Economist Rap

Well done, sirs. Well done.

The quotes by Keynes and Hayek at the end are truly excellent:

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist." - John Maynard Keynes

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - F.A. Hayek

GM Declares Success, Pays Back Government Loan With Government Money

I have seen some gloating in the previous week by people who believe GM's "early" loan payback is proof that government bailouts work, and that concerns from enraged citizens who are being taxed to bankroll GM's ineptitude are unfounded. It's time to set the record straight on this point.

As noted in the article, the government bailed out GM to the tune of $49.5 billion. However, of that amount, only $6.7 billion was a pure loan (the rest was the government buying equity stake in the company). When GM says it paid back its loan, it is only talking about the $6.7 billion, not the full amount.

"But wait!" I hear you say, "GM is still posting losses! How did they get the cash to pay back even the $6.7 billion loan?" That's a good question, and it has an easy answer: They took the cash from their government-created escrow account. In other words, they used government money to pay back their government loan. Hardly a ringing success story, though you won't see it mentioned in all the TV spots and political campaigning.

(Furthermore, if Shikha Dalmia's predictions are correct, they may have only done this to be in a better position to secure even more government money.)

Legalized Theft: And You Thought Taxes Were Bad

What rights do you have to your property, and what do the police need to legally take that property from you? Do you think you have the right to be convicted of a crime first? Do you think that you should at least be charged with a crime first?

The answer to those questions may surprise you. In fact, the police need neither a conviction nor even a criminal charge to seize your property. The name of the game is "civil asset forfeiture", and police across the nation are waking up to the fact that it's a lucrative business. It starts out simply enough: Laws are passed that allow police to confiscate property they suspect was acquired as the gains of unlawful activity. For example, if you deal drugs and pay for a sweet new ride with the proceeds from your drug selling, the police can confiscate the car. Most people never see the twisted side of these laws, a side that enables police officers to take the property of law-abiding citizens without anything approaching the kind of evidence that would be permissible in a criminal court case.

Many of these cases require nothing but a showing of "probable cause", the police are allowed to use hearsay as evidence, and the accused has no recourse but to attempt to prove his innocence (and here you thought that you were innocent until proven guilty). Even if you win, the state is likely to keep a portion of the forfeited property as a fee or demand a fee to return your property to you, not to mention that you will be out quite a bit of cash for court costs that the state has no obligation to repay. Add to this the fact that the police are usually the recipients of these forfeited assets, and you have a situation in which the police have a perverse incentive not to confiscate just the proceeds of illegal activity, but instead everything they can get their hands on.

The Coming California Meltdown

Oh, California, how I love thee. Every time I think about the incompetence of all the innumerable and unaccountable layers of government above me, I can at least take solace in one simple fact: It could be worse. I could live in California.

If anyone has been paying attention lately, California is in big trouble. They are basically bankrupt, but without the legal means to declare bankruptcy. One of the glaring missteps in California's long list of financial mismanagements has been its capitulation to the outrageous demands of the public employee unions, which are now crippling the state.

Crippled Boy Told to Remove Leg Braces At Airport Metal Detector

I think the story speaks for itself:

The boy is developmentally delayed, one of the effects of being born 16 weeks prematurely. His ankles are malformed and his legs have low muscle tone. In March he was just starting to walk.

Mid-morning on March 19, his parents wheeled his stroller to the TSA security point, a couple of hours before their Southwest Airlines flight was to depart.

The boy's father broke down the stroller and put it on the conveyor belt as Leona Thomas walked Ryan through the metal detector.

The alarm went off.

The screener told them to take off the boy's braces.

The Thomases were dumbfounded. "I told them he can't walk without them on his own," Bob Thomas said.

"He said, 'He'll need to take them off.' "

Ryan's mother offered to walk him through the detector after they removed the braces, which are custom-made of metal and hardened plastic.

No, the screener replied. The boy had to walk on his own.

That's the TSA for you: Protecting us from the 4 year-old crippled terrorist children of active police officers everywhere.

By then, Bob Thomas was furious. He demanded to see a supervisor. The supervisor asked what was wrong.

"I told him, 'This is overkill. He's 4 years old. I don't think he's a terrorist.' "

The supervisor replied, "You know why we're doing this," Thomas said.

Feel safe yet?

Federal Court Says Tasering of Pregnant Woman Was Justified

The story goes like this: A woman is pulled over for doing 32 MPH in a school zone. She contends that it was the car in front of her that was speeding, and therefore she refuses to sign the ticket (being under the incorrect impression that it would be tantamount to admitting guilt).

Now, as the police officer on the scene, you have two options. You can (A) give her the ticket anyway and send her on her way (it is not required that the driver sign the ticket) or (B) attempt to arrest her and tase her when she refuses to get out of the car. The police opted for second strategy, naturally, and now the court has sided with the officers, saying that the tasing was justified as a response to her resisting arrest. The problem is, as the dissenting judge notes, that failure to sign a traffic ticket is not an offense you can be arrested for, and you can't be charged with resisting arrest if the arrest itself is unlawful.

Health Care "Reform" Passes: Will it Reform Anything?

If the major goals of this bill were to allow coverage for all citizens, and simultaneously reduce the price of that coverage, my prediction is that this bill will fail spectacularly on both counts, and indeed could make things considerably worse than they are now. There are two key parts of the bill that turn the current system on its head:

The first part requires insurance companies to cover pre-existing conditions. This means, for example, that someone who has smoked two packs a day for thirty years cannot be denied health insurance for his newly discovered lung cancer, even if he has never paid a dime into the insurance system previously. This is obviously very bad for insurance companies, since the incentive to buy insurance before a major health crisis hits is effectively removed. With everybody signing up to take money out of the system, but no one signing up to put money in, insurance companies would be unable to operate.

To attempt to fix this problem, the bill introduces a new "individual mandate" that requires all citizens to buy health insurance or face a fine (to be filed with your tax return each year). This fine starts at 1% of your income, or $90, whichever is higher. By 2016, the fine will be 2.5% of your income, or $695, whichever is higher. The goal, of course, is to force healthy people into paying into the system so their insurance premiums can subsidize the sick people taking money out of the system.

There is a huge practical problem with this plan (not including any philosophical, moral, or constitutional objections, which abound as well).