Thursday, May 27, 2010

Of Politics and Oil -

The Washington panic, and the realities of the Gulf Coast spill.

This oil spill is a reminder—unpleasant for a public raised on fabulous technological advancement, and for an Administration engaged in taking over U.S. health-care and Wall Street—that government is not the Wizard of Oz able to solve every problem.

This Obama finger-pointing has, if anything, backfired politically. The oil spill was an opportunity for Mr. Obama—who campaigned as someone who likes to wrap his mind around "complex" problems—to remind the country that energy exploration and engineering are not error-free disciplines. The U.S. oil industry has a remarkable safety record, even as it has moved into deeper and deeper water to provide the U.S. with affordable oil. But no industry is accident free, and Mr. Obama could have served the public better by explaining the technical challenges of fixing this deep water leak. His decision to pound on BP for not performing immediate miracles has instead fed the public's expectations that this is like plugging a hole in a swimming pool.

Republicans have also done the nation no favors in their political rush to turn this oil spill into Mr. Obama's "Katrina." In an attempt to tie the disaster to the Administration, they've targeted the Minerals Management Service, suggesting agency bureaucrats weren't tough enough on Big Oil.

Never mind that there is zero evidence so far that this blowout resulted from lax regulation or shoddy practices. Never mind, too, that the GOP is targeting one of the few federal agencies that happens to believe in more domestic energy production.

We suppose it is too much to expect today's political class to withhold its game of panic and blame until industry plugs the leak and we learn what really happened and why. But the American people, watching this spectacle while the disaster unfolds, are being given one more reason to doubt the capacities and candor of its political leaders.

Incentives vs. Government Waste -

What if bureaucrats could benefit financially from finding cost savings?

Why are profit-seeking corporations so much more efficient and innovative than bureaucracies? A significant part of the answer to that question lies in the fact that bureaucracies are often hamstrung by legislation, and amending legislation is always a cumbersome and politics-ridden process. But another significant part of the answer lies in the phrase "profit-seeking."

Corporations exist only to create wealth. The more they create, the more their stockholders and employees prosper. Thus it's a corporate manager's job to look for ways to increase profits. More, their personal success depends on doing so. For the employees who come up with the really bright ideas prosper even more than their fellow workers, being rewarded with raises, bonuses and promotions.

But there are only three basic ways to increase profits: raise prices, cut costs or innovate. Raising prices is easy. Just cross out $19.95 and write in $22.95. Unfortunately, in a competitive economy, raising prices is going to cost you market share and is thus self-defeating. So corporate employees have no choice but to pursue the far more difficult second and third options, searching for ways to make the same product cheaper or to create a better product at the same cost. They do this hard work because they are highly incentivized by self-interest to do so.

Bureaucrats, alas, are not. In fact, they are highly disincentivized to increase efficiency and to innovate. In business a penny saved is a penny earned, the savings flowing directly to the all-important bottom line. But in a bureaucracy, a penny saved is a penny likely to be cut from next year's budget. And prestige in a bureaucracy comes not from profit but from the size of one's budget. So even accidental savings are likely to be suppressed with make-work.

[Bureaucrats] can certainly find new ways of doing their jobs that are cheaper and better than the old ways, especially if they are handsomely rewarded for doing so.

Self-interest is an immensely powerful force in human affairs—the very engine behind capitalism's success. Harnessing it to save money and increase innovation in a bureaucracy, just as the Royal Navy harnessed it to capture enemy ships, would be the biggest innovation of all and save the government billions.

Friday, May 21, 2010

The Bankrupting of America -


Mortimer Zuckerman: The Bankrupting of America -*


The American public feels it is drowning in red ink. It is dismayed and even outraged at the burgeoning national deficits, unbalanced state and local budgets, and accounting that often masks the extent of indebtedness. There is a mounting sense that taxpayers are being taken for an expensive ride by public-sector unions. The extraordinary benefits the unions have secured for their members are going to be harder and harder to pay.

