Going Broke

Barack Obama says “no one ought to go broke when they get sick in the richest nation on Earth.” He also says “no one should go broke because they chose to go to college.”

Question: Does “no one” include the government or society as a whole? I only ask because of the  trillion-dollar deficits that stretch way into the future.

TGIF: Obama and the Public

Broken or not, government at the moment is not inspiring confidence in the majority of people. That’s good news for those who look to government for neither inspiration nor solutions (to problems it itself has created). There’s no more urgent task that to fan the flames of political cynicism, emphasizing that what’s wrong with health care, finance, and energy won’t be fixed by electing the “right” person or party next time around but rather by removing the obstacles to bottom-up, decentralized solutions.

Read TGIF here.

Where’s the Bipartisanship?

James Fallows had an interesting post yesterday called “Why bipartisanship can’t work.” Since it is a long post I’ll summarize the arguments as I see it:

• Party discipline is difficult in American Politics because candidates raise their own money and can take the party label without the approval of the party. (Academics call this a “Weak” party system).
• Passing law requires party discipline and/or bipartisanship.
• Any law can be stopped if the minority party can enforce party discipline.
• Therefore American Democracy (as opposed to parliamentary democracy) is dysfunctional.

It never ceases to amaze how much political positions are influenced by power relations. The minority party inevitably whines about bipartisanship while the majority party takes heat from its more committed members for making to much of it. The Democrats are now considering using the “nuclear option” on health care (I know it is official called “reconciliation”) when a few years ago they were castigating the GOP for threatening to use it on judicial nominations.

Fallows is essentially right on his analysis of the party system in America, but wrong on his conclusions. We do have a weak party system and an effective minority can stop just about any bill it wants. If legislation is going to be passed it must either be relatively inconsequential to the majority of Americans so that it does not inspire intense opposition or it must have the overwhelming support of the American public.

But Fallows doesn’t explain why this is a bad thing? He implies that the health care bill not passing is evidence of a failure of American Democracy, but doesn’t explain how the minority party is supposed to support a bill the vast majority of Americans do not like? In this case the minority party appears to be doing the bidding of the majority of Americans. And if we are proponents of democracy don’t we want the “will of the majority” to carry the day?

So by what measure is American Democracy dysfunctional in Fallows’ opinion? Because law can’t be passed against the will of the people? All democracies have moments of failure, but the healthcare reform saga is not one of them.

State of the Union Breakdown

This video is actually called “16 lies in 7 minutes” but I don’t like the title, mainly because I don’t think it productive to call a politician a liar … it’s a bit redundant right? Nevertheless, the video is effective and makes some good points.

TGIF: The State of Obama’s Union

Despite what some popular right-wing talk-show hosts claim, Barack Obama is not pushing Marxism, revolutionary or otherwise. He’s pushing good old American progressive-corporate elitism.

Read TGIF here.

About that Spending Freeze

“Starting in 2011, we are prepared to freeze government spending for three years.” –Barack Obama

All spending? What about the military?

Okay, all spending, except the military.

What about the FBI?

Okay, all spending except the military and the FBI.

What about the CIA?

Okay, all spending except the  military, the FBI, and the CIA.

What about the Department of Homeland Security?

Okay, all spending except the  military, the FBI, the CIA, and the Department of Homeland Security.

What about the VA?

Okay, all spending except the  military, the FBI, the CIA, the Department of Homeland Security, and the VA.

What about Medicare?

Okay, all spending except the  military, the FBI, the CIA, the Department of Homeland Security, the VA, and Medicare.

What about Medicaid?

Okay, all spending except the  military, the FBI, the CIA, the Department of Homeland Security, the VA, Medicare, and Medicaid.

What about Social Security?

Okay, all spending except the  military, the FBI, the CIA, the Department of Homeland Security, the VA, Medicare, Medicaid, and Social Security.

What about education?

Okay, all spending except the  military, the FBI, the CIA, the Department of Homeland Security, the VA, Medicare, Medicaid, Social Security, and education.

With apologies to Monty Python.

What does spending “freeze” mean anyway?

Update: See also Nick Gillespie and Matt Welch for a healthy dose of reality.

