Friday, September 30, 2005

National ID System

... for animals?

That's right. The U.S. Department of Agriculture is promoting a National Animal Identification System, (NAIS), stating that the "USDA’s ultimate goal is to create an effective, uniform national animal tracking system that will help maintain the health of U.S. herds and flocks."[1]

To aid in tracking what it considers to be "livestock" animals, the USDA hopes to make this program mandatory by 2008. It includes requiring owners of any livestock (cows, pigs, sheep, chickens, etc.), to report their location and receive a premises ID. The premises ID is a unique identifier for a property that houses any livestock. The federal government will enter all information about a property and the property owner that it believes is relevant to aid in tracking the property owner's animals. Additionally, "animals will be identified either individually with a unique Animal Identification Number (AIN) or, if they are managed and moved through the production chain as a group, with a Group/Lot Identification Number (GIN)."[2]

"There are essentially four pieces of information required to document an animal movement event. The [list] below shows the four pieces of information that will be stored in a national animal records repository:
1. National Animal Records Repository—Data Elements
2. Animal Identification Number, AIN, or Group/Lot Identification Number, GIN
3. Premises Identification Number, PIN, of the location where the event takes place
4. Date of the event
5. Event type (movement in, movement out, sighting of an animal at a location, termination of the animal, etc)"[3] The above list is by no means inclusive, as each of the five elements contain its own data requirements.

According to Mary Zanoni, Ph.D., J.D., Executive Director of Farm for Life, "Every animal will have to be assigned a 15-digit ID number, also to be kept in a giant federal database. The form of ID will most likely be a tag or microchip containing a Radio Frequency Identification Device, designed to be read from a distance. (Plan, p. 10; St., pp. 6, 12, 20, 27-28.) The plan may also include collecting the DNA of every animal and/or a retinal scan of every animal. (Plan, p.13.)The owner will be required to report: the birthdate of an animal, the application of every animal’s ID tag, every time an animal leaves or enters the property, every time an animal loses a tag, every time a tag is replaced, the slaughter or death of an animal, or if any animal is missing. Such events must be reported within 24 hours."[4]

Guess who is promoting the NAIS the most?

It's not those "small farmers" that politicians always proclaim they must protect. It is the big companies, including but not limited to, the National Pork Producers, Monsanto Company, and Cargill Meat. Why would they impose such restrictions on themselves? Quite simply, they want to drive out their competition through forcing the small farmer's cost of raising animals to rise. (For example of how this reasoning works, see my previous post, Think Like a Lobbyist).

Additional analysis to why this is a violation of property rights is to follow.

to be continued ...

[1] Premises ID Factsheet
[2] Animal ID
[3] Ibid.
[4] Mary Zanoni, Ph.D., J.D. Why You Should Oppose the USDA’s Mandatory Property and Animal Surveillance Program

Thursday, September 29, 2005

Politicians & Money Don't Mix

Skimming an article on House Majority Leader Tom DeLay's indictment this morning, I noted that the alleged violation was, "Texas law prohibits use of corporate contributions to advocate the election or defeat of candidates."

I suppose that it is legal to use those corporate contributions to create additional special interest programs at the expense of millions of Americans. When was a politician indicted for that?

Quite frankly, I believe that his recent statements are more of a crime than the alleged
violations in his recent indictment.

Via the Washington Times, Sept. 14, 2005:



And how about McCain's violation of the McCain Feingold law earlier this month?

Via the Orange County Register (hat tip to Club for Growth):
Sen. John McCain has made a reputation for campaign finance reform and for being an independent thinker. So it was no surprise that Marilyn Brewer parlayed his endorsement into her first TV commercial for the Oct. 4 special election.In the ad, McCain compares Brewer to both Ronald and Nancy Reagan. One thing the first airings of the ad did not include: Brewer does not state that she approved the ad. That’s now required by law. Specifically, the law co-sponsored by McCain himself.

All the campaign finance reform laws in the world don't make politicians more responsible with other people's money. But the real threat is not with the use of voluntarily contributed funds -- it is with the use (and misuse) of forcibly seized taxpayer dollars.

Wednesday, September 28, 2005

Finding Oil

For some reason, people always seem surprised when they observe people responding to changes in price. According to an article I read this morning (found via Drudge):



Mr Naimi said that Saudi Arabia would "soon" add 200 billion barrels to its current reserves estimate of 264 billion barrels.

Did billions of barrels of oil just magically appear? Not quite.

As the price of oil rises, the costs of exploration and R&D have greater recoverability, translating to a higher expected return. When the price of a scarce good goes up, we can expect that people will try to produce or find more of that good to sell at the high prices.

Prior to a rise in oil prices, it may not have been a worthwhile investment to search for more oil or find alternative energy sources. Fortunately, I do not have to go to Saudi Arabia and tell people to start finding more oil for me to consume. The price signals that the market sends combined with the desire to make a profit are more than sufficient.

Tuesday, September 27, 2005

Pure Exploitation

I'll admit it - I am quite addicted to eBay. Perhaps my fondness for eBay stems from my view of shopping as purely a transactions cost and eBay as a way to reduce the time I have to spend shopping. Perhaps it is because items in general are less expensive. Or perhaps it is because of the unique items that are available for sale. In perusing eBay this morning, I happened across this auction. I had to chuckle at the irony somewhat -- it is not often that you hear of people exploiting their own loss after a hurricane, amidst charges of "price gouging" and "taking advantage of other people's misfortune." At the same time, I had to marvel at the seller's entrepreneurial spirit.

A few years ago, I remember when Hurricane Isabel came through Virginia. It didn't cause significant damage, but there were power outages and many fallen trees. I was one of the first to take advantage of other people's misfortune. I drove around and found a neighborhood with a number of fallen trees and came across a house with a weeping willow that had fallen across the yard. I knocked on the door and asked the owner if he would like for me to remove the tree. I wasn't sure how much a tree removal service would cost, but I knew my price was less. I made the deal - for $100, I would cut down the tree for him and take all of the branches and logs away. The owner of the house was more than happy that I was making money from his misfortune. He had a heart condition and did not want to risk moving the tree himself. So I suppose not only was I taking advantage of the tree falling through his yard, but also taking advantage of his poor health! Yet, this transaction was mutually beneficial for both parties. What if I had not come along seeking to profit from the misfortune of others? Perhaps the man would have tried to move the tree himself, risking further injury. Or perhaps he would have paid a more expensive tree removal service. Lucky for him, I was competing with others who also wished to exploit the negative impact of Hurricane Isabel. Had there been a law stating that I could not take advantage of this man's misfortune and could not charge him to remove the tree from his yard, I would have just stayed home.

