Headscratcher (10)

Failure to pay timely attention to an automobile's fuel gauge often results in running out of gasoline. When that happens, a call to an emergency service will, after a modest wait for police or a towing service, result in the supply of a gallon of somewhat expensive gas.

The current eco-fad is to purchase overpriced electric powered vehicles. Simple plug-in hybrids do make a certain level of operational, if not financial, sense as does the Chevrolet Volt which is a battery powered plug-in vehicle with a 'range extender' gasoline motor.

The newly introduced Nissan Leaf, however, is a pure electric car with a range of about 100 miles, as claimed by the company, and only 73 miles as tested by the Environmental Protection Agency (EPA) . Reduce that - by a lot - when sitting in traffic jams on days when heat or air conditioning are required and the risk or running out of fuel becomes substantial.

Then what?

The answer is simple. Call a tow truck and, instead of purchasing an expensive gallon of gas, the vehicle will be hauled away to spend hours being recharged while the unfortunate eco-freak owner paces impatiently as he (women are likely too sensible to buy these impractical status symbols) contemplates the new damage to his bank account.

A headscratcher indeed!

Advice for New Dictators

Dear Dictator:

Congratulations!

Whether you acquired it as a result of a coup d'etat, a vaguely legitimate election (with no plans for any more), a rigged election or by the cancellation of any further elections, you have just acquired your very own country. The following suggestions should help to provide you with some guidance regarding your next steps:

1. Never forget that all dictatorships have a 'Best Used by Date'. It can sometimes be hard to determine that date but you do want to be long gone by the time it arrives.
2. Never, ever, believe your own propaganda.
3. When stealing money, don't overdo it. You only need a billion or two for a very comfortable retirement. If you have many children, wives and mistresses you may need four or five billion but stealing tens of billions is overdoing things. If you do, you will never work out how to enjoy it or even to hide it - and perhaps yourself - from those seeking vengeance after your retirement.
4. Give your children some of the money and encourage them to leave the country for a life of leisure and debauchery. Whatever you do, refrain from trying to establish a dynastic succession. Some dictators (and absolute monarchs) have been murdered by descendants who too much desired to take their place.
5. Hide the money well. This is getting harder - specially since Switzerland's bank secrecy laws are under attack. There are still some tax havens with good secrecy laws but you need to diversify. Don't put all of your ill-gotten gains in one place.
6. Keep some of your wealth as bullion (coins, small bars) in a reasonably secure warehouse. Use a company - registered in a country where 'Bearer Shares' are permitted - to buy the warehouse.
7. Give your retirement planner a decent share of the money that you have stolen and that he is hiding for you. Include him in your planning for retirement. If you do, there is a reasonable chance that he will only steal a modest part of your retirement fund.
8. If you catch your retirement planner stealing from you, execution - slowly and painfully - is appropriate pour encourager les autres.
9. Negotiate - well in advance - retirement homes in more than one country. Ideally these countries are run by fellow dictators but, in a pinch, an absolute monarch will suffice.

To sum up, don't steal too much or too obviously, keep your children away from the levers of power, hide the money well, and leave before you are deposed or, worse, executed.

Enjoy your new country and, after a while, your very comfortable retirement.

Sincerely

Your Friend

PS: if you feel that this advice is of value and were minded to wire a couple of million U.S. dollars to my bank account, I would be very grateful.

Burdens as a Result of Government Actions

The following aptly sums up the manner in which citizens permit governments to mismanage the affairs of their nations and inflict great pain upon their citizens:

"The marvel of all history is the patience with which men and women submit to burdens unnecessarily laid upon them by their governments.”

To prove that there is - once again - nothing new under the sun, the author was none other than George Washington.

Let us listen to, and act in accordance with, the words of Winston Churchill who frequently annotated reports and proposal with the words 'ACTION THIS DAY'.

We could make the world a slightly better place.

Presidential Cowardice

President Obama sent his budget proposal to the Congress on Monday. It was greeted by Republicans with the ancient cliche 'dead on arrival' and accompanied by shrieks of pain from Democrats who oppose some of the all too modest proposed cuts.

There is nothing in the budget about bringing under control the big five spending categories: Medicare, Medicaid, Social Security, Defense and Interest on the National Debt which, between them, account for approximately two thirds of total spending and nearly one hundred percent of all taxes collected. The reality of this piece of political theater is that the President, by admitting that he is waiting for the Republicans to make the first proposals for real - repeat real - and significant spending cuts, as well as reform of entitlements, demonstrated his weakness and woeful lack of political courage.

Since the 2012 Presidential campaign will soon begin, Republicans should keep in mind that, if they actually do want to win the White House - as opposed to merely making a statement, they need to attract centrist voters. They must, therefore, address the real issue of out of control spending whose growth seems not to be subject to the Constitutionally required appropriations process.

In addition, they must nominate a serious, thoughtful and competent person. Charismatic airheads who speak in slogans, such as Ron Paul, Michelle Bachmann and Sarah Palin as well as out of control quasi-intellectuals like Newt Gingrich, will almost certainly fail to dispatch Mr. Obama to the early, and well deserved, retirement so needed by our country.

