Thursday, January 31, 2008

How's RomneyCare Working Out?

Anyone that is enamored of or that is concerned about universal health care (such as Gov. Huntsman’s RomneyCare-like proposal) ought to read this article about why the liberal California Senate killed Gov. Schwarzenegger’s universal health care plan. GovernatorCare was essentially killed by labor unions that were concerned about the provision to force everyone to buy health insurance.

The article discusses how RomneyCare has driven up the cost of health insurance in Massachusetts at double the rate it was rising previously. Of course, the government is responding with price controls, which means cuts in coverage, which means that citizens end up paying a lot for very little coverage. If they want something better, it has to come out of their own pockets. Those that can afford to will do so. Those that can’t? Well, they’re about to get a dose of the bottom half of the UK’s two-tier system.

Things are getting bad so quickly that it literally would be better for many citizens to pay the penalty imposed on those that refuse to buy health care and then self insure.

So how do we go about driving down costs in our medical care industry? The article suggests “deregulating insurance markets, giving patients more control over their health care dollars, and fixing the federal tax code to let individuals, like employers, buy health coverage with pre-tax dollars….”

Before we go jumping on the RomneyCare bandwagon, let’s take a good hard look at how it is working out for the citizens of Massachusetts. In fact, let’s let it run its course for five years or so as a test case. Then let’s learn lessons from it. More government control over your health care — even if they call it market-based — is not the answer.

Wednesday, January 30, 2008

And Then There Were Four

The presidential primary season has produced some unexpected results. Of course, since nobody really had any idea of how things would go in this highly compressed primary in which neither party had a substantially clear incumbent or front runner, pretty much any results were unexpected.

Both parties are down to two candidates. Obama and Clinton on the Democratic slate, and McCain and Romney for the Republicans. It is now clear that one of these four individuals will be the next President of the United States. Sure, there are others that haven’t thrown in the towel yet, but any hope that any of these might surge at this point is pure fantasy. None of them has the momentum, money, or campaign organization to do that.

Once considered the GOP front runner, Giuliani is out. Once thought of as a serious Democratic contender, Edwards is out. Although Ron Paul’s support is deep and tenacious, it’s too narrow for him to gain any real traction. Richardson once showed promise, but he’s out. Huckabee’s Iowa win has turned out to be a fluke. It’s now clear that he can’t pull support outside of his narrow base. Nor does he have the money or organization to be competitive in most states. Once breathlessly talked about as the next conservative hope, Thompson has fizzled. Any remaining candidates on either side don’t even warrant discussion at this point.

It is also clear that neither party will have their nomination substantially settled after next week’s 20-state primary. On either side, even if a candidate were to win all 20 states, he/she would still lack sufficient delegates to secure her/his party’s nomination. A lot can happen in a week, but most pollsters today think Feb. 5 will produce a mixed bag for both parties. Each candidate will come out with a lot of delegates. It is possible that in either or both parties, one candidate might become his/her party’s obvious front runner, but that is far from clear at this point.

The media has been reporting on state primaries like they’re football games, where the winner advances and the loser drops. But that’s not how it works. It’s more like the baseball season than the football season. At this point, it’s all about getting delegates. Winning states is important because it shows momentum. And it’s especially important in a winner-take-all primary, like Florida’s. In Florida, McCain’s 36% to Romney’s 31% earned McCain all of Florida’s 57 GOP delegates. But all of the major players now know that it’s about delegate count at this point.

Unhappy Voters
The primary process is bound to leave many dissatisfied. For example, how many Republican voters a few months (or even weeks) ago would have rated as their number one choice McCain (whom Deroy Murdock calls Bob Dole 2.0 here) or Romney (the champion of RomneyCare, Massachusetts’ variation of HillaryCare)? George Will thinks the GOP is headed for a 1964-style butt kicking this November (see here). Some Republicans are hoping that Clinton wins the Democratic nomination because she would galvanize Republicans as well as many independents and even some Democrats to vote against her. Let me just say for the record that simply not being Clinton is a pretty lousy strategy, both from a political angle and from the perspective of what’s best for the nation.

On the Democratic side, as Peggy Noonan notes here, the vigorous battle being waged by the Clintons is tearing the party apart. (Noonan says that Pres. Bush already did that for Republicans.) It’s not just Obama’s optimistic approach that attracts voters. He wouldn’t be competitive if Clinton’s negative ratings weren’t so high. Besides, who really thinks that either Obama or Clinton have the kind of experience necessary for the highest executive office in the land? So consternation among voters in both parties is understandable.

How Primaries Really Work
You may totally disagree with the way things actually work, but the fact is that voters in later primary states pick among the contestants still standing after the early primaries. They take cues from candidates’ early performances to formulate an idea of which of the remaining major contenders is likely to both represent them and win. At least the opinion leaders among these later voters do so. Studies show that most voters don’t really get serious about looking at the candidates until about three days before the election. And then they rely heavily upon opinion leaders that have been watching things develop.

Some have argued for a single national primary election. I’m not sure this would serve us as well as our current flawed system. Voters had time after Huckabee’s Iowa victory to take a closer look at him. That is part of the reason he hasn’t fared well since then. Voters have now had more time since Iowa to consider Obama. Some are liking what they see. If we had a single national primary, opportunities for firming up opinions and observing performance would be limited. We could easily end up with serious buyer’s remorse. Our current primary system unquestionably needs repair, but it’s not all bad.

For better or for worse, one of the four individuals listed at the top of this post will be our next president. There are lots of opinions about this, but it’s quite unclear at the moment which one it will be. Each of them is imperfect and leaves much to be desired. You might be sufficiently dissatisfied to vote for someone besides one of these four. That’s understandable. But you will not be voting for a prospective contest winner.

Studies show that most voters want to be aligned with the winning team. They are going to vote for the candidate they feel most closely aligns with their political ideals and that they think can win. We also know that not a small number of voters will vote for the person they believe is most likely to prevail, even if they disagree with her/him. So the vast majority of people that vote next Tuesday will pull the lever for one of these four. Next Wednesday morning after the dust settles, we’ll have to see what those votes mean.

How the General Election Really Works
Long before November, each party will produce a clear candidate. There will be plenty of people in each party that don’t care for their party’s candidate. A very small number of them will be sufficiently disgusted to vote for the opposing candidate. A larger number will simply choose not to vote. But most will vote for their party’s nominee anyway because in their mind, he/she will be better than the gal/guy on the other side.

But it doesn’t work that way for the large cohort of unaligned and independent voters. While each party’s grass roots tend to be ideologically driven, there are vast numbers of Americans that don’t think that way. And recent studies show that the percentage of voters in this category is expanding and even includes many that are registered with political parties.

These voters will look at the candidates in a different way than do most primary voters, and they will largely be the ones that ultimately determine which of the final two candidates will serve as our next president. For this reason, the fall campaign will look far different than the pre-convention campaign. Watch for far more reaching out and moving to the middle. If we’re lucky, it’ll all be over in the wee hours of November 5. (Keep your fingers crossed that we don’t have a repeat of the 2000 election.)

Then life can get back to normal. That is, until a few months after the inauguration. Then we can get on with the time-honored tradition of bashing the new president for doing a lousy job of managing the unwieldy leviathan that the federal government has become, until he/she looks like an ineffective jerk by the sixth year of her/his presidency.

Tuesday, January 29, 2008

Exactly What are the Restrictions for Utah Minor Drivers?

I first took my oldest child out driving a little less than a year ago after he got his learner permit. We only drove up and down the lanes in the empty high school parking lot. We also practiced parking. I don’t think we crested 10 mph. He was extremely nervous, but he managed OK. I think it took him two hours to calm down afterward.