It is comforting to me that there are people with an entrepreneurial spirit who wish to take advantage of my misfortune. In fact, I wish there were more people who wanted to take advantage of my misfortune -- then I might pay less to have my misfortune corrected. For example, I currently have a nail in my car's front tire. I have neither the time nor the inclination to patch the tire myself, but it is certainly an inconvenience having to fill my tire with air a few times a week. Luckily for me, there are at least a dozen tire places within just a short distance, and all of them are competing for my business. They stand ready at a moment's notice to take advantage of my misfortune, so that I don't have to suffer misfortune for long.

Call it what you will: pure exploitation, taking advantage of others, profiting/benefiting from misfortune, etc. This profit-seeking behavior makes people better off than they otherwise would be.

Monday, September 26, 2005

Correction to 'Counting Costs'



Sunday, September 25, 2005

Counting Costs

I attended public school, private school and was homeschooled during my elementary school to high school years. Having had exposure to all three environments, I feel somewhat qualified to correct statements such as this one, overheard earlier in the week: "Homeschooling is cheaper than private school."

Homeschooling is not cheaper than private school. In fact, it is far more expensive. One might argue that the benefits of homeschooling outweigh the benefits of private school and so it is a better deal, but that is irrelevant to the issue of cost. The cost of homeschooling is next best use for your time and money, i.e. your opportunity cost.

Both of my parents have college degrees in technical fields. However, in order to accommodate my wish to study at home, one of them (my mother) had to stay at home as well, giving up three years of her salary for the three years that I was homeschooled. She could have sent me to private school for all three years and given up less than one year of her salary. Or, if she valued her leisure time more than working, she could have enjoyed gardening and shopping instead of spending her day teaching me algebra, physics and trigonometry.

Representing cost as merely the dollar amount for tuition represents a fundamental fallacy in economic thinking. All costs are opportunity costs. Monetary costs make up only one part of the total cost.

Saturday, September 24, 2005

Door-to-Door Confiscation

In Stalin-esque fashion, officials in Louisiana have taken the view, "If the opposition disarms, well and good. If it refuses to disarm, we shall disarm it ourselves."[1] As I mentioned last Tuesday, the evening news presented a video of police entering a home in New Orleans, finding firearms, and confiscating them. Perhaps I should have been more clear. "Entering" meant breaking the glass on the front door and opening the door, using what appeared to be a crowbar. "Finding" meant, upon not finding survivors, rather than continuing to search for survivors elsewhere, they searched for weapons that might have remained in the home.

Officials have continued their weapons confiscation mission in New Orleans, going from door-to-door to take guns from their rightful owners. They have even seized a firearm from a man who had one in his boat for protection while he rescued people. Law enforcement is supposed to protect those who cannot protect themselves -- not create more people who cannot protect themselves. It is ironic that law enforcement is targeting gun owners and those gun owners are peacefully surrendering their weapons, rather than using them to defend their right to keep them. So much for the argument that owning a weapon means you are more likely to use violence to resolve conflict. Apparently the police would rather confront peaceful gun owners than unarmed looters. Those 'right-wing-extremist' gun owners are not nearly as extreme as the founders such as James Madison, who stated, "Americans need not fear the federal government because they enjoy the advantage of being armed, which you possess over the people of almost every other nation."

Two groups, along with individuals in Louisiana, are trying to stop this blatant violation of property rights. "The National Rifle Association (NRA) and the Second Amendment Foundation (SAF) filed a motion in the U.S. District Court for the Eastern District of Louisiana, seeking a temporary restraining order to halt the seizures of guns from law-abiding citizens. They described the confiscations as 'arbitrary,' 'without warrant or probable cause' and thus 'illegal.'" Read the whole article here.

The creation of law enforcement officers did not end the right to self defense. The existence of police does not nullify the need for private ownership of firearms. As Patrick Henry stated in a speech on June 9 1788, "Are we at last brought to such humiliating and debasing degradation, that we cannot be trusted with arms for our defense? Where is the difference between having our arms in possession and under our direction, and having them under the management of Congress? ... If our defense be the real object of having those arms, in whose hands can they be trusted with more propriety, or equal safety to us, as in our own hands?"

If we want to claim that racism is at work, or that government has no regard for people in low-income areas, this is the best case so far. As Thomas Sowell stated six years ago, "The biggest hypocrites on gun control are those who live in upscale developments with armed security guards -- and who want to keep other people from having guns to defend themselves. But what about lower-income people living in high-crime, inner city neighborhoods? Should such people be kept unarmed and helpless, so that limousine liberals can 'make a statement' by adding to the thousands of gun laws already on the books?"

"To disarm the people [is] the best and most effectual way to enslave them."[2] And how much easier it is to control slaves than those who may act freely.

[2] Mason, George. 3 Elliot, Debates at 380

Friday, September 23, 2005

A 'Forced' Choice

This article caught my eye partly because one of the people mentioned in it lives in Northern Virginia. It is easy to sympathize with the woman in the article; she has been the victim of unfortunate health conditions. Noting that she is also living on disability pay and contributions, we might also postulate that her health conditions had a negative impact on her income.

The other reason this article caught my eye is its application of the word "forced" to a choice based on price changes and budget constraints.

For Pam Koren, the storm's impact has been more immediate - and more drastic. Suffering from low blood sugar, spasms of the esophagus and nerve damage, she exists now on disability pay and contributions from her daughter, who attends college and works as an assistant youth minister.

With gas and food prices rising after the storm, she says, she was forced to put her house in Burke, Va., on the market. She is considering east-central Pennsylvania, and a less expensive home.

"I'm a wreck because I'm not sure I'm making the right decision," she says. "I didn't want to have to do this, but things have become so tight I have not had a choice. I did not expect things were going to get this bad."

