He "Saw Wind and Made a Windmill"

A great story from Wired.com about William Kamkwamba, a persistent young man from Malawi who built a windmill to "power a small bulb in his bedroom so he could stay up and read past sunset...But one windmill has turned into three, which now generate enough electricity to light several bulbs in his family’s house, power radios and a TV, charge his neighbors’ cellphones and pump water for the village’s fields and household use."

Daily Read - 2/5/10

An interesting article from last November in the Guardian (UK) discusses whether the Playpump (pictured) is an efficent solution for water problems in Africa or just a clever marketing gimmick.  Children play on a merry-go-round, which pumps water into the raised tower.  Some critics say it is "over-reliant on child labour."

In President Obama's address at the National Prayer Breakfast, he "applauded Jewish, Christian, Hindu, and other faiths that are responding to the earthquake in Haiti. He said such compassion should be harnessed for everyday disasters, like hunger and poverty. He also said that liberals have started to embrace the idea that religious groups and other private efforts can play a major role in fighting social problems…There is an "increasing recognition among progressives that government can't solve all of our problems, and that talking about values like responsible fatherhood and healthy marriages are integral to any antipoverty agenda.""  I hope he's right, particularly in light of recent comments from Obama's Office of Social Innovation.  (Philanthropy.com)

Philip K Howard, of Common Good, has an editorial in the WSJ. He thinks when Obama said "Let's try common sense" in the State of the Union, he really meant more laws. "Government is out of control, schools are out of control, health-care costs are out of control, lawsuits are out of control—because law has supplanted the responsibility of people needed to keep them in control."


Charles Krauthammer in today's Washington Post says "don't the Democrats see that clinging to this agenda will march them over a cliff? Don't they understand Massachusetts?"  He argues the Democrats are sticking to their agenda because many of them believe "(1) The people are stupid and (2) Republicans are bad. Result? The dim, led by the malicious, vote incorrectly."  Obama says he has not explained health care clearly enough, even after 29 speeches. (I thought he had "a gift"?)  Krauthammer also says liberals believe in the "moral hollowness of conservatism," while liberals "act in the public interest."

Of course, you can find commenatators on the left who say Republicans think Democrats are stupid and are only motivaed by politics.  Thus, the rise of the tea party movement and others who are sick of both sides.

Somehow I missed this one earlier this week: "Education Secretary Arne Duncan said Sunday that 2005's Hurricane Katrina was "the best thing that happened to the education system in New Orleans," since it forced the failing school system to start over from scratch."  He later apologized.  (Politico)

Obama's budget has some optimistic projections for economic growth going forward.  Perhaps he should plan for the worst, based on the chart below, an analysis of past budget projections, from downsizinggovernment.org (here)  However, Paul Krugman says not to worry - deficit fearmongering is only politics.  Perhaps, as Obama says, the worst is behind us.  Robert Reich argues for "The Necessity of Obamanomics" on the editorial page of the WSJ, given the "big picture" (he doesn't mean the big picture below).  On the other hand, the Economist thinks "Mr Obama’s budget reveals a road-map to fiscal catastrophe" and "the cuts the president has proposed are comically insufficient."  Moody's Investors Service, which provides credit ratings, said "Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the Aaa government bond rating." (quoted here)

Obama Aide says Government Not Good at Finding New Ways to Treat Social Problems

In a recent speech, Sonal Shah, head of the White House's Office of Social Innovation and Civic Participation, said "It's hard to take risks when you have 535 board members," and "that resistance to cultural changes and legal constraints made it hard for government to be agile and try new approaches to finding and financing the most effective and innovative nonprofit groups."  So, she "urged foundations to take greater risks...to figure out what ideas were worth government investing in," according to a column at Philanthropy.com.

In review, Obama created a new "Office of Social Innovation."  The first lesson that the head of this new office learns is that government is a terrible way to achieve social innovation - they are not good at identifying good ideas, and not good at generating new ideas.

Instead of creating a new office that apparently has no function but to provide a few more government jobs, why didn't Obama just give some speeches about Americans donating more to their favorite charities, or volunteering?  Does the government really need to be more involved in channeling tax money into charities of their choice?