During the 1996 election campaign, then President Clinton was unpopular enough that he might well have been defeated. Republicans, however, nominated Senator Bob Dole (R-KS) who, while a decent Senator, was not really Presidential caliber and he duly lost. An old friend of your correspondent, formerly a very senior staffer in the Reagan White House, said then: "you can't beat the President with a nobody because the President of the United States, no matter how unpopular, is somebody."

Your correspondent hopes that Republicans will keep their eyes on the real objective and the actions that will be needed to achieve it.

Acting LikeTeenage Boys

One of the features at the just concluded CPAC (Conservative Political Action Committee) meeting was an egg throwing booth featuring pictures of former Vice President Al Gore and climate scientist Michael Mann.

Behavior like this may be appropriate for teenage boys - and the MTV show 'Jackass' - but hardly what your correspondent would like to see from those who aspire to lead our nation.

Since many of the attendees decry waste, fraud, and abuse in government spending, why were they wasting perfectly good food? If they wanted to play juvenile games, could they not have thrown rotten fruit and vegetables instead.

Attitudes towards Government

Since 1776, Americans have generally had doubts about the value of government. Columnist George Will, writing in the Washington Post last year, summed up the average citizen's experience with government.

"The average American has regular contact with the federal government at three points - the IRS, the Post Office and the TSA. Start with that fact if you are formulating a unified field theory to explain the public's current political mood."

Enough said!

What If They Held an Election...

... and the bad guys won? Or, at least, were able to dictate coalition policies? To name only a few, all of these were elected in generally legitimate polls:

• Hamas (Gaza Strip)
• Hezbollah (Lebanon)
• Joerg Haider's Freedom Party (Austria)
• Adolph Hitler (yes, he was legitimately elected Chancellor)
• Too many third world strong men who, it turned out, believed in 'one man, one vote, ONE TIME'.

Will Egypt and the Muslim Brotherhood be next?

Job Creation

New and poorly trained supervisors tend to start the day like this:

Here's a pile of work and here's a pile of people, what shall I give the people to do to keep them busy?

They miss the point which is to get the work done - not to keep the people busy. That means that they should look at the work first and assign enough people, with suitable skills, to get quality work done on time and as cheaply as possible.

Inevitably, during good times, most companies accumulate excess employees. Some of these employees have really nothing much to do (other than to look busy and refrain from attracting attention) while many more work quite hard - sometimes very hard - at tasks that contribute little of economic value. When times are good, no one cares very much since there are plenty of profits to support share prices and senior management bonuses. When hard times arrive, however, management focuses on removing excess while getting more useful work from those who remain. All levels of management, at least for a while, remember that the objective is to get the work done rather than to keep the workers busy.

Politicians generally think like poorly trained supervisors. They see corporations with healthy profits, and significant cash balances, and grab the opportunity to castigate them for not creating new jobs and hiring new employees.

These politicians also miss the point. If there isn't any useful and profitable work to be done, why spend money on additional employees? Since corporations, regardless of the propaganda that they may put out, are solely driven by profit, we can be sure that, if they can see a way to make more profit by hiring additional employees, they will indeed take that course of action.

None of this is very complicated so it would only take some very slightly more sophisticated economic thinking from our politicians to reduce - at least a bit - the noxious cloud of political hot air now enshrouding Capitol Hill.

Paying for Health Care

One of the knottiest of economic problems is that of the free rider. That is, a person or organization that benefits from a service without actually contributing to the cost.

Take, for example, a township where revenues for the Fire Department are derived from subscriptions. The intent is that those who do not pay receive no service. Next, consider the owner of a row house who does not pay for fire protection while all of the other houses on the block are covered. When that house begins to burn, however, the Fire Department will still provide its services in order to protect the houses belonging to its paying customers.

That is the free rider problem in a nutshell.

While health care is not a constitutional right, Federal law requires that anyone, whether or not that person has insurance or the ability to pay, who presents at an Emergency Room must be treated. That is another example of the free rider problem and it is exacerbated by the fact that many of these persons could have been treated for much less money had they neither deferred, as is usual, seeking medical help nor sought it in the most expensive possible place.

Since these patients do not pay their bills, the costs are transferred to those who do in ways that are entirely lacking in transparency.

The Fire Department free rider problem has a relatively simple solution: most Fire Departments are funded by the taxpayer and all homeowners are required to pay property taxes. Solving the health care problem is harder and many of the options are unattractive:

1. should service be refused to those who have no insurance?
2. should there be a mandate to buy insurance as in the current much disputed health care bill?
3. should those who are insured, or who can afford to pay, continue to pick up the tab for those who can not or will not pay?
4. should health care be publicly funded?

The first option is morally repugnant, the second may be found to be unconstitutional, and the third describes the current highly unsatisfactory situation. Given that approximately fifty percent of current health care expenditures are paid directly by the government through Medicare, Medicaid, Veterans Administration and the military, principled objections to government paid medical care can no longer be sustained - at least not with a straight face.

Assuming that the individual mandate is found to be unconstitutional then, although no one really wants to address the issue, the question will be whether government funded medical care should be available to all - as in the Canada and the United Kingdom. A public option alternative, competing with the current much hated insurance companies, may make insurance more affordable (although Medicare has conspicuously failed to reduce costs) but, without an individual mandate, the free rider problem still exists.

