Too Much to Explain All at Once

There are times when I have things I want to post here, but there is always more to organize and say, so I wait. And then more stuff happens, or more information pours in. So I need to quote Inigo Montoya (we quote The Princess Bride often in our home): “Let me esplain. No, there is too much; let me sum up.” Today I sum up what I want to do over time, in future posts.

One point I’d like to write about concerns the political primary race for the presidency; longer answers make things clearer than shorter answers. I keep getting that reinforced, but with every reinforcement it gets more difficult to pass along. I need links to video and audio, and/or transcripts. Do I cover it by person, or by issue? I’m undecided.  

A second point I’d like to write about—and these won’t be mutually exclusive—is my concern about damage already done during this primary. I don’t think the damage is insurmountable, but it’s unfortunate.  

On the bright side, the candidates as a group are considerably more conservative than we had four years ago. Anyone we choose will be a better choice than our current president, simply because philosophically our candidates believe in constitutional government, with the limits enumerated therein.  

But in past elections—several—we have been pushed to nominate someone “electable.” In political speak that means “moderate,” assuming those swing voters in the middle are more likely to choose somebody that isn’t very ideological one way or the other, ignoring how successful elections have been when candidates (e.g. Reagan) ran with a clear conservative philosophy. This mistaken notion gave us McCain in 2008, to some extent George W. Bush in 2000 (although in some ways he just turned out to be less conservative than how he ran), Bob Dole in 1996.  

So now, everyone is so determined not to be pushed toward less conservatism that there is an innate distrust of anyone in the lead. If someone leads, it must be because the “establishment” wants that person, and we don’t want that. Or, alternatively, if someone leads, it must be that that’s who Obama wants to run against, so we can’t choose that person. So there’s a tendency to dismiss anyone who leads: we won’t be fooled into supporting Romney, so we must support someone else; and then as soon as each other-than-Romney candidate reaches a leading position, they can’t maintain it.  

Last night while we were talking about this, my son Political Sphere said, “So you know who the next anybody-but-Romney candidate of the week will be, right?” Yes, I answered: Huntsman. Because he hasn’t had a turn yet. 

Is this shuffling of leading candidates because they’re not good candidates? I don’t think so, generally. I think it’s more the distrust of anyone leading. I think there is an irrational belief that the only fair way to choose a candidate is to have every candidate rated equally by polling data and media coverage and any external factor at the time of a single primary election day, so we all get equal say. 

This isn’t going to happen. So, we can only study each candidate for ourselves, using as much real information instead of external pressure as we can find. And once we have gone through that due diligence, share what we know. 

Whichever I choose, my endorsement is not likely to sway many people. But I am going through the process, and I’m trying to do that thoroughly. So I plan to share that process over the coming weeks and months in the hopes that the reasoning might help others in doing their own reasoning. 

In general I don’t think of Spherical Model as a political blog. Politics is just a way of doing our part as citizens to maintain/regain our freedoms. But those freedoms have so eroded, and seriously so during the past few years, that our economy and civilization are threatened. So, if moving back up into the northern hemisphere (in the Spherical Model) requires spending some time on the nitty-gritty of politics, we can handle it.

Vice President Grandpa

It would be a daunting task to review Dick Cheney’s In My Time, all 527 pages. I found the history from this particular insider’s perspective to be fascinating. But it was a heavy read. It is lightened by some personal stories, and my favorites tended to be the delight this world leader took in his grandchildren. The book is written along with his daughter, Liz Cheney, so she may have influenced what got told. But I thought it would be worth humanizing Cheney with some family-arity. 

