The Amateur Citizen

Stimulating My Nostalgia - ARRA's Five Year Anniversary

2014-02-24T01:24:00.001-08:00

I woke up Sunday morning, opened up The New York Times and scrolled down to the Opinion section. Listed at the top was an Op-Ed penned by the NYT's Editorial Board about the five year anniversary of the American Recovery and Reinvestment Act and what it had accomplished. I couldn't help but feel nostalgic. At the time of the bill's passage I was 22 years old and finishing my last year of undergrad in beautiful San Luis Obispo, Ca. It was one of the happiest periods of my life, even despite the fact I was about to graduate right as the Great Recession began.

At the time I was very hopeful about the Obama presidency (I voted for him in November 2008) and his stimulus bill; I was sympathetic to progressive economic ideology. But it didn't take long for my hope to turn to doubt. In January 2009, while ARRA was making its way through Congress, I was enrolled in two Economics courses taught by Dr. Michael Marlow. The key takeaways in class were that the macroeconomy is extremely complex and there is a hidden side to everything. The famous Friedrich Hayek quote became one of my favorites, "the curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

Hence my skepticism Sunday upon reading the NYT Editorial Board's proclamation that the stimulus package worked, even though the NYT stated ARRA was not well constructed nor big enough. My personal bias is that ARRA destroyed value and that the American economy would have been better off had we not borrowed and spent $832 billion through political and government channels, but instead let the American people keep the billions and save or invest it as they best saw fit. Although the Times eloquently claimed that the stimulus was worth it, their math was not convincing.

The NYT editorial board distilled ARRA's benefits into one paragraph, but one sentence succinctly summarized their evidence, "(ARRA) raised the nation’s economic output by 2 to 3 percent from 2009 to 2011."

Some back of the envelope math on these numbers are as follows...U.S. GDP grew from $14.5 trillion in 2009 to $15.2 trillion in 2011, or ~4.8%. 3% of which ($435 billion) is directly attributable to ARRA according to the NYT and their survey of "fair-minded economists."

Perhaps I'm misunderstanding the Times, but $435 billion of value is $397 billion short of the original investment five years in, using the rosiest assumption, and ignoring opportunity costs and the extra costs of interest rates. ARRA's actual GDP contribution of 3% could be lower, as is often the case with headline numbers. So much for that economic multiplier we kept hearing and reading about in early 2009.

Taking into account the interest payments future generations are now forced to repay and the picture looks fuzzier (as well as selfish and unfair to those young Americans). Assuming the government financed the $832 billion ARRA package via 10 year notes at 2.5% (interest rates ranged from ~2% to ~4% in the 2.5 years following ARRA) is ~$21 billion in interest per year. A total of $210 billion in interest costs will by incurred by 2019 directly related to ARRA. By 2019 the total cost of ARRA will be $1.04 trillion.

The final cost of ARRA will probably be much higher as there is no current plan from Democrats nor Republicans (save Rand Paul) to reduce our total outstanding debt...so ARRA will continue to sit on the government's books accruing billions in interest each year. This debt will most likely be a drag to future growth as future generations will be left to pay ARRA's bill...and by that time whatever short term 3% GDP blip will be long forgotten and arguably less significant than the $1+ trillion dollars of debt.

The NYT tried to answer a seemingly simple question: was ARRA worth it? Too bad there is not a simple answer, and it's most likely not "yes". A tougher, more pertinent, question is what would have happened had we not borrowed $832 billion and spent it on a smorgasbord of spending bills and temporary tax cuts? That's impossible to answer but after analyzing the NYT's proof we probably would have been better off not adding $1 trillion of additional debt onto our collective books.

In addition to the pleasant nostalgia I received while reflecting on early 2009, the NYT Editorial Board reminded me of that Hayek quote. The curious task of economics is to prove to politicians that the outcomes of their ambitious economic designs may end in a lesson in humility, and an example of the limitations of macroeconomics as a precise science.

My Zimmerman Verdict

2013-07-14T12:56:00.004-07:00

The case of Trayvon Martin and George Zimemrman is so sad, simply because this entire tragedy could have been easily avoided. Consider if Zimmerman had instead yelled out to Martin on that fateful February 2012 night, “Hey there, how are you doing? Do you need help? Are you lost?” Trayvon Martin would be enjoying this beautiful Sunday with his family.

Instead, George Zimmerman’s common sense told him to profile Trayvon Martin as a criminal, and then call the police, which he had done 46 times before, even though Martin was not doing anything wrong.

Next Martin's common sense told him to defend himself and run from Zimmerman--an arguably reasonable action given how Zimmerman was following/stalking Martin as he walked around the neighborhood.

After that the details get fuzzy, which is probably why the jury found Zimmerman not guilty.

However we know Zimmerman's common sense--or his overzealous attitude and desire to be a police officer--told him to keep following/stalking Martin after he initially fled, even after 911 dispatch said it wasn't necessary, and even after Zimmerman agreed with 911 dispatch by saying "Ok".

Therefore Zimmerman is guilty of engaging in an overzealous pursuit of an unarmed and otherwise peaceful Martin. Why did Zimmerman pursue Martin to such extents, even after Martin initially fled the scene?

Zimmerman's handgun embolden him to pursue Martin to such extents--a pursuit based on the biased perception that Martin appeared suspect. Sure the neighborhood had suffered a recent string of robberies. And if Zimmerman saw Martin do something wrong this would be a different story, but Zimmerman didn't because Martin was not doing anything wrong.

Florida's “Stand Your Ground” laws are guilty of encouraging the use of deadly force during physical altercations, even when retreat is a viable option. Ironically enough, if Martin stood his ground instead of fleeing from Zimmerman, he may still be alive today.

After Martin fled and Zimmerman followed him, both Martin and Zimmerman are guilty for not following Dr. Bernice King’s advice to “conduct ourselves on the higher plane of dignity and discipline” by letting this escalate into a physical altercation. Who started the fight is an unanswered question, all we know is that Martin ran away, Zimmerman (against the common sense of 911 dispatch) zealously followed him in pursuit, there was a fight, and Martin was killed.

Now onto the hot button (i.e. racial) aspects of this case…

First let me set the stage. Is there racial discrimination in the U.S.? Absolutely, America’s war on drugs is a clear example of institutionalized racism.

Is Zimmerman guilty of being a “creepy ass cracker?” Yes (even though Zimmerman is multi-racial Hispanic).

Is Zimmerman guilty of profiling Trayvon Martin as a criminal based on his appearance? Yes.

Is Zimmerman guilty of engaging in an unnecessary pursuit of an unarmed, peaceful 17 year old who was suspected of nothing more than (I'm using Zimmerman's own words to the 911 dispatcher): 1) being born with black skin, 2) walking around in a hoodie with one hand in his hoodie's pocket, and 3) running away from an armed, emboldened, and overzealous wannabe cop?

Yes, yes and yes.

Is Zimmerman guilty of murder? Apparently not.

It’s all very sad. A young man is dead, his life cut short. A beautiful family torn apart. A country divided.

