Dumbest Generation Getting Dumber 11/10/2009
 by Walter Williams, GMU The Program for International Student Assessment (PISA) is an international comparison of 15-year-olds conducted by The Organisation for Economic Co-operation and Development (OECD) that measures applied learning and problem-solving ability. In 2006, U.S. students ranked 25th of 30 advanced nations in math and 24th in science. McKinsey & Company, in releasing its report "The Economic Impact of the Achievement Gap in America's Schools" (April 2009) said, "Several other facts paint a worrisome picture. First, the longer American children are in school, the worse they perform compared to their international peers. In recent cross-country comparisons of fourth grade reading, math, and science, US students scored in the top quarter or top half of advanced nations. By age 15 these rankings drop to the bottom half. In other words, American students are farthest behind just as they are about to enter higher education or the workforce." That's a sobering thought. The longer kids are in school and the more money we spend on them, the further behind they get. While the academic performance of white students is grossly inferior, that of black and Latino students is a national disgrace. The McKinsey report says, "On average, black and Latino students are roughly two to three years of learning behind white students of the same age. This racial gap exists regardless of how it is measured, including both achievement (e.g., test score) and attainment (e.g., graduation rate) measures. Taking the average National Assessment of Educational Progress (NAEP) scores for math and reading across the fourth and eighth grades, for example, 48 percent of blacks and 43 percent of Latinos are 'below basic,' while only 17 percent of whites are, and this gap exists in every state. A more pronounced racial achievement gap exists in most large urban school districts." Below basic is the category the NAEP uses for students unable to display even partial mastery of knowledge and skills fundamental for proficient work at their grade level. The teaching establishment and politicians have hoodwinked taxpayers into believing that more money is needed to improve education. The Washington, D.C., school budget is about the nation's costliest, spending about $15,000 per pupil. Its student/teacher ratio, at 15.2 to 1, is lower than the nation's average. Yet student achievement is just about the lowest in the nation. What's so callous about the Washington situation is about 1,700 children in kindergarten through 12th grade receive the $7,500 annual scholarships in order to escape rotten D.C. public schools, and four times as many apply for the scholarships, yet Congress, beholden to the education establishment, will end funding the school voucher program. Any long-term solution to our education problems requires the decentralization that can come from competition. Centralization has been massive. In 1930, there were 119,000 school districts across the U.S; today, there are less than 15,000. Control has moved from local communities to the school district, to the state, and to the federal government. Public education has become a highly centralized government-backed monopoly and we shouldn't be surprised by the results. It's a no-brainer that the areas of our lives with the greatest innovation, tailoring of services to individual wants and falling prices are the areas where there is ruthless competition such as computers, food, telephone and clothing industries, and delivery companies such as UPS, Federal Express and electronic bill payments that have begun to undermine the postal monopoly in first-class mail. At a Washington press conference launching the McKinsey report, Al Sharpton called school reform the civil rights challenge of our time. He said that the enemy of opportunity for blacks in the U.S. was once Jim Crow; today, in a slap at the educational establishment, he said it was "Professor James Crow." Sharpton is only partly correct. School reform is not solely a racial issue; it's a vital issue for the entire nation. Excess Risk: Care Of Uncle Sam 11/09/2009
 by: Shout Bits The mainstream media's narrative for the financial meltdown of 2008 generally states that a bunch of overly greedy Wall Street insiders cooked up inscrutable instruments like CDOs and MBSs, and then parsed them into further inscrutable derivatives like default swaps until nobody knew how much risk was out there. These instruments, which ultimately relied on debt structures up to 98% of their assets, were destined to fail given any correction in the underlying real estate assets' value. Occasionally, reporters throw in that Congress abetted the process by fueling excesses at Fannie Mae – Rep. Frank's famous "roll the dice" quote says it all. Even rarer is a mention of how the Bush Administration repeatedly tried to put the brakes on the debt orgy. Naturally, the whole mess stirs up the regulatory instinct in Washington. In the shadow of cap and trade and socialized medicine, Congress is rewriting government's role in the capital engine. The premise, especially on the Democrat side, is that the free market gets risk wrong and is prone to excess swings. Government's new role is to monitor aggregate risk, even regulating healthy firms. In effect the new laws will make Washington the gateway for all capital formation in the US. But what, really, did the free market have to say about securitized mortgages and the rest of the debt bubble? The open market measures risk by comparing a risky security to a similar but risk free security (e.g. government bonds). Most often this is expressed by the difference in return between a security