Daily Read - 2/4/10

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Alexis de Tocqueville (quoted in a column by Bill Flax at Real Clear Markets)

"For the first time, government programs next year will account for more than half of all U.S. health-care spending, federal actuaries predict, as the weak economy sends more people into Medicaid and slows growth of private insurance...By 2020, according to the new projections, about one in five dollars spent in the U.S. will go to health care, a proportion far beyond any other industrialized nation."  (WSJ)

George Will with a startling statistic showing how improvements in treating infectious disease has drastically altered demographics, leading to higher health care costs.  "In 1900, more than 33 percent of all deaths were of children under 5; today they are less than 2 percent. In 1900, deaths of persons 65 and older were only 18 percent of all deaths; today they are 75 percent."  (Washington Post)

Jay Cost on how Obama's pleas for bipartisanship could in fact be partisan.  "This partisan view of bipartisanship doesn't suggest a meeting at the halfway point."

Politico's Glen Thrush has an interesting exchange between Sen. Blanche Lincoln (D-Ark.) and Obama from yesterday's Q and A between Senate Democrats and the President. Lincoln asked Obama to push back at the left wing of the party, and said "no one in your administration" understands how to make payroll - a jab at the lack of experienced businesspeople in Obama's administration. (Politico)

"Scott Brown (R) will be sworn into office Thursday, a week earlier than expected, after he asked officials in his home state of Massachusetts on Wednesday to certify his election "without delay.""  This eases concerns his swearing-in would be delayed for partisan reasons.  (Washington Post)

"Structural steel for the 1,776-foot tower that will be known as 1 World Trade Center has risen 200 feet above street level, a tangible sign of ground zero progress, redevelopment officials said Wednesday...The 104-story skyscraper is scheduled to be completed in 2013." (Washington Post)

 

An Attack Ad Tailored for the True Tea Partier

Daily Read 2/3/10

The ever-helpful Keith Hennessey on how the stated goal of the President's Fiscal Commission in his budget "is using clever language to make it sound like a balanced budget goal." One of the perils of having a very intelligent President is they have a greater capacity for "clever language." Hennessey also calculates what Obama considers an "acceptable level" of debt. Using Obama's numbers, he concludes "the President is defining 71-72% of GDP as an acceptable level of debt...Debt-to-GDP last exceeded 70% in 1950 as we were paying off the debt from World War II." Is this an "acceptable level"?

This week's Economist has a series of articles on financial reform. One article "Garrottes and sticks", the author highlights that Washington is under intense political pressure to do something, but is not sure what. "The administration is “trying to legislate by shouting,” Steve Bartlett of the Financial Services Roundtable, an industry group, told NPR radio, pointing out that when Mr Obama unveiled the Volcker rule he devoted more words to trashing banks than to outlining the plan. But bashing banks is good politics: a majority of Americans say Wall Street should not have been bailed out."

In Buttonwood's column "Not what they meant", he reviews the unintended (negative) consequences of past financial "reforms," and says "capital, like water, tends to flow around obstacles. Try to dam its movement at one point, and slowly but remorselessly it will find its way around." His prediction for the unintended consequence in this round of "reform"? That more and more capital will flow to the unregulated parts of the market, hedge funds will become bigger and even more influential -- "something the authorities may regret when the next crisis comes along."

The next Economist article "Off target" repeats the likely benefit to unregulated (or less-regulated) financial firms. "If banks are forbidden to indulge in proprietary trading, their employees may decide to decamp to the hedge-fund industry. Indeed, bank traders have been typical founders of hedge-fund start-ups. But once that initial spate of spin-offs has occurred, where will budding hedge-fund managers be able to prove their mettle? The best training ground will be at the existing hedge-fund groups."

Washington needs to tread carefully as it panders for votes by punishing banks, or the cure may end up worse than the disease.

Robert Samuelson in Newsweek (via RCP) says "a crude consensus has formed over what caused the financial crisis", but is "vastly simplified." "Unless we get the story of the crisis right, we may be disappointed by the sequel." In a classic boom-bust cycle, America became enamored with the idea of ever-rising house prices, and, thinking the housing market was not risky, "people took actions that made it more risky. The pleasures of prosperity backfired. They bred carelessness and complacency. If regulation was lax, the main reason was that regulators -- like the lenders, investors and borrowers they regulated -- shared the conventional wisdom." As Obama pounds the pulpit saying "never again!", Samuelson cautions "it's neither possible -- nor desirable -- to regulate away all risk." Although some changes need to be made in our banking system, "a single-minded focus on the blunders of Wall Street may also distract us from other possible sources of future crises, including excessive government debt and borrowing."