In Defense of Free Market Food Capitalism

2013-06-23T18:02:00.002-07:00

A few weeks ago Michael Pollan was in town promoting his new book Cooked. Kaitlyn and I became big fans of Mr. Pollan after reading In Defense of Food, and we really enjoyed the documentary on his book Botany of Desire. Since then I've read more of Mr. Pollan's editorials and found that we share similar concerns about the government's involvement in the food industry, and how the government's agriculture industrial policies contribute to America's obesity and health care cost epidemics. But I also sensed that Mr. Pollan and I would disagree on how government could fix these related problems.

After Mr. Pollan discussed his inspiration for Cooked and started the Q&A session, I walked up to the microphone and asked, "I think we both agree that government does more harm than good when it comes to both nutrition and health care in this country, but what do you think the government could do to help improve this situation?"

He started by offering two examples of the federal government's ineptitude in these fields: the omnibus farm bill currently slithering its way through Congress, and the recently passed "Monsanto Protection Act". Pollan added, "I think we need to try everything," including bans on soda like the ones recently championed by Michael Bloomberg.

"I think he [Michael Bloomberg] is a good business man because the largest contributor to New York City's rising hospital costs is type-II diabetes. So reducing the size of sodas is a good business decision because it reduces type-II and will lower health care costs in New York City.

"I also think we should try things like having the government reward farmers for planting good crops. I advocate using government to nudge consumers into making the right food choices...this nudging theme is cited in the field of behavioral economics, and I think it has some real promise. But really we need to try everything."

"Try everything" yet Mr. Pollan did not offer one recommendation that expanded freedom, nor one that channeled the power of the free market. I don't drink soda, but I would still like to have the freedom to buy a Big Gulp on a hot summer day (no Sarah Palin reference intended). And I believe that the amalgamation of American consumers, commonly referred to as the "market", is well equipped to reward farmers for planting "good" crops. No government involvement needed.

Restricting our freedom to make lifestyle choices and having the government pay farmers for planting good crops are not necessary solutions to fight obesity and rising health care costs. Instead of soda taxes and having government reward farmers, the government should allow for health insurers to price discriminate. I know discrimination has a negative connotation, but an insurance system that hides the true cost of our individual, voluntary lifestyle choices is not efficient and will not lead to lower obesity nor lower health care costs. Am I arguing that insurance companies should discriminate against people with any preexisting condition? No, and that's another discussion about what qualifies as an unavoidable preexisting condition.

What I'm getting at is an individual who makes unhealthy lifestyle choices should not pay the same insurance premiums as an individual who makes healthy ones. But that is exactly what happens today. In effect, our government discourages personal responsibility, so unhealthy Americans can keep drinking all the soda they want while their fellow citizens pick up the tab. This is not right.

This is even more troubling because a large portion of America's rising health care costs stem from avoidable (and expensive) ailments such as: type-II diabetes, heart disease, many types of cancer, stroke, hypertension (high blood pressure), and a host of other ailments and inconveniences. If individuals had a monetary incentive (via lower insurance premiums) to improve their diet then many of these ailments would arguably decrease, as would the costs of treating these diseases.

Now moving onto a separate but related topic--I find it disturbing to hear claims or insinuations that free market capitalism is ruining our health care system, and/or that greedy capitalists are increasing health care costs, because America's health care system is far from a free market.

The foundation of capitalism is that it's a profit and loss system; when individuals make healthy lifestyle choices they should profit (via lower insurance premiums), and when individuals make unhealthy decisions they should lose (via higher insurance premiums). And free markets work best when individuals are free to make their own decisions; if I decide that drinking three Big Gulps per day are worth the extra health insurance costs, then I am free to do so. What is not acceptable is drinking three Big Gulps per day, not exercising, and paying the same health insurance rate as my health conscious, soda avoiding, vegan wife.

That's why I find it laughable to hear a smart man like Michael Pollan advocate for restricting New York City's freedom to purchase a 20oz Big Gulp; it's just not a necessary solution to America's health care and obesity crises.

Mr. Pollan's specific public policy recommendations attack the symptom, not the disease. The only cure for the disease is to liberalize our health care and insurance systems by enabling insurers to price discriminate, and by doing so it will encourage personal responsibility and provide a meaningful incentive for individuals to make healthy lifestyle choices.

Limiting our soda freedoms to 16oz is silly, just as silly as making you pay for my unhealthy Big Gulp habits.

Celebrity-in-Chief

2013-02-25T10:27:00.001-08:00

Michelle Obama's politicized appearance during the crescendo of last night's Academy Awards, plus today's Politico column reporting on Barack Obama's unnecessary and ingracious name calling, inspired me to create the hashtag #CelebrityInChief. Anytime the Obama's step outside the political arena to throw bread and circuses at the American people, I'm going to use #CelebrityInChief and post something to Twitter/this blog.

Given the mutual infatuation between Obama, Hollywood, and celebrities-at-large, I'm looking forward to seeing where this hashtag journey takes us.

All I could think about during the last night's Academy Awards was that Michelle's husband has yet to answer a very important question regarding his Cheney-esque use of drones:

This Isn't Hard, Mr. President: Do You Think You Can Kill Us on American Soil or Not?

Bread and circuses. Bread and circuses.

Trading Barbs

2013-02-20T09:02:00.001-08:00

Wise words from Retired Gen.Stanley McChrystal in an interview with Foreign Affairs

“To the United States, a drone strike seems to have very little risk and very little pain. At the receiving end, it feels like war. Americans have got to understand that. If we were to use our technological capabilities carelessly—I don’t think we do, but there’s always the danger that you will—then we should not be upset when someone responds with their equivalent, which is a suicide bomb in Central Park, because that’s what they can respond with.”

The bold portion of Gen. McChrystal's quote reminds me of my admittedly long winded post The Next 9/11. I created this flow chart to illustrate how our Middle Eastern foreign policy often creates a negative feedback loop. I was happy to read Gen. McChystal and I share a relatively similar view on the matter.

The stereotypical terrorist does not live in a nation with strong institutions nor representative government. Thus when Obama authorizes a drone strike in Yemen or Pakistan, the Yemenis and Pakistanis don't have a formal institution or outlet to address their understandable grievances about our drone war. This lack of an outlet means these people are more likely to take radical measures to vent their anger, such as a "suicide bomb in Central Park."

Incentives Matter

2012-11-18T15:35:00.002-08:00

This Washington Post article and this Huffington Post article discuss a recent Senate investigation into a $1.4 billion Department of Homeland Security (DHS) program fraught with waste:

...the report documents spending on items that did little to help share intelligence, including gadgets such as “shirt button” cameras, $6,000 laptops and big-screen televisions. One fusion center spent $45,000 on a decked-out SUV that a city official used for commuting. (WaPo)

Also:

A marquee federal effort to share intelligence about terror threats with state and local law enforcers has produced no evidence of any. But it does appear to have caught a motorcycle gang telling members to obey laws, suspicious fishing at the border, and Muslims offering advice on marriage, success and reading. (HuffPo)

The waste present in this DHS program is a microcosm of a larger problem, namely that the federal government does not seem capable of managing the myriad of different, and often overlapping, programs it administers. Even programs deemed "[centerpieces] of U.S. counterterrorism strategy" by DHS chief Janet Napolitano are not immune to government mismanagement and waste.

The waste uncovered in this Senate investigation reminded me of an argument my liberal/progressive friends have used, in which they claim that centralizing government functions and programs at the federal level will lead to greater economies of scale.