This first one is right after taking office as VP: 

During my first weeks as vice president I had another obligation to fulfill. The previous October, as the campaign was winding down, our whole family was out on the road full-time. After one late-night rally, my six-year-old granddaughter, Kate, climbed into the seat next to me on the campaign plane. “Grandpa,” she said, “if you win, will you come to school as my show-and-tell?” “You only want me if I win?” I asked. “Yep,” she answered. I had to admire the kid’s frankness, so we struck a deal, and on a snowy February morning, I was Kate’s show-and-tell. My impression was that most of her fellow first graders were more interested in my Secret Service agents than in Kate’s old grandpa, but I’ll never forget the huge smile on her face as I walked into the classroom (pp. 313-314). 

Following 9/11 the VP spent a lot of time in undisclosed locations, which seemed to fascinate the media, who made it something of a game to imagine where he was located. Cartoonists and late-night comedians joined in the guessing. But in reality, much of the time he was at the Vice President’s Residence, or wherever he was scheduled to appear that day. They just didn’t tell anyone his location; thus it was “undisclosed.” Sometimes it was his Wyoming home, where he connected by secure video teleconferencing technology. Often it was Camp David. In 2001 they spent Halloween there, along with grandchildren: 

Our granddaughters  brought their Halloween costumes, and my staff—Mary Matalin, David Addington, and Scooter Libby—handed out candy at their cabins, as did Lynne’s assistant, Laura Chadwick and the Secret Service agents manning the command posts (p. 338). 

Although this isn’t a grandchild story, one of my favorites was about his dog, Dave, a hundred-pound yellow Lab, that he brought along to Camp David: 

He loved roaming the paths and the woods, and I quickly got used to taking him everywhere with me. One weekend when the president had scheduled a National Security Council meeting at Camp David, I drove with Dave in one of the Camp David golf carts over to Laurel for breakfast. I parked the golf cart, and Dave and I walked down the path toward the big wooden doors of Laurel. I had briefing materials for the day’s meetings and the morning newspaper under one arm and opened the door with the other. No sooner had we walked inside than Dave caught sight of the president’s dog, Barney, a Scottie, and set off in hot pursuit. I couldn’t really blame him. Barney was only slightly larger than the squirrels Dave so much love chasing, but we didn’t want any permanent harm to happen here. I dropped my papers so I could get hold of Dave, who by now had rounded the corner into the dining room. I rounded the same corner to encounter some of the cabinet spouses who had also been invited to Camp David for the weekend. Joyce Rumsfeld, Alma Powell, and Stephanie Tenet, all seated for breakfast, were watching aghast as Dave bounded around the dining table after a furiously scurrying Barney. At about that moment the president appeared. “What’s going on here?” he demanded. It was not an unreasonable question. I saw a tray of pastries on the breakfast buffet, grabbed one, and hollered, “Dave, treat!” He stopped in his tracks, then I grabbed him and took him back to Dogwood, the cabin in which Lynne and I were staying. I hadn’t been there long when there was a knock at the door. It was the camp commander. “Mr. Vice President,” he said, “your dog has been banned from Laurel” (p. 338). 

My favorite granddaughter story involved using the secure video teleconferencing system (SVTS) from his home in Wyoming: 

On August 10 I was scheduled to confer via SVTS with a visiting delegation of Iraqi exiles opposed to Saddam Hussein. They had gathered in the ornate Cordell Hull Conference Room in the Old Executive Office Building, across the street from the White House. All of them had taken their places and were waiting for me to appear on the screen, when, unbeknownst to me, my four-year-old granddaughter, Elizabeth, wandered into my office. The Iraqis were treated to images of Elizabeth jumping around in a pink princess outfit and making faces at herself as she watched her performance reflected back on the two-way video hookup. She was hustled off by my personal aide, Brian McCormack, before I arrived on the scene. I sat down in front of the camera and Scooter Libby sat down just outside of view. Unaware of the performance that had just taken place, I said to the delegation: “Greetings from Wyoming. I’m here with my chief of staff.” It was only after the meeting that someone explained why the Iraqis found that so funny (p. 386). 

