What Repayment Plan?

I occasionally find myself in agreement with liberal columnist and pundit, Michael Kinsley. He sometimes drops observational tidbits that are quite accurate, regardless of your political leanings.

So, I took note when I found Kinsley quoted in the Wall Street Journal’s opinion section, which leans generally conservative. I don’t know if Kinsley is only talking about the latest ‘stimulus’ spending or all such spending of recent months (and future months), but what he says clearly applies to the whole shebang:

“[E]ven if the stimulus is a magnificent success, the money still has to be paid back. The plan of record apparently is that we keep borrowing, spending and stimulating, faster and faster, until suddenly, on some signal from heaven or Timothy Geithner, we all stop spending and start saving in recordbreaking amounts. Oh sure, that will work.

“There is another way. If it's not the actual, secret plan, it will be an overwhelming temptation: Don't pay the money back. So far, even as one piggy bank after another astounds us with its emptiness, there have been only the faintest whispers about the possibility of an actual default by the U.S. government. Somewhat louder whispers can be heard, though, about the gradual default known as inflation. Just three or four years of currency erosion at, say, 10 percent a year would slice the real value of our debt -- public and private, U.S. bonds and jumbo mortgages -- in half.

“Anyone who regards the prospect of double-digit inflation with insouciance is either too young to have lived through it the last time (the late 1970s) or too old to remember. Among other problems, inflation works only as a surprise or betrayal. It can never be part of any public, official plan. Plan for 10 percent inflation, and you'll get 20. Plan for 20 and you'll need a wheelbarrow to pay for your morning Starbucks. But if that's not the plan, what is?”

A worthy question indeed. Every American should be asking it.

Techies and Their Managers

I work in an organization of professionals that are very intelligent, well educated, and good at what they do. That does not mean that it is problem free, but it is generally a decent work environment.

Most (not all) of the managers in this organization originally worked in the same kind of technical positions that they currently manage. With rare exception, these techies-cum-managers change their nature one they are in management.

To the techies, this change is Dilbert-esque or even sinister. It seems as if their once-human colleagues have morphed to become one of ‘THEM.’ In fact, these managers have taken on a new role that requires them to view the business quite differently.

Interestingly, many of the highly intelligent technical folks have difficulty comprehending the leadership view. They feel that their general intelligence level automatically translates to an objective view of the business. Often, however, they are so deep in their specialty niches that they cannot bring themselves to grasp the broader view. They can hear and say the words, but the meaning is apparently lost on them.

This was evident in a recent meeting. A group of technical professionals was very upset about being required to use an application that their analysis revealed was inferior to the one they currently use for the same purpose. Mostly, they felt that management had ignored their professional concerns in the decision making process. In fact, management was simply considering a much broader set of goals.

This does not mean that management was right or that they handled the situation properly. But when the bigger picture became more apparent, many of the technical people seemed incapable of comprehending it, preferring instead to keep looking at only a small piece.

My master degree program was half computer science and half MBA. Having received fairly deep training in both technical matters and management theory, and having worked at various levels in different organizations, I have some appreciation for the demands, views, and incentives that drive both technical professionals and their managers.

Management is not nearly as idiotic as depicted in Dilbert. But Dilbert would not be so consistently humorous were there not some truth behind the portrayal. Managers too can become so distanced from the functions they manage that they do a lousy job of leading. Sometimes they are placed in situations with competing demands. The result can seem bizarre to the workers.

In reality, the techies and the managers are simply responding to different sets of incentives. Techies are looking out for what they believe to be best for the business from their view inside their niche, while managers are trying to do what is best from a different vantage point. The former techies that remain too deep in technical pursuits usually make poor managers, because they never rise to the business view required of a manager.

Due to the incentives and viewpoints inherent in the jobs being done, most professional technical organizations simply cannot function without someone taking the leadership role and understanding the leadership perspective.

I don’t expect my technical colleagues to blindly accept anything management does. Heaven knows that my organization’s managers have made their fair share of blunders. But it would be nice if my associates would at least take a step back when management appears to do something harebrained and realize that there are probably bigger issues at stake, as opposed to automatically erecting the us-vs.-them wall.

Healthy vs. Unhealthy Risk

Could part of the reason for the banking meltdown be the corporate structure of the banks involved? James K. Glassman and William T. Nolan think so. They lay out their case in this WSJ op-ed piece.

