Friday, November 25, 2005

Different Political Spectrums

In the US ,or more broadly the world, the political spectrum is most often represented as a simplistic line as in Left-Right Politics. I don't think this shows enough variety of political views. Now I am not sure if I can ever answer these questions of where these political philosophies fit into a political spectrum map:
Where does the Fascist fit?
Shouldn't religion be not a left-right question?
The same with environmentalists, and any particular ethnic group.
George Orwell once argued that the difficulty in classifying Left versus Right is due in part to the propensity for nascent factions of an ideology to be disavowed and labeled as being on the opposing side of the left-right divide by their erstwhile comrades - or they may so choose to label themselves to highlight their disagreement. This results in incremental or evolutionary doctrinal distinctions being placed in opposition in the popular perception of the left-right political spectrum.

My first political science instructor stated that the straight line was not sophisticated enough and he drew a circle with a small gap on the bottom. He said as politics went to the extreme left and right end up being closer to each other than the centrists. I believe that the closest were anarchists and communists. I never have run across this political theory again. Below gives a clue that even if socialist believe in government, they are suppose to migrate to a communist system with no formal government.
For a start, Communism was never a social system at all, but a political MOVEMENT. There is a social system called ‘communism’, which literally means people living in communes (barracks), with no private ownership of property, no government, and everything shared out on the principle ‘from each according to their ability, to each according to their need’.

So now that I have concluded our political spectrum can not be analyzed by a line then what other model can we think of to explain the differences in political groups. A good place to start is Political Spectrum. The first chart is Nolan Chart. I like this because it shows that Liberatarians strive for more economic and personal freedoms.

But this also places Fascist and Communist in the same lower left corner, so maybe too simplistic. But try the test anyway.

And now for something completely different...Take the test. This might be the best model but what do you think? This would be the best test if you only want to do one, but it is fairly long.
If we recognise that this is essentially an economic line it's fine, as far as it goes. We can show, for example, Stalin, Mao Tse Tung and Pol Pot, with their commitment to a totally controlled economy, on the hard left. Socialists like Mahatma Gandhi and Robert Mugabe would occupy a less extreme leftist position. Margaret Thatcher would be well over to the right, but further right still would be someone like that ultimate free marketeer, General Pinochet.
That deals with economics, but the social dimension is also important in politics. That's the one that the mere left-right scale doesn't adequately address. So we've added one, ranging in positions from extreme authoritarian to extreme libertarian.

Both an economic dimension and a social dimension are important factors for a proper political analysis. By adding the social dimension you can show that Stalin was an authoritarian leftist (ie the state is more important than the individual) and that Gandhi, believing in the supreme value of each individual, is a liberal leftist. While the former involves state-imposed arbitary collectivism in the extreme top left, on the extreme bottom left is voluntary collectivism at regional level, with no state involved. Hundreds of such anarchist communities exisited in Spain during the civil war period

You can also put Pinochet, who was prepared to sanction mass killing for the sake of the free market, on the far right as well as in a hardcore authoritarian position. On the non-socialist side you can distinguish someone like Milton Friedman, who is anti-state for fiscal rather than social reasons, from Hitler, who wanted to make the state stronger, even if he wiped out half of humanity in the process.

The chart also makes clear that, despite popular perceptions, the opposite of fascism is not communism but anarchism (ie liberal socialism), and that the opposite of communism ( i.e. an entirely state-planned economy) is neo-liberalism (i.e. extreme deregulated economy).

With some political points of views:

My results:
The Political Compass
Economic Left/Right: 7.38
Social Libertarian/Authoritarian: -0.56

Your political compass
Economic Left/Right: 7.38
Social Libertarian/Authoritarian: -1.74

The next model is Pournelle. While I like the statism as a factor, defined as either "state as ultimate evil" and "state worship", and be sure to read this on rationalism also. All political groups want to portray themselves as not "irrational" but as "reason enthroned". Hank from here showed in the comments section that my ideas of rational thought is different than "rationalism". I think I will leave the pedantic philosophical discussions for others. I still question whether that factor in deciphering the political landscape is a significantly important.

The next model is Friesian Political Spectrum. It starts with the Nolan Chart and then makes it 3d with Z axis being liberty value. How about another test? I will try to study this later.

And lastly this chart is interesting. This seems to imply that we are more likely to get along with others in our group. But some international bonds are formed when both parties are willing to spend the social and political energy to get past cultural divides. Because I see the relationship of Japan and the US to be under this mutual cooperation, even though Japan is Confucian and the US is English Speaking.

I don't expect this to explain all aspects of political landscapes but at least get a primer started on thinking of how political parties in the US and the world should be analyzed in relationship to each other. One of my philosphies is that people or to a broader sense groups should be allowed to express themselves in their own words and not imposed by outside groups that want to disparage such groups in hyperbolic political attacks.

P.S.: I know that this might be going afield but Jason from ThomHartman's blog presented another political map defined as Triangle-of-Power. The three points of his equilateral triangle is defined as Government, Corporations and People. The Government is loosely defined as "The group that has control." This could mean elected politicians or a authoritarian monarchy like a king or a professional bureaucratic class. While Karl Marx does not put much emphasis on governments, he does talk about the bourgeoisie.
Corporations (bourgeoisie) as Jason defines is entities with wealth much greater than the average person. Marx: the bourgeoisie : those who "own the means of production" and exploit the proletariat. Jason does not define "wealth much greater than the average person", so we can not easily define who would be in that group. From his piece and his post on ThomHartman's blog, Jason sees corporations or businesses in general are a neccessary evil.
People (proletariat): This group is unique, as the other two are merely sub sections of this group. The People are all those that live on the land. Strangely enough, this group holds the most natural power when they act with one voice.

Thinking back to the triangle with the three corners being the categories of power, then you can see that where the country stands would be a combination of distances from the three corners. The closer the point is to one corner the more power that group has over the nation. I see that the lines are never possible to be at since each group has at least some power influence. But it is interesting to see the point with the three lines drawn to the respective corners.


More Democratic Peace

This is in response to sunrise posted 19 September, 2005 06:06 PM.
But we do have a statistic on how many non-liberal democracy countries attacked liberal democracy countries in 2003, none. (according to the list Mr "Democratic Peace" guy uses)

If we are to use dyads in this analysis, then the results for Iraq War are (2004 at PWHC)
Free vs. Not free=25
Partly Free vs. Not free=7
Not free vs. not free=1 (Kazakhstan)
Picking one year out does not prove or disprove a theory but it does shed some light that for liberal democracies to go to war it is usually not a unilateral action.

I was thinking to myself that I was disappointed that there was not more wars to use in our examples, but then again if Democratic Peace is correct then as the number of democracies increased then the number of wars will decrease.

The Israel-Palestine question has a strong meme in you. But the question of course surrounds as to who attacked who first. My contention is that the non-democratic regimes around Israel attacked first and lost ground in the wars. Thusly any conflict is now a civil war at best and not included in my discussions.

The percentage chance that given a liberal democracy attacks a random country (provocation?) being a non-liberal democracy is 54.7% (105/192) as of 2003. Each time we have this event occur we get the same chances, but what is the likelihood that over 10 years the free country does not attack another free country? The result is 3.6%, ooops .036%. Just as if we flip a coin 10 times then what is the likelihood that we end up with all tails? Conversely what is the chances that we would get at least one free country fighting another free country is 99.964%.

We can include Iraq in as many times as you want. We can take the Iraq-Kuwait leading to the one missed of Coalition vs. Iraq and there is the 1998 included in the chart of:
1998 2003 IV 1 Iraq International violence (US/UK airstrikes)

and Coalition vs. Iraq.
It still does not include any liberal democracy against another.

Also there's a conflict listed in 1990 between Armenia and Azerbaijan, yet there's no listing in Freedom House for Armenia in 1990 as if it didnt exist.

Both partial free with a rating of 5 in 1991. Since to evaluate a country you would need some time frame to look at. Dr. Rommel does discuss that ( web page :
RJR: You have to be careful of the time stamp on these ratings. That for Chile in 1973 was issued in January-February of that year. Now, if you take into account the delay caused by data collection for all nations, and the preparation and publication of the charts involved, I guess that the rating actually referred to about June or July 1972.

