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June 29, 2005
Taking a Break from Domestic Politics
Next week, with backpacks filled to the brim, Emily and I will be crossing the San Diego/Tijuana border and not returning to California for a year. It follows that the postings on this website will change from that point forward.
Many regular readers may have never wandered over to the About section to see why this site was started. “Economics With A Face” is the planned title of a book I plan to write on economics during a trip around the world. This site will be home to our travelogue, and hopefully, lay the groundwork for the book.
But since I started this site, I’ve used this weblog to practice writing on various topics. Readers will know that two of my favorite subjects have been Social Security reform and immigration reform, both currently hot-button issues in U.S. politics. Once we leave the country next week we plan on also leaving behind these domestic disputes. I might find time to comment on them from time to time, but for the most part I’ll leave the debate to the various weblogs on the left sidebar.
For now, as a form of closure, I’ll post some final thoughts on both issues whose causes will hopefully be advanced during our year abroad:
Social Security
Whether you say it’s bankrupt or merely in need of minor reform, I think it’s safe to say that a clear majority now understand that something needs to be done about Social Security, even if few can agree on the specifics of a proposal. To his credit, President Bush has accomplished this goal.
The optimist that I am, earlier this year I was convinced that some form of voluntary private accounts would be in place by this summer. To me, it just seemed like a no-brainer. Social Security is currently run like a Ponzi scheme and, by the very nature of its Ponzi scheme setup, has promised to pay out trillions more than it will take in through payroll taxes.
What better way to fix this mess than to let workers put part of their payroll taxes in private accounts? Much like a 401k, this would allow all workers to build real assets for retirement, instead of being forced to rely on the tax payments of their children and grandchildren 40 years down the road. While it’s true there is no crisis now, in order to fix the crisis coming down the road people need to start saving for themselves and the quicker the better.
I assumed fixing the system would find bipartisan support by slowing the growth of benefits for upper-income workers coupled with frontloading the contributions to private accounts so that even the lowest income earners would be putting aside a substantial amount of money. (For example, the Ryan-Sununu bill is set up so that workers earning as little as $10,000 annually would still set aside $1000 a year in their own account for retirement.)
Unfortunately, as witnessed by the current state of Social Security reform, my optimism has not transformed into political reality.
Somewhat surprisingly Democrats and some Republicans in Congress have come out against both progressive indexation of benefits and frontloading the contributions to private accounts. But if you’re against raising taxes on the middle class, against cutting benefits for anyone (including Bill Gates), and against private accounts, then the only way you can find money to fix the system is to raise taxes on the rich. The problem is that you first need to define rich, and second, when you compute the numbers, that won’t be enough to permanently fix the system. Add to that the coming Medicare crisis and fixing the Social Security problem without raising taxes becomes all the more imperative.
You’ll also hear many politicians say that they’re not necessarily against private accounts; it’s just that right now we can’t afford “the transition costs.” Any time you hear a politician utter these words it means one of two things: they are either stupid or dishonest. I tend to think most lean towards the latter but either way they shouldn’t be in office. As I stated above, Social Security has promised to payout trillions more than it will take in through payroll taxes. Tackling these costs today instead of years down the road does not increase their magnitude in the least. Politicians know that fact. Yet, they also know that they won’t be in office years down the road, and thus, prefer to push off politically unpopular reform for someone else to deal with.
Alas, it looks like the strategy of opposing any and all reform has been an effective political tactic, even if reprehensible. Luckily this can’t work forever. At some point the Democrats in leadership positions are going to have to bring some ideas to the table. Having the basis of your political philosophy “Against-All-Things-Bush” can’t be a long-term winner. After all, he is going to be out of office in another 3.5 years.
So soon politicians on both sides of the isle will have to start putting forth ideas, and at that point, whether in 1 year or 10, I’m sure that good ideas will rise to the top. Regrettably, it’s taking longer than I originally thought for the simple reason that politicians are in charge of any reform. Many politicians believe that they are smarter than the average person, and they seek power with the hope of making a better world through their wisdom. Of course, the government is the means towards their end. Yet many miss the key point that the good of society comes not from a centralized government directing the masses, but instead, from each individual being able to live their life freely.
P. J. O'Rourke sums this up nicely when he said:
Individual liberty is lost when government stops asking ‘What is good for all individuals?’ and starts asking ‘What is good?’
Private accounts get the government asking once again: “What is good for all individuals?” These accounts would take away a massive amount of power from Washington and redistribute it to men and women across the nation. That’s a big pill to swallow for those who prefer to act on “What is good.” For now, I’ll stay optimistic and believe that politicians are going to have to swallow it sooner rather than later.
For those who still desire more on Social Security, scroll down on this link and review my old posts. I hope next summer I’ll be able to add another to the list stating that workers across this nation are accumulating their own assets in their own retirement accounts. It would be a triumph for individual responsibility and liberty.