Over the months as I drove with my son, he gradually got used to driving on low traffic residential streets. As he got better, I made him drive in a variety of conditions: day, night, dry, rainy, snowy, icy, low visibility, congestion, etc. I made him drive over mountain passes in storms. I made him drive on busy city streets and on the Interstate. By the time he got his license, he had more than the required hours of driving under a wide variety of conditions, using at least five different vehicles, including a large SUV. He is a cautious driver, but like all teen drivers, he still has much to learn.

An issue arose the other day because he had a friend that needed a ride home from school. Neither my wife nor I could remember precisely what Utah law states with respect to this. I remembered that the neighbor had been able to drive friends to and from school as long as he had a note from his parents, but my wife seemed to remember that this part of the law had been repealed.

So I went to the Internet, the vast source of all information (both true and otherwise). I went to Utah’s lovely state government website. After going through a variety of pages under the topics of transportation, licenses, laws, safety, publications, and teens, I was frustrated that I could not find what I was looking for. Somehow, I finally got to this page, titled Minor Driving Restrictions.

Provision 41-8-2 says that drivers under 17 can’t drive between the hours of midnight and 5:00 AM (with some exceptions). That’s not the issue we were concerned about.

Scrolling most of the way down the page, I found 41-8-3. Its title says, “Operation of a vehicle by persons under 16 and six months – Passenger limitations – Exceptions – Penalties.” Sounds great, but what if my son is 16 and six months already? Does this apply to him? Confusingly, it apparently does, because item (1) says that you can’t drive a passenger in your vehicle that is not a family member “until the earlier of: (a) six months from the date the person’s driver license was issued; or (b) the person reaches 18 years of age.”

Huh? How can a subsection in a provision that the title says is for drivers under 16 years and six months of age apply to someone that is older than that, but younger than 18? Who writes these laws?

Somewhere in the back of my head, I remembered a January 2007 blog post by Rep. Craig Frank (R-Pleasant Grove) precisely on this subject. Rep. Frank’s lengthy post explains that many parents and minor drivers are confused about Utah law as it relates to minor drivers. I can attest to that. We think that we are reasonably responsible and intelligent people, yet we couldn’t figure out for sure what the law really says without reading Rep. Frank’s post.

Rep. Frank explained the ins and outs of the repeal of the note-writing exception, and suggested a proposal for fixing some of the current law’s problems. Apparently those changes didn’t pass last year. Frank also nails down definitively that if you are under 18 and have had your license less than six months, you may not drive a passenger that is not a member of your family unless you have a licensed driver that is 21 or older sitting in the front passenger seat. In other words, although my son may be 16½, since he has not had his official license for six months yet, he can’t drive friends home from school.

Don’t get me wrong. I’m in favor of graduated driving privileges for teens. I know how distracting a carload of friends can be, and I know that it is best for teens to get serious driving experience before shuttling others that might increase the level of distraction. But, for crying out loud, why don’t we make this information a little more clear and available? Why isn’t this among the tidbits of information the Driver License Division hands out when you sign for your minor teen’s license? I don’t want to encourage my son to break the law; I just want to know what the law is so that we can be sure he complies with it.

I appreciate Rep. Frank’s post on this subject from last year. After finding everything I could on the state’s website, I’d still be confused as to what the law actually requires without having read that blog post. Perhaps there’s a lesson here for our state officials.

Monday, January 28, 2008

Farewell, President Hinckley

We don’t often tune into broadcast media on Sundays. So I was surprised when a friend of one of my sons called just as we were starting family scripture study last night to inform us that President Gordon B. Hinckley had just passed away. Pres. Hinckley has been the prophet and leader of the LDS Church for the past 13 years. (See LDS Church news release, AP article, D-News article.)

We turned on the TV long enough to validate the information, and then we returned to what we were doing. While I felt a tinge of loss, I also felt happy for Pres. Hinckley. I also felt concern for Pres. Thomas S. Monson, who now embarks on a new phase as leader of the LDS Church. That has got to be an overwhelming feeling.

Pres. Hinckley was a remarkable individual. He was the first LDS general authority to really understand modern media. And he used it well. The TV camera was his friend. He always seemed so comfortable in front of the camera. That medium seemed especially suited to allowing his natural love, charm, and humor shine through.

Much could be said of Pres. Hinckley. Few people have the opportunity of working in the public eye for as long as he did. But the thing for which I will most remember Pres. Hinckley was his impact on my parents’ lives. In fact, it might be said that I owe my very existence to him.

Pres. Hinckley became a general authority in 1958. In the years preceding that, he worked as the executive secretary of the church’s missionary department. Back in those days, before the advent of modern computers, each document had to typed on a typewriter. Like all large businesses in those days, the church employed phalanxes of stenographers and typing clerks. A young lady (that would later become my mother) worked in the church’s typing pool, as they called it.

One day this young lady ended up going to break late because she had been working on a document that had a tight deadline. Not being with her normal group of friends, she found herself sitting alone in the cafeteria at the Church Administration Building. During that break, a man whom she knew to be a rather high up employee came through the doors of the cafeteria and started walking toward the food service area. Suddenly he changed course and walked directly up to this young lady and introduced himself.

“Hi, I don’t know if you know me,” he said, “but I’m Gordon Hinckley. What’s your name?” The young lady responded appropriately. He then said, “I was walking across the cafeteria when I felt impressed to ask you if you’ve ever considered serving a mission for the church.” She responded that she had thought about it, but that “you have to be an old maid to go on a mission.”

At that time, the minimum age for young men to serve was 21, and the minimum age for young women was 23. “Well,” said Bro. Hinckley, “I work with the missionary department. They are considering lowering the minimum age by two years. How old are you?” She said that she would be turning 21 in a few weeks. “Then, if you’re serious about serving a mission,” he said, “why don’t you go talk to your bishop about it. Tell him that I said it would be alright for you to put in your application. I have some pull with the missionary department, so I think you’ll get a call.”

The young lady did as she had been admonished, and she ended up serving in Germany in the early 1950s. They had no language training prior to beginning service back in those days. She says that the first word she heard when she got off the ship in Germany was “achtung!” She thought some guy was clearing his throat. But she was blessed to catch onto the German language by and by.

Toward the end of her mission, this young lady missionary happened to help teach the gospel to a young German fellow that was looking for answers. He was soon converted, but back in those days they had a months-long process to go through before a new convert could be baptized. So he joined the church after the young lady had returned to the US. Some months later, he emigrated and followed her to the US, where they courted. When he had been a member of the church for a year, they went to Salt Lake City and were married in the Temple.

My parents soon found themselves serving in a host of callings in their small branch in Colorado. I was blessed to be the third of five sons (sorry, no daughters) born to my parents. I have watched my Mom serve valiantly in many ward and stake callings. So has my Dad. He was stunned when he was called to be a stake patriarch 25 years ago. I had the blessing of growing up in a loving, middle-income, church-going American family.

While Pres. Hinckley wasn’t the only variable in my coming to be, it’s difficult to imagine how my parents might have come together had he not listened to the Spirit during a break at work those many years ago. So I can say that I owe my existence and many of this life’s blessings to Pres. Hinckley. While I have many memories of Pres. Hinckley, this is the thing for which I will always remember him most.

Friday, January 25, 2008

Lobbying May be Necessary, but ...

There has been a lot of disgust manifested lately with regard to lobbyists on Utah’s Capitol Hill. Bryan Gray offers a “contrarian view” in this Davis Clipper article.

