New Tariff Wars?

Herbert Hoover's tariffs were a major cause of the Great Depression. You'd think that, occasionally, we might learn something from history. But not today's Republicans. Diana Hsieh points to an article in the Telegraph:

The French government is facing calls to slap a massive import tax on Coca-Cola in retaliation for punitive American duties levelled on the salty, blue-veined, sheep cheese roquefort.

The American measures were taken as part of a trade dispute, now known as "cheese wars", in which the Bush administration took action against the European Union's ban on imports of US hormone-treated beef.

Last week, America imposed a 100 per cent import duty on a long list of EU products, but singled roquefort out for a 300 per cent tariff.

"Symbol versus symbol," said Philippe Folliot, a French member of parliament whose Tarn constituency contains many roquefort producers. "Since the United States has decided to surtax one of the most ancient (cheese) appellations, I think that the French government, with the European Union, must think about a heavy specific tax on imports of Coca-Cola concentrates produced in the US."

The correct response on tariffs is always the same, regardless of what other countries are doing: lower them. The last thing we need right now is a new round of tariff wars.

Around Colorado: 1/31/09

Stimulating Wildlife

"The massive federal stimulus package would rain dollars on Colorado's wildlife sanctuaries, shoring up visitor centers, tour routes and wildlife habitat, Interior Secretary Ken Salazar said Friday."

Yet if we are attuned to what Henry Hazlitt calls the unseen, we realize that all this money "raining down" is actually diverting resources away from other spending and investments. Expanding such spending with pork-laden projects will offer some people a more enjoyable recreation experience. But "stimulate" the economy it will not do, as it will only take resources away from where they are most desperately needed to turn the economy around.

Moreover, there's no good reason to force those who don't use the favored recreational areas to subsidize those who do. Instead, recreational areas should be funded by those who use them.

Wouldn't it be nice if Colorado journalists thought of their job as something other than to serve as political lap-dogs? Very few seem to. Which may be one reason why they're making themselves extinct.


Reason on Plastic Bags

Linda Gorman pointed out a Reason article that reveals some of the flaws of plastic-bag bans.


Owens Versus Churchill

And here I thought Bill Owens and Ward Churchill were a couple of has-beens. But Churchill is suing to get his job at CU back, and this has dragged the former governor into court proceedings. Churchill refused to shake hands with Owens, but Owens definitely won the fight, saying, "In retirement, he's starting to look a lot like Michael Moore... Ward Churchill is a plagiarist and a fraud, and, regrettably, we continue to pay for his deception."


Rocky Blasts "Stimulus"

Even calling it "simulus" spending is a lie -- this pork spending will damage, rather than help, the economy.

The Rocky Mountain News does a good job pointing out some of the basic problems:

The 647-page, $819 billion bill that passed the House - close to what Congress spends to run the government in a normal year - sprawls all over the place, defers major spending to a time when we hope the recession has run its course, greatly expands the federal government's role in health care, education and energy, and much of the bill is not likely to be temporary.

But the larger problem is simply that the federal government cannot "stimulate" economic growth by forcibly transferring wealth from some to others. It can only fund politically-favored projects at the expense of economically justifiable ones.


Barack Obama Caesar

"President Barack Obama today promised to lower mortgage costs, offer job-creating loans for small businesses, get credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan."

Oh, I guess I didn't realize we just elected an economic dictator.


Debating the Bailout

Today the Denver Post published several letters today that included the following comments:

"Cutting spending will cause aggregate demand in our economy to further shrink, and may well put us further down the road to economic collapse. We urgently need to support government spending on domestic projects, such as infrastructure renovation, etc. Spending on domestic projects will create jobs, increase tax revenues, and enable our economy to recover from the current crisis." -- John S. Dixon

But Dixon ignores the obvious fact that federal spending diverts funds from other spending and investment. Rather than flow to highest-priority investments that would create long-term economic prosperity, the funds will go to political pet-projects and special interests. A couple other comments at least point out that "free" federal money is not really free:

"[T]he dollar would be debased and cheapened, and the ways in which the resulting inflation in prices would furtively steal money from the pockets of each one of us, rich or poor." -- Jim Muhm

"...Colorado gets nothing from Washington except what it will need to pay for someday through higher taxes." -- Brian Richter

Meanshile, the Gazette argues, "It appears this bill, while sold as economic stimulus, has been transformed into a massive and perhaps permanent increase in federal spending that includes everything that has been on the wish lists for years."

Around Colorado: 1/30/09

Make My Day Better

Colorado Republicans announce: "Republican efforts to extend to the workplace the same rights Colorado citizens already have to protect their homes from violent intruders were stymied by ruling Democrats today [January 28]."


Ritter Right on Immigration

The Rocky Mountain News reports: "The Democratic governor [Bill Ritter] also said he personally supported a guest worker policy similar to the one former President George W. Bush embraced. Ritter added he endorses a pathway to citizenship for illegal immigrants, but that they should not necessarily be first in line." Good for him. Colorado business owners have a right to hire whomever they want, and peaceable immigrants have a right to seek a better life here -- as all of our forefathers did. The proper way to end illegal immigration is to make immigration legal.


'Plastic Bag Reduction Education Fund'

You've got to be kidding. What could these Democrats possibly be thinking? The Rocky editorializes:

Merchants would keep half the fee; the rest would underwrite a state "plastic bag reduction education fund . . . for the purpose of educating consumers" about the other part of the bill: an outright ban on plastic bags taking effect July 1, 2012.

The "fee" is almost certainly a tax, as it's not connected to the cost of providing plastic bags (which run about a penny apiece) or disposing of them. Besides, half of the revenue from the fees would support the "education" project, which is also unrelated to the cost or handling of the bags.

Because the 6-cent arbitrary charge appears to be a tax, it must be presented to voters for approval, according to TABOR.

Moreover, a plastic bag ban actually hurts the environment by encouraging paper bag use. But the fundamental reason to oppose the ban, as I've noted, is that it violates individual rights of property and free exchange.


Rosen on Pera

Mike Rosen criticizes the state's pension plan. I'd like to see a history of how pensions even got started. They strike me as a stupid idea, for the very reasons PERA is struggling: pensions promise future payments when future revenues are not known and cannot possibly be known (a problem worse in the private sector, where businesses can face bankruptcy). Why not simply do away with the pension for all new employees, and pay them commensurately more so that they can invest however they want?


Force as Recreation

The "co-chairs of the Denver Recreation Center Task Force" talk about how the city of Denver can better provide people's recreation, as though it were perfectly obvious that a legitimate governmental function is to provide (tax subsidized) recreation. Might it be possible that recreation is one of those things that people can pursue without the "help" of politicians?


Political Growth

The Denver Post reports that Colorado politicians want to "help" the economy through discriminatory taxes, tax-subsidized loans, tax-subsidized training, and tax hikes. This is the exact opposite of what is really needed: economic liberty.


Harsanyi, Sirota

David Harsanyi criticizes the new bailout package.

Meanwhile, David Sirota claims that George W. Bush drove the American economy "over [a] laissez-faire cliff." What? Bush dramatically expanded federal spending, federal entitlements, and federal economic controls. His policies were the opposite of "laissez faire." But Sirota is not exactly known for having the slightest clue what he's talking about.

Around Colorado: 1/29/09

Tax Hike Measure Coming

Ben DeGrow points to Rossputin's post predicting:

There's a reason that the first thing Ritter is proposing to do is cut education and prison funding, and "temporarily" suspend the homestead exemption which lowers property tax for many senior citizens, and it's the oldest liberal trick in the book: He's setting the stage for a tax increase proposal "for the children" and with the specter of violent felons roaming the streets unless we go along.

So now the Denver Post editorializes about Ritter's $823 million "budget cuts" -- most of which is a reduction of the increase -- which the Post believes will be offset by $2.9 billion in federal "free" money.

But that's not nearly enough tax spending for the Post: "The state's tangle of revenue restraints and spending requirements must be unraveled so state legislators can do the jobs they were elected to do and the state's budget can be constructed in a rational way."

In other words, TABOR must be gutted so taxes can be increased, because when you spend your own money, that's irrational, and only politicians can spend your money in a "rational way."


Remove the Devil Horse

Rachel Hultin wants to remove the blue Devil Horse from Denver International Airport. Her Facebook page announces the Heinous Blue Mustang Haiku Challenge.

I say take it down, melt it down, sell it for scrap, or sell it to some dumb sucker who thinks that ugliness makes art hip.


Tax-Funded Employee Unions

Peter Blake discusses a proposal to override local union rules for government employees, making unionization more widespread. I think the people paying those salaries should be able to decide the terms of the employment contract.


Climate Change Coordinator

Vincent Carroll notes that the "$80,000 salary for the governor's new 'climate change coordinator'... will not be paid with tax dollars. Three private foundations will pick up the tab." But using private money to advocate political force is not a lot better than forcibly seizing money to advocate political force. The obvious difference is that the former is properly protected speech.


Food Safety

The Rocky Mountain News editorializes, "The Food and Drug Administration said this week that a Georgia peanut plant knowingly shipped peanut butter that had tested positive for salmonella 12 times in the past two years." Of course the left will take this as a sign that the FDA should control industry more closely. However, in this case the FDA is part of the problem. When the government tells companies they can avoid liability by following certain rules, those rules are sure to be abused. Look, if you knowingly sell poisoned food (and I haven't verified the FDAs claims), then that's a criminal action, and it should be subject to criminal prosecution as well as civil lawsuits.


Coffman Calls for Alternative Stimulus

Congressman Mike Coffman writes, "Congress is right to take action to stimulate the economy, but the American people deserve better than a pork-laden spending frenzy with very little money going to the people who need it most." Yea, Republicans are going to make their comeback by me-tooing the Democrats. Congress should not try to "stimulate" the economy by spending more of other people's money, but rather by removing the political controls that have led to recession and hampered economic growth.

But Coffman does provide a useful service in detailing some of the spending:

Based on a Congressional Budget Office analysis, just $26 billion (7 percent) will be spent in the current fiscal year, and less than half -- 38 percent -- will be spent in the first two years. Even assuming such fiscal measures could be effective, the vast majority of funds in this bill would be spent too late to stimulate the economy anyway.

Democratic leadership promised large amounts for improving roads and bridges, but only $44 billion (about 5 percent) is for transportation infrastructure. Of that, only $30 billion is for highways. There are tens of billions spent mainly to protect or create government jobs. In addition, the National Endowment for the Arts will get $50 million, Americorps $200 million, Amtrak $800 million, grass replacement on the National Mall $200 million, repairs at the Smithsonian $150 million, NASA climate change research $400 million, and ACORN $10 million.

Rural Medicine

Mark Deutchman worries that there aren't enough rural doctors, and indeed "demographers and health care policy researchers acknowledge a serious national shortage of physicians everywhere in the country." Deutchman sees this as a problem for politicians to solve. But maybe the problem is that politicians have created paperwork nightmares through government-driven over-insurance, Medicaid, and Medicare, while subjecting doctors to the arbitrary whims of bureaucrats.

Did New Deal Cutbacks Harm Economy?

Sandra Elliot argues:

Liberal economist and Nobel Prize winner Paul Krugman stated on ABC's This Week (Nov. 17, 2008) that the economy improved after the New Deal, and that it was FDR's attempt to balance the budget in 1937 that then cut into that progress.

Robert S. McElvanie, an economic scholar at Millsaps College, says in his book The Great Depression that by 1937 production was above 1929 levels, stock prices and profits were up and many agreed the emergency had passed. But then, bowing to conservative demands for a cutback in spending and a balanced budget, FDR caused another downturn.

I posted the following reply in the comments:

It is interesting that Sandra Elliot relies on the authority of one economist with a specific agenda -- Paul Krugman -- yet she seems entirely uninterested in the works of economists who have actually studied the era in detail. (Elliot invokes Robert McElvaine's book -- note the correct spelling -- but he is a professor of history, not economics.)

It is true that FDR slightly scaled back some public works. But that is only a tiny aspect of the story. The real reason the economy recovered somewhat in the mid 1930s was that the Supreme Court threw out FDR's National Recovery Administration, FDR mitigated the damage of Hoover's tariffs, and the Federal Reserve's inflationary policy mitigated the harm of FDR's wage-and-price controls.

The real reason the economy again tanked in 1937 and 1938 is that FDR imposed harsher wage controls in a period of renewed monetary contraction. Add to that FDR's disastrous new taxes and his widespread persecution of businesses, and the result was a "capital strike." Economists Richard Vedder and Lowell Gallaway calculate that FDR's union legislation alone contributed nearly six percent [meaning six percentage points] to unemployment by 1938 (see Out of Work, page 141).