Immigration Reform
This is another issue that I’ve been optimistic on, only to be brought back down to earth by political reality. When first proposed by President Bush, I though some form of his guest worker program would be in place before the election. Here we are a year and a half past the date of his original proposal and migrant workers are still paying thousands to cross the border illegally. (Yes Pat, I still owe you $5).
Still progress has been made. McCain and Kennedy have introduced legislation in the Senate while Kolbe, Flake, & Gutierrez have introduced legislation in the House. Hot heads on AM talk radio are doing their best to thwart any attempt to reform our broken immigration system, but in the end I’m convinced they will lose the battle of ideas. For the most part, their concerns about security and waste of taxpayer's dollars are overblown.
Getting 10 million illegal immigrants into the system, in addition to making it easier for those who want to come to this country and work, will be a huge plus for our border security. Those who do not come forward are obviously more of a potential threat, and immigration officials could focus on this smaller group. Similarly, if a migrant worker can cross the border legally to do seasonal work, immigration officials will know that those crossing out in the middle of the desert are probably not simply coming here to earn money.
Immigration is a clear benefit to our society. But instead of going into a detailed defense here I’ll simply direct you to my archive section, with special attention to the two touching stories of to Jose Antonio Gutierrez (here and here) and Rafael Peralta.
It’s not very often that a government bill would instantly improve the lives of millions within this country and at the same time improve our security. The bills recently introduced in Congress would do exactly that. The sooner they cross the President’s desk for his signature the better. Again, I hope I’ll be posting on meaningful immigration reform once I’m back in the States.
So That’s All Folks…
And with that I’ll put U.S. politics to rest on this site. Emily says she’ll believe it when she sees it, but truthfully I think I’ll enjoy the break. Instead of reading the news dominated by stories political partisanship, we’ll instead be writing the news ourselves, and approaching it from the much more pleasurable perspective of the importance of individual liberty.
Truthfully, I can’t wait.
Posted by Peter Mork at 2:43 PM | Comments | TrackBack
June 28, 2005
Two Wrongs Don't Make A Right...
...but this still seems quite appropriate:
Weare, New Hampshire (PRWEB) Could a hotel be built on the land owned by Supreme Court Justice David H. Souter? A new ruling by the Supreme Court which was supported by Justice Souter himself itself might allow it. A private developer is seeking to use this very law to build a hotel on Souter's land.
Justice Souter's vote in the "Kelo vs. City of New London" decision allows city governments to take land from one private owner and give it to another if the government will generate greater tax revenue or other economic benefits when the land is developed by the new owner.
On Monday June 27, Logan Darrow Clements, faxed a request to Chip Meany the code enforcement officer of the Towne of Weare, New Hampshire seeking to start the application process to build a hotel on 34 Cilley Hill Road. This is the present location of Mr. Souter's home.
Clements, CEO of Freestar Media, LLC, points out that the City of Weare will certainly gain greater tax revenue and economic benefits with a hotel on 34 Cilley Hill Road than allowing Mr. Souter to own the land.
The proposed development, called "The Lost Liberty Hotel" will feature the "Just Desserts Café" and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon's Bible each guest will receive a free copy of Ayn Rand's novel "Atlas Shrugged."
Clements indicated that the hotel must be built on this particular piece of land because it is a unique site being the home of someone largely responsible for destroying property rights for all Americans.
"This is not a prank" said Clements, "The Towne of Weare has five people on the Board of Selectmen. If three of them vote to use the power of eminent domain to take this land from Mr. Souter we can begin our hotel development."
Clements' plan is to raise investment capital from wealthy pro-liberty investors and draw up architectural plans. These plans would then be used to raise investment capital for the project. Clements hopes that regular customers of the hotel might include supporters of the Institute For Justice and participants in the Free State Project among others.
A big thanks to Jon Moore for the link
Posted by Peter Mork at 2:05 PM | Comments | TrackBack
Three "Must Reads" on Social Security
I'll be posting at length tomorrow on Social Security, but in the meantime I wanted to direct everyone's attention to these three "must reads" on the topic:
1) Will Wilkinson takes a much needed look at the moral/ideological dispute over Social Security in a Cato Social Security Choice report entitled “Noble Lies, Liberal Purposes, and Personal Retirement Accounts.”
2) Jim Glass reminds us of his "thought experiment" on Social Security and ties it in with the new Demint-Ryan plan that includes marketable Treasury debt in private accounts.
3) Pat Toomey follows up Glass in today's WSJ with a more detailed look at Demint-Ryan.
Happy reading...
Posted by Peter Mork at 12:43 PM | Comments | TrackBack
June 27, 2005
It Has Started
Tom Palmer links to this article from the Houston Chronicle:
FREEPORT - With Thursday's Supreme Court decision, Freeport officials instructed attorneys to begin preparing legal documents to seize three pieces of waterfront property along the Old Brazos River from two seafood companies for construction of an $8 million private boat marina.
The court, in a 5-4 decision, ruled that cities may bulldoze people's homes or businesses to make way for shopping malls or other private development. The decision gives local governments broad power to seize private property to generate tax revenue.
