When the popular narrative of our 44th President coalesces, it will no doubt start with the following: President Obama "inherited" the worst financial crisis since the Great Depression from President Bush and that much of the increase in Federal spending that ensued was an attempt to inject capital into the economy to jump-start economic growth. What even happens in reality has yet to unfold, let alone how it will be remembered in the public consciousness, and issues like whether the stimulus was a Keynesian policy (let alone whether it was a good decision or if the stimulus funds were spent wisely) or whether it was justified by newer theories of economics, like those that emphasize the importance of irrational behavior of market participants, emphasizing how our "Animal Spirits" can function to impel us foolishly towards the cliff, en masse. While I quibble with the idea that anyone who undertakes the arduous, lifelong project of becoming a successful politician and then knowingly seeks and wins every phase of an arduous, nearly two year process to become President can "inherit" anything, and I would argue that no single person or even a single President was responsible for the economic crisis, one thing that seems certain is that Obama will be judged largely for how he fixes the economy, both in terms of spurring it to recovery and in preventing such "bubbles" from rocking the foundations of our economy ever again.

Americans are a fickle bunch, as evidenced by the fact that they seem to blame or credit Presidents for macroeconomic events that often had little or nothing to do with their fiscal policies (did Herbert Hoover cause the Depression in his 10 months in office before the market crashed? Did Bill Clinton cause the internet to cause a massive expansion in productivity and wealth? Did George W. Bush cause investors to overestimate just how productive and wealthy the internet would make us?) They also give answers to pollsters that at best would be described as confused, if not indicative of societal cognitive dissonance: 63% of Americans like the idea of expanding health-care to those who can't afford it, but only 28% are willing to pay higher taxes to achieve that goal. It may be what the polls say is wanted, but it is not a very brave or prudent policy stance to say that you favor free lunches, unfortunately.

That seems to be what we are being promised, however. Engaging in fraudulent "creative accounting" to deceive the public into thinking your organization is fiscally solvent when it's not or running an elaborate, long-term billion dollar Ponzi scheme are infuriating crimes when done by corporate types like the guys at Enron or Bernie Madoff, but apparently they are an acceptable way to attempt to buy votes when they are done by elected officials in Washington. Giving the very high quality medical care received by most Americans who have health insurance to the millions of people who currently only get health-care when they are so sick they have to go the emergency room will be very, very costly. The numbers given to the public about what that cost will be are huge, but even still are almost certainly underestimates of the actual cost, both because if an accurate, objective assessment of the cost was given the bill would die but also if you look historically at Medicare and Medicaid, long-term estimates of those costs were off by nearly an order of magnitude. As I mentioned, the government has created several Ponzi schemes, namely Medicare and Social Security: a relatively small payroll tax on the relatively small number of workers under 65 cannot pay for even a fraction of the costly health benefits and direct cash payments to all of the elderly now, let alone as the demographics change so that the ratio of elderly to working age people shrinks and the elderly live longer and collect more and more in benefits. This is absurd, and anyone who knows the key variables--the amount we owe, what we take in, the number of projected workers and retirees-- would recognize that it's a Ponzi scheme and the only question is when did people who continue to participate in the system turn from the winners who got in on the Ponzi scheme early to the pigeons who don't get back anything they pay. I certainly have no expectation that the money that comes out of my paycheck for Social Security or Medicare is money that is being set aside for me somewhere that I will someday see again and anyone my age who believes that is a fool.

And "creative accounting," I mean, jeez, we're told this is "deficit neutral" even though a key feature of the first ten years of the programs is that the taxes run for all 10 years but the benefits only start after 4 years. Despite having all of the general qualities of these other massively indebted social programs that are huge, failing Ponzi schemes we're supposed to believe this thing won't add a dime to the debt. So much of what the Government does now that has been developed as the Federal Government grew exponentially in the 20th Century is to function as a sort of the world's most massive charity that gives out cash to promote specific social goals and the interests of small but politically influential groups, except its "donors" don't give by choice, they can't choose how much they give and they can go to jail if they don't pay what they're told.