If Elliot wishes to move beyond her convenient propaganda to the facts, she might consider reading, in addition to Out of Work, Amity Shlaes's The Forgotten Man; Gene Smiley's Rethinking the Great Depression; Jim Powell's FDR's Folly; or Burton Folsom's New Deal or Raw Deal? It is true that it took Republican Herbert Hoover to devastate the economy, generating unemployment nearing 25 percent by the time he left office. But it is also true that FDR inhibited, rather than promoted, economic recovery through the 1930s.

Here I'll return to Elliot's claims about McElvaine. First, Elliot neglects to mention that, even using the most generous figures, unemployment remained over nine percent. To put this in perspective, today we're worried that "Colorado's unemployment rate jumped to 6.1 percent in December." Sure, the economy saw some turn-around under FDR relative to Hoover, but certainly there was no recovery.

What about industrial production? Here's what Amity Shlaes has to say on the matter (see The Forgotten Man, page 395):

What about that oft-cited rising industrial production figure? The boom in industrial production of the 1930s did signal growth, but not necessarily growth of a higher quality than that, say, of a Soviet factory running three shifts. Another datum that we hear about less than industrial production was actually more important: net private investment, the number that captures how many capital goods companies were buying relative to what they already had. At many points during the New Deal, net private investment was not only merely low but negative. Companies were using more capital goods than they were buying.

All this tells us that while some companies were gunning their engines for the moment -- that industrial production -- they had little hope for productivity gains in the years ahead.

Interestingly, McElvaine runs a blog for the Huffington Post. So, like Krugman, he's definitely a partisan in the debate. Obviously I have nothing against partisanship per se, as I'm a partisan myself, but when partisanship gets in the way of objective analysis, as it has for Krugman and Elliot, it's a problem.

Around Colorado: 1/28/09

I'm going to try something new today. I read the local news "papers" online every day, and generally I run across various interesting stories that I wish I had time to pursue further. But I can only comment at length on a small fraction of the stories of the day. So I'm going to try compiling many of the interesting stories in a single blog, with quick comments. I hope this provides readers with some good leads and also indicates at least in outline the free-market, individual-rights response. I hope readers will submit comments with links to stories I've missed.


Colorado Budget

Both the Rocky Mountain News and the Denver Post review Governor Bill Ritter's budget cuts. The Rocky begins, "Colorado must shut down two prisons, slice $225 million from schools and higher education and suspend property-tax breaks for senior citizens to close its funding shortfall, Gov. Bill Ritter's budget director said Tuesday." The Post adds "furloughing state workers."

But why do the politicians and the media always lead with the relatively popular programs, rather than things like corporate welfare? (Don't get me wrong; I think tax spending should be cut in those other areas as well.)

As Penn Pfiffner explains, most of the $600 million budget shortfall is actually a "cut" in proposed increases.

If the papers want to help put the budget in perspective -- and I've seen no indication that they do -- they'd offer their readers some historical context. I'd like to see the annual figures, in today's dollars, for state and federal spending from the very beginning, in absolute terms, per capita, and as a fraction of GDP.

But, somehow, the papers seem more interested in sensationalism than in context. The idea seems to be that sensationalism sells papers. Well, that's obviously not working.


Ritter's Attack on the Right to Bear Arms

The Post's article contains this ominous line: "The governor's plan also has one money-generating proposal: a $10 to $15 fee for background checks on would-be gun owners. Officials said there had been a fee in previous years, but it had been eliminated."

We have the right to bear arms. Ritter treats this right as though it were a political privilege. I guess we'll see whether the Democrats wish to remain in power.


Liberty Beer

The Post reviews the debate about beer sales in grocery stores. The Rocky also ran a story. I've made my case for economic liberty.


Oil Shale Rules

Why does the federal government get to set the rules for oil shale development? It's because the federal government owns vast tracks of land, especially throughout the West. The owner of the property must set the rules for use. I have long proposed privatizing these lands, transferring deed to current users and giving the rest away to conservation groups.


Bailout

Obama wants to spend another trillion or so of other people's money. Somehow, I doubt that the Republicans, who started this bailout madness, will put up much of a fight. It would be nice, though, if some elected official, somewhere, took economic liberty seriously.

David Harsanyi writes a nice critique of the bailout.

Here's a laugh: Ken Bonetti claims, "President Barack Obama’s economic stimulus is a welcome change from the counterproductive monetary policies and destructive laissez faire of the past 30 years." What universe have you been living in, brother? "Laissez faire" means hands-off. During the past 30 years we've suffered under the Community Reinvestment Act, the Troubled Asset Relief Program, Social Security, Medicare and Medicaid, capricious Federal Reserve policies, No Child Left Behind, Sarbanes-Oxley, HUD, the FDA, the EPA, the IRS, the SEC, the FCC... do I really need to continue here?


Smoking Ban

Michelle Shomler argues, "There is no safe level of exposure to second-hand smoke, a leading cause of cancer and heart disease. People have the right to assemble or work in an environment free from this health hazard."

Yes, people do have that right. They also have the right to assemble with smokers. What people do not have the right to do is dictate to property owners how they use their property. I agree with Shomler about one thing: establishments shouldn't need to "apply for a license that would permit smoking of all tobacco products purchased on-site." You shouldn't need a license from bureaucrats to use your property with voluntary patrons as you see fit.

Capping Progress

Vincent Carroll writes a critique of Obama's cap-and-trade proposal for emissions.


Office of Economic Stagnation

Mike Williams writes, "The Denver Office of Economic Development receives $25 million to help 180 households at risk of foreclosure. What? That's almost $139,000 per household! If they can only help 180 households with $25 million, they are incompetent - and we are stupid for letting them do it." I haven't checked into the numbers, but no matter what the numbers are, this is simply not a legitimate governmental function. Taxing stable homeowners to subsidize the unstable ones is wrong. It is indeed unfortunate, though, that the federal government promoted risky home loans, the central cause of the mortgage meltdown and the modern recession.


Climate Change Coordinator

Gov. Bill Ritter has appointed former House Majority Leader Alice Madden as Colorado's new climate change coordinator."

Well, isn't that exciting. One of my friends wrote in, "It's been damned cold lately! Tell her to turn up the global thermostat a few degrees!"


Plastic Bag Fines Hurt Environment

As I've argued, the real reason to oppose plastic bag fines is that they violate economic liberty. As Keith Lockitch points out, "Every value we create to advance our well-being--every ounce of food we grow, every structure we build, every iPhone we manufacture--is produced by extracting raw materials and reshaping them to serve our needs. Every good thing in our lives comes from altering nature for our own benefit."

However, it is also a little bit funny that the fines actually end up harming the environment. Westword points out that in San Francisco "the ban has forced a proportional increase in the number of paper bags used. Since paper bags take up much more space than plastic bags, it has caused greater volume into landfills." Way to go, eco nuts.

Of course, the environmentalist response to this would be to fine paper bags, too. Which is why getting to the core principles is important.

A Good Beer Needs No Political Force

The following article was published by Colorado Daily on January 26, 2009, under the title, "Free our beer: Stop telling grocers what they can and can't sell." It also appears on the Independence Institute's web page as "A Good Beer Needs No Political Force."

Game time is ten minutes from now. Tortilla chips, check. Salsa, check. Okay, where's the real beer? If you've ever wanted to buy food and fine beer at the same store, tough luck. State law says that's a crime.

Last year the Democrats pushed through the free-market reform of allowing liquor stores and their customers to conduct business on Sundays. Yet the Colorado liquor industry remains hampered by Prohibition-era controls. State law prohibits liquor stores from opening chains and selling food. It forbids grocery stores from selling anything but low-alcohol beer, and that's the big fight this year.

In a January 11 article for the Rocky Mountain News, John Carlson, executive director of the Colorado Brewers Guild, argues that the grocery-store restrictions promote "the diverse array of beer styles for which Colorado is nationally known... because independent liquor stores offer [craft brewers] vital access to market." However, truly "independent" liquor stores wouldn't demand protectionism imposed by politicians and their army of bureaucrats.

The point of the free market is not to maximize choices in beer or any other item, but to protect liberty. If having the most beers available were the goal, the state could force all liquor stores to carry every single beer brewed throughout the world. State law could also force existing brewers to expand ten-fold the styles of beer they produce. Somehow, I doubt the people paying Carlson's salary would appreciate such laws.

Free markets do offer consumers vast choices by protecting their right to exchange on mutually agreeable terms. People naturally seek a wide variety of goods and services. When politicians attempt to ensure "choice" by forcibly intervening in trade, they destroy people's choice to buy and sell as they see fit.

Choice does not justify force. For example, we have fewer choices today in horse-drawn buggies, hand-sewn clothing, and pet rocks. If politicians tried to force us to buy more of those things, they would undermine our choice to shop for other goods.

Carlson implausibly claims that grocery store sales would restrict the diversity of beer. The rise of microbrews is due to consumer demand, not protectionism. Some grocery stores would stock a wide selection, expanding the ability of craft brewers to get their product to market. Many stores would continue to compete for the business of those who just can't decide between that Smokejumper Porter and Mephistopheles' Stout.

Stores properly compete on diversity of selection, price, and customer service. Some people just want an ice-cold Coors. Others want the global sampler pack. Some shop for convenience, others for rare beers sold by knowledgeable employees. Telling grocery stores they can sell only low-alcohol beer is a bit like telling Wal-Mart it can sell only Britney Spears in the music aisle. We don't protect butcher shops by forcing grocery stores to sell only fatty hamburger.

By forcibly limiting the choices of shoppers who prefer a basic selection at lower prices, Colorado law forces some beer drinkers to subsidize those with more eccentric tastes.

Protectionism helps some businesses by harming their competitors. It violates the spirit of camaraderie, liberty, and free competition that craft brewers are supposed to represent. At game time, root for your team, and root also for the freedom to buy goods and services from anyone willing to sell them. And don't forget the salsa.


Ari Armstrong is a guest writer for the Independence Institute and the editor of FreeColorado.com.

Fines for Plastic Bags?

Last year I wrote about a proposal to fine the use of plastic shopping bags. Now it's back, this time with the support of the children, because when children support political economic planning it's so much cuter than when adults do it.

You can read about the story at 9News, the Rocky Mountain News, the Denver Post, or various other Colorado news sources. The upshot is that State Senator Jennifer Veiga and Representative Joe Miklosi want to impose a six-cent fine on plastic bag use, half of which would go to government-run education (because it is so obviously free from propaganda).

There are two main reasons, and several minor ones, why this is a horrible idea.

How stores supply bags to customers is properly between those parties, not politicians. Grocery stores have the right to provide the bags they want and that they believe their customers desire. Shoppers have the right to use those bags or bring their own. This is a matter of property rights and freedom of contract, and Veiga and Miklosi would violate both.

A government that can micromanage our shopping bags can control every other aspect of our life as well. If the "problem" is that plastic bags create waste, don't we need political controls on all other sorts of waste? All around us there is wasteful driving, wasteful packaging, wasteful thermostat-setting, wasteful clothing, wasteful everything -- according to the environmentalist zealots. Maybe we should just let the sate seize total control of the grocery stores, shut down the wasteful ones, and ensure the stores sell only non-wasteful products, as defined by politicians and bureaucrats. Clearly that is a recipe for tyranny of the highest order.

Now for the minor reasons. Plastic bags are cheap and convenient. Many people use them for trash-bag liners or to clean up after their wasteful pets. (Maybe those should be banned, too -- just think of all the poop and food baggage they generate.) Cloth bags are a nuisance for those shopping on the fly. Besides, grocery stores such as King Soopers already provide a modest financial incentive for bringing your own bags.

This proposal is social-engineering. It is wrong. It is immoral. The very fact that it has been proposed and lavished with media attention illustrates how far our nation has moved away from the principle of individual rights. It is a great scheme by the environmentalists, though: they spend our tax dollars to propagandize to children, who in return propagandize for environmentalist causes which would expand funding for government-run schools. Brilliant. [Update: Kent Denver School, which features the children pushing for the fine, is a "non-profit, private independent school." This does not change the arguments, though it does indicate how widespread is the anti-capitalist, environmentalist agenda.]

Update, January 30, 2009: The Rocky points out in an editorial:

Merchants would keep half the fee; the rest would underwrite a state "plastic bag reduction education fund . . . for the purpose of educating consumers" about the other part of the bill: an outright ban on plastic bags taking effect July 1, 2012. ...

Because the 6-cent arbitrary charge appears to be a tax, it must be presented to voters for approval, according to TABOR.