Let us go through your list now.
Sorry but the liberal democracy (Israel) was attacked by two not free regimes and not the other way around ( Yom Kippur War).
Iran has never been a free country and has only been rated partial free with 5.5 at best.
When of course, in reality is more a case of a Britain and Portugal conflict.

I guess I missed how many Britains and Potuguese soldiers died in that war. Plus the fact since deaths are listed as na invalidates it as a war. And not one mention in Wikipedia for either country as to the war.
I believe that 1975 is after 1973 when the US left Viet Nam.

Lastly let us run down the wars in our survey:
(F=Free,PF=Partial Free,NF=Not Free) CSPMajor Episodes of Political Violence

Egypt&Syria vs. Israel=NF vs. F
Iraq vs. Kuwait =NF vs. NF
Armenia vs. Azerbaijan=PF vs. PF
Iran vs. Iraq 78 =NF vs. NF
VietNam vs. Cambodia75=NF vs. NF
US et al vs Iraq 91 =F vs. NF
US et al vs Iraq 03 =F vs. NF
US/Uk vs Iraq 98 =F vs. NF
Mozambique vs Zimbabwe=NF vs. NF na standing
Zambia vs Zimbabwe =PF vs. NF
Cambodia vs Thailand =NF vs. NF
Lebanon vs. Israel =PF vs. F
Tanzania vs. Uganda =NF vs. NF
VietNam vs. Cambodia78=NF vs. NF
China vs. Vietnam 83=NF vs. NF
Iran vs. Iraq 88 =NF vs. NF
Israel vs. Syria =F vs. NF
Argentina vs. UK =NF vs. F
Israel vs. Lebanon =F vs. PF
China vs. Vietnam85=NF vs. NF
China vs. Vietnam87=NF vs. NF
Ecuador vs. Peru =F vs. PF
Eritrea vs. Ethiopia =PF vs. PF
India vs. Pakistan =F vs. PF
Afghanistan vs. USA =NF vs. F

Thus my study shows:
F vs. F =0
F vs. PF =4
PF vs. PF=1
PF vs. NF=1
F vs. NF =7
NF vs. NF=11 (1 na was included).

While it does show some tensions between Free Countries and Not Free Countries the highest tensions are between NF and NF countries. Not free countries only make up 25% (48/192 as of 2003) of all nations. This random selection process should result in only 6.25% of all wars between NF and NF. We also can see that 18 out of 23 wars included as least one NF nation. Thusly the rarest of the possible outcome has created the most occurances.
But after my granola bar, I now think I will have a nice hot cup of coffee. Then again maybe Ren will make me explain this. :)

For the sake of Kate I will try to read the tea leaves that sunrise has thrown down.
And yes I have been studying all this weekend. Unlike others, I have to work hard at understanding the world as it is.
sunrise: Yes, so is "Djibouti", but its not one of the 46 that Mr "Democratic Peace" guy uses? [else where is the count of 15 F v NF?]

So I guess I will waste my time chasing every imaginary conflict that sunrise has thought up in his life. Again in this one for was a conflict from 91-94 with the FRUD causing a rebellion with about 1000 deaths. Djibouti also received independence in 1977. web page
I remember now, Ron, you're the guy who rejected the notion that Americas freedom bombs had killed many Iraqis, or something. All those cluster bombs and Napalm killings were accidents or necessary for freedom etc. Bet you're a believer in 'Progressive Genocide' too. Give War a chance, eh Ron.

Again you have not explained what you mean. Since you are putting words in my mouth then what freedom bombs are you referring to (Clinton, Bush)? How many cluster bombs do you think have been used compared to suicide car bombs? Since you are the intellect here, why not explain what is the "Progressive Genocide" that you talk about?
Why not give freedom a chance for citizens around the world? Of course I am looking forward to eating your freedom fries in Zimbabwe.

And like i said, no McDonalds.

Your discussion of McDonalds number of franchises has no bearing unless we have access to the exact list of countries that McDonalds counts. As far as Kasmir not having a McDonalds, the theory holds that a country no matter where they place their McDonalds is then considered a McCountry and when any McCountry fights another McCountry this then violates the theory of McDonald's Peace Formula. Again changing the theory to fit the facts. No?

Eh? You want to address the idea of war not conflicts, by talking about Mr "Democratic Peace" guys theory that uses a list titled "Major Episodes of Political Violence" using the category "International violence" and not the "War" category, how weird.

There is not a category for "War". Just trying to use semantics.

Ok, i take your point that just looking at the three paired categories (ignoring the other six) in 2003 the most likely is F v F not NF v NF or PF v PF. But as we are concerned with only F and the non F, grouping the NF and PF together, as Mr "Democratic Peace" guy splits the democracies into groups and selects only one. Then the most likley is a non F v non F, i'm sure you'll admit. As we know, some of those "electoral domocracies" are listed as PF. And as pointed out earlier, there's also a non-democratic listed as PF, and a "electoral democracy" listed as F. Making a mockery of the whole thing.

No the most likely with the three categories or two is F vs. F (88 free countries) not NF vs. NF (44 countries). Again trying to use semantics to confuse the issues. At least you could mention what country and year that you see any inconsistancy with links to where you see this information. No???
There are nine options. F attacking F or PF or NF. PF attacking PF or F or NF. NF attacking NF or F or PF.

Rounding may not result in 100%.
We do not use explicit combinations thus F vs. NF is the same as NF vs. F. But I still placed in 9 squares for you.
Also, there are not anywhere near 46 examples to choose from at all, many were counted more than once (one counted 7 times!) where an ongoing dispute hasnt been resolved.

Why not tell us the examples you counted and which one was counted 7 times?
Some of the conflicts were started when there were a lot less "liberal deomocracies" around. Even during the last 32 years mentioned, there were times where it was 25%. How many "liberal democracies" were around when the conflicts started. You see, all that is going to affect the calculation of probability.

Go ahead, you have the facts and the brains so tell me what is the probability?
At a quick glance there are only 24 seperate " cases of international violence". Many of them starting at a time when there was less than 25% "liberal democracies" around. Not to mention that some conflicts are the result of border disputes over borders imposed on NFs by Fs. [India Pakistan, Pakistan Afghanistan being examples, Colonial Africa etc.]

Go ahead and tell us the 24 seperate cases. I like the fact that every war of course has its roots in the faults of the US. You sure have some nice rose coloured glasses! You should actually look at the moves of Ghandi during independence, especially with respect to mass migration.
So its not 1 in 6 at all, thats rubbish.

Its looking like a 1 in 25 chance or less.

Well statistics do not go with hunches or looks, so tell us wise one.
You see, if years ago there were only 20% "liberal deomcracies" (being generous perhaps) that's a 1 in 5 chance of picking an F bean out a bag of 150. Then pick another bean out the bag, and this time it will be less because you already have the 1 F bean in your hand, and if the F beans do their usual ganging up thing, then you'll need to grab a handfull of F beans further reducing the chances of picking another F to fight against. So, anyway, thats another 1 in 5 or less, added together thats 1 in 25 chance, or less, isnt it?

So tell us when there was 20% liberal democracies.



Torture - A Growing Scourge in China
-Time for Action

The Corruption Trap


Thursday, November 24, 2005

A Discussion in Externalities

I hope this post is not too long, but since this blog is for me, I think I will.
This is a discussion of me and Common_Man_Jason (Jason) talking to each other on the ThomHartman Blog.

For the record, I do not support state control of the means of production. I believe in free enterprise and the right to private ownership. I see a citizen controlled government as the arbiter of the marketplace, not the administer of the marketplace. Where people often get confused about the progressive ideology is that we also believe in a sensible public sector for resources that just aren't well suited for the private sector because the profit motive will lead to private tyranny.

For example, fire department services in a private sector would let a house burn down that didn't pay its bill or sign up for the service. Or if the roadways were privately held a private interest could control the flow of goods, services, and people to the benefit of their profit margin rather than to the benefit of freedom of movement within a free society.