and a US Treasury Bond (i.e. the spread). Riskier investments carry higher spreads, thus compensating investors for the relative lack of certainty of being repaid in full. By March 2008, before the bubble burst, the spread on a Fannie Mae bond had reached 258 basis points, or an extra 2.58% return per year over a similar government bond. By Comparison, two years earlier the equivalent spread wasy only 39bp (0.39%). Remember that these Fannie Mae instruments were considered highly safe by government approved risk experts (e.g. S&P and Moody's). These bonds were considered as safe as any private sector security, plus most people believed that Fannie Mae enjoyed the implicit guarantee of the government. Why would a AAA rated bond with an assumed government guarantee require a 258bp premium to sell in the open market? The answer is that the market knew something was badly amiss. In the absence of a AAA rating and a government guarantee, the bond should have been priced as junk. Why the AAA rating when the market knew better? The government actively contains the number of firms who issue such ratings, effectively creating a triumvirate that works in tandem. By allowing merely three agencies, there was little chance of a maverick questioning the status quo. Further, these agencies would hardly benefit from a reputation of being deal killers. Still further, since the government sponsored both Fannie Mae and the unofficial rating agency oligopoly, rocking the boat would be unwise. The ratings agencies rubber stamped MBSs, and their opinions were not valued by sophisticated bond investors. The government's medling with risk standards definitely caused the real estate bubble and collapse that engulfed the entire financial sector, but that is hardly stopping Washington from making things worse. Currently, the FDIC is hastening a commercial real estate collapse by arbitrarily requiring larger reserves for commercial loans than for residential loans. Even if a given commercial loan is performing well, the FDIC is requiring up to 30% more in reserves for that loan than for an even marginal residential loan. As a result, commercial lending is collapsing and dragging down both good and bad business properties. A free market that assesses risk would not paint with such a broad brush, but because the government has no skills at its new task, it can only generalize risk policies. Naturally, favored special interests are exempt from government risk restrictions, further distorting the efficient flow of capital. While Pres. Obama's plans to socialize health care, expand union influence, and eliminate energy dependent industries will harm the US, his sweeping plan to regulate and distort the process by which businesses form and grow is just as threatening. Voters need to know that government manipulation of risk assessment largely caused the 2008 disaster and that further government distortions of the free market system are not the path to recovery. Pelosi’s Healthcare Bill: a Terminal Disease 11/06/2009
 by: Brantley Oakley We have been fed serving after serving of compelling rhetoric by President Obama and the Spendocrats throughout this healthcare debate telling us that we must act now to help all those poor Americans who are not getting healthcare. The major problem we face in this bill and in many other political issues is that our crafty politicians know that when they shroud their agenda into an argument that plays on Americans’ generosity and desire for equality they can sell us a ticking time-bomb and we’ll buy it with a smile on our face and give our life savings for it. This bill would be a terminal disease for America for so many reasons;I’ve briefly underlined just a few of the major issues involved with passing this bill. Irreversibility One of the biggest problems I have with socialistic programs like Medicare and this healthcare bill is that they are essentially irreversible. Don’t think for a moment that when this legislation blows up and costs go through the roof that the Democrats will say “oops. We messed up. I guess we’re going to scrap this legislation.” Nor, will the Republicans be able to do reverse the bill because there will be millions of people receiving free healthcare who would be outraged. So, just like Medicare trudges on in spite of the fact that it is a failed program, so too will this legislation continue to grow and overburden Americans until it finally breaks us. Unaffordability The fact that this bill is called the “Affordable Health Care for America Act” is a farce. There is nothing affordable about this bill. The CBO estimates that this bill will cost over $1 trillion dollars in the first decade. I think it is rather self-evident that Congress has a long history of underestimating costs of its proposed bills, and it is doing so with this bill. There is no way we can afford this. Please understand, first and foremost, that the estimation is skewed because the government will collect revenue for 10 years to give 7 years of service. So, what happens for the next ten years? Also, keep in mind that Pelosi and the Spendocrats cut out the $250 billion that will be given to doctors. They are going to pass a separate bill for doctors’ compensation to avoid adding the number to the total cost of this bill—only in Washington is such a tactic rational or ethical. Pelosi plans on paying for this trillion-dollar disaster by taxing the wealthiest people in America; specifically, she wants to raise taxes to an astounding 45% on all persons who earn over $500,000. Mark my words; this will not happen. These people are not going to sit idly by while their wealth is plundered, nor is there any way that this tax will be able to