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Media Infiltrations: Of Interventions and Conservative Principles  National Review Online September 23, 2008 Quit Doling Out That Bad-Economy Line The Washington Post September 14, 2008
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Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!
Saturday, December 23, 2006
START HERE AND WORK BACKWARD... ...year by year, to the paleolithic era. It's the timeline of the history of information processing. I saw this on David Isenberg's blog, which has become an crack house of Leftist dreck, but still worth checking because of cool stuff like this.Posted by Donald L. Luskin at 11:54 PM | link
NET NEUTRALITY ADVOCATE VIOLATES NET NEUTRALITY Microsoft has poured zillions into MoveOn.org's efforts to portray cableco's and telco's as potentially discriminating against web sites they don't like -- and now Microsoft is doing the very same thing. It's new Internet Explorer 7.0 browser has a feature that warns users about visiting web sites that might be "phishing" scams -- but Microsoft's way of judging the risk of that is simply whether or not a web site is a big company that Microsoft approves of. What about web sites of small companies, of individual people -- what about this very blog? Just because I'm not Google or Amazon or IAC, IE7 will libel me by warning that I might be an online scam artist. Lobbyist, net-neutralize thyself! Stop discriminating! Read more about this on Scott Cleland's blog.
Posted by Donald L. Luskin at 6:46 PM | link
"FAIR" TRADE? OH, COME ON The Dems lay their protectionist cards on the table, concealed only by flimsy linguistic tricks like calling protectionsism "fair trade," in this WaPo op-ed by senators Byron Dorgan (D-ND) and Sherrod Brown (D-OH). My DC lawyer/lobbyist friend weighs in:
As Reagan once observed, the trouble with liberals is they believe so many things which aren't true. Here in this op-ed, two Democrats, one in Senate a long time and the second just elected, opine that free trade hurts the middle class.Update... Reader Kevin Meyer has some thoughts about how productivity stats are calculated in the age of global sourcing.No doubt most American middle class families don't think in terms of productivity or other economic terms, so their opening sentence is sadly true. The rest of the piece is a house of cards propped up for the camera. How do they not see that imported goods are imported for a reason and by Americans. Putting tariffs on imports via the sneaky not-so-clever ruse of "fair" trade, just undermines progress. Their favorite show tune must be "Stop the world I want to get off."
You'd think the economy was doing poorly that voters would put these guys in power on the basis of these arguments. The electoral situation in Ohio was aptly described as a perfect storm -- notorious corruption by numerous Republican incumbents, a perceived downturn in certain manufacturing jobs and lots of other trouble. Yet, the trouble for jobs is that Ohio isn't changing fast enough to adapt to new economic opportunities and is still overly dependent on heavily unionized industries, which are in decline for many reasons.
Take this quiz -- if you could locate a new Toyota plant in any one of the following four states -- Ohio, South Carolina, Mississippi or Texas -- where would you rank Ohio? Ohio doesn't benefit from protectionism; Ohio needs to quit fostering losers and get lean. The state with the second most auto industry jobs comes in last in this quiz, doesn't it? Count on this: next year and perhaps every year, Ford and GM will fire more UAW workers. Elsewhere in America, Toyota makes a better product and will become number 1 in total sales. Who will Senator Brown blame? The middle class car buyer who prefers anything with a Toyota badge on it? How would "fair" trade fix Ford?
Someone should estimate the cost of "fair trade" and project the impact on the average Wal-Mart shopper. We can start by spelling it "fare" because it hikes the cost of all goods as a spoil to the least efficient actors in the economy.
Posted by Donald L. Luskin at 6:46 PM | link
YOU AREN'T WATCHING BIG BROTHER So much for Dem promises to open up the processes of government to public view:
Speaker-to-be Nancy Pelosi cited the need to preserve the ''dignity and decorum'' of the House as she rejected a request Friday that C-SPAN operate its own cameras in covering the chamber.Thanks to colleague Tom Demas for the link.The public service network has provided gavel-to-gavel television coverage of House proceedings since 1979. But the House leader has kept control of the cameras, with coverage generally limited to tight shots of the speaker or the podium...
