what if?

Risk and Reward

A fundamental in all markets is the "risk and reward" principle.  If you take more risk, then you may reap more rewards than normal.  At the same time, however, you take the risk that your venture will turn out poorly.  Then your fate may be far below "normal."  Conversely, if you take the safe and prudent route, riches rate not to be yours. On the other hand, you are unlikely to face obliteration.

Lately, however, we have been skewing these normal principles in our markets.  Our government steps in and "saves" companies that they deem "too big to fail".  Instead of having those who followed poor practices going out of business, they still get rewarded.  So it is, too, in some state governents.  Witness what is happening in California.

The old deal seemed fair: public employees would earn lower salaries than Americans working in the private sector, but would receive a somewhat better retirement and more days off. Now, public employees get higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly reduced work schedules, thus limiting public services even as pay and benefits shoot ever higher. The new deal is starting to raise eyebrows, thanks to efforts by groups such as the California Foundation for Fiscal Responsibility, which publishes the $100,000 Club, a list of thousands of California government retirees with six-figure, taxpayer-guaranteed incomes. But even in these tough times, public employees continue to press city councils for retroactive pension increases, which amount to gifts of public funds for past services. Officials fear the clout that these unions, especially police and fire unions, wield on Election Day.

The story doesn’t end with the imbalance in pay and benefits. Government workers also enjoy absurd protections. The Los Angeles Times did a recent series about the city’s public school district, which doesn’t even try to fire incompetent teachers and is seldom able to get rid of those credibly accused of misconduct or abuse. Misbehaving teachers are sometimes kept from teaching, but they may spend years, even a decade, getting paid while they fight attempts to fire them. A state law referred to as the Peace Officers Bill of Rights, along with excessive privacy restrictions, likewise makes it nearly impossible to fire police officers who abuse their authority.

Ultimately, there is only one solution. Fire politicians who abuse basic principles of risk and reward.  Vote for those who promise to follow sound business practices and not abuse you, the taxpayers and the people

The No-Show

When something as incendiary as the Goldstone Report is written, you'd think that the author would have the decency to show up to debate and defend what he has alleged.

You'd be wrong.

Here is Alan Dershowitz, debating the report solo when its cowardly author stayed away.

Who Can?

The government can.

From my dad; thanks, Dad!

Ten Days

After a long flight, I found myself ensconced in a beautiful San Diego hotel overlooking the bay.  Ten days of bridge, photography, story telling - and yes, real estate and blogging as time permits!  If only I could learn to do without sleep.....

The view from my window.

The Invisible Hand

Happy Thanksgiving!  We surely have much in the world that could be much improved - yet, we have much for which we can be thankful.

I'm thankful to have my mom and dad and sister and her family all with me - even if they're far away.  I'm thankful for so many wonderful friends.  I'm thankful for the improvement in the lives of those whom I love - and I'm hopeful for others that they will see similar improvement.

I'm also thankful to live in a society where we are able to watch the miracle of the invisible hand at work.

The activities of countless people over the course of many months had to be intricately choreographed and precisely timed, so that when you showed up to buy a fresh Thanksgiving turkey, there would be one -- or more likely, a few dozen -- waiting. The level of coordination that was required to pull it off is mind-boggling. But what is even more mind-boggling is this: No one coordinated it.

No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. No one forced people to cooperate for your benefit. And yet they did cooperate. When you arrived at the supermarket, your turkey was there. You didn't have to do anything but show up to buy it. If that isn't a miracle, what should we call it?

Adam Smith called it "the invisible hand" -- the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy *is* planned, the more it is plagued by shortages, dislocation, and failure.

I am grateful for the invisible hand which works its magic.  May it always be so!

 

I Support This Message

No, I do not support a "purity list" of qualities that politicians must meet to be Republican candidates.  I support the message that such a list is divisive, polarizing and will lead to more Republican defeats - not victories.