Our nation has the most expensive health care system in the developed world. At the same time the fact that more than forty million residents have no medical insurance - and therefore only limited access to care while simultaneously inflicting massive costs on everyone else - is a disgrace. The so-called Affordable Care Act (less politely referred to as ObamaCare) is so far from being the solution that it may actually be a classic example of the old saying that the cure is often worse than the disease.

At some stage, our leaders - and the interest groups - will have to address the overall cost of medical care. Sooner - i.e. before it consumes the entire economy - would be better than later but, given the other issues facing us, nothing much is likely to happen until after the 2012 elections.

Your correspondent would be satisfied if a real debate, primarily addressing the issues of cost, were to take place in the next two years. If that were to happen, the prospects for real reform would be much enhanced.

Whiskey Tango Fox

During the State of the Union Address last week, President Obama clearly demonstrated his lack of understanding of popular culture when he offered us the slogan:

'Win The Future.'

That cliche is almost as lame - perhaps lamer than - President Gerald Ford's "Whip Inflation Now' and the associated WIN buttons. Worse, his supposedly inspiring slogan generates the abbreviation 'WTF' which, as used in text messages and on Twitter, simply means 'What The F*&k'.

Even though the President of the United States is regularly described as the most powerful man in the world, that really only refers to his ability to reduce the planet to a smoking, radioactive, ruin. The Constitution places very significant limits on the President but he can wield real power through his ownership of the bully pulpit and possession of the biggest microphone.

To keep that power, however, the President must be perceived as both serious and credible. Whiskey Tango Fox provides him no help.

Advice to President Obama on the State of the Union Address

The Constitution of the United States (Article 2, Section 3) states that the President "shall from time to time give to the Congress Information on the State of the Union".

Nothing in that clause requires the President to give a speech to a joint session of Congress. but Presidents Washington and Adams did choose to speak to the Congress. Beginning, however, with the third President (Thomas Jefferson - elected in 1801) and continuing through the presidency of William Howard Taft (1909 - 1913), Presidents contented themselves with a written message.

Yesterday President Obama gave the now traditional State of the Union Address to a Joint Session of the Congress. As usual, it was boring, took far too long (over an hour) and, given the size and complexity of our country, was woefully incomplete.

All those, not just Presidents of the United States, who venture to speak in public, would do well to remember this advice, provided by President Franklin Delano Roosevelt:

“The key to a good speech? Three things. Be clear. Be brief. Be seated.”

The Constitutional requirement to provide information to the Congress can, and should, be met with a detailed written document. What the nation needs from the President is not a laundry list of statuses, programs and policies but a speech that informs, encourages, uplifts and unites.

In short, this was an opportunity for leadership which President Obama, like so many before him, simply squandered.

What a waste!

Paging Mr. Darwin

"Paging Charles Darwin. Paging Mr. Darwin.

Please return immediately to your office where there are customers urgently awaiting your attention."

Where there is no nearby traffic light or marked crossing, pedestrians must choose between a long walk to the nearest light and crossing the road where they happen to be. Those who choose to walk without benefit of a marked crossing, specially those who proceed head down, cell phone to ear, and looking in the opposite direction to the oncoming traffic - if they are looking anywhere, are obvious candidates for immediate extinction.

Last year nearly four thousand pedestrians were killed by automobiles in the United States. While, in most States, pedestrians legally have the right of way, such petty legalisms are always trumped by the Gross Tonnage Rule - a variation on 'Might makes Right'. Those, therefore, who tread in dangerous places would be well advised to keep a good lookout. The alternative is a high likelihood of joining the other discards on Mr. Darwin's rubbish heap.

Your correspondent, yesterday, only narrowly avoided three members of this clearly-unfit-to-breed sub-species. He does not believe that any of them will thank him.

Headscratcher (9)

Writing in the Wall Street Journal, newly seated Senator Pat Toomey (R-PA) suggests that the there would be few problems if the Congress declined to increase the U.S. Government's statutory debt limit. His position is that, since the interest due on the national debt is less than ten per cent of tax revenues, all that needs to be done is to pass a law to ensure that the Treasury gives priority to debt service.

Senator Toomey does mention that there will be some consequences:

"If we do not raise [the debt ceiling], the government's tax revenue will enable us to fund roughly two thirds of projected expenditures, including interest payments. Without the ability to borrow the other third, spending cuts would be sudden and severe: Projects would be postponed, some vendor payments would be delayed, certain programs would be suspended, and many government employees might be furloughed."

What he does not say, however, suggests a level of ignorance and intellectual dishonesty that makes him entirely unqualified to serve in the United States Senate.

At the moment, one third of what the government spends is borrowed, so, what would really happen if the debt limit was not increased - even if the Treasury managed to avoid an default on the national debt?

Here are some examples:

• Salaries for Federal Employees - including serving members of the military - would have to be reduced by at least one third. Probably more for those not covered by collective bargaining agreements.
• Pensions (military and civilian) as well as Social Security payments would be reduced by a similar amount
• Medicare payments to doctors and hospitals would be delayed for a month and then only paid at sixty cents on the dollar.
• Payments to States for Medicaid, reduced below their already low level,will result in extreme financial stress as former recipients descend on hospital emergency rooms which are required to provide care regardless of whether they have any prospect of receiving payment.
• Withholding of funds due to government contractors will result in cessation of work, massive lay offs, and suits filed against the government for breach of contract. Many of these contractors will go bankrupt.