Near the end of Lord of the Rings, my favorite part is when Sam Gangee gets up the courage to speak to Rosie. After all the stories told in song, the reason for it all is so that people can get on with their real lives—their families. I guess that’s what I’m sensing from this historical memoir. A lot of hugely important things happened, but the reason those big decisions mattered was so that we could best get on with our families. 

After spending a chunk of yesterday trying to get an image of my granddaughter on camera as an angel for our Christmas card, I am reminded that this is what real life is about. Nothing better.

Experts

Wouldn’t it be a good idea if experts—the really smart people with all the information—could make decisions about our economy and our lives? Um, no. If you have a clear idea of who the experts are and what they really know, especially about your life, you tend to prefer making your own choices. 

When I took basic economics my first year of college, we talked about the Nixon price controls, what they had done to the economy and why. I have been a free market economist ever since. And I’ve always been very wary of anyone who considered Nixon a conservative. 

The Nixon price controls happened when I was old enough to be aware of them, but too young to have much understanding of the politics and economics involved. But I got a new up-close perspective on this piece of history from Dick Cheney’s memoir, In My Time. Just out of college he was an assistant to Donald Rumsfeld at the Office of Economic Opportunity. Here’s how he tells it: 

The inflation rate that had hovered comfortably around 1.5 percent at the beginning of the 1960s had climbed to 5 percent. The unemployment rate had nearly doubled to 6 percent.

            The Democratic majority in Congress was urging the president to use powers they had given him when they passed the Economic Stabilization Act, legislation that effectively authorized him to commandeer the economy by imposing controls on wages, prices, salaries, and rents. The Democrats voted these extraordinary powers confident that no Republican president, much less a solid free market one named Richard Nixon, would ever use them, and in the meantime, they could criticize him for not taking action. But Nixon took them up on their offer, and on Sunday night, August 15, 1971, he announced a freeze for ninety days on all wages and prices. The Cost of Living Council was created to monitor the freeze and to achieve an orderly return to the free market when the ninety-day period was over.

            The freeze was simple enough. Nobody was to raise wages or prices. But the follow-on, which became known as Phase Two, would have to have rules covering all sorts of things, from permitted increases in union contracts to the price of dill pickles, for the period until market forces ruled again. The deadline for moving from the freeze to Phase Two came fast, and the two entities that were supposed to write the regulations, the Pay Board and the Price Commission, wrangled and dithered. When it looked as though they were going to miss a crucial deadline for getting regulations published in the Federal Register, Rumsfeld decided to take things in hand. He assembled Jack Grayson, the chairman of the Price Commission, and about a dozen of our CLC staff and said that we wouldn’t be leaving until we had the regulations ready for the printer. We set up in Rumsfeld’s outer office, and as others paced and dictated, I sat at one of the secretary’s desks and typed everything on an IBM Selectric typewriter. By nine the next morning, when the secretaries arrived and emptied the ashtrays and replenished the coffee, we had written the regulations that would now be governing a major share of the U.S. economy. The degree of detail we achieved during our overnighter was truly impressive. We drew distinctions between apples and applesauce; popped and unpopped corn; raw cabbage and packed slaw; fresh oranges and glazed citrus peel; garden plants, cut flowers, and floral wreaths. We regulated seafood products “including those which have been shelled, shucked, iced, skinned, scaled, eviscerated, or decapitated.” We covered products custom-made to individual order, including leather goods, fur apparel, jewelry, and wigs and toupees….

            As assistant director for operations, I oversaw some three thousand IRS agents tasked with enforcing wage and price controls. At one point I sent a team of them to visit the major food chains, such as Safeway and Giant, and report on how they were complying with our regulations. The agents reported back that, depending on how a single regulation was applied, any one of several different prices might result, from one high enough to give the chain a significant profit to one low enough to cause a terrible loss. It was pretty clear which option the chains would pick—and who could blame them? They were dealing rationally with the arbitrary rules we were trying to impose (pp. 59-61).   