Some things are better suited for the private industry, and some things are better suited for the public industry. I wish the debate was over where to draw the line (and I do see it as a moving target) rather than whether all things should be private or all things should be public. History shows that neither work alone.

Yes a healthy democracy is important, but it is not the resources themselves that lead to tyranny but not well defined property rights.
I don't believe any system in the world has every been either or (Cambodia coming close). All systems have been a "mixed economy", it only boils down to the degree of one over the other.

I like some aspects of this political map , in that the political spectrum is divided between "dangerous but good" and "neccasary evil".

The dividing line for me is whether there are externalities that can not be captured by market mechanisms. For example public education is one, where the value to society as a whole is better off for having all citizens educated. But in some cases of free markets in LDC (Less Developed Counties) has shown that the market did result in the right level of education without government interference.

Along with this we also need to look at "public goods" . Where public goods are:

* Non-rivalrous — its benefits fail to exhibit consumption scarcity; once it has been produced, everyone can benefit from it without diminishing other's enjoyment.
* Non-excludable — once it has been created, it is very difficult, if not impossible, to prevent access to the good.

The perfect example is the fireman example as you pointed out. If the firemen lets one house burn down since non-payment this would jeopardize the paying customers. National defense is also an example here.

quote: Once national defense is in place it protects Bill Gates, Bill Clinton and Bill Rutherford () equally.

Of course that map is designed (as many maps of this sort are, even Doug's above) to sway a person in a certain direction (conservative is good, liberal is bad). You'll notice it doesn't even address corporate power, just state power. Further, it doesn't seem to even care what kind of state is being "worshiped." My statements were about public vs. private, yet a state power is not necessarily a public domain power. China, for example, is often called a communist country, yet it really isn't because the government is privately owned (much like the USSR was). China is actually more fascist than communist in that respect.

The key to the public domain, is that every citizen gets an equal voice (suffrage) in the administration of it. It isn't about "state worship" as the right wing propaganda chart you shared would imply, it's about democracy, or more specifically representative democracy (We The People elect with free choice servants to administer the public domain).

Externalities, by definition, are not captured by market mechanisms (unless the public domain forces them to be with public policy).

Jason, let me first say that no political map I have looked at is perfect. But these maps are much better than our left-right linear representation.
I don't see the sway as you see it or right wing propaganda. If you have a better map let me know. One thing to consider is that this map shows Fascists, Naxis, and Classical Anarchist as being irrational. I don't see too many people screaming to be in those groups.

With well defined property rights, many of the externalities will be accounted for in a free market. Again, I suggest the reading of:
Free Market Environmentalist
by Terry Anderson and Donald Leal
Then the reason that government is important is when property rights can not be well defined and there are large externalities (+/-) that can not be captured by the market.
And unfortunately most time public policy does not do a good job of capturing externalities.

Though this is not directly related, the first time I started thinking about other ways to define the political spectrum was "Communities, shared spaces and weblog reading" . And there I was thinking where would you put the environmentalists and Friends of Animals? By default they have migrated to the left but there is a counter offer of Free Market Environmentalists.

Dude! Do you even know what an externality is? It is the conscious decision of a corporation (or an association of corporations) to pass along a cost to the public; a cost it should be absorbing in the production of its goods and/or services. Of course the public domain isn't good at capturing those costs, because it shouldn't have too!

Why not just require the corporations who do the damage, to pay for the damage? Seems like that would prevent them from doing it, wouldn't it?

Most of the time citizens are completely unaware that they're being made to pay for part of a corporation's production costs because they are tricked by the artificially lower prices that result. They are simply unaware that the savings they thought they were getting were paid for with higher taxes and/or more dangerous environmental conditions (a tax on future generations who had no say in the policy, that is "taxation without representation").

You make externalities sound like an unavoidable natural condition. NO, it's a conscious human choice founded in greed and should simply be made illegal. The true Free Market person would support the idea of a corporation having to pay all the costs associated with the production of goods and/or services (and charging appropriately for said goods and services) rather than forcing and tricking others to subsidize them; many of whom do not consume said product or service and thus shouldn't be helping to pay for the production of it.

I will treat you with respect and expect that in return. Thanks for pointing out the faults with this political map. When originally looking at this map, I was interested in having fascist and socialist as not stationed in the same square. The label "welfare liberals" should be able to be changed and still make some of the points valid.
I believe that you have too narrow of view of externalities. First externalities can be positive as well as negative. One example is flu shots. If everyone around you gets the shot, you will be less likely to get a flu. You have recieved benefits from the actions of others. If a product or service has very positive externalities, then the market usually does not provide enough of this product or service. Either it is better to have the government provide the service or subsidize businesses to provide it. The problem of course is that then who determines what the right level of service should be.
Now there is positive externalities for having a professional sports team in your town, but I do not want any taxpayer monies for this.
Second, externalities are not limited to corporations. Let us say your neighbor has a large tree that shades your house and creates a beautiful neighborhood. Now you have some positive externalities (shade, beauty, comfort, energy) as will as negative (raking, cleanup, lack of view).
Thirdly, corporations have no conscience, only people do. And as such many externalities are not known or even able to be measured.
We know that a majority of pollution is caused by automobiles and this pollution causes health problems. So now how does the market create compensation for those that have property rights violated by those that polluted?
Under perfect markets then yes all externalities are captured in the transactions, but we all know that the courts have to settle property rights on a regular basis. Being a automobile claims adjuster, I was exposed to the dispute in property rights on a regular basis. Most were solved by the insurance industry but a lot still end up in courts.

I think this enough for now.
But what mechanisms would you use to get corporations to pay for the damages?

I'm not sure you're describing externalities here. You're describing public production vs. private production; and I agree that sometimes the public sector is better at providing a product or service (especially a needed one that isn't profitable) and sometimes the private sector is better at providing a product or service.

An externality is a cost, known to the private sector entity, that is purposely passed on to the public sector. That being said, I agree that there are times when it is appropriate for the public sector to pick up the cost; especially when the private sector is providing a needed product or service and would go out of business without passing on the cost. But that is usually not the case, and in most cases the general public is unaware that the private sector is passing on the cost, as they've made backroom deals with politicians.

No offense, but this bs was obviously propagated by some corporate think tank who wanted soften the image of what an externality really is. When corporate behavior results in a positive outcome for the public, then that corporation is doing its proper job and the result need not be called an externality.

Agreed. The key is what to do when it becomes known, and the executives of a particular corporation will be the first to know (like the health hazards smoking caused)
The producers of the product need to pay unless the public decides it is worth picking up the cost; but the public needs to be informed with truth, not lies, and there needs to be proper public debate both among legislators and the general public.

No one is asking for perfection; that's obviously not possible. The producer of a particular externality will be the first to know in most cases, and they need to be responsible for letting the public know the moment they know, and the public will decide if it is willing to pay for it.

As for any externality that is between two private spaces, that's why we have courts. It isn't pretty or quick, but it's the best we have and I think it works pretty well. That's how multiple private owners co-exists, and that is how they settle disputes.
Creating Laws, enforcing laws, and using the courts to settle any dispute about those laws. In spite of the propaganda to convince people that due process is somehow bad, it actually works.

Jason, could I have you read this article on externality.
Since the discussions was on where the line was between what should be provided by private vs. public enterprises, I was explaining that externalities should be a helpful guide for deciding these decisions.

I am sorry but the sports stadium is my own explanation (not a corporate think tank) of an example that has positive externalities but should not be provided by taxpayers. On a side note, I could see a city backing the bonds that went into the construction of the stadium as long as there was no costs to the city and not affecting its credit rating.

Yes you have explained some conflicts with external costs that are transferred. But the courts are very inefficient and seldom come back with the optimum equalized results. Part of this inefficiency is due to the high transaction costs to reach settlements.

Due to our litigious society, it creates incentives for corporations to either hide information that is adverse to their products or ignorance is bliss. Using the tobacco example, it would have better for them to not do research on their products.

A solution to some of the problems of externalities is by(above link):

This result, often known as the "Coase Theorem," requires that

1. Property rights are well defined;
2. the number of people involved is small; and
3. bargaining costs are very small.

Only if all three of these apply will individual bargaining solve the problem of externalities.