Senator Toomey's so-called solution will, almost certainly, result in a stock market collapse. That the bond market will treat us no better than Greece is a given. As a result, the cost of refinancing maturing debt - if it can be done - will rise to exorbitant levels.

We will not likely find ourselves in a double dip version of the current recession. Instead, we will be looking at a reprise of the Great Depression. Nor is a second American Revolution unthinkable. Except that this time it will more resemble the French Revolution with armed mobs besieging the Capitol and politicians hanged by the neck from convenient lamp posts.

While Senator Toomey is correct in noting that we have a spending problem, it is not something that can be solved by April of this year. Nor can it be solved by defaulting on the government's obligations to its employees, contractors and retirees.

Your correspondent has two questions:

1. What planet is this man from?

2. Why did the Wall Street Journal provide space on its editorial pages for the Senator to peddle such arrant nonsense?

A headscratcher indeed!

The Corruption of Language (11)

Lewis Carroll, writing in 'Through the Looking Glass' one hundred and forty years ago, accurately captured the reality behind the spin that politicians, PR flacks, press secretaries and other forms of public low life, use in their efforts to fool us and to achieve their objectives without being challenged:

"When I use a word," Humpty Dumpty said, in a rather scornful tone, "it means just what I choose it to mean -- neither more nor less."

If they think we are that stupid, shame on them. If we fail to challenge them, shame on us.

Civil Discourse

As it is now, political discourse in the 19th century was less than civil. When Mark Twain penned these words, he might better have been described as an optimist rather than as a speaker of truth:

"It is by the goodness of God that in our country we have these three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence to never practice either." (emphasis added)

If partisans - of all shades - were to remember that just because one has the right to say something does not necessarily mean that to act on that right is wise. Words really do have consequences and the children's mantra 'sticks and stones may hurt my bones, but words will never hurt me' is an expression of hope rather than a description of reality.

Your correspondent realizes that it is not a useful expenditure of time and effort for him to try and hold his breath while waiting for change.

Market Failure

In our politics, there is a much discussion of property rights but too little discussion of an obscure economic concept known as an externality.

An externality is a real cost, arising out of the production of goods or delivery of services, that is neither reflected in the price paid by purchasers nor the expenses incurred by the producer or provider. Since the existence of externalities is evidence of market failure, the remedies - if remedies there are to be - must take non-market forms.

A simple example of an externality is the creation of local air pollution and, hundreds of miles down wind, acid rain as a result of burning coal to generate electricity without either removing the sulphur prior to combustion or capturing the sulphur dioxide at the smokestack. Costs were inflicted on the world without any payment by those who caused the problem. Nor, since there was no cost to the utility, was there any market incentive to desist.

In the USA in the early 1990s, that issue was addressed by a combination of regulation and market forces. A 'Cap and Trade' program was established regulating the total permitted emissions of sulphur dioxide and allowing emitters to buy and sell emissions permits. Each year the total allowed emissions were reduced. Since the program was introduced, the production of acid rain, traceable to power plants in the USA, is much diminished. Without government action, however, the problem would still exist.

Many externalities involve using the commons - air, water, land - as free or cheap dumping grounds for pollutants. Those who pay little, sometimes nothing, for the privilege of disposing of excess fertilizers, sediments, sewage and other by-products contained in untreated or only partially treated storm water degrade the environment. In addition, there is so-called non-point source pollution. In plain language that means fertilizer that was applied far in excess of actual needs. Farmers spend a bit too much, which they think is their right, but the nation suffers greatly.

If that does not meet the definition of an externality - and therefore market failure - what does?

Homeowners, drivers, cities, States, farmers and all who discharge waste have little or no market incentives to reduce their impositions on the rest of us. As a result, the only entity capable of exercising ownership rights over these resources is government, representing the People.

If government were merely to charge a price for discharging these pollutants, it is all too likely that there would be no significant change in behavior. Perhaps the cost of living would increase modestly but no effective market signals would be sent to polluters. The situation where sellers have largely unlimited power to pass costs to buyers, as would be likely in this situation, is another form of market failure.

A classic case of so-called property rights versus the environment involves the Chesapeake Bay. Between storm water run-off from roads, parking lots and housing developments, discharges from poorly designed and maintained septic systems, and overloaded municipal sewage treatment plants as well as the leaching of fertiliser and manure from farms in the watershed, the Chesapeake Bay is in poor health.

The cause is not just the direct poisons (industrial waste, oil and rubber from roads, air pollutants dissolved in rain water) that find their way into the water. As much as anything, it is farmers who, collectively, are a very large contributor to the problem.

Fertilizer (which includes manure) helps things grow and fertilizer is cheap. Unfortunately, farmers - like alcoholics - seem to believe in the idea that, if some is good, more must be better. The result is that excess fertilizer leaches out of fields and into the waterways that feed the Bay. Poorly designed manure piles from dairy farms and, even worse, the industrial grade chicken producers on the Eastern Shore of Maryland also provide additional natural organic nutrients to the Bay.

So what is wrong with additional nutrients? Don't they help things to grow in the Bay?