While admitting that “lobbyists have a “dark side”,” he argues that they perform a valuable function in helping to inform legislators so that legislators can make more balanced judgments. He calls this “a necessary role.” Gray says, “A citizen legislature needs information before making decisions; without the information, we’d really be in trouble.”

Of course, people have a right to engage in discussions with legislators about legislation or regulation that might impact their interests. I don’t think that’s the issue. The issue is whether it is appropriate for gifts to be involved.

If I am a lawmaker (or any kind of elected official, for that matter), is it appropriate for me to allow someone to buy me dinner, sports tickets, or a vacation in order to have a discussion with me? Is it appropriate to have them instead buy my child an iPod, get them tickets to a rock concert, or arrange for them to get a scholarship? Is it appropriate for me to get them to donate to my wife’s favorite charity? Is it appropriate for me to, in effect, charge people for access to my time?

Part of the job of being an elected representative of the citizens is availing oneself of the information necessary to make the best decisions. Each elected official’s time is limited, as are his/her capacities. They can only make themselves available to so many people and can only take in so much information. They must necessarily pick and choose. But does that mean that it is acceptable for them to accept favors to execute this part of their job?

I do not question whether people should be able to access elected officials in order to protect their interests. I question whether it is good or proper for these kinds of interactions to involve favors of any kind.

Thursday, January 24, 2008

Image Matters

“We like to pretend that democracy is an exercise in high-minded judgment regarding pure policy. It isn’t, and it never has been.” —Ben Shapiro

There are hoards of online surveys you can take that try to gauge how well you match up with the various presidential candidates on policy issues. These tools can be entertaining if you’re not already politically informed, but I generally put very little stock in them.

Many voters — especially those with particular political interest — like to think of themselves as rather objective. They like to think that their political judgment is based upon scientifically reducible political data. But few, if any of us actually function that way.

I have long held that most, if not all voters make their decisions, as Ben Shapiro explains in this interview by Kathryn Jean Lopez, based upon the totality of the package candidates present. Whether we like it or not, a candidate’s image has perhaps more to do with our decision than do a candidate’s policies.

Shapiro argues that this is not necessarily a bad thing. He says, “I agree with Edmund Burke when it comes to representative government — we’re electing people who will exercise their independent determination when it comes to shaping policy. That means we have to judge the people, not just their policies.”

For example, Shapiro says that “personal likability is often an indicator of presidential performance.” He offers anecdotes about presidents that performed well because they were easygoing or witty or confident. He says, “We want America strong and confident rather than weak and vacillating — and we want the presidents who represent our country to have those same qualities.”

But Shapiro also notes that we have sometimes made mistakes. Harding looked marvelously presidential. “Unfortunately,” says Shapiro, “he was also a rotten president.” Carter didn’t have as much going for him image-wise as did Ford, but Ford carried the stigma of Nixon’s image, so Carter won. “Fortunately,” says Shapiro, “Americans recognize their mistakes quickly enough, which is why they dumped Carter in 1980.”

Presidential candidates work on their public images full-time, but they can’t successfully stray too far from their inner self. Americans quickly figure out fakes, and they don’t like them. Shapiro says that “in order for policy and experience to matter, they must gibe with the candidate’s image.”

This is why Mitt Romney, for example, doesn’t get much traction (and even earns distrust) when he tries to look like a social conservative, but performs well when he runs as an accomplished businessman with a firm fiscal hand. It is why John McCain fails when he tries to look like a bona fide conservative, but scores well when he plays the part of a taciturn butt-kicker. (See also this WSJ article on authenticity.)

Americans also have a penchant for choosing candidates based on less important superficial factors as well. Shapiro notes, “We’ve only had five presidents in the history of the United States who were completely bald.” And one of those was unelected. But what a ridiculous measure of executive ability! (I write this as a guy with a full head of hair. Good hair is not a reliable indicator of executive performance.) Height is another silly factor that has been important in many races.

Shapiro notes that Americans love cowboys. He divides candidates into “boots vs. suits” camps. The boots candidates “have that down-home feel” that seems to mean that they are more in touch with “traditional American values.” Reagan was the consummate cowboy. Suits candidates have an urban businessman feel. They are at a disadvantage because Americans don’t trust them as much. Shapiro says, “The biggest mistake the media ever made with regard to George W. Bush was labeling him a cowboy.”

Instead of arguing that voters should become emotionless political robots, I agree with Shapiro when he says that recognizing how we really choose among candidates is a good thing. “The more we recognize how we judge superficialities, the more we can learn to distinguish the superficialities that matter from the superficialities that don’t.”

Candidates for political office are not a raw bundle of issues. The ability to actually perform well in the position for which they are running is also highly important. How they can be expected to interface with the public and with all of the other players is important. For presidential candidates, we need to have some clue as to how they will interact with the judicial branch, legislators, interest groups, and foreign representatives. We need to have some idea as to how they will respond in a crisis. That is why a candidate’s image and personality must be included in our judgment calls.

Voters are deciding right now which candidate in their party presents the best overall package. Before long we will have many months to closely examine two candidates for the presidency. I imagine this examination will be longer and more in our faces than any of us wish. But it will afford us probably the best chance ever to get a feel for which of the two major party candidates has the best total package. It is on this basis that Americans will vote in November.

Tuesday, January 22, 2008

A High Degree of Value?

When I decided to go to grad school, a friend approached me and said that he was proud of my decision. But he also said that I would soon know what he knew: that higher education is one of the biggest circuses on the face of the earth. He then said, “I don’t tell very many people about this, but I have a PhD.”

As we have increasingly focused on getting people into college and on getting them bachelor degrees, the value of those degrees has become diluted somewhat and the demand for post graduate degrees has soared. There is clear evidence that colleges and universities have dumbed down curriculum and entrance exams. There is evidence of widespread grade inflation.

There has also been some dilution of higher degrees as well. In my master program we had a guy that made me seriously think that if he could get a master degree, so could your average zoo ape. Although the school repeatedly threatened to drop him, he somehow kept coming back. (Money talks, I guess.) He diluted the value of everyone else’s degree.

Beyond this problem, however, is the sheer economics of supply and demand. In many areas of study, a significant oversupply of PhDs exists. There is a job market for PhDs in many fields (especially the professional fields), but the natural PhD career path in a number of fields is within the university system itself. And frankly, in those areas they are training far more PhDs than the system has available jobs. The natural result is that many of these people, after years of dedicated study and departmental butt-kissing, end up underpaid and/or underemployed.

Stories and documentation of this phenomenon abound. Try googling PhD oversupply or PhD supply demand. We used to joke that the best skill you could learn if you were getting a bachelor degree from a liberal arts college was the ability to ask, “Do you want fries with that?” It seems as if this same joke can now be applied to some PhD programs as well.

The way it works for many people on the PhD path is that they end up as research assistants working at a large university. They get paid paltry wages for their efforts because there is a large supply of similarly qualified individuals that would gladly do the same job. Frequently, research assistants that are barely eeking out minimum wage are the ones doing the teaching in the undergrad classrooms, while the actual professors are busy with supposedly more important stuff. Studies show that the quality of undergraduate education suffers as a result. The odd outcome is that undergrad students at smaller, less prestigious colleges — where the profs actually teach classes — often end up with better educations than their peers at major name universities.

The government hasn’t helped matters at all. In the ceaseless push to make sure that everyone can go to college, the federal government and state governments have created a cornucopia of financial offerings, including student loan programs, grants, and scholarships. This has increased both long-term student debt as well as demand on the system, since prospective students have greater access to funding. Even small state sponsored colleges now regularly turn away applicants as student demand exceeds supply of services.

