Politicians–Hate the 1% they’re part of

August 10, 2016

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see that even the most ardent socialists wants a  nice summer home. I’m sure he’ll open it to the deserving proletariat to share it with him.

Sanders’ Latest Purchase Has His Supporters ENRAGED
Andrew West

Bernie Sanders purchased a $600,000 home after fighting the economic elite for most of his public career.
Bernie Sanders has made some questionable moves in the last few weeks, first endorsing establishment shill Hillary Clinton, and now this.

Oh, the disappointment that Bernie Sanders’ supporters must feel knowing that their socialist, seemingly incorruptible hero tucked his tail and fell in line behind the queen of collusion.  The latest inexplicable move by the ageing socialist will leave an even worse taste in the mouth of those who propped him up for months.

    “Sen. Bernie Sanders (I-Vt.) is the proud new owner of a summer home on the Champlain Islands, Seven Days has confirmed.

    “The Burlington resident last week plopped down nearly $600,000 on a camp in North Hero.

    “Sanders’ new waterfront crib has four bedrooms and 500 feet of Lake Champlain beachfront on the east side of the island — facing Vermont, not New York. The Bern will keep his home in Burlington and use the new camp seasonally.

    “’We’ve traveled up to the islands many times over the years — almost always on day trips,’ Sanders’ wife, Jane O’Meara Sanders, told Seven Days in a written statement. ‘We’ve been impressed with the North Hero community, eaten at the North Hero House and Shore Acres and have suggested them to friends who were looking for a beautiful place to stay or have dinner. St. Anne’s Shrine in Isle La Motte is my favorite church and it is nearby.’”

Having a socialist democrat plop down $600,000 on a summer home in a posh, island neighborhood is an enormous oxymoron that will leave his army of handout-seeking voters scratching their dreads.

<end>

    The communists had their dachas. All are equal under socialism, but some are more equal than others. This is Sanders third property.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

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They Hate Capitalism because They Love Control

August 9, 2016

Displaying

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see that liberals are killing the very thing that pays their outrageous salaries–Don’t shoot the horse you’re galloping on.

National Post – (Latest Edition)
Peter Foster
A transition to be avoided

THE PAIN IS ALREADY BEING FELT IN THE PEOPLE’S REPUBLICS OF ONTARIO AND ALBERTA.

‘The transition to a low-carbon economy” is a mantra mouthed by almost every political party, environmental group, global bureaucracy and media outlet. It is invoked not just as a policy prescription but as a moral signpost. However, like all the catchphrases of the Big Green Agenda – sustainable development, corporate social responsibility, climate crisis, environmental justice, social licence, etc. etc. – it demands trenchant analysis.

Free markets are always in the process of transition due to innovation and ingenuity, but the low- carbon transition is to be forced. Its great proponents are the enforcers, and we are talking about something far more radical than merely the way we generate energy. Leading Transitionistas such as the late Maurice Strong and UN climate Suprema Christiana Figures have admitted that they want a fundamental change in the global economic and political system.

<insert>

     When socialists talk about “fundamental change,” the mean there’ll be a lot of pain from which the friends of the government will be completely isolated. We’ll suffer, they’ll do alraight.

Whenever I hear such people assert both the necessity and viability of the Great Transition, I think of the introduction to my old paperback copy of Joseph Schumpeter’s great book, Capitalism, Socialism and Democracy, which was first published in 1942.

In that introduction, written in 1976, British Marxist academic Tom Bottomore declared that the book’s popularity was explained “by the fact that it undertakes a serious and thorough examination of the great social transition of the present age, from capitalism to socialism.” Bottomore, failing to see Schumpeter’s ironic message – “Socialism is coming, and won’t you be sorry when it arrives” – went on to praise Soviet satellite Yugoslavia as a likely model for the state enterprise that would bring about heaven on earth.

Fast forward 40 years and the Soviet Union has collapsed, but radical socialism has far from disappeared. It has simply gone green. The transition to a low- carbon economy is still code for a transition to more political control, less freedom and less wealth.

<insert>

      Less wealth, that’s a detail they never mention.

Fortunately, like that “inevitable” transition to socialism circa 1976, the transition to the low-carbon economy has profound practical problems. Unfortunately, the public’s slowness to grasp those problems will prolong the pain, although the pain is already being felt in much of Europe and in the People’s Republics of Ontario and Alberta.

The natural tendency of markets is always to use less energy per unit of output. Exxon Mobil, the now criminally-persecuted Great Satan for the radical green movement, projects that global GDP will be 80 per cent higher per capita by 2040, but this will require only a 35 per cent increase in energy use. That energy won’t be wind and solar.

According to optimistic projections from the International Energy Agency (which, like all multinational bureaucracies, is a node of transition-speak), these alternatives will account for just over two per cent of the world’s energy needs in 2040, when the use of fossil fuels will be greater. How does that equate with the alleged essential reduction of greenhouse gas emissions by 80 per cent by 2050? It doesn’t.

Despite the success of radical greens and their political puppets in bringing new pipelines to a halt in Canada, the fossil fuel industry shows no prospect of dying either here or elsewhere. Ironically, thanks to the fracking revolution, U. S. output has enjoyed a resurgence under the most anti- petroleum president ever. Crude oil production in 2015, at 12.7 million barrels a day, was 72 per cent higher than in 2010. Natural gas production was also at a record, at 74.2 billion cubic feet a day.

According to Harvard guru Michael Porter, not only does cleaner-burning natural gas promise further to lower emissions, but its sudden abundance and cheapness has revitalized the entire U.S. economy. Wind and solar still account for just three per cent of U. S. power generation, despite all the grants and subsidies.

