Thursday, January 31, 2008

Update and a Book Review

State of the Union

I was pleased to hear the President continue his support for Health Savings Accounts. He’s a lame duck and the Democratic controlled Congress is likely to do nothing about them, but at least he’s keeping the concept in the public eye. I was also pleased that he made a stand on earmarks. I wrote recently about the corrupting influence of earmarks a few weeks ago. If, like me, you happened to send an e-mail through the link I gave voicing your support to the executive order to ignore the earmarks, take note that you may have made a small difference.

Book Review

I was planning to suggest a few books that I have read since Christmas, but 3 of 4 were not easy reads. For one of them, I have had to wear out and wikipedia to explain all the terms. However, I read Freedomnomics by Economist Dr. John Lott. This book was a pretty easy read and I found some of the information jaw dropping. His specialty is crime and punishment and Chapter 4, which focuses on that, just blew me away. It really showed how conventional wisdom is flat out wrong when you look at the data on crime.

On a personal note, I sent him an e-mail to ask a question about an op-ed he wrote for From time to time I write more famous people to ask them a question or send a rebuttal, but I never hear back. Well, Dr. Lott not only e-mailed me back, but took the time to further explain his position. Even more, I sent the e-mail late in the evening and he replied by 6:30 the next morning. Wow! I think it says a lot about Dr. Lott, given that he wrote a top selling book and op-eds to the biggest names in media, but still takes the time to answer questions from average people.

His book is available at, but I checked it out from my local library.

Read the book, and as always, let me know what you think.

Monday, January 21, 2008

Mail Chauvinist

Last week I asked you to send me suggestions on how we could shrink the size of the government. My father responded and sent me a lengthy list. One of the areas he believes we could rid ourselves caught my eye because I had not thought about it in a while. Privatizing the Post Office.

I occasionally go to the Post Office, but it always seems like a hassle. The line is always long, and it takes forever, so I typically avoid going unless I have an unusually sized letter or box. At work, nobody uses the post office. We send everything via FedEx.

Increasingly, the Post Office is becoming more and more unnecessary. Do we write letters or do we send e-mails? We can pay our bills on-line. Fed-Ex and UPS deliver millions of packages. In my mailbox, it’s 90% junk that I don’t really want anyway.

It strikes me as odd that a government run organization would run directly in competition with private companies. FedEx, UPS, and DHL all have airmail and fast delivery as well as the Post Office. Why do we need a government organization competing with private companies?

It is true that the Post Office is required not to lose money on an on-going basis, but this hides some important facts. According to the National Review Online:

Few Americans realize that the USPS already has accumulated over $70 billion in unfunded liabilities — mostly money promised to employees in retirement and health benefits. The USPS doesn't have that money. Nobody knows how on earth it's going to meet these liabilities.”

If FedEx owed $70 billion to its employees, do you think the government would bail them out? Not likely. Private companies are required by law to deposit money into an account to maintain a high probability of paying off their pension plan obligations. The government is not required to do the same thing as private companies. I wonder who is going to have to pay this huge debt.

Some might wonder what we would do without a postal service. There are already dozens of shipping companies, local and global, that carry letters and packages. If there are profits to be made, you had better believe that they would be there to ship your letters. If you fear a rise in stamp prices (or mailing prices) because the government can perform this task cheaper than a private company can, please move the magic markers away from your nose.

Some might also wonder what other countries are doing. Well, by 2009 we will be one of the last countries in the industrialized world to have government run mail service. According to the same article, “The European Union aims to privatize all its national postal services by 2009.” According to Forbes, Italy will do it by 2008. Japan has already privatized their postal service in 2005.

Aren’t we always supposed to be like Europe?

As always, tell me what you think.

Wednesday, January 16, 2008

Thoughts and Ideas

Two topics this week.

More thoughts on Health Care

Over the last few months I have written a number of posts concerning the universal health care proposals. My three main criticisms of these plans are:

1. The Universal insurance plans proposed continue the HMO style of health insurance. HMO style insurance encourages over use of medical services by separating us from the actual expense of health care.

2. These Universal HMO plans by Obama, Edwards and Clinton also discourage people from finding the least expensive doctor or treatment. We don’t pay the costs so we don’t bother finding this information

3. HMO style insurance over insures us and leads us to take less care of our health because they don’t face the financial repercussions.

Well, I came up with yet another criticism of these proposed moves towards government run health care systems like those that exist in Canada and Western Europe. To be fair, none of the Universal Insurance plans Democrats have proposed would cause side effects of the size I’m talking about. However, all three have mentioned the “excessive profits” that drug companies are making and their party has been pushing to confiscate these profits or mandate lower prices by law. These moves could easily cause the effects that I fear.