John Stossel on how "Big, complicated government gives [politicians] opportunities to do favors for their friends." (RCP) Even if this particular story is not true, the overall point that larger government is inherently less transparent, and creates larger incentives to lobby for favors still stands.

Gateway Pundit has coverage of Las Vegas Mayor Oscar Goodman's threat to "give him the boot back to Washington," if Obama comes to visit. Although he's probably over-reacting to Obama's recent comments that people should not blow their college savings in Vegas, Goodman is in the unfortunate position of being mayor of a city that is very dependent on an industry that is on Obama's "naughty" list. And, although Obama says his repeated negative comments about Vegas are about saving money, this WSJ article from July 2009 pointed out that government conferences were being moved out of Vegas, even if they were cheaper, to avoid political backlash. I'm not particularly pro-gambling, but much of Vega's economy comes from holding conferences, not from casual gamblers.

"It's now official: In 2009 the number of unionized workers who work for the government surpassed those in the private economy for the first time." "Government unions offer what is close to lifetime job security and benefits, subject only to gross dereliction of duty. Once a city or state's workers are organized by a union, the jobs almost never go away...which explains why the AFL-CIO and SEIU have become advocates for higher taxes and government expansion in cities, states and Washington." (WSJ)

Daily Read 2/2/10

The Economist's leader on bank regulation said "For investors the most dangerous words in the English language are “this time it’s different.” For governments and financial policemen they are “never again.”" Regulators, like Sisyphus, are doomed to fight the last battle, to watch the boulder roll back down the hill the next time there is a crisis. The Economist questions "Can he live up to this promise? Or is it destined to become a YouTube classic, played endlessly in half a decade or so, after another banking implosion?"

Physician, heal thyself! The status of most private companies in the middle of the credit crisis has been resolved, but: "Fifteen months after Fannie and Freddie were effectively nationalized, neither the Obama administration nor Congressional leaders see a quick solution to one of the thorniest problems in American finance: how to fix the twin mortgage giants without choking the flow of credit to homeowners and dealing a blow to a still-fragile housing market." (NY Times)

Thomas Sowell on a possible contributor to higher unemployment rates among young workers in this recession: minimum wage. "The very fact that the government has to impose those wage rates means that workers were unwilling to risk not having a job by refusing to work for less than the wage rate that has been mandated. Now that choice has been taken out of their hands, with the hidden cost in this case being higher unemployment rates." (Real Clear Politics) Maybe Obama should consider a temporary reduction in the minimum wage to spur employment?

The uncertainty theme continues in the clean energy industry. "Wind turbine manufacturers "need more certainty" to add shifts and factories in the United States, said Elizabeth Salerno, director of data and analysis for the wind industry trade group." The $787 billion stimulus bill that needed to be passed in a hurry to create jobs in shovel-ready projects is not creating as many jobs as expected, but don't worry: "Obama's advisors said the biggest clean-energy benefits of the stimulus are still to come." (LA Times)

Installing solar panels can save money in the long run, but homeowners have trouble with the up-front installation cost. Berkeley, California has a program by "which it lends homeowners the money to put panels on their houses. The owners repay the loans over a period of years through an extra charge on their local property-tax bills." (The Economist)

Since Obama promised to freeze some government spending starting next year, his budget this year is "one of the greatest spend-while-you-can documents in American history," according to this WSJ editorial. In addition to lots of new spending, "the White House proposes to convert long-standing "discretionary" spending that requires annual appropriations into permanent entitlement programs," making it harder to cut back spending later. "If Mr. Obama's priorities become law, federal outlays will have grown an astonishing 29% since 2008." They make an attempt to pay for some of this, and the WSJ helpfully highlights selected tax increases found in Obama's budget:



Mark Steyn's editorial in yesterday's Washington Times talks about political consequences for Democrats:

"We don't quit. I don't quit," he said. But throughout the chamber, Democrats were quitting. "I quit," says Rep. Marion Berry of Arkansas, declining to run in November. "I quit," says Sen. Byron Dorgan of North Dakota, doing likewise. "I quit," says Beau Biden of Delaware, son of Vice President Joseph R. Biden Jr., choosing not to run for his father's seat.

