Gates and Buffett Take the Pledge - WSJ.com

 

Kimberly Dennis: Gates and Buffett Take the Pledge - WSJ.com

 

Bill Gates and Warren Buffett announced this month that 40 of America's richest people have agreed to sign a "Giving Pledge" to donate at least half of their wealth to charity. With a collective net worth said to total $230 billion, that promise translates to at least $115 billion.

It's an impressive number. Yet some—including Messrs. Gates and Buffett—say it isn't enough. Perhaps it's actually too much: the wealthy may help humanity more as businessmen and women than as philanthropists.

What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett's investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.

Other signers of the pledge, like Oracle's Larry Ellison and eBay's Pierre Omidyar, have similarly transformed the way people all over the world exchange information and products. They have democratized the transmission of ideas and goods, creating opportunities for people who never would have had them otherwise.

Successful entrepreneurs-turned-philanthropists typically say they feel a responsibility to "give back" to society. But "giving back" implies they have taken something. What, exactly, have they taken? They haven't taken from society, but rather enriched us in ways that were previously unimaginable.

 

 

 

On Gay Marriage, Leave It to the Voters - WSJ.com

I disagree with Mr. Yoo on the policy goal, but he is correct in describing how we should resolve the issue.

 

John Yoo: On Gay Marriage, Leave It to the Voters - WSJ.com

 

In deciding Perry v. Schwarzenegger last week, Judge Walker struck down California's Proposition 8, which banned gay marriage, as a violation of the rights of gays to equal treatment under the law. Judge Walker did more than distort settled precedent and sweep aside centuries of practice. He short-circuited the Constitution's democratic process for the resolution of moral disagreements.

A single judge, he elevated himself above the collective wisdom of millions of California voters and the considered judgment of state and federal officials.

The Constitution does not set up the federal courts as a roving commission of do-gooders to correct all of the nation's problems. The courts, populated by a small number of older lawyers deliberately isolated from the people and inexpert in any field, are likely to cause more social diseases than they cure.

This distortion of the judicial role and rending of the political fabric are wholly unnecessary. The Constitution creates a far better approach to decide contentious moral issues: federalism. Under our decentralized system of government, states offer different combinations of taxes, spending and rights. Citizens can vote with their feet and live in the states that satisfy their preferences.

We trust federalism on other fundamental questions, like life and death. Gay marriage should be treated no different than capital punishment, euthanasia and the basic questions of education, welfare and the family. During the Constitution's ratification, Alexander Hamilton assured New Yorkers that the Constitution would never permit the federal government to "alter or abrogate" a state's "civil and criminal institutions [or] penetrate the recesses of domestic life, and control, in all respects, the private conduct of individuals."

Federalism will produce the political durability that supporters of gay marriage want. If states steadily approve, a political consensus will form that will be difficult to undo.

Consider, by contrast, abortion. Roe v. Wade (1973) only intensified political conflict at a time when the nation was already moving in a pro-choice direction. The decision tied the fate of abortion to the whim of the courts. It poisoned our politics, introduced rounds of legislative defiance and judicial intervention, and undermined the neutral principles of constitutional law.

 

 

 

Washington vs. Paul Ryan - WSJ.com

 

Washington vs. Paul Ryan - WSJ.com

 

Mr. Ryan wants to remodel Medicare by giving seniors a modified voucher to buy private insurance. Mr. Orszag, et al., concede that the roadmap would make the entitlement permanently solvent, as confirmed in an analysis by their icon the Congressional Budget Office, but they claim that the amount of the voucher would not keep pace with rising health-care costs.

This is an odd complaint for an economist like Mr. Orszag, given that more market discipline and consumer choice in health care would drive down costs as it does in all other dynamic sectors of the economy. To take one example, recent research shows that a one percentage point increase in seniors insured by Medicare Advantage HMOs—the Ryan-like program that offers private options—reduces traditional fee-for-service Medicare spending by 0.9%, despite its price controls.