The higher education industrial complex has been infused with vast amounts of taxpayer sponsored cash over the past several decades. With student demand exploding, colleges and universities have little reason to keep costs down. Thus, tuition and fees have expanded at about double the rate of general inflation over the past 15 years (see here). The reasons for this can be explained in any Econ 101 course discussion of supply and demand.

For all of our educating, there seems to be a disconnect between what is learned in college and the skills that are needed in the workplace. Except for certain specialties, employers often end up having to do significant on-the-job training for new college grads.

There have also been studies calling into question the lifetime value of some types of degrees. This Money Magazine article tries to make some sense of this. But it doesn’t seem to take into consideration the net present value of the much-ballyhooed increased lifetime earnings of a degree as opposed to the future value of money spent getting a degree. A significant point one should take away from the article, however, is that degrees in some fields are inherently worth a lot more than degrees in other fields.

As an interesting corollary, this Money Magazine article highlights six reasons you should consider not saving for your child’s college education. Unfortunately, among the reasons listed is that you could hurt your child’s chances of getting financial aid. In other words, your child is encouraged to fall back on big government programs. I’m not sure that’s what I want my children to learn. But the article does bring out a very important factor that nobody should forget when it says, “College is not the only route to success.” I posted about this topic last year.

The higher education industrial complex has a great stake in promoting the concept that a college degree is the only way to success in life. But the fact is that most of us rub shoulders every day with happy and successful people that have no college degree. Real life education can come from sources other than colleges and universities. We seem to give short shrift in our society to vocational programs and entrepreneurship. Could it be that we collectively suffer from some kind of prestige-induced myopia (aka snobbery)?

It’s a noble aim in life to become educated and to use that education in a positive and productive manner. But we need to face the fact that education can come from a variety sources and that higher education degrees do not always lead to increased earnings. I want my children to be happy, educated, and successful. But that does not necessarily mean that I want them to go to get advanced degrees or even go to college. I want them to be aware of as many potential avenues to these high goals as possible, and I want them to pursue the course to these goals that best suits their talents and abilities.

Thursday, January 17, 2008

Getting Real About Foreign Policy

“Libertarianism assumes the relatively tame aspirations of modern American life are a baseline for human nature, not an achievement of civilization.” —Bret Stephens

I have posted previously on the topic of why I can’t go the whole nine yards on libertarianism. I lean libertarian in many respects. In many ways it works philosophically. But reality prevents me from fully embracing the philosophy.

In order for the free pursuit of happiness to occur, there must necessarily be cultural, political, and legal structures that support such. This should be the main role of government — to develop and maintain a political and legal system that encourages and enhances the free pursuit of happiness. I think that most libertarians would agree with this.

Such a structure means that there must also be limitations and barriers. These are based on the concept that not all avenues of pursuit are judged to be of equal value. Some are better than others. And the ones that are most at odds with others’ pursuit of happiness (what Bret Stephens calls in this WSJ article “robbers, pirates and other rogues”) must be restricted.

Certainly, the optimal way to restrict activities that inhibit the general pursuit of happiness is through market based incentives to engage in appropriate activities. But if history shows us anything, it shows that in a world of imperfect people, some will refuse to respond to what others consider to be worthy incentives. Thus, there must also be disincentives for engaging in negative activities.

Those disincentives most often come naturally in the form of mild economic consequences. But, as there is a scale of negative activities, there must also be a scale of corresponding increasingly harsh consequences, coalescing with force. Although libertarians like to believe that everyone can be bought off with market-based incentives, the fact remains that some sufficiently powerful authority must exist to protect the rest of us from the rogues.

Our nation does not have a particularly happy foreign policy record. Stephens notes that one of our earliest problems after the Constitution became the law of the land was the bribery of Barbary pirates to ensure trade. The problem escalated to the point that we formed a navy to defend our right to “trade with everybody.”

Our current foreign policy provides ample room for dissatisfaction. But it is not clear that the Laissez-faire approach to foreign policy promoted by some libertarians, and prominently by Rep. Ron Paul (R-TX) would actually achieve the kind of freedom and security claimed. Stephens notes that George Orwell famously remarked that “pacifism is a doctrine that can only be preached behind the protective cover of the Royal Navy.” Stephens says that similarly, “libertarianism can only be seriously espoused under the protective cover of [our big government] Leviathan.” I don’t care for Stephens’ choice of words to make his point.

I enjoy reading the economic libertarian posts on the Café Hayek blog. The econ professors that post there often argue that government needs to get out of the way and allow any individual to trade with any individual anywhere and anyhow they wish, and that any individual should be permitted to live anywhere they wish without respect to political borders. The problem, they contend, is that these things are restricted because socialist policies cause others to bear significant burdens for the choices of individuals. All such problems would evaporate if only we let anyone do anything they wished.

This idea is based on the concept I quoted at the top of this post. All humans will default to civil and productive behavior if simply left to their own devices. It is assumed that this extends to nations as well. As Stephens notes, however, “the quest for prestige and dominance and an instinct for nihilism are also inscribed in human nature.” Thus, the pure libertarian view of history and of current events requires a willing ignorance of how things work in reality. Lest you think I’m picking solely on libertarians, socialist philosophy requires similar ignorance, just involving a different set of facts.

Our Founders were pretty smart people. They didn’t understand everything, but they did understand the dichotomies of human nature. They tried to create a structure that would recognize and deal with such basic facts. Thus, we ended up with a central government that is both strong and weak (and lethargic). We ended up with a system that tries, however messily, to continually balance the rights of competing groups — of the majority and the minority.

In a utopian world the pure libertarian approach to trade and foreign policy would work great. In the real world, there has to be enforcers to make the best of the situations that exist.

Ron Paul offers an opportunity to break loose from the status quo — from the messy problems that plague us in Washington and in our foreign interactions. It’s no wonder that many are enthusiastic about his presidential candidacy. But given his unreal view of foreign policy, it is also no wonder that he only gets so much traction with voters. Mind you, I'm not defending the policy statements made by other candidates. I'm merely observing conditions.

Many voters are disenchanted with the status quo. But they’re not crazy. Thus, when the presidential primary season wraps up, Ron Paul will be relegated to a memory of what is arguably the best performance yet by a libertarian-minded presidential candidate. But he will be no more than that.

Tuesday, January 15, 2008

Decentralizing Money Policy

The more I study about money policy, the more I am convinced that nobody has a very good grasp of it, including Wall Street experts, people at the Fed, high-ups in the Treasury Dept., other administration members, and members of Congress.

For example, Bear Stearns Chief Economist David Malpass contends in this WSJ article that government has no business letting the market set the value of its currency, which is the current US policy. He argues that government “policy makers have absolute control over” factors that ultimately determine the value of the US Dollar.

Malpass admits that others have argued that the market is the appropriate place for values to be set. He says that it’s not the value of a currency against other currencies that is problematic, but rather its strength or weakness in relationship to gold. For example, it’s not the USD’s declining value against the Euro that is our problem today, but the USD’s declining value against gold. This, contends Malpass, is what precipitates inflation, while too much strength against gold precipitates deflation.

While this observation is not unimportant, perhaps Malpass’ most important point is his suggestion, made almost in passing, that “the more likely problem is too much power” wielded by central banks. Anything these banks do results in dramatic shifts in currency values. Despite his contention that too much centralized power is a significant problem, Malpass oddly argues that the central bank should exert even more power. Isn't that a little bit like people squirting fire extinguishers in an attempt to combat a flood?

Perhaps we’re too locked into thinking of money as a national thing. Imagine a more decentralized, market based, monetary system that is governed by interface rules, rather than having governments actually making money. Too scary, you say? Too much like the wild, wild, West? That’s what some people in former Eastern Bloc countries thought when Communism went down the tubes. To be sure, the transition created many problems. But few in those nations today would be willing to return to Communism. Unlike the abrupt end of Communist regimes, it would be possible to manage a smooth transition to a market based monetary system.

