Tuesday, October 25, 2011

WSJ.com - And Baby Makes Seven Billion


WSJ.com - Opinion: And Baby Makes Seven Billion


Nothing brings out the inner Malthus like a newborn baby.

That's especially true when that baby is born to a mother somewhere in Africa or Asia. According to the United Nations Population Fund, some time this coming Monday, probably in India, the world will welcome its seven billionth person. Well, maybe welcome isn't exactly the right word.

At Columbia University's Earth Institute, Prof. Jeffrey Sachs tells CNN "the consequences for humanity could be grim." Earlier this year, a New York Times columnist declared "the earth is full," suggesting that a growing population means "we are eating into our future." And in West Virginia, the Charleston Gazette editorializes about a "human swarm" that is "overbreeding" in a way that "prosperous, well-educated families&q uot; from the developed world do not.

The smarter ones acknowledge that Malthus's ominous warnings about a growing population outstripping the food supply were not borne out in his day. The track record for these scares in our own day is not much better.

The truth is that the main flaw in Malthus is precisely his premise. Malthusian fears about population follow from the Malthusian view that human beings are primarily mouths to be fed rather than minds to be unlocked. In this reasoning, when a pig is born in China, the national wealth is thought to go up, but when a Chinese baby is born the national wealth goes down.

Behind this divide between those who worry about limits put on human exchange and those who worry about limits to growth are two very different views of the human person. The former believe that so long as people are free to trade and use their talents, the more the merrier. The latter treat people as a great mass of more or less interchangeable cogs, hence the worries about "sustainability" and "carrying capacity" and the like.




Friday, October 21, 2011

WSJ.com - A Better Idea for Green Jobs

Washington has spent years trying to force-feed green jobs, to little good effect. So here's a better idea: Expand the number of green cards, as in the number of immigrant visas for foreign-born graduates of American universities in science, technology, engineering and mathematics.

This could even be bipartisan. President Obama this week praised the latest report from his jobs council that proposed more such visas. And this week Idaho Republican Raúl Labrador, a freshman of tea party provenance, introduced a bill in the House to do the same. The evidence is overwhelming that if we let these young people stay in America, rather than sending them home, they'll end up building new companies and tens of thousands of new jobs.

Meantime, the U.S. has to compete for talent. "We're finding a lot of these graduates get job offers, but when they find out how long it will take them to get green cards they leave and go work in other countries where they become our competitors," Mr. Labrador says. The global competition for human capital is as fierce as it is for financial capital, and the U.S. can't afford to reject either one.

Tuesday, October 11, 2011

WSJ.com - Avoiding Smoot-Hawley Redux


WSJ.com - Opinion: Avoiding Smoot-Hawley Redux


There's no question about it: China manipulates its currency. The value of the yuan is largely determined not by market forces but by a "managed float." Beijing sets a target range within which the yuan can be converted into U.S. dollars via markets in Hong Kong. Under most analyses of purchasing power parity, the yuan should probably be at a higher value relative to the dollar.

None of these statements are controversial. The real questions are: What does the managed float mean for America, and what should be done about it?

On the former, the managed float of the yuan means that U.S. imports from China are cheaper than they would otherwise be. It also means that China sits on large dollar reserves that get funneled back into U.S. financial assets (mainly Treasuries and mortgage-backed securities), putting downward pressure on U.S. interest rates.

In addition, it means that if the U.S. could produce the same goods and services at the same price as China, we would be at a comparative disadvantage. The reality, of course, is that the U.S. does not produce the same goods and services at the same price.

On the latter question—what should we do about this—the answer is: not start a trade war.



Monday, October 10, 2011

WSJ.com - The Banker Baiters


WSJ.com - Opinion: The Banker Baiters


White House financial czar Elizabeth Warren is off and running for Senate in Massachusetts, and her theme is t hat "the people on Wall Street broke this country." Meanwhile, Senator Dick Durbin this week urged customers to stage a run on Bank of America because it recently raised debit-card fees by $5 a month, President Obama piled on by telling regulators to punish BofA, and even Treasury Secretary Tim Geithner has joined the fun by vowing that America will "prevail" over the banks.

"Prevail"? Who is America's chief financial steward talking about here, the Taliban? What a turnaround: A couple of years ago Mr. Geithner was saying that Congress had to rescue the banks he was supervising at the New York Federal Reserve for the good of the economy, and now he's saying the same banks are enemies of the people.

Such are the vagaries of re-election politics when you don't have much else to run on. Lacking an agenda, much less an economic achievement, Democrats appear to have decided to campaign against Wall Street and the banks. Perhaps soon we'll see Ms. Warren and the President join the "Occupy Wall Street" protests in lower Manhattan. Maybe they can all march arm-in-arm on the New York Fed.

But how could they avoid protesting their own policies? The entire American financial system now operates under the rules they wrote in 2009 and 2010 when Democrats controlled both houses of Congress.

The predictable consequences of those rules are starting to appear in the marketplace. The 2009 CARD Act made it more difficult for credit-card issuers to raise rates and charge fees. New Federal Reserve regulations limited overdraft charges. Then came the 2010 Dodd-Frank law, which included a provision authored by Mr. Durbin that cut the "swipe fees" that debit-card issuers can charge merchants like Wal-Mart to process transactions.