<insert>

     If the government subsidies ended, the per cent would fall to very close to zero.

If lowering emissions really is the radicals’ priority, natural gas should be environmental NGOs’ ideal transitional fuel. Thanks to the shale gas boom and the (market-based) switch from coal, the U. S. is leading the world in emissions reductions. But ENGOs are not delighted at the fracking revolution. They hate it, and have pulled out every piece of fearmongering and misinformation available to close it down, particularly in Europe, where they are eagerly supported by Vladimir Putin. They want fossil fuels dead, and they want them dead now. Schumpeter was among those who warned of the dangerous leftist trends that were building during and after the Great Depression. His work was followed by similar warnings in Friedrich Hayek’s Road to Serfdom and fictional works such as Nineteen Eighty- Four and Atlas Shrugged. And yet societies continued down paths warned against by those authors for three or four more decades before socialist economic policies were exposed as disastrous. Exposed, that is, to everybody but reflexive socialists, who continue to fret and strut in countries such as Venezuela, or seek new rationalizations, such as catastrophic climate change and the related need for a forced transition to a low-carbon world.

Schumpeter wrote that capitalism was doomed partly because it funded a “scribbling class” of leftist intellectuals and academics committed to its destruction. These “judges,” he wrote, “have the sentence of death in their pockets.”

The costs of the new transition to green socialism are – or should be – already clear in soaring energy bills and sluggish economies, but the faithful – and the self- interested scribblers – claim the problem is merely one of denialism, obstructionism and, ultimately, moral turpitude. The transition is still inevitable in their minds, and their sentence for freemarket capitalism is still death.

<end>

   In Ontario, electricity generation is, in essence, run by civil servants. They enjoy incredibly high salaries and benefits and costs are higher than almost anywhere in the world. As recompense, we have lots of solar panels and windmills and no fracking.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

Government Believes All Your Money is Theirs

August 8, 2016

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

   Wherein we see the result of government overspending and tax overreach.

When Taxes Threaten Your Livelihood
Bob Dick

Chris Hughes has owned Fat Cat Vapor Shop for almost three years. The shop – tucked away in a small Lycoming County borough in Pennsylvania – specializes in electronic cigarettes (e-cigs), which many people seek as a healthier alternative to traditional smoking.

His capacity to help others is now in jeopardy.Chris understood the needs of people looking for an alternative to cigarettes. Instead of waiting for someone else to meet those needs, Chris took a risk and opened his own vape shop in December of 2013. “I didn’t go into business for myself," Chris said. "I went into business to help people.”

His capacity to help others is now in jeopardy.

Paying the State’s Deficit

Earlier this month, the state legislature passed a 40 percent excise tax on Chris’s vape shop and others like it. Worse, the tax is retroactive. Not only is the 40 percent tax imposed on products Chris buys, but he must also pay the tax on existing inventory.

According to Chris’s estimates, the new law would require him to make a tax payment of up to $40,000. “I just can’t afford that. This tax is forcing me to close my business.” Lawmakers included the new tax on e-cigs as part of a $650 million tax increase package to balance the state’s budget.

<insert>

     Alas, when budgets are balanced, spending is not decreased, taxes must be raised.

"I’m going to continue to fight, but I can’t help but feel let down by my government."The new e-cigs tax raises $13 million, which accounts for just 2 percent of the overall tax package. But to Chris, the tax is an enormous burden on his business – one he won’t be able to recover from. Chris isn’t the only one upset at the prospect of closing. “I’ve had customers come in crying because of the news that I’m shutting my doors. This is wrong. This is just unfair.”

Chris attempted to work with the legislature to pass a less punitive tax, but to no avail. His pleas to avoid a life-altering tax fell on deaf ears. Chris plans to close his shop in September if lawmakers don’t repeal the tax. “I’m going to continue to fight, but I can’t help but feel let down by my government.”

Fortunately, there’s still time to make things right. Lawmakers should come back to Harrisburg and repeal the excise tax. Any revenue lost could be offset by cutting spending from the $800 million of corporate welfare in the state budget.

Reducing special subsidies to save the livelihood of small business owners like Chris is a practical and moral solution to an unacceptable problem. It’s also a cause worthy of lawmakers’ attention—and one they must pursue before time runs out.

<end>

     For decades, libertarians have been warning of this. Government bureaucrats don’t care–They’ve got their guaranteed jobs.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Raise Student Loans—Raise Tuition—Increase Administrative Costs

August 7, 2016

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    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Effective economics is counterintuitive–almost all of what we believe is wrong. This is an example. One would think that giving students a hand to achieve higher education would be noble and useful. One would be wrong.

The Student Debt Crisis Is the Predictable Consequence of Subsidies
Daniel J. Mitchell

Normally, leftists get upset if there’s a big industry that charges high prices, engages in lots of featherbedding, and manipulates the political system for handouts.

<insert>

    They only get upset if it’s a non-favored industry. If the “renewable green energy” industry would do it, more subsidies would flow.

But for some reason, when the industry is higher education, folks like Hillary Clinton think the answer is to shower colleges and universities with ever-greater subsidies.

She says the subsidies are for students, but I point out in this interview that the real beneficiaries are the schools that simply boost tuition and fees to capture any increase in student loans.

And I also pointed out that the colleges and universities don’t even use the money wisely.

Instead, they build bureaucratic empires with ever-larger numbers of administrators while money devoted to the classroom shrinks.

<insert>

     The same thing that happened in k-12 education.

Sort of a pay-more-get-less business model.

Though that only works when there are government subsidies to enable the inefficiency and bloat.

