Saturday, June 09, 2012

Politicians are top-of-the-line cons

Politicians keep selling distortions because voters keep buying it

Would anyone work to support themselves or their families – and then turn over a chunk of that hard-earned money to somebody else, just because of the words used by that somebody else?

A few people may be taken in by the words of con men, here and there, but the larger tragedy is that millions more are taken in by the words of politicians, the top-of-the-line con men.

How do politicians con people out of their money? One example can be found in a recent article titled "The Autism-Welfare Nexus" by Paul Sperry in "Investor's Business Daily."

Genuine autism is a truly tragic condition, both for those afflicted by it and for their parents. Few people would have any problem with the idea that both voluntary donations and government expenditures are well spent to help those suffering from autism.

"Autism," however, has been sweepingly redefined over the years. What was discovered and defined as autism back in 1943 is just one of a number of conditions now included as being part of "the autism spectrum." Many, if not most, of these conditions are nowhere near as severe as autism, or even as clearly defined.

The growing number of children encompassed by a wider and looser definition of autism has been trumpeted across the land through the media as an "epidemic" of increasing numbers of cases of autism. Before 1990, one child out of 2,500 was said to be autistic. This year, it is said to be one out of 88. As Paul Sperry points out in IBD, "the number of language disorder cases has fallen as autism cases have risen, suggesting one disorder has simply been substituted for another."

Having heard, over the years, from many parents of late-talking children that they have been urged to let their children be diagnosed as autistic to get either government money or insurance money to pay for language problems, I am not the least bit surprised by Sperry's findings.

Every dollar spent on children falsely labeled autistic is a dollar lost – and urgently needed – in dealing with the severe problems of genuinely autistic children. But money added to the federal budget for autism is money that can be given to people, in the expectation of getting their vote at election time.

Another example of words substituting for realities was a front page story in the May 24 issue of USA Today, showing that the official statistics on the national debt only count about one-fourth of what the federal government actually owes. Even the staggering official national debt is literally not half the story.

Under ordinary accounting rules and laws, the money promised to people as pensions when they retire has to be counted as part of the debts of a business or other organization. But, since Congress makes the laws, the trillions of dollars owed to people who have paid into Social Security do not have to be counted as part of the federal government's debts.

When you or I owe money, we are in debt – and face consequences if we don't pay up. But we are not the federal government and cannot write our own accounting laws.

Perhaps the biggest frauds committed by redefining words are the many fraudulent uses of the word "poor."

For most of the history of the human race, there was no problem in defining who were "the poor." They were people without enough to eat, often without adequate clothing to protect them from the elements, and usually people who lived packed in like sardines in living quarters without adequate ventilation in the summer or adequate heat in the winter, and perhaps also lacking in such things as electricity or adequate sewage disposal.

Today, most of the officially defined "poor" have none of these problems, and most today have amenities such as air conditioning, a car or truck, a microwave oven and many other things that once defined a middle class lifestyle. Americans in poverty today have more living space than the average European.

Why are they called "poor" then? For the same reason that autism, the national debt and many other things are redefined in completely misleading ways – namely, to justify draining more money from the public in taxes, expanding the government, and allowing politicians to give handouts to people who are expected to vote for their reelection.

If we keep buying it, politicians will keep selling it.



If You Don't Like It

By economist Bryan Caplan

Suppose your boss screams all the time, has extremely bad breath, or requires all his employees to speak in a faux British accent. Even today, the law usually offers you no recourse - except, of course, for "If you don't like it, quit." Discrimination law has carved out a list of well-known exceptions to employment-at-will. But "If you don't like it, quit," remains the rule.

While researching firing aversion, I came across an interesting piece by Mark Roehling showing that few American employees realize that the law affords them almost no protection against discharge. Empirically, his work seems sound. But Roehling also clearly wishes that American workers had the kind of legal protection they falsely believe they already possess. Yes, he admits, employment-at-will has some academic defenders:

Legal scholars adopting classical or neoclassical contract law perspectives argue that employment at-will is justified in that it preserves the principle of freedom of contract, promoting efficient operation of labor markets and advancing individual autonomy (e.g., Epstein, 1984).