And for some time we got away with it. Aside from a one year respite in the Clinton Administration we've accumulated debt continuously since the Roosevelt Administration due to bipartisan,non-stop government social engineering and vote buying. This "charity" likes policies that are politically popular in their results (Social Security recipients like getting checks) but doesn't like paying for the stuff it gives away (those recipients would dislike cuts in the size of their checks and workers would dislike a payroll tax hike.) It was a looming problem, but economic growth kept pace, give or take, with entitlement spending and debt growth and meant that while our debt was getting bigger our creditworthiness was never really becoming more questionable. Things have changed, quickly.

Debt as a fraction of annual GDP stayed under 2/3, and generally was much lower, from when we were still paying down all those WWII war bonds in the early 1950s until last year. Now we're on pace to go to over 100% before Obama leaves office. It's unprecedented and staggering to comprehend the magnitude of the change. At the start of the 90s the debt was a little more than $3 trillion, total. A dozen years later in 2002 debt had doubled to $6 trillion. By the time Obama took office, in the midst of the financial crisis, at the start of 2009 another doubling had taken place this time in less than 7 years as debt had climbed to about $12 trillion. By the end of Obama's first term we'll hit 100% of GDP at $16.5 trillion and by the end of the Obama's second term or the first term of the next President debt is projected to be somewhere at or above $20 trillion.

A lot of the deficit spending that took place during and immediately after the period of chaotic financial instability when huge Wall Street firms were flaming out, being bailed out or having shotgun weddings to keep from going under was meant to prevent an economic meltdown (Bush's TARP) and to inject capital into the broader economy to try to insulate main street from the massive beating Wall street had just taken (Obama's stimulus). As time has gone on, despite an unprecedented, very destabilizing amount of debt, a good enough reason for deficit spending has been watered down from making sure the economy doesn't implode to making sure Americans don't have to deal with the consequences of the bad fundamentals in the economy to just generally pursuing liberal social and political goals. The consequences of the recession would be painful: the big three auto makers and other inefficient companies would go out of business and those people would have to try to find new jobs, just like the people who are being laid off from companies that are downsizing to try to cut costs. The government seems intent on not allowing permanent reallocation of capital to more productive uses (in other words to let the market figure out if renewable energy is actually a profitable thing for Americans to spend their time working on in the 21st century, and if not, what is) since it will be painful for those who lose their jobs and more importantly it would be politically unpopular.

We've essentially nationalized two unprofitable buggy-whip auto manufacturers, we provided a subsidy to those companies and consumers by hastening people's decision to buy cars with "Cash for Clunkers", and now we're trying to offer palliative care to make sure nobody suffers adverse consequences from a disaster with seemingly interminable unemployment benefits, Obamacare and changing the rules so Big Labor can make unions bigger. And we also want to pay for "green jobs" the market didn't demand and increase the cost of energy for environmental reasons. The plan to terraform Mars will be unveiled any day.

There's a problem or two, though. (Surprising.) A seemingly completely political obedient Federal Reserve, as opposed to acting independent of political goals and serving as a guardian of the strength of the U.S.'s currency, is irresponsibly both printing huge sums of money and keeping its lending rates rates very, very low, seemingly at a level that will keep market interest rates artificially low, apparently thinking it will know exactly when to flip off the switch on the printing press when there's just enough dollars chasing just enough goods. What are we doing? A few very shallow economic indicators look positive, with the Dow now back over 10,000 and GDP growth having gone positive in the 3rd quarter. But virtually all that GDP growth was due to increased productivity of people who were already employed, as businesses trimmed the fat and got more output from less labor as they fired presumably the least cost-effective portion of their work-force, capital investment was not particularly robust--nobody's out there building factories or buying huge new equipment to expand their business--and clearly employers weren't keen on taking on new workers as unemployment has now gone over 10%. This when at the beginning of the year unemployment was around 6% and Obama laid out 8% as a benchmark for success of the stimulus. Perhaps he should put himself in a business owner's shoes for a second: the government might raise my personal income taxes and take away more of the profits I make, I may be forced to either provide health-insurance that will cost a lot more than it does now for any and all employees I have or pay a penalty (or both) and I don't know what my energy costs will be, but oil will likely not be cheap and electricity could go up by a little or a lot. If you were facing all those uncertainties do you think your mindset would be "I see an opportunity here" or "It's time to hunker down and try to keep what I have?" Do you think you'd be expanding and creating jobs?