They believe that the move from a partnership structure in banks to a corporate structure over the past quarter century led to unhealthy risk taking. While risk taking is essential in any vibrant economy, too much of the wrong kind of risk eventually leads to serious problems — problems that “expose the rest of society to your failures.”

In the case of banking, current and past examples show that partnerships behave in a fiscally conservative manner. Glassman and Nolan offer Brown Brothers Harriman & Co, the nation’s largest and oldest private banking partnership as an emblem of responsibility and stability.

On the other hand, banking corporations tend to take unhealthy risks. Essentially, the managers figure that if something goes wrong, it’s the shareholder’s problem. They have already taken steps to insulate their personal holdings from corporate setbacks.

The basic idea here is that risk tends to perform its proper market function when it is tied to fairly direct accountability. Conversely, when accountability is diminished — when the people in charge of making business decisions do not bear the direct consequences for those decisions — the incentive for responsible behavior is reduced.

“[S]tructure determines behavior …,” write Glassman and Nolan. They suggest that no amount of government oversight will do for banking what a proper business structure will accomplish. They argue strongly for a return to partnership as the preferred structure for banks.

How do you get there from here? Not by governmental requirement, they say. “Rather, investors -- and governments -- should recognize the extra safety inherent in doing business with partnerships.”

The current economic crisis, where businesses and investors are scrambling to find a safe haven, provides a good opportunity for this kind of recognition. The big firms being bailed out do not offer a secure structure for doing business. So, hopefully, people will be wise enough to move to the staid and steady partnerships that offer the desired stability.

I wonder, though, what will happen once the current slump passes. When high-flying unhealthy risk takers offer a better return, will business dollars move back to the banking corporations? If so, it will prove that we have learned little from our present problems.

How Much are You Willing to Pay for News?

Modern technology has rendered the sharing of information cheaper and easier than ever before. But that doesn’t mean that all information should be given away gratis. At least that’s the argument made by Wall Street Journal tech editorialist, L. Gordon Crovitz.

The main Internet news content distribution model has been to allow unlimited access, paid for by advertising. Unfortunately, this model hasn’t functioned as well as the industry had hoped. Revenues have been falling. What can be done?

Crovitz says, “People are happy to pay for news and information however it's delivered, but only if it has real, differentiated value.”

As examples, Crovitz cites services like iTunes ($1 per song) and Amazon.com’s Kindle ($10 per book). “Beyond the Web,” he writes, “consumers pay monthly cable or satellite charges in the thousands of dollars per year.” Paid content delivered via wireless phone has also become quite popular.

Ultimately, it comes down to providing something of value. Crovitz writes:

“For years, publishers and editors have asked the wrong question: Will people pay to access my newspaper content on the Web? The right question is: What kind of journalism can my staff produce that is different and valuable enough that people will pay for it online?”

Some content suits the free access/advertising model. But clearly there is a market for the right kind of paid content.

As newspapers struggle to maintain a foothold in the market, Crovitz’s suggests that people are willing to pay for local information that makes a difference in their lives, and that local news is the one thing that city newspapers are uniquely qualified to provide.

I think Crovitz is correct, but that information must be of sufficient quality to make customers willing to part with their scarce resources for access to it. As far as my local newspaper goes, there has been a significant decline in both the quantity and quality of local content since the bygone days when I was a news carrier.

My guess is that newspapers find themselves in a Catch-22. They have steadily scaled back on reporting of local content due to declining revenues. They would need to beef up their staffs (and their staff skills) to provide the kind of content that will sell well online. But they see no way to get to that point from where they are.

I suppose that if existing newspapers don’t step up to the plate and provide sufficient worthwhile local content online that people will pay for, other outlets will eventually develop for this kind of information.

Sacrificing Liberty for Roads

As a follow-up to my last post about roads and transportation matters, I wish to note that the AP has reported that Transportation Secretary Ray LaHood wants to get more revenue to finance federal transportation infrastructure.

Although the article mentions enhancing revenues through “other funding options” such as “more tolls for highways and bridges and more government partnerships with business to finance transportation projects,” the main focus of the report is a push to charge taxes per mile driven rather than the current flat 18.4-cent per gallon gas tax. (You also pay state gas taxes per gallon: 24.5 cents in Utah.)

LaHood says that “everyone” agrees that the current “highway trust fund is an antiquated system for funding our highways.” What he means by that is that people have been buying less gas per mile driven due to more fuel efficient vehicles. When they buy less gas, they pay less gas tax. This means that government gets less revenue for roads without reducing the need to build and maintain them.