"This is the last little piece of the puzzle to put the project together," Freeport Mayor Jim Phillips said of the project designed to inject new life in the Brazoria County city's depressed downtown area.
Posted by Peter Mork at 3:11 PM | Comments | TrackBack
June 23, 2005
Economic Growth vs. Individual Rights
Supreme Court “liberals” stood up for developers, big business, and the power of the government over the individual in the 5-4 ruling today of Kelo v. New London.
It goes something like this: You own your home, unless of course your local government determines that it would be more useful to the economy as Burger King or a Target. If they feel that’s the case they can bulldoze your residence in the name of economic progress. Sickening.
Look, I think economic growth is extremely important, but it is not an end goal. Individual rights should trump any goals for "the good of society" set by politicians, economic development included. Wasn’t economic growth used in the 19th century to defend slavery? Sadly, once again, the government is ignoring the moral importance of individual freedom.
What scares me most about the Kelo case is that it makes states like California a prime target. Take cash strapped San Diego for instance. With a capped property tax of 1% that grows with inflation, local officials must be licking their chops at the prospects of refilling the city coffers. What’s to stop them from turning Mr. and Mrs. Smith’s home bought in the 1960s into a shopping center? Not only will the city start collecting additional sales taxes, but they’ll also get 1% of the property’s 2005 value annually instead of 1% of the property’s value in 1960. With California real estate prices performing as they have over the last few decades, this becomes an ever more appealing option to politicians.
There are lots of great analyses across the web but I thought this post by Radley summed it up nicely:
Sigh
The Supreme Court just ruled 5-4 that localities can seize land from private property owners and give it to developers -- for the sole purpose of increasing tax revenues.
The five most liberal justices on the court made up the majority, once again proving that today's left is utterly devoid of any principle other than ensuring massive, all-encompassing, ever-growing government power. In this case, they'll gladly side with huge corporations who collude with state and local government to screw powerless people out of the homes and property they've owned for generations. The corporations get cheap land below market value, and the local city council members get more tax money to throw around to win votes.
This was the worst Supreme Court term for the cause of liberty in a very long time.
It's hard to express how disappointing the last few months have been.
And this by Julian (via Will) wasn't bad either:
Now that the "liberal" justices on the court have sided with the drug warriors against cancer patients, and with a plan to rob people of their homes for the benefit of wealthy developers, will some court-watchers on the left begin to question the wisdom of having let economic freedom become the red-headed stepchild of modern jurisprudence?
. . . The straightforward implication is that any taking of a private residence to hand it over to a business, or just from a poor person to a wealthy person, will be a taking in service of a public purpose: As a general rule, the rich pay more taxes than the poor, and businesses pay more taxes than households.
Posted by Peter Mork at 11:10 PM | Comments | TrackBack
June 16, 2005
Fearing China
There was a great op-ed in Monday's San Francisco Examiner. Head on over and give it a read:
China. Why has that word for so long struck fear in the hearts of many Americans? During the Cold War people harbored terrible fantasies about hordes of Chinese swarming over them and imposing a virulent Oriental communism. Now the Cold War is over, and although China still has a communist-inspired authoritarian government, this is not your father's Red nemesis. Much has changed in the world's most populous country.
Yet many Americans remain in fear. But now it is an economic fear: China will buy up all the beef. China will buy up all the wheat. China will make all the textiles and clothing and take our jobs. China's trade surplus with the United States will put us hopelessly in debt.
Nonsense. It's about time we kept our heads and applied some basic economics to what's going on.
Hat Tip: Thanks to Cafe Hayek for the link.
Posted by Peter Mork at 2:28 PM | Comments | TrackBack
June 7, 2005
Gonzales v. Raich
If you have the time, it's worth reading Justice Thomas' dissent in the medical marijana case recently heard before the Supreme Court:
Respondents Diane Monson and Angel Raich use marijuana that has never been bought or sold, that has never crossed state lines, and that has had no demonstrable effect on the national market for marijuana. If Congress can regulate this under the Commerce Clause, then it can regulate virtually anything–and the Federal Government is no longer one of limited and enumerated powers.
Posted by Peter Mork at 9:35 AM | Comments | TrackBack
June 5, 2005
Two Marathons
I did two marathons this weekend. First up was the L3 CFA exam on Saturday. I walked out of the morning session thinking I had it in the bag. After the afternoon session I was convinced I had failed. My only consolation is that everyone else seems to be in the same boat, and I really don't think another 100+ hours would have made that big of a difference in my score. I just wouldn't have studied the material tested in the afternoon in the detail required. Totally blind sided. Tao sums it up nicely on his blog.
Next up was the Rock 'n' Roll Marathon this morning. Spending every waking moment studying for the test didn't leave much time for training, but somehow I managed to get through it. Right now I can barely walk but at least I can check "Running a Marathon" off my list of things to do in life. The next couple weeks are still going to be hectic as we're moving and getting ready for our trip, but hopefully I'll be able to start posting with a little more frequency.