C-SPAN's chairman and chief executive told Pelosi, D-Calif., that under this arrangement, cameras are prevented ''from taking individual reaction shots or from panning the chamber, leaving viewers with an incomplete picture of what's happening in the House of Representatives.'' Brian Lamb wrote Pelosi on Dec. 14 that media cameras long have been permitted to cover committee hearings and that for a dozen years or more independent cameras have been allowed into the chamber for joint sessions and joint meetings in the House.
He said C-SPAN would cover floor proceedings in the same manner it covers hearings _ ''fully, accurately and with the unbiased production style on which we've built our reputation for the past 28 years.''
Pelosi said in her response Friday, ''I believe the dignity and decorum of the United States House of Representatives are best preserved by maintaining the current system of televised proceedings.''
Posted by Donald L. Luskin at 1:34 PM | link
KUDLOW REPLAY Here's a YouTube video of Thursday's hit. I'm really starting to feel all alone out there on this inflation forecast!
Posted by Donald L. Luskin at 1:26 AM | link
Friday, December 22, 2006
THE MYSTERIOUS EAST From Muzi.com:China scraps wine maker's mass nude run promotionPolice in central China have scotched a wine maker's plans for a mass Christmas Eve "nude run" which the company said was a public interest event to discourage the use of "excessive packaging" in the industry.
...The company's advertisement called for "auspicious" men and women under the age of 30 with "healthy bodies" and "regular features" to apply.
"The goal of this streaking event is to raise consumer awareness and declare war on the excessive packaging of 'baijiu' through the language of the body," the report quoted a manager surnamed Ma as saying.
"The government has called for a sustainable society. Although there is no statute limiting packaging -- and this action may seem a bit much -- our focus is on the broad mass of consumers," Ma said.
Posted by Donald L. Luskin at 9:42 PM | link
A DEM DISASTER FOR STOCKS? My SmartMoney.com column today:
I'm already starting to see some very disturbing signs about what the new Democrat-controlled Congress might mean for stocks, and the economy.
Already the gigantic merger between AT&T and BellSouth has been held up by a Federal Communications Commission official because he fears retaliation by powerful Democrats. Oil companies are scrambling to volunteer billions of dollars in government contract adjustments, because they fear Democrats will slap them with massive taxes if they don't. And our Treasury secretary and Federal Reserve chairman have gone to China to plead for a revaluation of the Chinese currency — thus raising the prices of all Chinese goods American consumers buy at Wal-Mart — to forestall dangerous protectionist legislation from the new Democratic Congress.
Maybe you hate big telephone companies. Maybe you hate big oil companies. Maybe you hate Wal-Mart. Then this new Congress is for you!
But if you own stocks, and expect them to keep their value, you'd better think again.
Don't ignore this by telling me about the war in Iraq, or runaway government spending, or Republican corruption, or any of that stuff. Those issues are important, but they have nothing to do with the risks I'm talking about.
Don't blow this off by telling me about some "study" that "found" that the stock market performed better historically under Democratic presidents. I'm not talking about presidents, and I'm not talking about history. I'm talking about this Congress, right here, right now.
And don't tell me about how great the 1990s were for stocks under Bill Clinton, a Democrat. He was the president, not the Congress. And the great 1990s bull market for stocks got going after Republicans took control of Congress in the 1994 election.
The biggest threat from the new Democratic Congress is protectionism — legislation designed to protect American jobs by restricting imports from other countries. Here's a perfect case to see the difference between a Democratic president and a Democratic Congress.
In the 1990s, Democrat Bill Clinton was a powerful advocate of NAFTA — the North American Free Trade Agreement — that opened up unrestricted commerce between the U.S. and Mexico. Democrats in Congress — beholden to their supporters in organized labor who were worried about competition from Mexican labor — voted against NAFTA. The landmark free-trade law was only enacted because Republicans in Congress supported it. The result has been faster growth and more jobs both north of the border.
Today it's China that the unions are worried about, not Mexico. Democrats (and a few Republicans, too) would love nothing more than to slap huge taxes — 27.5%, according to one piece of proposed legislation — on goods imported from China, so they'll be less competitive with the same goods made here. How brilliant — a gigantic price increase for everything we buy at Wal-Mart. Like that will help the economy.
