Worst Wall Street Journal Editorial Ever

This editorial is so stupid it defies description. I am starting to think they put it in there just to make unions look bad. Maybe it was published on a dare?

Yet the Boeing case has a scarier aspect missed by conservatives: Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.

We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That's not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It's because we have too many poorly educated and low-skilled workers that are simply unable to compete.

Why Indeed Do Veterans Sleep in Dumpsters?

Laurence Tribe and Bobby Shriver have an editorial in today's Wall Street Journal about a lawsuit against the Veterans Administration to force them to provide more funding for caring for homeless veterans. Now I don't know the details about the lawsuit or benefits in this particular area, although as a veteran I am of course sympathetic to this. I was a bit concerned, however, with one of the veterans they are taking up the cause of.

Among the plaintiffs in this lawsuit is Greg Valentini. A private in the 101st Airborne, he took part in the initial invasion of Afghanistan. There, he participated in the assault on Tora Bora that sought Osama bin Laden. He was redeployed to Iraq, where he again experienced heavy combat. He received six decorations for his service.

Having served in the original OEF myself though, this claim is not true. The 101st Airborne was not part of the initial invasion of Afghanistan. They did not arrive until mid-January of 2002, two months after Kabul fell. Furthermore, they did not participate in the assault on Tora Bora, which took place in mid-December 2001. The authors of this piece should have known that, since only a handful of special operations troops took part in the operation, working with local Afghan forces, a decision which has been widely criticized over the years as allowing Osama bin Laden to escape to Pakistan. To the best of my knowledge the only significant combat operations they took part in was supporting the Army Rangers during Operation Anaconda, and they spent the rest of the time manning guard posts in Kandahar. At the time the tours were only 6 months. In fact a list of casualties from Afghanistan does not show a single fatality from the 101st for all of 2002, for any reason.

So how exactly did this private end up homeless? Well a previous article in the LA Times tells us:

Back home, it was meth that took the edge off, and nearly destroyed him.

"It wasn't pretty," says Mr. Valentini.

His son was scatterbrained, dishonest and jumpy. Mr. Valentini was torn. He knew Greg was strung out, but he also knew he'd been through something horrible.

"I was probably too lenient, but I was trying to understand his side of it."

"But I got worse and worse," admits Greg, who stole cash, credit cards and jewelry from his father. "I did a lot of humiliating things."

"Yeah, it was a blow," says Mr. Valentini.

Greg, who was arrested several times, often limped back home when he was set free. Once, his father told him he could sleep on the back porch, that was it. Another time, he kicked him out altogether.

In that same article, Valentini tells even farther fetched stories:

As the father grills burgers on a sunny and pleasant Southern California day, the son takes us into a war zone on the other side of the world. In Afghanistan, Greg says, his whole unit smoked opium "to take the edge off." Surviving firefights seemed to be a matter of luck. Once, in a convoy, he was switched out of one vehicle and into another. Minutes later, the first vehicle hit an IED, and there were no survivors.

Once again, the 101st did not suffer a single fatality during that tour in Afghanistan. Not a one.

Update: More overwrought stories here:

Six years later, Valentini can still hear the fury and chaos, see himself freezing in his first firefight in Kandahar, feel the butt of the rifle that a buddy used to bust him in the chops and snap him out of paralysis.

He began shooting, and shooting, and shooting, and during nine bloody months of heavy combat in Afghanistan, Valentini came to understand fear, absorb it, get comfortable with it. What was fear of death but a reverence for life?

Update 2: More problems in the complaint, although who knows what of this Valentini said, or his lawyer embellished. From page 38.

Mr. Valentini received his basic training in Fort Benning, Georgia, and was selected for further training at Fort Bragg, North Carolina. He was assigned to the 82nd Airborne Division and then to the 101st Airborne Division. In October 2001, he was deployed to Afghanistan as part of the initial assault on the Taliban and al-Qaeda after September 11.

Mr. Valentini's first mission was to take control of the Taliban-held airport at Kandahar, which involved heavy combat. Many of his fellow soldiers were killed. He also witnessed a number of civilian deaths and was tasked with transporting the dead bodies of civilians.

The first major problem with this being, the Army didn't take the Kandahar Airport, the Marines did in December 2001.

Marines took control of the airport Thursday night without resistance. Afghans on the ground appeared stunned and curious, then waved and fired weapons in the air in a show of support. Still, Brig. Gen. James N. Mattis has ordered that "force protection" remain a major concern as Taliban and Al Qaeda forces continue their retreat.