The standard rejoinder to this argument is that employees' "consent" to at-will employment is, in many instances, neither voluntary nor informed due to inequality in bargaining power between employers and employees and asymmetric information (i.e., the lack of equal information about future risks and the effect of at-will disclaimers) that both tend to favor employers (Blades, 1967). These defects in the bargaining process, it asserted, cause at-will employment to be both inefficient and unfair.

How solid is Roehling's "standard rejoinder"? Let's start with "inequality in bargaining power." Sounds sinister. But we could just as easily say, "some people have more to offer than others - and the more you have to offer, the better a deal you'll get." Then it sounds utterly trivial.

In any case, what would the economy look like if people could only make deals when they happened to have "equal bargaining power"? Almost all trade would be forbidden. Parties have equal bargaining power about as often as they have equal heights. The beauty of the price mechanism is that it persuades unequals to trade by giving parties with more to offer a sweeter deal.

Roehling's invocation of "asymmetric information" is even more off-target. In any standard asymmetric information model, the effect is not to "favor" parties with more information, but to scare off parties with less information, leading to fewer trades and making both sides poorer. The upshot: If the law somehow solved the asymmetric information problem, the result would be a big increase in labor supply - presumably making Roehling's first problem - unequal bargaining power - even worse.

Still, Roehling's intuitions are clearly widely held. My question for people who share his intuitions: Why don't the same arguments make you want to tightly regulate the dating market? With a few exceptions, modern dating markets are based on a strong version of "If you don't like it, break up." People's complaints about romantic partners are endless: "He's mean to me," "She nags me," "He's cheap," "She won't have sex before marriage," etc. Yet prior to marriage, "If you don't like it, break up," is virtually your only legal recourse.

If you take Roehling's "unequal bargaining power" or "asymmetric information" rejoinders seriously, current rules of the dating market should outrage you. Think about the inequality of bargaining power between, say, Channing Tatum and an unattractive single mom who cleans hotel rooms for a living. He has movie star looks, magnetic personality, fabulous riches, and millions of female fans; she's ugly, poor, alone, and responsible for her child's support. As a result, he could practically dictate the terms of any relationship. Does this mean she should have some recourse beyond, "If you don't like how Channing treats you, break up"?

The same goes for asymmetric information. People keep all kinds of secrets from those they date - past relationships, current entanglements, income, philosophy, whether they'll ever commit. And again, people's ultimate legal threat against romantic partners' concealed information and dishonesty is only, "If you don't like it, break up."

You could say we have a double standard because personal relationships, unlike work relationships, are too complicated to regulate. Maybe so, but I doubt it. Work relationships are incredibly complex, too. It's almost impossible to objectively define a "bad attitude," but no one wants to employ someone who's got one. You could argue that if we regulate one aspect of unequal bargaining power in the dating market, it will just resurface elsewhere. But that holds for the labor market as well: If the law requires employers to provide health insurance, they'll obviously cut wages to compensate. The simple story works best: The apparent double standard is real. Since people resent employers, they're quick to rationalize policies that tip the scales against them - even if employees ultimately bear the cost.

"If you don't like it, quit" and "If you don't like it, break up," sound unappealing - even heartless. But in the real world, it's hard to do better. In any case, trying to "do better" is probably unjust. The fact that Channing Tatum has incredibly high value in the dating market is a flimsy excuse to restrict his freedom to date. And the fact that Peter Thiel has incredibly high value in the labor market is a flimsy excuse to restrict his freedom to hire. Instead of complaining about the stinginess of people who have lots to offer, we should celebrate the universal human right to say, "I don't want to see you anymore."



From Hope and Change to Fear and Smear

Barack Obama lately has been accusing presumptive rival Mitt Romney of not waging his campaign in the nice (but losing) manner of John McCain in 2008. But a more marked difference can be seen in Obama himself, whose style and record bear no resemblance to his glory days of four years ago.

Recently, the president purportedly has been reassuring Democratic donors that his signature achievement, Obamacare, could be readjusted in the second term -- something Republicans have promised to do for the last three years. What an evolution: We have gone from being told we would love Obamacare, to granting exemptions to favored companies from it, to private assurances to modify it after re-election -- all before it was even fully enacted.