While a tax calculated on miles driven would resolve funding reductions caused by fuel efficiency, it would not solve the chief problems that led to the last year’s $8 billion shortfall. The current economic downturn has reduced actual miles driven per vehicle. Last year’s skyrocketing gas prices also reduced miles driven. So, even if we had LaHood’s tax-per-mile plan in place, it would not have made much difference in current funding.

Although the article doesn’t make it very clear, LaHood is trying to address a long-term trend rather than short-term fluctuations. While it is important that our highway funding mechanism be kept up to date with cultural and technological changes, it is also essential to consider the economic and moral costs of implementing a plan such as the one suggested by LaHood.

To charge taxes per mile driven, the government would have to know how many miles each vehicle had traveled. Assuming this could be effectively accomplished without unduly infringing on personal liberty, (a fairly broad assumption,) there would need to be an efficient tax collection methodology.

The AP writer says:

“The system would require all cars and trucks be equipped with global satellite positioning technology, a transponder, a clock and other equipment to record how many miles a vehicle was driven, whether it was driven on highways or secondary roads, and even whether it was driven during peak traffic periods or off-peak hours.

“The device would tally how much tax motorists owed depending upon their road use. Motorists would pay the amount owed when it was downloaded, probably at gas stations at first, but an alternative eventually would be needed.”

Does this sound a little Big Brother-ish to you? Not to worry. The AP reports:

“Privacy concerns are based more on perception than any actual risk …. The satellite information would be beamed one way to the car and driving information would be contained within the device on the car, with the amount of the tax due the only information that's downloaded, he said.”

Of course, gas pumps would need a way to read the data on that device. Moral hazards aside, implementing these devices on vehicles and gas pumps would not be without cost to the taxpaying consumer. Like most politicians and bureaucrats, however, LaHood seems to be blithely unconcerned about (or unaware of) these hidden taxes that would be levied directly or indirectly on everyone (since we all directly or indirectly use the highways).

The moment you install regulatory devices on automobiles — especially ones that calculate tax — people will start finding ways to subvert the devices. Then we will need to implement a corresponding policing function, thus, raising costs even more. This is a wicked spiral that will lead to restrictions on the liberty of each person.

(A low-tech workaround would be to fill up gas containers like the ones you use for filling your lawnmower, and then dump the gas into the vehicle off site. Government would then need to create restrictions on this kind of activity. Gas station attendants would be forced to become law enforcers.)

Might there not be an upside to all of this? Sure. But only if more government intrusion is welcomed. If the devices were not simply one-way devices, the ability of emergency responders to get to the scene of a crash would be enhanced. So would the ability of law enforcers to track down stolen cars and fugitives. We would first need to address the question of whether these benefits would be worth the moral hazards involved.

We have a system of federal highways that are essential to our nation’s economy and wellbeing. This kind of infrastructure does not come free of charge. Those of us that benefit from these roads — that would be all of us — have a responsibility to ante up our share for their development and maintenance. But it is essential that in devising systems to accomplish this objective, the higher goal of individual liberty be carefully guarded and maximized.

Our current gas tax system may be “antiquated.” Indeed, it may fail to adequately capture sufficient revenue to meet funding requirements. But at least it minimizes government intrusion. Businesses are tasked with collecting the federal tax on each gallon of fuel sold. The tax is collected while the taxpayers and their activities remain largely anonymous to the government.

While contemplating ways to address the long-term trend of declining revenues, let’s not throw away the best features of our current system. Let’s put liberty first on the docket instead of passing it off in some mumbling afterthought.

UPDATE: The Obama administration has nixed LaHood’s per-mile transportation tax idea, at least for now. Apparently some in Congress still want to pursue the idea, and a number of states are thinking about it as well.

Of Tolls and Private Roads

Like it or not, we have a road system that is primarily government owned and operated. Strict libertarians would like roads privatized. The private entities involved would find ways (mostly by exacting tolls) of building and maintaining roads, while also turning a profit. The argument goes that the profit motive would provide incentive for these entities to do a better job of caring for road infrastructure than government does.

This sounds intriguing, but a profit motive alone does not engender incentive for innovation, productivity, and higher quality. Fair competition is required for that to happen. For this reason, road privatization makes sense in only certain instances.

The Adams Avenue Parkway in southern Weber County is a good example of a mutually beneficial private toll road. Most of the $8.9 million construction cost came from private investors. The state put up $2 million and additional property taxes were levied on property owners along the parkway. A private company built the entire 1.6-mile stretch, and then returned all but half a mile of it to local government.