"These guys might try to make one big hit before they get out of town," said Maj. Tom Impellitteri. "The Marines have to remember: vigilance, vigilance, vigilance."

On Sunday, only one Afghan approached the perimeter of the airport. Given some clothes and food by Marines, he left quickly.

The complaint continues:

In February and March of 2002, Mr. Valentini's unit was part of Operation Anaconda in the Tora Bora Mountains, searching for Osama bin Laden and other elements of the al-Qaeda and Taliban leadership. He took part in significant ground fighting, under nearly constant sniper fire and mortar bombardment. Again, he witnessed the gruesome deaths of numerous civilians, including children.

OK, this might at least explain the previous Tora Bora claim. Operation Anaconda did not take place at Tora Bora, but rather the Shah-i-Kot Mountains. I have no idea what role he played in this, but based on the rest, I am not willing to give him the benefit of the doubt.

Too Big To Fail

OK, haven't posted for a while, been busy, but I was just watching HBO's Too Big to Fail, and reflecting on the whole financial crisis thing. The movie ends with a caption stating how the top 10 banks control 77% of the deposits, and they have been designated "Too Big to Fail". The presumption being that despite all of the chaos we still haven't learned anything and are continuing with the same policies.

This is to a certain extent correct, except now we have the financial system under a ridiculously complicated regulation scheme in which moral hazard is merely explicit rather than implicit, and companies are more formally protected against their business risks by the government. So basically the conflict is between letting the banks take all the risks themselves, the morally correct free market thing, and having the government regulate and guarantee them to some extent, a more practical but morally objectionable stance.

So the question really comes down to, not whether the government should do anything, since all but the most die hard Hayek devotee (of whom I am a non-diehard fan) would agree that government should do something to prevent a reoccurence. So the question is, how can we handle this systemic risk, without government control, and without the moral hazard endemic is classifying businesses "Too Big to Fail".

Unfortunately governments never take the simple solution, they would give up too much control and subtract from their whole raison d'etre. It doesn't have to be that complicated though. The simple solution is, quite simply (to be redundant) to instigate a sliding scale of capital requirements for financial institution. Banks can be as big as they want to, but their costs will simply increase the larger they get, reflecting their systematic risks. Banks already have to maintain a certain reserve ration, for example $1 of assets for every $10 they loan out. So allow this for smaller institutions, but say, for every $100 billion of liabilities that they have (in accounting terms a bank loaning out money is a liability) then this ratio increases by 10%. This will increase the costs of capital for larger insitutions, and bring banks down to a level of equilibrium which is both profitable and manageable, with no more government regulations than were required previously. In fact you could fit this entire program on a single sheet of paper.

Just an idea. Probably never get any politician to adopt it though.

My New Favorite Democrat

Pawlenty on the Public Unions

Is it too early to join the Pawlenty for President bandwagon?

When Americans think of organized labor, they might think of images like I saw growing up in a blue-collar meatpacking town: hard hats, work boots, tough conditions and gritty jobs. While I didn't work in the slaughterhouses, I did become a union member when I worked at a grocery store to help put myself through school. I was grateful for the paycheck and proud of the work I did.

The rise of the labor movement in the early 20th century was a triumph for America's working class. In an era of deep economic anxiety, unions stood up for hard-working but vulnerable families, protecting them from physical and economic exploitation.

Much has changed. The majority of union members today no longer work in construction, manufacturing or "strong back" jobs. They work for government, which, thanks to President Obama, has become the only booming "industry" left in our economy. Since January 2008 the private sector has lost nearly eight million jobs while local, state and federal governments added 590,000.

So Much for Hopenchange

Barack Obama in 2004:


"Well, I say to them tonight, there's not a liberal America and a conservative America; there's the United States of America.

There's not a black America and white America and Latino America and Asian America; there's the United States of America."

Barack Obama this morning:

“If Latinos sit out the election instead of saying, ‘We’re gonna punish our enemies and we’re gonna reward our friends who stand with us on issues that are important to us,’ if they don’t see that kind of upsurge in voting in this election, then I think it’s gonna be harder and that’s why I think it’s so important that people focus on voting on November 2.”

Quote of the Day

Via Rich Lowry:

It should be taken as an axiom of political life that if your argument is about the other side’s advertisements, you’re losing. If your argument is about who’s funding the other side’s advertisements, you’re losing badly. And if your argument is about how foreigners might — lack of evidencenotwithstanding — be secretly funneling cash into the other side’s advertisements, you’re losing in a historic landslide.