Indeed these nutrients encourage growth. Unfortunately, the species that feast upon the overdoses of fertilizer are algae which both block sunlight - therefore stunting the growth of underwater grasses - and consume far more than their fair share of oxygen. The lack of grasses and oxygen leads directly to the disappearance of oysters, crabs and fish. Sometimes, these conditions lead to anoxic decay with the production of foul smelling - even flammable - gases.

Last year, the U.S. Environmental Protection Agency - after too many years of ineffective activity - finally came to a comprehensive agreement with the States bordering the Chesapeake Bay. There was much grumbling over the cost but all , including the District of Columbia, agreed to take serious actions that would result in restoration of the Bay.

Now, however, the American Farm Bureau and the Pennsylvania Farm Bureau have filed suit in Federal Court to overturn the regulations. According to a report in the Washington Post - http://tinyurl.com/4sm9b8e - they claim that the costs of the cleanup will devastate farms and possibly drive them from the region.

In reality, they are claiming the right to dump THEIR rubbish into OUR Bay at no cost to themselves but at much direct cost to the watermen of Maryland and Virginia as well as to all of those who use the Bay for recreation. The costs of a dying or dead Bay are not particularly easy to quantify (at least not without starting a serious argument) but they are undoubtedly substantial.

Fortunately, the Federal Government, on behalf of all citizens, has asserted our collective ownership rights to the Bay. Since setting a price on these discharges would be unlikely to provide the desired result, regulation is the choice. Farmers must accept their collective responsibility and, if they can not manage the slightly increased cost, go out of business. Farmers, like all other businesspeople, must operate efficiently if they wish to prosper - or even survive.

Their property rights (the term of art is 'right of innocent enjoyment and use') can be assured but not to the extent that their activities result in degrading our common property together with our right to enjoy it or to make a sustainable living from it.

There is civil society and there is selfish society. Your correspondent much prefers to live in a civil society where there is respect for the rights of others. Sadly, it appears that these farmers, or their representatives, are consumed with short term and selfish desires. Our rights, in their opinion, must be subordinated to their desires.

That vast sums of taxpayer money are used to subsidize farmers only adds insult to injury.

Investing Strategies (4)

To those who manage their own money, especially to those who buy individual stocks, the process can sometimes feel like wagering on the outcome of a beauty contest. No matter how much time and effort is expended on research to find good businesses in which to invest, the outcome - at least with respect to capital gains - will be determined by everyone else in the market.

To continue the beauty contest metaphor, the problem is that one of the beauty contests on which one can wager is for the Miss Afghanistan title where all of the contestants are wearing burqas. Another is for the Miss Africa title where the contestants are of many different ethnicities so their physical characteristics vary widely. To add to the difficulty in picking a winner, the judges in this contest all seem to be Chinese.

It is one thing to develop one's own opinion as to who should win. To predict the decision of the judges - which is how the bet is won - when many of the facts are hidden or when the criteria for victory are unspecified is an order of magnitude more difficult.

On the other hand, even though capital appreciation is uncertain, a modest hedge is available that can be identified by those that do their homework: buy good stocks that pay decent dividends. Even if it takes the judges a while to come round to your point of view, at least you will be paid - even if only modestly - to wait.

Note: In the interests of full disclosure, your correspondent manages his own money, buys individual stocks, favors - but not exclusively - those that pay dividends, and picked some beauty contest winners last year although he also picked some substantial losers.

What if Mark Twain was wrong?

The new Congress is in session and already shows little resemblance to a body that is willing to address the very real mid and longer term issues faced by our nation.

The House, apparently desiring not to waste time with commemorative resolutions has banned them and is, instead, wasting its efforts by scheduling debate and a vote on a bill to repeal the so-called Affordable Care Act (ObamaCare). The repeal effort, while likely to pass the House, will go no further.

If it is truly the case - as is likely - that the Congress will work diligently to avoid hard issues, Mark Twain's harsh words are applicable:

"Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it."

"Suppose I were an idiot. And suppose I were a Congressman. But I repeat myself."

"No man's life, liberty, or property is safe while the legislature is in session."

"Whenever you find yourself on the side of the majority, it's time to pause and reflect."

But what if Mark Twain was wrong? Such would be an unexpected pleasure but your correspondent, being something of a cynic at heart, does not plan to hold his breath.

Congress and the Constitution

The 112th Congress will convene tomorrow and the leadership of the House of Representatives has decided that the entire text of the United States Constitution shall be read aloud as a part of the proceedings. Whether a significant fraction of the members will be in attendance or, if so, will actually pay attention is another matter.

Although we could hope that our Representatives would have a thorough understanding of the Constitution, it is clear from their past statements that few do. Here, then, are a few thoughts that may help:

1. The first three words of the Constitution are "We The People" not "We the States".
2. The tenth Amendment states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." (emphasis added)
3. To deprive some half a million citizens of any representation in the Senate and of full representation in the House, merely because they happen to live within the boundaries of the District of Columbia, is another of the injustices perpetrated by the Constitution. Consider correcting this - urgently - even if there is a modest partisan political cost.
4. Not even the authors of the Constitution agreed on what it meant. If you haven't yet done so, read the Federalist Papers: if you have read them, read them again.
5. The will of the people is not paramount so stop saying that it is. The people could vote to reinstitute slavery or to deny the vote to men (women are a majority now) or to recriminalize adultery and homosexuality - as they once were in many States - and set the penalty to death by stoning as in Iran. While these are unlikely outcomes, one reason for the existence of the Supreme Court is to protect the People from themselves.