A few tax hikes will hit: the Bush tax cuts will "expire" (as if only tax increases count as permanent changes to tax rate) and the capital gains tax on the wealthy will go up significantly (up a third from 15 to 20%) but with the weak economy a set of tax hikes that make our tax system ever more progressive and seek to raise revenues from capital gains will likely do little to raise revenues to a level that makes a big dent in future deficits. This fiscal policy will also likely end up working completely at cross purposes to the goal of our expansionary (and inflationary) monetary policy as tax hikes discourage both labor and investment at the margins, and if the wealthy are given an additional 5.4% surtax on both income and capital gains to fund Obamacare if it passes, this effect could be significant. One might say well that surtax will effect only a very small minority of the public, which is true, but generally it is the wealthy who have the ability to give people jobs. Is anybody thinking about it like this: if that tax passes and the rate of capital gains tax on those who have lots of money to invest increases from 15% to 25.4% then risky investments like decisions to throw money behind an idea for a new small business or to invest in a small business that seems poised to grow will need need to be something like 10% more profitable per unit of risk to make worthwhile the kind of capital investment that you know, creates jobs.

So, what could be the worst outcome here? Stagflation and implementation of a more European panel of social policies, meaning permanently higher rates of taxation, lower rates of GDP growth and a higher "natural" rate of unemployment? That would seem to be the best case scenario. However, if real economic recovery does start to come, or even if it does not, the combination of drastically increasing the money supply along with increasing the amount of government borrowing, which could crowd out whatever amount of private demand for loans there is, could mean that inflationary pressure and aggregate demand for loans could cause interest rates to rise dramatically. A frightening set of possibilities appear to be taking shape: if you're feeling conspiratorial perhaps the Obama Administration has figured out that the most realistic way for the Federal government to ever get out from under its tremendous debt (which is mostly held by foreigners and which will not involve a very politically unpopular policy combination of increased taxes and massive cuts in entitlement spending) is to simply devalue the dollar so much that our $15 trillion dollar debt that was worth $10 trillion euros in 2009 can go to 20 trillion nominal dollars in 2015 at which point it's worth $8 trillion euros, and similarly devalued against all other major currencies; in real terms the debt has gone down! So too, of course, has the net worth of everyone who has a bank account with dollars in it or owns dollar denominated assets. Buy gold. Hell, buy real estate.

More realistically and less out on the fringe is the idea that Obama and Congressional Democrats simply are ignoring or prioritizing as less important than systemic reforms that can only be enacted during some sort of societal crisis the fact that a few positive economic indicators may mask a reality that is far more dire than they believe. They may also fail to believe some of the following, which of course, I might be wrong about: that the costs of their social policies are far greater than they believe, that the "bold, persistent experimentation" that their agenda embodies has put a large amount of uncertainty into the business community at large which will hurt GDP growth and delay a sustained recovery, and that the combined effect of trying to put ever more goodies on the national credit card, proposing new taxes which may or may not come to be and doing so while the government's cash flow dries up means that the the figurative repo man is coming for the car.

The irony here is that the Obama Administration's attempts to provide stability in the life of the individual where you're guaranteed ever more just for being alive (at the cost of ever more personal and economic freedom) are so expensive to the national treasury and have unbalanced our books to such an extent that we could wind up doing severe damage to the creditworthiness of the country, the dollar could mirror the fate of the Yen in the 80s and 90s or worse suffering damage that would destroy vast amounts of American wealth and could end the reign of the dollar as the de facto global currency, and consequently could knock the United States off its pedestal as by far the most important economy in the world. Ours may be a fate like that of the British Empire at the end of World War II, except that unlike the decline in their economic and military supremacy, ours will not come from having made very important and noble decisions: to borrow exorbitant sums of money to destroy Nazi Germany and abandoning its policy of colonizing and exploiting the resources of foreign lands. Our debt will not be from having killed Hitler's empire, it will be from decades of being unwilling to be responsible and pay for the things we want in our domestic policy, and the end of American exceptionalism, unlike the end of British exceptionalism, will have been both deliberate and avoidable.