Principles are fine. Party platforms are fine. The Contract With America was great politics. But, if the GOP tells candidates that they have to properly genuflect to an agenda or they are not welcome in the party then we shouldn’t be surprised when candidates and voters will go looking elsewhere for a party or movement that welcomes diversity of thought.

If the Republican Party is serious about becoming competitive again, the last thing it needs to do is send messages of intolerance. And that’s exactly what a “purity test” does. It blows a very loud and ugly bugle that says independent thinkers need not apply. The GOP needs to be looking for converts not heretics.

Moving Lips

Yes, the old standard.  "How do you know a politician is lying?  His lips are moving."

John Stossel on how they continue to lie to us.  And, the money quote:

Medicare is already $37 trillion in the hole. Yet the Democrats proudly cite Medicare when they demand support for the health care overhaul. If a business pulled the accounting tricks the politicians get away with, the owners would be in prison.

Giving Thanks

Tomorrow, I will be leaving on a jet plane for San Diego.  There, I will spend 10 days with my bridge friends around the world, competing, photographing, writing stories - everything I love!

May your Thanksgiving holiday be filled with warmth and appreciation for all that is good in your life.

 

We can only be said to be alive in those moments when our hearts are conscious of our treasures.

 

Thornton Wilder   

Private Sector? Do Not Apply!

Absolutely amazing stats.

When one considers that public sector employment has ranged since the 1950s at between 15% and 19% of the population, the makeup of the current cabinet — over 90% of its prior experience was in the public sector — is remarkable.

Competition and Accountability

A most refreshing column today in the Wall Street Journal - and signed by a Democrat, too!

President Barack Obama has launched "Race to the Top," a competition that is parceling out $4.35 billion in new education funding to states that are committed to real reform. This program offers us an opportunity to finally move the ball forward.

To that end Mr. Obama and Education Secretary Arne Duncan are pushing states toward meaningful change. Mr. Duncan has even stumped for reform alongside former Republican House Speaker Newt Gingrich. Yet the administration must continue to hang tough on two critical issues: performance standards and competition.

Already the administration is being pressured to dilute the program's requirement that states adopt performance pay for teachers and to weaken its support for charter schools. If the president does not remain firm on standards, the whole endeavor will be just another example of great rhetoric and poor reform.

Competition among the states is also vital to reform. The administration is resisting the temptation to award funds to as many states as possible. And that's good. To be effective, Race to the Top funds cannot become a democratic handout. Competition brings out the best performance. That's true in athletics and in business, and it's true in education.

Race to the Top funds will not serve their purpose if they are awarded based on good intentions and promises. Instead, the administration is right to look at results. Has a state embraced rigorous standards? Has it welcomed charter schools? Has it turned around low-performing schools and held teachers accountable?

Bravo for this acknowledgement from Harold Ford, Louis Gerstner and Eli Broad that we must recognize and reward tangible results and success.  Competition breeds the best in adults and children.  Holding people accountable for what they do heightens the chance they will deliver their best.

Let's hope that this administration heeds these words.

A Debate about Values

This past year, I heard David Brooks speak in Minneapolis.  As you can tell from his writing, Brooks is witty and smart, funny and thoughtful.  He also, as far as I'm concerned, is incredibly wrong on some issues.

When Brooks says "the health care debate is fundamentally a debate about values" - I agree with him, to some extent.  The debate does highlight what people value, what matters the most to them, and so forth.  Still, how Brooks frames the debate isn't at all what it's about.

Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one.

We all have to decide what we want at this moment in history, vitality or security. We can debate this or that provision, but where we come down will depend on that moral preference. Don’t get stupefied by technical details. This debate is about values.

What is so wrong about this?  Brooks, like so very many others, frames the debate as "reform or status quo" - "this reform or no reform at all."  This is not the way it is.

A great many people who are libertarian or conservative or free marketers or however you wish to describe them agree that we need reform.  They agree that we need a method to help those who struggle mightily to get health care.  They agree that it is insane that someone must stay in a job they hate solely to get health care insurance, and they agree that how much of our current system works makes little sense.