She was forced to put her house on the market? More accurately, she decided that given her income constraints and the value she placed on goods other than her house, she decided that it was in her interest to sell her home and use the proceeds for a less expensive house and the remaining proceeds to purchase other goods on which she placed a higher value. We make choices like this every day because we live in a world of scarcity and constraints. When I choose to sell my car to buy a new one, is it terrible that I was "forced" to sell my car? If I had infinite resources, I would have kept it and the new car. The presence of scarcity and constraints requires me to determine which option is the best out of all available options. Am I "forced" to buy clothing because it is cheaper than making it myself and there is some minimum level of clothing that I must have? We do not and should not attempt to guarantee rights against circumstances which make one choice cheaper or more feasible than another; to do so is impossible.

The woman in the article is also quoted as saying, "I didn't want to have to do this, but things have become so tight I have not had a choice." Had she been more accurate, she would have said that due to budget constraints and rising prices, her available options have been reduced. To maintain the minimum requirements of other goods, she must then cut back on goods such as housing. She will still have one house, but the desirability of her location may be lower, the house may be smaller, etc.

Life doesn't always give us the choices we want, but (as long as we are the ones assessing our own values and making decisions based on those values) we always have choices.

Wednesday, September 21, 2005

More Hurricanes = More Government?






Think Like a Lobbyist

In the news yesterday, "New York Times Co. (NYT) on Tuesday said it would cut about 4 percent of its work force, or 500 jobs, and warned that weaker newspaper advertising and rising costs could reduce earnings to less than half of Wall Street forecasts this quarter. Knight Ridder Inc. (KRI) also plans to cut staff as the newspaper industry struggles with a lackluster ad market, increased newsprint costs and circulation declines with readers turning more often to the Internet for news."

The New York Times and other newspapers have also turned to the Internet to generate additional revenue, but have still been unable to compete against other online sources -- particularly blogs which charge no monetary fee for their use. Could it be the quality of the news online? Or perhaps the lack of monetary costs associated with clicking on a link to a blog has something to do with this phenomenon. I decided to think like a lobbyist for the newspapers, ignoring any moral objections to manipulating law in my favor at the expense of others, and asking myself: what would a lobbyist write ... ?

We must save these jobs! Newspapers are an integral part of history and we cannot let them disappear due to the rise of weblogs and other online news sources! Think of the days as a child, watching your father sit at the table with his newspaper and coffee. Remember clipping articles about your favorite athletes. Consumers are falsely led to believe that the Internet is a good substitute for newspapers. We must do something to save the newspaper industry!

If I were a lobbyist, I’d start proposing a “FAIRNESS IN JOURNALISM” law. Here are two options.

Option 1
Stated reasoning:
How do we know that the information presented in blogs is accurate and well researched? In the interest of protecting the public from misinformation, we should require the leader of each organization that produces articles which may be seen as news to take classes or obtain licenses to ensure that they understand and communicate the news. All they have to do is have one representative from their organization take a course and they can write all they want! It is such a simple step and will ensure that Americans are getting reliable information.

Hidden reasoning:
This law eliminates our competition by reducing the supply of competitors. Although it applies “equally” to everyone, it does not impact everyone equally. This is its intent. From the perspective of the NYT, this representative would be one of many – a small percentage of the workforce. (If 4% = 500 workers, their total workforce is approximately 12,500; therefore one person out of 12,500 accounts for only .008 percent of the NYT workforce). However, let’s suppose that one person from Capital Freedom were required to take the same class. One person accounts for 100% of the “Capital Freedom workforce,” and that workforce has much better things to do with her time. We can easily put Capital Freedom and other blogs out of business!

Option 2
Stated reasoning:
News organizations need to start "giving back to the community." As the NYT representative, I will be the first to support a law requiring all providers of information on current events to pay a flat $100 fee that will go to help the underprivileged in their community. Any news organization that refuses to pay the $100 is obviously doesn't care about helping the community and should no longer be allowed to serve as a source of news.

Hidden reasoning:
Let’s suppose we charge $100 flat fee to post any news. For the NYT, this is pocket change – especially compared to the profits that they can make as a result of the law. For a blogger like myself, $100 has to be greater than the psychological benefit I get from maintaining a weblog in order for me to continue it. We would therefore observe a law which disproportionately affects those news organizations designed to generate little or no revenue. A licensing fee has the same effect.

Luckily no one is proposing these (at least, not yet and not to my knowledge). We would know that the effect of either option in the "FAIRNESS IN JOURNALISM" law would be to reduce the supply of bloggers and other online news sources, reduce competition and lower incentives to provide the best quality news. Sometimes we have to think like a lobbyist to understand the true motives behind lobbyists' "consumer advocacy."

Tuesday, September 20, 2005

One Car A Month

For years, proponents of limiting the number of guns that can be purchased each month by an individual have stated, "who needs more than one gun anyway?" You can only accurately fire one (maybe two) at a time, and why would anyone need to buy more than one gun per month?

How right they are. A person probably does not need more than one gun. With that in mind, I'd like to propose another law that follows the same reasoning. We know that cars kill thousands of people each year. They are clearly designed to break the law and potentially cause harm to others, as evidenced by their ability to reach speeds that far exceed legal speed limits. Cars contain flammable substances and cause pollution; even when they are not driven, the gasoline they contain slowly evaporates into the air. What if a car were left unlocked and unattended -- think of the children! And, of course, you can only drive one car at a time. Why does anyone need more than one car?

People who may have had firearms ruined or lost to a natural disaster, fire, or theft (including government seizure), are subject to their state's one-gun-per-month restriction.* I include government seizure only after watching the evening news and seeing police enter a home in New Orleans, find firearms, and confiscate them. To the news anchors, it seemed to be a normal occurrence and nothing to cause alarm. (I suppose it's not looting if you're taking necessities such as food and water -- or if you are police loading someone else's firearms into your boat.) However, if you previously owned six firearms, it will take you at least five full months to replace them if you start buying them immediately at the maximum allowable rate. This unnecessarily increases the transactions costs associated with replacing lost firearms. Rather than replacing them all in one transaction, the individual must return to the dealer five additional times. This makes as much sense as going to the grocery store every day of the week when you could have purchased everything for the week in one trip.