Understand that the Constitution specifies how the government is organized, enumerates certain powers of government, and guarantees certain individual rights. It's one exercise in social engineering was Prohibition. Mandated by the 18th Amendment, which was adopted in 1919, Prohibition was unusual in that it limited the freedoms enjoyed by the People. It was an almost immediate disaster but was not repealed until 1933. Avoid social engineering and absolutely shun any constitutional reductions in freedom.

Consider that we are currently fighting two wars, in Iraq and Afghanistan, and that we have also fought numerous wars since 1945 without benefit of a Declaration of War. The Constitution (Article 1, Section 8, Clause 11) gives the Congress the power to declare war. Use this power to stop the President from involving us in foreign adventures at great cost in lives and treasure. Let the need to go to war be the subject of debate except when we are directly attacked.

There is no need for a Balanced Budget Amendment. Budget deficits, while frequently abused, are an essential part of financial management. What would have been the outcomes of the Revolutionary War, the Civil War and World War II had we been unable to borrow to finance those efforts? The solution is restraint and the willingness to say 'NO' to those who demand benefits without the will to pay for them. Since the majority of government expenditures are transfer payments, and the majority of voters are now net takers from the treasury, this will be hard. George Bernard Shaw described well your dilemma:

"A government which robs Peter to pay Paul can always depend on the support of Paul."

The Constitution and the Bill of Rights (the first ten Amendments) were a very flawed document - slavery, denial of women's right to vote, and the appointment of Senators by State Legislatures among them. It is still not a perfect document so treat it with caution and, particularly, mind the words of Thomas Jefferson who understood that the authors had no special knowledge or insight and was well aware of the risks of treating the Constitution as a sacred document immune to change:

"Some men look at constitutions with sanctimonious reverence, and deem them like the arc of the covenant, too sacred to be touched. They ascribe to the men of the preceding age a wisdom more than human, and suppose what they did beyond amendment. . . . Let us follow no such examples, nor weakly believe that one generation is not as capable of taking care of itself, and of ordering its own affairs . . . Each generation is as independent of the one preceding, as that was of all which had gone before."

So be modest in your actions and seek to serve the long term interests of your country rather than the short term interest of yourselves or of some strange ideology.

Resolutions for the New Year

Your correspondent knows better than to waste his time making New Year's resolutions which, probably sooner rather than later, he will disavow because they commit him to activities that are time consuming, expensive, healthy or boring. Besides, the result is too often embarrassment when he finds himself abandoning such resolutions.

He is, however, not above dreaming up resolutions that he would like to see other people adopt. Here are a few:

• For newly elected Republicans: realise that Senate Democrats have the votes to deny repeal of the so-called Affordable Health Care Act (ObamaCare) and, even if there are sufficient defectors to pass a bill, an unachievable two thirds majority is required to override President Obama's veto.
• For journalists: resolve to reduce the number of cliches and tautologies.The term 'veto pen' is a gross irritant, while 'snow blizzard' wins the 2010 prize for redundancy
• For all politicians - particularly Democrats: spend a little time reflecting on the idea that Bill Gates and Warren Buffet, rich as they are, both work really hard and are Americans. Doesn't that make them 'working Americans'?
• For all consumers: realise that 'Buy Now, Pay Later' has governed spending for too long. Comedian Will Rogers was ahead of his time when, in 1928, he anticipated our most recent thirty year spending binge with these words: "Spending money we have not earned, to buy things we do not need, to impress people we do not like." Save first and spend later.
• For Tea Partiers, who believe that the budget can be balanced if only waste, fraud, abuse, earmarks and the Departments of Energy and Education are eliminated: know that it will be a lot harder than that. Many sacred cows must die and oxen be gored before the objective can be achieved.
• For all those who are devout: remember that love, not hate, is the essential message of every religion.
• Finally, for those who still believe in Santa Claus, the Tooth Fairy and free lunches: know that Charles Ponzi is dead but his successors are waiting for you.

Wish lists, of course, are exactly that. Your correspondent is not entirely pessimistic but is, unfortunately, not certain that much in the way of change will actually occur in the next year. He would be pleased to be proven wrong.

Depending on Technology

Yesterday, SKYPE, the company which provides a not quite indispensable Voice Over Internet Protocol (VOIP) service, offered updated software. For those, like your correspondent, who downloaded and installed the new version, the result was yet another lesson on the dangers of being dependent on technology: SKYPE's servers promptly developed some unspeakable malady and the service went down for hours.

The loss of the ability to make telephone calls for no, or little, additional cost beyond the price of a reasonably fast (at least by American standards) Internet connection is inconvenient rather than critical. Businesses, however, that depend on air transport - just an older form of technology - have suffered two major disruptions this year: the eruption in the spring of the [Unpronounceable Name] volcano in Iceland and the present cold and snowy weather in Northern Europe.

Just in Time (JIT) supply chain management is one of the modern mantras of business and, indeed, when all goes well is responsible for significant contributions to reduced manufacturing costs. The problem is that things don't always go well which leads to disruptions that are both time consuming and expensive.