In other words, cost-conscious competition changes how doctors and hospitals provide care to all patients. A larger transition to market-based medicine could turn out to be as smooth as the private-sector shift to 401(k)s from defined-benefit pensions, and a similar reform was even suggested in 1999 by Bill Clinton's Medicare commission, which was led by Louisiana Democrat John Breaux.

This model is a threat to the ideology of those like Mr. Krugman who believe that government can and should decide how all patients are treated. But technocratic central planning won't reform the system, as its sad 45-year history in Medicare shows, and nothing is more likely to finish off Medicare "as we know it" than to continue the current trajectory as it swallows the federal fisc and crowds out all other priorities.

In that sense, Mr. Ryan is really presenting Washington with a philosophical choice between the status quo of an ever-larger and ever-more indebted government and a plan to pay for the promises we've made while still preserving free markets and economic growth. The firehose of invective pointed at Mr. Ryan is in part an attempt to scare voters and in part an effort to prevent voters from understanding that there is in fact a choice.

 

 

 

Why I'm Not Hiring - WSJ.com

First-hand account from an employer.

 

Michael P. Fleischer: Why I'm Not Hiring - WSJ.com

 

When you add it all up, it costs $74,000 to put $44,000 in Sally's pocket and to give her $12,000 in benefits.

To offset tax increases and steepening rises in health-insurance premiums, my company needs sustainably higher profits and sales—something unlikely in this "summer of recovery." We can't pass the additional costs onto our customers, because the market is too tight and we'd lose sales. Only governments can raise prices repeatedly and pretend there will be no consequences.

And even if the economic outlook were more encouraging, increasing revenues is always uncertain and expensive. As much as I might want to hire new salespeople, engineers and marketing staff in an effort to grow, I would be increasing my company's vulnerability to government decisions to raise taxes, to policies that make health insurance more expensive, and to the difficulties of this economic environment.

A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price.

 

 

Does Language Influence Culture? - WSJ.com

I almost didn’t read this article, but I’m so glad I did!  Fascinating!

 

Does Language Influence Culture? - WSJ.com

New cognitive research suggests that language profoundly influences the way people see the world.

 

It turns out that if you change how people talk, that changes how they think. If people learn another language, they inadvertently also learn a new way of looking at the world. When bilingual people switch from one language to another, they start thinking differently, too. And if you take away people's ability to use language in what should be a simple nonlinguistic task, their performance can change dramatically, sometimes making them look no smarter than rats or infants.

All this new research shows us that the languages we speak not only reflect or express our thoughts, but also shape the very thoughts we wish to express. The structures that exist in our languages profoundly shape how we construct reality, and help make us as smart and sophisticated as we are.

 

 

 

Taxes: A Defining Issue - WSJ.com

Daniel Henninger: Taxes: A Defining Issue - WSJ.com

 

At a time when the American people need to make some decisions about the nation's purpose, along comes Barack Obama to make the choices crystal clear.

In one corner of the world you have Europe, beset by a sovereign debt crisis that's been building for 50 years.  Americans, staring at fiscal crevasses opening across Europe, have to decide if they also wish to spend the next 50 years laboring mainly to produce tax revenue to pay for public workers' pensions and other public promises. The private sector would exist for the public sector.

In another corner of the world, wealth is rising from the emerging economies of the east—China, India, Korea and the rest—posing America's greatest economic challenge in anyone's lifetime. Do the American people want to throw in the towel, or do they want to compete? If the latter, the public sector has to give way to the private sector.

One or the other. It's time to choose.

This election and these times are a chance to put to the voters opposed visions of why we work and what we do with the money we earn.

If voters ultimately feel more secure with a Barack Obama and the like designing a national itinerary for some 300 million people in 50 states, then certainly one should vote for letting taxes rise now on one class of Americans and imposing a VAT next year on everyone. They need a whole lot of money, so give it to them to the horizon. We work, they decide.