This argument is intellectually tempting, but in reality breaks down for two primary reasons: 1) the federal government is convoluted and has undertaken too many functions to capture economies of scale, and 2) the federal government lacks incentives to organize itself efficiently, which is required to capture economies of scale.

Let's put federal spending into perspective. The feds spent ~$3.5 trillion in FY2012. Subtracting the $780B spent on Social Security transfer payments leaves ~$2.72T...or 7.8x what Wal-Mart spends on stocking their shelves and paying their store employees. To manage $2.7T in spending, and on top of that judge whether this cash is being well spent, is an undertaking that requires exceptional organizational efficiency, not exactly something the government is known for.

My bias, right or wrong, is that our federal government has undertaken too many functions and is not efficiently managing most, if any, of them. Even nonpartisan functions like infrastructure, education, and national security are fraught with waste and inefficiencies.

Rather than mismanaging thousands of programs, the federal government should focus on a select number of functions, preferably those defined in Article I Section 8 of the Constitution (plus any future amendments that expand these powers), and manage them well.

The mismanagement problem is compounded by another of government's weak points: incentives. What inherent incentives motivate the federal government to be efficient with our tax dollars?

We can't say the media, which in theory should function as a government watch dog, but in reality more closely resembles an annoying pack of yippity chihuahuas who never shut up.

We can't say voting because elections seem to be more about political brands and less about ideology, as discussed in my last post. And we can't say partisan politics because government inefficiency is one of the few things in Washington DC that reaches across the aisle.

The answer is more basic. The federal government has little incentive to spend our tax dollars wisely because the federal government is free from competitive forces, which would incentivize it to operate efficiently. Furthermore, the government has a captive customer base. Americans are forced to give the government money, and if we refuse, we are sent to jail. This dynamic does not bode well for efficiency. Government has little to no incentive to spend our money wisely (as evidenced by the DHS's "shirt button" cameras and pimped out SUVs).

Competition always benefits the consumer. It's a truth that innately makes sense--organizations operating in competitive markets are constantly innovating processes that increase efficiency, improve customer service, and lower costs.

An organization with no competition and captive customers is a monopoly. And monopolies are monopolies because they are able to serve themselves before, or in lieu of, serving their customers. Sound familiar?

The recession has been good to DC, judging from the number of construction cranes shown here.

I think it's time we bust our federal monopoly and elect candidates who want to divest federal programs back to the state and local levels. But that's a whole different blog post.

Politics and Thinking

2012-10-01T14:36:00.002-07:00

Politics these days is less about ideas and more about political brands (or has it always been about political brands?).

Or as this week's Economist puts it,

Turning out your base, not winning arguments, is increasingly the key to electoral success

Eugene Jarecki and Bill Maher Discuss "The House I Live In"

2012-09-25T20:25:00.001-07:00

I've posted about Eugene Jarecki's new documentary titled The House I Live In before, and here is an additional clip to whet your appetite. There are some good lines in here. Enjoy.

http://www.youtube.com/watch?v=BlghVHvmfys

Link

2012-09-18T21:35:00.002-07:00

Time to give back that Nobel Peace Prize Mr. Obama? Probably not. But definitely time to get our troops out of Afghanistan.

http://www.youtube.com/watch?v=P-mgOdlfXQ4&feature=youtu.be

Props to Ben Swann of Fox 19, the man who frequently delivers a healthy Reality Check.

The House I Live In

2012-09-17T22:26:00.001-07:00

I can't wait to see this new film by Eugene Jarecki titled The House I Live In (link to trailer).

Jarecki also directed the award winning war documentary Why We Fight. It should be available on Netflix streaming. If not, find it somewhere.

The Next 9/11

2012-09-13T22:26:00.000-07:00

There is always an outpouring of heartfelt emotions on the anniversary of September 11th. Americans who were alive when the attacks occurred can acutely recall the who's, how's, when's, and where's of the days events. But America struggles to recall the why's. Why did 9/11 occur?

It's disturbing when Americans give specious answers to the all-important question of why, answers like, "They hate us because we are free" or, "Islam is a violent religion" or, "There is no point rationalizing with the Arab world, they just operate differently than we do." I came across the following quote by Jonathan Weinberg, a World Trade Center survivor, and it highlights America's poor ability to answer this fundamental question:

"As President Obama pointed out, the American people did not choose this fight. It came to our shores and started with the senseless slaughter of our citizens."

I agree that the ordinary American citizens of 2001 did not directly choose this fight, nor are we directly responsible. However, I disagree that 9/11 "started with the senseless slaughter of our citizens". If anything the fight did not start on 9/11, and 9/11 was certainly not senseless; describing it as such is an abdication of pertinent Middle Eastern and Cold War history. It is silly to believe that on September 10th America was simply minding its own business, and then boom! the next day, completely out of nowhere, our country was senselessly attacked by Islamic extremists. The CIA term "blowback" comes to mind as I reflect on Weinberg's quote; anything can be senseless when you don't take into account the relevant historical context.

Without properly answering "Why did 9/11 occur," we will be unable better understand and peace with the Arab world, and less able to prevent the next 9/11.

In the following paragraphs I will discuss America's pre-9/11 foreign policy with respect to the Middle East, analyze how it has changed after 9/11, and conclude with why I believe the next 9/11 is inevitable barring a shift in our foreign policy.

Keep an objective and empathetic mind, leave any potential religious stereotypes and racism at the door, and try to put yourself in the shoes of an average Arab citizen. Hopefully, by the end of this post you will be able to make more sense of this tragic mess. If not, I won't plan on quitting my day job.

Pre-9/11 Foreign Policy

Weinberg incorrectly asserts that this fight started on September 11th. America's interest in the Arab region can be traced to the early 1920s when America and Britain signed the Red Line Agreement to start developing Middle Eastern oil. Fast forward past WWII and there are two superpowers left in the world--the USSR and America. As we all know, these two superpowers are engaged in an unconventional power struggle known as the Cold War. Not only are the Soviets and Americans racing to build the most amount of nukes, we are also battling for influence in key strategic regions like the Middle East.

I found this useful and well documented chronology of key U.S. interventions in the Middle East. I apologize in advance for the length of this post, but each detail written below is germane to the reasons why 9/11 occurred:

November 1947: The U.S. helps push through a UN resolution partitioning Palestine into a Zionist state and an Arab state, giving the Zionist authorities control of 54% of the land. At that time Jewish settlers were about 1/3 of the population.

May 14, 1948: War breaks out between newly proclaimed state of Israel, and Egypt, Iraq, Jordan and Syria, who had moved troops into Palestine to oppose the partition of Palestine. Israeli attacks force some 800,000 Palestinians--2/3s of the population--to flee into exile in Lebanon, Jordan, Syria, Gaza, and the West Bank. Israel seizes 77% of historic Palestine. The U.S. quickly recognizes Israel.

1953: The CIA organizes a coup overthrowing the democratically elected Mossadeq government of Iran after Mossadeq nationalizes British holdings in Iran's huge oilfields. The Shah, Mohammed Reza Pahlevi, is put on the throne, ruling as an absolute monarch for the next 25 years--torturing, killing and imprisoning his political opponents.

1966: U.S. sells its first jet bombers to Israel, breaking with 1956 decision not to sell arms to the Zionist state.