Perhaps business (and all of the rest of us who depend on technology) should adopt a more modest attitude. Murphy's Law states that 'whatever can go wrong, will go wrong'. Since Murphy's Law always applies - and there are those who believe that Murphy was an optimist - JIC (Just in Case) stockpiles of goods and materials can serve to reduce the costs when Mother Nature decides to assert herself.

We should always remember that, at the end of the game, the score is likely to be:

Mother Nature 5 Technology 2

Your correspondent would be remiss if he did not note the irony of the fact that he is writing this blog on the 12th floor of a high rise apartment building where he relies totally on electricity for elevator service. The good news is that the building does have a generator to provide emergency lighting and elevator service (but not much more). Your correspondent is confident that management has stocked up on diesel fuel.

Just in Case.

Tax Follies

Last week, after much posturing and empty rhetoric, the Congress managed to extend the so-called Bush Tax cuts for another two years.

The good news is that the economy avoided a threat, at a time when the risks of a tax increase, are higher than anyone should like. The result of tax increases in the USA (in 1937) and Japan (in 1997) played a major part in reducing economic growth to a crawl.

The bad news is that the Congress extended, and added to, a grotesque collection of porcine subsidies demanded by special interest groups and others who can afford to pay for the services of the K Street mafia - better known as lobbyists. The worse news is that there seems to be little willingness to address the gross distortions caused by the current tax code or the soon to be entirely unaffordable overspending that grows ever larger every year.

The latest tax follies, passed in haste, are just about bearable provided that the President is willing to follow the example of Ronald Reagan who, in 1986 with the help of two very liberal legislators - Senator Bill Bradley (D-NJ) and Rep. Dick Gephardt (D-Mo), was able to persuade the Congress to pass a really good tax bill. The Tax Reform Act of 1986 reduced tax rates in exchange for the elimination of many deductions and credits. Since then, the special interests have loaded up the tax code with so many additional deductions and credits that the benefits of the 1986 bill are long lost.

For those who even vaguely care about taxation and its effect on the economy, your correspondent recommends these thoughts:

• High marginal tax rates act as a disincentive to hard work.
• The hated Alternative Minimum Tax system is remarkably close to the nearly zero deductions flat tax supported by many Republicans. With some simplification, reduction of rates, and in combination with a consumption tax (VAT or Federal Sales tax), it could work well as the basis for the taxation of individual and family income
• How, exactly, are capital gains so different from other income that a lower tax rate is justified? Consider that the tax can be deferred almost indefinitely until the gain is actually realized.
• Subsidies should be explicit and made through the appropriations process. If my housing costs are to be subsidized, make it explicit, appropriate the funds, and send me a check. If I am a multi-millionaire with a mortgage on my vacation house, the absurdity - even immorality - of such a program becomes immediately self evident.
• Economics 201 teaches that the result of subsidies granted to enterprises that require the purchase of a significant asset (houses, farms) merely results in the value of the subsidy being capitalized in the price of the asset. The result is that only the owner of the asset, when the subsidy is first awarded or if it is later increased, will actually benefit. Everyone else loses.
• Farm subsidies - and the central planning that goes along with them - should be ended. It is hard to see any sense in the practice of giving large sums of taxpayer money to farmers so that they may use highly subsidized (really underpriced) water to grow cotton and alfalfa (two of the thirstiest crops known to man) in the Central Valley of California (a desert). But it happens: your tax money at work!
• Consider the inconsistency with respect to the deductibility of State and Local taxes: property taxes, yes; state income taxes, yes; state and local sales taxes, no; gasoline, cigarette, liquor and other local excise taxes, no. What possible sense does this make other than to trick people into moving to low income tax states but all the while forgetting that the states will raise the money that they need one way or another.
• Corporations don't pay income taxes, they collect income taxes that would otherwise be paid directly by shareholders.
• Consumption taxes don't apply to criminal activity but the proceeds of criminal activity (fancy cars and other bling) do get taxed. That would be more than happens today.
• Consumption taxes remove the IRS from inflicting itself on individuals because only businesses need to be audited. The efficiency of the tax collecting process is increased and the tyranny of the government is reduced.

The list above describes a tiny corner of the current waste and abuse of taxpayer resources. The real question, however, is whether there is a sufficiently large cohort of honorable, and clear thinking, citizens who are willing to trade deductions and credits that directly benefit them in exchange for lower tax rates, reduced government, and a more vibrant economy. If there are, the special interests will suffer a significant defeat. If not, the economy will suffer and our country will become ever more divided.

We should also remember the warning given by Thomas Jefferson: "a government big enough to give you everything you want, is big enough to take everything you have."

If President Obama can pull off anything like Mr. Reagan's feat, he might deserve a second term. If not, the economy, government overspending, the looming health care mess and class warfare over the renewal of the Bush tax cuts in two years, will likely send him into early retirement.

If so, he will not be missed.

Immigrants

The passage below surely has a familiar ring and might have been written by a far right wing Republican lamenting the culture and prescence of ethnic Hispanic immigrants:

"Few of their children in the country learn English: they import books from [country]... The signs in our streets have inscriptions in both languages, and on some places only [the other language], which (although I think it ought not to be) are allowed good in our courts, where the [ethnic group] business so increases that there is continual need of interpreters: and I suppose in a few years will also be necessary in the [legislature], to tell one half of the legislators what the other half say."