The alternative vision is that to compete for the next 50 years, the U.S. is going to need a tax structure that keeps more of the nation's decisions about using its wealth in the hands—and minds—of millions of intelligent citizens, from any economic class. They work, they decide.

So: Extend the current tax rates for all and free everyone in an economy begging for the chance to be strong again. Yes, the U.S. economy will always be "strong," but it needs to be strong enough to take on all comers and win, which last time I looked was the real American way.

 

 

 

Giving Lousy Teachers the Boot - WSJ.com

McGurn: Giving Lousy Teachers the Boot - WSJ.com

 

Donald Trump is not the only one who knows how to get attention with the words, "You're fired." Michelle Rhee, chancellor for the District of Columbia schools, has just done a pretty nifty job of it herself.

On Friday, Ms. Rhee fired 241 teachers—roughly 6% of the total—mostly for scoring too low on a teacher evaluation that measures their performance against student achievement. Another 737 teachers and other school-based staff were put on notice that they had been rated "minimally effective." Unless these people improve, they too face the boot.

Now, getting good teachers in the classroom and rewarding them for their work has always been a key aim of reformers. Alas, that also requires getting the dead weight out of the classroom and off the payroll. That's not so easy to do in big-city school districts, as reformers like Joel Klein, New York's school chancellor, have found.

So why has Ms. Rhee succeeded where others have come up short? One huge reason is the advance of school choice and accountability throughout Washington. Though reform has come fitfully to D.C., today 38% of the district's students are in charter schools. Until the Democrats killed it, there was also a voucher program for a few thousand more. The result of all this ferment is that the teachers union is feeling pressure it has never felt before.

 

 

 

The Liberal Dilemma - WSJ.com

Not that I care if liberalism’s agenda gets strangled, but I’m curious to observe the debate on that side of the isle and if there is courage to take on gold-plated public pensions.

 

Daniel Henninger: The Liberal Dilemma - WSJ.com

 

The Democratic Party's capture by public unions and professional politicians is strangling much of liberalism's agenda.

 

Listen to Jeff Adachi, a San Francisco Democrat and the city's elected Public Defender:

"San Francisco is the most progressive, pro-union, you know, lefty, and I'm probably the poster boy for that in many ways. But the reality is, if we don't do something, all of the important programs, not only public defense but we're talking about children's programs, after-school programs, education, senior programs, everything that we care about as progressives is going to be lost because it's being sucked up by the cost of pensions."

This downward spiral won't stop when the economy returns. The unions will get theirs; the vulnerable categories will get the shaft. For this to change, the modern Democratic Party would have to change. It's got to decide if it wants to do more for real people and less for gerrymandered politicians and union protectorates. Lifetime pol Joe Biden says the stimulus "is working." It is, for the boys in the clubhouse. Honest liberals and progressives distraught over the harsh math of 2010 have more in common with the tea partiers than they imagine.

 

 

 

The 'Paralyzing Principle' - WSJ.com

 

Review & Outlook: The 'Paralyzing Principle' - WSJ.com

 

The Gulf oil spill is having all sorts of nasty consequences well beyond damage to the regional environment and economy. Not least, the resulting political panic seems to be rehabilitating the thoroughly discredited theory of regulation known as the precautionary principle.

This principle holds that government should attempt to prevent any risk—regardless of the costs involved, however minor the benefits and even without understanding what those risks really are.

[Obama White House regulatory czar] Cass Sunstein's insight is that there are risks on all sides of a question—doing nothing can be dangerous, but acting might be more dangerous—so the only rational way to judge regulation is to quantify the costs and benefits. If the Food and Drug Administration took a harder line in approving new medicines, it might protect the public from a future thalidomide disaster. But it could also deprive the public of cures for disease or expose it to serious peril, like having no recourse in a pandemic.