But don’t take my word for it. According to a study published by the National Bureau of Economic Research (h/t: James Pethokoukis), tuition subsidies get captured by colleges and universities.

    With all factors present, net tuition increases from $6,100 to $12,559 [and] the demand shocks — which consist mostly of changes in financial aid — account for the lion’s share of the higher tuition. …These results accord strongly with the Bennett hypothesis, which asserts that colleges respond to expansions of financial aid by increasing tuition. In fact, the tuition response completely crowds out any additional enrollment that the financial aid expansion would otherwise induce, resulting instead in an enrollment decline… Furthermore, the students who do enroll take out $6,876 in loans compared to $4,663 in the initial steady state. The college, in turn, uses these funds to finance an increase of investment expenditures from $21,550 to $27,338… Lastly, the model predicts that demand shocks in isolation generate a surge in the default rate from 17% to 32%. Essentially, demand shocks lead to higher college costs and more debt, and in the absence of higher labor market returns, more loan default inevitably occurs. …Our model also suggests that financial aid increases tuition at the bottom of the tuition distribution more so than it does at the top.

By the way, I closed the above interview by stating that I want to make colleges and universities at least partially liable if students don’t pay back their loans because that will create a better incentive structure.

Pay More, Get Less

Two scholars from the American Enterprise Institute addressed this issue in an article for National Review.

    Just as government-subsidized easy money fueled a real-estate bubble in the 1990s and 2000s, boosting house prices while promoting unwise borrowing and lending, today government-subsidized easy money is fueling an education bubble — boosting tuition rates and reducing students’ incentives to choose education options smartly. …Like the brokers who caused the subprime-mortgage crisis, colleges push naïve students to take on debt regardless of their ability to repay, because colleges bear no cost when graduates default. A true solution requires a new financing system where colleges retain “skin in the game.”

The authors point out that default and delinquency are very common, but they point out that this is merely a symptom of a system with screwed-up incentives.

    The high delinquency rate is a symptom of a wider problem — a broken higher-education system. Colleges are paid tuition regardless of whether their alumni succeed. They face little incentive to control costs when those costs can be passed on to students who fund them with government-guaranteed loans that are available regardless of the students’ ability to repay.

It’s not just whether they have an incentive to control costs. The current approach gives them carte blanche to waste money and jack up tuition and fees.

    Between 1975 and 2015, the real cost of attending a private college increased by 171 percent while the real cost of public universities rose by 150 percent. If the tuition, room and board, and other fees at a four-year private college in 1975 were projected forward to 2015, adjusting for the average inflation rate, the cost of college in 2015 would have been $16,213. Instead, the actual cost in 2015 was $43,921. A large share of rising college costs can be attributed to expanded administration, new non-educational services, athletic programs, and government regulation. Colleges have economized by switching to part-time adjunct faculty. The American Association of University Professors estimates that roughly 3 out of 4 college courses are taught by adjuncts.

Amen. This is what I mean by the pay-more-get-less business model.

A Simple Solution

The solution, of course, it to make fat and lazy college administrators have to worry that their budgets will shrink if they continue to jack up tuition while providing sub-par education.

    The key to controlling costs and student-debt burdens is to require colleges themselves to have “skin in the game” so they have strong incentives not only to provide a good education, but also to safeguard the financial solvency of their graduates. …With “skin in the game,” colleges will face pressure to control unnecessary costs and limit student indebtedness. Colleges will redouble their efforts to ensure that students graduate with the skills necessary to succeed in the job market. Resources will no longer be freely available for unnecessary non-educational university spending.

The bottom line is that bad things happen when the visible foot of the government supplants the invisible hand of the market.

That’s what I basically was trying to say in the interview when I made the crack about a reverse Midas touch whenever there is government intervention.

The solution, of course, is to phase out the subsidies that have created the problem.

But (just as is the case with healthcare) that’s a challenge because of the inefficiency that is now built into the system. Consumers will be worried that tuition and fees will remain high, which will mean higher out-of-pockets costs for college.

So while I understand why politicians will be reluctant to address the issue, the longer they wait, the worse the problem will become.

P.S. This video from Learn Liberty, featuring Professor Daniel Lin, is a great (albeit depressing) introduction to the issue of how government handouts lead to higher tuition.

P.P.S. Is there a “bubble” in higher education? While government intervention and handouts definitely have enabled needlessly high tuition, I’ve explained that those high prices will probably be permanent so long as the subsidies continue.

P.P.P.S. Unsurprisingly, Paul Krugman doesn’t understand the issue.

<end>

      Irrational reverence for education regardless of usefulness plus lots of government subsidy results in ridiculously high tuition and paying for education which does not result in a better job upon graduation.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

Politics as Usual—Lying About Everything

August 6, 2016

 

Displaying

  Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

     Wherein we see incontrovertible evidence of straight out lying. The Iranians must be cackling about this. The Great Satan humiliated once again.

    National Post – (Latest Edition)
    Rex Murphy
    National Post

The Democrats and their lies

I think Hollywood could have saved itself some turmoil this year, and made a few bucks in the process, if it had held off on the new Ghostbusters movie and gone for something a little more current. There’s a great story sitting on the script writing tarmac, just waiting for the proper writers to put a little creative wind under its wings. It may be seen as a cross between The Price is Right and a State Department version of Casino Royale.

The plot: shady individuals in the U. S. government load up a huge cargo plane with pallets of stacked hundred- dollar bills — close to $ 400 million in total — and fly them off to Switzerland, where they are covertly exchanged for Swiss Francs, Euros and other currencies, then sent on to Iran. All this under a shroud of secrecy and in the darkness of night. The cargo plane with the mountain of laundered cash lands in Tehran and moments later, another plane takes off with some American hostages, who are now free to return to the United States.

