Archive
November-December 2006

Friday, November 10, 2006

   From Freedom to Farcism - I can't say that the elections either surprise, nor trouble, me.  The lack of surprise is really due to the fact that the Dems ran on a platform of "I'm not the other guy."  Not exactly a stirring motivational campaign slogan.  It doesn't trouble me for four reasons.  First, as Steve Slivinski has pointed out in his book, Buck Wild, for those of us who favor more libertarian principles, having a divided government is better, because it tends towards gridlock.  Second, soon enough, the Dems will start opening their mouths, and start alienating the political center; I would bet that their hold on power will be transitory.  Third, this will give the GOP a chance to shed its big spending profile, and, hopefully, a new group of leaders will emerge that are more faithful to the principles of limited government; I hope that Rep. Shadegg is successful in landing a spot in the upper tier of the Republican leadership in the House.  Fourth, the economy will not grow forever, and the odds are good that we will be in a recession by the time the 2008 election rolls around.  So, if the Republicans controlled both houses and the presidency, they would have certainly taken the fall for that (even though, it is largely unfair to blame either party for this; it is just the political reality).  With the Dems controlling both houses, that will likely be less damaging to the GOP.

     But, I diverge.  I am writing this blog as a response to the libertarian film, America: From Freedom to Fascism, written, produced and directed by Aaron Russo.  It has been showing at our local independent theater, because the owner really likes it.  It is billed as a documentary, but it is not.  It is propaganda, in the same vein as Michael Moore's stuff is propaganda.  That is, there is an agenda here, and the movie pushes that agenda hard and fast throughout the ninety some odd minutes that it lasts.  There really isn't any meaningful attempt to "get at the facts" of the two major issues of the film, which are . . .

There is no law requiring Americans to file tax returns.  It seems like an interesting question, but a moot one.  There is a parade of talking heads (some of whom are now in jail), that assert such a tax is unconstitutional, and that, in fact, the Supreme Court has said so.  But, if this is the case, then why doesn't the SCOTUS hear appeals for these cases where tax protestors are sent to jail for failing to file?  Aye, there's the rub.  And, even if this were true, and tomorrow everyone agreed that this was the case, then we'd end up with a law, the day after tomorrow, that did mandate our filing of tax forms.  The filmmaker implies that we'd all be in hog heaven when we found out that we didn't have to pay taxes.  I'd say that was the fallacy of composition.

The Federal Reserve must be dismantled.  Here, we see the conspiracy theory in full bloom.  This is one reason I wanted to see the film - among the various classes I teach is one on "Money and Banking," where much time is spent talking about the Federal Reserve, aka "The Fed."  Russo paints a dark picture here - nefarious bankers control the U.S., and, by extension, the world, through their control of the Fed, and its control of the money supply.  It is a bizarre notion, and it is politically bankrupt.  I am willing to entertain the notion that the Fed has outlived its usefulness.  I am especially interested in a serious consideration of Milton Friedman's argument that the Fed should just grow the money supply at a constant rate, and give up the idea of discretionary monetary policy.  But, I don't think that there is some kind of evil cabal at work here.  Russo totally ignores the political aspects of the Fed (like, the ruling body, the Board of Governors, is selected by the President and confirmed by the Senate) in favor of the quaint fact that it is "privately owned" by its stockholders, which are member banks.  This "ownership" has no meaningful power.  The Fed finances its operations through its interest earnings on government securities, and it kicks back a fair share to the the Treasury every year.  Its peculiar operational structure is explicitly designed to prevent overt political pressure from determining its policies, and that's a good thing.

     So, two thumbs down from me, for this poor excuse for a documentary.  Another reason I wanted to see the film was that candidates from the Libertarian Party were going to be at the theater, after the film, to chat.  I told my wife not to expect them to endorse this silly film, but I spoke too soon.  They wholeheartedly embraced Russo's vision of the world, and it made me think, once again, about what is wrong with this party and these people.  In attendance were Barry Hess, candidate for governor (AZ) and David Schlosser, candidate for the U.S. House of Representatives (AZ 1st District).