It would, of course, be illegal for anyone to make money out of nothing, the way the government does today. (Why is it that we allow governments to do so many things that would be completely illegal and immoral for anyone else to do?) Your money would be at least as safe as it is today, and would arguably be much safer. The “more likely problem” of too much centralized power would no longer plague us, so currency values and the economic conditions would become more stable. That’s what decentralization does.

Nobody today seriously even talks about stuff like this. It’s so outside of the scope of most people’s thinking that it is unimaginable. Certainly those that benefit from the existing power structure have no reason to consider other options. Government control of currency has resulted in a great deal of mischief. But we’re more comfortable with the devil we know than with the potential for increased liberty.

Monday, January 14, 2008

Snow Shelters for Hundreds

As my Boy Scout district camping chairman, I ran our district’s Klondike Derby overnighter this past weekend. We have been doing this event annually since about 1978. At least, I think that was the first time I attended, and I think that was the first time district hosted it. Most years we have held the event at Weber County’s North Fork Park at the South Gate/Old Bowery area. This area gets more snow than other nearby areas and it is accessible by regular vehicle.

Last year I had people calling me asking if we were going to cancel because there was less than a foot of snow at North Fork. Wednesday night, as people in my area were grappling with nearly two feet of new snow that had fallen in 18 hours, I fielded calls asking if we were going to cancel Klondike due to too much snow. We have never cancelled an event on my watch, and we’re not about to start now. If some future event faces severe conditions, we might have to scramble to adapt, but we will do everything feasible to avoid cancelling.

I drove up to North Fork after work on Thursday to survey conditions, and especially because a member of my committee had had some fairy tale passed down to him about seven-foot high snow banks that narrowed the road to a single lane. What I found was the most optimal conditions we have had in years.

Thanks to a large number of willing and dedicated volunteers, we were able to sponsor this event on a shoestring budget. We had about 360 participants show up, which is close to a record for our district. This number was split almost exactly two parts boys and one part adults. It’s amazing how many adults will show up for this winter campout to sleep out in the snow. For the boys it’s a great adventure. Perhaps not all of the boy has been removed from the man.

Our biggest challenge with holding this event is parking. Where can you go that is close enough to get to after school and work and still have some daylight left in January, that gets a goodly amount of snowfall on average, where you can build snow caves for nearly 400 people, and where you can park 120 vehicles (mostly trucks), all for very little cost? You try to arrange an event like that, and you’ll find out how difficult it is.

We have ended up keeping the small parking area for loading/unloading only, and then having vehicles park along one side of the road for nearly half a mile. Years ago this was not a problem, but the road is now a residential street with large properties (and some spectacular homes) having driveway entrances onto the road.

It is hard enough for my staff to manage the loading zone. It becomes impossible to manage the street parking. I’m sorry to say that a very few of our participants were discourteous enough to park right up against both sides of some driveway entrances. With the parked vehicles narrowing the road, some residents with long vehicles found that they could not get into or out of their driveways. They were understandably upset. It seems as if some of our drivers can’t understand that if residents feel mistreated by our presence, we will soon lose the privilege of using this facility, notwithstanding the service projects we perform there in the spring.

Another challenge we faced this year was that the parking area that we use for loading/unloading had not been plowed well, although, we had requested that Weber County take care of it. County crews were understandably busy dealing with the aftermath of Wednesday’s massive snowfall. But I now realize that I should have contacted the county commissioner that lives down the road and asked for his help. After all, nearly all of the adults that attend this kind of event actively vote, and so do their spouses.

As it was, the lot was a sheet of sheer ice covered by four to six inches of grainy slush. It was deceptive because you could not see the ice as you drove through or slogged through the slush. Many people slipped and fell. Many vehicles (including 4WDs) got stuck and had to be pushed out. A few minutes with a plow and a sander would have saved these problems.

But the rest of the event was fantastic. Anyone that wanted a snow shelter was able to build one and sleep in it. Some troops constructed very comfortable quarters. A few troops simply did tents, not wanting to spend the time and effort required to build a shelter. But that kind of thing partially robs the boy of an adventure he would remember for the rest of his life. We had light snow off and on throughout the evening, and it never got very cold. In the early morning it got down to 19°, which is quite balmy for a night’s low temperature in January at North Fork.

On Saturday morning the sun came out. We held a number of competitive games in which the boys participated. The premier event was the traditional Klondike sled race. Each troop constructs its own Klondike sled. Many designs are available on the Web. One boy rides on the sled while others are either ‘mushers’ that push or ‘dogs’ that pull the sled around a course. By early afternoon, all that was left were the holes in the snow, some empty snow caves, footprints, and memories.

It takes months to put together an event like this. It takes me some time to deal with the aftermath as well. For the troops, it takes as much work to pull off this overnighter event as it does to do a whole week of summer camp. But it is one of the most highly demanded events we hold. It accomplishes many of the aims of Scouting in a relatively short period of time.

So why do I volunteer countless hours to host this event and camp in the snow when I could avoid the stress, the work, and the discomfort? Perhaps it’s because I take seriously the oath I took at age 14 when I became an Eagle Scout, “to give back more to Scouting than it has given to me.” Perhaps it’s because I hope in some small way to influence the lives of some boys for the better, the way others did for me when I was a youth.

I’m grateful for fantastic climate and snow conditions that developed for our Klondike Derby this year. That’s something we can’t control. And I’m especially grateful to all of the volunteers that came out and did so much work to make this event successful. I now need to buckle down and get serious about our district Camporall next fall.

Wednesday, January 09, 2008

Who's Ahead?

The media are reporting on the presidential primary like a bunch of junior high girls gossiping about the latest news of who has a crush on whom. For a brief few days, Obama was the next JFK, with an unstoppable juggernaut of hopeful and youthful voters. But today, Sen. Clinton, who was all but out of the race at the end of last week, has regained her air of inevitability.

On the GOP side, Romney is down, but not out. But after two second-place finishes in states where he expected to perform the strongest, his chances aren’t good. Huckabee was the great charismatic hope a couple of days ago. He’s not completely forgotten, but he’s yesterday’s news. McCain has now been assumed to have mounted an unstoppable charge to the nomination.

Get a grip folks! As far as actual delegates, Obama has 25, Clinton has 24, and Edwards has 18. Whoever wins the Democratic nomination needs at least 2,025 delegates. On the GOP side, Romney has 24 delegates, Huckabee has 18, McCain has 10, Thompson has 6, Paul has 2, and Hunter has 1. Whoever wins the Republican nomination needs 1,191 delegates.

So, Obama and Romney are the current leaders, whatever that means. You wouldn’t know it from the media coverage.

Let’s get real about this. On the Democratic side, the three candidates named above have 1.2%, 1.1%, and 0.8% respectively of the needed delegates. On the GOP side, the six candidates listed above have 2%, 1.5%, 0.8%, 0.5%, 0.2%, and 0.1% respectively of the needed delegates. This basically tells us that the current top three contenders in each party are in a statistical dead heat.

But why is this even important right now? We’ve had a grand total of three states complete most of their primary processes. (The Wyoming GOP will award two more delegates at its state convention.) We’ve still got 47 states and DC to go.

Well, the reason this stuff is important is that history shows that momentum builds from the early states and that later states take the cues from the early states. At least that’s what we’re told. But, no, it does not actually mean this. In fact, later states often vote quite differently than do early states. What early victories mean is that a campaign isn’t dead yet. Candidates that win big or that perform better than expected can more easily raise additional funds to spend campaigning in later states.