A spokesman for the U. S. State Department (I see Charlie Sheen in this challenging role) claims that there is “no connection” between the release of the hostages and the $400 million delivered to the very same airport where the hostages were waiting to be flown out. And he flatly rejects a statement from one of the hostages who said that they were kept on the tarmac in Tehran for “hours and hours,” while their handler told them they were “waiting for another plane (and) if that plane doesn’t come, we never let (you) go. ” The cash arrives in Tehran; the hostages leave Tehran. No connection. Pure coincidence.

<insert>

    Whoever handled this for the U.S. should be fired immediately. The same airport?   

In real life, this would be very, very hard to believe, but as a movie, it’s as credible as any. The problem is that it’s not a movie. It’s this week’s real news. So when U. S. President Barack Obama, wearing the smile of a cat belching on its way past an empty goldfish bowl, tells Americans and the world that the cash and the hostages have “nothing to do” with each other, some people — at least those over the age of 10 who are not employed by MSNBC — are a little troubled.

They are probably the same cynical skeptics who raised an overworked eyebrow when Democratic presidential candidate Hillary Clinton went on national television to tell America that FBI Director James Comey found all her statements to be “truthful,” right after he invalidated nearly every statement she had ever made about her private email server.

We should remember that on the matter of truth and how to escape its embracing tentacles, cloud its appearance and erase its presence, Clinton has trained at the dojo of the great sensei himself, the Houdini of equivocation and denial, Bill Clinton. But for Hillary Clinton, it may also be the case that her capacity for taking what has just been said and claiming that it actually meant the opposite derives from a past trauma.

Could it stem from the post- traumatic stress from the time she “was under sniper fire in Bosnia?” After all, battle stress from nonexistent bullets fired by nonexistent snipers can leave a secretary of state unnerved. This could easily lead her to imagine, for example, that an unseen video triggered the Benghazi attack that left four Americans dead, when all the world knows otherwise — that terrorists saw an under- defended American embassy on an anniversary of 9/ 11 and stormed it, leaving its ambassador and four others murdered.

But why acknowledge the many confusions and contortions contained in her statements, when she could simply dismiss the truth? As Clinton herself so plangently put it, “What difference, at this point, does it make?” This is the same tact taken by Obama when he declared of his health-care policy — on numerous occasions, I might add — that, “If you like your plan, you can keep your plan; if you like your doctor, you can keep your doctor; if you like your hospital, you can keep your hospital.” These were all lies — explicit, unqualified, and direct lies — every time they were spoken.

On big things and small, Obama and Clinton seem more alike each day. Perhaps that is why Obama is so invested in seeing her take over from him. They both share an exceptional insouciance when it comes to asserting that what is the case is actually not the case, and what is not the case is the case. Considering this affinity, and their sovereign dexterity in exchanging reality for fiction, it is no wonder he sees her as the “most qualified person in American history to be president.”

Exactly. Just like the planeload of cash that had nothing to do with the release of the hostages.

<end>

  Lying does have one advantage. If one doesn’t like events and motivations, just lie about them.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

The Government Fighting the Tide—Regulating Uber and Airbnb

August 5, 2016

Displaying

Click to see a large version of this cartoon...

 

   A similar cartoon was in a history textbook, way back when. It showed, as this one does, an  unstoppable phenomenon against the doomed attempts to stop it.

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

How Information Entrepreneurs are Outsmarting Regulators
Ilma Amin

Across the globe, a cohort of young companies is driving dynamism in the private sector, despite frequent threats of regulatory measures. Today’s innovative entrepreneurs are providing as many benefits as the industrial revolution did in the 19th century.

What are the secrets behind the overwhelming success of these young innovative companies? Progressive companies have been extending new services to people even though these companies are not the owners of the most relevant and profitable tangible assets that make the business work.

Consider the companies at the forefront of social media: Facebook and Instagram. Facebook is the most popular social media site, whilst Instagram claims the top spot as the most valuable photo company yet. Neither provides original content or owns any actual cameras. Instead, these companies are powered by consumers who are willing to become part of a digital sharing community, in return for the global platform that Facebook and Instagram offer for free. They have augmented online repositories of user experience by digitizing the details of our everyday interpersonal relationships.

And consider the structure of the ride-sharing phenomenon taking over the world one smartphone at a time: Uber, Lyft, and others. Founded in 2009, Uber it is now the world’s largest taxi company, without owning a single vehicle. The vehicles are all owned by the drivers, who pick you up and take you to your destination with the tap of a button on your phone at the fraction of the cost of traditional cabs.

<insert>

    The howls of the regulators and the taxi owners resonate to the heavens. It’s a case study of why government should stay out of business.

Let us not forget about Airbnb, the multimillion dollar company responsible for turning homes into hotels. The company is now the largest accommodation provider, yet it doesn’t own any real estate. Airbnb is able to provide even the most luxurious accommodation to consumers at a significantly cheaper price than a 5-star hotel.

<insert>

      The screams here are no less loud. If regulators do not have power, they have nothing.

More Information, Fewer Problems

These new platforms are helping individuals shift away from overwhelming work regulations and authoritative figures from top level management. So what are the secrets behind the overwhelming success of these young innovative companies? They are at the forefront of a revolution that is quietly turning millions of people into part-time entrepreneurs, and disrupting old notions about consumption and ownership.

The central feature of this people-driven entrepreneurial revolution is meeting the demand of previously un-served consumers by offering more information. Sharing economy companies put consumers and suppliers in touch with one another, eradicating “asymmetric information” problems where one party in a transaction has access to more information than the other.