In a 2002 book, Mr. Sunstein pointed out that the best way to prevent automobile pollution would be to eliminate the internal combustion engine. Should the EPA ban that too? "If these would be ridiculous conclusions—as I think they would be—it is because the costs of the bans would dwarf the benefits. Pollution prevention is not worthwhile as such; it is worthwhile when it is better, all things considered, than the alternatives."

 

 

 

David Souter vs. the Constitution - WSJ.com

This historical example illustrates that law should mean what it says, not what some justices think it should say or mean.  If a law is outdated, than we should change it, not just impose “new realities” thru judicial dictat.

 

John McGinnis and Michael Rappaport: David Souter vs. the Constitution - WSJ.com

 

The former justice's logic would justify Plessy v. Ferguson.

At the recent Harvard commencement, retired Supreme Court Justice David Souter attacked what he regards as the "simplistic" model of giving the Constitution a "fair reading." A judge, he said, must determine which of the conflicting constitutional values should become our fundamental law by taking account of new social realities. His remarks were a thinly veiled assault on those who think the Constitution should be interpreted according to its original meaning.

Justice Souter actually provided a primer on how not to be a judge. He made up a Constitution that never was to justify a kind of judicial power that was never intended.

We should reflect on the great suffering and injustice that a failure to follow the original meaning of the 14th and 15th Amendments caused to so many for almost a century. While we believe that an originalist reading of the Constitution also supports Brown, the salient point here is that Brown would not have had such central importance had the Reconstruction-era amendments been enforced according to their original meaning. The greater economic and voting power that enforcement would have ensured would likely have prevented the caste system of public education in the South.

Justice Souter recognizes that his method of interpreting the Constitution is indeterminate, but he argues that it is necessary to put our trust in justices to reach just results. The historical reality is that this interpretive method permitted justices to create a Constitution of their own contrivance in the service of injustice.

 

 

 

Obama's Political Oil Fund - WSJ.com

Obama's Political Oil Fund - WSJ.com

The BP oil spill is already a calamity for the Gulf Coast ecosystem and economy, but now that Washington is looking to deflect all political blame it could also became a disaster for the rule of law. Exhibit C is the new White House demand that BP pay into an escrow account controlled by government to pay for the economic costs of the spill.

The idea is for BP to turn its assets over to a fund administered by an "independent" trustee who would decide what are legitimate damage claims from Gulf residents and businesses.

The White House knows it has no legal authority to demand such a corporate ATM card, but it is counting on public anger to coerce BP to go along. The White House also knows BP is currently operating under the Oil Pollution Act, a piece of legislation passed in 1990 by a Democratic Congress.

The bill made polluting oil companies responsible for all containment and clean-up costs. The law also established a claims process, which requires that companies compensate businesses or individuals harmed by oil spills.

BP has more than 600 claims personnel working to pay fishermen and others that have suffered economic damage. It has vowed to pay all "legitimate" claims and has worked through 20,000 of 42,000 submitted so far…

By contrast, a government-administered fund more or less guarantees a more politicized payment process. The escrow administrator will be chosen by the White House, and as such would be influenced by the Administration's political goals. Those goals would include payments to those harmed by the Administration's own six-month deep water drilling ban. That reckless policy will soon put thousands of Gulf Coast residents out of work, but the White House knows that BP isn't liable under current law for those claims. The escrow account is an attempt to tap BP's funds by other means to pay the costs of Mr. Obama's own policy blunder.

Offshore drilling, even in shallow water, is coming to a stop as the entire industry considers the additional political risks of operating amid a political panic in which even the President of United States seems oblivious to the rule of law. We hope BP resists Mr. Obama's demands to put a political actor in control of its Gulf payments—both for the sake of legitimate Gulf claims, and to vindicate the U.S. as a nation that doesn't discard the law for the sake of political retribution.

 

 

Are You Smarter Than a Fifth Grader? - WSJ.com

Before you read today’s article, test yourself by answering the following questions AGREE or DISAGREE, based on your understanding of basic economics:

1)      Restrictions on housing development make housing less affordable.