One gun per month restrictions accomplish as much as "one car per month" restrictions would, and are equally, if not more, absurd.

*Not all states have a 'one-gun-a-month' restriction, but there has been vocal support for making this a federal law.

Monday, September 19, 2005

Owning Your Time

A dusk-to-dawn curfew is in effect in New Orleans, in an attempt to make up for the law and order that government did not provide earlier.

It might seem like a minor issue on the surface, but instituting a curfew has some strong implications. If someone else has the ability to tell you how to spend your time (or how not to spend your time), your time is no longer yours.

When you go to work, you sell rights to restricted amounts of your time. Given that most employment is 'at will,' meaning it can be terminated by either party at any time for any reason, one has the right to end the ongoing sale of his time as well. If an employee enters a contract promising a year of service to his company, he has agreed to sell at least a year of his time. In exchange for your time, your employer gives you money at an agreed upon rate.

Curfews are not contracts. There is no compensation for the lost time, the time when your duty is to remain in your home when you may have assessed that a better use of your time existed elsewhere. Regardless of the reasoning, a curfew is simply a measure that steals your right to your time.

Sunday, September 18, 2005

An Anniversary Worth Remembering

Yesterday was the anniversary of the adoption of the U.S. Constitution (September 17th 1787) by a convention of states. Ratification was not complete until June of the following year. In the 200+ years of its existence, it has only been amended 18 times.

As much as the founders were able to anticipate abuses of power, and as carefully worded as the Constitution is, we've still departed from its original intent. To avoid any further misinterpretation of the Constitution, I have two small changes to propose:
  1. Remove the phrase "promote the general Welfare" at the beginning. It has become popular to believe that government's purpose is to make laws promoting the "general welfare," rather than that the purpose of writing a constitution which limited central government was to promote the general welfare.
  2. Remove the commerce clause, which allows the federal government "[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes," or alter it so that its meaning is not so easily distorted. The commerce clause allows for the federal government to regulate interstate commerce (not intrastate commerce) - which was subsequently interpreted to allow federal government to place any regulations it desires on any activity that might affect interstate trade. Its purpose was to allow the federal government to prevent states from creating barriers to trade with other states (e.g. taxing goods that come from other states). It has been the justification for many rulings, including a recent case which upheld federal restrictions on medical marijuana, regardless of whether it was legal in individual states. It was misused in a 1942 Supreme Court ruling (Wickard v. Fillburn) which allowed for regulating a small farmer's harvest of wheat, which he did not sell but used only for himself and his household. The court ruled against Fillburn, reasoning that although Fillburn grew wheat only for himself and did not sell it to other states, his activity"may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce, and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.'"
Note that my proposed "changes" are merely changes to the wording and not the original intent. The Constitution was intended to limit government, not to be used as a tool to manipulate law and expand federal power.

Saturday, September 17, 2005

Pledging Allegiance

I recited the pledge of allegiance on my first day at a public school, repeating the words mindlessly and putting my hand over my heart as the teacher had instructed. No one informed me that I had the right to not say the pledge, and certainly no one told me how ridiculous it was to pledge my allegiance, my loyalty, to government. Government is an institution that exists only to protect my rights to life, liberty and property. Shouldn't it be pledging its allegiance to me, and not the other way around?

Instead, we're quibbling over the phrase "under God," a phrase which provides an exit clause for many who believe in God: when the government is in conflict with God, their allegiance remains with God, not with government. Some religions prohibit any oath of loyalty to the state, regardless of whether they simultaneously state that their loyalty is dissolved when the state makes laws prohibiting their religious practice. Maybe politicians and judges should read the Declaration of Independence:



The Declaration, containing references to God, morality, Providence and principles, was about absolving people of allegiance to government. It was not intended to replace the British rule and demand allegiance to a new government.

Rather than arguing over the phrase, "under God," maybe we should be addressing the constitutionality of a pledge of allegiance to government. Establishing the worship of the state is no accomplishment.

Friday, September 16, 2005

Do We Really Want an Investigation?

I keep hearing on the news and radio that people are demanding a full-scale investigation into why the government response to Hurricane Katrina was so poor. People should be held accountable for their actions, but my faith in government conducting a thorough investigation of government is a bit lacking. Combine that with the cost of an investigation and I'm pretty sure it's not such a great deal after all.

So why do we demand investigations?

Truth be told, I don't think we really do. When we voice our "demands" without taking into account the costs and benefits of those demands, we're only expressing wishes unconstrained by our willingness to pay.

For example, if I were asked whether I'd like a brand new Ferrari, I'd say yes. This is a wish that does not take into account the cost of the Ferrari. However, if I were at the dealership and they handed me a piece of paper to sign stating that I wanted the car, I'd say no. Why? Did I lie the first time when I said I wanted a Ferrari? There exists a price where I would be willing to purchase a Ferrari (e.g. my desire for a Ferrari can be valued at some amount), but at prices above that, I am not willing to make the tradeoff. When I choose to keep my money and not buy the Ferrari, I am effectively saying that I would rather keep my money to buy other things of more value to me.

Still, I'd rather see a brand new Ferrari in my driveway than a politician getting a slap on the wrist.

Thursday, September 15, 2005

More Money?

What a surprise. The federal government needs more money.

Much like the adolescent who aspires to buy a car, spends his allowance on movies with his friends, and later runs back to his parents saying he just doesn't have enough money. A parent should be wise enough to say, "If you want to buy a car, you'll just have to cut back on other expenditures. Maybe movies with your friends aren't worth the cost to you right now."

A taxpayer should be wise enough to say, "If you can't manage what I've already given you, why do you deserve more?" As I pointed out in an earlier post, FEMA had enough money to put at least 700 firefighters through an eight-hour course on sexual harassment and discrimination upon the firefighters' arrival in New Orleans. If it didn't use those resources wisely, how does unfettered access to your wallet give them a greater incentive to do so?

When the initial request was for 10.5 billion, I knew it wouldn't last long, especially considering that as of September 3rd, "FEMA ha[d] been spending $500 million a day on disaster relief," and today "emergency expenditures soar -- with new commitments as high as $2 billion a day." Had we continued with the $500 million per day, we would have finished spending that in 25 days.