Where they do not agree is that the bills that have been before Congress are the way to best reform.

How about we highlight this value - honesty?  How about those who support this bill at least have the decency to frame the debate as one in which those on the other side acknowledge reform is needed, but have a different system in mind?  How about we at least consider free market solutions?  How about we examine allowing individuals to purchase health insurance in any state, to be able to join larger pools to keep costs down, to actually talk about and implement tort reform?  And so on and so forth.

Yes, Mr. Brooks.  Health care reform is about values.  Some of us think that the reform which is not being discussed in Washington is one that really preserves the values that made this nation great.

This past year, I heard David Brooks speak in Minneapolis.  As you can tell from his writing, Brooks is witty and smart, funny and thoughtful.  He also, as far as I'm concerned, is incredibly wrong on some issues.

When Brooks says "the health care debate is fundamentally a debate about values" - I agree with him, to some extent.  The debate does highlight what people value, what matters the most to them, and so forth.  Still, how Brooks frames the debate isn't at all what it's about.

Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one.

We all have to decide what we want at this moment in history, vitality or security. We can debate this or that provision, but where we come down will depend on that moral preference. Don’t get stupefied by technical details. This debate is about values.

What is so wrong about this?  Brooks, like so very many others, frames the debate as "reform or status quo" - "this reform or no reform at all."  This is not the way it is.

A great many people who are libertarian or conservative or free marketers or however you wish to describe them agree that we need reform.  They agree that we need a method to help those who struggle mightily to get health care.  They agree that it is insane that someone must stay in a job they hate solely to get health care insurance, and they agree that how much of our current system works makes little sense.

Where they do not agree is that the bills that have been before Congress are the way to best reform.

How about we highlight this value - honesty?  How about those who support this bill at least have the decency to frame the debate as one in which those on the other side acknowledge reform is needed, but have a different system in mind?  How about we at least consider free market solutions?  How about we examine allowing individuals to purchase health insurance in any state, to be able to join larger pools to keep costs down, to actually talk about and implement tort reform?  And so on and so forth.

Yes, Mr. Brooks.  Health care reform is about values.  Some of us think that the reform which is not being discussed in Washington is one that really preserves the values that made this nation great.

The Wal-Mart of Heart Surgery

Amazing article that I found at my friend Andrew Tobias' blog this morning.  A doctor in India is able to perform quality heart surgery at a fraction of the cost in the U.S.

In a second-floor operating room one October morning, Dr. Shetty finished sewing a new aorta onto the heart of his 11-year-old patient. The process provided an example of how he slashes costs. Four years ago, the sutures would have been bought from a Johnson & Johnson subsidiary. Today they are made by a Mumbai company, Centennial Surgical Suture Ltd.

Four years ago, Dr. Shetty scrutinized his annual bill for sutures -- then $100,000 and rising by about 5% each year. He made the switch to cheaper sutures by Centennial, cutting his expenditures in half to $50,000.

"In health care you can't do one big thing and reduce the price," Dr. Shetty says. "We have to do 1,000 small things."

Even when Dr. Shetty can't find a super-low cost provider, he does the best he can.

"I Lift My Lamp"

The United States is distinct from many other nations on the planet.  Only a few people can claim that they have descended from ancestors who have been here for centuries. 

For the rest of us, we are immigrants.  Our parents or grandparents or great grandparents walked or came in ships or planes to arrive in our country.  Many came with little or nothing.  They came to escape religious persecution, or poverty - or to save their very lives.  Irrespective of the reasons, however, the ancestors of most Americans came from somewhere else.

Why then, Jeff Jacoby muses, are so many conservatives steadfastly opposed to immigrants in our nation?

The Titanic of Administrations

Suppose someone on the Titanic had warned of an iceberg ahead.  Suppose they had issued that warning in time to avoid the sheep careening into it.