According to the Kenneth Shadlen of Development Studies Institute, between 1996 and 2000 the United States accounted for 63% of all medical patents worldwide even though we make up only 5% of the population. Even when you compare the U.S. to Western Europe we blow them away. On a per capita basis, the U.S. puts out 2 to 2 ½ times the medical advances of the UK, France, Canada, and Germany. Clearly, our medical system, based on profits, outperforms the European countries with socialized medicine. The rest of the world is relying on our free market system because we choose not to exclude them from new medicines and technologies.

All else being equal, if the United States were to switch to a similar system for medicine as the four mentioned, worldwide medical advances would fall by almost 40%. Instead of finding cures and treatments for say 500,000 people next year, it would only be 300,000. That treatment you were hoping for that was only 10 years off could be 18 years off. How much needless suffering and pain would we inflict upon the world if we were to do as others have chosen to do?

Before we barrel down the road towards socialized medicine, we need to appreciate what could be the catastrophic consequences.

It’s a Nice Idea, But It Can’t be Done

Recently, in this newsletter, on my blog, and other blogs I have been defending the idea of Texas dropping the property tax for a sales tax in the spirit of the Fair Tax. I’ve come across general support, but also some doubt that it could ever be accomplished. I'm told that like the flat tax, fair tax, and many of the ideas that I have proposed, these changes are too ambitious to ever occur. I have run across some evidence that these doubt are unfounded.

The state of Utah recently switched from a complicated income tax with lots of loopholes and deductions to a Flat Tax. Read about it here:

The governor of the state of South Carolina recently proposed a budget that includes a flat tax option where citizens can choose whether to pay their state income tax under the existing system of deductions and loopholes or pay a flat tax.

“Under the plan, residents could choose to pay a flat 3.4 percent income tax rate. In exchange, they could claim no tax deductions or credits.”

When the winds are blowing against the ideas of the free market and small government, it seems like an impossible task to significantly reduce the size of our government. Over the last 20 years, Ireland has shown that it can be done.

In 1985, government spending accounted for 54% of the Irish economy. The Irish made a choice to reduce the size of government and they did. Over the last twenty years, the Irish have cut government spending by 35% as a percentage of GDP. Their country now has a lower overall tax rate than the United States. They have moved from one of the poorest countries in Western Europe to one of the wealthiest. The Heritage Foundation lists them as having a more free economy than the United States. In 1985, the average Irish family made 40% less than their French and German counterparts. Today, because of the massive spending cuts and massive growth from that, the Irish make 40% more than the French and the Germans according to the IMF.

Do you think that we can move to less government in the United States? Tell me yes or no. Tell me what you think is the easiest government spending to get rid of. Send me an e-mail or go out to my blog.

As always, tell me what you think and pass this newsletter along to anyone who might be interested.

Tuesday, January 8, 2008

Supply Side Corruption

I suspect everyone has heard of Alaska’s “Bridge to Nowhere”. This wonderful piece of pork barrel spending planned $300 million to build a bridge as long as the Golden Gate Bridge and higher than the Brooklyn Bridge to connect a town of 7,400 people in southern Alaska to it’s airport across the bay. More specifically, it was an earmark.

What is an Earmark?

A wordy definition given by the Congressional Research Service is on p.5 of this pdf. An earmark is a small part of a bill inserted by a legislator to direct funds to a specific project or organization, typically within his or her own district. In this case, Congress approved a sum of money for transportation in Alaska, but Sen. Ted Stevens inserted an earmark to dedicate a big chunk towards his bridge. Wisely, Sen. Coburn of Oklahoma successfully fought to remove the earmark.

Sen. Stevens’ defense, made by many, is that he knows his state better than bureaucrats in Washington. Even though the bureaucrats do not live in Alaska, it is hard to believe that any one person could be smart enough to know the best use of funds in a state that covers 500,000 sq. miles. The places and people he knows would certainly get more attention.

If this were the only problem with earmarks, it would not be worth talking about. The real problems are much bigger. Instead of coming up with solutions for big issues, they are sitting in presentations by hat-in-hand organizations listening to pleas for government handouts.

Earmarks also increase total spending. It may be true that a Rep is simply sending a portion of his or her district’s funds to a certain project or organization, but having that earmark gives them a stake in seeing the bill pass. If a Congressman is worried about getting re-elected and can save his neck by building a nice museum in his district by use of an earmark, the temptation is to vote for the entire spending bill regardless of how bloated it gets.

In 1994, Republicans swept to power promising fiscal discipline because the spending habits of Democrats were out of hand. The Republicans held strong for a few years, but soon succumbed to the money game and the number of earmarks and pork barrel projects skyrocketed. In 2006, the Democrats swept to power promising fiscal discipline and earmark reform. They then proceeded to vote down the earmark reforms and started busting the budget with pork-filled bills.

In a letter to House Majority Leader Nancy Pelosi concerning earmarks, Rep. Carolyn Cheeks Kilpatrick is quoted in an article by

“There are a few examples of where your help could significantly assist a few members in highly contested races,” she wrote.