Putting the expenditures in perspective, "Since Katrina struck, Congress has already spent $62.3 billion, dwarfing the inflation-adjusted $17.8 billion that Congress spent on hurricanes Andrew, Iniki and Omar, which struck in 1992, and the $15.2 billion emergency appropriation for the Northridge, Calif., earthquake of 1994. The entire Persian Gulf War of 1991 cost less than $83 billion in today's dollars."

Just keep giving them more and they will keep demanding more.

Wednesday, September 14, 2005

Three "Simple" Questions

Here's a survey:
1) How would you rate the federal government's response to Katrina: good/very good, poor/very poor?

2) Do you approve of the way President Bush is handling the economy?

3) Do you believe the President is doing a good job of handling gas prices?

(Questions are from a CNN/USA Today/Gallup poll)

According to the report, "36 percent said 'good' or 'very good' while 63 percent said 'poor' or 'very poor'" with regard to the federal government's response to Katrina. But this information is useless for making any policy determination. My answer to the first question would be 'very poor' -- and I would be grouped with those who would have the federal government more involved and spending more than few billion per day than it already is. So if I answer 'very poor,' many people will think that I am saying the government should have done more, when in fact I wish the government had done less and stayed out of the way.

Question #2 is poorly phrased. How does a person "handle the economy?" What does this even mean? It implies that "handling the economy" is the job of a president.

The same issue arises with question #3. "Do you believe the President is doing a good job of handling gas prices?" How does a President "handle gas prices?" Price controls and anti-price-gouging laws? Eliminating the restrictions on building new refineries? Should the President even be involved in determining what the "fair price" is?

The questions are overly simplistic, but simple as they seem, make broad assumptions about the role of government. How could anyone look at the answers and make any meaningful determination of the opinions of those surveyed?

How would you answer a survey like this?

Tuesday, September 13, 2005





When did this calamity happen? It hasn't—yet. But the doomsday scenario is not far-fetched. The Federal Emergency Management Agency lists a hurricane strike on New Orleans as one of the most dire threats to the nation ..." from a National Geographic article in October 2004, almost a year prior to Hurricane Katrina.

It is nice to think that there is some big wonderful organization there to protect you from harm, just as it is nice believe that 'snake oil' can cure all your ailments. Both are myths. Like snake oil salesmen, politicians have offered countless benefits to their constituents, and like snake oil salesmen, they know better than to offer a guarantee.

The above photograph (from Dept. of Commerce) is not a black and white photo of New Orleans today, but one from 1927, when flooding was throughout New Orleans, Mississippi, Arkansas, Illinois and affected other states to the north and east. Over 700,000 people were displaced from the flooding. But we didn't see widespread looting or people relying heavily on government to save them. They weren't handed $2000 debit cards to get food and clean water. People were somewhat self-sufficient in spite of their adverse circumstances. Yet the billions of dollars government has already spent have failed to make people significantly better off had they not relied on government in the first place.

Monday, September 12, 2005

Blaming Red Herrings

Kanye West, Rev. Jesse Jackson and others do not speak for all of the black community when they blame racism for the government's response. "The mayor failed in his duty to evacuate and protect the people of New Orleans. ... The truth is, black people died not because of President Bush or racism, they died because of their unhealthy dependence on the government and the incompetence of Mayor Ray Nagin and Governor Kathleen Blanco," Reverend Jesse Lee Peterson, founder and president of the Brotherhood Organization of a New Destiny, was quoted in a recent Washington Times article.

Throwing red herrings into the 'blame equation' is always a good tactic - for those who want to avoid blame, but deserve it. Rev. Peterson is right. People died because of their unhealthy dependence on a government that does not properly allocate resources and does not get things done quickly. It is undeniable that many people in government were counterproductive before, during and after Katrina. Yet government organizations that stood in the way of helping people have been given more tax dollars, and will continue to ask for more funding so they can "better respond to future tragic events." They will couple the tragedy in New Orleans with their obvious incompetence and claim that, if they had more money, they could do better next time.

When a private company fails to deliver a satisfactory product or service, they offer a refund. When government fails, it asks for more money.

Sunday, September 11, 2005

The Power of Private Enterprise

This is the best detail of the flooding in New Orleans that I have found ... and no surprise, it was compiled by a private entity.

Flood Map of New Orleans from CC Technologies, via WorldNetDaily.

Saturday, September 10, 2005


Here's a story you may not have heard. FEMA asked for firefighters from around the country, highly trained in search & rescue and tactical medicine and capable of living in austere conditions -- firefighters whose valuable skills could help rescue those still trapped in New Orleans. According to reports, at least 700 firefighters responded and went to New Orleans.

However, they didn't start a rescue mission right away. Their "first task was an eight-hour course on sexual harassment and equal opportunity employment procedures." In a society that condemns "discrimination" over incompetence and idiocy, when it was faced with conducting training to avoid potentially being accused of insensitivity, harassment, or racism, versus actually saving lives, FEMA opted for the first. Of course, they were only following the federal regulations brought to us by the EEOC that require strict compliance with all EEOC regulations? How ironic that in times of emergency we often talk about giving up some of our rights, yet the government never offers to give up any of its regulations. Instead of saving lives, approximately 700 firefighters were stuck in a room watching Power Point presentations like these.

That's not the end of the story. It gets worse.

Government, displaying its uncanny ability to put resources to their best and highest use (as it so claimed in Kelo v. New London), told firefighters of their assignment: distributing flyers. "'Our job was to advertise a phone number for FEMA,' said Portage Assistant Fire Chief Bill Lundy ... 'We're trained in tactical medicine,' Lundy said. 'We weren't being used for that. We were being used to hand out flyers.'"

In the understatement of the year, their boss, Portage Fire Chief Tim Sosby, said, "It seemed like an incredible misuse of valuable resources."

The firefighters went home.