Keith Olbermann Warns of the Great Terrorist Threat Against US Muslims

I have never considered Keith Olberman some sort of intellectual giant, but this is stupid even by his standards. From 3:45 in:

Maybe those exploiting 45 Park Place would still shake their fists and decry terrorists by extremists, who happen to be Muslim, and never face the shameful truth about our country, as the Jacksonville Mosque bombing shows, since 9/11 Muslims have been at far greater risk of being victims of terrorism in the United States than have non-Muslims.

Visit msnbc.com for breaking news, world news, and news about the economy

If That Doesn't Work He Will Put a Boot to Their Throat

First he usurps the bankruptcy process with GM and threatens the creditors to get them to accept it, then he extorts $20 billion out of BP, now he is threatening the insurance companies. RIP capitalism.

President Obama, whose vilification of insurers helped push a landmark health-care overhaul through Congress, plans to sternly warn industry executives at a White House meeting Tuesday against imposing hefty rate increases in anticipation of tightening regulation under the new law, administration officials said Monday.

The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than covering claims.

Uhh, you are responsible. The new law changes the way the insurance market works, they will have to respond to it. You have nobody to blame but your own misguided policies. Go back to school and take economics 101.

A Tale of Two Counties

As I have touched on before, end public employee unions now, before they turn us into another Greece.

Virginia law denies public employees collective bargaining rights; that's helped Fairfax resist budget-busting wage and benefit demands. As revenue dipped two years ago, Fairfax officials froze all salaries for county government and school employees with little ado. By contrast, Montgomery leaders were badly equipped to cope with recession. County Executive Isiah Leggett took office proposing fat budgets and negotiating openhanded union deals after he succeeded Mr. Duncan. Then, as economic storm clouds gathered, he shifted gears and cut spending -- while still trying to appease the unions.

Did the Stimulus Work? Don't Ask the Government.

I have touched on this before. The supporters of the $800 billion stimulus package claim all these jobs have been created and credit Keynesian theory, but the way that the jobs are being calculated is by using that very same Keynesian theory, in a perfect bit of circular logic.

In response to a new CBO update on the effects of the stimulus, DemWarRoom, the twitter feed for Senate Democrats, has posted a triumphant note about the program's success: "Critics of the stimulus listen up: CBO estimates that it put 2.8 million ppl to work in 1st 3 months of 2010." But it's stimulus boosters who ought to be paying more attention: Douglas Elmendorf, the head of the Congressional Budget Office, has stated plainly that his team's estimates do not measure real-world outputs (just inputs), that they do not serve as an independent check on its success or failure, and that if the stimulus had not created jobs, the CBO's figures would not reflect that fact. So no, sorry, try again: The CBO's updates do not actually confirm whether or not the stimulus is creating jobs.

Is Keynesian Theory Dead Yet?

It didn't work in the 30's, it didn't work during the lost decade in Japan, it didn't work now. I know economics is a soft science, but still...

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House's Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

Another Racist Calls Obama a Socialist

Where are the denuciations?

"I think that the president and Nancy Pelosi get credit," Sharpton said. "I think this began the transforming of the country the way the president had promised. This is what he ran on."

And if that transformation is socialism, then so be it, he explained. That is what the American public "overwhelmingly" voted for.

Inane at Any Speed

Ralph Nader, one of the biggest frauds of the last half century, weighs in, poorly, on the recent Supreme Court election free speech decision.

The disparities between individual contributions and available corporate dollars mock any pretense of equal justice under the law. A total of $5.2 billion from all sources was spent in the 2008 federal election cycle (which includes 2007
and 2008), according to the Center for Responsive Politics. For the same two-year period, ExxonMobil's profits were $85 billion. The top-selling drug, Pfizer's Lipitor, grossed $27 billion in sales during that time.

Of course business is the ultimate boogie man for Nader, unless he is busy shaking them down. Nevermind that the McCain-Feingold act which the court truck down was only created in 2002, and there were plenty of rich companies before that, none of which were spending billions of dollars on campaign related commercials. The idea that they would is just silly.

Nader proposes a solution:

In the absence of a future court overturning Citizens United, the fundamental response should be a constitutional amendment. We must exclude all commercial corporations and other artificial commercial entities from participating in political activities. Such constitutional rights should be reserved for real people, including, of course, company employees, to enhance a government of, by and for the people.