Apparently, this Congresswoman is requesting that the party leadership should use public money to help secure the re-election of party members by use of earmarks. This is unbelievable! Let me make it clear: She wants to take YOUR money and give it to lobbyists to help keep her party in power!

In response to this letter Rep. Campbell of California said, “This letter appears to request taxpayer dollars to aid in political campaigns, which is improper and possibly illegal.

Note: I don’t like to make a big issue out of offhanded quotes, but her quote was in a prepared letter with her signature. This was not a misstatement and was not taken out of context.

Most importantly, there is the very real problem of lobbyists making a campaign donation and the Congressman magically seeing the light and deciding that yes, the road leading to said lobbyist’ proposed development should be expanded. In other words, corruption.

A few years ago, Congress passed the McCain-Feingold bill to limit donations and lobbyist influence. It does not seem to have worked, as there has been no mass exodus by lobbyists out of DC. This year, Congress slipped thousands of earmarks into bills to help special interest groups. The problem with the McCain-Feingold bill is that it was an attempt to reduce demand for government handouts. If you can cure the demand for free money, I’ll nominate you for a Nobel Prize. It is not the demand for free money that can be controlled, it is the supply.

We need to ban earmarks, plain and simple. If a Congressman cannot give funds to a particular project or organization, the lobbyists will stop asking for money. If there is no supply of free money, there is no demand for free money.

This is also one of the reasons I support the flat tax. If there is no supply of tax breaks and loopholes, there will be no demand for tax breaks and loopholes.

To end corruption and the appearance of corruption, we have to cut off the supply of free money handouts. We must ban earmarks.

Right now, an organization called FreedomWorks has a website set up to send an e-mail to the President letting him know you want him to override the earmarks. It was quick and easy. I sent one and I hope you do too. Check it out here.

As always, let me know what you think.

Tuesday, January 1, 2008

The Moral Man

Over the last few months, I have read and listened to a number of people on the left describe the moral duty of Americans to help the poor. Because of this, they believe that we need to raise taxes, specifically on the wealthiest Americans, to accomplish this.

Many of us are repulsed by this kind of thinking straight away, but let’s really examine what these people are saying.

Who has a moral duty to help the poor? Don’t we all? So, if I vote to tax the wealthy, when I am not wealthy, and use the money to pay government workers to help the poor when I am not a government worker, have I done a moral thing? How can it be moral for someone to volunteer none of their own money and none of their own time towards those in need? Did Jesus tell the rich young ruler to confiscate his neighbor’s possessions and give them to the poor? Of course not, that would be nonsense. It would also be nonsense to believe that someone is doing a moral thing by forcing the rich to help the poor. They should remove the plank from their own eye before removing the speck in another’s.

Now are the rich doing something moral by paying taxes to help the poor? How can we consider an act moral if it is by compulsion? It may be moral not to cheat on your taxes, but it is not a moral act merely to obey the law. Recently, the press reported the “heroic” acts of Billionaire Warren Buffett when he requested that Congress raise his taxes. Was this a moral request? Hardly. What is stopping Warren Buffett from cutting out the middleman and simply writing a check? The government accepts donations. No, Warren Buffett wants to volunteer other people’s money and he wants to be on TV so that he can make a spectacle of his generosity. It is not a moral act to volunteer other people’s money.

Wouldn’t it be moral to take money from rich people since they got that money by taking advantage of the little guy? If Warren Buffett made his $30 Billion by taking advantage of other people, surely he should go to jail, not just pay some taxes. By using this excuse to tax everyone above a certain level, we are claiming that every single one of them did something immoral to gain that money. This is absurd. Should they all go to jail? Is it moral to take away money from every person because they have or make significant sums of money? This claim lacks proof, so it is not moral to take money away from someone simply because of a high income.

Is it moral for the poor to help themselves by volunteering the money of the rich? Of course not, you can’t use the government to enrich yourself and call it moral.

It is not moral for the poor to tax the rich for their own gain. Nor is it moral for the middle class to tax the rich to help the poor. Nor is it moral for the rich to avoid prison by paying their taxes. So is taxing the rich to help the poor a moral thing? How can it be moral when neither the poor, the middle class, nor the rich are individually doing anything moral? It is not, and therefore it is not a moral thing to tax the rich to help the poor.

It is moral to choose privately to help those in need. It is moral to give and not seek acclaim. It is moral to spend one’s own time becoming involved in the lives of those who need a brief reprieve from life’s storms, or who cannot do for themselves. It is moral to become aware of how to best serve those in need and not just assume that money will fix all the problems. It is moral to choose to help, it is not moral to be compelled to help.

In this New Year, I hope that all of us can find a way to help those in need as best we can, and not just point the finger and whine about what’s fair.

I also hope that all of you had a Merry Christmas and will have a wonderful New Year. It’s amazing that I sent out my first post almost six months ago. I appreciate all the feedback and criticism I have received so far. I have grown by leaps and bounds doing the research for posts and the discussions I have had with many of you via e-mail and the blog.

As always, tell me what you think.