Marketplace of Ideas

The editor’s opinion from Marketplace, Northeast Wisconsin’s business magazine. (Obligatory disclaimer: Most hyperlinks go to outside sites, and we’re not responsible for their content. And like fresh watermelon, peaches, pineapple, grapefruit, tomatoes and sweet corn, hyperlinks can go bad after a while.)

August 21, 2008

Marketplace of Ideas is moving

You may recall when this blog began in April that I said this was the Marketplace of Ideas blog’s temporary location.

Well, this is the last Marketplace of Ideas blog item you’ll read here. Beginning today, Marketplace of Ideas can now be found at the Marketplace Web site,, and, for those who want to bookmark,

Along with Marketplace of Ideas, Marketplace Today, our breaking news site, is also moving to, and, for those who want to bookmark,

Go over there now, and you won’t miss a thing.

Analysis of the (Sun)day

Sunday's New York Times Magazine will include this in-depth exploration of Barack Obama's economic beliefs. Writer David Leonhardt has "spent much of this year trying to get a handle on what is sometimes called Obamanomics and have come away thinking that Obama does have an economic ideology. It’s just not a completely familiar one. Depending on how you look at it, he is both more left-wing and more right-wing than many people realize."

The piece begins with what it calls the Democratic Party's, and Bill Clinton's, "two Bobs" — Robert Rubin, Clinton's secretary of the treasury, who focused on reducing the budget deficit, and Robert Rubin, Clinton's secretary of labor, who "argued that the government should invest in roads, bridges, worker training and the like to stimulate the economy and help the middle class." Put the two together, and what do you come up with?
Obama’s agenda starts not with raising taxes to reduce the deficit, as Clinton’s ended up doing, but with changing the tax code so that families making more than $250,000 a year pay more taxes and nearly everyone else pays less. That would begin to address inequality. Then there would be Reich-like investments in alternative energy, physical infrastructure and such, meant both to create middle-class jobs and to address long-term problems like global warming.
Nothing about that paragraph will assuage those who believe the budget deficit is the biggest problem we face. And if that seems like a disjointed set of proposals to you, there's more:
Labor unions, in particular, would prefer more trade barriers than many other Democrats. During the primaries Obama nodded, and at times pandered, in this direction. Since then, he has disavowed that rhetoric, to almost no one’s surprise. Yet his zig-zagging on the issue did highlight the biggest weak spot in his, and his party’s, economic agenda. He still hasn’t quite figured out how to sell it. For all his skills as a storyteller and a speaker, he has not settled on a compelling message about how to put the economy on the right path.

The lack of such a message has contributed to several of his worst moments over the last year. Most recently, the campaign has come out with a series of small-bore, populist energy plans — a windfall-profits tax on oil companies, a crackdown on speculators, a partial opening of the strategic oil reserve — that seem more political than economic. The most glaring misstep on this score was his comment this spring about bitter rural voters clinging to guns and religion. It was, in effect, an admission that his own message about the economy hadn’t yet broken through.

Leonhardt claims that Obama's economic thinking has been influenced by the University of Chicago school of economic thinking, but there's not much evidence that Obama actually believes in free markets (he is, however, a veteran of the Chicago school of corrupt politics); he only seems more market-friendly compared with, for instance, his primary opponent Hillary Clinton:
“The market is the best mechanism ever invented for efficiently allocating resources to maximize production,” Obama told me. “And I also think that there is a connection between the freedom of the marketplace and freedom more generally.” But, he continued, “there are certain things the market doesn’t automatically do.” In other words, free-market policy isn’t likely to dominate his agenda; his project would be fixing the market.
No New Democrat there. And, by the way, Barack, markets generally resist getting "fixed" to meet political priorities; his "fixes," whatever they are (for instance, his desire to reduce the gap between "rich" and poor by sticking higher taxes on the right) are likely to lead to Obama's lesson number one in the Law of Unintended Consequences.