In essence, government paid less for the portion of road it kept than it would have paid to construct the road itself. The property taxes levied on adjacent property owners are no more than if government would have built the road.

Only half a mile of this road is on private property operated by a private company. The private road connects seamlessly to public roads. The $1 toll to drive that short half mile seems terribly steep. But realize that there are several other competing routes available, including major highways. The road is a convenience. No one is forced to drive on this stretch, but it can save some drivers 15-20 minutes at peak traffic times.

This road would never have been constructed by government alone, since no non-toll model would have made funding feasible. The only worry government has with this short road is maintaining the public roads that connect to it: roads government would maintain anyway.

The result is a win-win situation. Drivers that believe that their personal time saved in traffic is worth the high toll are free to use the private road. No one else has to pay for or give a second thought to the road. Since there are competing routes available, the company that owns the road has an incentive to maintain it well. Drivers on the competing routes contend with less traffic than they would otherwise, due to the fact that some drivers opt to pay the cost to drive on the toll road.

Another fairly successful model is the 10-mile long 91 Express Lanes toll highway in Los Angeles. These lanes were constructed between the existing east- and westbound lanes. Government owns the lanes and contracts with a private firm to operate and maintain them. The continuously varying toll prices, based on traffic density (demand), are displayed on electronic billboards along the stretch.

People are free to use the express lanes if they are willing to pay the toll prices — a form of willing self taxation — but they don’t have to. They can opt to drive on the more congested toll-free lanes. Once again, the people that opt to pay to drive on the express lanes relieve some congestion for those that drive on the toll-free lanes.

Still, public-private partnerships don’t always provide sufficient incentives for fair play. The private firm that initially owned the lanes negotiated a non-compete agreement that prevented the state from making significant improvements to the nearby highway for 30 years. This caused a lot of contention until a few years ago when government acquired ownership of the express lanes.

Private road ownership and/or tolling can provide transportation solutions in targeted situations, but experience shows that they can’t be successfully or efficiently implemented everywhere. As we saw with the tolling debate on the Mountain View Corridor, businesses and residents along the corridor would have been unfairly affected by full tolling because it would have raised their costs comparative to those along competing routes.

There is no one-size-fits-all transportation solution alternative. Where it would make sense to implement tolling and/or private roads, each solution must be carefully crafted to suit the conditions.

It must also be recognized that addressing our current and future transportation needs requires a broad spectrum approach. We can’t achieve what needs to be done with tax increases and public transportation improvements alone. No option should be excluded, but each option needs to be implemented where it makes the most sense and will provide the greatest cost-benefit value.

What to Do About Bad Loans

When I worked as a loan collector at a bank, we would regularly see information about every loan in the account range to which we were assigned. This included the original and current balances, terms, collateral, debtor info, resources (i.e. income) upon which repayment was based, and timeliness of payments.

One day my colleague had a new loan show up for a 20-something person that had a pricey new Corvette as collateral. To us collectors, the resources listed seemed far too meager for such a grand loan balance. It was unsurprising when the first payment came in late. Each subsequent payment was increasingly late until the loan was two months in arrears before it was five months old.

In this case, the delinquent debtor sold the Corvette and paid the entire sales price on the loan. But the car had lost more value in its young life than the decline in the loan balance over the same period. This meant that the young debtor ended up taking out a signature loan for the balance. A signature loan is a no-collateral loan with a high interest rate.

By the time this small loan was paid off two years later, the five-month lark with the sports car had exacted a very steep price from this young person. Not only had the debtor been taught a painful lesson, the loan officer received some counseling about the matter as well.

When you get a car loan, you agree in the contract that the collateral is worth the amount being loaned, and that you will make the specified payments on schedule regardless of what happens to the value of the collateral. Most contracts specify that if the collateral falls below a certain percentage of the loan balance, the lender may raise the rate to reflect the increased risk they are taking or may require immediate payment of the full balance. (That usually happens via refinancing, but not always.)

What happens when a person incurs a house loan for which he has insufficient resources to repay? In the past, it has usually meant selling the home or having the loan foreclosed on. Today it is estimated that some nine million home occupiers (I hesitate to use the term homeowner) have outstanding loan balances that significantly exceed both the value of the home they occupy and their ability to repay the loan.