People can see that iceberg, and they are telling us to steer clear.

The planned deficits will have destructive consequences for both fairness and economic growth. They will force upon our children and grandchildren the bill for our overconsumption. Federal deficits will crowd out domestic investment in physical capital, human capital, and technologies that increase potential GDP and the standard of living. Financing deficits could crowd out exports and harm our international competitiveness, as we can already see happening with the large borrowing we are doing from competitors like China.

At what point, some financial analysts ask, do rating agencies downgrade the United States? When do lenders price additional risk to federal borrowing, leading to a damaging spike in interest rates? How quickly will international investors flee the dollar for a new reserve currency? And how will the resulting higher interest rates, diminished dollar, higher inflation, and economic distress manifest itself? Given the president's recent reception in China—friendly but fruitless—these answers may come sooner than any of us would like.

Mr. Obama and his advisers say they understand these concerns, but the administration's policy choices are the equivalent of steering the economy toward an iceberg. Perhaps the most vivid example of sending the wrong message to international capital markets are the health-care reform bills—one that passed the House earlier this month and another under consideration in the Senate. Whatever their good intentions, they have too many flaws to be defensible.

Let's reform health care, but do it with a system that will not create more bone-crushing debt.  We still have time to avoid that iceberg.  President Obama should right the ship and avoid disaster.

"Let There Be Light"

A man who shines light on what it means to be an American, and on doing what one must to strive and succeed.

Born in 1975, Mebrahtom (his full name means "let there be light") grew up in an Eritrean village with no electricity and no running water. Besides poverty, Meb's parents, Russom and Awetash, feared for their family's safety because of Russom's involvement with the Eritrean Liberation Movement and because of the ongoing war with Ethiopia. Meb's father decided to flee. "He walked all the way"—60 miles—to Sudan, Meb says. Russom eventually made his way to Milan, Italy, where he worked to raise the money to bring his family out of East Africa.

On Oct. 21, 1987, a date that rolls off Meb's tongue, the family immigrated to San Diego as refugees with the help of the Red Cross and the sponsorship of Meb's half-sister, Ruth. "Dad used to wake up at 4 a.m. so we could learn English," Meb says. "He worked as a taxi driver and worked in restaurants to be able to feed the family."

Meb adds, "You start on the bottom, work hard, and your dreams will come true—and that's what happened. We have a very successful family because my parents always emphasized using the opportunity you have to the maximum: 'There are a lot of people that don't have this opportunity, so make sure you use it.' That stuck in our head."

Identity Politics

Are you a Democrat?  Are you a Republican?  Are you libertarian or conservative or liberal or progressive or moderate or far this or that?  As an American, it is your right to hold the beliefs that make the most sense to you.

Whether you are black or white or red or yellow or brown, whether you are a Muslim or Christian or Jew or atheist, whether you are male or female or gay or straight or young or old or urban or suburban or rural, there is no set of beliefs to which you must adhere.

Someone should tell Jesse Jackson.

What a dignified and elegant response to Mr. Jackson's: "You can't vote against health care and call yourself a black man." from Alabama Congressman Artur Davis.

Mr. Davis is running for governor in a state that John McCain won last year, and his vote was surely influenced by the reality that Alabamans aren't the biggest fans of ObamaCare. The Congressmen, to his credit, took the high ground in response to Mr. Jackson's low blow. "One of the reasons that I like and admire Rev. Jesse Jackson is that 21 years ago he inspired the idea that a black politician would not be judged simply as a black leader," he said in a statement referencing Mr. Jackson's 1988 Presidential bid. "The best way to honor Rev. Jackson's legacy is to decline to engage in an argument with him that begins and ends with race."

You can be black and believe that the current health care bill is a wrong choice for our country.  Intimating anything else debases us all.

Evidence for Theory

What do you do if the data for your theory seems to contradict it?  Do you do more research?  Re-check your efforts and conclusions?  Revise and reshape your beliefs?