It is galling for private-sector workers to see so many public-sector workers thriving because of the power their unions exercise. Take California. Investigative journalist Steve Malanga points out in the City Journal that California's schoolteachers are the nation's highest paid; its prison guards can make six-figure salaries; many state workers retire at 55 with pensions that are higher than the base pay they got most of their working lives.

What we suffer is a ruinously expensive collaboration between elected officials and unionized state and local workers, purchased with taxpayer money. "Scratch my back and I'll scratch yours."

Public unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening in California is happening in slower motion in the rest of the country.

The lopsided subsidies for pension and health costs are a large part of the fiscal crises at the state and local levels. The subsequent squeeze on education and infrastructure investment is undermining the very programs that have made it possible for our economy to grow.

City government was developed to serve its citizens. Today the citizenry is working in large part to serve the government. It is always hard to shrink government spending. It is particularly difficult when public-sector unions have such a unique lever of pressure.

We have to escape this cycle or it will crush us.





Tuesday, May 18, 2010

Can Dirt Do a Little Good? -


Can Dirt Do a Little Good? -


According to the "hygiene hypothesis," first proposed in 1989, exposure to a variety of bacteria, viruses and parasitic worms early in life helps prime a child's immune system, much like sensory experiences program his brain. Without such early instruction, the immune system may go haywire and overreact with allergies to foods, pollen and pet dander or turn on the body's own tissue, setting off autoimmune disorders.

Many of these microorganisms evolved symbiotically with humans over millions of years—the so-called "old friends" theory. But where they've been eradicated, a key part of human development has been thrown off.

Many experts advise common sense. "We don't want to say to children, 'OK, play by the dirty river bank and catch whatever you can,' " says Dr. Weinstock. "But we can say there's nothing wrong with kids playing in the dirt. They don't have to live in total sanitation, and they won't die from eating something off the floor. It's probably more healthy than not."




Monday, May 17, 2010

The We're-Not-Europe Party -


Dan Henninger: The We're-Not-Europe Party -


For Americans, this has been a two-week cram course in what not to be if you hope to have a vibrant future. What was once an unfocused criticism of Mr. Obama and the Democrats, that they are nudging America toward a European-style social-market economy, came to awful life in the panicked, stricken faces of Europe's leadership…

The state of Europe can be summed up in one word: stagnation… Stagnation isn't death. Economies don't die. Greece proves that. They slow down. Europe's low growth rates allow its populations to pretend that real, productive work is being done somewhere by someone. But new jobs are created slowly, if at all. Younger workers lose heart.  Economic stagnation is a kind of purgatory.

Barack Obama would never say it is his intention to make the U.S. go stagnant by suppressing wealth creation in return for a Faustian deal on social equity. But his health system required an astonishing array of new taxes on growth industries. He is raising taxes on incomes, dividends, capital gains and interest. His energy reform requires massive taxes. His government revels in "keeping a boot on the neck" of a struggling private firm. Wall Street's business is being criminalized.

Economic stagnation arrives like a slow poison. Look at the floundering United Kingdom, whose failed prime minister, Gordon Brown, said on leaving, "I tried to make the country fairer." Maybe there's a more important goal.

A We're-Not-Europe Party would promise the American people to avoid and oppose any policy that makes us more like them and less like us.



Thursday, May 13, 2010

Welfare Wagons -


Holman Jenkins: Welfare Wagons -


Even if you believe saving gasoline is a holy cause, subsidizing electric cars simply is not a substitute for politicians finding the courage to jack up gas prices. Think about it this way: You can double the fuel efficiency of any car by putting a second person in it. You can increase its fuel efficiency to infinity by refraining from frivolous trips.

These are the incentives that flow from a higher gas price. Exactly the opposite incentives flow from mandatory investment in higher-mileage vehicles. You paid a lot for a car that costs very little to operate—so why not operate it? Why bother to car pool? Why not drive across town for a jar of mayonnaise?