I had been relying on this comment from 9News: "The other three cents would go back to the state to fund education."

I did try to look up the bill before posting this article. I could not find it in the listings on the legislative web page, so I called the state capital and learned that, because the bill had not yet been introduced, it was not available online. I am happy to correct the record now.

The "plastic bag reduction education fund" makes the bill even worse, much worse, as it would force consumers to fund environmentalist propaganda, adding to the violation of their rights an infringement on their freedom of speech, which entails the right not to fund speech one finds objectionable.

Dumb As A...

The Denver Post opines today, "Also on the chopping block is half the tourism promotion budget, a particularly counterintuitive move, since such studies show tourism promotion spending brings back $13 for every dollar spent."

Uh, no.

First, the Post isn't reporting the full results of the "study" in question. The study alleges that the "state taxes returned per ad dollar invested" amount to $5.81; the rest is local taxes. (See page 21.)

Second, and more importantly, the study itself is laughable, as my dad and I pointed out earlier this month, and as Vincent Carroll has also noted. Yet, so far as I'm aware, this is the third time the Post has mentioned these studies in an editorial without critical comment.

The entire budget for corporate welfare should be eliminated.

Let's hope the state's legislators aren't as dumb as the Post.

Sea Kittens Yum

As I've mentioned before, I've taken to reading Jason Sheehan's restaurant reviews for Westword, which has nothing to do with my interest in restaurants (which is minimal). Now he's taken on PETA:

Yes, that's right. PETA is currently campaigning to have the name "fish" changed to "sea kitten." ... Once netted, they are either suffocated or clubbed in the head or decapitated. None of this overshadows the fact that they are delicious, and that the only way to get them from the ocean to my belly is to kill them.

Sea kittens -- yum.

'The Whole Country Is With Him'

I found this comment amusing in light of current events:

"The whole country is with him... If he burned down the Capitol, we would cheer and say, 'well we at least got a fire started anyhow.'"

-- Will Rogers on FDR's first election, quoted in Amity Shlaes, The Forgotten Man, p. 150

Highway Mileage Tax

Politicians own most roads. I don't think they should, but now political roads are so entrenched that it would be a difficult thing to transition to a free market in roads. (Certainly I don't regard such a move as a priority.) So long as politicians own the roads, they must fund them with some sort of taxes or fees. How should they do that?

Ideally, roads should be funded as closely as possible by use. That's the idea behind the gasoline tax. If you drive more, you pay more. If you drive larger vehicles that cause more wear on the roads, you pay more. If you don't drive at all, you pay nothing. So, as far as taxes go, the gasoline tax is among the least offensive. Certainly they are better than general taxes collected for roads that bear no relation to use.

What about toll roads? For new highways, a toll makes a lot of sense. Notably, a toll road need not be owned or operated by politicians; they can and should be owned and operated by market companies. I'm not a huge fan of charging tolls for politically-owned roads that are also funded with gasoline (and other) taxes. I'm more open to the idea of charging tolls on such roads for new lanes.

This brings us to today's news:

Provisions for tolls on existing public roads and a fee based on miles driven must be removed from a major transportation funding bill if it is to get bipartisan support, Republican leaders say. ... [Two legislators] have gotten mixed reaction on the proposed vehicle-registration-fee increase at the heart of the plan, which would cost drivers of most cars and trucks $41 a year. ... Senate Minority Leader Josh Penry and House Minority Leader Mike May say they are willing to increase the fee if other changes are made... [including the] elimination of a study to determine if there is a funding source, such as a vehicle-miles-traveled fee, that would be better than the 75- year-old gas tax.

Obviously I'm against raising registration fees, which have nothing to do with use.

What about a per-mileage fee? I was surprised to learn from Vincent Carroll that Robert Poole of the Reason Foundation is among those "intrigued with billing for miles." Carroll is sensible to the implications:

[W]ith an electronic gadget in your car that notes when and where you drive, bureaucrats will enjoy much more power. They'll be able to adjust driving fees according to the time of day or type of car. They'll be able to create zones in which the tax per mile is higher than it is in others.

Yes, they'd be able to do all of that, and perhaps eventually much more. Eventually somebody will get the bright idea of using the tax for more far-reaching social-engineering (beyond driving politically-correct cars). What about tax "incentives" for politically-correct driving, such as government-approved "volunteer" work? "Incentives" for driving in economically depressed areas? "Incentives" for driving to politically-favored jobs or health activities?

Carroll summarizes the argument against the gasoline tax:

State Rep. Joe Rice, D-Littleton, has got the right idea when he says "we've got to figure out something besides the gas tax" to pay for roads. Hybrid vehicles and, later, a growing fleet of fully electric autos are going to destroy the link between the miles you drive and the amount of fuel tax you pay.

The argument about hybrids is unconvincing. Many hybrids get worse gas mileage than my family's two traditional vehicles. If hybrids actually manage to catch on, that would imply only that the gasoline tax might have to be increased per gallon.

I don't see "fully electric autos" rising in the market anytime in the near future. Nobody has solved the battery problem, so far as I'm aware. (They're expensive, large, heavy, and toxic.) So until somebody creates an electric car that actually works at a reasonable cost, I see little point in changing the type of tax. If that happens, surely there are alternatives to a mileage tax.

I for one have no interest in telling Big Brother where and when I'm driving.

Slumdog Millionaire

In my recent list of "good cross-cultural" movies, I forgot to mention the spectacular film, Slumdog Millionaire. Oscar gave me a helpful reminder by nominating the film for 10 of its awards.

It's about three impoverished Indian children who struggle to survive and reach adulthood with their spirits and bodies intact. The "Millionaire" part comes in when one of the trio, as a young adult, lands a spot on the native version of "Who Wants to be a Millionaire." The young man does very well, which leads to suspicion. He tells the story of his life in flashbacks. This is not a story about becoming a millionaire, but about fighting for one's loved ones, no matter what. If features very fine acting and directing.

What's culturally interesting about the film is that it's an English film set and filmed in India, mostly in English, and its gimmick is an international game show. Wikipedia notes about the game show, "The format is owned and licensed by the Japanese production company Sony Pictures Television International." So it is a truly global film.

My only minor gripe with the movie is that it shows some of the economic development of India without indicating why it happened. But that's background.

Wiki also notes the film had a budget of $15 million, yet it is phenomenally better than many films that cost ten times more.

Feds Caused Medical Cost Shifting

Today the Rocky Mountain News sorta kinda praises "Gov. Bill Ritter's proposal to expand medical coverage by leveraging new fees on hospitals." The paper summarizes:

[A] well-designed plan could ease some of the cost-shifting that occurs when patients who require care and can't pay their bills show up at emergency rooms and doctors' offices. And cost-shifting results in private health insurance premiums rising much faster than they should.

Under the plan, hospitals would pay fees to the state based on the number of beds occupied or the days patients are admitted. These fees would then be leveraged with a dollar-for-dollar match from the federal government.

But why is this a problem in the first place? It is a problem because the federal government forces hospitals to treat people without compensation. Imagine a federal law that required grocery stores to hand out food, for free, to anyone claiming to need it; that would result in "cost-shifting" in food. On a free market, many health-care providers would negotiate lower prices based on need, and charities would help cover those unable to pay the bills. But the federal law interrupts these voluntary solutions and forces some to pick up the tab of others, whether they can afford it or not.

This is a classic case of the federal government trying to solve a problem (with Ritter's help) that the federal government created.

Barack Obama and the Politics of Cynicism

Barack Obama said many wonderful things in his inauguration address, and he said them very well. Ultimately, however, Obama offers the message that economic liberty must be forcibly restrained because free-market principles no longer apply.

Obama calls his opponents cynics. What is cynicism, and which side exhibits it? Obama uses the term basically to mean a nay-sayer. The modern term but loosely connects to its Greek roots; Oxford's dictionary defines a cynic by today's usage: "A person disposed to rail or find fault; now usually: One who shows a disposition to disbelieve in the sincerity or goodness of human motives and actions, and is wont to express this by sneers and sarcasm; a sneering fault finder."

Obviously merely finding fault is not cynicism; anyone who takes any position whatsoever necessarily finds fault with the other side. Instead, cynicism is faulting others' positions or motives without good reason, or faulting mankind as such though no such conclusion is warranted; it is substituting the sneer for the argument. So what does Obama have to say about cynicism?

Obama complains about "worn-out dogmas that for far too long have strangled our politics"; he says "the time has come to set aside childish things." He leaves his meaning obscure, but clearly he's setting up somebody for a fall.

Obama then offers due praise to the American spirit:

[I]t has been the risk-takers, the doers, the makers of things -- some celebrated, but more often men and women obscure in their labor -- who have carried us up the long, rugged path towards prosperity and freedom. ... We remain the most prosperous, powerful nation on Earth. Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished.

He then summarizes his ambitious goals:

The state of our economy calls for action: bold and swift. And we will act not only to create new jobs but to lay a new foundation for growth.

We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.

We will restore science to its rightful place and wield technology's wonders to raise health care's quality... and lower its costs.

We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age.

Obama's vision for the federal government is ambitious. He wants the federal government to aggressively fund not only transportation infrastructure, but communications, scientific investigation, health care, energy production, and education. Later he says the federal government should also help people find jobs and prepare for retirement. The scope of this federal control of the economy is breathtaking. Though he invokes the spirit of the Founders, the sort of federal government that Obama promotes bears little resemblance to the government instituted by the Founders, the purpose of which is to defend our "unalienable Rights" to "Life, Liberty and the pursuit of Happiness."

Far from endorsing a free market, Obama instead lauds the "watchful eye" of the federal government. This is not merely the eye of a "night watchman" who guards against force and fraud and helps resolve disputes peaceably. That sort of watch protects a free market. Instead, Obama proposes a "watchful eye" that observes -- and controls -- how people spend large fractions of their money, which corporations receive federal funding, how individuals and companies conduct business, and how individuals receive health care and other basic services. It is a Watchful Eye with a far and penetrating gaze.

Here is the segment in which Obama discusses his Watchful Eye and the alleged cynicism of those who do not care to be so watched:

Now, there are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans. Their memories are short, for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.

What the cynics fail to understand is that the ground has shifted beneath them, that the stale political arguments that have consumed us for so long, no longer apply.

The question we ask today is not whether our government is too big or too small, but whether it works, whether it helps families find jobs at a decent wage, care they can afford, a retirement that is dignified.

Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

And those of us who manage the public's dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.

Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched.

But this crisis has reminded us that without a watchful eye, the market can spin out of control. The nation cannot prosper long when it favors only the prosperous.

Notably, Obama completely ignores the fundamental cause of our economic troubles: a network of federal controls that promoted risky loans. In other words, the cause of the problem was the federal government's "watchful eye," yet Obama considers it the only solution.

Obama's passage echoes the writings of Jim Wallis, who preaches "progressive" religion:

One could say that people of faith should endorse a "limited" view of government. This is not the old conservative proposal for small government, sometimes cynically argued in order to reduce the public sector's ability to counter the power of the wealthy and ensure more fairness and balance in a society. But neither is it an argument for big government that usurps more and more control in a society and puts in jeopardy both individual rights and countervailing powers to the state. Clearly, the answer to the endless left-right debate is neither small government nor big government, but rather effective, smart, and good government.

Obama (following Wallis) is right about one thing: the central issue is not about small versus big government. The central issue is about whether government protects or violates individual rights. If a large number of citizens roam the countryside victimizing innocents, government must exert considerable force stopping them. If a foreign aggressor threatens to destroy us or take us over, government must grow to a size necessary to stop the threat. In all cases, it is the proper job of government to protect us from force and fraud and oversee the peaceable resolution of disputes. That is, it is the proper job of government to protect our rights, whatever size of government that requires.

Central to liberty is the right to use one's own wealth and resources as one deems best. We have the right to interact with each other on a voluntary basis, rather than by force. We have the right to exchange and cooperate to mutual advantage. We have the right to volunteer our services or donate our wealth as we see fit. We have a basic, fundamental human right to live in economic liberty. The term for such a socio-economic system, in which the rights of each person are consistently upheld, is capitalism, characterized by the free market.

Notice that Obama does not praise a "free market," but a market under the federal government's Watchful Eye. Obama does not endorse economic liberty, free markets, or individual rights in the economic sphere. He endorses the massive, forced redistribution of wealth by politicians and bureaucrats. He endorses far-reaching economic controls by the same. His vision of the federal government is not one that protects individual rights in the economic sphere, but one that aggressively violates them.

Yet Obama, like Wallis, holds that no principles are necessary in the economic sphere. True, Obama praises the "old" virtues of "honesty and hard work, courage and fair play, tolerance and curiosity, loyalty and patriotism." But these can remain sufficiently vague so as not to challenge the propriety of the Watchful Eye.

