Monday, June 22, 2009

Burning Down the Camp

This story is from Arnold Kling at EconLog. So simple that even a child could understand but so complex that most politicians probably won't.

The Financial White Paper: A Fabulous Tale

Arnold Kling

Once upon a time, there was a summer camp. To entertain the kids, the counselors handed out matches1, lighter fluid2, and newspapers3. The camp burned down.

Afterwards, a white paper was written, proposing more supervision by counselors. It called for a systemic counselor to watch out for camp-wide fire hazards, and it called for procedures to put out fires that are "too big to let burn."

The white paper was written under the direction of two counselors, Larry and Tim, with input from another counselor, Ben.

The end.

1housing policy that encourages speculative purchases and subsidizes mortgage indebtedness
2tax policy that encourages banks and other firms to maximize debt relative to equity
3bank capital regulations that reward securitization and the creation of off-balance sheet entities

Tuesday, June 16, 2009

Book Review: An Island Called Liberty

I can’t believe I have not before now reviewed the wonderful libertarian children’s book, An Island Called Liberty by Joseph Specht. My youngest daughter actually brought this oversight to my attention a few days ago. This book should be owned by all liberty-loving parents.
The story starts out as the islanders are living a live-and-let-live life on Liberty Island. They are accepting of the preferences and choices of their fellow islanders and as long as one’s actions don’t violate someone else’s rights, the government does not interfere. In fact, there are only two laws: (1) keep your promises (enforce contracts) and (2) don’t harm others or their property. In other words, Liberty islanders live by the Libertarian non-aggression principle.
Unfortunately, this free and prosperous island is turned into a burdensome welfare state due to the well meaning intentions of some. It begins when compassionate Flo thinks there should be a better way to help those who need help. Even though the needy are being helped by private charity, that does not matter to do-gooder Flo as some are not contributing their “fair share.” She convinces the citizens of Liberty to pass a law so everyone will pay to help the poor. This leads to the creation of a bureaucracy to administer the program.
Once the precedent has been set, more and more well intended government programs are added over the years. And with these programs come higher taxes, bigger government, and increased regulation. In the end, the burden of bigger government is too much and the industrious islanders soon stop producing, thus the comparison to Atlas Shrugged some reviews have made.
In the end, the good citizens of Liberty realize the error of their ways and go back to smaller government and doing for themselves. But there is a warning for them and for us,
“But don’t think such lessons live on forever,
You see, despite that their kids were outstandingly clever,
The lesson they learned from way back when,
Eventually faded . . . and it happened again.”

Monday, June 8, 2009

Sonia the Umpire

The L4K Lemonade Stand Chronicles:
Sonia the Umpire
One day as Barry and Little Timmy were "working" at the Lemonade Stand a couple of the neighborhood boys came by to see if Barry and Little Timmy would like to play some baseball. While Barry was quite good at basketball (just ask him), he wasn't particularly good at baseball. Little Timmy was even worse as he was very clumsy and, therefore, couldn't hit or catch. But Barry was very persuasive and talked Little Timmy into playing.
The neighborhood boys said they would get Ole Mr. Madison to be the umpire but Barry didn’t like that idea. He told them he would ask his friend Sonia.
“Are you sure she has even read the rule book?” the boys asked.
“I, um, think so. But I am sure she will, um, make the correct calls,” Barry assured them.
The boys didn’t think Sonia was a good choice, but they didn’t put up much of a fight. They told Barry and Little Timmy to meet them at the playground in one hour. The boys ran off to tell the other neighborhood kids.
Barry and Little Timmy went over to Sonia's house and knocked on the door. Sonia opened the door. She was wearing a "Che" shirt. Barry said, "Cool shirt, Sonia."
Sonia replied, "What? This old thing? I have two more just like it."
"Yeah, so do I," Barry said proudly.
He explained to Sonia that they needed an umpire for the baseball game. She eagerly agreed to be the umpire.
As Barry and Little Timmy were leaving, Little Timmy asked Barry, "Are you sure Sonia likes me, Barry?"
"Of course, why do you ask?” replied Barry.
"You know," said Little Timmy. And Barry did know.
The children chose teams. Barry chose all his friends regardless of how good they were at baseball. The other team had all the best baseball players from the neighborhood plus a few other players who Barry didn’t like.
Just then Sonia showed up. She was dressed in black just like a real umpire. She yelled, “Play ball!”
And the boys and girls ran on to the field.
It had been a close game. Sonia had made a few bad calls which had led to a few arguments among the teams. One in particular led to a shoving match. It was the bottom of the 6th inning and Little Ricci was on second base when a long center field drive sent him around third and headed to home base. Barry was the catcher. As Little Ricci ran past third base, he was being cheered by his teammates and even some of the other team’s players.
You see, Little Ricci had been born with a physical disability which prevented him from walking until he was almost four years old. But through hard and many weekends at an expensive clinic, he had been able to not only walk but to run (though he could not run as fast as most of his classmates).
Sonia did not like Ricci though. She always felt he had certain privileges because his father was a successful storekeeper. As Little Ricci slid into home plate, Barry just missed him by a few inches. Sonia called him out. Even Little Timmy had the look of disbelief on his face. Barry jumped in celebration and almost high fived Sonia. And Sonia winked at Barry.
It really doesn’t matter who won the game that day. Lessons were learned by all. Barry learned that it feels good to be cheered. Little Timmy learned that Barry would support him regardless of how poorly he does. Sonia learned that she can use her power for good (and “good” was whatever she said it was). The players learned that it does not matter how good they are because someone in power can arbitrarily pick and choose the winner. (What a horrible lesson to have learned!)
But Little Ricci learned an even more important lesson. He learned that he must never give in to injustice. Even though some will arbitrarily try to use their power to promote their agenda, he vowed to never allow this to happen to him again.
And the neighborhood boys learned that they had better speak up when someone wants to pick an umpire who does not know the rule book or is unwilling to apply the rules fairly. Or did they learn that? We will see.

Wednesday, June 3, 2009

Rule of Law Quizzes

I love online quizzes. I recently stumbled upon a website called Rule of Law Revolution where there are numerous quizzes on the Constitution and the Rule of Law. But be forewarned, the questions are tough.
Many politicians like to use the phrase "rule of law" but within the context of their speech it becomes obvious that what they really mean is very often the opposite of the historical meaning the phrase. EconTalk has a podcast of Richard Epstein on The Rule of Law. (Now that was a lot of links.)

Monday, June 1, 2009

Video: National Debt Explained in a Road Trip

The Political Math Blog has produced an excellent video explaining how fast Obama and the Dems are increasing the federal debt in comparison to past presidents (and recent past presidents weren't pikers).

Political Math explains, "I would like to state that I am not trying to defend President Bush’s spending. I personally think Bush was spending far too much. My preference would be to reduce the debt… or at least stay put and let inflation take it’s toll on the debt. My point in this video is that it is the most absurd hypocrisy for someone to complain about how much Bush spent and then yawn when Obama is spending so much more."

I am reminded of a song from my youth . . .

"Living easy, living free
Season ticket on a one-way ride
Asking nothing, leave me be
Taking everything in my stride
Don't need reason, don't need rhyme
Ain't nothing I would rather do
Going down, party time
My friends are gonna be there to

We're on a highway to hell
(don't stop me)