In this year’s compressed primary schedule, it is not at all clear that this factor will be as meaningful as it has been in past races. If you don’t already have a significant campaign machine up and running in MI, NV, SC, FL and all of the Feb. 5 states, you’re probably toast, regardless of how well you have performed in IA, WY, and NH.

All of the Democratic candidates score fairly well here. Giuliani and Romney are the only GOP candidates that get good grades here. (Giuliani has purposely foregone the early states in order to focus mainly on later states with high delegate counts, so he has no delegates yet.) McCain probably comes in next, with Thompson behind him. Huckabee, whose campaign has been run on a shoestring budget, simply doesn’t have much going in these states, and he has precious little time to get it all together. Paul has a pretty good organization of loyal grass roots supporters in most of these states. Hunter does not.

Having a great campaign machine does not mean that you can win. It means that you can be more competitive. Those that have mediocre or ethereal campaign organizations can still be competitive, but it’s a lot more difficult.

At any rate, it is not clear that the current candidate rankings mean anything with respect to who will ultimately win each party’s nomination. Nor is it clear that the IA and NH votes will ultimately prove to be meaningful in this respect. Anybody that tells you that they have a good understanding of who is going to win each nomination is either deluded or is lying. Right now, it’s all very much up in the air. With 3.3% of needed Democratic delegates decided and 5.1% of needed GOP delegates decided plus all of the uncertainties of this year’s campaign cycle, nobody really has a clue what is going to happen.

This is part of the reason for the media’s adolescent handling of the race. The fact that this is the first wide-open presidential race in more than half a century adds to the titillation. I’m afraid that we’ll have to live with this silliness for about four more weeks. By the morning of Feb. 6, there should be a lot more clarity. But somehow I doubt this will mean an end to media ridiculousness on the issue. I mean, after that, there will be another nine months to go until the general election.

Monday, January 07, 2008

Utahns Yawn as State Spending Increases

Utah has enjoyed a recent spate of huge budget surpluses. The conventional wisdom has been to ‘invest’ in areas that are chronically underfunded.

More money on transportation? Of course. Infrastructure must be built and maintained. Do you want bridge problems like they have in Minnesota? Oh, we do have those problems? Well, for heaven’s sake, let’s spend more. Maybe we can get our national legislators to toss us a few bucks to assuage their guilt. Ah yes, it’s a good time to be a transportation contractor in Utah.

More money on education? Well, sure! Don’t you know that we’re in last place in the per-pupil spending race in the nation? Don’t you know that spending more money on education will make it better? Don’t you care about the children? Never you mind about the inability to account for past spending increases.

More money on … well, just about anything? Heck, why not? We’ve got the money. And besides, we had some lean years in ’02 through ’04, where we really had to tighten our belts. Let’s splurge while we’ve got it. I mean, what area of state spending isn’t chronically underfunded?

More money returned to the taxpayers? Well, no. I mean, it would only amount a measly $X for each taxpayer. I’m sure they’d rather leave that paltry sum in the hands of the state bureaucracy. And besides, this money is so badly needed.

Indeed the Utah Taxpayer Association’s January newsletter shows, “During the 10-year time period from 1999 to 2009, total [State of Utah] government expenditures will have nearly doubled.” That isn’t meaningful unless you compare it to inflation. The newsletter explains, “Total state expenditures will increase 12% from 1999 to 2009 after adjusting for inflation and population growth.” So it’s not so bad. Or is it?

The newsletter also explains, “Government growth will easily exceed combined population growth and inflation for both [5-year and 10-year] time periods [ending 2009].” Unlike the federal government, states must balance their budgets each year. Utah has done well in this respect. So, where has all the money for this increased spending come from? The newsletter says:

“From 1997 to 2007, all major revenue sources grew faster than combined inflation and population growth and only state sales tax and motor fuel tax grew slower than personal income, while property taxes grew at a rate nearly equal to personal income.”

In other words, the State of Utah has increased its share of what comes out of its taxpayers’ pockets. If you’re a Utah taxpayer, you have less of what you earn in terms of real money, while state government has more of the money you earn. This is an ongoing trend that won’t stop with this budget year. Do you care? Or are you like the proverbial frog in the pot of water where the temperature is increased only one degree per hour?

Respected political analyst Michael Barone opines in this WSJ article that the average voter today came of age in an era of unprecedented prosperity. “The median-age voter in 2008,” he writes, “was born around 1963, so he or she missed out on the culture wars of the '60s, and on the economic disasters and foreign policy reverses of the 1970s.” Consequently, today’s voters are “relatively unconcerned about the downside risks of big government programs, and largely unaware of America's historic foreign policy successes.”

It seems that Utah voters are no exception to this trend. They seem relatively unconcerned about the fact that the growth of state government is outstripping their ability to provide for their families. So when Governor Huntsman (under whose watch Utah has experience the largest historical increase in state government spending) stands up and says that, while his 2009 budget includes another massive surplus but has no room for tax cuts, the voters shrug. When he says that all Utahns need coercive universal health care (masqueraded as a market-based solution), they cheer.

We seem incapable of casting our eyes westward to see California’s fate. After sloshing years of budget surpluses into the trough of increased government spending, the economic cycle inevitably turned from boom to bust. Angry voters ousted their standing governor in a recall and elected a celebrity his place, only to demand essentially that he not cut spending. They still want government to spend, but they aren’t so keen on paying for it.

But we can’t see that. So we celebrate Utah’s expanding government as the budget surpluses are ‘invested.’ Today, Utah’s strong economy is showing signs of weakening. The boom can’t continue forever. What will we do when the bust comes along? As the UTA notes, “More than half of all education and general fund revenues are individual and corporate income taxes, which are highly volatile.” When the economy turns down, what will happen to all of Gov. Huntsman’s celebrated education spending increases?

Ah, but why worry about that? Right now the state is flush with cash. Let’s spend it!

Indeed, in a democratic society, we have the government we deserve.

Alternatives to Political Coercion

People in Utah often wonder why there is such a contentious relationship between the UEA and the state legislature. Like all employee unions, the basic power structure of the UEA is essentially coercive. That is, the ultimate power it has is to strike, although, it also has power to employ other forms of political coercion.

That is not to say that the union is devoid of noble goals and has no history of collaborative efforts. But the basic reality remains that its power base is coercive. The state legislature is to the UEA what the executive boards of Ford and GM are to the UAW. The legislature holds the keys to the actual money that the UEA seeks to control. The basic nature of these power structures is opposition, so you end up with contention.

This SL-Trib article discusses a presently tiny organization that aims to offer education employees an alternative to the UEA. The Utah Council of Educators is a non-union organization. The cost of dues provides members with the same kind of liability insurance and legal coverage that is offered by the UEA, but at about a third the cost of UEA dues. The UTCE does not do collective bargaining or engage in any kind of political coercion. It does lobby the legislature, but its president says that the organization seeks to make friends rather than enemies on Capitol Hill. The non-partisan UTCE steers clear of “controversial and divisive social issues” and does not endorse political candidates.

The UTCE has already earned the UEA’s ire by working last year with legislators on a bill to eliminate the UEA’s de facto monopoly on representing education issues. The UTCE argued that all educator employee groups should be treated equally, and that no one group should receive preferential treatment under the law. It was hard for the UEA to deny that it enjoyed preferential treatment or to mount any decent argument in favor of retaining such.

The UTCE also “offers classroom mini-grants, teacher scholarships, and professional development support.” With its much lower dues (a difference of over $350 per year) and its non-controversial collaborative approach, the UTCE hopes to triple its membership over the next year to become about the same size at the AFT. Even then, it will be very tiny in comparison to the UEA.