To make matters worse, many of these people couldn’t sell their home for any reasonable price, due to market conditions generally and locally. The remaining option for these people is foreclosure. Most of them would end up renting for years to come, but it is possible that some of them could actually afford to buy a lower tier foreclosed home.

Politicians eager to appear compassionate have decided to thwart this market mechanism in multiple ways, beginning last fall. (Since they bear some culpability in the matter, some action may be warranted.) The latest $75 billion (could end up being as much as $85 billion) installment would permanently enslave many people in homes they still won’t be able to afford and in which they likely will never develop equity. It will be like renting, but with shackles that prevent them from looking for other rental options. The banks and the government will be the de facto landlords, but without the rights that regular landlords enjoy.

If this latest plan were applied to cars, the Corvette buyer mentioned above would have been forced to keep the Corvette instead of getting into something more affordable. Also, if you think renters are bad, people that feel like they’re over a barrel and stuck in a home in which they have no equity are famously horrid at caring for the place. So, not only will their more responsible neighbors be forced to help keep them in an unaffordable home, these same neighbors will see their property values decline due to the ill kept homes in the neighborhood.

Instead of putting taxpayer money into a plan that tries to keep people shackled to homes they can’t afford and that they don’t own, a better program would be to help these people transition to more affordable dwellings and liquidate the vacated homes at rates the market will bear. This would not be without pain to individuals and institutions, but it would be better than what we are doing.

Good Question

What kind of government does the United States have? What kind of government do our legitimate foundational documents say we have?

How much do the answers to the previous two questions differ? Why? What is good about that and what is not?

If the government we have differs from the form described in our legimitate documents, what direction are we headed? Where does that direction lead us?

This video addresses the question of what kind of government we legally have and describes the ultimate destination of other governmental forms.

Not All Republicans Believe In Limited Government

After I cited a report last month that Jeb Bush was considering a run for the U.S. Senate, it turned out to only be a rumor. The Wall Street Journal reports on an interview with Mr. Bush, where he says that he’d be happy to never run for another political office. Bush has the advantage of having concluded two successful terms as Florida’s governor just before the economy went down the tubes.

Bush talks about what he thinks the Republican Party needs to do to regain its footing. Although he defends his brother’s presidential record, he says, “I think the one common thread throughout all these strains of conservative thinking and Republicanism is limited government. If we don't have that in common, what else do we have?”

But there is a distinct ‘moderate’ segment of the GOP that argues in favor of a big government approach. They want more of George W. Bush’s “compassionate conservatism.” People want government that helps them address real life problems, they say. These moderates insist (not without evidence) that the party has already embraced big governmentism. All that remains is for the party to align its rhetoric with its behavior.

Jeb Bush has demonstrated that conservative approaches to government can work. He thinks the GOP needs to apply these principles in California to show that smaller government can be effective. Good luck on that. California voters have demonstrated a durable unwillingness to align their expectations with the ability and readiness to pay for them.

An example of the kind of policy Jeb Bush likes is Sweden’s voucherized primary and secondary education system. Education “is not based on seat time,” says Mr. Bush. “It's whether you accomplished the task. Now we're like GM in its heyday of mass production. We don't have a flourishing education system that's customized.” He notes that Sweden’s system serves children from extremely varied backgrounds (including recent immigrants) quite well.

Mr. Bush says the GOP needs to focus on the states, because it’s much easier to accomplish things at the state level. He seems to somewhat advocate a states vs. Washington approach. Unfortunately, most states today are very happy lobbying Washington for more money and more favors. They seem to be willing to accept the burdens that come with federal cash.

Many of Mr. Bush’s ideas sound intriguing. Still, it’s difficult to see them coming to fruition in a country that appears to be moving rapidly in the opposite direction. On the other hand, from his own experience, Bush advocates a long-term approach. That might work.

But Mr. Bush is wrong about all Republicans espousing limited government principles. The current situation is not without its parallels. After the failed Goldwater candidacy, many Republicans dropped small governmentism like a hot potato. It took a dedicated Ronald Reagan to make small government ideals vogue again (against the wishes of the strong moderate wing of the party).

It will take Americans becoming broadly dissatisfied with big government bungling and intrusion before they decide to tack back the other direction for a while. That learning period might take some time, because the effects of government policies often become apparent only after a few years of application. And because each generation needs to be burned before they gain a full grasp of the danger of fire.

Gotta Win

The more I watch politics, the more I am amused and disappointed by myopic ideologues. They are all over the blogosphere. These people remind me of team-aligned sports fans. Their ‘team’ is always right and the opposing teams are always wrong. Even when their team loses, their team is still right.