When an Airbnb user is able to access a stranger’s networks of real-world connections, the user gains powerful cues as to the host’s authenticity, intent and dependability. Similarly with Uber, the app discloses the name of the driver, the number plate, and most importantly the driver’s rating to the user, which helps build trust even before the user and the driver meet each other.

It is not just consumers who are empowered by the free flow of information; the sharing economy caters to the individual needs of workers too, providing flexibility and mobility. These new platforms are helping individuals shift away from overwhelming work regulations and authoritative figures from top-level management. Workers in the sharing economy system instead have total control with their hours, what they want to sell, and when they are willing to let their product or service be used.

So Much for Regulation

There is growing public awareness that regulations are not primarily designed to protect us but to protect established interests. Today, user reviews and accessible information can help consumers hold companies to account directly, and are proving more powerful than government regulation. And that is what the regulators are afraid of.

Now government regulation is starting to weave its way into this new sector, forming roadblocks to hinder the undeniable progress of Uber and its colleagues in our economy. The governments of China and Iran have even placed restrictions on social media by banning Facebook and Instagram.

Uber often foregoes taxi licenses for many of its drivers, causing an easy loophole for government intervention when the company enters new, heavily regulated markets. As a result, the South Korean government has an excuse to delay the entry of ride-sharing services, while Uber has been ordered to exit the domestic market in countries like Taiwan.

Airbnb has also had to deal with its fair share of restrictions, as seen by the regulations passed in Chicago, which require hosts to register with the city, while also imposing a tax on each transaction to pay for the city’s homeless services and limiting the number of apartments and the days that can be rented out in a particular building, depending on its size.

Fight the Power

However, these entrepreneurs are fighting their way around the regulators.

Despite international forms of social media being banned in China and Iran, entrepreneurs have created alternatives, with apps like WeChat and Qzone allowing citizens to still take part of the social media movement that is shaping the digital community today. In fact, the growth of these apps has made China the world’s largest social network market.

Uber has grown notorious for being the target of aggressive regulations at the hands of local governments, but it has been fighting back and has had some success in winning lawsuits. Regulators argue that drivers do not own a “registered taxi licence” necessary to operate, so the entrepreneurs behind Uber are retaliating by announcing the bold plan to purchase commercial licenses for its drivers. The fight doesn’t stop there; Uber is set to invest £377 million in creating its own mapping system, thus ending their reliance with Google Maps, further certifying its remarkable power in the transport market.

The entrepreneurs behind Airbnb too are working around regulators. Just recently, the company has proposed buying land to build community centers to draw tourists to small, little-travelled towns. Airbnb is drawing more travellers and boosting tourism. In contrast, the weight of regulation from over-active government officials is crushing the tourism industry.

Politicians all over the world have come out to protect the established interest; they do not seem to understand why people would want to work for themselves, or why consumers want more flexibility and choice. They think we need regulations to run efficiently, but clearly the ongoing success of the aforementioned companies proves otherwise.

As long as regulators do not stand in the way, these benefits will only continue to expand throughout the economy. Allowing innovative young companies to disrupt slow-moving industries will lead to higher quality, more dynamism, and more choice.

Governments should instead identify and support these new paths for innovation, and adjust rules to promote them. They are, after all, consistently ahead of the game in areas that will drive the next decades of growth. Transport, media, tourism, communication – who knows which industry will be next?

<end>

   The best thing a government can do for any business is to leave it alone.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

How Government Control Increases Prices—Part 45ad

August 4, 2016

Displaying

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

   Wherein we see that government must exert power, although its careful planning results in the opposite of what its propaganda requires.

     With friends like this, one needs no enemies.

from marginalrevolution.com

Laissez-Faire in Tokyo Land Use

by Alex Tabarrok on August 4, 2016 at 7:25 am in Economics, Law, Uncategorized | Permalink

Tokyo, Japan’s capital city, has a growing population of over 13 million people but house prices have hardly increased in twenty years. Why? Tokyo has a laissez-faire approach to land use that allows lots of building subject to only a few general regulations set nationally. Robin Harding at the FT has a very important piece on the Tokyo system:

tokyoHere is a startling fact: in 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).

Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged.

This is not the result of a falling population. Japan has experienced the same “return to the city” wave as other nations.

<insert>

     Less planning, more progress—a universal law of government.

How is this possible? First Japan has a history of strong property rights in land:

Subject to the zoning rules, the rights of landowners are strong. In fact, Japan’s constitution declares that “the right to own or to hold property is inviolable”. A private developer cannot make you sell land; a local government cannot stop you using it. If you want to build a mock-Gothic castle faced in pink seashells, that is your business.

But this alone cannot explain everything because there was a huge property price-boom in Japan circa 1986 to 1991. In fact, it was in dealing with the collapse of that boom that Japan cleaned up its system, reducing regulation and speeding the permit approval process.

tokyo-japan

…in the 1990s, the government relaxed development rules, culminating in the Urban Renaissance Law of 2002, which made it easier to rezone land. Office sites were repurposed for new housing. “To help the economy recover from the bubble, the country eased regulation on urban development,” says Ichikawa. “If it hadn’t been for the bubble, Tokyo would be in the same situation as London or San Francisco.”

Hallways and public areas were excluded from the calculated size of apartment buildings, letting them grow much higher within existing zoning, while a proposal now under debate would allow owners to rebuild bigger if they knock down blocks built to old earthquake standards.

Rising housing prices are not an inevitable consequence of growth and fixed land supply–high and rising housing prices are the result of policy choices to restrict land development.