There's also another spot where Leonhardt is just plain wrong:
The Tax Policy Center, a research group run by the Brookings Institution and the Urban Institute, has done the most detailed analysis of the Obama and McCain tax plans, and it has published a series of fascinating tables. For the bottom 80 percent of the population — those households making $118,000 or less — McCain’s various tax cuts would mean a net savings of about $200 a year on average. Obama’s proposals would bring $900 a year in savings. So for most people, Obama is the tax cutter in this campaign. ...
All told, Obama would not only cut taxes for most people more than McCain would. He would cut them more than Bill Clinton did and more than Hillary Clinton proposed doing. These tax cuts are really the essence of his market-oriented redistributionist philosophy (though he made it clear that he doesn’t like the word “redistributionist”). They are an attempt to address the middle-class squeeze by giving people a chunk of money to spend as they see fit.
What's wrong with this analysis? How about this: Poor people do not own businesses, poor people do not employ other people, and poor people do not drive the economy. Business owners, most of whom live in households that bring in more than $118,000 a year because they are successful — do. And business owners will get a big fat tax increase out of Obamanomics, not because it will bring in more tax revenue (less than they think, of course), but because Obama and his minions believe in "fairness":
He would then pay for the cuts, at least in part, by raising taxes on the affluent to a point where they would eventually be slightly higher than they were under Clinton. For these upper-income families, the Tax Policy Center’s comparisons with McCain are even starker. McCain, by continuing the basic thrust of Bush’s tax policies and adding a few new wrinkles, would cut taxes for the top 0.1 percent of earners — those making an average of $9.1 million — by another $190,000 a year, on top of the Bush reductions. Obama would raise taxes on this top 0.1 percent by an average of $800,000 a year.
I don't believe that Obama actually will cut taxes on the non-"rich." You may recall that Clinton proposed a middle-class tax cut during his first campaign, only to throw it away when he let Rubin talk him into increasing everyone's taxes instead. The result was that taxes reached a record 20 percent of Gross Domestic Product by 2000, helping push the economy into the 2001 recession, even though no one noticed it at the time. Since most Democrats seem to believe that government can spend your money better than you can, Obama will have to convince congressional Democrats to do something they seem constitutionally incapable of doing.

There's a bigger issue here, and one that Leonhardt doesn't address. What exactly can you believe in what Obama says? His well publicized flip-flops on trade, capital gains taxes and other, smaller issues make you wonder what exactly he does believe in, other than getting elected. And this, remember, is someone who, as Leonhardt's otherwise fawning piece admits, has "never run any government entity — no state, no city, not even a municipal agency — and he may not prove to be good at doing so."

The fact that Obama's economic mishmash may sound good, and probably is in fact better than other Democrats of the tax-and-regulate-everything-that-moves school of politics, is not a compelling reason to vote for him.

August 20, 2008

18 reasons

At last, reality has made a tardy appearance into the debate about the role of drinking in our society.

A group of college presidents has signed on to the Amethyst Initiative, a public statement that “the 21-year-old drinking age is not working, and, specifically, that it has created a culture of dangerous binge drinking on their campuses. ”

Why? As the presidents’ statement notes, “Alcohol education that mandates abstinence as the only legal option has not resulted in significant constructive behavioral change among our students. Adults under 21 are deemed capable of voting, signing contracts, serving on juries and enlisting in the military, but are told they are not mature enough to have a beer. By choosing to use fake IDs, students make ethical compromises that erode respect for the law.”

The presidents call upon elected officials to “support an informed and dispassionate public debate over the effects of the 21-year-old drinking age,” including “whether the 10% highway fund ‘incentive’ encourages or inhibits that debate,” while seeking “new ideas about the best ways to prepare young adults to make responsible decisions about alcohol.”

The 21-year-old drinking age requirement — tied to federal government blackmail that takes 10 percent of highway funds away from states that don’t have a 21-year-old drinking age — is ineffective in reducing underage drinking, in colleges and in the places where it was supposed to inhibit underage drinking, high schools. When college freshmen arrive in their dorm, either they have no experience with alcohol if they’ve been following the law, or they’re used to breaking the law. Away from home for an extended period for the first time in their adult lives, in most cases, with no parents telling them not to drink, they start drinking, sometimes to excess and sometimes with tragic results.

Advocates of the 21-year-old drinking age claim that 1,000 lives have been saved each year by the higher drinking age, according to the U.S. Department of Transportation. The Amethyst Initiative quotes Choose Responsibility as noting that more than 1,000 18- to 24-year-olds “die each year of alcohol-related causes other than traffic accidents," and that the 21-year-old drinking age has not prevented deaths, but delayed them — “every claim of an 18-, 19-, or 20-year-old life ‘saved’ as a result of Legal Age 21 is offset by the number of 21-, 22-, or 23-year-old lives lost.” If that is true, then the 21-year-old drinking age is an abysmal failure for that reason alone. Choose Responsibility also points out that “Four factors have combined powerfully (and dramatically more than Legal Age 21) to the decline of driving fatalities associated with alcohol: safer cars, higher awareness by drivers of all ages, greater utilization of a ‘designated driver,’ and more vigorous law enforcement.”