That's a hell of a double dip. Are you willing to risk the (already shrinking) value of your savings account, the #1 spot in global geopolitics and economics, the solvency of our government, and another sustained period of economic contraction so that we can have Obamacare and Cap and Trade?

Labels: ballyhoo, economics, obama, philosophy, politics

I watched another C-SPAN televised town hall today and they've done the country and those who care to pay attention a huge service by doing so. The narratives that the meetings are either infiltrated by unhinged, astroturf Republican sycophants shouting down Democrats or that ACORN or SEIU or other community organizations or unions have organized a massive, concerted counterattack both overstate the case. There are varying degrees of rancor depending on the position of the member of Congress and the political leanings of their constituents, and while there is anger and there are occasionally small groups of people shouting or a large portion of the audience booing, out of turn and in anger, for the most part these incidents result in brief delay in the proceedings, not any sort of effective "shouting down" of the opposition in the sense that those with opposing viewpoints are allowed to express them--they have the microphone--after a brief outburst. Similarly, while those who support the bills seem to be slightly more organized than those who oppose it--often a number of are carrying multiple copies of the same sign, and others who are in their camp have hand-made signs, all of which are held up when the anti-reform crowd cheers in an (ineffective) attempt to create a confusing visual image. References to Nazism have not been present in several meetings I've seen, and the most outlandish thing a supporter on the right said was to question whether Barack Obama was, in fact, a patriot. Jim Webb--whose town hall this view was expressed at--said this was beyond the pale of civil discussion, although permissible under free speech, but that he disagreed with questioning our President's patriotism. Overall the impression I got was that while there is a lot of anger that the idea that the protesters on either side are political pawns or crazy people was completely wrong.

Most opponents were concerned about the general contradiction of how we can save money by expanding care to millions of new people--the Democratic argument basically seems to be that the $1000 tacked onto most folks' health insurance premiums annually to provide acute, emergency care to people who have no general health coverage is equal to or greater to the cost of both insuring them all and also paying for the subsidies of the insurance premiums for all that seem like they must go up if the whole country basically adopts community rating--health insurance companies must charge people more or less the same rate within some relatively narrow band whether they are healthy or not--and furthermore those companies must accept people with pre-existing conditions. The math doesn't seem to work out; you're going to make insurance a lot more expensive for everyone, promise that the government will pay for the part that people can't afford, and put a lot more people into the program, those of whom are the horror stories that necessitate this reform are those who will cost the most to provide care for and/or are the least able to pay for their insurance.

Jim Webb's answers to the hard questions seemed to make much more sense than the Senior Democratic leadership--although to be frank, the partisan anti-health-care reform crowd didn't seem to buy his arguments--but his arguments provided some serious questions about the role of government. His good ideas, first of all, were that he would oppose specifics about proposed legislation that seem to violate the pledge to make this plan pay for itself. Specifically, he opposed the public option at first and if it were to be implemented later to increase pressure to drive down costs it would have to compete on a level playing field and not run at a loss subsidized by taxpayers; he recognizes that this simply continues the failed premise of entitlements like Medicare and Social Security and would lead to a massive budget shortfall in a short period of time. I wasn't quite sure what to make about his proposal that doctors be compensated differently, with the general idea being that the incentives be changed from procedures performed to overall outcomes of patients--an idea which both in theory and as Webb explicitly pointed out would steer more people into becoming GPs and would reduce the disparity in compensation between hot-shot specialists like brain surgeons and the doctors in the trenches of pediatric medicine and general practice. This seems like a necessary type of reform to do something about runaway costs of medicine, but unfortunately it takes a lot more work and years of schooling and skill and is generally something that in the free market would be compensated more richly to be a brain surgeon than to be a pediatrician. Social engineering to encourage the few people who want to be doctors to be GPs by changing the financial incentives so that even when the objectively measured amount of training and difficulty of performing brain surgery is greater by a fair amount than that to become a GP that the discrepancy in pay will be lessened seems like it will lead to a shortage of brain surgeons and therefore waiting and rationing of brain surgeries. And this would apply to all acute and semi-acute specialties where the U.S. truly leads the world... orthopedic and trauma and cardiac surgery, surgical oncologists cutting out tumors, oncology in general.