No.

If you're among some who subscribe to man-made global warming, you just lie.

Controversy has exploded onto the Internet after a major global-warming advocacy center in the UK had its e-mail system hacked and the data published on line.  The director of the University of East Anglia Climate Research Unit confirmed that the e-mails are genuine — and Australian publication Investigate and the Australian Herald-Sun report that those e-mails expose a conspiracy to hide detrimental information from the public that argues against global warming.

Key to Success

Freedom.

Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments.

How do we know that institutions are so central to the wealth and poverty of nations? Start in Nogales, a city cut in half by the Mexican-American border fence. There is no difference in geography between the two halves of Nogales. The weather is the same. The winds are the same, as are the soils. The types of diseases prevalent in the area given its geography and climate are the same, as is the ethnic, cultural, and linguistic background of the residents. By logic, both sides of the city should be identical economically.

And yet they are far from the same.

On one side of the border fence, in Santa Cruz County, Arizona, the median household income is $30,000. A few feet away, it's $10,000. On one side, most of the teenagers are in public high school, and the majority of the adults are high school graduates. On the other side, few of the residents have gone to high school, let alone college. Those in Arizona enjoy relatively good health and Medicare for those over sixty-five, not to mention an efficient road network, electricity, telephone service, and a dependable sewage and public-health system. None of those things are a given across the border. There, the roads are bad, the infant-mortality rate high, electricity and phone service expensive and spotty.

The key difference is that those on the north side of the border enjoy law and order and dependable government services — they can go about their daily activities and jobs without fear for their life or safety or property rights. On the other side, the inhabitants have institutions that perpetuate crime, graft, and insecurity.

The State of Journalism Today

My friend Christopher Fountain may be a Realtor.  That does not mean, however, that he can't be an expert on Real Issues outside of Real Estate.  Here is but one.

Number of AP reporters assigned to story:
• ObamaCare bills: 2
• Palin book: 11

Number of pages in document being covered:
• ObamaCare bills: 4,064
• Palin book: 432

Number of pages per AP reporter:
• ObamaCare bill: 2,032
• Palin book: 39.3

On a per-page basis, that is, the AP devoted 52 times as much manpower to the memoir of a former Republican officeholder as to a piece of legislation that will cost trillions of dollars and an untold number of lives. That’s what they call accountability journalism.

A number of good friends are journalists and reporters.  They're great people, and I am terrifically sad for those among them who may lose their jobs because of a dramatically changing industry.  Nevertheless, some people who cover the news are at least in part responsible for where it is today.  Eleven AP reporters on Sarah Palin's new book - and two AP reporters on a bill that will encompass approximately one sixth of our economy?  It leaves me breathless.

You Know the Routine

How do you know a politician is lying?  His lips are moving.

Ten weeks after 9/11, Senator Schumer said this:

There are also those prisoners of war who we have captured and will capture in Afghanistan and other countries who will receive a trial of some sort. It is clear we need to try those suspects in a forum that achieves two primary goals—two goals, I might add, that may not conflict. First, the Government must have the power to use even the most sensitive classified evidence against these suspects without compromising national security in any way, shape, or form. In addition, those who commit acts of war against the United States, particularly those who have no color of citizenship, don’t deserve the same panoply of due process rights that American citizens receive. Should Osama bin Laden be captured alive—and I imagine most Americans hope he won’t be captured alive. But if he is, it is ludicrous to suggest he should be tried in a Federal court on Center Street in Lower Manhattan.

Now, however, defends exactly what he denounced in 2001.  We might ask him this:

What has changed in eight years to transform KSM and his cohorts into people who do “deserve the same panoply of due process rights that American citizens receive”? And if Schumer wants them executed, why did he pick the least-likely and slowest manner in which to pursue that goal?

Do trial lawyers support politicians because the politicians make trial lawyers look awfully good in contrast?  Must be.