June 1967: With U.S. weapons and support, Israeli military launches the so-called "Six Day War," seizing the remaining 23% of historic Palestine--the West Bank, Gaza, and East Jerusalem--along with Egypt's Sinai Peninsula and Syria's Golan Heights.

Hmm...looks pretty one-sided to me. Of course, this picture is worth a thousand words (or more).

September 17, 1970: With U.S. and Israeli backing, Jordanian troops attack Palestinian guerrilla camps, while Jordan's U.S.-supplied air force drops napalm from above. U.S. deploys the aircraft carrier Independence and six destroyers off the coast of Lebanon and readies troops in Turkey to support the assault. The U.S. threatens to use nuclear weapons against the Soviet Union if it intervenes. 5,000 Palestinians are killed and 20,000 wounded. This massacre comes to be known as "Black September."

1973-1975: U.S. supports Kurdish rebels in Iraq in order to strengthen Iran and weaken the then pro-Soviet Iraqi regime. When Iran and Iraq cut a deal, the U.S. withdraws support, denies the Kurds refuge in Iran, and stands by while the Iraqi government kills many Kurdish people.

Summer 1979: U.S. begins arming and organizing Islamic fundamentalist "Mujahideen" in Afghanistan. National Security Advisor Zbigniew Brzezinski writes, "This aid was going to induce a Soviet military intervention," drawing the Soviets into an Afghan quagmire. Over the next decade the U.S. alone passed more than $3 billion in arms and aid to the Mujahideen, with another $3 billion provided by the U.S. ally Saudi Arabia. Osama

November 4, 1979: Islamic militants, backed by the Khomeini regime, seize the U.S. embassy in Teheran and demand the U.S. return the Shah to Iran for trial. The Embassy and 52 U.S. personnel are held for 444 days; this international embarrassment prompts new U.S. actions against Iran--including an abortive rescue attempt.

September 22, 1980: Iraq invades Iran with tacit U.S. support, starting a bloody eight-year war. The U.S. supports both sides in the war providing arms to Iran and money, intelligence and political support to Iraq in order to prolong the war and weaken both sides, while trying to draw both countries into the U.S. orbit.

1982: After receiving a "green light" from the U.S., Israel invades Lebanon to crush Palestinian and other anti-U.S. and anti-Israeli forces. Over 20,000 Lebanese and Palestinians are killed, and Israel seizes southern Lebanon, holding it until 2000.

September 14, 1982: Lebanon's pro-U.S. President-elect, Bashir al-Jumayyil, is assassinated. The following day, Israeli forces occupy West Beirut, and from September 16-18, the Phalangist militia, with the support of Israel's military under now-Prime Minister Ariel Sharon, move into the Sabra and Shatila refugee camps and barbarically massacre over 1,000 unarmed Palestinian men, women, and children.

1987: The U.S. Navy is dispatched to the Persian Gulf to prevent Iran from cutting off Iraq's oil shipments. During these patrols, a U.S. ship shoots down an Iranian civilian airliner, killing all 290 onboard.

1988: The Iraqi regime launches mass poison-gas attacks on Kurds, killing thousands and bulldozing many villages. The U.S. responds by increasing its support for the Iraqi regime.

July 1988: A cease-fire ends the Iran-Iraq war with neither side victorious. Over 1 million Iranians and Iraqis are killed during the 8-year war.

1989: The last Soviet troops leave Afghanistan. The war, fueled by U.S.-Soviet rivalry, has torn Afghanistan apart, killing more than one million Afghans and forcing one-third of the population to flee into refugee camps.

August 1990: Iraq invades Kuwait. The U.S. seizes the moment to assert its hegemony in the post-Soviet world and strengthen its grip on the Persian Gulf: the U.S. condemns Iraq, rejects a diplomatic settlement, imposes sanctions, and prepares for an all-out military assault on Iraq.

January 16, 1991: After a 6-month military buildup, the U.S.-led coalition launches "Operation Desert Storm." For the next 42 days, U.S. and allied planes pound Iraq, dropping 88,000 tons of bombs, systematically targeting and largely destroying its electrical and water systems. On February 22, 1991, the U.S. coalition begins its 100-hour ground war. Heavily armed U.S. units drive deep into southern Iraq. Overall, 100,000 to 200,000 Iraqis are killed during the war.

1991-present: U.S. military deployments continue after the war, with 17,000 to 24,000 U.S. troops in the Persian Gulf region at any given time. (CSM)

1993: U.S. brokers a "peace" agreement between Israel and the Palestine Liberation Organization at Oslo, Norway. The agreement strengthens Israel and U.S. domination, while leaving Palestinians a small part of their historic homeland, broken up into isolated pieces surrounded by Israel. No provisions are made for the return of the four million Palestinian refugees living outside of Israel, the West Bank, and Gaza.

1995: The U.S. imposes oil and trade sanctions against Iran, reinforcing sanctions in effect since 1979, for alleged sponsorship of 'terrorism', seeking to acquire nuclear arms and hostility to the Middle East process. (BBC, CSM).

August 1998: Claiming retaliation for attacks on U.S. embassies in Tanzania and Kenya, President Clinton sends 75 cruise missiles pounding into rural Afghanistan --supposedly targeting Osama Bin Laden. The U.S. also destroys a factory producing half of Sudan's pharmaceutical supply, claiming the factory is involved in chemical warfare. The U.S. later acknowledges there is no evidence for the chemical warfare charge.

January 2001: Tenth anniversary of the U.S. war on Iraq: sanctions are still in place and the UN estimates that 4,500 children are dying per month from disease and malnutrition as a result. The U.S. planes, which have flown over 280,000 sorties in Iraq over the past decade, continue to attack from the air. In the past two years, over 300 Iraqis have been killed in these bombings.

October 2001: U.S. begins bombing Afghanistan, as the first act of war in "Operation Enduring Freedom"--the U.S. "war against global terrorism."

Let's stop there so I can add a few important details.

Osama bin Laden was a part of the Islamic fundamentalist "Mujahideen" we began supporting during the summer of 1979 to fight the Soviets. After the war ends and the Soviets pull out of Afghanistan in 1988, bin Laden is stripped of his Saudi citizenship, and subsequently disowned thereby losing his annual $7 million filial stipend. He flees to Sudan in 1993 (when the article below is published). In 1996 and 1998, bin Laden authors two fatwas calling for the withdrawal of American military forces from the Arab world and an end to supporting Israel.

Published in 1993 by London based newspaper The Independent

What caused bin Laden, a charismatic Muslim fundamentalist, albeit psychopathic ticking time bomb, to "turn" against America? More importantly why did other Muslims join Al-Qaeda and commit suicide attacks against the U.S. on 9/11? In short, it didn't take much to turn bin Laden or motivate Muslims to despise the U.S. and USSR. Since the beginnings of the Cold War many Arab governments were used as pawns by the U.S. and USSR, and if anything negative happened to the Arab people it was brushed off as collateral damage.

War is terrible and unfortunately there will always be collateral damage, but it's easy for us to say that as we sip on our lattes at the corner coffee shop. Think about how many innocent Muslims died as a result of our foreign policy. When we hear leaders mention American values, we usually think of pleasant things like freedom, equality, strong rule of law, etc. The Arab people associate the word "America" with a much darker image, one that evokes anger, sadness, and great loss.