Thanks to the UTCE, the UEA may have lost some of its special privileges, but it will still remain the largest single power group outside of elected government on Capitol Hill. Heck, with the UEA members serving in the legislature, it may also be the largest single elected power group on Capitol Hill. But it is refreshing to see a non-contentious (and less expensive) alternative offered.

A spokesman for the national Association of American Educators, which partners with many non-union education associations (including the UTCE) admits that these organizations do not have the political clout enjoyed by NEA affiliates. But she contends that they are “a credible voice. When legislators want to hear what educators think without any spin or agenda, they come to us.”

The 2007 legislative session proved that some powerful legislators are willing to collaborate with a non-partisan educator group that doesn’t inherently have it in for a significant number of legislators. I will be watching the next few legislative sessions to see if the tiny UTCE actually gets more of what is really important to education employees with collaboration than the massive and well-funded UEA gets with its hostile approach.

Friday, January 04, 2008

Living With the Iowa Caucus Results

Obama and Huckabee won the Iowa caucuses hands down last night (see AP article). Obama won 38% of the 220,558 Democratic voters that turned out, to garner 16 delegates. Edwards won 30% for 15 delegates, and Clinton won 29% for 14 delegates.

The story is more lopsided on the Republican side, with Huckabee winning 34% of the 114,000 GOP voters that turned out, for 30 delegates. Romney picked up only 25% for 7 delegates. Democrats turned out almost 2 to 1 as many voters as Republicans.

The Clinton campaign shrugs Sen. Clinton’s third place finish off, saying that their strategy is focused in larger states that come later in the primary cycle. (This is also the Giuliani approach. He mounted almost no effort in Iowa at all, preferring to apply his resources to larger states that have many more delegates. Incidentally, Giluliani’s got to be loving the Huckabee win in Iowa. It will make his job of running against Romney easier in the later states.)

The Romney campaign, which spent over a year making Iowa the first major battle it must win in order to leverage competitiveness in later states is also soft pedaling its loss to Huckabee, saying that Romney will be far more competitive in all of the other early states than Huckabee.

Both the Clinton and Romney campaigns are probably right about their chances in later states, but man, their Iowa losses have got to sting. You spend over a year pouring millions of dollars into building a strong campaign machine in the state. You practically live part-time in the state. And yet you find that you can’t overcome the personality issue — the fact that Iowa voters don’t get warm fuzzies about your personality, which is something that is pretty ingrained by this point in your life. Instead, they go for the candidates that have the warmest personalities. It’s got to gall you.

For Romney, the question of religion did turn out to be important. 80% of Huckabee’s Iowa voters were Evangelical Christians, like Huckabee himself (see AP report). 60% of Huckabee’s Iowa voters felt “it was very important to share their candidate's religious beliefs.” If Huckabee has to rely mostly on fellow Evangelicals, he won’t find much support in New Hampshire, or anywhere in the Northeast. He might find more support in the Bible Belt, but that alone won’t win him the nomination. He’s going to have to find ways to reach out to non-Evangelicals. At any rate, it appears that Romney had no chance to win the support of most Huckabee voters chiefly on the basis of religion.

Ron Paul came in with 10% of the GOP vote, only slightly behind Thompson and McCain, who each garnered 13%. (It should be noted that McCain won this support without even campaigning much in Iowa.) Some analysts are saying that New Hampshire’s culture and primary process favors independently-minded candidates, so that Paul could turn a much higher result in the Granite State, like McCain did in 2000. McCain is surging in New Hampshire as well. However, Paul will likely suffer the same fate in South Carolina that McCain did in 2000, since that state’s culture and primary process does not favor mavericks.

Is it any wonder that Americans are tired of Iowa and New Hampshire having such an outsized impact on our presidential selection process? Iowa is notoriously populist leaning and is generally indifferent about military issues and foreign policy. This made candidates like Huckabee and Edwards far more competitive there than they would be in most other states. New Hampshire tends to be independent minded to the point of seeming nutty to the rest of the nation. How would the nation like Utah or Idaho to have as much sway in selecting presidents as Iowa and New Hampshire?

Iowa does not actually have a very good track record of selecting eventual party nominees or presidents, but its caucuses do tend to narrow the field. New Hampshire has a better record than Iowa, but it’s not that great. Once again, it tends to narrow the field a bit. Michigan and South Carolina have better records, but it is possible that this is somewhat due to what has already occurred in Iowa and New Hampshire by the time these later primaries occur.

This year we have Wyoming (tomorrow), Nevada (Jan. 19), and Florida (Jan. 29) added into the mix of early states before most of the rest of us vote on Feb. 5. The idea is that this combination of early states, taken as a whole, provides some kind of balanced approach. But to most Americans, it still looks pretty screwy.

Wikipedia lists five proposals for changing the presidential primary system to be fairer. Some of them strangely keep Iowa and New Hampshire up front in the name of tradition. Others would assign states primary/caucus dates by lottery or rotation. Iowans and Granite Staters have made it clear that they will strongly oppose any plan that does not let them keep their overgrown power. In practice, the setting of primary dates is left up to each individual state, with the major political parties’ national committees working to exert some power over the process.

With all the bickering and ambiguity over who actually has the power to change the process, politicians have found little motivation to get serious about fixing our current presidential primary system. But this year’s messed up process may generate the necessary oomph to get the politicians going on it.

Presidential Qualifications

Dr. Lawrence Lindsey spent six years as a member of the Board of Governors of the Federal Reserve. He has served in a variety of economic advisory positions in the Reagan, Bush I, and Bush II administrations. Having seen the inner workings of three White House administrations up close and having had experience with other administrations, Lindsey feels qualified to provide a list of what he feels are minimum (non-partisan) qualifications for the presidency in this WSJ op-ed piece.

“Our job as voters should be to select someone who will (1) know what he or she doesn't know, (2) get up to speed quickly, and (3) avoid making serious mistakes in the meantime.”

To help voters determine which candidates fill this bill, and to provide additional qualifications, Lindsay suggests three questions that should be applied to each candidate.

  • 1. “Has the candidate faced a crisis or overcome a major setback in his or her life?”
  • 2. “Has has the candidate had a variety of life experiences?”
  • 3. “Can the candidate tell the difference between a foreign enemy and a political opponent?”
Of these qualifications, Lindsey writes, “No candidate is going to be perfect, and reasonable people can differ about whether a certain candidate possesses each of these traits. But these are a good filter.” Lindsay does a decent job of discussing why each of these questions is important. He also says that some past executives haven’t measured up. For example, neither Johnson nor Nixon could have passed muster on the third question. In sum, Lindsey says, “I have become a firm believer that the character traits someone brings to the job are more important than the issue papers or debate sound bites that get so much attention in the primaries.”

One of the problems of our current system of selecting presidents, Lindsay contends, is that it is better at selecting good candidates than at selecting good Chief Executives. He laments that “the process of selecting a president has little to do with the skills needed for the job.”

Conservative pundit John O’Sullivan puts forth in this NRO article some additional considerations, which Lindsay seems to be brushing aside. Although written from a conservative standpoint, it is possible to think of his discussion in a non-partisan way. I think Lindsay is correct in his contention that character supersedes issue statements in importance, but O’Sullivan is not off base when he suggests that candidates must necessarily also be ranked by how well they agree with the voter on issues.