Friday, September 09, 2005

Speculation & Volatility

A common misperception is that speculation causes price volatility to increase; that is, spikes and drops in prices become more pronounced with increased speculation. It is true that we observe a positive correlation between increased speculation and price volatility. Usually speculation in futures markets and other derivatives precede the rise or fall in prices. However, the jump from correlation to causation is not to be made simply on the basis of which came first, thereby committing the post hoc ergo propter hoc (lit. "after this, therefore because of this") fallacy. If we use econometric analysis and run regressions that include both speculation and volatility as explanatory variables, we encounter the problem of multicollinearity* that prohibits us from drawing any statistical inference from the data; however, identifying the varying external causes of both speculation and volatility in order to test for correlation is also a challenge because many causes exist and causes may be different for each case. With the rising and falling gas prices, many people have blamed speculation and the existence of futures markets for creating this volatility. In doing so, they have ignored the fundamental causes of both speculation and market volatility. The prior knowledge or expectation of a significant rise or fall in prices (enough to cover transactions costs at minimum) is what causes speculation. That is, if I have reason to believe that the price of computers will increase twofold in the next week, I will approach a supplier of computers and ask if I may make a contract to purchase one thousand computers next week at a price higher than today's price, but lower than what I anticipate next week's price to be. I don't put a lot of money behind my bets unless I'm pretty sure they are right, so I'm not going to make this contract based on a pure guess. Instead, I might know that a report will come out stating that computers make children ten times smarter, thereby increasing parents' demand for computers. When the price of computers is high next week, am I to blame? Of course not. Assuming I hold the contract for delivery** rather than selling it earlier for a profit, I will have a thousand computers that I want to sell. If I charge the same price as everyone else, they might not sell as quickly as I'd like (I don't have room for a thousand computers in my house), so I charge less than my competitors. In doing so, I have actually decreased price volatility from where it would have been.

But suppose the scientists who originally drafted the report recognized that they had made a calculation error and what they meant to say was that computers cause children to lose focus on their homework and obtain poor grades in school. The existence of my futures contract didn't affect the price of computers, but the supplier with whom I made the contract is happy. I have acted as an insurance and reduced his loss on computers by my contract to purchase them at a higher price than he would have received otherwise.

Based on the nature of speculation, it is more likely that speculation reduces volatility from what it would have been had no speculation occurred. Speculation mitigates the volatility caused by other factors, such as hurricanes and reports that computers make your child smarter/less studious.

* Multicollinearity results when two explanatory variables are related and occurs in varying degrees; perfect collinearity (generally theoretical), and near-perfect or high multicollinearity distort the regression analysis.
**Forward or futures contracts are rarely held in order to acquire the good; rather they are held to close a position or hedge another investment.

Thursday, September 08, 2005

The Problem with Polls

CNN published a poll in which it says that,

"Fifty-six percent of 609 adults polled by telephone September 5-6 said they believe the hurricane devastated the city beyond repair. And 93 percent of poll respondents said they believe Katrina is the worst natural disaster to strike the United States in their lifetime.

But a majority of respondents -- 63 percent -- said they believe the city should rebuild. And 66 percent said they believe all New Orleans residents should evacuate the city.

Opinions varied widely, however, on the response of federal, state and local officials regarding Katrina. Forty-two percent of respondents characterized President Bush's response to the disaster as "bad" or "terrible," while 35 percent said it was "good" or "great."

Federal government agencies' response was described as "bad" or "terrible" by 42 percent, and "good" or "great" by 35 percent. State and local officials' response was described as "bad" or "terrible" by 35 percent and "good" or "great" by 37 percent.


These are some of the most inconsistent statements I've seen. If 56% believe that New Orleans is "beyond repair," meaning that it cannot be repaired, how can 63% be in favor of rebuilding it? Perhaps the definition of "beyond repair" is a little vague. Suppose that "beyond repair" means that it would cost more than it is worth to rebuild. In that definition we have also negated reason to rebuild, so we should not expect more than 44% to be in favor of rebuilding. How can we explain the 19% difference? Or by "beyond repair" are we simply differentiating between repairing and replacing? If that were the case, it would seem fairly obvious that many homes would be more costly to repair than to replace; were that the universally accepted definition of "beyond repair" I would have expected more than 56% of respondents to have answered yes.

Maybe more than 63% are in favor of New Orleans being rebuilt -- but which parts of the city and by whom? The article said that the question was phrased, "should the city rebuild?" By "city" do they mean the government? individuals who resided in New Orleans? private companies? charities? A different set of answers might have been obtained had the question been more specific.

The conclusions are virtually meaningless without background on why the respondents chose the responses they did and what they meant by their responses. We can neither explain nor understand the responses to polls like this one without also knowing the reasoning that holds the responses together.

Wednesday, September 07, 2005

"Law Gouging"

It should seem pretty obvious to most people, but oil companies sell oil. Oil companies are not non-profit institutions or charities. Their only goal is to obtain the highest profit possible.

But some politicians believe that oil companies have a different job and make statements similar to the following:
"There are growing concerns that oil companies are making too much in profits at the expense of consumers," said Sen. Pete Domenici, R-N.M. (CNN article)

I'm glad that they are. It means the oil companies are doing their job -- nothing more, nothing less.

The problem that politicians fail to answer is what profit is not at the "expense of the consumer" and how much is "too much" profit? Oil companies are not able to charge any price they want. They are constrained by demand. It doesn't matter if oil companies are a single monopoly, an oligopoly, a price taker or price seeker; they will only charge what people are willing to pay. If they decide to raise their price too much, they will notice a drop in profit and will lower the price to increase revenue. When politicians allege "price gouging," they ignore a few fundamental economic principles and principles of property rights. 1) No company has to be in business. For whatever reason, a company always has the right to close its doors and stop selling its goods or services. 2) Companies are in business to make as much money as possible. They are not in the charity business and their only "social responsibility" is to make profit. Any charity a business conducts is of its choosing, and not out of obligation. 3) Companies always operate as profit maximizers. When we observe a change in price in a profit-maximizing firm, it is a reflection of a change in demand. It doesn't mean that the company cared about consumers before, but has now become greedy. The company always wanted the consumers' money and as much as it could get. 4) Consumers do not have to buy _________ (fill in the blank, because any good fits). For example, consumers do not have to buy gasoline for their cars, but do so because it is cheaper than walking or moving closer to their office. Any transaction between companies and consumers is voluntary.