What’s more, as Choose Responsibility notes, “Legal Age 21 has created an environment of excess consumption and goal-oriented drinking. While fewer individuals aged 18–20 are drinking, those who choose to drink are doing so at dangerous and alarming rates. … Brain development is complete around age 25; therefore, 21 is not a magic number. What puts individuals at greater cognitive risk is binge drinking, whose rates have only climbed.”

To no one’s surprise, suggesting that the drinking age may be too high is tantamount to mandating drinking until you’re comatose to such anti-alcohol types as Mothers Against Drunk Driving. The PR NewsWire headline for MADD’s news release: “Some University Presidents Shirk Responsibility to Protect Students from Dangers of Underage Drinking.”

“It’s very clear the 21-year-old drinking age will not be enforced at those campuses,” said Laura Dean-Mooney, national president of MADD, which, according to the Associated Press, is “even urging parents to think carefully about the safety of colleges whose presidents have signed on.”

That’s an interesting statement (not to mention a neat bit of character assassination), given that every one of the 157 college-age people, 18 to 23, who drank themselves to death from 1999 through 2005, according to an Associated Press study, died in a state with a drinking age of 21. Actually, it’s very clear the 21-year-old drinking age is not enforceable at any campus except where there’s almost as many security personnel as students. So much for the “informed and dispassionate debate.”

Then again, there is no such thing as an “informed and dispassionate debate” when it comes to the issue of alcohol generally and drunk driving specifically. (See the aforementioned PR Newswire headline.) We as a society lose all proportion whenever the subject of drunk driving comes up, as the show of police force called “Drunk Driving. Over the Limit. Under Arrest” under way until Sept. 1 with $50 million of your tax dollars, demonstrates. (On Sunday I noticed within a one-mile stretch of U.S. 18–151 that goes through a village of 1,100 people west of Madison, one Wisconsin State Patrol squad car, one county sheriff car, and one village police car. None appeared to be doing anything other than sitting on the side of the road trolling for potential drunk drivers, around 6 p.m. On Tuesday, two state troopers were similarly trolling for drunk drivers on Calumet Street in Appleton at 3 p.m.)

Driving under the influence of alcohol means your senses are partially impaired from your ability to give full attention to driving. That also occurs with drivers on some kinds of medication, drivers who notice their car interior is too warm or too cold, cellphones, car audio systems, car navigation systems, cars that flash instrument panel warning lights, passengers, other cars, and drivers who are thinking about anything else besides driving. Some impairments are more serious than others, obviously, but to assert that, as a Colorado MADD chapter president, Penny Wagner, said, “Once you’ve consumed your first drink, you’ve lost that ability to make a sound judgment,” calls into serious question the credibility of the organization sponsoring that point of view. (Then again, MADD supports an absolute sobriety standard for all drivers.)

How serious is drunk driving? The National Highway Traffic Safety Administration reports that the number of drinking drivers involved in fatal crashes totals 0.127 percent of all drivers. Note the word “drinking,” not “drunk,” because the NHTSA counts every driver with any blood alcohol content in that percentage.
(If you drink one beer and then are killed in a car crash in which the other driver was sober, then you died in an alcohol-related crash, according to the federal and state DOTs.) That is how the state Department of Transportation can propagandize that “alcohol-related crashes in Wisconsin killed 337 people and injured 5,552” without saying how many of the dead and injured were in fact legally or factually intoxicated. (And about that last point, “legally or factually intoxicated,” few people notice that a legal intoxication level creates a crime based on a state of being, rather than a state of doing, or, put another way, a state of mind instead of an action — in this case, bad driving.)

Like other laws created to make politicians look good or constituents feel good without producing actual results, the 21-year-old drinking age serves to encourage disrespect for the law. I’m still waiting for someone to give an actual logical rationale countering the presidents’ observation about how people are legally considered adults at 18 except when it comes to alcohol use. (Recall the words of Benjamin Franklin: “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”) It is also another example of how laws can serve to deter personal responsibility. The 21-year-old drinking age is also an example of power triumphing over reason — why can’t you drink before you’re 21? Because we said so!