There is not one definitive answer to the why question, rather a bunch of sensible answers that center more on America's belligerent track record and imperial-like military presence, and less on "they hate freedom" or "Islam is a violent religion" explanations. The average U.S. citizen may be ignorant of post-1953 Middle East history, but the Arab world is very aware, and this history frames their point of reference.

America kept kicking the hornet's nest and eventually, on September 11th, we were stung. And there was nothing senseless about it.

Post-9/11 Foreign Policy

Rather than privately admit that our pre-9/11 foreign policy was flawed and changing course, our elected leaders arrogantly continued down the same path with increased intensity. The Bush administration engineered an unconstitutional invasion and occupation of Iraq--a country that had nothing to do with the September 11 attacks. And instead of focusing on a quick campaign against The Taliban, who actually did harbor Al-Qaeda, we committed to an unjustifiable and unsustainable occupation of Afghanistan. Since our invasions it is estimated that over 1,000,000 Iraqi and Afghan civilians have died.

In addition to two unpopular and immoral wars, the Bush administration ordered the CIA to create a covert torture operation to squeeze information out of suspected terrorists. Not only does this constitute a war crime, it flied in the face of the international Nuremberg principles, which were pioneered by America in response to the Nazi holocaust in order to determine what constitutes a war crime. Thankfully President Obama has ended Bush's torture ring, but rather than prosecuting those involved in torture, he has shielded the war criminals--which is a war crime in itself and also a direct violation of established international laws and treaties. Both Messrs. Bush and Obama have not only set a poor precedent, but more importantly have undermined America's reputation in the world. Their actions have dimmed "the light of the values that we proudly present to the rest of the world".

Some established politicos, especially those in the GOP, will make asinine arguments that water boarding is not torture. I dare them to try it and see for themselves whether repeatedly inducing the sensation of drowning is torture or not. Others may defend Bush's torture ring as a necessary evil to obtain the information we need to save lives. So war crimes are okay if the end result is productive? I don't believe the end justifies the means. These are ridiculous and morally bankrupt arguments.

In addition to shielding war criminals, Mr. Obama has dramatically expanded our illegal drone campaign, which is a direct violation of Pakistan's and Yemen's fragile sovereignty. Mr. Obama's 2008 campaign slogan of "change" did not apply to his foreign policy. As one MSNBC guest put it, Obama has "out Cheney'ed Cheney."

Fresh after two weeks of political conventions, many Americans seem to not care that our great country has devolved from "land of the free, home of the brave," into, "land of the foolish, home of the hypocrites." But as The Economist notes in a recent article, the people of Yemen care. The Yemenis can't even walk outside, or gather in public places for a wedding, without fearing they will be assassinated by a drone. In the eyes of the Yemenis, America is the true terrorist. Where do we get the right to do this?

This leads to the underlying attitude I find so troubling among many Americans--we act like America can do whatever we want because 9/11 made us the victims. Never mind the fact that America has directly and indirectly killed more innocent Muslims around the world than vice-versa. According to UN estimates, our sanctions on Iraq during the 1990s alone led to the deaths of 500,000 Iraqi children, a price the Clinton administration thought was "worth it."

We act act as if America is exceptional because we can do whatever we want to do, no matter how many established laws and international legal precedents we break. Our politicians and history books claim we are this great bastion of freedom, morality and a protector of human rights, but our actions do not support this rhetoric.

The more war crimes we commit, the more illegal drone strikes we launch, and the more we fight this fruitless war on terror, the more we give "propagandists in Al Qaeda or the Taliban an endless supply of material" to not only accurately portray America as hypocrites, but also recruit more terrorists and undermine what should be our primary goal--lasting peace. I don't understand how our counter-productive foreign policy could not be motivating future terrorists to commit the next 9/11.

The Next 9/11

In President Obama's most recent 9/11 anniversary speech, he said, "the attacks have brought out the best in the American people." I disagree. 9/11 brought out the worst in our foreign policy. And since we live in a democratic republic, our actions abroad are a direct reflection on the American people. In effect, 9/11 brought out the worst in all of us.

Unless we alter our foreign policy by focusing more on defending our actual borders, and reducing our unsustainable and unnecessary global military presence, I fear America could suffer another 9/11.

Many Islamic extremists reside in countries with weak political institutions and/or corrupt governments. When these extremists, their sympathizers, or the average Arab citizen want to obtain closure from their indignation, they have few options, most of which are extreme. So they strap a bomb to their car, or fly airplanes into buildings, or commit some other seemingly senseless atrocity. This reality leads to the negative feedback loop we find ourselves stuck in today:

Time to say "Enough!"

I fear Americas future will be filled with more terrorism, domestic or abroad, if we don't elect leaders who understand the history behind this loop, understand why this loop exists, and have the political will to break this loop. Unfortunately, the two horses in the 2012 presidential race do not foot the bill (especially the Romney/Ryan ticket). So the ultimate question that remains is: will we have the courage to break away from the mainstream political brands and elect someone who fits the bill? I doubt it, but I remain hopeful.

Technically Speaking, Obama's a War Criminal? Yes, And So is G.W. Bush

2012-09-11T10:58:00.003-07:00

Here is a truly fascinating transcript of an interview between John Cusack (yes, this John Cusack) and Jontahan Turley, a law professor at George Washington University and popular guest on all the big print and television news outlets.

My favorite part:

TURLEY: Well, the question, I think, that people have got to ask themselves when they get into that booth is not what Obama has become, but what have we become? That is, what's left of our values if we vote for a person that we believe has shielded war crimes or violated due process or implemented authoritarian powers. It's not enough to say, "Yeah, he did all those things, but I really like what he did with the National Park System."

Enjoy.

Misconstrued Perceptions About the Quality of U.S. Health Care

2012-09-06T12:29:00.002-07:00

My latest post on the economics of meats and sweets included the following statement: "it is no wonder our health care system is in crisis mode--it's swelling with an unsustainable amount of demand, which results in price inflation and a perception of declining quality (which may very well be true)".

However, it seems the perceptions of declining health care quality have been misconstrued by a faulty, or seemingly disingenuous, analysis of health care data by the World Health Organization (or WHO). I recently listened to an EconTalk podcast featuring Scott Atlas (link here) in which Atlas presents compelling arguments that the quality of U.S. health care is actually top notch, and far better for patients of all income classes than what the media pundits, politicians and WHO claim.

Atlas focuses his arguments on WHO's famous, or infamous, World Health Report 2000 which ranked the United States "a disastrous 37th out of the world’s 191 nations in 'overall performance'" . This report is frequently cited by people in high places, particularly those who advocate for an expansion of government involvement in heath care. However, the report and its underlying analysis is deeply flawed as Atlas argues in the podcast (and if you don't want to invest an hour in your own enlightenment, at least read Atlas' article titled The Worst Study Ever?).

Another interesting argument from the podcast is that the uninsured receive better health care than those enrolled in Medicaid. This is because Medicaid limits the treatment options available to health care providers, whereas a provider of care to an uninsured patient doesn't have any limitations on what treatments they can employ. I haven't looked too much into this argument, but it did pique my curiosity.