Here's the irony: the same politicians that criticize oil companies for profiting from voluntary transactions don't make the same harsh judgments about farm subsidies. Why don't we hear them say, "There are growing concerns that farmers are making too much in profits at the expense of taxpayers" -- the taxpayers who did not want their money taken and given to farmers and who received no goods in exchange? Yet in the same article from which the first quote was taken,

"Grassley, R-Iowa, said he favors loan relief for farmers whose grain harvest may not reach market on schedule because of difficulties at the New Orleans port. Sen. Max Baucus, D-Mont., called for help with Medicaid costs in states that take in storm victims. Sen. Ted Stevens, R-Alaska, said he favors tax relief for airlines hard hit by a spike in fuel costs.


Price gouging? Maybe we should be talking about law gouging. It sounds like oil companies aren't the only ones taking advantage of the recent disaster in New Orleans and Mississippi, as politicians seek more and more tax dollars and new policies. Rather than fearing profits made by oil companies, maybe there should be "growing concerns that politicians are making too many laws at the expense of consumers and taxpayers."

Tuesday, September 06, 2005


People have alleged that the lack of adequate response in New Orleans is because of racism, citing that a substantial percentage of people in New Orleans are black and low-income. In contrast, they say, if the population was predominantly white, government response would have been much better. Kanye West claimed that, "George Bush doesn't care about black people!" We heard the usual cries of racism from Jesse Jackson, who "questioned why Bush has not named blacks to top positions in the federal response to the disaster, particularly when the majority of victims remaining stranded in New Orleans are black: 'How can blacks be locked out of the leadership, and trapped in the suffering?'"

I've been highly critical of government's response;however, I'm not so naive as to believe the response would have been better if the residents of New Orleans were mostly white. I'm first in line to criticize our President when he endorses unsound policy or makes statements of economic ignorance, but there's no evidence to suggest that he is racist and "doesn't care about black people."

President George W. Bush was the first and only President to appoint a black man, Colin Powell, to United States Secretary of State, who "became the highest ranking African American government official in the history of the United States."[1] He was the first and only to appoint a black woman, Condoleezza Rice to the same position as Powell's successor. "Doesn't care about black people" doesn't make sense.

It's easy to make charges of racism and ignore the real issues. Most of the problems with government response are because of inherent flaws in government itself. People who want to help out are prohibited by government regulations, FEMA has made unnecessary requirements that cause unnecessary delays, and somehow the Humane Society has permission to be in New Orleans, but the Red Cross does not. Politicians simply don't know how to get things done, but they insist on taking the responsibility away from those who are better equipped to handle the job. What we have seen is government doing what government does best - producing only regulations and delaying real progress.

Monday, September 05, 2005

People v. Animals

I'm as much of an animal lover as anyone else, but this is sickening.

Animal Planet has started requesting donations to help those harmed by Hurricane Katrina ... but not for the hundreds of thousands of people, for the thousands of animals.

Thousands of animals have been killed by Hurricane Katrina, the most devastating storm to hit the United States in decades, while many others are in need of rescue, according to wildlife officials, animal shelters and humane organizations.

Wildlife officials in Louisiana, Mississippi and Alabama — the three U.S. states hit hardest by the hurricane — believe thousands of wild, farm and companion animals have perished due to storm surging and flooding from Katrina's heavy rains ...

The Louisiana Society for Prevention of Cruelty to Animals told WDSU NewsChannel that anyone caught abandoning their pets "could be charged with cruelty to animals." (emphasis added)

The Humane Society of the United States has been asking for donations to fund a "massive relief effort to rescue animals and assist their caregivers in the disaster areas," according to their Web site.

Those poor animals.

Aside from the one "casualty" pictured in the set of photos on the site (See How Katrina Has Affected Animals), the animals look to be pretty well taken care of to me. The dolphin has his own swimming pool, the cat has more shelter than many of the people in New Orleans, and the dogs don't appear to be wading through the dirty water, unlike the people who are carrying them.

Dollars donated to help animals are dollars not going to help people.

Does the Louisiana Society for Prevention of Cruelty to Animals really believe a government that has been unable to maintain any semblance of law and order in New Orleans is somehow going to be able to prosecute cases of animal cruelty? Loot all you want, but don't leave your pets home alone!

Interestingly enough, The Humane Society of the United States, claims that its "highly trained Disaster Animal Response Teams are heading to Mississippi to begin a multi-state animal rescue and recovery effort" and "38-foot Disaster Response Unit and other rescue vehicles affiliated with our teams are fully stocked and on their way." I wonder if FEMA is giving them permission to provide aid, or if they too are being turned away.

**September 05, 2005 10:42 AM**

According to The Humane Society website, "Our highly trained Disaster Animal Response Teams are in Louisiana and Mississippi coordinating a multi-state animal rescue and recovery effort. We're now in New Orleans and have rescued hundreds of animals in the hardest hit areas of Mississippi since Friday." (emphasis added)

Meanwhile, the Red Cross, as pointed out by Don Boudreaux at Cafe Hayek, is not assisting in the human rescue effort in New Orleans under orders from the National Guard.

Sunday, September 04, 2005

Chief Justice Rehnquist Dies

This morning, I learned that Chief Justice Rehnquist passed away last night from cancer that he had battled for almost a year.

Chief Justice Rehnquist served on the court since 1972 and was appointed Chief Justice by Reagan in 1986. Rehnquist was known for his advocacy of state's rights, support of religious displays in public settings and his dissent in Roe v. Wade. He sided with the minority in upholding the mandatory death penalty for 1st degree murder in North Carolina as Consitutional in Woodson v. North Carolina (July 2, 1976). In May of the same year, Rehnquist again sided with the minority in Virginia State Board of Pharmacy v. Virginia Consumer Council, where he held that a ban on advertising prices for prescription drugs was not a violation of the first amendment. However, Rehnquist did not always uphold state's rights. In 1987, he sided with the majority and against state's rights in South Dakota v. Dole, in which he claimed that it was Constitutional for Congress to deny federal highway funding for states that did not adopt a uniform drinking age of 21 as a means of encouraging states to adopt a higher minimum drinking age. In 1989, he was in the minority (5-4), in Allegheny v. ACLU. The ACLU alleged that the two displays, one of a nativity scene and the other a menorah, violated the first amendment. Rehnquist disagreed with the court's decision that Allegheny had violated the first amendment because the nativity scene endorsed Christianity, but the display of the menorah was Constitutional.