Lindsay takes the luxury of pooh-poohing the current presidential selection process, but O’Sullivan accepts reality when he contends that candidates must also be ranked by their likelihood of winning. Adding O’Sullivan’s qualifiers means that some candidates that might in principle meet all of Lindsay’s tests might still rank low based on their positions and/or their perceived competitiveness. But applying Lindsay’s tests to O’Sullivan’s qualifiers means that some candidates with whom we might find more agreement and who might seem competitive are yet unqualified to serve.

O’Sullivan also entertains the concept that a party’s loss of a White House race might be acceptable under certain conditions. If the opponent will be a weak, unsuccessful president and/or if the party’s nominee will pull the party too far from its moorings, a loss might be preferable to a win, O’Sullivan contends. It might lead to something much better down the road. (This, of course approaches the issue as what is good for the party, and not necessarily what is good for the nation.)

Included in this is the question of how well the candidate can hold the party coalition together. Both major parties consist of competing groups that agree on enough points to form a coalition. While the power of various groups has waxed and waned, the groups that form the two parties’ coalitions have pretty much been the same since the mid-70s. Speculation as to the break-up of each party’s coalitions has frequently popped up because intra-party relationships between coalition groups have been nothing if not contentious. There are periods where these contentions are less publicly apparent, but they do not go away. When they roil to the surface, speculation of a break up is bandied about.

The GOP has more surface contention than the Democratic Party at the moment. There is concern that a candidate that cannot appeal to the whole coalition would destroy the coalition. For example, Giuliani might disappoint social conservatives, and Huckabee might disappoint libertarians and fiscal conservatives. A non-uniting candidate could cause the coalition to split, like it did in 1992 with Bush I and Perot. But, as it was in 1992, the split would prove temporary. History shows that major groups permanently leave major parties only when they perceive a better fit in the other major party. That’s not a happening thing right now for any major group in either party.

At any rate, it seems that most voters and pundits consider chiefly three things about potential candidates: 1) Is this candidate most likely to win? 2) How closely do I agree with this candidate? 3) Do I like this candidate’s personality? Sometimes the order of these questions is switched. Most Ron Paul supporters, for example, would switch #1 and #2, or maybe even move #1 to #3.

These questions are not unimportant. I think, however, we would do well to add to our analysis the tests suggested by Dr. Lindsey. Does the candidate have experience overcoming personal disaster? Has the candidate had a broad variety of life experiences? Does the candidate harshly regard foreign foes of our liberty while regarding domestic opponents without malice? Regardless of party affiliation, these are good questions to ask about each candidate.

Wednesday, January 02, 2008

Bigger Homes = Bigger Mortgages

The average home has been steadily increasing in size and number/quality of amenities for generations. The 800 sq. ft. homes that had one electrical outlet in each room and where people once raised eight or nine kids gave way to much larger homes by the time I was a kid. My parents still live in the rambler they built 45 years ago. It has 1100 sq. ft. up and down (for a total of 2200). We had only one bathroom until Dad added a second one when he finished the basement during my early teen years. Still, my folks raised five kids in that home and we didn’t feel deprived.

This Gainesville Sun article reports that the average home size has grown roughly 20% over the past decade and a half, while the average number of dwellers per home has decreased slightly over that same period. (Also see this Zillowblog post.) We are getting more floor space for fewer people. The Kaysville, Utah family of five featured in the G-Sun article is upgrading from a 2100 sq. ft. home to a 5700 sq. ft. home. They essentially say that they need the space because they’ve got more stuff than people used to have. The G-Sun article says, “In much of the country, the growth in big houses is fueled by suburban homebuyers seeking luxury, rather than big families needing space….”

The average family’s mortgage debt-to-income ratio has increased pretty much directly proportionate to the increase in average home size. Clark Howard reported on his 10/12/07 show (see here) that over one generation, “Mortgage debt has risen 50 percent, while the average size of a home has risen 50 percent!”

It isn’t necessarily the cost of the amenities we are adding to our homes that is at the root of our mortgage debt increase. The real cost of better stuff has steadily decreased over time to make it more affordable. (See this Money Magazine article for some interesting insights.) A big plasma TV today is no more expensive in real terms than was a basic b/w TV set in 1960. But it requires a lot more space, so we build bigger and more opulent homes, which demand bigger and more oppressive mortgages.

An interesting feature of our economy is that this constant push for bigger homes affects everyone. A spokesman for the National Association of Home Builders reports, “You cannot sell a new home today with 1½ bathrooms,” which was the average home in 1970. “Even if only two people are in house, they still want 2½ to three bathrooms.” In other words, housing expectations have increased across the board, even among the poorer classes. So everyone, including the person that rents, is affected.

This would all be fine if housing costs as a percentage of family income had remained steady. But that’s not the case. Total family compensation has increased dramatically during my lifetime, mainly due to the increase of two-earner families and the increase of employment benefits. (Wages not including benefits have remained roughly stagnant.) But for all this added income, a greater percentage of it is going to mortgage debt than when we had single-earner families with fewer employment benefits. We are using this increased debt to fund bigger, nicer houses with a lot more stuff.

Our economy is presently structured to get people into debt early and then keep them there. During my lifetime, demand for debt instruments has exploded and the market has responded with increasingly easy credit. Median household debt from all sources has increased 1200% since I was a child. That’s a good way to get lots of stuff before you have to pay for it, but it’s not a good way to have peace of mind.

It is possible to have the peace of mind of minimal or no debt, but it requires a lot of dedication and a willingness to be satisfied with less stuff than your income peers. This kind of peace does not fall from the sky. It requires serious focus and effort. It requires swimming against the current of what everyone else is doing. Thanks to many blessings, my wife and I have been able to manage our household of seven on a single income for many years, which is certainly not what most others are doing. Lower cost, low debt living is not easy. But it’s worth it.

The Price Must be Right

Recently I drove past a house that my son passes each day on his way to and from school. My son, who was in the car with me, noted that the realtor sign in the yard was different. First the home had been for sale by owner for many months. Then it had a professional realtor sign out front for half a year. Now there is a different realtor sign.

As we drove by the house, my son wondered aloud why these people can’t seem to sell their home. I responded that there were only three possible reasons: 1) they are asking too much, 2) they haven’t successfully advertised the home to realistic potential buyers, and/or 3) it’s just a lousy home (i.e. due to location, construction quality, ground water problems, etc.). Of course, all of these things basically come down to one thing: the sellers are insisting on pricing the home higher than the actual market value of the home. You can sell even a desperately awful home if the price is right.

The home in question is at least 40 years old. Its construction quality was obviously below average even when it was new. The home has had many owners over the years, but some of the recent owners have done major structural and cosmetic upgrades to the place. It looks much nicer than it ever has. The location is decent. It’s in a fine neighborhood. It doesn’t have water problems. The place has a track record of being successfully sold in the past. It has been aggressively marketed for nearly a year, and yet it does not sell.

The only possible answer is that the owners are unwilling to sell the home for the price the market will currently yield for it. I suspect (but do not know for sure) that the owners have more invested in (and/or owed on) the home than what a reasonable buyer is willing to pay for it. Perhaps they even went into the place as an investment. Many people have bought and upgraded homes to sell them for a profit. But in a declining real estate market, any gain you might have received for your efforts can quickly evaporate as market prices generally decrease.

If you are considering buying or selling a home, it certainly pays to be aware of what the real estate market is doing — especially the market in the area where the home is located. There are general national, state, and regional trends that matter. But what matters most is the market in the immediate vicinity of the home. Armed with this kind of information, you can make appropriate buying/selling decisions.

You can't make the real estate market do what you want it to do. I suppose if you're not very serious about selling, you can put a high price on your home and then wait to see if some sucker comes along that is willing to pay it. But if you're serious about selling, the only way to move your home is to price it according to market conditions.