To prevent the utter lunacy of an outright tax on Chinese imports, the Bush administration has been trying to get China to revalue its currency, the yuan, in relation to the dollar. At a stroke, that would make all Chinese goods more expensive in dollar terms. The administration is hoping that a small yuan revaluation will be better than a huge tax.
We call that appeasement. It didn't work against the Nazis, and it won't work against the protectionists. But no less distinguished authorities as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were in China last week trying to talk the Chinese into it.
Last week it was announced that five major global oil companies — including ConocoPhillips and Marathon Oil — agreed to pay billions of dollars in increased royalties on oil leases with the U.S. government now that oil prices are so high. Their contracts, made in the late 1990s, don't mention any such royalties. But the Department of Energy, which negotiated the contracts, claims that the omission was an error.
Hey, a deal's a deal. The Department of Energy wrote contracts like this with 59 different companies — all the big boys — and we're supposed to believe they screwed up every single deal? Apparently so — and Nancy Pelosi, the new Democratic Speaker of the House, has vowed to pass new laws to collect the royalties that no one ever heard of as part of her first 100 hours of legislative action.
I don't call that "royalties." I call that a windfall-profits tax. And the energy industry is so scared of it, they're starting to line up to appease Pelosi with "settlements" before the new Congress convenes. Look for Chevron and Exxon Mobil to cave next.
And how about telecommunications policy? The Department of Justice has already cleared the proposed AT&T merger with BellSouth as having no antitrust implications. But for months it's been held up at the FCC, pending that agency's clearance.
The FCC's Republican chairman, Kevin Martin, is for the merger, as is another Republican commissioner. The two Democratic commissioners are opposed, insisting that the two companies agree to onerous "net neutrality" regulations on pricing and access as a condition of approval — even though none of their competitors will be similarly burdened.
A fifth commissioner — a Republican — could break the tie. But he refuses to because he's afraid that the Democratic senators and congressmen who will control telecom policy next year will haul him up on ethics charges. Yes, even though the FCC's general counsel has already officially ruled that no ethics issues exist for him. More appeasement.
So will this merger ever go through? Will billions of dollars of new shareholder and customer value be created? Or not? Well, with the Democratic Congress coming in, it's not going to happen without blackmail — either of FCC commissioners, or of the two companies that want to merge.
As I wrote here right after the election, I doubt that any really big, bad antibusiness legislation is going to come out the new Democratic Congress. But small, bad things will happen. And some good things that might have happened now won't happen.
We'll survive. But it doesn't help America to have its currency devalued, forcing up the prices we pay for foreign goods. It doesn't help America to take money from oil companies who should be exploring for new sources of energy. It doesn't help America to prevent two companies from merging and creating a more efficient broadband environment.
It doesn't help shareholders of Wal-Mart, ConocoPhillips, Marathon Oil, Chevron, Exxon Mobil, AT&T or BellSouth.
Who does it help? You figure that part out...
But if you're an investor, watch your wallet.
Posted by Donald L. Luskin at 11:23 AM | link
THE MYSTERIOUS EAST Headline from the People's Daily:
Carlyle and Dah Sing to buy bank stakeMust have been one hell of a song.
Posted by Donald L. Luskin at 10:38 AM | link
YOUR 15 MINUTES IS UP Yesterday I had posted another shot in the little blog-war I've gotten into with Peter Ferrara and Tom Giovenetti concerning their false claims that the Bush administration is actively seeking a tax hike as part of a Social Security reform compromise. After posting it, I took it down because I thought better of the snarky tone I'd taken in it -- and I realized that I was only feeding Ferrara and Giovenetti's PR machine by keeping their fantasies alive in the blogosphere. Shortly after that I got several nasty emails from Giovenetti (which my respect for his privacy prevents me from reproducing here) taunting me for having taken down the post. Well, no good deed goes unpunished when you're dealing with unscrupulous people. Now Giovenetti has even blogged about it, publicly crowing about the fact that I took the post down, trying to create some kind of support for his campaign of deception even from that trivial factoid. What's that old line about getting into a mud-fight with a pig? The problem is that the pig likes it. So for the moment I'll just wait for history to prove Giovenetti to have been a fool. He can keep his PR echo-chamber operating, citing media that quote him and his cronies as "proof" of his absurd speculations, and I'll continue to provide quality expert analysis of the realities of the Social Security reform challenge. To each his own.