     I am quite inclined towards libertarian principles, but the crazy talk just turns me off.  Hess, and to a lesser extent, Schlosser, were masters of the crazy talk.  Hess was practically evangelical in his enthusiasm for the party, but was unwilling (or, was it unable?) to take public funding for his campaign.  Huh?  If it's legal, why not take it, so as to better get your message out?  He claimed to be turning these funds down on principal, but I am not convinced.  It is not hypocritical to be against this funding and still use it.  I am opposed to public funding of higher education, yet that is where I work.  If the system was entirely private, I believe I would still have a job, but we don't have such a system.  It is only hypocritical if you pretend its a good idea, when it isn't.  And, I was further bemused, when Hess told us that he makes money off of international currency trading.  Wha????  If he believes the Fed should be dismantled, how does he justify making a living off of trading currencies that are controlled by the Fed, and other central banks?  My head is swimming!

     So, a couple more big thumbs down to these candidates, and, indeed, to this party.  I wish there was another party that was populated by more level-headed people, that didn't see conspiracies under every rock, where we could focus on what can be done to make things better - private accounts for Social Security, for example.  But, there isn't.  So, I will continue to associate with Goldwater/Reagan-type Republicans.

Sunday, November 12, 2006

   Paycheck - Sci Fi Econ - One of my continuing interests is how economics is portrayed in science fiction writing.  I am a long-time fan of the sci fi genre.  I can remember reading a Scholastic Book, while in grade school, about a robot that wanted to see in color.  I was hooked.  I picked up many paperbacks throughout my high school years, including the I, Robot series, by Isaac Asimov.  I've been an off-and-on member of the Sci Fi Book Club for 30 years.  [If it wasn't for the required response cards, I would only have joined once!]  I can still vividly remember reading Asimov's Foundation Trilogy while I was in college.

     As I pursued an undergraduate degree in economics, and, eventually, a PhD in that field, I found myself intrigued by the representations of the economic landscape in science fiction.  From the bizarre, and untenable - like the lack of money in Star Trek, and the entire collapse of a planetary system, due to faulty monetary policy, in John Brunner's Total Eclipse - to the hopeful and inspiring - like Heinlein's rugged economic individualism in The Moon is a Harsh Mistress.

     I have been compiling a folder of miscellaneous notes over the years.  I keep thinking that I might craft together a course on the subject.  Today, that interest jumps out onto my blog.  I just watched Paycheck, for the umpteenth time.  And, as I have so many times before, I also read Philip Dick's short story that is the basis for the movie.  I like to remind myself how they differ.  The plot of the written story, at its core, involves a coming revolution against a government that has continually curbed individual freedoms.  We don't really get anywhere near the revolution, as the story concerns Jennings' search to follow the clues he sent himself in lieu of his expected paycheck.  In many ways, the story and the movie are similar - Jennings is a technical expert, hired to work on a secret project for a private company, who has his memory wiped at the end of the job, and who, now, must find his way through a world where people want to find out what he knows.

     And, yet, there is a fundamental difference between the story and the movie - in the movie, the CEO is the evil character, and the business is the vehicle for the destruction of mankind.  In the book, the CEO is a stalwart character, who is concerned about the destruction of liberty by the government.  Ah, that old Hollywood bias!

     So, there is a nice passage in the story that highlights Dick's vision of the future, at least insofar as this plot was concerned:

     Fascinating vision.  But, I can't say that businesses will really be able to fend off the intrusions of government, as portrayed in this story.  Still, we can dream.  Dick's stories have been regularly turned into movies, many of which are my favorites - e.g., Blade Runner, Total Recall, Minority Report, and Imposter.  For those who want to know more, here are some links:

Philip K. Dick Fans
A Life of Fantasy
The Hollywood Afterlife of Philip K. Dick

Thursday, December 21, 2006

   Is the Min. Wage a Violation of the ADA? - Before the newly passed minimum wage becomes law in Arizona, there is already some fallout on its real costs.  Up until now, employers of disabled workers were allowed to pay less than the minimum wage.  And why is that, do you think?  Because, these workers are not as productive.  Said Randy Gray, in an AP story run in the local paper last Sunday, "Why would someone want to hire someone who works at 10 percent and pay them 100 percent?"  Why, indeed?