The policy choices were made–they can be unmade.

<end>

   Lots of laws—high prices.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “
Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.”
Cui Bono–Cherchez les Contingencies

High Prices—Poor Product—Government Monopolies in Action

August 3, 2016

Displaying

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see various kinds of government regulations which produce less innovation, shoddy product and high prices–the government trifecta.

Government Regulators are Monopolies
Howard Baetjer, Jr.

Monopolies provide poor quality at high cost. Everybody knows this. A monopolist does not have to keep improving the quality of the good or service it produces or keep its price down, because its customers have nowhere else to go. When a monopoly is a monopoly by law – and those are the only kinds of monopolies that last – customers have nowhere else to go because no other enterprise is legally permitted to offer the good or service in question.

Why do we let monopolies provide the service of assuring product quality and safety?The more important a good or service is to the public well-being, the more we should want it to be provided competitively, so competition can force providers to keep improving quality and containing cost.

So why do we let monopolies provide the service of assuring product quality and safety?

Among the most important services in society is assuring the quality and safety of goods and services. We want assurance, for example, that our taxi drivers are competent and their cars are safe, that our banks have adequate capital, that our medicines are safe and effective, and that our schools teach our children well.

And yet the government agencies that regulate the quality and safety of these are legal monopolies. Those they regulate are required to abide by the government agencies’ decisions; the regulated enterprises have no freedom to choose different quality-assurance services from some competing entity instead. Government regulatory agencies are thus not regulated by market forces and, accordingly, they are not directly accountable to the public they are supposed to serve. (See my previous piece in this series, “Government Regulators are Unregulated.”) They are indirectly accountable to the public through the political process, but that process puts so much distance between the public and the government regulator that regulators are effectively left unregulated.

So, government regulators are unregulated monopolies.

Consider some examples:

    Taxicab service is regulated by public service commissions (PSCs). Taxicab and limousine companies may not decline to follow the standards set by the PSCs and sign on instead with alternative enterprises with different standards of quality and different methods of quality assurance; the PSCs face no competition as they impose their standards, be they sensible or silly, cost-effective or wasteful. The PSCs have a monopoly on the service of assuring the quality and safety of taxicabs and limousines.
    Bank capital is regulated by a web of agencies including the Federal Reserve (“the Fed”) and the Federal Deposit Insurance Corporation (FDIC). Banks may not decline the attentions of the Fed and FDIC and instead choose to be inspected and certified as safe by, say, independent associations of banks that mutually guarantee one another’s deposits. Hence the Fed and FDIC face no competition as they impose their standards, whether those standards are good or bad, whether they stabilize or destabilize banking overall. The Fed and FDIC have a monopoly on the service of assuring the soundness of banks and the safety of depositors’ money.
    Drugs are regulated by the Food and Drug Administration (FDA). Pharmaceutical companies may not choose some other entity, perhaps in the private sector, to test their products and certify their safety and effectiveness (at least for on-label use). The FDA faces no competition in setting these standards, even though the standards it imposes and the processes it mandates are excessively strict, time-consuming, and expensive. It has a monopoly on the service of assuring the quality and safety of drugs.
    Government schools are regulated by boards of education and state departments of education. Government schools may not set their own standards for curriculum and teacher performance, nor embrace a different kind of curriculum, such as the Montessori approach. They may not choose to be accredited by some independent enterprise maintaining different standards. School boards face no competition in standard setting for government schools. School boards have a monopoly on the service of assuring the quality of K–12 government schooling.

To be clear, these regulatory agencies do not have monopolies in the strict sense that no other provider of quality assurance is allowed to operate. For example, some taxi companies may distinguish themselves by enforcing particularly high standards of cleanliness and punctuality; banks could join associations that certify their exceptionally large capital cushions; and name-brand drug manufacturers try to distinguish their products as better than generics. In all these cases, however, the government regulator is the only quality assurer to whose standards all the enterprises in the industry must by law conform. Additional requirements over and above what the government requires are allowed, but the government’s requirements are mandatory. In this sense government regulators have monopolies.

The legal monopoly status of government agencies leaves the public stuck with nowhere to turn. The legal monopoly status of government regulatory agencies is a problem. It means that when and if these agencies do a bad job of assuring quality in their industries, the public is stuck and they have nowhere to turn, so there are no systemic forces at work to improve the agencies’ performance or replace them with better quality-assurance providers. And, often, the government agencies do a very poor job indeed.

It need not be this way. The service of assuring quality and safety can be – in fact it has been and is, to the extent government interference allows – provided competitively through the free-market process, so that the enterprise of quality assurance itself is regulated by market forces. For example:

    In the Internet age, non-“taxi” ride services such as Uber, Lyft, and others have managed to come into being outside the control of the PSCs. They have established their own standards of driver and car quality, and of systems for enforcing those standards. Their standards and systems are different from those set by the PSCs and, judging by public enthusiasm for the services, better. The quality and safety assurance methods used by Uber and Lyft would seem to make taxi regulation obsolete. Why should bureaucrats try to assure the safety and quality of taxis when competition among Uber, Lyft, and taxis would do the job better? Set taxis free of government regulation. With that freedom would come more accountability to the public, not less: with Uber and Lyft, and taxis if they were allowed, every rider is an inspector.

<insert>

     If, fifteen years ago, one had asked taxi boards, local governments and taxi operators, if unregulated ride-sharing services would be successful, they would have denied it. Now that ride-sharing is successful, they have no argument.