MADD and its allies will not tell you this, but the vast majority of people who used alcohol before their state said they legally could are not drunks and in fact use alcohol responsibly after they reach the legal drinking age. If that were not the case, the drunk driving and drunk-driving death rates would be an order of magnitude higher than they are. (Then again, MADD is well known for playing fast and loose with the facts, liberally using junk science, or generating all kinds of inaccuracies.)

To date, in Wisconsin only the president of Ripon College has signed on to the initiative. Northeast Wisconsin’s other college presidents and chancellors should too. So should the proponents of the 21-year-old drinking age agree to engage in “an informed and dispassionate public debate over the effects of the 21-year-old drinking age.” Don’t hold your breath.

August 19, 2008

Today's sign of your advancing age

Beloit College released its annual Mindset List today, reminding all of us who have already graduated from college about the lives of today's college freshmen:

The class of 2012 has grown up in an era where computers and rapid communication are the norm, and colleges no longer trumpet the fact that residence halls are “wired” and equipped with the latest hardware. These students will hardly recognize the availability of telephones in their rooms since they have seldom utilized landlines during their adolescence. They will continue to live on their cell phones and communicate via texting. Roommates, few of whom have ever shared a bedroom, have already checked out each other on Facebook where they have shared their most personal thoughts with the whole world.

It is a multicultural, politically correct and “green” generation that has hardly noticed the threats to their privacy and has never feared the Russians and the Warsaw Pact.

Some of the more amusing ones (well, you may find them amusing; then again, you may not, particularly the last one):
  • Gas stations have never fixed flats, but most serve cappuccino.
  • As a precursor to “whatever,” they have recognized that some people “just don’t get it.”
  • WWW has never stood for World Wide Wrestling.
  • IBM has never made typewriters.
  • Roseanne Barr has never been invited to sing the National Anthem again.
  • Caller ID has always been available on phones.
  • Soft drink refills have always been free.
  • They have never known life without Seinfeld references from a show about “nothing.”
  • The Green Bay Packers (almost) always had the same starting quarterback.

Analysis of the Day

The Milwaukee Journal Sentinel's Patrick McIlhearn notes that his car's driver has never gone on strike, unlike Racine bus drivers and (back in the late '70s, I remember) Madison bus drivers. Nor, I would add, do they race through the first half of their route and then sit for several minutes, making some passengers miss their bus and others late, as Madison drivers have been known to do.

Gas prices and Madison

Democrats such as U.S. Rep. Steve Kagen (D–Appleton) must be breathing sighs of relief now that gas prices have slipped around 40 cents a gallon from their record highs of earlier this year. (Must be that nasty antitrust lawsuit against OPEC.)

Which does not mean that gas prices are no longer an issue for voters. That is what Randy Melchert, a Republican candidate in the 24th Assembly District in southeast Wisconsin, believes.

Melchert has a three-pronged way to reduce gas prices in the Milwaukee metropolitan area by 10 percent, and to reduce gas prices in the rest of Wisconsin as well:
  • Eliminate the state’s minimum markup law.
  • Reduce the state gas tax to the national average.
  • Eliminate the federal mandate requiring use of reformulated gas in the Milwaukee area.
Melchert’s Web site,, has an interactive calculator that shows how much money his would-be constituents would save if his plan became law. Northeast Wisconsin residents, who are not subject to the reformulated gas mandate (yet), would not save the estimated 14 cents per gallon cost of RFG, but they would still save the 24 to 36 cents per gallon the minimum markup law requires and the 4 cents per gallon above the national average at which the state gas tax is set.

The gas tax is no longer indexed to inflation, so at least it's not automatically increasing every spring. Then again, the transportation fund is decreasing thanks to Gov. James Doyle's repeated raiding of the fund to balance the state budget. The transportation fund seems to be, in the words of another observer, the payday loan store of state government.

As for Doyle’s position on the minimum markup law, he seems to emulate the death penalty dance of former Gov. Tommy Thompson. Thompson said publicly that he would sign a bill reestablishing the death penalty if it reached his desk. However, a death penalty bill never reached his desk because, despite the repeated efforts of state Sen. Alan Lasee (R–Rockland), Republican legislative leaders prevented it from coming to a vote since they didn’t support the death penalty.

Similarly, Doyle has said publicly that he would sign a bill ending the minimum markup law if it reached his desk. No such bill has reached his desk, in part due to strange votes of people like Sen. Glenn Grothman (R–West Bend), who in 2005 voted in committee against ending the law over concerns that gas stations wouldn’t be able to cover the cost of credit card transactions. It’s not clear what part of the state Constitution stipulates that legislators’ duties include monitoring gas station credit card transaction fees.