In 1973 Nixon imposed another price freeze:  

apparently hoping in the midst of Watergate for some political benefit. But he didn’t get it. Among other things, the freeze made raising animals for market unprofitable. A Texas hatchery drowned forty-three thousand baby chicks. Pigs and cows were slaughtered—and the president announced an early end to his 1973 effort to freeze prices.

            By this time I had grown wary of government economic control. At the start of my tenure at the Cost of Living Council, when I had been immersed in getting things going, I hadn’t had much time to think about it, but by now I realized that every day millions of people were making millions of economic decisions, and it didn’t matter how smart we were or how many regulations we wrote. There wasn’t any way we could intervene without doing more harm than good.

These thoughts confirmed my innate skepticism about what government could and couldn’t do. We could write checks, and we could collect taxes. We could run the whole military and defense side of things. But when something as big and ham-handed as the federal government tries to run something as complex and dynamic as the American economy, the result is sure to be a train wreck (p. 62). 

There are some interesting insights here. The people involved—the experts—were really smart, measured by IQ and education, as far as I can ascertain. And many of them were conservative; they were the ones who mainly believed in free markets. Imagine the damage that could have been done if they had truly believed in sabotaging the free market to bring about socialism. (On the other hand, in our time maybe we can see without having to imagine.)

Best case scenario: the experts are people who have very little idea about what I need, what I want, what I value; they can only make generalized decisions likely to displease the fewest people. No one can expect them to make exceptions for every individual, so it would be better if you changed yourself to become less exceptional. And the decisions they make, no matter how much data they may say they have, will ultimately be arbitrary. That is the one thing you can count on. 

If there were an expert I’d be persuaded to trust, it might be Thomas Sowell, and fortunately he can be trusted because he knows better than to take on the job of “expert decision maker.” Here are a couple of favorite quotes on trusting the experts:

There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs.

                                             —Thomas Sowell, Sept. 29, 2009

Whether the particular issue is housing, medical care or anything in between, the agenda of the left is to take the decision out of the hands of those directly involved and transfer that decision to third parties, who pay no price for making decisions that turn out to be counterproductive.

—Thomas Sowell, October 17, 2011

Laffer Curve Primer

In the past week I came across a couple of reminder’s of the Laffer Curve, grabbing my attention enough to cover it in a post here.

First, I just finished reading Dick Cheney’s autobiography, In My Time. I’m sure I’ll have more to say on that in future posts, but this little anecdote was fun: 

It was in the wake of our loss [Ford’s election bid in 1976] that Don Rumsfeld and I had dinner one night at the Two Continents restaurant in the Hotel Washington with economist Art Laffer, a creative guy who certainly captured my imagination with a curve he drew on the back of my napkin. What it showed was that you can raise taxes only so high before people become disinclined to work. On the other hand, it’s possible to create incentive—and economic growth—with tax cuts. The Laffer Curve subsequently became one of the hallmarks of supply-side economics. I wish I had known how historic my napkin would become so that I could have saved it (p. 78). 

I had a similar response when I first heard of the Laffer Curve. Eye opening. 

Then later in the week I came across an article by Daniel Mitchell spelling out a few basics on the Laffer Curve. One of the interesting illustrations shows how much more revenue (about 5 times more) the government took in when Reagan lowered the upper tax rate of 70% down to 28%, comparing 1980 to 1988.  

The article had links to three short videos (about 7 minutes a piece) on the theory and real world evidence for the Laffer Curve, and then the frustration with the way tax bills are measured. They are all informative and clear, but the third one may make you want to do something to change the world. The three together take less time than half a television show without commercials. Definitely worth the time investment. 

The first video gives you the basic theory of the Laffer Curve.

http://www.youtube.com/watch?v=fIqyCpCPrvU&feature=player_embedded

Video II offers real-world examples of the Laffer Curve in action.

http://www.youtube.com/watch?feature=player_embedded&v=YsB_rnzBA08

The third video covers the frustratingly inaccurate “satic scoring” used by the Joint Committee on Taxation, causing bias toward higher taxes. 

http://www.youtube.com/watch?v=Mw7LtVwDCbs&feature=player_embedded

If these concepts make sense to you, share them with a friend.