To Obama, anyone who upholds government as the defender of economic liberty must be dogmatic, childish, cynical, detached from reality, and "stale" in their arguments. Obama's alternative is a pragmatic appeal to government that "works" to oversee the economy. But this raises several questions. If economic liberty is a dogma, then what is it that Obama advocates? Who is to determine whether the government is "working?" For whom is it "working?" How can a government "work" to violate individual rights without straying from justice and prosperity? How can a government that violates economic rights protect rights generally?

Theory and fact, ideology and history demonstrate that economic liberty promotes justice and prosperity, while political controls promote the opposite. Obama's memory seems to have shut out practically all of the 20th Century. Those who argue that federally-controlled medicine wouldn't work (to take but one example) do not embrace cynicism: they embrace reality.

So who here is the true cynic?

Advocates of economic liberty hold that each individual properly lives his own life and pursues his own ends, consonant with the rights of others. Such advocates hold that, when people are free from force and fraud, they will join together on a voluntary basis to create a just, prosperous, and peaceful society. This view is the opposite of cynicism: it is a view rooted in the belief that people tend to do a good job leading their own lives and cooperating with others, and that the best society is a free one.

Obama, on the other hand, unleashes a string of personal attacks against the defenders of economic liberty. He implies that a government that protects individual rights is inadequate for preserving the "greatness of our nation." He holds that people, if left to their own choices in a system of economic liberty, will tend to do the wrong thing. What people need is not liberty, by Obama's view, but the guidance of a Watchful Eye. He holds that people must be watched -- and controlled -- by federal politicians and bureaucrats.

I can imagine no more cynical view than that.

Good Cross-Cultural Movies

By coincidence, my wife and I have seen several movies lately that deal with themes of ethnic relations. Culture clashes can give rise to funny as well as poignant moments. Last November, we saw Outsourced, in which an American goes to India to train his replacement.

Gran Torino remains in theaters. Clint Eastwood plays a widowed war veteran with rough and bigoted language. His neighborhood has been largely bought out by Asian immigrants, and an Asian gang roams the streets. Yet Eastwood's character finds that he has more in common with his new neighbors than he thought, and he resolves to help them fight off the local gangsters. Unfortunately, some idiot reviewer spoiled the ending for me. But I still really enjoyed the movie, even though it takes the bigoted language too far and features some occasionally clunky acting.

Under the Same Moon tells the story of a boy living in Mexico who travels to the U.S. illegally to join his mother, also in the country illegally to find work. I enjoyed the story for two main reasons. The boy shows amazing determination and cleverness in making his journey. And a friendship that the boy develops on the road proves inspiring in its bonds.

The Visitor also deals explicitly with the immigration issue. Richard Jenkins brilliantly portrays a man who has lost the meaning of his life. He finds it again when by chance he meets a young foreign couple. He is inspired by the couple's love and by the young man's devotion to African drumming. The fact that the film takes an overtly political turn in the end didn't diminish my enjoyment of it, though it will turn off some.

August Evening is a slow, ponderous film about an elderly man and the young widowed woman once married to his son. I really enjoyed the acting in this movie, especially by Veronica Loren, the young woman. Both the main characters struggle to move into the next stage of their lives. The father-in-law struggles to find work and maintain bonds with his family, and the woman tries to push out new love. The pair moves around Texas, staying for a time with the man's two surviving children. Not much happens in this movie, but it's a nice portrayal of a loyal friendship. And there is one very funny scene that I won't describe here.

In The Band's Visit, the band is from Egypt, and its members accidentally visit a tiny town in Israel. Very strong acting, especially by Saleh Bakri, who plays a young womanizer and musician, and Sasson Gabai, the band's leader who often clashes with the younger player. As with August Evening, there's not much going on plot-wise, but these characters are mesmerizing to watch, and again parts of the movie are very funny.

Finally, I will mention The Kingdom, in which FBI agents travel to Saudi Arabia to figure out who attacked an American installation. The best part of the movie, besides its heroic and tense finale, is the friendship between the lead American and the local officer assigned to protect and monitor the group. I must offer special praise to Ashraf Barhom, whose touching portrayal of the Saudi officer makes the film. Barhom, like Bakri, is from Israel. I hope to see much more of both of them.

We live in a global economy, in which international travel is easier than ever before. One reason I like these movies is that they help us discover the richness of our world, as well as the themes universal to humanity.

Obamanomics Threatens Economic Recovery

The following article originally was published January 20 in Grand Junction's Free Press.

Obamanomics threatens economic recovery

by Linn and Ari Armstrong

Barack Obama wants to "stimulate" the economy with barrels of other people's money. Crack cocaine and crystal meth provide a "stimulus" too, and Obama's proposal is about as healthy. Obama would have us believe that the answer to bad debt is more bad debt. Like a drug addict, Obama is looking for a short-term fix that endangers long-term health.

In his January 8 speech on the economy, Obama warned, "If nothing is done, this recession could linger for years." But if Obama proceeds with his plan, he could make the recession worse and undermine long-term economic prosperity.

A recession occurs when an economic shock compels people to readjust their plans. In this case, the shock was largely caused by federal policies that encouraged and even mandated risky home loans. A recession is the period of changing strategies and rethinking behavior that sets the stage for renewed economic prosperity. A sick economy, like a sick person, needs recovery, not artificial stimulation.

The basis for long-term economic prosperity is the enforcement of just and stable laws. The government plays a legitimate role in preserving a free market by protecting property rights and freedom of contract, stopping violence, rooting out fraud, and providing the legal framework for resolving disputes.

Such stability is precisely what Obama threatens to undermine. It is ironic that Obama delivered his address at George Mason University. Russ Roberts, an economist at George Mason, recently wrote, "By acting without rhyme or reason, politicians have destroyed the rules of the game. There is no reason to invest, no reason to take risk, no reason to be prudent, no reason to look for buyers if your firm is failing. Everything is up in the air... The frenetic efforts of FDR had the same impact: Net investment was negative through much of the 1930s."

In his Virginia Declaration of Rights, Mason himself wrote "That no free government, or the blessings of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality, and virtue..." Obama's plan is the opposite of temperance and frugality.

Obama said he wants to spend tax and deficit dollars to "invest in priorities like energy and education; health care and a new infrastructure." Isn't it interesting that this is the same corporate and personal welfare Obama also supported before the recession?

Obama wants more federal control over the economy, and he is using the recession as a pretext to achieve it. Does anyone doubt that these "investments" will be politicized? Obama has long supported government-funded health care. He has long demonized traditional energy producers and called for politically-correct -- and frighteningly expensive -- "green" energy.

The result of Obama's "investments" will be to put medicine, energy, and other industries more under the capricious control of federal politicians and bureaucrats, thereby contributing to the insecurity that Roberts warns about.

Obama would also siphon resources away from free-market investment. The government can "invest" only by taking wealth out of the free economy through taxation, deficit spending, or inflation. Politicians now talk of adding a trillion dollars to the deficit. This too threatens long-term prosperity.

Yaron Brook of the Ayn Rand Institute argues that the federal government should reduce spending -- not increase it -- so that "as much real capital as possible will remain in private hands, and be put to productive use by entrepreneurs to create valuable goods and services to sell at home and abroad."

In his speech, Obama invoked the spirit of Franklin Delano Roosevelt and his New Deal. Is Obama the next FDR? Those who read our December 8 column may hope not. Through his first two terms in office, unemployment never dipped below 9 percent (or 14 percent depending on the estimate), and it climbed again by 1938, due largely to FDR's stiffer wage controls.

Amity Shlaes reviews the transition from Coolidge to Hoover to Roosevelt in her book The Forgotten Man. As Vice President under Harding, "Cool Cal" witnessed a recession in the early 1920s, but thanks to a hands-off policy, by 1923 "it was hard to find an unemployed man."

But in the early 20th Century central planning became the rage in parts of Europe and, to a lesser degree, in the United States. Shlaes reviews that two economists popularized the term "beneficent hand" to substitute the hand of politicians for the Invisible Hand of Adam Smith's market. In their book The Road to Plenty, they promoted spending as primary.

But one astute observer of the time wrote about this book, "Too good to be true -- You can't get something for nothing." This observer was FDR himself, just a few years before his own "beneficent hand" stimulated the economy into the ground.

FDR forgot the lesson that Obama seems never to have learned. A stimulated orgy of federal spending is no substitute for a sound economy.


Linn is a local political activist and firearms instructor with the Grand Valley Training Club. His son Ari edits FreeColorado.com from the Denver area.

Hollywood Welfare

With more and more Colorado families struggling to pay the bills, the Colorado legislature is looking to put Hollywood movie producers on the dole.

The Rocky Mountain News reports, "With an eye on luring movie productions to the state, the Colorado Film Commission hopes its latest proposal will fly because its $10 million cost would be offset by payroll and sales taxes paid by film companies that come to Colorado."

The relevant House Bill is 1010, which would create "within the Colorado Office of Economic Development the Colorado Office of Film, Television, and Media." The new bureaucracy would, among other things, "market Colorado as a destination for making feature films..."

The proper purpose of government is to protect individual rights, not help produce films. By forcibly transferring wealth to the project, the legislature would violate the rights of those who do not wish to fund it. Among other problems, many Coloradans would be forced to subsidize films that they regard as philosophically corrupt.

If legislators really want to help develop the economy, they will put an end to corporate welfare, protectionism, high taxes, and economic controls. They will eliminate the Office of Economic Development and cut tax rates across the board.

Sean Page points out that Hollywood Welfare isn't all it's cracked up to be; one study for New Mexico "found that the state gets about 14.4 cents in tax revenue for every dollar it spends on these efforts."

The Rocky reports, "Colorado's film industry has argued that productions no longer choose locations based on scenery or a movie's plot, but look first at states that offer financial incentives."

That's just pathetic. We don't need to stoop to our knees to grovel beside other states over who can best bilk the taxpayers in order to subsidize movie producers.

It's also a good argument against the alleged economic gains. States that play this game will find they are trying to out-compete each other in luring these Hollywood bandits to town.

Quillen on New Deal Make-Work

Unlike FDR's wage and price controls, destruction of agricultural crops, and massive cartelization schemes, the New Deal's make-work spending actually left something to show for the effort. Ed Quillen, neglecting to review the most obviously destructive aspects of the New Deal, points to the "infrastructure" projects that continue to enhance our lives. He pushes his point: "The post- World War II population growth along the Front Range couldn't have happened without those Depression-era water projects."

Letter writer Cora Scherma praises Quillen's analysis and New Deal make-work: "[P]erhaps the neocons and libertarians among us should consider the following: Don’t attend concerts or religious services at Red Rocks; don’t enjoy IMAX films at Phipps Auditorium; avoid sections of the Denver Zoo lest you be tainted by big government..."

But Quillen and Scherma commit a basic economic fallacy. Henry Hazlitt explains in Economics In One Lesson:

There is no more persistent and influential faith in the world today than the faith in government spending. Everywhere government spending is presented as a panacea for all our economic ills. Is private industry partially stagnant? We can fix it all by government spending. Is there unemployment? That is obviously due to "insufficient purchasing power." The remedy is just as obvious. All that is necessary is for the government to spend enough to make up the "deficiency."

An enormous literature is based on this fallacy... [A]ll government expenditures must eventually be paid out of the proceeds of taxation; that inflation itself is merely a form, and a particularly vicious form, of taxation. ...

I am here concerned with public works considered as a means of "providing employment" or of adding wealth to the community that it would not otherwise have had. ...

For every dollar that is spent on the bridge [or other public work] a dollar will be taken away from taxpayers. ... Therefore, for every public job created by the bridge project a private job has been destroyed elsewhere. ... [Consider also] the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs. (1979 edition, pages 31-34)

Of course an artificial boom or bubble -- such as the modern one caused by federal easy credit policies -- necessarily triggers a consequent recession, which tends to generate temporary unemployment. If the government has imposed wage controls, including wage floors and union favoritism, this will dramatically exacerbate unemployment, as it did during the Great Depression clear through the late '30s. The solution is to remove the political impediments to economic activity and allow a recovery. Federal make-work may soak up some of the unemployment, but only at the costs that Hazlitt reviews. These funds are desperately needed in the market economy; they will instead be diverted to politicized projects.

Quillen errs also in imagining that government is the only entity capable of conducting certain projects. But there is no reason to expect that a market cannot provide water as it provides so many other goods and services.