To sum it up: I can safely say America does not have a health care quality issue, nor a health care equality issue...the U.S. has a health care cost issue solely because America is addicted to the Western pattern diet.

The Economics of Meats and Sweets

2012-08-07T00:42:00.002-07:00

It's no secret America's health care system has a major problem with affordability...we hear about it all the time. Costs are increasing faster than inflation, Medicare is bankrupting this country, and there are so many uninsured poor people that need care.

It's also no secret that America has many obese citizens. I think there is a connection...

Thanks to the good folks at CBS, this 60 Minutes episode titled Is Sugar Toxic (video link here) blew my mind; I highly recommend it. The video starts with the bold but arguable claim that "75% of the diseases in America are preventable." I've heard this 75% number before in the documentary Forks Over Knives. Both films qualify cancer, Type-II diabetes, hypertension, and heart disease as largely preventable via proper diet. I strongly believe the overwhelming majority of these diseases are preventable; there is an abundance of scientific evidence showing that a diet heavy in plants, and light on meats and sweets (aka Western pattern diet), decreases the occurrences of these diseases. It's pretty self-explanatory. If I eat healthy foods, then I probably won't be obese, and I probably won't suffer from obesity related diseases like Type-II diabetes or heart disease.

But I'm not here to preach about why you should eat vegan, put down the potato chips, and abandon the Western diet. That would be annoying. I'm arguing there is a better way to fix our health care system and address America's obesity problem...a way that doesn't involve expanding Medicaid, or using the IRS to threaten the American public into purchasing health insurance.

My solution revolves around this theme: people should be held accountable for their lifestyle choices. If I make poor lifestyle choices, then I should pay the costs for my choices. If I indulge in the Western diet, can't foot the associated insurance costs and/or doctor bills, then I should go bankrupt and hopefully society can learn from my mistake. America's health care system is falling apart because America is addicted to the Western diet and then passing along the costs to someone else in America. In short, there is a lack of accountability.

My scheme is akin to insurers charging smokers a higher premium because they addictively inhale nicotine and hundreds of other toxic carcinogens. If I addictively inhale a diet heavy in meats and sweets, and my medical tests are not in line with some baseline of health, then I should pay more to insure myself against cancer, heart disease, type-II diabetes, hypertension, and other largely Western diet related diseases. If I eat a healthy diet and my vitals are good, again relative to some baseline, then I should pay less. (Note: I do like the new regulation that requires insurers to cover pre-existing conditions, with a fair incentive structure that discourages any potential scams...so yes the Affordable Care Act has a few good provisions).

The economic impact of diet-related disease is as follows. Something like 17% of America's GDP, or $2.5 trillion per year, is spent on health care. Of this, ~$1.92 trillion (75%) is arguably spent treating preventable diseases. If the 75% estimate is anywhere close to accurate, then it suggests our health care system is swelling with an unsustainable amount of demand, which results in price inflation and a perception of declining quality (which may very well be true).

To truly fix this problem, barring some amazingly cheap medical breakthrough that allows humans to load up on processed foods, requires Americans to eat less processed foods. It will be tough, the Western diet is addicting. Sugary, salty, meaty snacks tastes good, and humans have evolved to love foods that taste good. However, if humans were accountable for over consuming unhealthy foods, then the health care system would have less demand, prices would fall, and health care would be more affordable for everyone.

Here are some additional ideas to help fix the system:

1. Contact your representatives and request they support legislation that links health insurance premiums to lifestyle choices. Doing so offers an incentive to replace unhealthy diets with more fruits and veggies. This system just makes sense...there needs to be a price for poor lifestyle choices.

Health insurance was invented to secure us from infrequent, catastrophic diseases...now we expect insurance to cover not only the $640 billion of unpreventable diseases, but also the $1,923 billion of preventable diseases. That's a tough job.

Establishing the definition of "preventable" may not be the easiest task at first, however a competitive insurance market (along with legal precedents set by courts) will lead to industry standards and improved customer satisfaction.

2. Contact your representatives and request they end the employer provided health insurance tax loophole. This odd program is unique to America and it's one of the stupidest tax loopholes around. I'm not arguing companies shouldn't offer group health plans, I'm arguing they shouldn't be incentivized to offer them. In it's current form, group health insurance programs mask and socialize the true costs of the Western diet. Furthermore, it's not clear this program is more efficient than alternative schemes, so it should not be treated as such by government.

3. Contact your representatives and request they end the federal tax credit that incentivizes the overproduction of corn and soy. These subsidies artificially lower prices and increase supply, hence the reason why livestock are fed corn (although they naturally eat grass), and why high fructose corn syrup is in so many American foods.

4. Contact your representatives and request they remove the import tariffs on sugar. This is somewhat counter to the conclusion from Is Sugar Toxic, however tax loopholes are a symptom of a corrupt government system where political favors, influence and votes are bought and sold (i.e. crony capitalism). Crony capitalism is on display in Is Sugar Toxic when Sanjay Gupta interviews a spokesman for The Sugar Association. This association is comprised of a group of domestic sugar producers that lobby the government for favors. It's a fact that lobbyists and cronyism lead to tax loopholes, lopsided and corrupt regulations, and a bad reputation for capitalism.

Here is a tangentially related 60 Minutes report on Jack Abramhoff, in which Abramhoff paints a sobering portrait of crony capitalism in action.

Eat your plants, avoid meats and sweets, and see you in the year 2100 (hopefully).

Lobbyists and the Nobility of Government

2012-07-08T21:20:00.000-07:00

Is the government more noble, honorable, equitable, and/or efficient than the private sector? Tonight's 60 Minutes interview with Jack Abramoff will help you answer that question.

My take: lobbyists seem like a symptom (not a cause) of why our federal government doesn't work well and why the economy is sputtering.

Via New York Times: "Secret ‘Kill List’ Proves a Test of Obama’s Principles and Will"

2012-05-29T09:29:00.000-07:00

Interesting article. But when I post it to Facebook, the thumbnail reads: http://prntscr.com/9ung6. Although the title is clearly: http://prntscr.com/9ungn on the NYT website.

Seems fishy because the NYT.com article paints a darker portrait of Obama's "leadership" than the Facebook thumbnail suggests.

And true leadership doesn't involve circumventing the Constitution to kill American citizens living abroad, nor killing innocent Pakistani civilians, all in an attempt to downsize al-Qaeda. The downside of giving one man too much power is that power is easily misused and/or abused. C'mon Democrats! What happened to your civil liberties and anti-war platforms?

True leadership would be bringing the troops home, closing our foreign military bases--and using our Navy to fill protect our global interests--and lastly, using the savings from the two aforementioned activities to boost our actual defense spending here at home (e.g. more domestic bases, more infrastructure, more domestic troops). We need more defense, not more offense. The latter has been the (belligerent) strategy pursued since 9/11, and it arguably creates future terrorists. Minding our own business, investing in a true defense and freeing up trade are the tried and true methods of expanding global peace and prosperity.

Need an Answer

2012-05-22T22:54:00.001-07:00

I'd love to get Paul Krugman's answer to this question:

Would there be a recession if:

the United States Federal Government reduced its spending from $3.5 trillion to $750 billion
states picked up a portion of this slack by increasing spending on formerly federal government programs

states manage and fund their welfare, unemployment, Medicare and Social Security programs (and fund them through their own means of taxation)

meanwhile overall units of service received by citizens increase or remain constant

thanks to increased efficiency, i.e. doing more with less--a characteristic emblematic of many industries that provide consumers with more satisfaction for less over time (e.g. computers, cell phones, consumer goods, automobile gas mileage, solar panels, etc.)