For that matter, setting (or effectively setting) gas prices is not the role of government, period. Many Republicans wrongly favor the minimum markup law on the premise that eliminating it would eliminate smaller gas stations in favor of the behemoths of Big Oil. As stated here before, evidence of predatory gas pricing is nonexistent, and as it is, consumers don't usually know or ever care about the source of their gas (with the exception of Citgo, owned by Venezuela and its vile "president," Hugo Chavez).

On the other side of the aisle, do not assume that the drop in gas prices is a success of the Democratic Party. It may well be that gas prices aren't going to drop to the levels (about $2.30 a gallon) that preceded Democratic control of Congress. It is a 100 percent guarantee that, next spring at the latest, they will increase with a President Obama and Democratic-controlled Congress, since Obama and most Democrats believe that oil companies should be saddled with windfall profits taxes and, anyway, we need to be weaned from our cars and "cheap" energy. (I'll believe that the next time I see any Democratic member of Congress on a Washington, D.C., bus.)

Then again, perhaps there's less urgency about gas prices in Madison because ... gas prices are (as of today) lower in Madison than in other metro areas of Wisconsin.

August 18, 2008

Prince Charles: “Let them eat cake”

Why, one might ask, did our Founding Fathers fight for independence from Great Britain?

One reason is so that we would not be the subjects of twits like His Royal Highness Charles Philip Arthur George, Prince of Wales, Earl of Chester, Duke of Cornwall, Duke of Rothesay, Earl of Carrick, Baron of Renfrew, Lord of the Isles, Prince and Great Steward of Scotland, et cetera, et cetera, et cetera. As he waits … and waits … and waits to succeed Queen Elizabeth atop the United Kingdom, he feels free to enlighten us commoners about the dangers of genetically modified foods, as reported in the London Daily Telegraph:

In his most outspoken intervention on the issue of GM food, the Prince said that multi-national companies were conducting an experiment with nature which had gone “seriously wrong.”

The Prince, in an exclusive interview with the Daily Telegraph, also expressed the fear that food would run out because of the damage being wreaked on the earth’s soil by scientists’ research.

He accused firms of conducting a “gigantic experiment I think with nature and the whole of humanity which has gone seriously wrong.

“Why else are we facing all these challenges, climate change and everything?”

Relying on “gigantic corporations” for food, he said, would result in “absolute disaster.

“That would be the absolute destruction of everything … and the classic way of ensuring there is no food in the future,” he said.

“What we should be talking about is food security not food production — that is what matters and that is what people will not understand.

“And if they think its somehow going to work because they are going to have one form of clever genetic engineering after another then again count me out, because that will be guaranteed to cause the biggest disaster environmentally of all time.” …

In the interview the Prince, who has an organic farm on his Highgrove estate, held out the hope of the British agricultural system encouraging more and more family run co-operative farms.

When challenged over whether he was trying to turn back the clock, he said: “I think not. I’m terribly sorry. It’s not going backwards. It is actually recognising that we are with nature, not against it. We have gone working against nature for too long.”

Let’s see here. Our planet, whose population is growing (except in Europe), has starving people. There is also an effort to replace oil imported from the Middle East with ethanol from corn or other plant sources. Genetically modified plants have never been proven to harm nature or people. (Our sample size: 8.5 million farmers on more than 100 million acres of cropland in 21 countries, as of 2006.) In fact their genetic modifications can eliminate or reduce the need for pesticides and herbicides. Modifications can increase cold and drought resistance. Modifications can also increase the nutritional value of crops.

I’d be curious about what Charles considers to be “working against nature.” Irrigation? Fertilizer? Insecticides and herbicides? Hybrid crops? Use of tractors and combines? Metal silos? Lights? Electricity?

It’s not clear if Charles is really as ignorant or as insensitive to the problems of the world outside Clarence House as this makes him appear, or if he’s been listening to Jeremy Rifkin too much. (Bonnie Prince Charlie says we have, as of now, 15 months to reverse global climate change, assuming global warming is actually occurring.) It’s pathetic to see one of the world’s (alleged) leaders succumbing to superstition over science, similar to opponents of nuclear power. It’s also pathetic to see the next leader of the country and kingdom that produced Adam Smith, John Stuart Mill, William Wilberforce, Winston Churchill and Margaret Thatcher become vaguely socialist. That, or he’s channeling his inner Marie Antoinette.