Giving Thanks

I’m thankful for family. I have a good husband of almost 30 years, three beautiful and brilliant children, two daughters-in-law that have become mine, and a granddaughter who has spent her entire life in my home where I can see each new step he takes and hear each new word and song she learns. 

I’m thankful that I had my dad for so long; he was 91 when he passed away two years ago Christmas. And I’m thankful to still have my mom, at 82, still healthy and able to drive and take care of herself—and her friends. 

I’m thankful for my home—not a grand home, but the finest I have ever lived in. 

I’m thankful for enough food, and ease in obtaining it. 

I am thankful for my religion; it has made all the difference in my life. It guides me to live in a way that leads to civilization and happiness through the unavoidable trials of life. 

I am thankful for relatively good health—enough to be the oldest player in the church volleyball league. 

I’m thankful to be living in the free country of the United States of America, in the free state of Texas. I’m thankful that the founders were brilliant enough to guarantee our freedoms with a written Constitution. 

I’m thankful for books, and reading, and the internet and more ways than ever to learn and share information and connections. 

I’m thankful that there are more things to be thankful for than I can remember to enumerate in one afternoon. 

I’m thankful we have a day set aside to remind us to be thankful. May my celebration and yours be full of good memories!

We Share Thankfulness

Last night Mr. Spherical Model and I attended a Thanksgiving Service, the 5^th annual such service offered by a local interfaith clergy association for the whole community. The three main faith groups presented the program: Christian, Muslim, and Jewish, expressing their views on giving thanks, through spoken word and music. 

Community members mingle following
interfaith Thanksgiving Service

The Muslim representative shared his religion’s view that we should begin everything we do by offering thanks to God. This is a belief all our religions share, so it is a bond between us. 

A Methodist pastor retold the story of the Good Samaritan, and reminded us that we are each others’ neighbors. We can be grateful to share this community with people of various faiths. We don’t just cohabitate, but we come to care for one another; we are neighborly. And he’s right; unlike other parts of the world where that neighborliness is lacking, it is a blessing in our little part of Texas. 

A Jewish rabbi talked about the Jewish practice of recognizing and giving thanks for “the miracles of every day”: opening our eyes in the morning, finding firm ground, having clothes, being free. These blessings teach that our very lives are miracles.  

If there was a theme to the evening, it was that each of our faith traditions leads us to thankfulness to God in all things. This was also brought out in the music. Words from the Q’uran were chanted, meaning, “If you are grateful, I will certainly give you more,” and “My Lord, bestow on us the ability to be grateful.” Two young girls, sisters, from the host Mormon congregation, sang a song of gratefulness for family harmony, “There is beauty all around when there’s love at home.” And another Jewish rabbi sang from Psalm 92, “To sing praises unto thy name, O most High: To show forth thy lovingkindness in the morning, and thy faithfulness every night.” 

I especially enjoyed the words of the closing congregational hymn, which expressed the theme well: 

Because I have been given much, I too must give;

Because of they great bounty, Lord, each day I live

I shall divide my gifts from thee With every brother that I see

Who has the need of help from me. 

Because I have been sheltered, fed by thy good care,

I cannot see another’s lack and I not share

My glowing fire, my loaf of bread, My roof’s safe shelter overhead,

That he too may be comforted. 

Because I have been blessed by thy great love, dear Lord,

I’ll share thy love again, according to thy word.

I shall give love to those in need; I’ll show that love by word and deed:

Thus shall my thanks be thanks indeed.

            —Text: Grace Noll Crowell; Music: Phillip Landgrave

Parabolas

natural parabolic shape
of a recession and recovery

With recessions, the rule is: what goes down must come back up. The natural shape of a recession is a parabola. There’s a sharp drop to as low as it’s going to go, and then the direction changes upward during recovery. If it is allowed to follow the natural course of events, the recovery will essentially mirror the drop—and then keep going up. 