2)      Mandatory licensing of professional services increases the prices of those services

3)      Overall, the standard of living is higher today than it was 30 years ago

4)      Rent control leads to housing shortages

5)      A company with the largest market share is a monopoly

6)      Third World workers working for American companies overseas are being exploited

7)      Free trade leads to unemployment

8)      Minimum wage laws raise unemployment

It’s too bad basic econ isn’t actually taught in 5^th grade, or 12^th grade for that matter.  Perhaps our country would be in a better financial situation if it were.

 

Daniel Klein: Are You Smarter Than a Fifth Grader? - WSJ.com

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey the answer is unequivocal: The left flunks Econ 101.

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.

Adam Smith described political economy as "a branch of the science of a statesman or legislator." Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us.

 

 

Does the Internet Make You Smarter? or Dumber? - WSJ.com

A pair of articles today.  I found the implications of both articles worth the time spent reading, and I don’t think they made me dumber.

Does the Internet Make You Smarter? - WSJ.com

Every increase in freedom to create or consume media, from paperback books to YouTube, alarms people accustomed to the restrictions of the old system, convincing them that the new media will make young people stupid. This fear dates back to at least the invention of movable type.

What the 16th-century foes of print didn't imagine—couldn't imagine—was what followed: We built new norms around newly abundant and contemporary literature. Novels, newspapers, scientific journals, the separation of fiction and non-fiction, all of these innovations were created during the collapse of the scribal system, and all had the effect of increasing, rather than decreasing, the intellectual range and output of society.

We are living through a similar explosion of publishing capability today, where digital media link over a billion people into the same network. This linking together in turn lets us tap our cognitive surplus, the trillion hours a year of free time the educated population of the planet has to spend doing things they care about. In the 20th century, the bulk of that time was spent watching television, but our cognitive surplus is so enormous that diverting even a tiny fraction of time from consumption to participation can create enormous positive effects.

 

Does the Internet Make You Dumber? - WSJ.com

The picture emerging from the research is deeply troubling, at least to anyone who values the depth, rather than just the velocity, of human thought. People who read text studded with links, the studies show, comprehend less than those who read traditional linear text. People who watch busy multimedia presentations remember less than those who take in information in a more sedate and focused manner. People who are continually distracted by emails, alerts and other messages understand less than those who are able to concentrate. And people who juggle many tasks are less creative and less productive than those who do one thing at a time.

 

 

 

Storming the School Barricades - WSJ.com

"The Lottery"—an explosive new documentary about the battle over the future of public education opening nationwide this Tuesday.

The Weekend Interview with Madeleine Sackler: Storming the School Barricades - WSJ.com

 

A new documentary by a 27-year-old filmmaker could change the national debate about public education.

Finding out that the teachers union had hired a rent-a-mob to protest on its behalf was "the turn for us in the process." That story—of self-interested adults trying to deny poor parents choice for their children—provided an answer to Ms. Sackler's fundamental question: "If there are these high-performing schools that are closing the achievement gap, why aren't there more of them?"

Some parents in the film do not know what exactly a charter school is. And the truth, as the film implicitly points out, is that such technical designations don't much matter. What these parents know is that they desperately want their children to have the best possible education, and to have opportunities that they themselves could only imagine. Winning a spot in Harlem Success Academy—or another high-performing school—is critical to reaching that goal.

"The public education system is at a crossroads," Ms. Sackler says. "Do we want to go back to the time when children are forced to attend their district school no matter how underperforming it is? Or do we want to let parents choose what's best for their kids and provide a lot of options? Sometimes those options might fail. But . . . I don't see how you could choose to settle for what we've been doing for half a century when it's been systemically screwing over the same kids—over and over and over."