I wrote a while back about my inability to comprehend sports fanaticism.

“I can’t remotely fathom the value of rooting for, aligning myself with, buying promotional paraphernalia for, or wearing clothing with logos of any sports team whatsoever. I mean, these people are playing a GAME, for Pete’s sake. … How does it make one iota of difference in reality whether they win or lose a game or a season?”

Politics is different. The outcomes of political contests can actually make substantive differences in our lives. It is for that reason that politics needs to be regarded far more seriously — and objectively — than sports.

I have watched all of the political factions and all of the political parties for years. None of them is always right. None of them has a plan that, if followed, would result in the kind of society we’d all prefer to live in.

Still, there are those that turn politics into a win-lose game. There is no possibility of win-win for these people. Their side is right, no matter what it says or does. Any opposing thoughts are to be crushed with convincing passion. They MUST WIN, at all costs.

Nowhere is this ridiculous and childish attitude more prevalent than in the blogosphere. There are many that learn nothing of value from reading viewpoints that differ from their own. Their prime directive is to dump arrogant, narrow-minded comments wherever possible.

They click the post button and sit back smugly satisfied at having demonstrated their sheer brilliance, completely blind to any other possibilities. They go on the offensive, apparently fearful that opening their minds a smidgen might erode their faith in their own political views.

The blogosphere allows ideologues from different factions to snipe back and forth at each other, generating much heat but little light. These snipers cherish the thrill of the fight, much like sports fanatics love the action of the game, behaving like deranged toddlers in response to events on the field.

While this kind of glop is titillating for like-minded people and for opposing debaters, it is incredibly boorish to everyone else. Many political bloggers consider themselves highly enlightened, when they are actually just being jerks.

I’m not completely clean in this matter. But I hope I’m learning.

By the way, nobody ever did step up to my challenge “to effectively explain in an objective manner why our academic institutions should sponsor semi-pro sports teams ... [and] why even one cent of taxpayer money should fund this type of entertainment.” That invitation is still open.

Klondike Heroes

Over this past weekend, I ran our Boy Scout district’s Klondike Derby winter campout. While I have attended Klondike many times over the years, this is my third season heading up the event.

We were favored with a 24-hour window of very fine weather this time. While it rained in the valleys on Friday morning, our venue was getting new snow. That all stopped early in the afternoon. Unlike other years, a county crew came by and plowed the parking area before groups started arriving. The evening temperatures were nice, although, it did get quite chilly overnight. In the morning a few clouds moved in, but temperatures again became quite pleasant. There was nary a breath of wind throughout the event. You can’t hope for better than that on a winter campout.

This year’s event produced a record turnout. We had more than a one-third increase in attendance over last year. As has traditionally been the case, attendees included almost exactly two-thirds boys and one-third men. It is amazing to see so many fathers come and camp in the snow with their boys. Many of these guys are not in Scouting positions, and many of them aren’t real outdoorsmen. They are just there to support their sons.

My staff did a wonderful job. We have a great district Scout executive that attended the event and handled registration. The Order of the Arrow took care of our opening ceremonies. Leaders from eight of the zones in our district came out and ran the Scoutcraft events. Our health and safety chairman managed unloading and parking along with a crew of volunteers.

The boys hardly pay any attention to all of these adult volunteers, unless they otherwise know them. The youth are still too callow to know or care about the sacrifices these people are making to provide this adventure for them. I know this, because I was once one of those boys that didn’t have a clue about such things.

I’m grateful for the volunteers that staff these events. But in my mind, the real heroes are the scoutmasters. Having been a scoutmaster, I know what these guys do. They work directly with the boys week after week. They train the boys, try to make sure they have adequate gear, get them to the event, keep them safe and on task during the event, and get them home again.

It is the scoutmasters that do the hard work of helping boys construct safe snow shelters. I have learned over the years that one winter camp overnighter takes as much work — preparation, setup, teardown, cleanup, etc — as does going to a weeklong summer camp. Winter camping is hard work for a scoutmaster.

When a boy is crying during the night that he’s cold and wants to go home, it’s the scoutmaster that is out of his warm sleeping bag and handling the situation. When a boy is having troubles cooking his dinner in the winter conditions, it’s the scoutmaster that painstakingly helps the boy learn what to do. When a boy is out wandering around camp in the dark throwing snowballs, it’s the scoutmaster that worries about getting him safely back to the campsite. They are the ones that get up periodically during the night to make sure that the boys are safe in their shelters.