Don't ask what any of this has to do with preventing the next financial crisis. The new rules and laws achieved Washington's goal of cutting bank revenues, by more than $15 billion per year. But it costs money to provide checking services and electronic payment networks, and the political class is now stunned that banks would seek new ways to profitably serve customers.




Friday, October 7, 2011

WSJ.com - America's Enduring Ideal

This article is longer and a bit thicker than most I post, but I think it gets to the core of many of our left/right debates.  Personally, I land on the side of maintaining personal freedoms while practicing and encouraging a moral life in all of us.


WSJ.com - America's Enduring Ideal


Only through a reshaping of our principles and a reordering of the American economy, Mr. Sachs believes, can we become "a mindful society." We must abandon a culture that is defined by hard work and the striving for upward mobility and an economy that has unleashed unparalleled prosperity. Hard work impedes leisure. Ambition is a vice. Economic growth hurts the planet.

Mr. Sachs is right to dislike the greed and vulgarity that can accompany bourgeois life. But he is wrong to attribute these phenomena to capitalism uniquely. Discord and imperfection arise from human nature. The question is how they can be contained and redirected. Capitalism, together with our moral traditions, has long offered a solution consistent with individual freedom.

The freedom and independence of the American population can best be guaranteed by allowing the people to govern themselves through their elected representatives; by keeping limits on the size of government; and by encouraging each of us to take responsibility for our own well-being. We can best be aided by our families, communities, churches and local institutions—and by the government only as a last resort.

For, ultimately, Mr. Sachs's quarrel is with our founding principles of equality and liberty. Underlying the arguments in "The Price of Civilization" is a contention that the Constitution is too conducive to freedom, that it endorses an economic system too friendly to growth and the satisfaction of appetite, that it creates political institutions too inattentive to our national character.

The Founders thought of America as exceptional, but Mr. Sachs thinks that this claim is a myth and that the country's present greatness a historical aberration. Our decline is, thankfully, inevitable, he says: "America will not again dominate the world economy or geopolitics as it did in the immediate aftermath of World War II. That was a special historical moment; we can be glad that economic progress throughout the world is rapidly creating a more balanced global economy and society."

It is through this prism of decline that we may better understand Mr. Sachs's calls for an overbearing government to take more earnings from you and make more decisions for you, as well as his instructions for hard-working Americans to restrain their ambitions and accept their current place in life. He seeks nothing less than to replace the vision of the Founders—the ideals of individual liberty that have enabled America to achieve the unrivaled social, material and spiritual flourishing of the past two and a quarter centuries—with one that relies almost solely on the wisdom and beneficence of an intrusive, unlimited government.

The dialogue between capitalism and its critics is an old one, and it will continue. But as citizens of a self-governing nation, Americans must choose from time to time between alternative visions for our future.




Thursday, October 6, 2011

WSJ.com - Elizabeth Warren and the Blessings of Government


WSJ.com - Opinion: Elizabeth Warren and the Blessings of Government


Elizabeth Warren—Harvard Law School professor, former Obama consumer-prot ection czar, and now a candidate for Senate in Massachusetts—recently gave a revealing presentation of her views on justice and taxing the rich:

"There is nobody in this country who got rich on his own. Nobody," she said at a campaign event. "You built a factory out there—good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. . . . You built a factory and it turned into something terrific or a great idea—God bless, keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay it forward for the next kid who comes along."

There's much truth in Ms. Warren's statement. But if government stuck to what it does fairly well—roads, police, fire and the courts; enforcing contracts that help businesses interact with their customers and other businesses—the federal government wouldn't need to spend over $3.5 trillion a year, as it now does. And of course it's state and local governments—and not Washington—that primarily fund police, fire and education, so it's a bit strange to ask the rich to pay their fair share of federal income taxes because they enjoy police protection.

Much government spending supports activities that are ineffective or even harmful to the economy, often helping the politically powerful at the expense of the rest of us. Wouldn't it be great for the federal governm ent to stop federal export subsidies, propping up financial institutions, meddling in the education system, and trying to engineer the entire health system from the top down?

If the feds stopped all that, Ms. Warren would have a stronger point. We could all feel some gratitude for government's role in helping us live better lives. All of us, rich and poor, would look at government differently.




Tuesday, October 4, 2011

WSJ.com - What if the NFL Played by Teachers' Rules?



WSJ.com - Opinion: What if the NFL Played by Teachers' Rules?


Imagine the National Football League in an alternate reality. Each player's salary is b ased on how long he's been in the league. It's about tenure, not talent. The same scale is used for every player, no matter whether he's an All-Pro quarterback or the last man on the roster. For every year a player's been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct.

Let's face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt?

No matter how much money was poured into t he league, it wouldn't get better. In fact, in many ways the disincentive to play harder or to try to stand out would be even stronger with more money.

Of course, a few wild-eyed reformers might suggest the whole system was broken and needed revamping to reward better results, but the players union would refuse to budge and then demonize the reform advocates: "They hate football. They hate the players. They hate the fans." The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn't help.

If you haven't figured it out yet, the NFL in this alternate reality is the real -life American public education system. Teac hers' salaries have no relation to whether teachers are actually good at their job—excellence isn't rewarded, and neither is extra effort. Pay is almost solely determined by how many years they've been teaching. That's it. After a teacher earns tenure, which is often essentially automatic, firing him or her becomes almost impossible, no matter how bad the performance might be. And if you criticize the system, you're demonized for hating teachers and not believing in our nation's children.