The Hill reports today that Durbin and Schumer are preparing to take over if Harry Reid loses his seat: "The second- and third-ranking Senate Democratic leaders are doling out huge sums of cash, laying the groundwork for a leadership race should Senate Majority Leader Harry Reid lose reelection."

Meg Whitman on Welfare in California

Former eBay CEO Meg Whitman is running for governor of California. She has a column in the Orange County Register lamenting the state of the welfare system there. "In 1996, California had 21 percent of the nation’s welfare cases. Today, 32 percent of all welfare cases in the United States are in California, even though we only represent 12 percent of the total U.S. population. Consider this troubling comparison; California is nearly twice as big as New York state, but we have five times as many welfare cases."

Why?

Only 22 percent of welfare recipients in California who are required to meet federal work minimums are working. According to the Public Policy Institute of California, our state is one of only nine that does not unconditionally enforce the federal government’s five-year lifetime limit on cash welfare assistance. These flaws in our welfare system, coupled with a monthly cash check that is almost 70 percent higher than the national average, work against the goal of helping more welfare recipients leave welfare for a life of greater independence and dignity.

Douthat on Keeping "Culture Wars" Local

Columnist Ross Douthat chimes in on abstinence-only versus contraceptive-oriented sex education in today's New York Times. He argues "we should understand it more as a battle over community values than as an argument about public policy," and "What is taught in the classroom is vastly less important than the matrix of family, culture and economics: the values parents impart and the example that they set, the friends teenagers make and the activities they join, and the cross-cutting effects of wealth, health and self-esteem." "The abstinence-based courses that social conservatives champion produce unimpressive results — but so do the contraceptive-oriented programs that liberals tend to favor."

I hate to wonder how much effort and money is being put into debating these things at the Federal level, for little effect.

Daily Read 2/1/10

A WSJ article on effects of the recession's "triple whammy" to non-profits: "Donations are down. Government funding is down. Need is up." Consider giving more to your favorite charities this year. When you give directly to a non-profit, you decide what's worthy, and charities are more accountable for wasting money than the government is. You can stop donating, you can't stop paying taxes. However, if you think the government is a good way to provide services to the needy, keep reading...

President Obama is submitting his $38 trillion budget to Congress today. The deficit will "approach a record $1.6 trillion this year," and "recede to $1.3 trillion in 2011 but remain persistently high for years to come under Obama's policies." (Washington Post, emphasis mine)

Megan McArdle of the Atlantic (here) on why Obama is having trouble with his "they broke it, I'm going to fix it" message: "what he has done, and what he wants to do."

In Obama's remarks on his budget, he says "the previous administration and previous Congresses created an expensive new drug program, passed massive tax cuts for the wealthy, and funded two wars." Obama is campaigning for additional, expensive medical programs; He is not likely to reverse the tax cuts during a recession; He was not in Congress when the Iraq war started, so has been able to get a free pass, but calls the war in Afghanistan a "necessity." So, how is the existing budget everyone else's fault? And, how are the "persistently high" future budgets everyone else's fault?

Obama says some proposed spending cuts are "more painful, because the goals of the underlying programs are worthy," and he is "willing to reduce waste in programs I care about." This is the problem when people see government as a source of benefits, and as a way to steer the economy. Everything the government does is "worthy" to someone, and the conversation becomes about small cuts in "waste" instead of whether the government should be involved at all.

This article, "The greatest risk is living swaddled in bubble wrap", from The National says that, in the UK, it seems "the principal role of government is to remove all hazards from daily existence." (h/t Overlawyered.com) If that's truly government's role, we're doomed to ever larger tax bills!

The Washington Post has an article today on how the crusade for a Consumer Financial Protection Agency lost steam, "echoing the enduring national debate over whether government intervention is more a solution or a problem." Opposition to CFPA is increasingly bipartisan.

The GOP blog has this excerpt from Obama's meeting with Republicans in Baltimore where he admits some people might not be able to keep their current insurance under health reform, then blames it on things that "got snuck in" to the bill. Again, those provisions were "worthy" to someone, or they wouldn't be there.