    In banking free of government restrictions and mandates, different banks with different tolerance for risk and different ability to assess it would make different kinds of loans and hold different kinds of assets. Profit-and-loss feedback would tell banks and their clearinghouse associations or insurance pools which kinds of loans and asset profiles are riskier, calling for more capital to back them. (All banks would naturally join clearinghouse associations to reduce their cost of exchanging checks and notes, as they did historically. Today the Fed is the monopoly clearinghouse. Insurance pools would likely arise if the FDIC were to go away.) These standards, enforced by clearinghouse associations or insurance pools as conditions of membership, would evolve with experience. Those whose standards were too strict would lose members to more liberal competitors, and those whose standards were too loose would lose members by attrition as weak or troubled banks were bought out by stronger ones. Those whose standards were near the sweet spot would thrive and be imitated.
    If doctors and hospitals were free to try new drugs according to their own judgment, new drugs would be regulated in the same way off-label uses of drugs are regulated now: that is, in the words of Dan Klein and Alex Tabarrok, “by the consent of patients and the diverse forms of certification made by physicians and medical institutions.” Different doctors and hospitals, and their insurance companies, would set different standards for what kinds of drugs might be used for different maladies, based on continuing research into their safety and effectiveness. Doctors, hospitals, pharmaceutical companies, and insurance companies would both compete and cooperate with one another in a process of discovering what standards of drug safety and procedures for assuring it work best.
    Schooling could be regulated by market forces even if governments continued to pay for it through a voucher system or some other mechanism for letting parents, rather than school boards, decide which schools receive their children’s schooling dollars. In such a system parents unsatisfied with one school could put their children in another, better regulated school. Schools could choose to adhere to different quality standards set by different schooling companies or associations, such as today’s charter school enterprises KIPP (Knowledge Is Power Program), Uncommon Schools, and Green Dot schools, or the Montessori or other approaches. Parents’ choices and those of schooling enterprises learning from the successes of one another would shape the evolving quality standards schools would have to meet to stay in business.

Regulation of quality and safety is an essential service in any healthy economy. It is too important to be handled by unregulated government monopolies. We should replace government regulation with regulation by market forces.

<end>           

    Those who believe that only government regulation is “real” regulation obviously don’t know about markets regulating themselves.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

 

Political Correctness—Free Speech Punished

August 2, 2016

Displaying

   Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

    Wherein we see that liberals are less than liberal when it comes to transgressions against their code of tolerance.

Fascists at Texas university suspend student, order diversity training for saying all lives matter

Fascists at Texas university suspend student, order diversity training for saying all lives matter
By Joe Newby –

Student at University of Houston suspended, ordered to diversity training for saying all lives matterIf colleges are indeed training the nation’s future leaders, America is doomed.  On Sunday, the Daily Caller reported that Rohini Sethi, a student government leader at the University of Houston, was suspended and ordered to diversity training for engaging in the heinous act of free speech.  In this case, the offensive speech was a Facebook post that read, “Forget #BlackLivesMatter; more like AllLivesMatter.”

The post, according to the report, was made shortly after the July 7 Dallas police shootings.

According to the Daily Caller:

“Just for her to say, ‘forget Black Lives Matter,’ is a punch in the stomach,” student Nala Hughes told a local press outlet at the time.

Sethi serves as the vice president of UH’s student government association (SGA), and several UH students demanded her immediate removal.

As it turns out, it’s not that easy to remove a member of the student government, so the good fascists at the University of Houston found a way to extract their pound of flesh.

The Daily Caller added:

Instead of going through that arduous process, the student senate approved a measure giving SGA president Shane Smith exceptional one-time powers to punish Sethi as he saw fit. In response, Smith released a letter Friday outlining a set of five punishments for Sethi. The punishments include:

    A 50-day suspension from SGA starting August 1. This suspension will be unpaid (she currently receives a stipend of about $700 a month).
    A requirement to attend a three-day diversity workshop in mid-August.
    A requirement to attend three “UH cultural events” each month from September through March, excluding December.
    An order to write a “letter of reflection” about how her harmful actions have impacted SGA and the UH student body
    An order to put on a public presentation Sept. 28 detailing “the knowledge she has gained about cultural issues facing our society.”

<insert>

   The worst punishment of all would be to be subjected to the “workshop.” I was made to attend a few of these while a civil servant. They’re indescribable in terms of the amount of nonsense.

Naturally, if Sethi fails to abide by any of these requirements, she will be kicked out of SGA altogether.

In my day, we’d tell fascists like Smith what he could do with his unconstitutional order.

According to Smith, the punishment was harsh because Sethi failed to understand how heinous it is to say that all lives matter.

“Since her original post, I have not felt that she has understood or respected how her actions have affected the people around her, as well as the reputation of SGA and the university,” he said.

He wasn’t finished, however.

“The first amendment [sic] prevents a person from being jailed by the government for what they say. But [it] does not prevent people from receiving other consequences for what they say,” he added.

What’s next? Jail time and firing squads for saying all lives matter?

Maybe the school should change its motto to something more appropriate, like, “training tomorrow’s fascists today.”  They can even have a choice of either wearing black or brown shirts…

<end>

   Universities truly are breeding grounds for people so sensitive they will lay on ridiculous punishments for those who bruise feelings. If one made this up, one would not be believed.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies

Nordic Socialism—Not Nirvana

August 1, 2016

    Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

   Wherein we see that the oft-referenced Scandinavian Socialism is not what it appears.