     But, these workers will no longer get exempted by the new state minimum wage law.  Said Rebekah Friend, AFL-CIO official, and leader of the campaign to raise the minimum wage, "These are workers.  Whether they're disabled or not, they're workers."  Yes, and pretty soon, they will be unemployed workers.  Well, it certainly is good that we got rid of that deadwood in the work force.  Imagine, workers willing to work for less than the minimum wage.  Have they no dignity?  After January 1st, they won't.  How many are affected?  According to the story, upwards of 5,000 workers may find that they are out of work.

     And, nothing will be done about this.  At least, not until the next election.  Since the minimum wage law was passed by referendum, it can't be amended by the state legislature.  So, unless another ballot measure shows up a year, or two, from now, the law is the law.  Unfortunately, there is a bigger message here, and that seems to have been missed by the media.  The point of any wage is that it reflects the value of a worker's productivity.  That's why, in general, doctors get paid a lot, relative to schoolteachers, and why schoolteachers get paid a lot relative to retail store clerks.  If you don't like your wage, you need to do something to improve your productivity.  Raising the minimum wage just puts some people out of work (because their productivity isn't high enough) in order to keep others earning an artificially higher wage.

     So, then I began to wonder . . . if the minimum wage acts to discriminate against the disabled, isn't the minimum wage law in violation of the Americans for Disabilities Act?  Of course, both are anathema to those of us who cherish individual liberty and freedom, but, I wonder . . .

Thursday, December 28, 2006

   The Unimportance of Education - For many years there has been an undercurrent of dissatisfaction with public education.  The basis for that discontent is the inability to produce students that are truly educated.  In the grade schools, the pressure to pass students through the system, without an education, can be somewhat tempered by vigilant parents.  And, the whole choice/voucher debate will, hopefully, push the system towards more and more competition.

     Education is, after all, a very personal and individual quality.  I often tell my students that I can't "teach" them anything; that "teaching" is a misnomer.  I can talk; I can cajole; I can threaten; I can entice; I can penalize; I can reward; I can even entertain.  But, I cannot "teach."  What is really happening is that students are learning.  Or, not.  I do try to help them, but, it really has more to do with them than it does with me.  I don't take any credit for the A+ student, but, neither do I take any blame for the F student.  I provide them with the opportunity to learn, and, then, I judge them accordingly.  Indeed, my primary task is to judge them, based on how they have demonstrated what they have learned.

     At the university level, where I "teach," we are constantly under pressure from forces that work towards an erosion of our educational standards for the students that we graduate.  The more robust the competition for students, and the less a financial role that is played by the state, the more likely it is that these forces will be effectively balanced by the desire, on the part of students and parents, that our college degrees actually represent the earning of an education.

     Of course, there have been critics.  The seminal work by Allan Bloom, The Closing of the American Mind, is a powerful indictment against a system that places more value on self-esteem than on developing a reasoning faculty in students.  A recent essay by one of my favorites, Arnold Kling, laments the proliferation of "Wizard-of-Oz diplomas" - ones that look good on paper, but are hardly worth the paper they are printed on.

     At the university where I "teach" we are being quickly propelled towards a world where all we do is give out Wizard-of-Oz diplomas.  Our president has said, over and over again, that every graduating high school student in Arizona should go to college.  And, we are becoming blindingly focused on the "retention" of these students, since every student in our university means more money from the state and the feds.  Now, the public choice economist in me understands full well why the president of a large state university would argue for more students and argue for keeping them in school longer.  What does dismay me is that there aren't more (or, any?) voices out there questioning such a transparent conflict of interest.

     It wasn't too many years ago that the mindset of the administration was much more focused on graduates that were well-educated.  At least, that was the case in the business college, where I work.  [In the education college, they don't seem to have focused on education for at least a generation; for a prime example see one of my earlier blogs.]  The classes I am primarily responsible for, were described as "weed-out" classes by a former dean.  That probably sounds rather impolitic, but the mindset was that our graduates would be better-served with a diploma that actually means something about the level of their education.  A marketing student would call this the "branding" effect.