Posted by Donald L. Luskin at 9:37 AM | link
THE BAIT AND SWITCH IS HERE As a Democratic congress prepares to take office, Paul Krugman prepares the intellectual groundwork for abandoning any pretense of the "fiscal responsibility" that the Dems have raved about the last six years. Here's the narrative: a balanced budget was fine in the 1990s, but it set the stage for GOP abuses in the 2000s -- so we need to bust the budget now to show how important big government is, and to prevent possible abuse in case another GOP president is elected. No kidding.
In a saner political environment, the economic logic behind Rubinomics would have been compelling. ... Since the 1990s were an era of peace, prosperity and favorable demographics..., it should have been a good time to put the federal budget in the black. And under Mr. Rubin, the huge deficits of the Reagan-Bush years were transformed into an impressive surplusBut ... Mr. Rubin's surplus was a bad thing, because it greased the rails for Mr. Bush's irresponsibility.
Suppose the Democrats can free up some money by fixing the Medicare drug program, by ending the Iraq war and/or clamping down on war profiteering, or by rolling back some of the Bush tax cuts. Should they use the reclaimed revenue to reduce the deficit, or spend it on other things?
The answer, I now think, is to spend the money - while taking great care to ensure that it is spent well, not squandered - and let the deficit be. By spending money well, Democrats can both improve Americans' lives and, more broadly, offer a demonstration of the benefits of good government. Deficit reduction, on the other hand, might just end up playing into the hands of the next irresponsible president.
In the long run, something will have to be done about the deficit. But given the state of our politics, now is not the time.
Posted by Donald L. Luskin at 9:29 AM | link
Wednesday, December 20, 2006
ANOTHER APPEAL TO OUR BAY AREA FRIENDS Christmas is for children, and so is this very worthy cause. Please click here.Posted by Donald L. Luskin at 2:00 PM | link
TELECOM REGULATION PRIMER I've been studying the issue of so-called "net neutrality," so I've been trying to understand the wider context of telecom regulation, and how it has infuenced the boom-and-bust cycle of the telecom industry. My friend Bret Swanson at the Discovery Institute has been a most valuable resource. Here are three great links he just sent me, pointing to commentaries that explain it all.
Peter Huber on the 1996 Act for the Manhattan Institute
A 2006 Journal op-ed by Swanson on "net neutrality" and recent deregulatory developments
Posted by Donald L. Luskin at 9:42 AM | link
Tuesday, December 19, 2006
ATTENTION FRIENDS IN THE BAY AREA Want to give the most important Christmas present of you life? Click here. More info here.Posted by Donald L. Luskin at 8:46 PM | link
THE RELIGIOUS RIGHT, LEFT AND CENTER It's taking over the world!
Posted by Donald L. Luskin at 11:23 AM | link
PROBLEM SOLVING Readers have some views stimulated by my dialog with George Gilder (here and here). Rich Sinda writes,
I thought the whole point of the "Don't Solve Problems" mantra was for the government not to try and solve problems for us. It would be insane for me not to solve my personal problems. i.e. If I don't like my job I should get a new one. I thought the whole idea was for the government to let us solve our own problems instead of trying to do it for us. Isn't that what the whole personal accounts thing is all about? Putting responsibility back on us for our own welfare? If we aren't going to bother solving problems maybe we should just leave the tax code like it is!My DC lawyer/lobbyist friend writes,
If the government “solves” a problem, it uses its regulatory power to stop someone from doing something, or burdens A to pay for B. In the business world, an “imbalance” or an unmet need, sparks innovation and competition to fill the need. If some internet users want faster upload speeds and have reasons to pay for better service, they will create the revenue stream which solves the problem without subtracting service from or adding cost to others. Therefore, to solve the “net neutrality” problem (if there is one) let the market work. Otherwise, all the government can do is slow down the deployment of a much faster system.Update... George adds to his earlier reply to me:Consider the problem for a small but growing number of Internet users who upload lots of content to the web, considering that most broadband packages offer slower upload speeds comapred to download speeds. I predict Ed Markey will have investigative hearings on this upload speed problem, just because it’s an easy way for him to look like he’s helping the Davids fight the Goliaths. Maybe the reason a podcaster isn’t willing to pay for the upload delivery costs of its product is that no one pays them for it, which means it’s economic value is zero and its only purpose is vanity.