Said differently, if the federal, state and local governments were previously spending $30,000/year (and their citizens received 15 units of benefit), but reduced their spending by half to $15,000 (and their citizens continued receiving 15 units of service), would Keynesians (like Krugman) argue there would be a recession because spending decreased by $15,000?

I hope not, because then they would be arguing against the merits of efficiency...and that would be just crazy.

People Pay Corporate Income Taxes

2012-05-01T16:23:00.003-07:00

Question: when a corporation earns a profit and pays its annual income tax, who actually foots the tax bill? Does the corporation pay it, or does someone else?

To answer this let's analyze what a corporation can do with its profits in lieu of paying income taxes:

Distribute bonuses to existing employees or dole out raises
Hire new employees
Invest in new capital
Distribute profits via dividends
Lower prices to increase demand

It is clear to me that the opportunity costs of corporate income taxes are: less bonuses and raises for people, less hiring of people, less investment in other’s peoples goods and services, less dividends for people, and higher prices for people. Corporate income taxes are effectively indirect taxes on human beings—taxes on you and me. These taxes are an inefficient way of collecting government revenue because of their indirect nature. With most things in life, I prefer to be more direct than indirect, and more efficient than less efficient. The real question should be, is there a better way?

I believe there is. Here is why:

Any income tax contains an inherent flaw, namely they do a poor job of aligning the costs of government services with the benefits received from these services. Why is this alignment so important? Because the more costs and benefits are aligned, the easier it is for consumers (i.e. taxpayers) to evaluate whether they are getting their money's worth.

Take the example of shopping at a grocery store. I like to survey the aisles and choose what groceries best fit my tastes, preferences and income. Before walking up to the register I have a good idea of how much everything costs, and after paying I receive a receipt that clearly displays how much each item cost. If I don’t like any of the items, I can do an exchange or receive a refund.

The way income taxes work is quite different than the above…it’s like going to the grocery store but instead of surveying the aisles, you’re handed a box of groceries. You don’t know what’s inside the box. You don’t know if you want or need whatever is inside the box. You don’t know what each items costs. All you know is that you must pay the bill or go to jail. And you most certainly cannot ask for any exchanges or refunds.

I’m sure we all prefer the normal way of paying for groceries. Of course in practice it would be politically difficult to adopt the normal approach, nonetheless it’s important to understand this inherent flaw so we can improve upon our existing tax code.

The indirect nature of corporate income taxes–which take money away from workers, investors and consumers–and inherent flaws of income taxes make it harder for society to analyze the costs and benefits of government services. The alignment between costs and benefits is important in order for any market–even a market for government services–to function efficiently.

So are corporate income taxes necessary? I think not. My two-step solution to fixing this mess would look something like this:

Make the federal corporate tax rate 0%. Corporate taxes create unnecessary complexity and further muddy the cost/benefit alignment necessary for a more efficient government.

This simultaneously eliminates all corporate tax loopholes and levels the playing field between big businesses–that can lobby and lawyer their way around the statutory tax rate–and smaller businesses that don’t have the resources to game our inefficient tax code.

Eliminate taxes on capital gains, dividends and interest and tax all investment income as ordinary income. This means Warren Buffet and Mitt Romney will pay the same tax rates as their secretaries (we don't need to further complicate our tax code with a "Buffet Rule").

The government currently taxes corporate profits, and then taxes the dividends paid out after taxes, which is effectively a double tax on the same profit stream. My solution would end this inefficiency and tax all income at the higher ordinary rate.

Christian Hypocrisy and the Middle East

2012-02-22T23:24:00.000-08:00

Some thoughts after reading this Economist article on Egypt's Muslim Brotherhood and watching tonight's CNN debate:

I will preface this by saying the Arab world is not a perfect place. However, if I was a moderate Arab, I imagine it would be hard to petition my citizens to integrate with Western ideals when Western bombs have caused / are causing so much death and destruction in my region.

Since many American Christians like to bring religion into the Middle East discussion, it is infuriating that these same Christians continue to conveniently overlook the undeniable truth that America's leaders have far more innocent Arab blood on their hands over the past four decades than vice-versa. I'm sick of American Christians imagining they are reliving the f-ing Crusades while simultaneously overlooking the human tragedy which motives so many Islamic radicals.

America has all the power, all the big guns and weapons, but what have we done with our power and might? We haven't used our post-WWII power to innocently defend our borders...instead we have used our post-WWII power to exert our will on weaker Arab countries. We have overthrown governments, supported ruthless dictators, caused immense death and destruction and killed thousands of innocents. America has the moral responsibility to take the high road...but what do so-called Christians like Santorum, Romney and Gingrich want to do? Cause more death and destruction. And many Christians buy into this bullshit. It's shameful.

No wonder my generation likes Ron Paul...we are really good at smelling the bullshit hypocrisy of the left and right.

Why Ron Paul > Newt Gingrich, and More Thoughts on the Revolution

2011-12-13T15:40:00.000-08:00

Newt is a status-quo candidate. Newt is a slog-it-out candidate with an uninspiring message. Newt communicates fear rather than thought. Newt talks the talk the median GOP voter wants to hear. Newt does not profess; he calculates and thinks quantitatively. Newt shamelessly panders. He has barely a shred of political and personal decency left. Newt as nominee is another episode of the same phony soap opera.

We have come to expect our presidential candidates to be full of (sh)it. We know they pander to what we want to hear; always walking a tight line between the median voter, careful not to deviate too far from the status quo.

Ron Paul is the antithesis of the status quo. He is consistent and has been fighting for his beliefs since 1976, when he first was elected to Congress. He is not wishy-washy. Ron Paul is a momentum candidate with inspiring, new messages. Paul does not make you fear, he makes you think. Paul is a paradigm shift. Ron Paul professes, he does not calculate. Paul thinks qualitatively. Paul walks the walk, even when it’s not the “cool thing to do”. Paul is humble and a gentleman. Ron Paul is an indisputable change from the status quo.

Yet it’s widely acknowledged people don’t like change. We shy away from what is perceived as different. We are infamously intolerant. We prefer to be boxed into the viewpoint we know, rather than explore a viewpoint we don’t. We don’t bother to evaluate the opportunity costs and externalities of our viewpoints. Given this, it’s no surprise Paul is ridiculed for not delivering a politically safer message; a message more in line with the status quo. But that doesn’t mean Paul is wrong.

Many people think Paul is right. Like Ron Paul, his supporters do not flip-flop. Ron Paul’s supporters do not care about the stigma and intolerance associated with challenging the status quo. Paul’s followers are just as genuine about him as Paul is for his message. The more support Paul picks up, the more “cool” his messages becomes, and the more momentum he picks up. Paul is viral.

The status quo is a drug and we are addicts. When you think about Paul’s explanations for his positions, our drug loses its appeal. It’s only a matter of time before people vote for rehab.

