Blaming the Symptoms

If you are slow to function the "morning after", do you blame the headache for your woes? Or do you attribute it to some bad judgments you made the previous night? What would be the most effective solution? Aspirin? Or less alcohol the next time?

If someone is in poor health because they are very overweight, do you blame the obesity? Or do you attribute it to poor choices about diet and lifestyle? What would be the best solution? Diabetes and blood pressure medicine? Or less eating and more exercise?

When we see children who are failing academically, getting involved with gangs and drugs, do we blame poverty? Or do we attribute it to bad choices that they and their parents have made? What would be the best solution? Hand out money to compensate for their distress? Or discourage more bad behavior? 

Why, of course, we blame poverty! We hand out money and make excuses for the bad behavior choices. The fact of the matter is that poverty is a symptom, not a condition that you catch like a virus. In the US at least you are very unlikely to be poor if you do three things:

1. Graduate from high school (it's free and graduating these days has pretty much become a "won't do", not a "can't do").
2. Get a job -- any job.
3. Get married -- and have children (in that order).

Just knowing those factors (and your age), I can predict your income levels fairly accurately.

If you blame the headache and take aspirin, you're going to continue having hangovers.
If you keep eating and not exercising, you're going to be continue to be obese and have related health problems no matter how many drugs are prescribed.
If you keep encouraging people to have children without marriage (the entire welfare system discourages marriage), if you keep paying them not to work, you're going to continue having high levels of poverty.

Why do we keep blaming the symptoms and not the underlying behavioral causes? It must be that we're okay with the outcomes as long as we can just mitigate their pain. Take two aspirin. Repeat. Repeat.

Al Franken Misses the Punchline

Now that Congress is actually reading the Obamacare bill they passed three years ago without such due diligence, they've decided they don't like parts of it. Specifically the excise tax on medical device sales lost on the Senate floor 79 to 20.

The two Democrat senators from Minnesota had these comments. Al Franken: "The industry is being punished for its innovation and growth." Amy Klobuchar: "The tax is a burden on medical device businesses but, most importantly, it is a disincentive for jobs. It stifles innovation, and it makes it more difficult for the next generation of lifesaving devices to make it to the market."

What's behind this epiphany? Minnesota happens to be the home of several big medical device manufacturers who employ a lot of Minnesotans. But, really, Senators could you expand your parochial brains just a bit? If a tax on medical devices stifles innovation and retards job creation, why doesn't a tax on pharmaceutical companies make it more difficult for the next generation of drugs to make it to the market? Why doesn't a tax on, say, successful software developers not stifle innovation and jobs in the software industry? Why doesn't a tax on any enterprise not stifle innovation and jobs?

The answer is, IT DOES.

300,000 New US Millionaires. Oh My.

Sad news for egalitarians. According to data from Spectrum Group, the Chicago-based wealth research firm, there are now 8.99 million U.S. households whose net worth totals $1 million or more (not including primary residence). That's up from 8.6 million in 2011 and just short of the all-time record set in 2006, when the United States had 9.2 million millionaire households.

So what is an egalitarian to do about this? Hope for a stock market crash and another recession? Punish 300,000 people who invested in the stocks and real estate that fueled their wealth increase? Make sure they won't do it again?

Sic Transit Fantasy

The history of urban rail projections is a textbook case of repeated fraud upon the public. Knowing that Urban Rail is so cost-ineffective that voters would reject the projects if they were told the truth, the rail utopians dream up totally unrealistic ridership projections, which are then sold to the uninformed public as fact.Then when ridership fails to come even close to those fantasy projections . . .  oops! Looks like taxpayers will just have to subsidize the shortfall.

The Seattle Sound Transit light rail system has been in operation for four years now. As you can see by the chart below, ridership is nowhere near the usage used by Sound Transit and used to justify the project. Oops. But as the old saying goes, "Fool me once, shame on you. Fool me twice, shame on me. Fool me over and over again, call me a Seattle voter."

The Takers to Makers Ratio is Increasing

If you want a simple explanation of why the economy is not going to be roaring back anytime soon, this chart sums it up. It's the percentage of the population that is employed -- i.e. producing all the money that government wants to spend or redistribute to the non-working. Some of this is related to the aging population profile. Some of it is due to the fact that we have increased subsidies for those not working. Irrespective of the reason, it's pretty hard to grow production with this many fewer people working.

The Economic Performance of Hugo Chavez

One of the persistent themes in the left's Chavez Rhapsody is how much he did to economically to benefit the people of Venezuela. The hard facts are that the people of Chile, Columbia, and Peru benefited a great deal more from having leaders who emphasized market-oriented growth policies over "Socialism or Death". All, by the way, without the tremendous oil resources that are available to Venezuela.

Real GDP Growth in Latin America

More Debt=Lower Growth=Family Budget Cuts

Manmohan Kumar and Jaejoon Woo of the International Monetary Fund (IMF) confirm the previously published findings of Reinhart and Rogoff that sovereign debt and economic growth are inversely related. Specifically they estimate that a 10 percentage point increase in the debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of 0.2 percentage points per year. On average high-debt economies grew 1.3 percentage points slower than their low-debt counterparts. A difference of 1.3 percentage points of growth would cost the US more than $200 Billion per year -- or about $2000 per household per year.

The current administration would like you to believe that $2000 per year is nothing your household should be concerned about. Unlike when the government's revenue decelerates, you will be expected to actually cut your spending by $2000 every year . . .  and reelect those whose profligacy cost you that amount.

Catastrophic Budget Cuts in One Picture