Scherma adds a double error to the above. First she suggests that the only ones to oppose federal make-work are "neocons and libertarians"; I am neither. Second she implies that, when politicians force people to fund projects, those most opposed to that use of force should also refrain from benefiting from that which they were forced to fund. But that would only add a second injustice to the first, first stripping people of their wealth, then of even any marginal benefits of it.

The seen, as Hazlitt puts the matter, consists of the projects funded by politicians with other people's money. These projects are visible, and their use is obvious. They offer something tangible for which the politicians can take credit. The unseen are all the investments and expenditures prevented by the forced wealth transfers. Politicians can take little credit for allowing individuals to produce without their "help." So the next time you read about New Deal spending, or federal spending under Obama, consider not only the jobs and projects created, consider also the jobs and projects prevented.

Pfiffner Explains Colorado's Budget Cut

The Colorado media are filled with claims that the state budget faces around a $600 million shortfall. Penn Pfiffner explains the details in an Independence Institute podcast.

Pfiffner explains: "Really the bottom line that we need to talk about when we talk about that $600 million, is that about two-thirds of that is a lower amount in the increase. Now there will be some real cuts in the general fund operating budget from last year to this year because of the recession."

Jon Caldara, who interviews Pfiffner, summarizes, "Out of this $600 million that we're hearing... about $400 million of it is just scheduled increases in the budget."

Pfiffner continues: "Let's talk about the real amount of dollars that won't show up in the general fund: it's $234 million. So when people say we're cutting the budget, they're accurate in saying $234 million. How much of that is the total budget we're talking about? It's three percent -- 3.1 percent." Pfiffner argues that the state "can endure that."

Pfiffner and Caldara then discuss Amendment 23, which forces increases in education spending even at the expense of other programs. Pfiffner points out that this will put "an additional $408 million going into that state education fund."

Pfiffner points out that a "reduction in revenues... is happening across the nation; after all, the nation's in a recession, not just Colorado, and every state is dealing with it."

"Because we have TABOR [the Taxpayer's Bill of Rights], because we have restrictions, because we have a mandated balanced budget requirement, Colorado is nowhere near in as bad as trouble as, say, New York or California," Pfiffner added.

Pfiffner argues that the current pain was exacerbated by Democratic profligacy. He says:

At the beginning of this last budget cycle, conservatives within the house and the senate said, Governor Ritter, don't spend so much. Don't let your budget grow so quickly. We don't know if we're going to be able to afford all of this. And furthermore, don't increase the size of the staffing that you've done at the state level. And Governor Ritter was kind of willing to overlook any possibility like that. The staff grew by a large amount, as you see the budget grew by a large amount, and now they're having to retract back...

The general fund is but a portion of the total budget. Pfiffner explains, "The overall budget, this is the total budget, is set at $18 billion, $366 million -- $18.4 billion... You certainly can adjust $234 million within that."

Pfiffner also explained that the predicted increase in spending from Referendum C has been scaled back from the highest estimates to "more like $4 billion for those five years," still considerably higher than the estimates provided when it was passed.

Under Referendum C, the state keeps money that under TABOR it otherwise would have to refund. "The additional amount of new taxes coming in... this year is $363 million. Let's compare that: $363 million of new Referendum C dollars is more than the $234 million they're saying they have to cut." In other words, over the last few years spending is up considerably, only now there will be a modest overall decline in the general fund.

Pfiffner summarizes, "The large numbers thrown around by the state leaders is really not a true cut in the budget. The true cut in the budget is about a third of what they're saying... The legislators have a job to do, but it's not an undoable job, it's well within the means of what they can change."

Windmills and Mechanical Energy Storage

I know very little about electricity-generating windmills, so my comments here may seem naive to those who do. However, I know that some very smart scientists sometimes read my web page, and I thought perhaps my comments might prompt their more-knowledgeable replies. I started thinking about this during the recent Colorado wind storms, when I noted to my wife that it's too bad we can't harness some of that violent air flow.

As far as I can tell, there are two big problems with windmills. First, they work only at certain wind speeds. If the wind is too slow, they don't work. If the wind is too fast, they either break or don't work. Second, they directly turn a generator which in turn charges batteries. (At least this is how the windmill worked that I've seen close-up.) Batteries are expensive, limited in capacity, limited in life span, and inefficient in that they leak energy. (If they're not hooked up to batteries, you've got to somehow get that energy to someplace it can be used, which creates a new set of thorny problems.)

It occurred to me this morning that it might be possible for a clever engineer to solve some of these problems with an old-school approach: mechanical energy storage. Basically what I have in mind is a big spring-loading system, or maybe a flywheel.

It seems to me that if somebody could get a windmill to do two things at once, it might work pretty well. The first thing is to capture energy at all different wind speeds. Maybe the traditional propeller mill can accomplish this, or maybe what's needed is something more cylindrically shaped attached at two points. The big key is a geared system so that the mill can always spin (above a certain minimal wind speed) within a reasonable range. The second thing is to store the energy locally in some sort of mechanical-storage device. (Hell, it could just slowly lift a giant boulder in the air or something.) This mechanical storage system in turn runs the generator as needed. Also, you could hook up other moving things to charge this device.

I think part of what made me think of this are the giant mechanical clocks in Neal Stephenson's Anathem. That book also makes me sensitive to two points: most ideas are wrong (including most of the ones in that book), and the good ones are hardly ever original. I suspect one or the other is the case here, but nevertheless I thought I'd give it a go to see what more "praxic"-minded people have to say about it.

Russ Randall on the Economy

Last night I heard an interesting presentation by Russ Randall on the economy. I haven't investigated his claims sufficiently to judge whether they're remotely on track, but he tells a fascinating and initially-plausible story.

Randall started a web page with the peculiar name, Austrian Enginomics, which he describes as "Austrian Economic Theory blended with engineering logic." I'm not quite sure what that means. In Randall's favor, he was predicting economic trouble back in 2005:

Many economists believe the current (May 2005) cycle of interest rate tightening will be the cause of the economy eventually “breaking” and sinking into a recession or worse. Enginomics (and Austrian economic theory) recognizes the root cause of any upcoming economic downturn was the financial bubble creation in the first place; NOT the series of interest rate increases. The current series of post-root-cause central bank interest rate increases are belated attempts to correct a problem they created in the first place by the extended artificial suppression of interest rates and administration of easy monetary policy operations. (emphasis omitted)

Randall tries to estimate the real value of economic production based on inflation, population, and productivity measures. He places actual "total equity valuation" in 2007 at around 8 trillion dollars, whereas the nominal value showed closer to 18 billion. By this account, stocks have not reached their downward correction, and real estate is about half way there. The bond market has not yet started to fall but is soon to follow.

Randall further argues that the serious problems started around 1994, when easy money policy started to generate "the most extraordinary equity bubble in the history of the republic." This bubble began to correct from about 1999 till about 2002, when the feds again started cranking out easy credit.

So the bad news, by Randall's account, is that the economy is going to get seriously worse before it recovers. The good news is that our economy does produce vast real value, so, while production will dip below normal for a period as firms and individuals make the necessary transitions, the economy will recover. If, that is, the federal government does not totally destroy the economy through attempts at massive central planning.

There is an obvious potential problem with Randall's account, though: his base-line estimate of productivity may be way off. This goes back to debates about the Great Depression. I am persuaded that most of the stock gains through the '20s represented real economic improvements; the era showed profound advances in technology and manufacturing. While federal policy did create a bubble, the deep problem was caused by Hoover's tariffs and wage and price controls. I have no idea whether productivity today tracks Randall's estimates. But I would want to look carefully at the tremendous advances in computer technology, the internet, cell communication, and medical technology before concluding that his estimates are accurate. Obviously, if real productivity is higher than what Randall estimates, then the bubble is smaller, as are the necessary economic adjustments.

Generally, I am not going to get in the game of trying to predict the economy. It's a very hard thing to do, which is why very smart people routinely lose tons of investment money. A friend of mine once related a story that illustrates the problems. He was part of an investment club that spent considerable time tracking stocks and creating just the right portfolio. After many years of this, the portfolio showed practically the same gains as the S&P 500. We've all heard that chimpanzees throwing darts at a board could over time do about as well in creating a diversified portfolio as the highest-paid experts in the field.

That is not to say that the market is fundamentally irrational or totally unpredictable. Rather, because people tend to capture obvious gains immediately, and because of the inherent uncertainty of the future, "get rich quick" investment typically doesn't work. A major source of uncertainty is the large-scale, capricious economic intervention of politicians.

Yet, at a broader scale, economic trends are predictable. In an economy with fair and stable rules that protect property and voluntary association, the economy will tend to continually grow more productive and prosperous. In a completely capricious society, whether run by local thugs or national dictators, the economy will tend to stagnate and shrink. We are in a middle stage, and general economic trends are difficult to predict precisely because it's hard to measure and anticipate the conflicting movements of productivity gains and political losses.

Obviously, people looking to invest or protect existing investments do their best to anticipate short-term economic trends. But, for the general long-term health of the economy, what are important are the principles. We're in the mess we're in precisely because politicians and their appointees have strayed from sound economic principles and turned to range-of-the-moment tinkering. On this point, Randall and I agree.

Colorado Media Matters Cites Economist Who Critiques New Deal

Colorado Media Matters (CMM) relies heavily on an economist to make the case that the New Deal helped the economy. Unfortunately for CMM's case, that economist -- Gene Smiley -- is a well-known critic of the New Deal with a book out called Rethinking the Great Depression.

The main issue is that are two main sets of unemployment data for the Depression era. Colorado Media Matters plausibly argues that the lower figures, adjusted for federal make-work employment, should be used. (I discuss the issue at greater length in my previous post.) Beyond that, CMM fails to make its case and indeed undermines it.

Colorado Media Matters writes:

[F]ormer Wall Street Journal writer Amity Shlaes -- whose 2007 book The Forgotten Man: A New History of the Great Depression (HarperCollins) conservative media figures have cited frequently to dismiss the New Deal's effectiveness -- acknowledged that her unemployment figures excluded "make-work jobs," instead relying on data compiled for the Bureau of Labor Statistics (BLS) by economist Stanley Lebergott. In a November 29, 2008, Wall Street Journal op-ed, Shlaes wrote, "To be sure, Michael Darby of UCLA has argued that make-work jobs should be counted. Even so, his chart shows that from 1931 to 1940, New Deal joblessness ranges as high as 16% (1934) but never gets below 9 percent" [emphasis in original]. After World War II, BLS ceased counting those in work-relief programs as unemployed, as economist Gene Smiley noted in a 1983 Journal of Economic History article.

A 1993 Journal of Economic Perspectives paper by Robert A. Margo, drawing from Smiley's article, presents a table comparing Lebergott's and Darby's unemployment figures...

Media Matters for America previously has documented other conservative media figures and outlets similarly cherry-picking unemployment figures to assert that the New Deal failed to reduce unemployment. Additionally, Colorado Media Matters has pointed out that Independence Institute President and KOA host Jon Caldara parroted other conservatives by claiming that the New Deal was a failure that "plunged us into misery."

So, by CMM's account, Smiley played a central role in bringing to light the adjusted figures. Yet as I've pointed out, the higher figures that Shlaes cites come from Out Of Work by Richard Veddar and Lowell Gallaway, who point out that Smiley endorses the use of the higher figures as well.

As for CMM's case for the New Deal, it is flawed for reasons I discuss in my previous post. CMM argues that, because unemployment fell between Hoover and FDR, therefore FDR's New Deal was responsible for the improvement. Colorado Media Matters thus commits an obvious logical fallacy. Critics of the New Deal argue that, even though unemployment fell relative to its high under Hoover, nevertheless the New Deal hampered economic recovery. Therefore, CMM's criticisms of its opponents are groundless.

Media Matters for America quotes Smiley's 1983 article as well.

So Smiley is a trusted economist, then, in the lights of CMM and its national counterpart. Perhaps Colorado Media Matters should therefore pay attention to Smiley's critique of the New Deal.

I contacted Smiley to verify that he wrote the 1983 paper. Here's what he had to say:

Dear Ari,

Yes, I wrote that article. I'm not exactly sure what you mean by "my take" on the different unemployment rate estimates but I can make a couple of comments. Darby's contention is that if one is trying to understand the speed of the recovery one has to look at the truly unemployed; i.e., those who simply did not have jobs. In the search model he used that is crucial to the speed of the recovery. Thus, he excludes all those employed at federal projects designed to put people to work. Lebergott's estimates (which were much earlier and the first real estimates of unemployment for the 1930s) are generally used to demonstrate the slowness of the recovery under the assumption that if the recovery had been faster private employment would have picked up more quickly and fewer would have been employed at government make-work jobs. Essentially Darby's contention is that if one wants to examine how quickly the private economy was recovering one has to exclude all those employed at government make-work jobs because they were no longer part of the private economy. Darby makes the point that post-WW II unemployment estimates do exclude people employed at comparable government make-work projects. ...

