It's all clear now

Very funny.

More or Less Bankruptcy

Under Obamacare, there are two key items to have in mind:
1) The individual mandate - all must have insurance.
2) Pre-existing conditions - insurance companies can't deny coverage based on it.

Because of #2, I have no incentive to comply with #1. I can wait until I'm sick and then get insurance. I'll be fined though, right? Well, unless the fine is greater than the insurance, I'll just pay the fine and call it insurance. Or not pay. What happens if I don't pay for the insurance or the fine? Will I be forced into bankruptcy with the US Government as my creditor? Or will I be thrown in jail?

One very good reason to reform healthcare is the number of bankruptcies attributed to healthcare catastrophes. Will an individual mandate actually create more bankruptcies?

The practicalities of health care make fixing it brutally difficult.

A Good Cause

Every year 29,000 kids age out of foster care in the US. Within two years, 60% will be homeless, dead or in jail. I found those numbers staggering. If you want to make a small difference in a few of their lives, here's a nice project locally.

Teach like a champion

It's a totally lame title, but I just finished this book and thought it was simply extraordinary. We're all teachers, even if it isn't our profession. I thought it had great ideas for teaching at church or at home. Here's an article I recently read about the author and his program that will show you why I decided to buy a book on teaching. I liked the book so much I wrote a five page summary of it that I can refer to frequently. If you'd like a copy of the summary, email me and I'll send it since I don't think I can upload word docs onto blogger. The summary might not all make sense without reading the book, but much of it will.

The Worst Loan Shark

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Ben's Take on Happiness

Ben Bernanke gave the commencement address at the University of South Carolina this year and I think he did a great job of summarizing the "economics of happiness". I recommend you give it a read, even though it's a bit long, as most commencement addresses are. For the ADD among you, here are a list of the keys to happiness nd couple of snippets:

Ben's Keys:
1) Spend time with family and friends.
2) Spend time in activities that give you "flow".
3) Challenge yourself.

More generally, economic policymakers should pay attention to family and community cohesion. All else equal, good economic policies should encourage and support stable families and promote civic engagement. And to help people feel in control of their own destinies, policies should respect the autonomy of individuals, families, and communities to make their own decisions whenever possible, as research has confirmed the intuitive notion that individual freedoms contribute to life satisfaction.

Happiness is just one component of the broader, longer-term concept of life satisfaction, and only one indicator of how the fabric of our lives is being shaped by our choices and circumstances. I am reminded of a story about Abraham Lincoln. According to the story, Lincoln was riding with a friend in a carriage on a rainy evening. As they rode, Lincoln told the friend that he believed in what economists would call the utility-maximizing theory of behavior, that people always act so as to maximize their own happiness, and for no other reason. Just then, the carriage crossed a bridge, and Lincoln saw a pig stuck in the muddy riverbank. Telling the carriage driver to stop, Lincoln struggled through the rain and mud, picked up the pig, and carried it to safety. When the muddy Lincoln returned to the carriage, his friend naturally pointed out that he had just disproved his own hypothesis by putting himself to great trouble and discomfort to save a pig. "Not at all," said Lincoln. "What I did is perfectly consistent with my theory. If I hadn't saved that pig, I would have felt terrible."

I, Pigovian

Holman Jenkins nails the Pigovian argument today in the WSJ. If you want to use less oil, charge more, don't give tax credits for alternatives. Charging more raises revenue and cuts consumption. Giving tax credits to a highly regressive tax (the people getting the tax credits are not poor) and encourages consumption. Here's a great excerpt:

Even if you believe saving gasoline is a holy cause, subsidizing electric cars simply is not a substitute for politicians finding the courage to jack up gas prices. Think about it this way: You can double the fuel efficiency of any car by putting a second person in it. You can increase its fuel efficiency to infinity by refraining from frivolous trips.

These are the incentives that flow from a higher gas price. Exactly the opposite incentives flow from mandatory investment in higher-mileage vehicles. You paid a lot for a car that costs very little to operate—so why not operate it? Why bother to car pool? Why not drive across town for a jar of mayonnaise?

Though as eager as any to clamber aboard the electric-vehicle bandwagon, German parts maker Robert Bosch notes with rare honesty that electric cars may end up responsible for more CO2 than their conventional counterparts in regions (like much of the U.S.) where electricity is produced from coal.

The downside of entitlements

Doom and gloom article from Samuelson today on the threat of the welfare state. Here's an excerpt:

The welfare state's death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day -- no one knows when -- doubt governments' ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.

The Constitution - Not for Children

Check out the copyright page on this edition of the Constitution. Good warning for the progressive era.