Nordic Socialism Isn’t the Answer for America

Nordic Socialism Isn’t the Answer for America
Nima Sanandaji

The new American Dream is to be found in Denmark, at least according to the American left. As the support for free markets is falling, many Americans turn to the vision of introducing democratic socialism, inspired by the Nordic countries. It was the quest of introducing a Nordic-style welfare model that propelled Bernie Sanders, an unlikely candidate, to compete with the much more well-funded and connected candidate Hillary Clinton for months in the Democrat primary. However, the aim of introducing a Nordic-style welfare model is also shared by Clinton, who will run against Trump in the coming presidential race. Ezra Klein, editor of the liberal news website Vox, has explained, “Clinton and Sanders both want to make America look a lot more like Denmark – they both want to pass generous parental leave policies, let the government bargain down drug prices, and strengthen the social safety net.”

Out with the Old

Turning towards democratic socialism is a major course change in American politics.Turning towards democratic socialism is a major course change in American politics. For a long time, Americans have favored small governments and free markets over a generous welfare state. However, opinions are changing. A recent Harvard University study shows that a significant share of the American youth have lost faith in the free market system. Merely 38 percent of Americans in the age group 18-34 support capitalism. This is only slightly higher than the 33 percent who support socialism. As a contrast, amongst the middle age generation (50-64 years), fully 52 percent are in favor of capitalism while only 15 percent prefer socialism. Amongst those over 65, as few as 7 percent support socialism, while 60 percent believe in capitalism.

The same poll showed that Bernie Sanders, the self-proclaimed socialist, was by far the most favorable candidate among young Americans. A majority of 54 percent had a favorable view of Sanders, compared to 37 percent for Hillary Clinton and as few as 17 percent for Donald Trump.

Bernie Sanders, who joined the Democratic Party in 2015 after having been the longest-serving independent in US congressional history, used to be an old-fashioned socialist. His recent popularity owes to a clever shift in rhetoric, wherein Sanders explains that he doesn’t believe in socialism in general, but rather Nordic-style democratic socialism in particular.

Tried, and Failed

These days, it is difficult to generate enthusiasm about pure socialism. The system has failed, leading to human misery on a wide scale in every country in which it has been introduced. The Soviet Union, Cuba, Venezuela, and North Korea are hardly positive role models. China, the last major socialist country, has in many ways transitioned to a capitalist economy. A less radical idea that is gaining ground is democratic socialism.

<insert>

   Aside from failure, socialism is just swell as all of the have shown.

Will the American Dream of equality, social mobility, and lower poverty be strengthened in such a system? Democratic socialism is becoming increasingly popular amongst the Left in the United States. An important reason is that positive role models exist. In fact, a number of countries with social democratic policies – namely, the Nordic nations – have seemingly become everything that the Left would like America to be: prosperous yet equal and with good social outcomes. Bernie Sanders himself has explained, “I think we should look to countries like Denmark, like Sweden and Norway and learn from what they have accomplished for their working people.”

Is it likely that the US will become more equal, prosperous, and better prepared to face social challenges if democratic socialism is introduced? Will the American Dream of social mobility be strengthened in such a system? Will Americans benefit from longer life spans and lower poverty if they adapt Nordic-style welfare models? According to Bernie Sanders, Democrat activists, left-of center intellectuals, and journalists, the answer seems to be yes. However, as I show in my new book Debunking Utopia – Exposing the myth of Nordic socialism, much of this is built upon misconceptions about Nordic societies:

    Yes, it is true that Nordic societies combine high living standards with large welfare states. However, numerous studies show that the high tax systems significantly impede the living standard in these countries. Nordic countries compensate for large public sectors by having strong working ethics and adapting market-friendly reforms in other fields. The lesson for America certainly isn’t that higher taxes will create more prosperity, but rather the opposite.

    Nordic societies did not become successful after introducing large welfare states. They were economically and socially uniquely successful already in the mid-20th century, when they combined low taxes and small welfare states with free-market systems.

<insert>

       This is tantamount to tacking public education onto prosperous societies and then attributing the prosperity to public education, another arguments statists have made.

    The root of the high levels of equality, the economic prosperity, the high levels of trust and other advantageous social features of the Nordics seem to be a unique culture rather than unique policies. After all, Spain, Italy, and France also have large welfare states, built upon the ideals of democratic socialism. Why doesn’t the American left believe that US society would evolve to resemble Southern Europe after introducing a large welfare state?

    Over time, the generous welfare states of Nordic nations have created massive welfare dependency, gradually eroding the strong norms of responsibility that undermine the region’s success. This, combined with the growth-reducing effects of a large state, explains why Nordic countries have gradually, over the past decades, moved towards less-generous welfare, market reforms, and tax cuts.

    The combination of open borders, high taxes, and generous welfare systems has been anything but a success in Sweden. The open-border policies that Sweden experimented with in 2015 led to a massive influx of new arrivals, who are finding it very difficult to integrate in the country. The result is massive social tension and increasing poverty. Countries such as the US, Canada, Australia, New Zealand, and even the UK are much better at integrating the foreign-born in their labor markets.

Lastly, while the idea of Nordic-style democratic socialism is all the rage among the left in the US and other countries, in the Nordic countries themselves social democracy has never been weaker than today. In Denmark, the social democrats themselves have introduced massive market reforms and called for a much slimmer welfare state. In Sweden, the only one of the Nordic countries to currently be led by a center-left government, the Social Democrats are polling their lowest support in modern times.

In a time when the American left – and, for that matter, much of the global left – are enthusiastically pushing for a Nordic-style democratic socialism, perhaps it is worth knowing more about the strengths and shortcomings of the system?

<insert>

     Imposed on an already wealthy state and now growing smaller. The Nordic miracle is much less than it seems.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Power Teaching: How to Find Someone to Teach Your Child when the Education System has Failed.
Cui Bono–Cherchez les Contingencies