At least, though, Webb claims he would not vote for a bill that would increase the deficit and laid out specific ways in which the overall cost of health-care must be cut in order for him to believe that the bill will be paid for. He also proposed some unpopular revenue sources to pay for the inevitable short-fall in savings and the cost of the new program (in addition to the $200-$500 billion in cuts to Medicare in the several bills) such as taxes on those who have really expensive "Rolls Royce" health-care plans that cover virtually everything. As a believer in markets one would think that would create a massive niche market for insurance providers who provide the richest possible coverage that isn't taxed and would therefore generate less revenue than the government will predict, but at least he's thinking about it.

As a sidebar one thing he seemed somewhat less dismissive than most Democrats of including Republican ideas that are largely structural changes that are free to the taxpayer such as serious tort reform, truly pro-competition and anti-defensive medicine provisions in a final bill. He did say that 35 states had caps on malpractice awards, but seemed to fail that this was not the only way to reduce the massive malpractice premiums doctors pay. I've found the absolute demonization of insurance companies understandable, but have found the lack of any noise about trial lawyers or any movement by Democrats to throw them under the bus surprising. Loser pays rules, limits on non-economic damages, more stringent rules for what constitutes malpractice such as necessarily including some deviation from a well-defined standard of care could all drive down the massive cost of malpractice suites which manifest themselves both in insurance costs but also in the defensive medicine that doctors practice--this seems like pure common sense--Webb was not dismissive of it, but on the other hand, he was very, very far from promising that he was going to go back and take the word of the people to Harry Reid and make sure that every member of his party would have to vote up or down on including such reforms.

In general his business experience and experience successfully running Virginia's state government with a heavily Republican legislature was clear, and we would do well to elect more officials in every branch of Congress who have actually run things and understand--apparently contrary to many on both sides of government--that waving a wand and declaring something so by fiat is very different from getting in the trenches and making something work. One thing I wonder about, though, is that as a businessman why he doesn't ask why health-care costs are rising so much faster than inflation: how much of it is it due to waste, fraud, deceitful practices of insurance companies and pharma companies and other economic players in the industry and how much is it due to innovation, increased amounts of expensive care being given, and a general rise in the number of transactions where people willingly get effective, life-extending treatment from doctors? A novel proposal he brought up that I've thought about previously but which I've never heard a serious national politician bring up is to address through trade policy the fact that government-run health-care systems in foreign countries (including in the first world) generally have price controls in place and give U.S. Pharmaceutical companies a choice: sell us the drugs at a deep discount and take a small profit margin or we'll wait til they go generic or (in some cases in some countries) circumvent your intellectual property rights and you'll get no profit. That does not spread the burden of paying for massively disproportionately U.S. based pharmaceutical R&D across the industrialized world and is why drugs cost so much less in Canada than in the U.S.--the current model is to get the U.S. market to support the rest of the world by paying retail while they all get the drugs at just above cost. He deflated the can-do spirit of liberal questioners who asked why we don't do what Canada does and use the U.S.'s massive "bargaining power" to negotiate for better drug prices like every other country. Short answer: if there's no profitable market for big pharma, they'll stop producing new drugs. This is a very good idea, but why we can't institute the trade reforms to make the Europeans pay their fair share for drugs outside the scope of a massive overhaul of the entire U.S. system of how health-care reimbursements are paid is beyond me, though.