Lastly the automobile pollution is not externalities caused by the production of automobiles but by the consumption by consumers. Some of the pollution could be tied to the purchase of gasoline, but most is tied to how consumers use the gas (1965 F150 vs. 2005 Prius) or how much a consumer uses.
From link above:

And, Jason could you provide some examples of externalities to discuss?

Wednesday, November 23, 2005

Coase Theorem and Externalities of Smog Pollution In California

Incentives matter.
Let me first explain how the present tax structure is in California.
What Fees Are Due When Registering a Vehicle?

Various fees are due upon initial registration and annual registration renewal. Some fees are due for every vehicle upon registration. Assessment of other fees is based on:

* Type of vehicle (auto, trailer, etc.)
* Owner’s county of residence
* Special license plates
* Unpaid Parking Violation/Toll Evasion Bail

The registration fee and the CHP fee are due for the vast majority of vehicles registered for use on the highway. This money is used by the California Highway Patrol (CHP) and the Department of Motor Vehicles (DMV) to offset costs. A Reflectorized License Plate fee is assessed upon initial registration on most vehicles.

Vehicle License Fee

Most vehicles are also assessed a Vehicle License Fee (VLF). The VLF was established by the Legislature in 1935 in lieu of a property tax on vehicles. The formula for VLF assessment established by the Legislature is based upon the purchase price of the vehicle or the value of the vehicle when acquired. The VLF decreases with each renewal for the first 11 years. The DMV returns almost all vehicle license fee revenue to the cities and counties. For more details on how your VLF money is used, contact your local city or county government officials.

Since property taxes are raised on the presumed value of a car the newer and more expensive vehicles have the larger fees and older (especially over 11 years) pay the least amounts.

The other process in registration is getting a smog certificate. The certificate charges for this is relatively small (I believe $8-10) but is required when paying to have a smog check station do the check. And the station collect somewhere between $30 and $50.

While the smog checks do measure the amount of pollutants, it only provides a pass, no pass or extreme violator. The last category they can confiscate your vehicle. If the vehicle fails the test, the test can be redone again.

So what are the incentives? The incentive is to pass the test only and to keep older less efficient and more polluting cars on the road.

So how can we create incentives that promote a cleaner healthier environment for all?
The amount of pollution a vehicle emits is known fairly precisely since the smog check shows levels of pollutants for any given RPM and the miles driven since the last check is recorded also. So it would be a fairly easy calculation on the past years amount of pollution a vehicle put into the air. Miles driven multiplied by the average pollution per mile.

The tax would then be based on how much damage the vehicle actually polluted and in turn a rough estimate of the external costs of the consumption (externalities). If one pollutant was higher or caused more damage, you could adjust the taxes to reflect the social costs associated with that type of pollution.

What are the incentives in this tax package?
1. Encourage less consumption of gasoline, no matter what vehicle a person had. Some pollution is directly related to miles driven.
2. Encourage the use of less pollutant/more efficient vehicles. It is not the process of buying a Hummer that is the sin. It is the consumption of fuel and the corresponding pollution that comes from it. Let me use my family as an example. When growing up we had 2 or 3 cars one was an F150 (12mpg) truck and the other a VW Bug(30mpg). So were they sinning since they had an inefficient vehicle or were they a saint for the opposite? Because of the options presented to them they could use one vehicle for tasks that were inefficient but for short durations and other tasks on a daily basis to save fuel (costs).
3. Encourage the maintenance of all vehicles on the road. Since the tax is not a pass/no pass result and is based on actual level, then any reduction in pollutants per mile would decrease the tax. This should create markets that cater to reducing pollutants in older vehicles and incentives for upkeeping a cars performance.
4. Allows the market to drive choices that are better for society than dictates from the government.
5. Encourages mass transit while still providing an opprotunity for every economic group the benefits of owning a vehicle. As we saw in Katrina the poor did not have access to transportation and here is an interesting post.

While I have written about this on several occasions including Governor Arnold, this was inspired by my discussions at ThomHartman's Blog about externalities and the dividing line between public and private providers of services...
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Monday, November 21, 2005

Bretton Woods System of International Finance

Since this is my blog, I believe I will put my book report here!
Actually this is my International Finance assignment...

Assignment One
Session Five 2005

a. Outline the reasons for the collapse of the Bretton Woods System of International Finance.
To avoid the problems of balance of payments with gold as being the medium of transactions, the world implemented the Bretton Woods System (BWS) or defined as an adjustable peg system. The two main reasons for the break down of the BWS were due to lack of adequate adjustment mechanisms and lack of liquidity.

The United States currency became the “gold standard” as the currency was convertible to gold at the exchange rate of $35.00 per ounce of gold. But to maintain the levels of reserves other countries had to run a surplus and the US to run a deficit. And if the US was to implement policies to curb its deficit it would stifle world trade leading to stagnant and shrinking economic growth with deflationary pressures. As confidence in the system waned, the ratio of US reserves to liquid liabilities became too low and something had to be done to adjust this.

The bad money (overvalued asset) drove out good money (undervalued asset). Gresham’s Law was proven right when gold was driven out by dollars. The composition of world official international reserves changed from 90.7% gold and 9.3% currencies in 1980 currencies until 1970 was 40.1% gold, 48.3% currencies and 11.6% in IMF positions and Special Drawing Rights ( 494).

Since confidence of the BWS system was based on the free exchange of dollars for gold, the US could not adjust the exchange rate of dollars for gold. Since the US inflation was about 40% accumulative, thus gold should have also risen of the same amount. But the US was unwilling or unable politically to pursue deflationary policies.

Neither debtor nor surplus countries were willing to adjust their currencies. Debtor nations felt devaluation was a sign of national weakness while surplus nations did not want to adjust the economy away from the export of tradable goods. While debtor nations had the option of the ‘scarce currency clause’ to penalize surplus countries this option was never used. This probably was considered a sign of weakness also.

These factors lead to the enviable position of the US being able to consistently out consume what it produced also referred to as the Seigniorage Problem (gains from creating new money( 491)). And thusly many nations became jealous of the reserve currency status of the US dollar including Italy and France. After President Charles de Gaulle espoused the virtues of gold, France led the march to demand gold for dollar claims and thus reducing gold reserves held by the US. This in turn led the two tier approach to gold pricing on March 17, 1968.

Another reason the adjustable peg system failed is of the “one way speculative gamble”. The speculators seeing a rise in the deficit of a counties balance of payments could surmise that the currency would need to be devalued eventually. By speculating in the futures markets by selling short, he would have little chance of loosing since the currency is pegged. But he would reap high profits if the currency would be devalued. His only downside would be transaction fees and a slight gap between the forward rate and the spot rate. And as put by a foreign exchange specialist, “In those days we could make money just by following the crowd (1. pages 401-403).” In one way the speculative attacks added stability by hastening the transition to the new equilibrium.

b. Explain the effects on UK interest rates…
I will be assuming that the risks exposed to both markets are the same. Thus not factoring the US and UK experienced external shocks to the system through 9-11 and 7-7 dated incidents, as well as any other shocks to the systems. I will also assume no transaction costs as well as any factors of taxation that may affect decisions in this perfect market.
PPP holds that the expected rate of inflation (UK) increasing 2% per year will cause the ₤ to depreciate by 2% per year more than the current rate. And the US $ would appreciate by the reciprocal. Current spot market exchanges would not change since price levels have not changed in the short term. Since the spot market in the future will change, forward exchange rates will be arbitraged until it meets the expected rate of depreciation less the time value of money.

c. Why do the levels and movements of exchange rates differ from the absolute and relative PPP?
Absolute PPP states that prices will tend to equalize prices across countries, while relative PPP considers only the rates of changes in price levels or broadly defined as the inflation rate. Since there are many distorting effects on the absolute PPP which includes but not limited to transportation costs, tariffs, imperfect information, imperfect markets, and protectionism measures, relative PPP may be a better guide to knowing which direction exchange rates will head with all other things being constant. (2.)
Absolute PPP is defined as exchange rate equals ($/₤) = (price level in US)/ (price level in UK). Relative PPP is defined as a change in exchange rates ($/₤) = (change in US price levels)/ (change in UK price levels).