Nevermind that the case he is talking about is not about a commercial corporation, but Citizens United, a non-profit one. This also effects unions and other such non-commercial entities. I would love to see Nader supporting an ammendment banning unions from political speech.

The Public Unions

Personally, even though it will probably never happen, I think it should be illegal for public employees to be unionized. For starters, the whole point of unions was to protect workers from "capitalist exploitation", so why do they need protection from the enlightened government that they helped elect. Secondly, in a private corporation there are checks and balances, a company cannot survive without paying enough to recruit qualified workers for their industry, nor can they survive if they pay their workers too much to be competitive. GM stands as an example of this, although they have managed to survive solely through government intervention. In government though, they have an endless supply of money they can simply confiscate from taxpayers to pay their workers, in a weird sort of monopoly power. Anyway, the WSJ, as usual covers this topic well.

In private industries, union workers are subject to the vagaries of the marketplace and economic growth. Thus in 2009 10.1% of private union jobs were eliminated, which was more than twice the 4.4% rate of overall private job losses. On the other hand, government unions offer what is close to lifetime job security and benefits, subject only to gross dereliction of duty. Once a city or state's workers are organized by a union, the jobs almost never go away.

This means government is the main playing field of modern unionism, which explains why the AFL-CIO and SEIU have become advocates for higher taxes and government expansion in cities, states and Washington. Unions once saw their main task as negotiating a bigger share of an individual firm's profits. Now the movement's main goal is securing a larger share of the overall private economy's wealth, which means pitting government employees against middle-class taxpayers.

Fox News and Media Bias

I found this study on the media and the president interesting. Most of the focus was on the fawningly ridiculous coverage of Obama, but this factoid stood out.

Previous CMPA studies found that Mr. Bush received only 23 percent positive
evaluations in 2001; Mr. Clinton had 28 percent positive evaluations in 1993 and Mr. Reagan had 26 percent positive evaluations in 1981…

Fox News was never in the Obama fan club, however. Only 22 percent of their stories on Mr. Obama were positive during the year, some of it quite pointed.

So otherwise Fox News treated Obama just like the media treated every other president up to Obama. Hey, they really are fair and balanced!

Cheap Economists

I found this rather amusing, and it explained several of my professors in b-school. They know who they are.

Academic economists gather in Atlanta this weekend for their annual meetings, always held the first weekend after New Year's Day. That's not only because it coincides with holidays at most universities. A post-holiday lull in business travel also puts hotel rates near the lowest point of the year.

Economists are often cheapskates.

The economists make cities bid against each other to hold their convention, and don't care so much about beaches, golf courses or other frills. It's like buying a car, explains the American Economic Association's secretary-treasurer, John Siegfried, an economist at Vanderbilt University.

"When my wife buys a car, she seems to care what color it is," he says. "I always tell her, don't care about the color." He initially wanted a gray 2007 Mercury Grand Marquis, but a black one cost about $100 less. He got black.

Why the Health-Care Bills Are Unconstitutional

I am not a huge Orrin Hatch fan, but he is absolutely right here. If Congress can force you to purchase a private product, then their powers are unlimited, and the constitution is meaningless.

President Obama's health-care bill is now moving toward final passage. The policy issues may be coming to an end, but the legal issues are certain to continue because key provisions of this dangerous legislation are unconstitutional. Legally speaking, this legislation creates a target-rich environment. We will focus on three of its more glaring constitutional defects.

First, the Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate. Congress's powers to tax and spend do not apply because the mandate neither taxes nor spends. The only other option is Congress's power to regulate interstate commerce.

I Guess He Wanted a More Challenging Job

I was a bit amused to see this in the news. Why exactly would you want to go from holding a job where your biggest concern is "where do I stash this ginormous pile of money?" to a company which is doing so poorly it is majority owned by the US government?

DETROIT — General Motors has hired an outsider to run its troubled finance operations, bringing in the chief financial officer of Microsoft.Chris Liddell will join GM next year, GM Chief Executive Ed Whitacre Jr. said in a statement today.

Liddell, 51, brings depth and experience to the job leading GM's global financial and accounting operations, the statement said.

I Think They Are Being a Bit Too Ambitious

I was amused by this Reuter's headline pointed out by Best of the Web.

Obama administration aims for high school financial literacy

Who knows, maybe they can find someone who can teach Tim Geithner how to use TurboTax?