sustain the massive cancer of costs that this bill would create. The cost of running Medicare has doubled every four years since 1966. The reality is that this program will probably cost around $3 trillion by the end of the first decade and will grow unrestrained until it brings us to our death bed. What about the Medicare cuts? President Obama said this bill would be paid for by Medicare cuts; what about that? Good question. Supposedly, the federal government, which hasn’t cut costs since Regan was there, is going to raise $400 billion by cutting out waste in Medicare. Well, I say if it’s that easy to cut the Medicare costs, why hasn't Washington done it? Do that first and then come talk to me about healthcare reform. Even if Washington can cut $400 billion—I’m not buying it—but even if they can, that’s not going to cover the tab when this thing doubles or triples or worse in the coming years. Remember, Medicare currently has $34 trillion in unpaid liabilities. That’s just for the elderly. What’s going to happen when you allow the government to take over healthcare for everyone. 2048 Pages Perhaps the single scariest facet of this bill is that it is an incomprehensible mess. You do not need 2048 pages to state what they have said this bill states. No ordinary American and most of Congress does not really know what is in this bill. We don't know what little surprises this behemoth is hiding? If Washington wanted to play straight with Americans, they would write a lucid and legible bill, and I’m not buying this notion that legislative language has to be this way; this bill is deliberately protracted and obscure. To vote for this bill is to hand Obama, Pelosi and the Spendocrats a blank check and say “I don’t know what you’re doing, but I trust you.” I agree that our healthcare system needs to be reformed, but this bill embodies the worst possible solution to the problem, which is why I only slightly disagree with the Wall Street Journal when it says this bill is the “worst bill ever.” It’s not the worst bill ever; that award goes to the Cap-and-Trade bill, but this healthcare bill is a close second.  by: Marc Gallagher Republicans displaying their “Red State pride” following the results of Tuesday’s elections need to face reality. The two GOP gubernatorial election victories in Virginia and New Jersey were unsurprising and expected. Now if a true limited government conservative beat out Bloomberg in the New York mayoral race there would be a reason for celebration. The reason Bob McDonnell beat out Creigh Deeds in Virginia was not because McDonnell represents some new style small government Republican. McDonnell won because Deeds made campaign mistakes. McDonnell made none. Deeds lost the race more than McDonnell won it. The same is true for the New Jersey race. Corzine, a former chairman at Goldman Sachs, easily became a scapegoat for a failing economy and political corruption. So, he lost. What Tuesday’s election results really demonstrated was a lack of conviction for either Democrats or Republicans. When the political spectrum shines red, then blue, then red, then blue, over and over again something tangible comes to light: America is not rooting for either party to win. America is rooting for the underdog. After 8 years of Clinton, George W. Bush was the underdog. In 2004, Bush was still the underdog largely due to his perceived strength (however false it was) in fighting “those who attacked us on 9/11″. That quickly soured so much that by 2006 the Democratic Party was the underdog so they won control of Congress. If Bush was up for re-election himself in 2006, he’d have lost. The 2008 election cemented the underdog theory with America getting the chance to elect the first African American President. McCain, largely a Bush twin, had no chance. Tuesday’s election results demonstrated that the Republicans are now, once again, the underdogs. This bodes well for them in the 2010 election and it could carry over to the 2012 Presidential contest. Of course, that depends on who has the perceived power at that time. The point of this “underdog theory” is that we are not happy with the blue nor the red team. When the time comes we just want to take away power from whichever team has it. For liberty champions this eternal game is growing extremely tiresome. When everyone buys into the two team league yet no one wants either team to finish in first place, isn’t it time to expand the league? It just so happens that there is a liberty-loving team already in place ready to be added to the league. Here are their names:
These are the real underdogs and outcasts. Let’s help make them winners and keep them winning. It's Official: Global Warming Is A Religion 11/04/2009
by: A An executive has won the right to sue his employer on the basis that he was unfairly dismissed for his green views after a judge ruled that environmentalism had the same weight in law as religious and philosophical beliefs. …In a landmark ruling, Mr Justice Michael Burton said that “a belief in man-made climate change … is capable, if genuinely held, of being a philosophical belief for the purpose of the 2003 Religion and Belief Regulations”. The ruling could open the door for employees to sue their companies for failing to account for their green lifestyles, such as providing recycling facilities or offering low-carbon travel. …John Bowers QC, representing Grainger, had argued that adherence to climate change theory was “a scientific view rather than a philosophical one”, because “philosophy deals with matters that are not capable of scientific proof.” That argument has now been dismissed by Mr Justice Burton, who last year ruled that the environmental documentary An