d. Describe and explain the effects which a reduction in Government expenditure would have…
I will assume that the government in the question is more biased on domestic consumption and imports little, unlike the expenditures by China for Boeing’s 737 planes. A reduction in government expenditure will reduce income by the multiplier effect of change in G/(s+m). Because the sum of marginal propensity to save plus the marginal propensity to import is less than one since some of the change in income is the result of less domestic consumption. As a result of a drop in income imports will drop while export being exogenous will stay the same CA=X (same)-M↓. If we relax the assumption that exports are exogenous, the multiplier would be the same direction but less, because the marginal propensity to import in the other country is less than one. As the other countries income falls and consume less of imports the first countries exports will decrease also. And of course if trade wars break out then nothing is guaranteed.

a. If the reduction in government spending was accompanied by a reduction in taxes, then the reduction in government spending would be offset by increased disposable income by consumers. But this increases the leakages in the system by increased savings and more imports on the first round. Thus the multiplier effect of higher disposable income would not overcome the negative effect of the government expenditure multiplier, and still have a reduction in total income. This lower income results in lower imports but since the marginal propensity to import is higher in consumers than the bias for government domestic purchases, then imports will increase. With available information I could not say which effect would be greater and thus no conclusion of the changes in the current account balance.

b. Just like reduction in taxation, reduction in the borrowing by government does not show a clear pattern of reducing the CA balance. There is one more link in this that the consumers were not faced with, and that is even if more funds are now available for either investment or increased consumption does not mean that either will happen and not to the extent that extra monies become available. Consumers may decide to move the savings to other investments. Banks may hold excess reserves. And business may not wish to invest at the current economic climate even if the banks do reduce the interest rates.

d. Use the elasticities and absorption approaches to explain why devaluation may not improve a country’s balance of payments.
I will assume no Giffen Goods or negative elasticities. Since devaluation affects only the price levels of export goods in other countries and the import prices, then the sum of elasticities of exports plus imports must be greater than one for devaluation to be effective. That for a given increase in prices for imports and exports must produce greater percentage changes in quantities than the percentage changes in prices. Either the increased price level for imports cuts back more or decreased price level of exports increases more.

Over the long run elasticities tend to increase. The markets have time to adjust to market signals to lead to substitutions or increase consumption in lower priced items. These effects create a J-curve that at first worsens the CA but after time the CA becomes positive. Small countries face infinite elastic curves as being price takers and as such would always benefit from devaluation.

The absorption approach assumes that for national income to raise that the country must be short of full employment. But from the experience of the US with rates believed to be below full employment for sustained periods of time, we should wonder if there is a definite concept of full employment. While I can see that not all labor can be substituted, we can see that indeed the labor can change in geographic as well as jobs categories in a relatively short time frame.

If a change in income that results from devaluation increases more than the marginal propensity to absorb, then devaluation will result in an improved current account balance. But if marginal propensity to absorb (defined as the sum of consumption, investment and government expenditures) is greater than the income change then the current account balance will worsen.

The absorption approach is more flexible in looking at the income effect of devaluation and looks at what policies can be implemented to achieve the best desired output.

1. Peter Lindert, (1986) International Economics, Eighth Edition, Richard D. Irwin, INC.
2. Keith Pilbeam, (1998) International Finance, Palgrave

Links of interest:

Marshall-Lerner Condition
Basic Exchange Rate Theories-CIES
Purchasing Power Parity

Saturday, November 19, 2005

Sue/My political philosophies:

The above link is incorrect. But I think this comment to Sue from Thom Hartman's blog showed some of my political philosophies...
Hi Sue:

Nice to hear from you.
As for me, I am in a distance learning degree programme from University of London in MSc Financial Economics. My economic interests are International Economics, Externalities and Utility Curves.

Some of the sites that have similar philosophies to me are:
Perc/Improving Environmental Quality Through Markets
TheCommons/Markets Protecting the Environment Markets
Greenspirit/For a Sustainable Future (Trees)
A World Connected

And non-economic:
Democratic Peace

It's only natural that there will be some NIMBYism wherever a plant is proposed, whether by environmentalists or not, but it is often balanced by people wanting the jobs and/or boost to the local economy that a new or expanded plant can provide. Which side wins varies from project to project.

But fortunately or unfortunately, the legal system is not democratic and is not balanced between the needs of the many or the one. Our legal system allows a small group or one to take an action to court and either win or lose. A perfect example is the case of saying the pledge of Allegiance in school. One person in the nation has brought the case to the Supreme Court that will affect every public school in the US. Growing up in Oregon, I also saw that with high unemployment (especially in timber), the small group was shutting down the large group.
If there could have been an economic solution that benefited most citizens while not harming anyone, then this would have been an ideal condition.
Environmental regulations are a different matter. Many of them have the purpose of reducing the amount of pollution that plants output - pollution which harms people's health, often reducing or wiping out their productivity as well as causing personal and financial distress. I believe that if such financial costs had to be factored in to decisions about what plants to build, etc., we would have a very different view about which projects were economically efficient.

As noted above, I am always concerned about externalities even if they are positive. We may have a different view if we count all costs, but if we are to protect the property rights of those affected by externalities we need to use the market to come at an economic efficient outcome.

Let me give you one case that explains how negative externalities can be taxed at the source and distributed to those affected.
California has a vehicle registration tax based on the value of the car and require a smog check to make sure that your car does not pollute with either a pass or fail. Does this create incentives to reduce air pollution. No. But since we know from the smog check how much exhaust approximately it produces in a year (miles driven times pollution level), we can tax to the level of damage this causes. This pool of monies can now compensate anyone that is suffering from that pollution.
This creates the incentives to buy Hybrids or reduce miles or even tune up your car more often.

The present incentives in California are almost as bad an idea as Oregon going to a mileage tax.

And Sue stop by here sometime.

Monday, November 14, 2005

Democratic Peace and Happiness

Dr. Rummel has again presented some interesting findings about freedoms and happiness.
The above link goes to his full text that is first analyzed by
That out of the way, the author's show that subjective well being is highly correlated with economic development (.70) as measured by GNP. No surprise there. But, they point out:
This process is not linear, however. The correlation weakens as one moves up the economic scale. Above $13,000 in 1995 purchasing power parity, there is no significant linkage between wealth and subjective wellbeing. The transition from a subsistence economy to moderate economic security has a large impact on happiness and life satisfaction, but above the level of Portugal or Spain, economic growth no longer makes a difference.

This correlates with the microeconomic theory of diminishing marginal utility. As people get more of any good he/she receives less utility (happiness) per unit consumed. Below I tried to graph a marginal utility derived from income on the horizontal axis and utility on the vertical axis.

This shows that at low income levels an increase in income increases hapiness more than the percentage change in income. The slope is above unity(slope>1). But as income goes up utility has less effect on the total happiness as the slope of the curve becomes closer to zero. I assume that income is a positive good and the marginal utility never becomes negative since money can be fungible and used to purchase other goods.
From the above information it appears that $13,000 PPP is where the marginal utility of income becomes close to zero with no more significant effect on a persons happiness. This then leads to what other factors can increase or decrease a nations overall happiness. Anyone up for a social utility curve?

This chart is shows the correlation between well being and freedoms:

And RJR comment:
The correlation between well-being and freedom (liberal democracies, in effect) is .78. This is liner. The curvilinear (polynomial or logged correlation would be higher, since it would account for the slight sag in the middle of the distribution) of a number of partially free nations, some being electoral democracies such as Mexico and Turkey. Although the plot seems to imply that freedom is the cause of well-being (it can't be the other way around), the author's believe that this is in question, and that other factors may better account for well-being.

