Monday, April 04, 2005


Amtrak: "If the federal government had supplied stagecoach service in the 19th century, we would still have stagecoaches in operation. Luckily, Washington was wise enough to stay out of that business. It was not wise enough to stay out of the passenger rail business, which is why we still have Amtrak. President Bush finds it hard to overhaul Social Security, which may not be surprising: It's a huge program that plays a large role in the life of virtually every American. But he may find it equally frustrating to shift federal policy on Amtrak, even though it's a small program that affects hardly anyone. This is one of those programs that demonstrates eternal life is not just a religious hope for the next world but a fact in this one. It was launched in 1971 with the hope that, in the words of President Nixon's transportation secretary, it 'could be profitable within perhaps three years.' That forecast proved, well, premature."

U.S. foreign debt too LOW: "Here's another reason to be bullish: everyone is worried sick that America is overindebted, but it's not. This country could profitably take on more loans from abroad and invest the money in productive assets. We're underindebted. The debt worriers have been with us for a long time, and they've always been wrong. Their economic prescriptions are born of a moral philosophy that says debt is bad and more debt is worse. They don't like to see the U.S. importing capital from abroad at the rate of $600 billion a year. What the worriers fail to contemplate is the uses to which that capital is put. What is the right debt level for society to carry? The answer is: that level where our marginal borrowing costs approach our marginal return on assets. This is, in fact, the same formula that a corporation would use. If you can borrow at 6% to build a factory that will yield a return of 12%, you should borrow. The U.S. is nowhere near there"

Bye Bye German jobs: "Volkswagen is traditionally thought of as a German manufacturer yet four of its six passenger cars are produced outside of Germany. Volkswagen spokesman Matthew Wiesner says there is a mix of reasons behind the trend. "It's the same with so many of the various producers around the world. It is a mix of where the plants are positioned around the world, currency rates and the fact that Europe is becoming very expensive to produce things," he says".

Coyote Blog has some excellent case studies on the effects of raising the minimum wage. He lists from his own real-life experience four effects: 1. The jobs just go away; 2. The jobs get outsourced to contractors; 3. The jobs get automated away; 4. Prices go up to customers. That brief summary is only a start, however. This is definitely a case of "Read the whole thing".


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