Tax handouts for electric vehicles are emblematic of an alarmingly childish refusal to take account of circumstances. The U.S. government is deeply in debt. In people and nations with their backs to the wall, one looks for signs of rationality. Running up more debt to subsidize electric runabouts for suburbanites is not such a sign.




Wednesday, May 12, 2010

Blame Obama. Why Not? -

I really liked the picture of Uncle Sam as Jabba the Hut. 


Dan Henninger: Blame Obama. Why Not? -


The left and the media knee-capped the Bush presidency for not making Hurricane Katrina go away fast enough. So now, like a village feud in ancient Sicily, the right and its media are knee-capping the Obama presidency for not making the Gulf's spilled oil go away fast enough. Boo hoo.

Are we supposed to say that the criticism of Mr. Obama is unfair? Sorry. The permanent smackdown that is now U.S. politics has devolved into a zero-sum proposition whenever anything bad happens in American life—an oil spill, a terrorist bomb in Times Square, a financial meltdown, a mining disaster.

It works like this: If you occupy a position of leadership or responsibility in public or private life… you will get blamed for days on end, no matter what the facts are.

For the longest time, whenever a disaster such as Katrina or this oil spill hit, people have expected the government to step up and move heaven and earth to help. With a big mess, you need big authority to clear a path. The assumption beneath this expectation is that government, if it really wants to, can do just about anything.

In fact, after about 100 years of chowing down responsibilities, Uncle has inflated into something as big, powerful and sloppy as Jabba the Hut, a fat guy who can barely move.



Tuesday, May 11, 2010

Elena Kagan and the 'Hollow Charade' -


Neomi Rao: Elena Kagan and the 'Hollow Charade' -


I think Americans can understand that judges draw on a variety of tools in interpreting the law, and that these tools differ for judges based on their constitutional values.

For example, when a statute is unclear, Justice Antonin Scalia might press harder on the language of the law, look at the context of specific words, and generally seek to understand what the written law means. He seeks to limit his own discretion, in part because the Constitution gives Congress, not the courts, the power to enact laws.

By contrast, Justice Stephen Breyer might focus on the purposes of the law and look to sources outside of the Constitution—including foreign law—to come to a decision. He may consider the outcome that makes the most sense to him because he considers judges to be a part of the democratic process. These are fundamentally different ways of dealing with difficult cases and they reflect two distinct attitudes about the proper role of a judge.

Ms. Kagan and those preparing her face a simple, political problem: "progressive" views of judging are difficult to defend. It may be why no recent nominee has tried. The simple statement that "judges should interpret the law, and not make it" resonates with Americans in a way that "judges should figure out the best answer" does not.

The reality may be more complicated than either of these formulas, but an attitude that emphasizes the rule of law has more appeal not merely because of its simplicity but because it captures the idea that judges are not policy makers. It emphasizes that judges should interpret the language of the law and try, as best they can, not to impose their own personal views of justice or the good when deciding cases.




Sunday, May 9, 2010

What Cards Don't Say on Mother's Day -

To Mom. 


Amy Henry: What Cards Don't Say on Mother's Day -*


So while I hope that my daughter has every choice in life, I also hope that she has the chance to be a mother. And perhaps my task now is to make sure that when she is, no one can make her feel ashamed or diminished by making that choice. I hope to teach her that baking Barbie cakes and reading "Harold and the Purple Crayon" and sitting on her child's bed listening to stories about his day even though her back feels like someone went at her with a two-by-four—are, inconsequential as they seem at first blush, the very warp and woof of a mother's life.


But, how exactly do I convey to her that whether or not a mother's seemingly inconsequential, menial tasks 'fulfill' her, nurturing children is innately good and just might surprise her fulfill-o-meter? How can I help her resist the need for affirmation from a culture that will probably never give it to her—and to embrace motherhood not as a second-class citizen, but with the kind of femininity that is paradoxically as strong as nails, as soft as a kiss?


