not eccentric base-pleasing, group-greasing forays into birth control as stimulus, as the speaker of the House dizzily put it before being told to remove it.

"Business as usual." "That's Washington." But in 2008 the public rejected business as usual. That rejection is part of what got Obama elected.


Tuesday, January 27, 2009 - How Modern Law Makes Us Powerless

Americans don't feel free to reach inside themselves and make a difference. The growth of litigation and regulation has injected a paralyzing uncertainty into everyday choices. All around us are warnings and legal risks. The modern credo is not "Yes We Can" but "No You Can't." Our sense of powerlessness is pervasive. Those who deal with the public are the most discouraged. Most doctors say they wouldn't advise their children to go into medicine. Government service is seen as a bureaucratic morass, not a noble calling. Make a difference? You can't even show basic human kindness for fear of legal action. Teachers across America are instructed never to put an arm around a crying child.

The idea of freedom as personal power got pushed aside in recent decades by a new idea of freedom -- where the focus is on the rights of whoever might disagree. Daily life in America has been transformed. Ordinary choices -- by teachers, doctors, officials, managers, even volunteers -- are paralyzed by legal self-consciousness. Did you check the rules?  

All this law, we're told, is just the price of making sure society is in working order. But society is not working. 

Monday, January 19, 2009 - Beware of the Big-Government Tipping Point

Socialized health care fundamentally changes the relationship between citizens and state.

For most of our nation's history, our approach to economics has favored enterprise, self-reliance and the free market. While the American economy has never been entirely laissez-faire, we have historically cared more about equality of opportunity than equality of results. And while Americans have embraced elements of the New Deal, the Great Society and progressive taxation, we have traditionally viewed welfare as a way to help those in dire need, not as a way of life for the middle class. We have grasped, perhaps more than any other nation, that there is a long-run cost to dependency on the state, including an aversion to risk that eventually enervates the entrepreneurial spirit necessary for innovation and prosperity.

This outlook, once assumed, is now under attack due to a recent series of political and economic events. 

...if we do not succeed in resisting greater state involvement in the economy -- and health care is meant to be the beachhead of this effort -- we will move from a limited welfare state into a full-blown one. This will reshape, in deep and enduring ways, our nation's historic sensibilities. It will lead here, as it has elsewhere, to passivity and dependence on the state. Such habits, once acquired, are hard to shake. 

Friday, January 16, 2009 - Suspend Your Disbelief

What is required for full enjoyment of an inauguration, from opening prayers to speeches to marching bands is, in the great 19th-century phrase, the willing suspension of disbelief. If you don't put your skepticism aside, you will not fully absorb and experience the drama. You must allow it to be real for you.... 

To believe, suspend disbelief. We have been through this before, the flags and fine speeches, the brass donkey paperweight, the glass elephant, the rise and fall of administrations, the coming and going of figures great and small. It's good to put that aside for a few days, to remove yourself from politics, partisanship and faction, to suspend your disbelief, to be grateful that the signs and symbols endure, as does the republic, and raise a toast: "To the president of the United States."

Thursday, January 15, 2009 - Theodore Roosevelt Was No Conservative

Progressives of both parties, including Roosevelt, were the original big-government liberals. They understood full well that the greatest obstacle to their schemes of social justice and equality of material condition was the U.S. Constitution as it was originally written and understood: as creating a national government of limited, enumerated powers that was dedicated to securing the individual natural rights of its citizens, especially liberty of contract and private property.

Looking ahead, conservatives hardly need to look back to progressives for inspiration. If there is a desire to "conserve" or restore something about our political tradition that has been lost with the rise of modern liberalism, how about the American founding as a model? It is with the founders that we can find the patriotic promotion of America as an exceptionally great nation -- a notion that attracts some conservatives to TR. - Cutting Monthly Bills? Turn to the Web

At first blush, the individual savings seem too small to bother with.

They're not.

Ask yourself if it's worth changing cable or home Internet providers, say, or cellphone providers, in order to save just $10 a month.

Many people couldn't be bothered. It's no surprise. Ten bucks doesn't sound like much.

But one of the key themes of this column is that combining recurrent savings with compound interest has explosive power. It's the atomic fission of finance.

Slashing just $10 from each month's costs and investing it, instead, adds up to quite a bundle over the course of an adult lifetime. Someone who did that over fifty years would have an extra $54,000 when they retired. Not bad.

Wednesday, January 14, 2009 - Six Lessons for Investors

There is almost no limit to the ability of investors to ignore the lessons of the past. This cost them dearly last year. Here are six of the most important of these lessons:

1) Beware of market forecasts, even by experts. 
2) Never underrate the importance of asset allocation.
3) Mutual funds with superior performance records often falter.
4) Owning the market remains the strategy of choice.
5) Look before you leap into alternative asset classes.
6) Beware of financial innovation.

Tuesday, January 13, 2009 - Freedom Is Still the Winning Formula - Opinion: Freedom Is Still the Winning Formula


For 15 years, The Wall Street Journal and The Heritage Foundation have been measuring countries' commitment to free-market capitalism in the "Index of Economic Freedom." The 2009 Index, published this week, provides strong evidence that the countries that maintain the freest economies do the best job of promoting prosperity for all citizens.

The positive correlation between economic freedom and national income is confirmed yet again by this year's data. The freest countries enjoy per capita incomes over 10 times higher than those in countries ranked as "repressed." This year, for the first time, the Index also correlates economic freedom with important societal values like poverty reduction, human development, political freedom and environmental protection. The linkages are robust, with economically freer countries performing significantly better on every indicator of well-being.

It would be ironic indeed if the world's advanced economies, in seeking to address current woes, abandoned the system that has brought them and others around the world the amazing levels of prosperity experienced over the last half century.

Monday, January 12, 2009 - Researchers Link Better Sleep to Cold Prevention

Preventing the common cold may be as easy as getting more sleep.

Researchers paid healthy adults $800 to have cold viruses sprayed up their noses, then wait five days in a hotel to see if they got sick. Habitual eight-hour sleepers were much less likely to get sick than those who slept less than seven hours or slept fitfully.

"The longer you sleep, the better off you are, the less susceptible you are to colds," said lead author Sheldon Cohen, who studies the effects of stress on health at Pittsburgh's Carnegie Mellon University. - 'Atlas Shrugged': From Fiction to Fact in 52 Years

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit. 

Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.

The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you. That's the justification for the $2 trillion of subsidies doled out already to keep afloat distressed insurance companies, banks, Wall Street investment houses, and auto companies -- while standing next in line for their share of the booty are real-estate developers, the steel industry, chemical companies, airlines, ethanol producers, construction firms and even catfish farmers. With each successive bailout to "calm the markets," another trillion of national wealth is subsequently lost. Yet, as "Atlas" grimly foretold, we now treat the incompetent who wreck their companies as victims, while those resourceful business owners who manage to make a profit are portrayed as recipients of illegitimate "windfalls."


Tuesday, January 6, 2009 - There's No Pain-Free Cure for Recession

Individuals, companies or cities with heavy debt and shrinking revenues instinctively know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system...  
On a gut level, we have a hard time with this concept. There is a vague sense of smoke and mirrors, of something being magically created out of nothing. But economics, we are told, is complicated. 

It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.

When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

The good news is that economics is not all that complicated. The bad news is that our economy is broken and there is nothing the government can do to fix it. However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick. But if we put our faith in the power of government to make the pain go away, we will live with the consequences for generations.