Sorry, Don, for the precipitate reply, which definitely needed more concessive phrasing. My role on my board is to sharpen debate rather than to mute it. Of course, you value growth and need no sanction from Milton. But I do believe that social security and its actuarial flaws tie libertarian minds into knots and embroil Republican accountant-economists in self-defeating tangles of cleverness. Social security is a pay-as- you go pension scheme and it can be changed as it goes. No macro solution today is worth a dime in higher taxes and no direct abolition is remotely practical in politics. We should focus on cutting the payroll tax and leave the debt and catastrophe toting to Democrats.When we cut taxes we win. When we engage all the special interests in anti-spending campaigns we lose.
Anyway, I remain a great admirer. And you have become great on TV!
Best,
George Gilder
Posted by Donald L. Luskin at 10:45 AM | link
Monday, December 18, 2006
DO YOU HEAR THIS, SPEAKER PELOSI? From Adam Smith's Wealth of Nations, published in 1776:"Apothecaries' profit is become a bye-word, denoting something uncommonly extravagant. This great apparent profit, however, is frequently no more than the reasonable wages of labour. The skill of an apothecary is a much nicer and more delicate matter than that of any artificer whatever; and the trust which is reposed in him is of much greater importance. He is the physician of the poor in all cases, and of the rich when the distress or danger is not very great. His reward, therefore, ought to be suitable to his skill and his trust; and it arises generally from the price at which he sells his drugs. But the whole drugs which the best employed apothecary in a large market-town, will sell in a year, may not perhaps cost him above thirty or forty pounds. Though he should sell them, therefore, for three or four hundred, or at a thousand per cent. profit, this may frequently be no more than the reasonable wages of his labour, charged, in the only way in which he can charge them, upon the price of his drugs. The greater part of the apparent profit is real wages disguised in the garb of profit."Reader Alan Scanio sent this in, noting "This should probably be pasted all over Pfizer's web site. Apparently, grumbling about drug price-gouging has been around for hundreds of years."
Update [12/19/2006]... Reader David Katten notes that Wealth of Nations is available free online.
Posted by Donald L. Luskin at 9:14 PM | link
MORE FROM GILDER George Gilder has responded to my response to his warning "Don't solve the Social Security problem." George writes on his blog,
This reply dramatizes the flaws in the libertarian mind, which Luskin, who is right about most things, superbly exemplifies. Growth is not to be valued for its manifest and diverse benefits but is somehow deemed to be nullified because it will expand social security payments under the current formula in some actuarily unsustainable way. Then, sensing that this stance is somehow untenable (if social security is unsustainable it will not be sustained in real terms), Luskin establishes his intrinsic virtue by citing the sainted Milton advocating some politically impossible abolition.I have to say I'm a little surprise by both the substance and tone of this response. What have I ever said that suggests that I don't value growth, or that I think growth is "nullified" by any attribute of Social Security? I'm not sensing my view is untenable. I'm not citing Milton Friedman for effect. I don't need to establish my virtue. Why does George say all these things? Oh well...
Posted by Donald L. Luskin at 1:56 PM | link
Sunday, December 17, 2006
THE MYSTERIOUS EAST You can give labor away in China, but not airplane tickets.A travel agency in east China's Shandong Province has been fined 150,000 yuan (19,180 U.S. dollars) by the local government for selling air tickets for one yuan (13 U.S. cents) each.Why prohibit discounting? But even more mysterious -- why did it take three days for these seats to sell out?The Jinan Price Bureau said in a notice that Jinan Spring Holiday Travel Agency had broken the regulations on selling discounted air tickets by the National Development and Reform Commission and the General Administration of Civil Aviation of China (CAAC).
Jinan Spring Holiday Travel Agency and its parent company, the budget airline Spring, put more than 400 one-yuan tickets on the market on Nov. 28 and they sold out in three days.
Posted by Donald L. Luskin at 9:52 PM | link