This is a concept my sons, Economic Sphere and Political Sphere, have been sharing with me from time to time. I don’t have the economic math skills to reproduce all the math logic for you, unfortunately. But I think the basic concept will do. Recessions happen because the market needs to correct, from a bubble or maybe a natural disaster--something that interferes with the natural long-term aggregate growth of the free market. But once there’s a drop, then a naturally growing market returns.  

Political Sphere shared an article from Forbes about the concept that recessions follow a natural course—unless interfered with. The article makes that point that the excuse “this time is different” is never true. 

L-shaped recession, natural
recovery is prevented

Real trouble happens when there is interference, usually intended to “help.” According to Wikipedia, one of the shapes a recession can take is the L shape. In this one, the sharp drop happens just as you would expect. But then, instead of bouncing on the bottom and coming back up, the level just sort of dribbles along horizontally near the bottom. Other names for this are “depression,” “lost decade,” and “malaise.” These are all terms beginning to be applied to our current L-shaped recession. They are terms that applied to FDR’s Great Depression as well. 

What is it that causes this recession to be different, to languish at the bottom instead of bouncing back? Government interference. How do we know? 

This is maybe more than you wanted, but here’s a basic formula: 

Y = C + I + G + NX 

Y is GDP (production) in actual dollars.

C is consumption, which is a function of Y-T (taxes).

I is investment, or infusion of new capital (not spending on used materials, or stock exchanges).

G is government spending.

NX is net exports. 

Government can affect Y by increasing spending or raising or lowering taxes. More taxes means less money for consumers to spend, and less taxes means more money for consumers to spend. Indirectly investment will be affected if Y decreases, when there is less profit to be made. But mainly the other way government can change Y is by increasing government spending.  

I had to ask Economic Sphere why the formula includes “+G” instead of “-G.” In theory, G is just another product consumers (we the people) spend money on. To some degree it’s necessary. So the amount spent on G is just another part of the measure of GDP. However, when spending on government is too high—includes debt—it temporarily appears that the G portion of the economy shows actual growth in GDP. But that is an illusion. 

natural ups and downs of
business cycle show a sine wave

It appears, in the short run, that government spending (or stimulus) increases Y. But Y’s rate of growth is, in a natural free market, fairly constant. There is fluctuation, an ongoing sine wave, or little rises and dips, but you can draw a line through that at approximately the natural rate of growth (maybe somewhere near 4%). Government spending can’t change that. It doesn’t affect aggregate supply; it only affects aggregate demand. So it may appear for a time that it has affected growth, but there will be a natural pull back to the equilibrium point where aggregate supply and demand intersect. There will be a correction. So the more government does to try to make the market go up, the greater will be the eventual correction back to the natural rate of growth. 

The longer and greater the government over-expenditures, the more drastic will be the inevitable correction. 

So what happens if government sees that inevitable drop and tries to prevent it—with more government spending? It causes an even greater drop. If the measures are taken after the drop, presumably in an effort to stop more drop or cause a rise, it interferes with the natural recovery. That is what we’re seeing now. 

Greater government spending at a time when great government spending already caused the dip is like hitting the economy over the head and beating it down. Every new interference, every new beat down, leaves the economy languishing down at the bottom, unable to rise because of the repeated drop-causing interferences. When they say, “The economy was in much worse shape than we thought; imagine how bad a shape we’d be in if we had done nothing,” you can know for certain that things are worse because of what they did in their ignorant attempts to control a natural force.  

If government wants to have a positive effect on GNP, it needs to cut spending. Since it can’t (won’t) cut to zero, the next best thing would be to cut to the bare bones of the enumerated powers of the Constitution. At the same time, lowering rather than raising taxes will help. Both lowered government spending and lowered taxes leave more money available for growth.