In 2000, Rehnquist delivered an opinion in Boy Scouts of America v. Dale where a scoutmaster's membership was revoked after the organization learned that he was homosexual. Rehnquist upheld the Boy Scouts' decision as acting within the law, stating that requiring them to retain Dale as a scoutmaster would violate their right to expressive association under the first amendment, and would "force the organization to send a message, both to the young members and the world, that the Boy Scouts accepts homosexual conduct as a legitimate form of behavior." In another controversial case this year, Chief Rehnquist sided with Justices O'Connor, Scalia and Thomas, the minority in Kelo v. New London, advocating a strict definition of "public use" in application of eminent domain.

Saturday, September 03, 2005

A Culture of Entitlement

I am not entitled to your labor or your property because I am limited by your rights to both. Likewise, you are not entitled to my labor or property because I have rights to both. My rights limit your claim on my life, liberty and property. I may propose an exchange between my property and property of yours which I desire, or I may ask for you to give me your property. In either case, you have every right to refuse.

A proper government enforces rights, not morality. Just because you have the right to refuse does not mean it is moral to do so. These are two separate issues. If I were able to give water and food to someone who does not have property that I desire and who will die without water and food, would it be immoral to refuse? If I were starving and others had plenty of food and water, but I had nothing of value to offer in exchange, would it be moral for me to claim their food and water? I have no rights to their food and water unless they decide to transfer those rights to me. Is it ever moral to violate their rights in order to increase my chances of survival?

Government is not intended to conduct charity, even in the form of disaster relief. Equipped with tax dollars, government has assumed this responsibility, even though it does a poor job of delivering results. People whose earnings have been taken every year for government to provide charity to others understandably criticize government for not providing charity to them after natural disasters, e.g. "They're just not doing enough." Using this reasoning, it is easy to lay claim to other people's property. It breeds a culture that does not accept charity thankfully, but believes it is entitled to charity. The crisis in New Orleans is a clear representation of this. As presented on the evening news, only a few people were asking for help; instead, people demanded help.

When the concept of rights become so distorted as to denote morality and entitlements rather than limitations on actions, people believe that they are entitled to property regardless of whether it belongs to them. People believe that their "right to life" trumps another's right to property and rationalize stealing. In confusing rights and morality, people believe that their inability to provide for themselves constitutes an obligation for others to provide for them. This "culture of entitlement" is self-destructive. By placing the burden on others, it absolves people of any responsibility to care for themselves.

Friday, September 02, 2005

The Superdome Wasn't Safe?

This isn't such shocking news when you've read my earlier post which predicted that there would be crime in the Superdome when officials prohibited individuals from bringing weapons. My prediction was right on target (pardon the pun), when I said that unattended weapons would be taken by looters. The houses that were not completely destroyed by Hurricane Katrina were completely ransacked by looters. In my earlier post, I predicted that a prohibition on weapons would cause a higher level of crime inside the Superdome. Even with military police there to ensure people were safe, many people in the Superdome faced a dangerous environment permeated with the threat of violence.

According to Dr. Charles Burnell who treated sick people inside the Superdome, "We had three murders last night. We had a total of six rapes last night. We had the day before, I think, there were three or four muders. There were half-a-dozen rapes that night. We had one suicide last night. We had one military policeman shot." Rather than remain in a dangerous environment, the doctor said, "Until I can insure that I'm not putting my life in any significantly dangerous situation as I was before - I will not be back in the Superdome."

We see violence frequently in areas where people are disarmed for the same reason that we see violence infrequently in hunting camps and gun stores. When we disarm people, we eliminate one of the more critical risk factors that a criminal considers prior to committing a crime: what is the likelihood that the person I decide to harm will kill me? An armed individual is in a unique and advantageous position to defend themselves from crime. Unlike an outsider observing what may appear to be an altercation in which the victim is not clearly identifiable, the victim knows with 100% certainty the distinction between herself and her attacker. The ability to operate a firearm requires no substantial physical strength, and often does not require marksmanship because the average distance between the victim and the attacker when a gun is used for self-defense is only around 7 feet.

The decision to disarm those seeking shelter in the Superdome likely harmed more than it helped. Irrational fears should never be substituted for rational ones.

Thursday, September 01, 2005

Price "Gouging" and Economic Ignorance

President George W. Bush was quoted as saying, "I think there ought to be zero tolerance of people breaking the law during an emergency such as this, whether it be looting, or price-gouging at the gasoline pump or taking advantage of charitable giving, or insurance fraud," in a "Good Morning America" interview.

Is "price gouging" the moral equivalent of looting or insurance fraud? Looting and insurance fraud are both stealing - there is a winner and a loser. The winner is the one who steals and the loser is the one who is stolen from. A voluntary transaction where one party exchanges dollars for goods is a win-win situation. Both parties make the exchange because both parties believe that it will make them better off.

Bush continued, saying, "I would hope Americans conserve if given a choice." Well, Mr. President, that's exactly what "price gouging" does. It encourages Americans to choose to conserve, based on how much they are willing, or unwilling, to spend on gasoline. The increase in price reflects the increased scarcity. There is high demand for a finite supply. When the price rises, the quantity demanded decreases. The higher price ensures that gasoline goes to the Americans who believe it will benefit them the most.

For example, I had planned to meet a friend who works approximately 20 miles from me. Since it is not critical for me to see her today, and with gas prices around $3.00/gallon costing me more to drive 40 miles round trip, I decided to reschedule for another time. Meeting my friend for lunch was, in my assessment, a wasteful use of gasoline. Instead of taking the scenic route home, I'll just drive the most direct route. Rather than driving to a nearby store, maybe I'll walk. However, another person may have a better use for the gasoline - to transport survivors of Hurricane Katrina to Texas, for example. The higher price of gasoline is what ensures that gasoline is available to go to its highest use. There is no need for government to determine who has the greatest need for gasoline when the price system does just that. People who genuinely "need" gasoline should be thankful for so-called "price-gouging."

If only politicians were economists ...