You should probably understand that I am a critic of the New Deal. I have argued extensively that the programs which are commonly accepted to be the New Deal were responsible for the slow recovery of economic activity after the end of the Great Depression in March 1933. I have examined this in my book, Rethinking the Great Depression. For the most part Amity Shlaes and I agree. I read her entire manuscript, The Forgotten Man, before it went to the publisher.

All the best,
Gene Smiley

I do appreciate the fact that Colorado Media Matters accuses its opponents of cherry picking the data. We do need our state jesters.

Sirota's Statistics Fail to Vindicate New Deal

Here I continue my critique of David Sirota's case for the New Deal. Sirota wrote a piece for the January 2 Denver Post. I wrote a reply on January 4 as well as a short letter for the Post, published January 7. (I've also written several other articles on the matter.) Sirota completely ignores my critique of his case in his January 6 follow-up for the Post's Politics West. I continue my case here in the hopes that eventually Sirota will attempt to engage the debate and respond to his critics.

1. Sirota's Smear of Shlaes

The worst aspect of Sirota's follow-up his his unjust smearing of Amity Shlaes, the respected economic historian who wrote The Forgotten Man. Reading Sirota's claims, I doubt that he has read the book. Whether or not he did, he misrepresents its contents.

Sirota claims that Shlaes's books has been "discredited," that she "wholly omits some relevant data and deviously manipulates other numbers," and that she is dishonest.

To back up this claim, Sirota quotes a Slate article by historian Eric Rauchway, which states, "She has unemployment at 20 percent in the 1937-38 recession. ... A third of the people Shlaes counts as unemployed had a job that the New Deal gave them through its relief programs."

Notably, Rauchway does not claim to "discredit" Shlaes's book, though he argues she is pushing an ideology (as is he), and his case is considerably more nuanced than is Sirota's. For example, Rauchway points out a couple of FDR's virtues: he supported freer world trade and he helped repeal Prohibition. Indeed, I recently praised FDR for opposing Prohibition. What Rauchway does not do is demonstrate that the New Deal as a package improved the economy. For example, he praises FDR's union laws without examining the economic case that those laws contributed considerably to unemployment at the time.

To Sirota, Shlaes is dishonest because she uses an unemployment figure of 20 percent during the 1937-38 recession. But Sirota uses practically the same figures to make his case. Sirota writes:

So to end this historical revisionism once and for all -- to compare apples to apples, rather than apples to conservatives' fuzzy math -- let's go to the great equalizer, the Census Data, and specifically Census document HS-29 (available in PDF or Excel formats). Quoting directly from Census data, here are the unemployment rates and total number of official unemployed at the beginning and end of the presidential terms since the Great Depression...

The unemployment rate that this Census data provides for 1938? Nineteen percent. So, if Shlaes uses this figure, she's dishonest, but if Sirota uses the same figure, he's invoking the "great equalizer" of data. Oops.

Notice that Sirota admits that there was a renewed recession in 1937-38. In his first article, he claimed -- without any evidence or economic argument -- that pulling back on the New Deal caused this. As I review, FDR's new wage controls in a period of monetary contraction primarily caused this increased unemployment.

If Sirota would check Shlaes's book, he would find that she neither omits nor manipulates the data. (I quote from the 2008 paperback.) On pages 402-403, Shlaes writes a detailed note about her unemployment figures. She writes:

During the 1920s and the Depression, Washington did not keep the sort of systematic unemployment data that it collects today. ... Still, there were some national numbers to talk about. The Labor Department collected figures, as did the Census Bureau [Sirota's "great equalizer"], the Commerce Department, [etc.] ...

For the 1930s, I have gone with month-by-month figures calculated by Richard K. Vedder and Lowell E. Gallaway, in Out of Work: Unemployment and Government in Twentieth Century America (San Francisco: Independent Institute; New York: Holmes & Meier, 1993 [p. 77]). These authors use [scholar Stanley] Lebergott and government numbers as their basis. Economists on the right such as Michael Darby, Harry Scherman Fellow at the National Bureau of Economic Research, argued later that Lebergott and the BLS both overestimated the number of unemployed by counting as unemployed people who actually had full- or part-time work in make-work programs such as the WPA. But I have gone with the traditional numbers.

So Sirota can argue that Shlaes does not use the best numbers, but he cannot fairly claim that she omitted or manipulated the data.

Neither Sirota nor Rauchway offer month-by-month, or even year-by-year, unemployment figures that they think are properly adjusted to account for federal make-work. Amazingly, Colorado Media Matters (CMM) provides a good citation for this. According to the Darby figures, unemployment dropped steadily from 22.9 percent in 1932 to 9.1 percent in 1937, then bumped back up to 12.5 percent in 1938.

Shlaes does stray from the "traditional numbers" in her "Afterword to the Paperback Edition." On page 393 she writes:

In the very best years of Roosevelt's first two terms, unemployment still stood above 9 percent. Nine percent is better than horrendous, but it hardly is a figure that induces hope.

Indeed, as I've noted, Obama's own economic advisors believe the current recession will peak at 9 percent unemployment without their intervention (even though I think their intervention will only make matters worse). Today we all think that employment approaching 9 percent is a disaster, yet the defenders of the New Deal praise FDR because, using the Darby figures, FDR almost managed to get unemployment down to 9 percent before it spiked back up to double-digits.

Perhaps Shlaes should have explained the Darby figures in more detail and earlier in her book. However, the statistical matter is not nearly as clear-cut as CMM would have us believe. While CMM accuses its opponents of cherry picking the data, CMM itself cherry-picks its sources. The Vedder and Gallaway book came out in 1993, the same year as the paper by Robert Margo cited by CMM. However, Vedder and Gallaway certainly were aware of Darby's work, and they ran his figures through their regressions (see pages 42-43). They write:

Questions have been raised about the basic accuracy of the government unemployment-rate data... Both the [Robert] Coen and the Darby estimates place unemployment at lower levels in the early thirties than the official Bureau of Labor Statistics estimate derived by Stanley Lebergott. We are inclinded to agree with Gene Smiley that the Lebergott/BLS estimates are probably as good as any. (pages 42, 79-80, footnotes omitted)

What is interesting about this is that the reference to Smiley is a 1983 article in the Journal of Economic History -- the same article that CMM cites here and here to advocate use of the lower statistics.

Smiley influenced Vedder and Gallaway, who in turn influenced Shlaes. Smiley, Vedder, and Gallaway are intimately familiar with Darby's figures. Yet Sirota and Colorado Media Matters want us to believe that Shlaes's use of statistics is sinister rather than merely a case of making a reasonable use of limited data.

Even granting the lower figures, Sirota's entire case boils down to the claim that FDR's New Deal worked wonders when it couldn't manage to get unemployment below double digits for most of FDR's first eight years in office. That's a pretty lousy case.

2. Sirota Confuses Correlation with Causation

Sirota's argument is that "the pre-WWII New Deal era saw the single largest drop [in unemployment] in American history." He goes on at length about this point.

But, as I argued in my first reply, it's pretty hard to do worse than unemployment approaching 25 percent. Hoover, with the help of the Federal Reserve, decimated the economy. The fact is that the economy continued to struggle under FDR and never really recovered till the '40s. The question, then, is whether unemployment dropped under FDR because of or in spite of FDR's policies.

Sirota apparently never learned the fundamental lesson of statistics that correlation does not prove causation. He sees that unemployment dropped under FDR (relative to its horrific rate under Hoover), and he concludes that FDR's policies therefore helped reduce unemployment. That Sirota's argument may be seductively simplistic does not change the fact that it is completely wrong.

To get the idea of the sort of logical fallacy Sirota is committing, consider the following examples:

* A patient feels ill, so his doctor bleeds him with leeches. Slowly the patient recovers. Therefore, the blood-letting caused the recovery. QED.

* A woman reporting physical ailments visits Franz Mesmer, who applies magnets to her and stares deeply into her eyes, after which the woman reports improved health. Therefore, to follow Sirota's method, we must conclude that the magnets caused the improved health.

* Jill comes down with a nasty cold. She smokes one pack of cigarettes per day. Over a period of two weeks, Jill mostly recovers from her cold. Therefore, by Sirota's logic, Jill's smoking reduced the severity of her cold.

If Sirota wishes to make his case, he cannot merely claim that unemployment dropped between Hoover and FDR, a fact that everyone acknowledges. (Sirota wrongly claims that Shlaes fails to acknowledge this.) He must demonstrate, using evidence and argument, that the economy improved somewhat because of FDR's policies, rather than in spite of them. He must tackle head-on the arguments and evidence amassed by the critics of the New Deal showing that FDR's policies made matters worse than they otherwise would have been, not better.

3. National Product

Sirota looks mainly at unemployment, but he also mentions economic growth. Growth is tightly tied to employment: with nearly a quarter of the nation out of work, less stuff gets made. So it is not surprising that, with unemployment less than that (but still dramatically higher than normal), production went up relative to the late Hoover years.

Sirota would not be surprised that critics of the New Deal discuss this relative increase in production if he would check their works. Here's what Shlaes has to say on the matter (page 395):

What about the oft-cited rising industrial production figure? The boom in industrial production of the 1930s did signal growth... [but a]t many points during the New Deal, net private investment was not merely low but negative. Companies were using more capital goods than they were buying.

Again the reality is considerably more complex than Sirota acknowledges.

At this point, Sirota has written two articles that utterly fail to make his case that the New Deal helped the economy. Perhaps he'll seriously grapple with the relevant issues in a future article.

4. Sirota's Stereotyping

This is a minor point tacked on at the end. Sirota claims that, after his first column, he received "angry email from conservatives," and he claims to be answering "right-wingers." However, as I pointed out in my first reply, "many critics of the New Deal are not conservatives and many conservatives praise FDR."

In Sirota's simplistic world of angry conservatives and enlightened liberals, where does he fit treatments of Hoover, the Republican president preceding FDR? As I've noted, every critic of the New Deal I'm aware of also excoriates Hoover. But Sirota lacks either the ability or the will to see beyond his ideological blinders. He leads with stereotypes and ad hominem attacks and weakly follows with arguments.

Sirota received at least one e-mail that was neither angry nor from a conservative: my own. (If Sirota wishes to call me a conservative, perhaps he will explain what he's talking about, given that I'm an atheist who supports gay rights, the right to abortion, the re-legalization of drugs, and the total repeal of all censorship.)

On January, 4, I wrote to Sirota:

Dear Mr. Sirota,

I've written a criticism of your recent op-ed on the New Deal here:
[link]

I would be more than happy to publish your reply, which you are welcome to send me via e-mail.

Thanks,
Ari Armstrong

Angry conservative, indeed.

Obama's Fear Mongering

Barack Obama wants to frighten us into giving the federal government dramatically more power over the economy. However, not even his own advisers agree with his economic predictions. Obama said, "If nothing is done, this recession could linger for years. The unemployment rate could reach double digits."

Of course it's easy to claim that something "could" happen. But Obama wrongly suggests a causal relationship. It is also true that "if something is done, this recession could linger for years" with double-digit unemployment. And everything about Obama's economic plans promises to undermine the economy, from trade restrictions to welfare expansion to new controls on energy and medicine.

But here let us look only at the job picture. Interestingly, Obama's advisers released a paper the day after Obama's speech in which they claim unemployment will reach 9 percent "Without Recovery Plan" and only 8 percent with it. Well, they can claim whatever they want. The fact is that increased central planning threatens the economy. At least they admit:

It should be understood that all of the estimates presented in this memo are subject to significant margins of error. There is the obvious uncertainty that comes from modeling a hypothetical package rather than the final legislation passed by the Congress. But, there is the more fundamental uncertainty that comes with any estimate of the effects of a program. Our estimates of economic relationships and rules of thumb are derived from historical experience and so will not apply exactly in any given episode. Furthermore, the uncertainty is surely higher than normal now because the current recession is unusual both in its fundamental causes and its severity.

In other words, it's hard to predict the future. A lot of things "could" happen. The economy could recover relatively well despite Obama's grand schemes. But Obama's advisors fail to look at one source of error: the flaws generated by their own pragmatist/Keynesian pretensions.

Ritter's New Mandate

The Denver Post reports:

... Ritter threw his support behind a proposal requiring homebuilders to offer buyers the option of putting solar panels on their home or having the home pre-wired for the panels.