I'm not sure. But someday, when the thumbscrews of mothering start to tighten on her, one thing I will do is remind her that despite her momentary exhaustion or discouragement, mothering remains a profoundly worthwhile undertaking, one that Chesterton calls nothing less extraordinary than "the mystery of the making of men."




Friday, May 7, 2010

The Greek Economy Explained -

I still don't get the riots.  Don't they realize they are just making their situation worse?  Gee, our country is broke, so let's go destroy and disrupt. 


The Greek Economy Explained -


The Greeks are giving the world a good taste of their modern politics. Periclean democracy, meet Athenian mob rule: Tens of thousands are rampaging through the capital and other large cities this week in protest against €30 billion in austerity measures needed to secure the €110 billion bailout for the bankrupt country.

The nationwide strike—led by government-employee unions, which threaten further disruptions after parliament yesterday approved the rescue package—was a timely show for Greece's prospective rescuers in Germany and at the International Monetary Fund. The medicine for Greece's deficit and debt woes won't go down easily in Athens.

In terms of overall ease of doing business, Greece comes in 109 out of 183 countries around the world. It is dead last among the 27 members of the European Union as well as the advanced economies in the OECD. You have to go up 30 slots to find the next worst EU performer, Italy.




Thursday, May 6, 2010

A Fannie Mae Political Reckoning -


A Fannie Mae Political Reckoning -


One sign that the White House financial reform is less potent than its advertising claims is that it doesn't even attempt to reform the two companies at the heart of the housing mania and panic, Fannie Mae and Freddie Mac. So we're glad to see that yesterday GOP Senators John McCain, Richard Shelby and Judd Gregg introduced a Fan and Fred reform amendment that will let Democrats show if they're serious about reducing reckless lending and taxpayer risk.

From the 2008 meltdown through 2020, the toxic twins will cost taxpayers close to $380 billion, according to the Congressional Budget Office's cautious estimate…. Moreover, these taxpayer losses understate the financial destruction wrought by Fan and Fred. By concealing how much they were gambling on risky subprime and Alt-A mortgages, the companies sent bogus signals on the size of these markets and distorted decision-making throughout the system.

In short, the McCain amendment precisely targets the problems that caused the mortgage crisis: If the housing giants are no longer subsidized, they will become small enough to fail. That means they will stop lending money to people who cannot afford to pay them back, and in turn they will stop endangering taxpayers.

This is a genuine anti-bailout vote, and you would think Democrats would be more than happy to go along given their claims that they want to stop bailouts. Yet Republicans aren't even sure that Majority Leader Harry Reid will allow a vote on the McCain measure lest Democrats get pressure from the White House to oppose it. They would then reveal that their reform is less about reducing risk than about giving the political class more control over the financial status quo.



Wednesday, May 5, 2010

Arizona's Immigration Mistake -


Clarence W. Dupnik: Arizona's Immigration Mistake -


My deputies have referred more illegal immigrants to Border Patrol and Immigration and Customs Enforcement than any other state or local law enforcement agency in Arizona. But this new law will pass the burden of immigration enforcement to my county department. This is a responsibility I do not have the resources to implement.

There is a horrible problem with illegal immigration in this country, and it affects the citizens of Pima County every single day. Because of our proximity to the border, our county population demographic is heavily Hispanic (both legal and illegal). That means we must interact with witnesses and victims of crime in their times of need, regardless of their immigration status. Though this legislation states that inquiry into a person's immigration status is not required if it will hinder an investigation, that's not enough to quell the very real fears of the immigrant community.

Law enforcement did not ask for and does not need this new tool. What we do need is assistance from the federal government in the form of effective strategies to secure the border. Additionally, the federal government must take up this issue in the form of comprehensive immigration reform policy. If any good is to come from this firestorm, it is that our legislators will finally recognize that a problem exists and that they are the only ones with the authority to address it.