Most of the scoutmasters in my district wear many hats. Regardless of what the manual says about it, these guys store and haul the troop gear. They are the ones that mostly handle advancement issues. They arrange for transportation and manage the troop finances. Here and there you occasionally find a functioning unit committee that takes care of some of these matters. But that’s a rarity.

I salute these scoutmaster heroes. I personally know a number of the scoutmasters in my district. I think of my friend Ken, who still manages to do a great job in his position, although, his wife is currently struggling with breast cancer treatments. I think of my friend Vince, who has a houseful of little kids at home; none of which are yet old enough to attend Scouting events. I think of my friend Mike, who is in a PTA-sponsored unit and deals with many issues that his colleagues in LDS-sponsored units don’t face. I think of my friend Lloyd, who keeps on doing this job 100%+ year after year after year. I think of my friend Kent, who continues to serve as scoutmaster, even after being diagnosed with Multiple Sclerosis last year.

These men, and many more like them, are my heroes. And so are their wives. Many of them do a load of work to support their husband scoutmasters. Then they take care of the home and family while their husbands are out providing adventures and learning experiences for boys. These people that demonstrate happiness in unselfish service to others are my heroes. Thank God that there are such people in the world today.

Congress Cuts Its Own Pay - sort of

I recently wrote about Utah legislators cutting their own pay by 10%. Congress has gotten the message that something like that would be a politically savvy move, given the current state of the economy (see SL-Trib article). Congress is opting to forego its automatic annual pay raise next year. (That won’t stop them from otherwise spending taxpayer money like drunken sailors.)

Rep. Jim Matheson (D-UT) has long been an opponent of Congress’ automatic pay increase. Every term since coming to office he has introduced legislation that would do away with this “secretive pay system” in favor of an actual public person-by-person vote on the matter. This, he says, would introduce true accountability, because constituents would know how each federal legislator voted on the matter. And every term (regardless of which party has been in control), Matheson’s proposal has been panned.

The fact that Congress isn’t going to take the automatic increase for one year doesn’t mean that Matheson’s perennial proposal has gained any ground among his congressional colleagues. Most of them see the current measure as a way to bolster their political standing with voters. Few of them are interested in actually being accountable for setting their own pay.

Still, Matheson persists. Each time he receives an automatic pay raise, he donates the increase to charity that year. Even this is somewhat of a political stunt, because he keeps that amount the following year, meaning that he is perpetually one year behind his colleagues on the congressional pay scale. But each year he does put his money where his mouth is. This year, it cost him $4,700.

It would be wonderful if Matheson’s vote-for-each-raise proposal were to actually get some serious consideration. Perhaps it would be a good idea to make a candidate’s support of this concept one of the criteria we use when deciding whether she/he deserves our support or not.

Debt Attitudes

When I was in my early 20s I worked at a bank in a variety of positions. At one point I became a branch operations manager. When the branch manager was training me, he told that during the 60s they had a small sign in the window of the bank. It was positioned away from other larger signs that promoted actual bank products because it was intended as a joke. The sign read, “Come in and get a loan to pay off all your debts.”

When the sign was first put up, everyone understood the humor behind the message. But after a few years, they ended up having to remove the sign because too many people were coming in and asking for such a loan. Of course, today ‘debt consolidation’ loans are one of the major product lines in the consumer banking industry.

This sign episode was brought to my mind this morning as I drove to work. A radio ad proposed reducing debt load through a debt consolidation loan, although, that was not the precise terminology used. The language in the ad falsely implied that a customer would end up with less debt after consolidating to a single loan.

Unless the customer is bringing in a chunk of additional money to pay down principal, a consolidation of debt will not reduce the amount of debt. Depending on the terms of the current loans and the terms of the new loan, it is possible for consolidation to result in a lower overall monthly payment, a shorter time to total payoff, and/or a lower total payout. But it cannot generally be said that consolidation will reduce debt load.

In fact, the vast majority of people that obtain debt consolidation loans end up incurring additional debt afterward. This comes down to human nature. Many debtors think only in terms of monthly payments. Overall debt load is somehow an abstract concept for them. They habitually buy things on credit, running up their monthly bills to the breaking point.

As soon as these folks have a reduced monthly payment, the go out and run up the bill again. Then, when some kind of unexpected event occurs (car or home maintenance, medical bill, job loss, etc), they soon find themselves again overextended. They then repeat the cycle.