Rather than using Mexico, Spanish, and Hispanic for 'country', 'language' and 'ethnic group', Benjamin Franklin writing in 1751 (as quoted by H.W. Brands in his excellent biography 'The First American') was referring to German immigrants who, he feared, would overrun and dominate Pennsylvania.

Demonizing immigrant groups has a long and inglorious history in America. In addition to persons of Hispanic origin, the list includes Germans, Portuguese, Irish, Poles and Jews - all of of whom are now considered mainstream rather than despised interlopers. It is very likely that those of Hispanic origin will, too, become ordinary Americans distinguishable, but only sometimes, by nothing more than their names.

Surely it is time for the right to stop obsessing about immigrants and read a little about the successful integration of formerly despised ethnic groups. And why should anything be different this time?

Headscratcher (8)

The wonder is that the Wikileaks affair came as a surprise to anyone.

Nearly forty one years ago, your correspondent went to work as an assistant to a former very senior advisor to the President of the United States. He taught me two things, which I have never forgotten, on my first day at work:

• Lesson 1: there are no secrets so act accordingly, and
• Lesson 2: never put anything in writing that you would be embarrassed to see on the front page of the Washington Post.

While much of what has been disclosed is merely the day to day communications of the lower levels of the diplomatic corps and the military, the first lesson applies. No one, therefore, should be surprised when all is revealed.

The frequently gratuitous, and insulting, remarks about foreign leaders may indeed be accurate - and are certainly entertaining to the casual onlooker - but they have added some complications to the conduct of American foreign policy. Those complications could have been avoided had the authors of the diplomatic cables paid even the slightest attention to the second lesson.

It is definitely a headscratcher that so many supposedly intelligent and knowledgeable people should fail to understand one of the very basics of the 'Washington system'.

Thought for the Day

Douglas Adams, writing in 'The Hitchhiker's Guide to the Galaxy', maintained that the ultimate answer to the ultimate question of life, the universe, and everything, was 42.

Some of us who race sailboats are not entirely convinced by his argument and strongly believe that the real answer may actually be found in Rule 42 (Propulsion) of the Racing Rules of Sailing.

Not Actually the End of the Line

During the Thanksgiving Holiday, your correspondent was chatting with a longtime friend, who happens to be a former high government official and now senior executive for a major company. During the conversation, he strongly encouraged me to resume publication of this blog.

After considerable thought, I have decided to resume my commentary on life, the universe and everything.

Watch this space.

End of the Line

Blogging was enjoyable but, in the end, too time consuming.

I thank all those who have read and commented.

Who's Next?

If life was a reality show, President Obama would be a serious candidate, along with former Presidents Johnson and Carter, for the 'Most Unpopular After Two Years' award. Neither of those unfortunates (for our country) served a second term and your correspondent would be pleased were Mr. Obama to join the pantheon of one term Presidents.

It is worth noting that Mr. Obama, prior to - indeed even after - becoming a public figure had never run anything. Nor does he appear to have spent much time contemplating, or developing, policy or a political philosophy of greater sophistication than 'big government knows best and will fix everything for you'.

His sole successes - while not quite equivalent to being famous for being famous - involve two bestselling books of little distinction and the ability to get himself elected to the United States Senate and, subsequently, the Presidency. That the USA now lacks a leader of substance offers a major opportunity for Republicans in 2012. It is critical, however, that they consider the previous jobs held by the candidate that the party puts forward in 2012.

Forget charisma and the ability to attract adulatory crowds: just concentrate on substance.

Mitch Daniels, currently Governor of Indiana and formerly Director of the Office of Management and Budget might be a choice worthy of serious consideration.

American Socialism (7)

That the means of production and distribution should be owned by the State was an essential part of Karl Marx's socialist/communist vision.

Why then, in the United States - supposedly the land of capitalism and free enterprise, do nine States, including the Commonwealth of Virginia, have a monopoly on the sale of wine and liquor within their borders? While Virginia Governor McDonnell is considering privatizing the state owned liquor stores, there is serious doubt that the necessary legislation can actually be passed. The reason being that the business, even though it is state run, is so profitable that the politicians are reluctant to let go of the revenue.

While the situation is a hangover from the profoundly illiberal, but mercifully brief, era of prohibition, we do not live in those times now. The hypocrisy of political opposition to socialism, while the Commonwealth of Virginia simultaneously benefits from a state owned business that generates nearly $250 million in profits, would be hilarious if it did not say so much about the intellectual honesty - or lack thereof - exhibited by politicians.

The United States Constitution both celebrates, and requires, limited government. The intent of the founders was that government should only do what individuals, business, and the free market can not. Running liquor stores for profit scarcely falls into that category.

Better that Virginia's liquor stores are sold sooner rather than later. If there is an imbalance between spending and revenue, then the politicians should first look to spending cuts and, only if absolutely necessary, additional taxes.

Enough said!

Return

Your correspondent's right arm has recovered enough so that typing - at least with three fingers - is now possible. Getting through the day is still hard and very time consuming, so posts will not perhaps be as frequent as before.