 

 

 

The West's Wrong Turn on Natural Resources - WSJ.com

 

Joseph Sternberg: The West's Wrong Turn on Natural Resources - WSJ.com

 

For all that talk about a new knowledge economy, things still matter a great deal in this world. And whether it's the steel beam holding up the floor of your office, the gasoline you put in your car or the circuitry in your new iPad, "things" mean natural resources. So it's worrying that one of the major policy trends emerging in recent days is that the capitalist West is cutting itself out of the resource game.

The danger is that if [democracies] won't supply minerals to the world on market principles, others—like China—will step into the gap with other ideas.

Without giving too much credence to China alarmists, it is still possible to say the world is better off if resources are in the hands of transparent companies that will trade on market principles free of the risk of excessive government interference. The third and worst alternative is to stay on the current track of crippling Western resource reserves while also blocking capital from the willing investors that remain.

Yes, companies will continue to extract resources in the West even under the taxes (though the outright drilling ban is another story). But those bad policies will make a major difference at the all-important margins of the market, which drive pricing decisions. The choice for Western policy makers now is simple: They can clamp down on their resource industries for domestic political reasons and hand pricing and supply power to nonmarket and nondemocratic governments. Or they can allow their own companies to run a truly global resource market capable of meeting the world's need for things.

 

 

The New Cannery Row - WSJ.com

 

Review & Outlook: The New Cannery Row - WSJ.com

 

Hidden inside the latest Democratic spending bill is an $18 million taxpayer handout to American Samoa. How did that get in there? Read on for another lesson in the uncreative jobs destruction of the minimum wage.

When Democrats in Congress increased the minimum wage in 2007, the U.S. territory of 65,000 in the South Pacific pleaded for its traditional exemption from the wage law to prevent job losses. But Democrats followed union orders and said that if multinational companies like StarKist, one of Samoa's largest employers, could pay its CEO millions it could afford to pay workers $7.25 an hour. So they raised the minimum wage for low-skilled Samoan workers from $3.26 an hour to $5.25 today and by 2015 it will rise to the current U.S. minimum of $7.25.

Job losses have followed the way that any economics 101 student would expect. Last September Chicken of the Sea closed its tuna canning operation in the territory, leaving more than 2,000 Samoans jobless.

Then last month StarKist announced it will lay off as many as 800 workers, bringing its work force there from 3,000 before the minimum wage hike to 1,200 by 2011. StarKist explained that because of the minimum wage hike Samoa is no longer competitive with other tuna canning countries. American Samoa's unemployment rate, which was less than 10% in 2003, has climbed to some 30% or more today. Sorry, Charlie.

We've rarely seen a more devastating real world indictment of the impact of the minimum wage. Congress could simply lower the minimum wage to bring the jobs back, but instead taxpayers get to shell out $18 million to undo the damage that Congress's economic illiteracy has caused. Please remember this the next time a Member of Congress says the minimum wage helps "working families."

 

 

 

Of Politics and Oil - WSJ.com

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 - WSJ.com

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.

The Bankrupting of America - WSJ.com

 

Mortimer Zuckerman: The Bankrupting of America - WSJ.com*

 

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.

 

 

 

 

Can Dirt Do a Little Good? - WSJ.com

 

Can Dirt Do a Little Good? - WSJ.com

 

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."

 

 

 

The We're-Not-Europe Party - WSJ.com

 

Dan Henninger: The We're-Not-Europe Party - WSJ.com

 

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.

 

 

Welfare Wagons - WSJ.com

 

Holman Jenkins: Welfare Wagons - WSJ.com

 

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.

 

 

 

Blame Obama. Why Not? - WSJ.com

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

 

Dan Henninger: Blame Obama. Why Not? - WSJ.com

 

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.

 

 

Elena Kagan and the 'Hollow Charade' - WSJ.com

 

Neomi Rao: Elena Kagan and the 'Hollow Charade' - WSJ.com

 

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.

 

 

 

What Cards Don't Say on Mother's Day - WSJ.com

To Mom. 

 

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

 

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."