Inconvenient Truth by Al Gore was political and partisan. The decision allows the tribunal to go ahead, but more importantly sets a precedent for how environmental beliefs are regarded in English law. Wow! Its a religion, not a scientific position. I probably should be laughing, but I’m not.  by: Peter Suderman The New York Times' health-care blog has a long post going over the fuzzy numbers House Democrats have used to make their recently released, 1,990-page health-care bill more palatable. The post covers a lot of the same territory as I did last Friday: It's only $900 billion if you look at the net rather than the gross; the score doesn't account for the doctors' Medicare "fix"; the bill increases Medicaid costs for states by $34 billion (which isn't counted in the score). And, the post adds, it's not clear that the bill "bends the cost curve," in other words, that it reduces the rate of rise in health-care spending. The post ends, however, with a response from Florida Democrat Alan Grayson, who takes issue with the idea that Democrats should be talking about budgeting or cost-curves at all: Representative Alan Grayson, Democrat of Florida, who has earned himself a reputation recently as a rabble-rouser, said that Democrats had done themselves a disservice by focusing on economic arguments. “We have wasted so much time talking about bending the cost curve, people have no idea what that means,” Mr. Grayson said. “Why would you want to bend a curve? It’s already bent.” So Mr. Grayson is focusing on another number — the 44,789 Americans that he says die every year for lack of insurance. “The messaging was just wrong, and now it’s right,” Mr. Grayson said. “We are saving people’s lives and saving money. That’s what really matters.” Now, some may think it's useful for a Democrat to be adopting an aggressive, moralistic tone on health-care reform, but the problem is that at least half of Grayson's primary claim just isn't true. Let's leave aside for a moment Grayson's blustery claim that the bill will save lives (which is impossible to verify: even if you accept his lives-lost statistic, there's no way to account for long-term future losses due to reduced medical R&D); his idea that the bill will save money is just wrong, at least by the traditional definition in which "saving money" means "spending less." Even if you take the CBO at its word that reform will cut the deficit (a sketchy claim that even the CBO seems to know is unlikely) cutting the deficit isn't the same as spending less. It's entirely possible to cut the deficit and yet still spend more. It's true that the reform bills, as written, produce some savings by cutting certain types of Medicare expenditures. But that money is then repurposed to help pay for subsidies so that lower-income people can buy insurance. And that money only pays for some of the new expenditures in the bill. The rest comes from either a surtax on expensive insurance plans (in the Senate plan) or a new tax on couples who earn more than a million dollars a year and individuals who earn more than $500,000 a year (the House plan). Either way, what these bills do isn't save money. Instead, they spend more, but also bring in more revenue through new taxes, theoretically resulting in a lower deficit over the long haul. Our Libertarian Future 11/02/2009
 by: David Boaz Brink Lindsey described a “libertarian consensus that mixes the social freedom of the left with the economic freedom of the right” in his book The Age of Abundance. Matt Welch and Nick Gillespie said that right now is a “libertarian moment.” I saw a “civil liberties surge” in public opinion polls on marijuana laws and gay marriage. And now Jacob Weisberg foresees the imminent end to various kinds of prohibition in these United States: Within 10 years, it seems a reasonable guess that Americans will travel freely to Cuba, that all states will recognize gay unions, and that few will retain criminal penalties for marijuana use by individuals. Whether or not Democrats retain control of Congress, whether or not Obama is re-elected, and whether they happen sooner or later than expected, these reforms are inevitable—not because politics has changed but because society has. For good measure, he adds that we’re not going to prohibit either abortion or gun ownership. “Conservatives would be wise to give up on the one, liberals on the other. In each of these cases, popular demand for an individual right is simply too powerful to overcome.” Sounds like libertarian heaven: The chief reason these prohibitions are falling away is the evolving definition of the pursuit of happiness…. Republicans face a risk in resisting these new realities. Freedom is part of their brand; if the GOP remains the party of prohibition, it will increasingly alienate libertarian-leaners and the young. But the party as presently constituted has very little capacity to accept social change. Democrats face a danger in embracing cultural transformations too eagerly. Nearly four decades after George McGovern became known as the candidate of amnesty, abortion, and acid, cultural issues are still treacherous territory for them. Why get in front of change when you can follow from a safe distance and end up with the same result? Of course, if the Democrats raise taxes and the deficit high enough, and do what they’re threatening to do to health care, marijuana may be the only medicine you don’t have to get on a waiting list for, but you won’t be able to afford it. And the marriage penalty may make everyone decide they can’t afford to get married. And flights to Cuba may be too expensive on our dwindling after-tax incomes. |   Recent Posts
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