"Homebuyers already have choices when it comes to countertops, paint colors and flooring," he said. "People should have similar options when it comes to sustainability."

Come on, Bill, buyers already have that "option." What Ritter wants is not the option but the requirement. The result of this will be to marginally increase the cost of homes.

Buyers and sellers -- of homes and other goods -- have the right to negotiate mutually-agreeable terms. Buyers who want solar panels are free to demand them, and sellers are free to provide them.

The problem for Ritter is that most people don't want to put up the extra expense of buying solar panels. Which is why Ritter wants to force people to explore that "option."

Jon Caldara had a great reply for the Post, even though safety codes too should be a matter of private contract and tort enforcement: "That's insane. Why don't we also require them to offer Corian countertops as well? This is between a private builder and a private owner, and the government's only responsibility is to make sure the building is up to safety codes."

Three on Rand

Yaron Brook writes in an Ayn Rand Institute media release:

Obama-nomics couldn't be more wrong. Prosperity requires that the government drastically cut government spending. That way, as much real capital as possible will remain in private hands, and be put to productive use by entrepreneurs to create valuable goods and services to sell at home and abroad. By taxing and inflating our wealth away, Obama will simply be creating more of the crushing debt that brought about the current crisis. You don't put out a fire with more gasoline. And you don't end a recession by destroying capital.

Keith Lockitch (also of the Institute) writes for the Washington Times:

Why is it that no matter what sacrifices you make to try to reduce your "environmental footprint," it never seems to be enough? Well, consider why it is that you have an "environmental footprint" in the first place. Everything we do to sustain our lives has an impact on nature.

And Stephen Moore writes about Atlas Shrugged for the Wall Street Journal:

For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism. ...

The current economic strategy is right out of "Atlas Shrugged": The more incompetent you are in business, the more handouts the politicians will bestow on you.

Moore makes a couple of missteps -- what he describes is not "simply" the "moral of the story," which is much richer, and the Atlas Society that Moore mentions doesn't do justice to Rand's work -- but his article is worth a read, as are the other two pieces.

Ayn Rand's work is increasingly relevant in today's world.

Meniskus

Last night I saw Meniskus at Nissis. Thanks to a friend who has dragged me to several shows, I've finally become a fan. While I was underwhelmed at an early show, I think because the band wasn't taking the venue seriously, last night the group was completely on its game, and its members did full justice to their compositional prowess.

Meniskus consists of a violinist who also sings am amazingly wide range, an acoustic guitarist who also picks up an electric bass, and a fabulous drummer who backs up vocals and plays a keyboard on the side. They're very good musicians, and they've written several great songs. I hope that brings them success.

Meniskus has a couple albums out, and I think Foreign Beyond is the one to pick up. (ITunes has it.) They have a video out on YouTube for "Letters."

This is a Colorado band that deserves a listen.

Richman Versus 'Stimulus'

Sheldon Richman has a nice article out today summarizing the folly of "stimulus" spending:

Since the government has no money lying around waiting to be spent, it will have to borrow close to a trillion dollars to carry out the program President-elect Obama and the congressional leadership are planning. But borrowing money for their pet projects injects nothing into the economy. It merely moves money from where it currently is in the economy to where politicians want it to be. How is that a stimulus?

Moreover, the debt will be covered (monetized) by the Federal Reserve by creating money out of thin air.

Obama is trying to frighten the American public into supporting a massive expansion of federal power -- an expansion that Obama would have favored regardless of economic conditions. But a more-socialized economy will not lead to prosperity: it will undermine it. Now is the time for Americans who care about their liberties and their economic well-being to stand up and demand economic liberty.

FDR's Patronage and Court Packing

Burton Folsom's review of FDR's systems of "patronage" -- federally supporting favored candidates with tax-funded programs -- and his scheme to pack the Supreme Court are breathtaking. Blagojevich looks tame by comparison. Here are just a couple examples:

When two officials with the RFC [Reconstruction Finance Corporation] and National Emergency Council (NEC) openly supported [Walter] George for Senate [against Roosevelt's pick] they were fired and replaced with men loyal to the president. (page 203)

The Philadelphia Inquirer observed, "The Administrations attempt to dictate the selection of popular representatives, even to the extent of using PWA [Public Works Administration] grants as lures, looks to be a monumental political blunder." (page 204)

As the second quote suggests, FDR overreached on the campaign trail, and his "tampering with the other two branches of government triggered a large opposition" (page 211).

Meanwhile, Folsom notes, FDR sat on an attempt to crack down on lynchings. On this point, however, Folsom makes an odd remark about liberalism:

Black Americans implored Congress to make lynching a federal crime, and thereby create the federal machinery to enforce justice in areas that refused to punish lynch mobs. That would expand government which appealed to liberals, and would improve civil liberties for a persecuted American minority, which also appealed to liberals.

Folsom thinks it odd that FDR failed to support the law against lynching despite its liberal appeal. And it is tragic that FDR failed to use his political capital on such a worthy cause.

However, this idea that "liberals" want to "expand government," presumably meaning that conservatives want to restrict it, puts the debate on false grounds. Beyond the problem with defining liberalism -- I consider myself a liberal in the true sense -- this focus on the mere size of government is misplaced. I do want limited government -- a government limited to protecting individual rights. But that says nothing about the size of government needed to accomplish that goal. If a nation faces a powerful aggressor, the nation's government will have to become quite large to successfully face the threat. Similarly, when large criminal mobs go around murdering people, the government may have to take large-scale actions. The essential is the goal of government. The resources and extent of activity necessary to attain that goal are a different matter.

Ritter to Promote Transparent Budget

Face the State reports:

With the 2009 legislative session jumping into full swing, Gov. Bill Ritter is scheduled to deliver his State of the State speech today where it is expected he will introduce his plan for a more transparent government by proposing to make the state budget available online. The plan is just the latest is a string of instances where the Democrat has utilized Republican ideas to suggest changes to state law.

Government transparency has been a priority for Republican lawmakers in recent sessions. Face the State has obtained a copy of draft legislation (PDF) that Sen. Mike Kopp, R-Littleton, and Rep. Don Marostica, R-Loveland, were planning to introduce this session to make the itemized state budget available online, but which Ritter may enforce by executive order instead.

This is a great, great idea that deserves broad support.

Politically, this is a great move for Ritter. As Face the State observes, this is a Republican idea. But the Democrats have won here by accommodating some of the better Republican ideas and repudiating the worst ones (regarding social policy). In some cases, it took the Democrats to pass reforms that Republicans long opposed, such as permitting Sunday liquor sales, a free-market issue.

Not only the state government but every governmental entity in the state should make its complete budget and spending documents available online. Taxpayers deserve access to this information. If Democrats deliver, they just might prove to Colorado voters that they deserve to remain in charge.

Three for Freedom

Paul Hsieh writes for the Christian Science Monitor:

... Any government that attempts to guarantee healthcare must also control its costs. The inevitable next step will be to seek to control citizens' health and their behavior. Hence, Americans should beware that if we adopt universal healthcare, we also risk creating a 'nanny state on steroids' antithetical to core American principles. ...

Please help the good doctor earn the widest possible audience.

Next, Brian Schwartz has a nice piece from January 3 in Boulder's Daily Camera:

[Y]ou cannot walk away from an elected politicians who claim "we're all in it together." Politicians "bring people together" with legislation. If you peacefully refuse to cooperate with such legislated "togetherness," you're a criminal and can end up in prison.

Finally, the Denver Post published my letter critical of Hoover and FDR:

... [N]o critic of the New Deal claims the trouble started with FDR. Instead, Republican Herbert Hoover helped launch the Depression with his horribly destructive tariffs and wage and price controls. And the Federal Reserve destabilized the money supply.

FDR inherited unemployment nearing 25 percent, and it never fell below 14 percent through 1940. Hopefully Barack Obama won’t have to push unemployment over 14 percent to be considered as great a president as FDR.

I also briefly summarize the causes of the worsening economic conditions of 1937 and 1938.

I have also written a more detailed reply to David Sirota.

Buy a Carbon Monoxide Detector

Kirk Mitchell reports that "faulty repairs to a boiler vent" leading to carbon monoxide poisoning may have caused the death of a 23 year old University of Denver Student. Horrible. Mitchell also points out that five other Coloradans have died of carbon monoxide in the last few weeks.

However, the appropriate response is not for the legislature to require carbon monoxide detectors, as some have argued. It is simply not a proper legislative function.

Instead, individuals should take it upon themselves to purchase carbon monoxide detectors for their homes. I bought one for mine. The cost is trivial compared to the risk it averts. I urge readers to buy one for their homes. If mortgage companies or insurance companies required their installation prior to loan approval, that might also make sense.

Where the property of others is concerned, the matter is properly one of torts. If investigation sustains the claim that faulty repairs caused the recent death, whatever company is responsible is probably looking at a massive law suit. I'm sure the family's lawyers will also evaluate whether the apartment complex in question did anything negligently. It is indeed a shame that two failures -- faulty repairs and lack of a detector -- seem to have caused the death. If I were a member of the victim's family, I would seek to sue anyone actually at fault and do whatever I could to spread the story in the media to help educate the public.

It is tempting to claim "there ought to be a law" to solve any given problem. But often new laws don't solve the problem, or they generate other problems, and the answer lies beyond the legislature. Politicians are not there to do everything for us. They are properly there to protect liberty, property rights, and the rule of just law. The rest is up to us.

Wage Controls Past and Present

The Denver Post's William Porter thinks it's "good news" that Colorado's minimum wage is going up in this time of economic trouble. But the effect of wage controls is to throw some people out of work, in this case some of those with the least experience trying to gain a foothold in the job market.

This past Wednesday I lamented the automatic increase in Colorado's minimum wage. Yesterday I discussed some aspects of wage controls during the Great Depression. Here I discuss more of the background of wage controls as reviewed by Burton Folsom in his book, New Deal or Raw Deal?

Folsom notes that Congress imposed a minimum wage on Washington, D.C. in 1918 (page 113). The law required women to be paid $71.50 per month. The result? Congress Hall Hotel fired Willie Lyons, a woman working as an elevator operator for $35 per month, and hired a man for the same price. What a great way to help women.

Thankfully, the Supreme Court rejected the law, upholding the right "to freely contract with one another in respect of the price for which one shall tender service to the other in a purely private employment where both are willing, perhaps anxious, to agree."

Folsom notes that wage controls were built into National Recovery Act codes until they were judiciously struck down in 1935 (page 114). Then in 1938 Congress passed a national minimum wage (page 114-15). The intent of the law was protectionism of New England industries, which were losing jobs to the lower-cost South.

The same year saw a return of the minimum wage in Washington, D.C. Folsom reviews, "Immediately after its passage, the Washington Post lamented, scores of maids and unskilled workers were laid off by local hotels" (page 115).

Folsom also discusses the fact that Social Security increased the cost of labor, also contributing to unemployment (page 116). Richard Vedder and Lowell Gallaway argue in Out of Work, "[N]early 1.2 million people were added to the unemployment rolls by 1938 because of the increases in labor costs associated with social insurance programs" (page 141).

Folsom, like Vedder and Gallaway, reviews too the harmful effects of union laws (pages 119-121).

Labor is not exempt from the laws of supply and demand. When wage controls push wages above their market rates, the result is unemployment. When politicians try to force businesses to pay employees more than they contribute, the result is that businesses fire people or decline to hire them. And yet we have Colorado "news" columnists proclaiming that wage controls are "good news."

UPDATE: I have reviewed as much of Folsom's book as I intend to. Following are links to previous articles on the Great Depression.

Yes, FDR Made Depression Worse and Longer

Politicians Caused and Worsened the Great Depression

Folsom Reviews FDR's Errors

How Hoover and FDR Damaged Agriculture

'Taxpayers... Bleeding at Every Pore'

Sirota and the New Deal

Shut Down Corporate Welfare for Tourism

The following article originally appeared in the January 5, 2009, edition of Grand Junction's Free Press. Additional links and notes are provided here.

Shut down corporate welfare for tourism

by Linn and Ari Armstrong

Does Colorado need corporate welfare to promote tourism? The Denver Post argues in a December 28 editorial that, in this time of economic trouble, state legislators should continue to forcibly transfer your money to bureaucrats to spend on tourism advertising.

However, such corporate welfare is inherently unjust and economically wasteful, and now is the perfect time for the legislature to eliminate it.

The proper purpose of government is to protect people's rights of property and voluntary association. Corporate welfare violates rights by forcing some to subsidize the business of others.

Colorado's constitution rightly bans corporate welfare. Article XI, Section 2, states, "Neither the state, nor any county [etc.] shall make any donation or grant to, or in aid of... any corporation or company..."