The True Costs (and Opportunity Costs) of War

2011-12-08T13:33:00.000-08:00

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. […] Is there no other way." - President Eisenhower

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." - President Eisenhower

From: MilitaryEducation.org

Just Who is Threatening Who?

2011-12-07T18:03:00.001-08:00

Visually, this whole Iran debate looks much much different.

The Difference Between Isolationism and Non-Interventionism

2011-12-03T09:01:00.001-08:00

Here's my comment on George Will's latest Op-Ed in yesterday's Washington Post:

-----------------
I have much respect for George Will, but to label Ron Paul as an "isolationist" is flat out disingenuous. Isolationists believe their country should abstain from political or economic relations with other countries (paraphrase from Webster dictionary).
Ron Paul has publicly stated he supports trade between countries (not any big news there...most candidates believe trade is good), and cites peace as one of the main benefits of international trade (based on the assumption you're less likely to go to war with your business partner). North Korea is an isolationist state. Ron Paul is not an isolationist.

Ron Paul is a non-interventionist, and there is a big difference. Noninterventionists (again paraphrasing from Webster) think their country should not intervene in the affairs of another nation, specifically military affairs that are not related to their own direct self-interests. Thomas Jefferson once said, "Commerce with all nations, alliance with none, should be our motto." Sounds like he had a bit of the non-interventionist streak in him as well.

I would expect other, less-reputable, and more flamboyant conservative writers to disingenuously label Ron Paul an isolationist, but not George Will. He should be ashamed for not holding himself to higher standards in today's column.
-----------------

Apart from Will's poor choice of one adjective, he writes a pretty darn good article on why neither Mitt nor Newt are good for the GOP nomination. It's too bad he dismisses Paul based on his own misunderstanding of isolationism and non-interventionism.

Is Ron Paul Definitively Bad for Science?

2011-11-22T08:41:00.001-08:00

On my way to work this morning I received my usual weekly Quora update email (for those unfamiliar with Quora, it's a website that allows users to seamlessly submit questions and answers about a range of topics..HT Omar El-Ayat) and, for some reason, got really fired up when I saw Josh's answer to the question: Is Ron Paul definitively bad for science?

You can read Josh's answer here, and my reply to Josh here.

Here's to the End of Energy Subsidies

2011-11-11T09:37:00.000-08:00

Here is an interesting op-ed by Jigar Shah, the co-founder of SunEdison (which was bought my my company MEMC in 2009). Shah was an early pioneer in the utility and commercial scale solar market and, like most entrepreneurs and legendary visionaries, has a perceptive and enlightening personality. In the article, Shah argues that America benefits from China's support of it's solar cell and module manufacturers. I wholeheartedly agree!

For the record, America should not emulate nor envy China's mistaken policies of using government to promote certain industries. Industrial policy is a terrible idea and usually comes back to bite governments and their economies in the butt. China's industrial policy is unsustainable; their loose monetary policy and cheap debt has led to price inflation and civil unrest.

Mr. Shah also addresses energy subsidies in his op-ed and argues "[America needs] incentives to incubate new technologies to reach the scale necessary to reduce costs, we do not need to incentivize proven existing technologies."

I partially disagree with this statement because solar and wind are not "new". Both are proven technologies that have existed for decades and therefore should not receive federal subsidies or special tax treatment of any kind. Secondly, the federal government should quit subsidizing all forms of energy. Doing so would create a level playing field where energy technologies compete based on their inherent advantages (aka benefits) and disadvantages (aka costs).

If the government wanted to promote renewable energy deployment, it would be best implemented at the state level via renewable portfolio standards (RPS). Under RPS the state’s ratepayers who benefit from, for example, a large scale solar farm would see the costs and benefits of that solar farm reflected in their electricity rates, and hopefully the air they breath (although there are positive externalities since air does not adhere to artificially created state boundary lines).

Most governments promote alternative energies via feed-in-tariffs (FIT) subsidies, which, if not properly structured (an easy mistake since FIT are set by politicians/bureaucrats and not the market), can lead to unsustainable bubbles and inefficient costs for renewable electricity. Spain in 2008-2009 is a good example. The U.S. thankfully does not have a national FIT administered by the federal government. Unfortunately, we still have other energy (and non-energy) subsidies.

When the federal government involves itself in energy via FIT, investment tax credits and loan guarantees, then the taxpayers of all 50 states share in the associated costs and a disproportionate amount of the benefits. Why should taxpayers in the not-so-sunny state of Minnesota subsidize California’s alternative energy ambitions?

If you read my blog (you probably don't...nobody reads this thing) then you know I have my qualms about the federal government's one-size-fits-all/monopoly approach to governing. The federal government could do Americans a favor by ending all energy subsidies (and all other subsidies too) primarily because 1) it's not explicitly stated in the Constitution, and 2) they do a poor job executing on their strategy. State governments are better suited to pick up the slack by providing their own RPS incentives--if that’s what their constituents want.

Opponents to my anti-subsidy position may ask, “how will these technologies achieve scale and lower costs?” To that I answer: fossil fuels took off in the 19th and 20th centuries because consumers were excited about the new possibilities that were suddenly available to them thanks to fossil fuels and the internal combustion engine. The fundamentals surrounding fossil fuels enabled private investment to flow into the sector. Scale was achieved. Costs came down.

In the early 2000s, prices for fossil fuels began to rapidly increase as demand for fossil fuels exploded and supply stagnated. High energy prices, plus worries surrounding pollution and global warming, excited consumers about the prospects of alternative energy and energy efficiency. Sure enough, global investment began to flow into the alternative energy sector. Scale increased. Costs continue to fall.

Take for example Evergreen Solar's November 2000 IPO. This capital raise was, at the time, a highly successful event for the Company and their venture capital backers. Private investors took on Evergreen’s technology, execution and scale risk. Subsequent to the IPO, the state of Massachusetts offered Evergreen a low interest loan as an incentive for locating the Company's manufacturing plant in Marlborough, MA. Evergreen accepted and shortly thereafter, Massachusett's high labor costs hamstrung the Company and Evergreen eventually declared bankruptcy (but not before Evergreen's executive team desperately attempted to save the Company by raising more private capital and moving to China in 2010). Of course Evergreen's unconventional wafers didn't help their economic vitality.

Starting in 2000 and continuing to present day, private investors have taken on a great deal of alternative energy risk because the global consumer wants cleaner energy. Public entities have been less successful at creating sustainable alternative energy markets. Public entities can help deploy alternative technologies, but they should not repeat the mistakes of Massachusetts…oh wait they already did in 2009 when they gave a ~$530 million loan guarantee to risky Solyndra who, like Evergreen, attempted to manufacture in a high-wage region and also had an unconventional product. The point is that the U.S. is not a good place to manufacture low-tech products (e.g. solar cells and modules). Our workers have higher wages than Chinese workers because, on average, U.S. products and services add more value than Chinese products and services. Therefore, U.S. workers should focus on their competitive advantage, which include activities like: designing more efficient and less expensive solar technologies, installing/developing solar projects, etc, and does not include monotonous activities like solar cell and module manufacturing.

"Smart government" (translation: smart bureaucrats and smart politicians) needs to realize how difficult it is to subsidize the "right" solar company, or alternative energy technology. Let the market do that. And if citizens want to have cleaner energy, then state-level RPS standards seem like the best way to go.