While Dr. Rummel does not show the correlation between income and freedom, I still wanted to show a utility curve with a "dip" in the center:

Although this is my theory, I can see this effect happening to people that is in the middle ground. They are not destitute so the level of utility is high but can see the promised land and thus are not completely satisfied (marginal utility stagnant in this income band) in there present location. Just as some nations are partially free but are not completely satisfied since they have seen how other countries have freedoms. RJR uses the examples of Mexico and Turkey that are close allies with the US and of course Mexico knows more about the US than we know about them.

Addition 11-19-2005:
For world wide policies implications, this should lead us to try and bring the most number of people to $13,000PPP in the world. I am not suggesting that we redistribute income, but that this is the target for achieving the most happiness for the most number of people worldwide. While I think that we should tax at all income levels (low marginal taxes), we at least know the portion that will not affect happiness (utility) as much as below this mark. The reason for some taxes is that that person has a sense of contribution to society as a whole. That nothing is a free ride in life.
And of course the best way to insure the well being of more people is with democratic peace.

Bernanke goes before banking panel

Inflation too high: Bernanke
WASHINGTON (Reuters) -
Federal Reserve Chairman nominee Ben Bernanke said on Tuesday U.S. headline inflation was currently above rates desirable in the long run but focusing on the long-term trend was most important for monetary policy.

In explaining why he favored the Fed adopting a long-term inflation "objective," Bernanke told the Senate Banking Committee that it was important to look beyond short-term volatility in inflation rates.

"The inflation objective is explicitly a long-term or medium term objective," said Bernanke. "It focuses on, for example, core inflation to avoid getting involved in short-term fluctuations in energy prices and the like."

"My principal concern at that point would not be that inflation had temporarily risen above its normal range -- for example current inflation is above the range that in the long-run would be desirable," he said. "But the concern would be that expectations about inflation going a year or two into the future had become unhinged or unanchored."

Bernanke said naming a range for desired long-term inflation "doesn't change the underlying dynamic."

"It's only an attempt to perhaps provide a bit of additional confidence, a bit of additional assurance or a bit of additional certainty to the markets about the Federal Reserve's long-term objective."

Sorry that I put the whole article here, but since yahoo links only work so long and the article was not too long I put it here.
To sum this up, Ben feels that inflation is a long to mid term problem that is above what the level should be. He uses the core CPI index to peg the inflation rate to avoid seasonal as well as volatile changes in the rate due to energy and food prices.
In the long run core inflation rate tends to go toward the general CPI, it can still deviate in the short run as here shows:

The below is from MarketWatch with title above as the link.
Bernanke goes before banking panel
Tuesday hearing should precede easy confirmation
By Rex Nutting, MarketWatch
Last Update: 4:42 PM ET Nov. 14, 2005

WASHINGTON (MarketWatch) -- Ben Bernanke appears headed for easy confirmation as Federal Reserve chairman, but not before he endures a day of tough questioning at the Senate Banking Committee.

The senators will hear from Bernanke on Tuesday about his views on the current economic situation and how he would lead the single most powerful economic institution in the world.

For financial markets, the most pressing matter is the near-term course of interest rates. The Fed has boosted its target for the short-term federal funds rate at 12 meetings in a row from 1% to 4%.

When will the tightening stop?

Markets won't like what they'll hear. More rate hikes are coming.

"Most of the pressures still lie on the side of further tightening," said Bill Dudley, chief economist for Goldman Sachs.

Given his reputation as something of a softie on inflation, Bernanke could use the hearing as a forum for rebuilding his credibility as an inflation-fighter. See related story.

For those with a longer view, the hearing will provide an opportunity for Bernanke to set out his vision of how the central bank should conduct monetary policy, and bank supervision and regulation.

Bernanke, 51, has breezed through the confirmation process twice before. The former chairman of the Princeton Economics Department served as a governor on the Fed board for three years from 2002 until earlier this year, when he moved to the White House as chairman of the Council of Economic Advisers.

Members of the committee seem disposed to approve Bernanke. "I think it will be a relatively easy confirmation," said Sen. Charles Schumer, D-N.Y. after meeting with Bernanke last week.

Senator Jack Reed, D.- R.I. said Bernanke faces no roadblocks.

"I think it will be rather smooth," Reed told reporters on Monday.

"My guess is that this is a non-controversial nomination. I would assume this would go quite quickly," he said.

Sen. Jim Bunning, R-Ky., said he would vote against Bernanke, as he has done twice before in lonesome dissents. Bunning complained that Bernanke hasn't shown enough independence.

Once the committee votes, probably later this week, the nomination would move to the full Senate. A simple majority would be required.

Bernanke has been nominated to take Alan Greenspan's seat on the board beginning on Feb. 1. The term lasts 14 years.

Inflation targeting

As an academic and as a Fed governor, Bernanke favored greater openness in Fed communications. By explaining its goals and tactics clearly, the central bank can avoid policy surprises that keep markets from functioning efficiently, he has argued.

The Fed has become much more transparent in the past decade under Alan Greenspan's regime. The committee now announces its policy changes and explains them in a short statement following meetings. Summaries of the meetings are released three weeks later. Complete transcripts of meetings are released with a lag of five years.

Bernanke wants to go further. If the Fed were to formally adopt and announce a target for inflation, markets would have a clearer understanding of the Fed's policies.

In its simplest incarnation, inflation-targeting could mean policymakers would follow a set rule: If inflation rises above the target of, say 2%, raise rates. If inflation falls below the target, cut rates. See earlier story on inflation targeting.

Such inflation targeting has been resisted firmly by Greenspan and others at the Fed, although similar methods have been adopted at most other central banks, including the Bank of England, the European Central Bank, and banks in Canada, Australia and New Zealand.

Critics object to a mechanistic approach to policy, figuring that the Fed must remain flexible to respond to crises.

On the Hill, lawmakers have objected to any retreat from the Fed's dual mandate of low inflation and maximum employment.

But Bernanke has rejected those criticisms of his ideas. Inflation targeting needn't reduce flexibility to act in a crisis.

Bernanke favors a policy of "constrained discretion." The Fed would be constrained by its inflation target but would have discretion to react to temporary hiccoughs in the economy.

Under Bernanke's form of inflation targeting, the Fed would react not to past inflation but to future expected inflation.

"Bernanke's speeches suggest a predilection for activist, pre-emptive policy -- in either direction -- to keep inflation expectations from drifting too far from the Fed's target," Dudley said.

Nor would inflation targeting supersede federal law that requires the Fed to maximize employment, Bernanke has said.

After all, the Fed long ago decided that maximizing employment cannot be a short-term goal. Fed officials from Paul Volcker to Greenspan to Bernanke have said the only way to maximize employment in the long run is to keep prices stable.

Any move to a formal inflation target would be a slow process. While half of the Fed presidents favor a more explicit numerical target, most of the Fed governors do not favor the change.

Fiscal policy

Bernanke will have to navigate a trick minefield when the questions turn to the touchy terrain of fiscal policy, which is under the purview of Congress and the White House, not the Fed.

How much should the Fed chairman get involved in tax and spending debates? Greenspan rarely passed up an opportunity to talk about subjects far afield of monetary policy, including taxes, spending, Social Security reform, immigration, education, and trade.

Democrats still fume when they remember how Greenspan endorsed President Bush's first tax cut on the ground that the government was in danger of running persistent surpluses.

Given his current job as one of Bush's economic advisers, Bernanke will be under pressure from the senators to show his independence from the White House.

In his speeches as a governor, Bernanke rarely strayed from monetary policy. But as chairman, he'll be asked for his opinions about every issue with even the slightest connection to economics.

Schumer said Bernanke had promised him that fiscal policy and other issues wouldn't be off limits. "He understood that the role of Fed chairman was to talk about the other side of the economic ledger."

Bernanke's political and personal skills will be tested at the hearing. "We can expect politically motivated and occasionally nasty questions," said Mickey Levy, chief economist for Bank of America.

As a career teacher, Bernanke should be used to the sorts of questions he'll be asked on Tuesday and over the next 14 years: Frequently obsequious, occasionally provocative, at times off-topic and often just plain stupid.

Again I put the whole article here.
The most interesting aspect of Bernanke's nomination is that it is treated as so mundane. While the Supreme Court nominations can cause fillibusters and every political action committee to become overactive, quite possibly the most powerful man in the world is nominated with so little press.