     But, now, that has changed.  Our current charge is to "produce diplomas."  There is the addendum of, "but, not by lowering standards," but that is just disingenuous double-talk.  The quality of our students hasn't changed, in any appreciable sense, in many years.  We don't really have much in the way of an admission standard.  And, they are, by and large, the products of a pretty awful public secondary school system.  On average, the students I see don't know how to write well, don't like to read much and are not inclined to think.  They believe that hearing me say something is equivalent to their having learned something.  And, we seem to be on the crest of a wave that will validate this belief.  I now tell my students that there are two goals they may pursue at the university - getting a degree and getting an education.  One is easier than the other.  One presents the illusion of success.  One will short-change them in the long run.

     I don't know how this will all turn out.  I suspect that we will delude ourselves that our standards have not fallen, while we watch more and more skilled work being done abroad.  There may be some private sector responses that will help to alleviate this proliferation of the Wizard-of-Oz diploma, but that requires students pay again to get the opportunities that were missed the first time around.  Over the years I have been teaching, one suggestion that I would make, that would likely raise the educational attainment of students in a dramatic fashion, is to raise the minimum age for college to 21, or 22.  If someone wants to go at 18, or 19, or 20, they can pay a premium for that option.  If they are very smart and test well, they can earn scholarships to pay that premium.  Otherwise, most of the students I see really would be better off by making their college years the ones from 22 to 25 rather than 18 to 21.  After all, the collapse of the social security system will necessitate later retirement ages anyway, so why be in a rush to start a 40, or 50, year career?  It probably would be less of a burden on parents as well, as they can insist that their children provide more financial resources for their own college education.  Well, it's just an idea.

Sunday, December 31, 2006

   Are the Disabled Above the Law? - As the new year begins, the state of Arizona will impose a higher minimum wage on employers, as approved by voters this past November.  Using the power of the state to regulate voluntary economic relationships is a disaster, as has been shown over and over again.  [For example, with the passing of President Ford, I couldn't help but remember his ill-conceived "Whip Inflation Now" plan, which totally ignored the ultimate reason for inflation - government policy.]

     And, so it goes with the new minimum wage law in Arizona.  The current issue is that disabled workers, who had been exempt from the federal minimum wage, will not be exempt from the more restrictive state minimum wage.  The basic argument has been that these, less productive, workers will not find jobs unless they also can be paid a low wage.  Even some inside this field - promoting disabled workers - believe that there should be no exemption.  From a recent article that appeared in the local paper, Howard Fischer paraphrases the executive director of the Arc of Arizona, writing that she "said applying the law to all guarantees the disabled will have the same rights as everyone else."

     Of course, nothing could be further from the truth.  The requirement of a minimum wage doesn't equalize rights.  What it does is metes out disproportionate punishment.  In this case, disabled workers will likely lose their jobs, along with a piece of their hard-won dignity, all to satisfy the perverse desire of certain activists to destroy free market capitalism.

     This past week, the state agency charged with enforcing this law, the Industrial Commission of Arizona, issued a press release advising employers of disabled workers to continue with their current wages "until an advisory opinion can be issued."  I guess that means disabled workers are above the law, especially since the enforcers of the law are willing to wink and look the other way.  Isn't it more than a little dismaying that this government agency has decided to refuse to enforce the law?  We were debating this law most of last year; the voters approved of it in early November; yet we cannot expect the enforcing body to have figured out what it means.

     Well, nobody will want to be responsible for having, potentially, thousands of disabled workers laid off of their jobs, but I can't fathom how this commission can just decide whether this law should be enforced or not.  Isn't it up to someone else to challenge the law, and seek remedy in a court?  It makes one wonder if we aren't a "nation of laws," but rather a nation of interpreters of law.  A loyal reader, Jason, opines that with such an exemption, perhaps business owners can get workers to sign papers acknowledging some mental disability, thus allowing them to receive a lower-than-minimum wage.  After all, he notes, "liberals find a way to make everyone disabled in some fashion."  Good point!

Related blog:
Is the Min. Wage a Violation of the ADA?

dfoster@kaibabjournal.com