Article V, Section 25, prevents the state legislature from "granting to any corporation... any special or exclusive privilege." And Article V, Section 34, states, "No appropriation shall be made for charitable, industrial, educational or benevolent purposes to any person, corporation or community not under the absolute control of the state..."*

Not only does corporate welfare for tourism violate the state's constitution, it defies economic sense. Bureaucrats who spend tax dollars have poor incentives to spend the money wisely. Businesses that fund their own advertising, on the other hand, tend to look harder at results.

If the Denver Post were correct about the benefits of tourism advertising, that would prove only that businesses that benefit should fund the advertising on their own. Most other businesses advertise without drawing on tax dollars.

Why should politicians advertise for only certain businesses and not others? If putting politicians and bureaucrats in charge of advertising is such a great idea, why don't we let bureaucrats handle everybody's advertising? Central planning by bureaucrats is the best way to run the economy, right?

The Denver Post ignores the general problems of corporate welfare, and the paper makes ludicrous claims about the benefits of the tourism subsidies.

The Post argues that, because tourism spending dipped during a recession, that somehow proves that corporate welfare was responsible for the subsequent rise of tourism. But might we surmise that more prosperous times were the cause?

The Post reports, "State tourism director Kim McNulty tells us studies show that, for every dollar the state spends to promote itself to tourists, it makes back more than $13."

And what are these "studies?" The Post declines to name them. McNulty told us in an e-mail that "the study that was quoted in the Denver Post article... is a study that Longwoods International did for the Colorado Tourism Office."

The web page of Longwoods International shows that this Canadian company conducts "Budget Justification" for a variety of government agencies. Back in 1986, "The Colorado Tourism Board (CTB) hired Longwoods to conduct an image study as input into a new advertising campaign." In 2002-03, "Longwoods was hired to measure the Return on Investment of the campaign [at that time], which information would be used to help secure future funding."

So do you get the idea of how this works? Colorado bureaucrats spend tax dollars to hire a Canadian company to provide "justification" of the bureaucrats' budget and to "help secure future funding" for those bureaucrats. Surprise, surprise, those are the results that Longwoods delivers.

We asked McNulty via e-mail and phone message how much the state spent on the latest study. Unfortunately, we did not hear back from McNulty by deadline.** So another thing we have not been able to ask her is how many tax dollars her office spends on salaries, supplies, and facilities.

Anyone with a rudimentary understanding of statistics can tell that Longwoods' claims about the returns on tax dollars are bogus. You can find the study at http://tinyurl.com/9975uk. Longwoods works from survey data that simply cannot demonstrate what Longwoods claims they can.

Longwoods asked people whether they were "aware" of the tourism ads and whether they traveled to Colorado. But this confuses cause and effect. It is not the case that, in a random sample of the population, some people become aware of the ads and because of that decide to travel to Colorado. Instead, people already keen on traveling to Colorado are more likely to become aware of Colorado-specific advertising. Similarly, if you're planning to buy a new Volkswagen, you start seeing Volkswagens everywhere.***

Based on this flawed methodology, Longwoods makes the wildly implausible claim that each advertising dollar generates $193 of "visitor spending" and $13 of "total taxes returned." What would you think if somebody offered to take your money, promising to return nearly 200 times the revenues? We'd expect such an offer to arrive in an e-mail from the widow of Prince Sajutamiwa from the Federal Republic of Nigeria.

Sadly, the Denver Post cited the same sort of bogus claims back in 2006.**** Hopefully our legislators will display a bit less credulity than these editorial writers and take the tourism industry off the dole.


* Dave Kopel listed these three sections in a 1996 article.
** McNulty replied regarding the cost of the study on January 5 at around 3:30. She writes via e-mail, "I was out of the office and was not able to respond until today. The contract amount for the Advertising Effectiveness, Image Benchmarking and Return on Investment survey was $122,000. This is not a study we do every year."
*** Paul Hsieh provided the Volkswagen example.
**** The Denver Post's editorial was dated June 11, 2006. For additional background on Colorado's corporate welfare for tourism, see "Wasteful Spending by Colorado Government," page 12; "Corporate Welfare"; "Taxes for Tourism: Further Reflections"; and "Intel Inside."

Sirota and the New Deal

David Sirota praises the New Deal in an article for the Denver Post.

Sirota devotes the majority of his article to ad hominem attacks, empty assertions, and appeals to authority. Sirota starts on the wrong food by tagging critics of the New Deal as "conservative," even though many critics of the New Deal are not conservatives and many conservatives praise FDR. Sirota refers to criticism of the New Deal as "abject insanity," "ridiculous," and "not... remotely serious." He claims that "mainstream economists" laud modern bailouts, " the vast majority of Americans think the New Deal worked well," and professional historians agree the New Deal was swell.

What Sirota scrupulously avoids is any evaluation of the arguments and claims made by critics of the New Deal.

Sirota claims that the economy grew, and unemployment fell, during FDR's first two terms. But this ignores a number of critical facts. Critics of the New Deal lambast not only FDR but his predecessor, Herbert Hoover, who destroyed the economy with his tariffs, wage controls, and other economic controls. Critics of the New Deal also point out that Federal Reserve policy played a major role in causing and prolonging the Great Depression.

FDR did not take office until March 4, 1933. I reviewed the basic unemployment figures of the era back in October. The unemployment rate in 1929 was 3.2 percent. By 1932, it was 23.6 percent. Unemployment hit its peak in 1933, the year FDR took office, at 24.9 percent. So Sirota's point, then, is because FDR did not manage to throw more than a quarter of the nation's population out work, he was therefore a great president whose policies are vindicated. However, FDR never oversaw remotely normalized employment rates prior to the WWII. From 1931 through 1940, the lowest unemployment reached was 14.3 percent in 1937. And this is the basis on which we are to praise FDR?

Sirota does manage to slip in two arguments among his logical fallacies. The first pertains to the worsening conditions of 1937 and 1938:

[T]he right bases its New Deal revisionism on the short-lived recession in a year straddling 1937 and 1938. ... [T]he fleeting decline happened not because of the New Deal's spending programs, but because Roosevelt momentarily listened to conservatives and backed off them.

As Nobel-winning economist Paul Krugman notes, in 1937-38, FDR "was persuaded to balance the budget" and "cut spending and the economy went back down again."

Notably, Sirota declines to specify which "cut spending" might plausibly have harmed the economy.

Meanwhile, Sirota ignores the major causes of the economic problems of those years, specifically wage controls and constrictive Federal Reserve policies.

Richard Vedder and Lowell Gallaway write in their book, Out of Work:

The Wagner Act [of 1935] provided the stimulus for several AFL unions to form the CIO in order to organize the mass-production industries. Significant organization attempts did not begin until the end of 1936. In the first half of 1937, the major automobile companies, excepting Ford, capitulated and recognized the United Auto Workers. Other important industries, most notably steel, were either unionized (U.S. Steel) or avoided unionization by paying union-scale wages. (Page 139, footnote omitted)

Using regression analysis, the authors estimate that, during 1937 and 1938, unionization increased the unemployment rate by about five percent (page 141). The authors also note that Social Security, passed in 1935, also increased the cost of labor and thereby increased unemployment (page 141).

The authors acknowledge that, in 1937, income tax receipts were up "at a time when absolute federal spending was declining" and "the federal deficit contracted sharply" (page 143). Let us grant that it's stupid to raise taxes during a depression. It is true that changes in federal spending can harm the economy, simply because many businesses must adjust their behavior accordingly, and that takes time. But the notion that less forced wealth redistribution somehow damages the economy is absurd. Sirota commits the basic eonomic fallacy of looking at the seen -- the government spending -- and ignoring the unseen -- the business activities that don't exist because resources are forcibly transferred away from them. So Sirota's story of the economic troubles of 1937 and 1938 doesn't bear scrutiny.

On the other hand, there is a straightforward and obvious link between wage controls and unemployment. Especially during a time of (federally induced) deflation, artificially high wages are disastrous. They artificially increase the monetary wages of some at the expense of throwing others -- in the case of the Great Depression, many others -- out of work.

Sirota's second argument is that (even) Milton Friedman praised "the New Deal's Federal Deposit Insurance Corporation." But critics of the New Deal point out that the Federal Reserve is a major cause of the Great Depression to begin with. So let us put Sirota's claim in context.

Vedder and Gallaway point out:

Monetary policy was clearly restrictive. On three occassions between August 1936 and May 1937, the Federal Reserve Board raised reserve requirements, flexing new regulatory muscle provided by the Banking Act of 1935. The doubling of reserve requirements led banks to scramble for reserves, and to rebuild previously existing excess reserves. This, to monetarists such as Milton Friedman, led to a decline in the stock of money and a resulting economic contraction. (Page 144)

Again, contractive monetary policy plus heightened wage controls is a bad mix.

Perhaps in a future article Sirota would care to actually enter the debate rather than restrict his discussion to name-calling, platitudes, and appeals to authority. FDR's policies demonstrably worsened the Great Depression caused by Hoover and the Federal Reserve. The sort of economic ignorance promoted by Sirota only threatens to subject the modern economy to similar turmoil.

Congress Against the Economy

The New Clarion (a nice new online publication) pointed to a recent article by Michael Malone lamenting the federal roadblocks to entrepreneurship:

From the beginning of this decade, the process of new company creation has been under assault by legislators and regulators. ...Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.

The new laws and regulations... have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.

Faced with crushing reporting costs if they go public, new companies are instead selling themselves to big, existing corporations. ...

For all of this, we can first thank Sarbanes-Oxley. Cooked up in the wake of accounting scandals earlier this decade, it has essentially killed the creation of new public companies in America... and cost U.S. industry more than $200 billion by some estimates.

So, while the modern economic mess was primarily caused by federal encouragement of risky loans, Congress has "helped" to destroy productivity in other ways as well. (For some additional examples, see Veronique de Rugy's article for Reason.)

Notice also that, even as the federal government prevents sensible mergers that would take advantage of economies of scale and better management (as with Whole Foods), in other ways the federal government encourages uneconomic conglomeration.

America's politicians may yet be able to push the nation into another Great Depression.

The Link Between Poverty and Poor Diet

The Denver Post is quite right to claim, "It's no coincidence that some of the heaviest people typically have the worst diets — sugary soda for breakfast, fast food and convenience store cuisine."

The problem is that the Post wants to put federal bureaucrats in charge of nutrition. But the federal government has been a big part of the problem by pushing out voluntary food banks in favor of tax-funded food stamps. The proper solution is to reverse course, not bureaucratize health.

The Post points out, "Obese people frequently develop chronic ailments that all of us end up paying for, either through increased health care premiums or through tax dollars for government-subsidized health care." Again these are problems caused by politicians. The reason that insurance rates go up is that in many cases politicians force the healthy to subsidize the careless via mandated coverage. And obviously "government-subsidized health care" is a politically-generated problem.

Unsurprisingly, "Low-income people have the highest rates of obesity and are more likely to have a poor diet and suffer from inadequate exercise."

This begins to uproot the problem. The problem is not that poverty causes poor health, at least not in this country, at least not usually. The problem is that irresponsible choices cause both poverty and poor health. Obviously there are many exceptions, but that's the general trend.

The Post makes two implausible claims: "Highly processed, nutritionally bereft food typically is cheaper than fresh foods. Furthermore, some urban areas don't have full-service supermarkets, leaving those without transportation unable to buy healthy food."

On the second point, perhaps the Post would care to point out a single neighborhood in the entire Denver Metro area that lacks easy access to a "full-service supermarket." Those who do live relatively far from a market most often have bus access or carpooling friends. The fundamental problem is not lack of access to good food, but lack of will to eat it.

And it is not generally true that "highly processed" food is cheaper that "fresh foods." Sure, if we're talking about bags of flour and white rice, those are cheap. But earlier the Post said the problem was soda and fast food. I would add to the list processed cereals and snacks. It would be interesting to see the ratio of food stamps spent on pricey junk rather than healthy food.

Right now I have a cupboard full of squash that I purchased at a regular grocery store on a regular sale at 50 cents per pound. I just purchased a luscious head of green lettuce for 88 cents, also on regular sale. Turkeys have been on sale for less than a dollar per pound. The regular price of whole chickens is 99 cents per pound. I regularly pay two dollars per gallon of marked-down organic milk, and the regular price for the low-end brand is $2.49.

The problem is not that healthy food costs more than junk food; typically junk food costs more. The problem is that many poor people choose to buy the more-expensive junk food, and the federal government helps them do it with our tax dollars.

But apparently the Denver Post's answer to junk food is junk journalism.