I still see serious problems with this much less drastic, much more acceptable plan that Webb outlines the broad strokes of, as opposed to HR 3200, though. First, one of the details he outlines for driving down costs is not only having community rating but FORCING those young people who have the money to buy health insurance but choose not to to do pay for a plan (or part of a plan since the plans they can buy in most states now are much, much cheaper than they would be under the Webb plan.) This seems blatantly Unconstitutional, and in the way that gets overturned by Supreme Courts, especially conservative ones, which unless one of the 5 conservatives dies or retires, we will have for the foreseeable future. I say "in the way that gets overturned" because there are many Unconstitutional laws--say Medicare and Social Security-- for which no Federal government mandate exists in Article 1, Section 8 of the Constitution but which give people free money. People generally don't complain about those. When you go from allowing people to make a choice as a free person in a free country not to buy something (health insurance) and live with the risk, such as it is, that you might go bankrupt and be a burden to society if you got hit by a bus, to forcing them to buy such insurance basically in an indirect and somewhat bizarre form of taxation to decrease the overall risk of an average person in the insurance pool to try to keep the premiums of the new insurance companies who are community-rated, allowing prior-existing-conditions, and denying less procedures, those people are going to be upset and ask where the Constitution allows the government to force them to buy something they don't want. Can you think of another good the government makes you buy? Car insurance, yes, but the whole problem with that analogy is that you don't buy a car and drive it around on your own property... you drive it around public roads. In other words, you're taking advantage of a government maintained road network to get to useful places, your driving affects others safety, you have to be licensed to drive on that network, and therefore increased regulation is permissible. Driving on publicly funded and maintained roads is a privilege, not a right. Living and choosing not to buy insurance, thus far in our country's history, has been.

In response to the specific question of what Article and Section of the Constitution Webb would cite to justify the government's takeover of the health-care choices of virtually all Americans in some sense--even if they don't immediately change the structure of coverage for most Americans--his answer was not only a red herring and a total dodge in a format where the questioner could not respond, it was highly insulting. He responded that since this law clearly cannot be justified by the Constitution and since Medicare and Medicaid and Social Security cannot either that he "assumed that the questioner wants Medicare and Medicaid and Social Security to be repealed." The questioner was not allowed to say if they would repeal those programs if they could or--in a rhetorical stance similar to one Webb used before saying that if we were starting over that he would not link health-care to employment--would do so ideally but in the real world recognize that this is unworkable. In addition to blind-siding this woman who asked a legitimate and fair question with no chance to respond, he demands of the questioner an ideological coherence that he exempts himself from. While the questioner must by virtue of asking what the Constitutional justification is of this law support the immediate repeal of every Unconstitutional social program written into law that is essentially Unconstitutional--the good Unconstitutional laws as mentioned above-- Webb can take the stance that since a previous government passed an Unconstitutional law every future government can do so, as well, and not have to answer to their constituents. By defying her to support the destruction of other programs--by which he presumably meant to say that since these laws that many people like aren't justified by the Constitution that we've come to a consensus that the Constitution can be ignored--he essentially openly defied his oath of office: to protect and defend the Constitution. I guess they should add a codicil "unless people get free money."

Our founders were clever in writing the Constitution and they anticipated the very dangers of Unconstitutional, popular laws like Medicare and Social Security. The power of the many who stand to gain is in theory checked by the fact that the power to create a national system of social insurance or medical coverage is, in fact, not among the powers listed to Congress and therefore is reserved to the states and ultimately the people. Unfortunately, previous generations of lawmakers have taken the easy way out and ignored their oath to defend and protect the Constitution. If we're ever going to get on the road to sustainable financial demands on our citizenry and paying off our debt, sticking to the powers enumerated by law and reforming the massive body of Unconstitutional but popular law--and not passing any new, Unconstitutional entitlement programs--would seem to be a good start.

Labels: ballyhoo, constitution, government, philosophy, politics

I think in the sixties there was a wavy gravy book called Zen and the Art of Motorcylce Maintainence. Now I'm not pretentious enough to capitalize every first letter of the title like this is some profound realization but I really do enjoy--even though I'm not particularly good at--taking care of a bunch of living plants and making them grow and so forth, and no bigger a responsibility does a homeowner have to take pride in and room for ugly rumors amongst the neighbors than in maintaining the LAWN.