First I think we have to agree that a discretionary spending freeze would be a step in the right direction. If Obama follows through on this promise we should be willing to pat him on the back, “good job old chap!” and maybe even buy him a beer. Yes I know that it would only apply to 17% of the economy and that the entitlements, which are really sinking the ship, are left untouched, but I’m trying to be positive. After all, it isn’t every day that someone as ideological as Barack Obama steps back from the brink of radicalism.

But these are bizarre times in which definitions of words like “job creation” and “spending freeze” are not always clear and could be hiding something sinister. So we have to ask: What is a spending freeze anyway?

It’s a law being passed that forbids the increase in funding for any discretionary program, right? Except no report I see says anything about the spending freeze being statutory. “President Barack Obama intends to propose a three-year freeze in spending … ” says the Wall Street Journal. According to the USA Today the freeze will be part of the yet unreleased budget. But isn’t the budget supposed to be the thing being frozen, so it’s a little unclear (a) how a budget freezes itself and (b) why you would need one if it could.

Things become clearer (and yet foggier) if you read the WSJ article closely. A spending freeze, if not statutory, should at least mean the spending is held down across the board, right. Regardless of the perceived value of the program? Otherwise, you aren’t freezing the budget, you’re just freezing the programs you don’t like, which should happen every year anyway right?

But in the WSJ article we have this little nugget:

The administration officials said the cap won’t be imposed across the board. Some areas would see cuts while others, including education and investments related to job creation, would realize increases.

So a non-statutory (and probably non-binding) freeze isn’t even an across the board cap. It’s merely a pledge to prioritize spending, which should be done every year, but clearly is not.

So it appears, at least according to the press reports, that Obama is offering the American public a non-statutory, non-binding promise to cut a few programs to pay for the expansion of other programs, but overall saving the taxpayer “10 to 15 billion” in 2011 which is just about 0.7 percent of the projected Federal Budget Deficit in 2010.

Is that Hope and Change you can believe in or what?

Keynes vs. Hayek Rap

The great debate between Keynes and Hayek finally makes it to rap — thanks to Russell Roberts. Watch and enjoy.

The Economics of Fandom

I’ve been rooting for the Chicago Cubs for about ten years now. It has been a brutal decade. I have friends who’ve been rooting for the Cubs their entire lives and they will tell you it’s been a tragedy since birth. I couldn’t help thinking about the Cubs last night as the New Orleans Saints clinched the first Super Bowl berth in franchise history.

For Saints fans last night made years of agony and anguish finally worth it, which got me thinking a little about the nature of “fandom”. Is it rational that Cubs fans continue to root for a team that time and time again has disappointed them? I’ve had many occasion where fans of teams that win, like the Yankees, have asked me “why not root for a team that wins?” And honestly I couldn’t answer them.

But last night I realized that there is a certain economics strategy to the devotion of a fan. Devotion is a real thing that could be measured in time spent watching games, researching players, and talking to friends about the teams. The joy on the faces of Saints fans present for that great moment last night made it clear there is a value being realized: the delight and elation and … well … glory of winning. And this glory seems to be commensurate with the emotional commitment a particular fans has made.

If you’ve been following a team for only a couple of years, the joy of victory is not nearly as profound as that of the lifelong fan. Likewise, to change teams after ten years of emotional investment trades the greater amount of joy (however improbable the victory)  for a lesser, though more likely joy.

So for everyone else out there who is a fan of a losing team … stop questioning your rationality (do you hear me Jets fans). You could take the cheap joy of becoming a fair weather fan. Or you could hang in there, knowing that when that moment does come, it will be transcendental.

Rizzo on the Supreme Court Ruling

I highly recommend this post by Mario Rizzo on the Supreme Court free-speech decision. Nobody has put it better. A tidbit:

The terrible truth of the matter is that a large complex government is incompatible with political and personal freedom. It is not just the economic freedom in various sectors that is threatened by a large welfare and regulatory state. (Most classical liberal-oriented economists well understand the effect on economic liberty.) However, those other freedoms that modern-day social democrats (aka “liberals”) value are also threatened.