In response to some of the issues by Roger Nusbaum, I wanted to talk about them here.
No I have not seen the testimony of Bernanke before the Senate but even the above article states:"Frequently obsequious, occasionally provocative, at times off-topic and often just plain stupid." So I can imagine how silly their questions can be, and shows how the testimony was not even repeated on C-Span but protests of ANWR was on for three days.

As far as Roger Nusbaum's comment on "Ahem, socialism", I do agree with the sentiment but it is a complicated question. From my study in international economics, the US has been in the enviable position as being the currency of international trade. As a result most countries use the US as reserves for their current account. This basically results in most of the rest of the world subsidizing our way of life in the USA.

While I would say we are more of a free market, we still have one theory of Marxism/Socialism. Marx was a strong believer in that every able body person should be given a job. Unlike most economic theories of work as being a disutility (less consumption is better than more), Marx felt that a person derived self-satisfaction from work.

These ideas are manifested in the Fed’s role of maximizing employment, while maintaining low levels of inflation. Contrasted with most European countries allowing up to 12% unemployment with more of a social safety net for societies better or worse condition. We can see that some of the French riots would indicate that the US has a better social contract.

To maintain the low unemployment rates, the Fed considers long term stable prices as the primary tool for this approach. But in addition to trying to keep prices stable but also the Fed is to keep inflation low. So the Fed’s dual mandate is the goal of low inflation and maximum employment. Much has changed in our perception of what a central bank can do since my studies in economics in the mid 80's. Economist felt that there was a direct trade-off between employment and inflation, similar to a risk -reward tradeoff. Lower unemployment was to mean higher inflation and higher unemployment meant lower inflation.

These policies with a more openness should be good for markets. Bernanke believes correctly that uncertainty and suprises in the markets prevents from them working most efficiently.

The policy of forward looking or expected rate of inflation is a good idea as long as the information that this is based on is unbiased. By telling the markets ahead of time which direction the Fed is targeting allows the market to adjust expectations to reality. Markets tend to self fulfill prophecy. If a majority of consumers feel that a recession is coming, then they cut back on purchases. This cutback then leads to business to see a drop in demand and as such will produce less. And finally business cut back employment and the result is a recession!

Of course Bernanke will need to address fiscal issues and any other economic issues the Senate is caught up with at the time. I hope that Bernanke can create vague enough language and politically correct enough to not have him land in a tribal war between the two political parties. In hindsight it seems funny to think that the Federal government was going to have persistent surpluses. I remember that several economists stating that the Fed's role would be severely hampered if there was no debt to use in the open market functions. So Greenspan was not perfect as some predictions of problems in the future.

I am pretty optimistic about the US economic power for at least 40 years. India's labor force is 60% in agriculture and as such it will take at least one generation to start to transfer the work force to other industries. The US took at least 2 generations and had an immigrant population that filled the new jobs in industry. Also for example the current account deficit does not worry me because at 6% of yearly GDP, would mean that a family having a credit card bill of 6% of yearly income. This would mean he could pay off his credit card bill by putting 1% of his pay per month for 6 months.

The globalization questions I hope to answer in other posts. Thanks.

Links of interest:
by Jim Puplava,Storm Watch Update,June 24, 2005

More on the "Missing Inflation"
Random Roger's Big Picture
CPI readings top expectations
Does High Employment Mean Inflation?

Sunday, November 13, 2005


We were talking about staging in this Topic:UN to open investigation into the Jordanian hotel blasts.

And I just opened my email from associated with

And I saw this:

Upon further investigation it says on the marque.

So come on over to ChurchSignGenerator to:/
Choose the design you want to use:
(more new designs coming soon someday!)

New! Now you can get your customized church sign as a refrigerator magnet! Just generate a sign normally and choose how many you want! Only $7.50 per magnet (plus shipping)!

And some choices:

And some more options.

Of course I want to add the Cindy staging:

A staged event is only an event that the government puts on. No?
If we are to imply staging as being directed by a controlling force or under duress in places like North Korea, China, and Cuba, then it should be refered to as such.

But here is some nice

Now let’s zoom out and see the media swarm around this manufactured event:

You have to love

From here:
The fact is that some staging and coordination is a part of every major media event; the press just decides how to report on it depending on who’s doing the staging.

Exhomeless-Guy said...

"Stage" your own message on a sign at .

I love the free market so I will include it in my post.
But I could not link to his pictures so no good pictures to show you guys.

Saturday, November 12, 2005

Mayor Ray Nagin/Random Thoughts on Hurricane Katrina

Just some random thoughts on Hurricane Katrina:
DeLay: Shelter is Kind of Like Camp
From here:FEMA says debit card distribution at Reliant Park complete
This morning, U.S. House Majority Leader Tom DeLay's visit to the Reliant Park this offered him a glimpse of what it's like to be living in shelter.

While on the tour of a shelter with top administration officials from Washington, including U.S. Secretary of Labor Elaine L. Chao and U.S. Treasury Secretary John W. Snow, DeLay stopped to chat with three young boys resting on cots.

The congressman likened their stay to being at camp and asked, ``Now tell me the truth boys, is this kind of fun?''

They nodded yes, but looked perplexed.

While I will agree that his words look insensitive and lack political correctness as well as giving ammunition to the moonbats, I think his comments can still be in the beltway. Kids are more forgiving of natural disasters or disruptions in their lives than adults. Many young people will look on tragic events in the past with fond memories. As in:
All this was exciting and fun for my brother and I.

I don't have the link for the article below but it has some important facts.
Louisiana Officials Could Lose the Katrina Blame Game
By Jeff Johnson Senior Staff Writer
September 07, 2005

(1st Add: Includes information about restoration of Mardi Gras fountain)

( - The Bush administration is being widely criticized for the emergency response to Hurricane Katrina and the allegedly inadequate protection for "the big one" that residents had long feared would hit New Orleans. But research into more than ten years of reporting on hurricane and flood damage mitigation efforts in and around New Orleans indicates that local and state officials did not use federal money that was available for levee improvements or coastal reinforcement and often did not secure local matching funds that would have generated even more federal funding.

In December of 1995, the Orleans Levee Board, the local government entity that oversees the levees and floodgates designed to protect New Orleans and the surrounding areas from rising waters, bragged in a supplement to the Times-Picayune newspaper about federal money received to protect the region from hurricanes.

"In the past four years, the Orleans Levee Board has built up its arsenal. The additional defenses are so critical that Levee Commissioners marched into Congress and brought back almost $60 million to help pay for protection," the pamphlet declared. "The most ambitious flood-fighting plan in generations was drafted. An unprecedented $140 million building campaign launched 41 projects."

The levee board promised Times-Picayune readers that the "few manageable gaps" in the walls protecting the city from Mother Nature's waters "will be sealed within four years (1999) completing our circle of protection."

But less than a year later, that same levee board was denied the authority to refinance its debts. Legislative Auditor Dan Kyle "repeatedly faulted the Levee Board for the way it awards contracts, spends money and ignores public bid laws," according to the Times-Picayune. The newspaper quoted Kyle as saying that the board was near bankruptcy and should not be allowed to refinance any bonds, or issue new ones, until it submitted an acceptable plan to achieve solvency.

Blocked from financing the local portion of the flood fighting efforts, the levee board was unable to spend the federal matching funds that had been designated for the project.

By 1998, Louisiana's state government had a $2 billion construction budget, but less than one tenth of one percent of that -- $1.98 million -- was dedicated to levee improvements in the New Orleans area. State appropriators were able to find $22 million that year to renovate a new home for the Louisiana Supreme Court and $35 million for one phase of an expansion to the New Orleans convention center.

The following year, the state legislature did appropriate $49.5 million for levee improvements, but the proposed spending had to be allocated by the State Bond Commission before the projects could receive financing. The commission placed the levee improvements in the "Priority 5" category, among the projects least likely to receive full or immediate funding.

The Orleans Levee Board was also forced to defer $3.7 million in capital improvement projects in its 2001 budget after residents of the area rejected a proposed tax increase to fund its expanding operations. Long term deferments to nearly 60 projects, based on the revenue shortfall, totaled $47 million worth of work, including projects to shore up the floodwalls.