I recently had a storm door put in on my house and while the screen insert was being put in (it's summer) the glass insert lie on the lawn for about thirty minutes... I didn't really think much of until two days later I saw that a MASSIVE PATCH OF DEAD GRASS IN THE EXACT SHAPE OF THE DOOR had formed. Yikes! I checked out the roots and the stuff is still alive so I'm hoping an intense schedule of watering will get that stuff back to green by August or at worst next spring without me having to friggin' take out the whole top layer of grass there and re-sod it. I have another much less visible patch of dead grass where there was recently a dumpster on my property for renovations... whether to try to tear that up and plow the dead grass under and fill it in with top soil and put in some border stones and increase my acreage for gardening is an interesting question since I really have no idea what type of grass I have and whether if resodding that particular spot (it gets only intermittent sunlight and is under shade most of the day) would work particularly well.

At any rate this was going to be a post about what I've done recently for the web-application and what I had planned for today but suffice to say I did the design work (which is a surprisingly large amount of work) on the front-end of the web site... I realized that having people maintain this huge database of information about what players they've configured and saved on what teams is pretty friggin' stupid if they don't have a way to like... intentionally access it. So the old model where you go straight to the model and start playing is out the window and now you have to sign up to play around (I promise no dumbass like "please confirm your login e-mail" pages... this data ain't exactly national security or your credit card number... it's just that by adding a login layer it allows me to know who you are and what database entries I need to look up.) Anyways a preview of what the main page interface will look like can be seen here. Comments (in the provided comments section below or if that's not work by sending an email to adam@bmc.o where you expand all those abbreviations) are appreciated.

At any rate that's about as much work as I'm going to do on my web site today since I'm about to head off to home depot to get a sprinkler, some plants, some border fencing stone, a weed-whacker, etc. and do some serious lawn maintenance. Booya!

Labels: lawns, markov chain, markov chain web application, philosophy

Henry Ford, in 1938, after the Anschluss between Nazi Germany and Austria sealed the fate of Europe, was awarded the Grand Cross of the German Eagle by Adolf Hitler, who modeled Volkswagen on Ford's company and considered Ford a personal hero.

I perhaps, am as bad as Hitler since, half-Jew by blood that I am, Henry Ford is perhaps the historical figure whose intellectual output I most admire. Ford was not the most intelligent man in history; I'm sure on an IQ test, he'd probably lose to Karl Marx. Hell, Marxists throughout history have often been highly intelligent.

He was not a particularly "good person" in any sense, either. While he did promote some social welfare programs, he mainly abandoned them. I don't think, in general, he personally cared for the personal welfare of individual strangers, and from reading his 1922 memoir, My Life and Work (more on that in a minute) the tone suggests, to me anyways, that he was probably not very personable. He was on record as an anti-Semite and he was often simply wrong about politics, and he published a newspaper that contained within its pages not just forged material impugning Jews, but material that Ford should have been smart enough to deduce was clearly forged. I fault him more for his lack of skepticism and empiricism in printing the Protocols of the Learned Elders of Zion more than for his anti-Semitism. Every man has a right to hold beliefs which are abhorrent to me. But why would I admire a man who specifically held an irrational hatred for my own ethnic kin?

Because if you take the time to read My Life and Work, which is not really an autobiography or memoir, you will understand (in my opinion) fundamental truths about the goodness of America's economic and governmental systems. You will see who is really exploiting whom in this world. And most importantly, you will be given the tools to use reason to make razor like slices of induction and deduction to slay any unjustified policy proposal, any fallacious argument and of course most easily stupid and morally awful ideas that Ford himself held plenty of (I didn't say the man was immune to cognitive dissonance.)

Reason is the mental tool that makes us better than the other animals, and learning how to reason, and to reason correctly, as I contend this book teaches implicitly (and sometimes explicitly) provides much more wisdom than often times comes from very intelligent people who have had spent decades learning the intricacies of a very complex, but completely erroneous, theory. For example, I don't doubt that in a debate of Marxist dialectics or the schools of foreign policy thought that have ebbed and flowed into and out of favor with American Presidents that Noam Chomsky would trounce me. Yet without all of his intelligence about foreign policy and marxism and neo-marxism, I feel confident that standing on the shoulders of giants, the conclusions about the world around us I come to are more wise and of more utility than the intellectual detritus that Chomsky swills and regurgitates with porcine intensity. I think Chomsky provides an interesting intellectual counterpoint to Ford; his output is, in its volume and intellectual depth and breadth, totally in another zip code from Ford's. Ford simply wrote what he presumed to be a simple memoir justifying all of the work he had done with his life. Chomsky's "work" was to traffic in all manner of complex ideas. Both men are blatant anti-Semites and I think are about equally reprehensible as individuals. Ford, however, contributed much more to the well-being of his fellow man than Chomsky ever could conceive of in all his utopian fantasies by actually getting out there and doing things he knew were wise, if not justified by someone with a Ph.D. in whatever useless subject Chomsky's Ph.D. is in.