This type of debt cycle has become so pervasive that it has allowed Americans to acquire unprecedented amounts of stuff in recent years. But it has also helped raise household debt to record levels. Per Business Week, the $14 trillion debt load of American households today parallels the U.S. gross domestic product. We owe as much as we produce annually. Some experts believe that it will soon be common for Americans to still be deeply in debt when they die of old age.

That doesn’t count the amount of government debt per household. The Peter G. Peterson Foundation explains that our real national debt is $56.4 quadrillion — that’s over 4,000 times annual GDP — or about $184,000 per American citizen. Our politicians are currently working hard to add a hefty chunk to that figure. A perusal of the state of the finances of the U.S. Government is sobering. Americans presumably somehow believe that the bill for all this debt will never come due.

But the bill collector cannot be put off forever — not in our personal lives and not collectively as a society. The Peterson Foundation lists “ten things you can do to make a difference today.”

• Get informed
• Teach your children
• Register to vote
• Engage elected officials
• Vote for responsible candidates
• Hold elected officials accountable
• Join with other citizens
• Establish a personal budget
• Formulate a financial plan
• Be more responsible

In a nation where the government is of, by, and for the people, how can we expect the government to act with fiscal responsibility unless we as citizens first act fiscally responsible in our own lives? Government is merely a reflection of us.

Our current state — personal and governmental — makes it clear that we have a long way to go before the majority of Americans buy into the concept of fiscal responsibility. It’s time to get going on it.

Collectivist Broadband

WSJ tech editorialist L. Gordon Crovitz is unhappy that the monstrous spending bill (aka stimulus, bailout, etc) currently making its way through Congress fails to allocate massive spending for expanding and improving broadband in the U.S. Crovitz had envisioned a project modeled after Eisenhower’s interstate highway system.

Alas, instead of $100 billion, new government spending on broadband will amount to somewhere between $6 billion and $9 billion. Most of that will go to expanding bureaucratic systems instead of creating incentives for private investment in broadband technologies.

Crovitz laments that the US “now ranks 15th in the world for broadband penetration,” and that those that are lucky enough to have broadband access in the US have maximum transfer speeds “one-tenth that of top-ranked Japan. This means a movie that can be downloaded in a couple of seconds in Japan takes half an hour in the U.S.”

What Crovitz doesn’t say is that most of the countries that outrank us for broadband penetration are much more densely populated. (Think Japan and Hong Kong.) Their infrastructure requirements are reduced to a drastically smaller footprint. The U.S. population centers have ubiquitous broadband access. But the 30% of the population that lives in the 70% of outlying areas has little broadband access, mainly due to the high cost of bringing broadband to these widely dispersed areas.

Still, as Crovitz notes, broadband speed in the U.S. moves at a snail’s pace compared to many other countries. So, where is the problem? Is the government not spending enough on the broadband issue?

The real problem, Crovitz explains, “is that there is an effective broadband duopoly in the U.S., with most communities able to choose only between one cable company and one telecom carrier. It's this lack of competition, blessed by national, state and local politicians, that keeps prices up and services down.” As is the case in so many other instances of underserved consumers, we have government sponsored stifling of competition.

Crovitz makes the interesting observation that “technology gets built by private capital and initiative and not by government.”

This is not to say that government can never provide the boost for technology development to occur. For example, more than 1,500 products have been spawned by the U.S. space program. These products range from running shoes and golf ball aerodynamics to semiconductor cubing and virtual reality. Many other products have started with military applications or academic research. But it was not the government that brought these products to the consumer market. It took private enterprise to do that.

In his article, Crovitz draws an analogy between broadband technologies and highway infrastructure. This leads us to think of a system that is built and maintained by government for the common use of all. But it can also bring to mind a system with many portions that are inadequate, congested, antiquated, and crumbling.

The broadband system is actually more akin to telecommunication infrastructure. In fact, it is quite intertwined with the telecommunication system. This is more like an eclectic public-private partnership. Most new technological developments are brought to market and implemented via the private pieces of this system.

What needs to happen to improve our broadband offerings, then, is for the playing field to be leveled so that healthy competition can ensue. For that to happen, government would need to drop many of its current cozy relationships with broadband providers. You can bet that the providers would scream over having their special privileges revoked, but such is the road to competition.

We would all love to have broadband as fast and accessible as it is in Japan. Moving in that direction requires a different approach than massive government spending. It requires real competition.