No new state money had been allocated to the area's hurricane protection projects as of October of 2002, leaving the available 65 percent federal matching funds for such construction untouched.

"The problem is money is real tight in Baton Rouge right now," state Sen. Francis Heitmeier (D-Algiers) told the Times-Picayune. "We have to do with what we can get."

Louisiana Commissioner of Administration Mark Drennen told local officials that, if they reduced their requests for state funding in other, less critical areas, they would have a better chance of getting the requested funds for levee improvements. The newspaper reported that in 2000 and 2001, "the Bond Commission has approved or pledged millions of dollars for projects in Jefferson Parish, including construction of the Tournament Players Club golf course near Westwego, the relocation of Hickory Avenue in Jefferson (Parish) and historic district development in Westwego."

There is no record of such discretionary funding requests being reduced or withdrawn, but in October of 2003, nearby St. Charles Parish did receive a federal grant for $475,000 to build bike paths on top of its levees.

Earlier this year, the levee board did complete a $2.5 million restoration project. After months of delays, officials rolled away fencing to reveal the restored 1962 Mardi Gras fountain in a four-acre park featuring a new 600-foot plaza between famous Lakeshore Drive and the sea wall.

Financing for the renovation came from a property tax passed by New Orleans voters in 1983. The tax, which generates more than $6 million each year for the levee board, is dedicated to capital projects. Levee board officials defended more than $600,000 in cost overruns for the Mardi Gras fountain project, according to the Times-Picayune, "citing their responsibility to maintain the vast green space they have jurisdiction over along the lakefront."

Democrats blame Bush administration

Congressional Democrats have been quick to blame the White House for poor preparation and then a weak response related to Hurricane Katrina. U.S. Rep. Henry Waxman (D-Calif.), ranking Democrat on the House Government Reform Committee, joined two of his colleagues from the Transportation and Infrastructure and Homeland Security committees Tuesday in a letter requesting hearings into what the trio called a "woefully inadequate" federal response.

"Hurricane Katrina was an unstoppable force of nature," Waxman wrote along with Reps. James Oberstar (D-Minn.) and Bennie Thompson (D-Miss.). "But it is plain that the federal government could have done more, sooner, to respond to the immediate survival needs of the residents of Louisiana and Mississippi.

"In fact, different choices for funding and planning to protect New Orleans may even have mitigated the flooding of the city," the Democrats added.

But Rep. Tom Davis (R-Va.) suggested that Waxman "overlooks many other questions that need to be asked, and prematurely faults the federal government for all governmental shortcomings; in fact, local and state government failures are not mentioned at all in [Waxman's] letter."

Davis wrote that Waxman's questions about issues such as the lack of federal plans for evacuating residents without access to vehicles and the alleged failure of the Department of Homeland Security to ensure basic communications capacity for first responders might "prematurely paint the picture that these are solely, or even primarily, federal government responsibilities.

"This is not the time to attack or defend government entities for political purposes. Rather, this is a time to do the oversight we're charged with doing," Davis continued. "Our Committee will aggressively investigate what went wrong and what went right. We'll do it by the book, and let the chips fall where they may."

The House Government Reform Committee will begin hearings on federal disaster preparations and the response to Hurricane Katrina the week of Sept. 12. The House Energy and Commerce Committee is schedule to hold hearings on the economic recovery from Katrina beginning Wednesday morning.

Posted by Tom at September 7, 2005 09:06 AM

The most telling facts in this is article is that New Orleans did not secure matching funds that were available from the federal government and worse yet did not use some of the money that was on the table for levee improvements or coastal reinforcement.
But they had money for gold courses and historic districts and bike paths on the levees.

Links of interest:
This is hyperbolic but does have some good points that environmentalists are using the court system to supercede the decisions of the people or the legislative branches. The group Save Our Wetlands (SOWL)is evern bragging about the countless lawsuits they have filed.

This is more funny than anything else.

This is a pretty raw, compelling interview with New Orleans Mayor Ray Nagin.
This is a pretty raw, compelling interview with New Orleans Mayor Ray Nagin. It's a mirrored copy of a mp3 of a WWL radio interview with the mayor, apparently from late yesterday afternoon.

It's politics, man - and they're playing games. They're spinning. They're out there spinning...

...I need 500 buses, man. Get public school bus drivers to get down here...Get every doggoned Greyhound bus in America and have them get their asses to New Orleans...

...I'm probably going to get in so much trouble...I don't want to see anybody do any more god damned press conferences. Don't do another press conference until there are resources in this city. Get off your asses and let's do something...

I'll have a longer, more reflective post later on...

Comments: Those pesky facts...

Yes, those pesky "Facts" are coming out.

Friday, November 04, 2005

Results of Fascist Poll

Thanks for all the participated in the poll!
From the above link to DailyKos you can see the questions of the poll, or here.
The questions are derived from Nazi Conspiracy and Aggression Volume IV
Document No. 1708-PS
Also HT to FPC for pointing to Modern History Sourcebook:
The 25 Points 1920:
An Early Nazi Program

And the results are:
How many of the above policies do you agree with:
Category------Range----Percentage----Number of Votes
Almost all-----(23-26)--15%-------------3
More than Half(15-18)--15%------------3
Around Half---(11-14)--5%--------------1
Less than Half(7-10)---5%--------------1
Very few------(3-6)----36%--------------7 (I cast one vote here)
Almost none---(0-2)----10%-------------2
Votes: 19
While the total poll numbers are low it does show a nice distribution but with a low point in the 7-14 range of only being 10%. The low number of agreements was slightly higher of 9 (Taking out my vote) vs. 8 of high number of agreements with a slight bias against the low number of agreements with 11 choices (0-11) vs. 12 choices (14-26).
This of course is not a scientific poll but may point to my point of view that while Fascism has many similarities with socialism or left leaning similarities and yes even some right leaning similarities it is not logical or useful to put Fascism on a left-right divide.
Some other ways of looking at political landscapes can be found here.
I don't expect this to explain all aspects of fascism but at least get a primer started on thinking of how political parties in the US and the world should be analyzed in relationship to each other. One of my philosophies is that people or to a broader sense groups should be allowed to express themselves in their own words and not imposed by outside groups that want to disparage such groups in hyperbolic political attacks. Ron Rutherford

Links of interest:
Two Myths
More Nazi Talk
Fascist Sunny
Nazi Ideas
Another link to Nazism
International Order
Left-Right and Fascists
Left-Wing Fascism
Right-Wing Fascism

Quotes from poll:
Debrief on this... (none / 0)
By fpc.

LOVELY... (none / 0)

I guess because I agreed with a few of these; like:

Enable every capable and industrious US citizen to obtain higher education

We demand an expansion on a large scale of old age welfare

Breaking of rent-slavery

I'm thinking like a Nazi..... this is a ridiculous diary.... I guess 'semi-socialist' countries like Canada, the UK, and others in Europe that have universal healthcare, reduced university tuition rates, and welfare programs and retirement pensions are also 'thinking along the same lines as the Nazis' on some of these issues...

how ridiculous...

An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59) By HopefulCanadian

Not ridiculous at all... (none / 0)

The point is not to denigrate someone who may agree with some of these, but to make you think (of course, we know that rational thought becomes difficult once the word 'Nazi' has been uttered).

As time went on, the nationalist part of the Nazi program was strengthened, and the socialist part de-emphasized. But it was always there.

Remember, they were national socialists. We might expect to be in agreement about a few things. I agreed on six. I have to wonder about those who agreed on nearly all, though...
By memiller

well.... (none / 0)

though I did not agree with that many either; I must say, that there ARE some socialist countries that have NO SIMILARITY whatsoever to a Nazi-like socialism.

Cuba is socialist, hardly anything like Nazi Germany.... of course that society is hardly ideal either, but I still feel that its insulting even to compare socialism in general to NAZI Germany...

An eye for an eye only ends up making the whole world blind--Gandhi (-9.38, -7.59)
Again by hopefulcanadian.