He outlines how, and more explicitly and in more plain language than another one of my heroes, Adam Smith, not simply why capitalism is the best economic system but also in plain words how that works. Understanding how capitalism works is perhaps more important than understanding why it works.

I will try to put as succinctly as possible why I think this book is perhaps the most important book I have ever read: You can learn from an economics text book, that supply and demand determine an equilibrium price that the market will eventually reach (and freer and more liquid markets will reach equilibrium more quickly.) You can be told that this is a good thing, that there are no other economic systems that work better, and even be shown why government mandating supply and demand is less efficient. But Ford never really dwells on theory; his words are almost always firmly rooted in either facts or simple to understand principles. Despite this form of expression, you come away from reading his book understanding how the free market works, why the ingenuity of a anti-semite crank who had a mutual man-crush with Hitler who simply strove to build cars is what makes Americans unique, in their entrepreneurial spirit, why America has been more prosperous than all the other industrialized nations, what the nature of American exceptionalism really is (I'm not sure that American Exceptionalism and the German concept of "Fordism" to which Hitler subscribed are not identical) and finally why something as mundane as figuring out how to optimize supply chains leads to man constantly gaining more and more of that most precious resource, time not spent providing for ones' means to exist, but time spent enjoying existence.

Consider that a book that is often times about how supply chains logistics work, some esoteric discussions of small pieces of economics that are occasionally wrong, and is, formally, a description of an automobile company correctly predicts and explains why global free trade will eventually lead to improved quality of life everywhere, and which starts off with two paragraphs so grandiose that you can almost not believe that they are the preface to a book with chapter titles like "The Tractor and Power Farming."

INTRODUCTION

WHAT IS THE IDEA?


We have only started on our development of our country--we have not as
yet, with all our talk of wonderful progress, done more than scratch the
surface. The progress has been wonderful enough--but when we compare
what we have done with what there is to do, then our past
accomplishments are as nothing. When we consider that more power is used
merely in ploughing the soil than is used in all the industrial
establishments of the country put together, an inkling comes of how much
opportunity there is ahead. And now, with so many countries of the world
in ferment and with so much unrest every where, is an excellent time to
suggest something of the things that may be done in the light of what
has been done.

When one speaks of increasing power, machinery, and industry there comes
up a picture of a cold, metallic sort of world in which great factories
will drive away the trees, the flowers, the birds, and the green fields.
And that then we shall have a world composed of metal machines and human
machines. With all of that I do not agree. I think that unless we know
more about machines and their use, unless we better understand the
mechanical portion of life, we cannot have the time to enjoy the trees,
and the birds, and the flowers, and the green fields.

If I were allowed to make one change to generic American curricula, I would have students who always and everywhere read a rather lame attempt at both literary craft and political correctness, To Kill a Mockingbird, and force them to simply read this entire book. There need be no book report, but simply a quiz that asks questions about the content of the book that anyone who carefully read the book would easily pass. I think this would do more than any other single book possibly could to instill in them at least the concept of why we should have the political and economic systems that we have (or I guess I should say had, prior to say 2007) but also the more intelligent a student is and the more they think about the book, Ford's own life, and think about what the book says, they will take away fundamental concepts about philosophy, reasoning, empiricism, logic, and all sorts of other great precepts.

Basically, to really put it succinctly, I think this one tome by Ford, and a freethinking mind, are enough to at least suggest the ideas that are handed down as dogma from everyone from Socrates to Hobbes to Milton Friedman. And it can be appreciated (on some level) by every single 9th grader. To me that's quite a book, and quite a man who could write such a book without even intending to.

Labels: economics, philosophy, usa