Category: responsibility

Categories
national politics & policies responsibility

A Deficit of Common Sense

Congress has just raised the federal debt “ceiling” to $14.3 trillion. 

Yes, it’s called a “ceiling,” though I cannot recall seeing any other ceiling so adjustable.

The Associated Press reassures us: The new ceiling means that congressmen won’t have to pass an even higher ceiling until after November. According to the AP, if Congress had to raise the debt limit too close to the election, this would “[feed] a sense among voters that the government is spending too much and putting future generations under a mountain of debt to do it.”

“Feed a sense”? Yes, committing fiscal crime in broad daylight might serve to “feed a sense” that the crime is in fact being committed.

Meanwhile, Moody’s, the Wall Street credit agency, warns that the U.S. is at risk of losing its triple‑A credit rating. The federal government must stop its fashionable trillion-​dollar annual deficits. But Moody’s also proclaims to understand why the government has run these trillion-​dollar deficits. Seeing as how we’re in a recession, it would be politically tough to trim budgets right now. 

Let me get this straight. If you’ve been taking on way too much debt, the best solution to the problem is to borrow money even faster and even more irresponsibly? But only for now? Then kick the habit later … when it’s suddenly real easy?

No, I don’t think so. Try again, Moody’s.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies responsibility

Washing Dishes

If you can’t pay your bill at a restaurant, management may set you to washing dishes to cover the cost of your meal.

Or so it’s said — I’ve never heard of it actually happening. Clean dishes are a must for serving food to paying customers; restaurants simply can’t wait around to press non-​paying customers into service. Instead, they hire folks to do the dishes.

This came to mind when our president and congressional leaders began pushing to raise the federal government’s debt ceiling by $1.9 trillion.

The raise would allow the federal debt to increase to $14.3 trillion, about the size of our country’s entire yearly economic output.

Senator Max Baucus of Montana is all for raising the limit. He says it simply must be done: “We have gone to the restaurant,” he explained. “We have eaten the meal. Now the only question is whether we will pay the check.”

No dishwashing for Baucus. 

Most of us avoid Congress’s unseemly situation by looking in our wallets for cash or ready credit before we order the filet mignon, not after we’ve consumed it.

I’m no wizard of high finance, but hey: If we want to stop piling debts onto our children, at some point we will have to prevent our so-​called representatives from borrowing more trillions.

Oh, and if a congressman enters your diner, better make him pay cash up front.

This is Common Sense. I’m Paul Jacob.

Categories
judiciary responsibility

Pump Down the Volume

Can somebody sue you for making something wonderful that might hurt somebody else who uses your product carelessly?

Of course. This is America, land of the Bill of Rights, mom, apple pie, Chevrolet … and outrageous litigation.

Some suits are sound, sure. But, on top of those you’ve got your money-​grubbing frivolous actions, pushed by freeloaders and fronted by freebooters, er, lawyers. But at least these folks don’t always win. That’s where I’ve got some good news to pass along: A federal court has slapped down ludicrous litigation against Apple Computer.

Apple makes the popular iPod media player. Litigants Joseph Birdsong and Bruce Waggoner alleged that Apple is culpable for “possible hearing loss” resulting from iPod use, thanks to allegedly improper earbud design.

Birdsong and Waggoner don’t assert that their own eardrums had burst, or even that the ears of others had suffered. In fact, the ruling against them notes: “At most, the plaintiffs plead a potential risk of hearing loss.…”

Obviously, when your own careless conduct causes you harm, you alone are responsible. Turn  your stereo volume to the max and press your ear against stereo speakers. It isn’t the stereo maker’s fault when your eardrums pop. 

By the way, iPods also have volume control.

This is Common Sense. I’m Paul Jacob.

Categories
responsibility too much government

Global Gall

Human cells have 46 chromosomes. So all the relevant evidence tells us.

But suppose persuasive evidence emerged that human cells have, say, 48 chromosomes? And suppose hackers discovered emails by prominent biologists talking about the need to “hide the extra chromosomes”? Or to prevent other biologists from discussing the evidence for these extras?

And suppose after the scandal broke, a government agency asked biologists to sign a petition “defending the integrity of genetic science” against “skeptics”?

Hacked emails from the University of East Anglia’s Climate Unit confirm that there is more deception and less unity in climate science than many have claimed. Debate about the extent of global warming and of mankind’s contribution to it intensifies. But some scientists have struggled to suppress this debate and even to hide basic climate data.

In response to the scandal, the United Kingdom’s national weather service recently asked climatologists to sign a petition saying everything is hunky-​dory in climate research and the official global-​warming paradigm. 

Hey, I like petitions, but … are we doing science here? Or politics? 

One anonymous scientist, quoted in The Times of London, explained that UK’s weather service “is a major employer of scientists and has long had a policy of only appointing and working with those who subscribe to their views on man-​made global warming.”

I think my question has been answered.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets responsibility

Economist-​in-​Chief

I’m not an economist. So take my advice with a grain of salt. Or two.

But hold the pepper. I’m not the only non-​economist. Our president isn’t one, either.

Sure, he has economists on his staff, but I’ve more than just begun to doubt their wisdom.

Take his latest advice to banks: “Go back and take a third and fourth look” at operations … and “explore every responsible way” to put their money in the hands of small and medium-​sized businesses with current loan applications.

We can all agree it’d be nice to get rolling like we were before the bust.

But I bet bankers are trying to learn something from the bust, something about booms. They have every reason to be super-​cautious. What if the current situation remains a house of cards, one that could come a‑crashin’ at any moment? Lending money out now, in questionable cases, would be a horrid waste of capital.

I know that presidents are now cheerleaders for prosperity. One of their jobs, in the modern interventionist economy, is to pretend that prosperity is always right around the corner. Even if it isn’t.

But bankers have a different job. That job is to not lose money. And if they are now afraid tht in making a loan they might not get their money back, no amount of “advice” from our alleged economist-​in-​chief should change their minds. It’s called “fiduciary responsibility.”

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets responsibility too much government

Massive Failures

How many times, in the last year, have I heard praise for FDR’s banking reforms, even down to the specifics of federal deposit insurance?

The funny thing is, this factoid is false. Roosevelt opposed deposit insurance. Everyone did who at that time knew the history of the states that had experimented with this form of subsidy. Only logrolling pushed deposit insurance into law as a known special favor to small banks in rural areas — not to cure the nation’s ills.

The actual history and lessons of bank failures is explored by Charles Calomiris in a recent paper provocatively titled “Banking Crises Yesterday and Today.” According to this Columbia Business School professor, bank panics were not uncommon in the U.S., prior to the Federal Reserve in 1913. And the Fed pretty much stopped them. Massive bank failures, on the other hand, are different. Not unheard of elsewhere, massive failures had not been a problem in America leading up to that time. However, such failures became a problem a few decades later in the Great Depression.

Calomiris explains that such massive crises are brought on, chiefly, by institutional risk factors, like deposit insurance, government manipulation of the housing market to increase ownership through loosening of financial standards, and the “too big to fail” doctrine.

It turns out that honest standards, and not mammoth government subsidies and guarantees, prove the best way to prevent catastrophe.

This is Common Sense. I’m Paul Jacob.