Obama's calls for a new civility four years ago are apparently inoperative. The vow to "punish our enemies" and the intimidation of Romney campaign donors are a long way from the soaring speech at Berlin's Victory Column and "Yes, we can." Obama once called for a focus on issues rather than personal invective. But now we mysteriously hear again of Romney's dog, his great-great-grandfather's wives, and a roughhousing incident some 50 years ago in prep school.

The "hope and change" slogan for a new unity gave way to a new "us versus them" divide. "Us" now means all sorts of targeted appeals to identity groups like African-Americans for Obama, Latinos for Obama, gays for Obamas, greens for Obama, or students for Obama.

"Them," in contrast, means almost everyone else who cannot claim hyphenation or be counted on as a single-cause constituency. In 2008, the Obama strategy was supposedly to unite disparate groups with a common vision; in 2012, it is to rally special interests through common enemies.

Remember the Obama who promised an end to the revolving door of lobbyists and special-interest money? Then came the likes of Peter Orszag, who went from overseeing the Obama budget to being a Citigroup grandee, and financial pirate Jon Corzine, who cannot account for more than $1.5 billion of investors' money but can bundle cash for Obama's re-election. If you told fervent supporters in 2008 that by early 2012 Obama would set a record for the most meet-and-greet fundraisers in presidential history, they would have thought it blasphemy.

Obama is said to go over every name on his Predator drone targeted-assassination list -- a kill tally that is now seven times larger in less than four years than what George W. Bush piled up in eight.

Guantanamo is just as open now as it was in 2008. If Obama supporter and former Yale Law School Dean Harold Koh was once accusing President Bush of being "torturer in chief," he is now an Obama insider arguing that bombing Libya is not really war and that taking out an American citizen and terrorist suspect in Yemen is perfectly legal. Previously bad renditions, preventative detentions and military tribunals are now all good.

Some disgruntled conservatives jumped ship in 2008 for the supposedly tightfisted Obama when he called for halving the deficit in four years and derided George Bush as "unpatriotic" for adding $4 trillion to the national debt. Yet Obama already has exceeded all the Bush borrowing in less than four years.

What accounts for the radical change in mood from four years ago?
The blue-state model of large government, increased entitlements and high taxes may be good rhetoric, but it is unsound reality.

Redistribution does not serve static, aging populations in a competitive global world -- as we are seeing from California to southern Europe. "Hope and change" was a slogan in 2008; it has since been supplanted by the reality of 40 straight months of 8-percent-plus unemployment and record deficits -- despite $5 billion in borrowed priming, near-zero interest rates, and vast increases in entitlement spending.

Obama's bragging of drilling more oil despite, rather than because of, his efforts is supposed to be a clever appeal to both greens and business. Private equity firms are good for campaign donations but bad when a Republican rival runs them. "Romney would do worse," rather than "I did well," is the implicit Obama campaign theme of 2012.

To be re-elected, a now-polarizing Obama believes that he must stoke the fears of some of us rather than appeal to all of our hopes by defending a successful record, while smearing with the old politics rather than inspiring with the new. That cynical calculation and constant hedging and flip-flopping may be normal for politicians, but eventually it proves disastrous for the ones who posed as messianic prophets.




Enterprise value tax: "A proposal from the Obama administration that has generated significant opposition from the financial sector is the enterprise value tax. This is because high taxes on investment income can be a hindrance to investment by reducing incentives for investors and financial managers to engage in certain financial activities or higher risk investments."

Markets and generosity: "A frequent though quite unjustified charge against free markets is that they encourage what Karl Marx called the cash nexus or, as it is also put, commodification, treating people as items for sale. The claim is that when people engage in commerce, they are hardhearted, stingy, or as the Oliver Stone and OWS crowd would have it, greedy. But this is a complete distortion."

Bloomberg takes a Big Gulp out of liberty: "If the Mayor can dictate the size of soda pop servings, he can dictate every other aspect of any business in his city. He could pass an ordinance restricting donut shops from selling more than 2 donuts at a time to a customer. He could outlaw larger portions of French fries; more than one pork chop per plate; any serving of steak more than 3/4 of an inch thick -- there is no limit to what evil he could do to our appetites."



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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