HT: Cato

Once a teenage boy, always a teenage boy

*snicker*

Death tax

Despite my recent trend toward libertarian posts, I'm not at all averse to taxation. I'm in favor of taxes in the following order:
1) Pigovian taxes (externalities, e.g., gasoline, cigarette taxes)
2) Estate taxes (death tax)
3) Consumption taxes (sales tax)
4) Production taxes (e.g., income)

This image gives me pause on my enthusiasm for each generation earning his/her own through high estate taxes:

Definition of a capitalist

I don't normally read the National Review, but thought this was a useful description of capitalism as a place that lies between socialism and anarchy, not to be confused with anarchy itself. (HT: Cafe Hayek)

If by “capitalist” you mean someone who cares more about his own profit than yours; if you mean someone who cares more about providing for his family than providing for yours; if you mean someone who trusts that he is a better caretaker of his own interests and desires than a bureaucrat he’s never met, often in a city he’s never been to: then we are all capitalists. Because, by that standard, capitalism isn’t some far-off theory about the allocation of capital; it is a commonsense description of what motivates pretty much all human beings everywhere.

And that was one of the reasons why the hard socialism of the Soviet Union failed, and it is why the soft socialism of Western Europe is so anemic. At the end of the day, it is entirely natural for humans to work the system–any system–for their own betterment, whatever kind of system that may be. That’s why the black-market economy of the Soviet Union might have in fact been bigger than the official socialist economy. That is why devoted socialists worked the bureaucracy to get the best homes, get their kids into the best schools, and provide their families with the best food, clothes, and amenities they could. Just like people in capitalist countries.

It’s why labor unions demanded exemptions and “carve-outs” from Obamacare for their own health-care plans. And why very rich liberals still try their best to minimize their taxes.

The problem with socialism is socialism, because there are no socialists. Socialism is a system based upon an assumption about human nature that simply isn’t true. I can design a perfect canine community in which dogs never chase squirrels or groom their nether regions in an indelicate manner. But the moment I take that idea from the drawing board to the real world, I will discover that I cannot get dogs to behave against their nature–at least not without inflicting a terrible amount of punishment. Likewise, it’s easy to design a society that rewards each according to his need instead of his ability. The hard part is getting the crooked timber of humanity to yield to your vision.

And it’s also why the problem with capitalism is capitalists. Some people will always abuse the system and take things too far. Some will do it out of the hubris of intellect. Some will do it out of the venality of greed.

I bring all of this up because many in Washington seem convinced that the solution to the problem with capitalists is always less capitalism. To be sure, a free-market society is in some sense a government program. The government must prosecute criminality, enforce contracts, and demand that the rules be observed. Few lovers of free markets are so laissez-faire as to want to strip the government of its role as referee.

But few should want the ref to suit up and play the game.

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Bring on the Squash

I don't like zucchini. I never have. However, it is the one thing that I know I could plant anywhere, never water, without sunlight and it would still grow to the moon. We're on the verge of planting our garden and I'm sure we're a couple of months from zucchini mounting on the counter. When they do, this is the first recipe I'm going to try. Sounds awesome. HT: Wednesday Chef.

Zucchini Pancakes
Makes 12 pancakes

For the pancakes
3 medium zucchini, shredded
Salt and freshly ground black pepper
3 large eggs, beaten
1/2 cup all-purpose flour
1 tablespoon extra virgin olive oil
1 cup crumbled feta cheese
3 scallions, thinly sliced
1-2 tablespoons finely shredded fresh mint
1 teaspoon baking powder (I forgot to add this! And they were fine)
4 to 6 tablespoons vegetable oil, more as needed

For the yogurt sauce
2/3 cup plain yogurt
2 cloves garlic, finely chopped
1/2 teaspoon salt

1. Preheat oven to 250 degrees. Place zucchini in a colander over a bowl, and mix with 1/2 teaspoon salt. Allow to drain for five minutes. Transfer to a cloth kitchen towel, and squeeze hard to extract as much moisture as possible. Squeeze a second time; volume will shrink to about half the original.

2. In a large mixing bowl, combine zucchini and eggs. Using a fork, mix well. Add flour, 1/2 teaspoon salt, olive oil, feta, scallions, mint and 1/2 teaspoon black pepper. Mix well, add baking powder, if using, and mix again.

3. Place a cast iron skillet or other heavy skillet over medium heat. Add 2 tablespoons vegetable oil and heat until shimmering. Place heaping tablespoons of zucchini batter in pan several inches apart, allowing room to spread. Flatten them with a spatula if necessary; pancakes should be about 3/8 inch thick and about 3 inches in diameter. Fry until golden on one side, then turn and fry again until golden on other side. Repeat once or twice, frying about 5 to 6 minutes total, so pancakes get quite crisp. Transfer to a plate lined with paper towels, and keep warm in oven. Continue frying remaining batter, adding more oil to pan as needed. Serve hot.

4. For yogurt sauce: In a small bowl, combine yogurt, garlic and salt. Mix well, and serve on the side or on pancakes.

Higher Taxes = Less Work

I hadn't read this (pdf) Nobel-written paper before. Interesting to see how closely he can model the degree to which people work less when you tax them more. Little surprise that I favor less government and stronger individual incentives. We like papers that support our view of the world, don't we?