Monday, November 12, 2007

Magic Doesn't Make Things Happen

This will be my last post that falls off topic from medicine and economics. It is highly relevant to both topics, but it is really more directly political. I think that it is an important thing to say though, and may clear up some misunderstandings as to where I am coming from. The following are some general rules that seem to be forgotten in the modern political debate.

#1: You cannot make things happen with a philosophy of government. If I have a philosophy that says that the government should take care of the poor, and I vote for people who espouse that philosophy, it doesn't make the government take care of the poor. What it does is generally give more power to the people in government to take money under the auspices of giving it to the poor. Whether this actually happens or not can be a matter of great debate. In other words, I cannot vote to make something happen, I can only vote to give the government the power to do something. This is a VERY IMPORTANT distinction.

#2: Getting things done is 10% inspiration and 90% perspiration. No matter how high and mighty my cause, somebody has to actually do the work to get it done. I usually fail to understand why we are progressively giving more functions of everyday life over to the same organization that we berate constantly for inefficiency. Around election time, everyone screams and moans about the lack of good choices and votes for "the lesser of two evils." They then proceed to turn progressively greater amounts of function over to "the lesser evil," who they all believe isn't actually that good. Considering that the work on the part of this individual is what gets things done, this is a recipe for progressively diminished efficiency.

#3: Giving the government power makes it more powerful. When it becomes more powerful, it is less likely to listen to you. As our good friend DeCartes said, "power corrupts, and absolute power corrupts absolutely." No matter how much you believe in the redistribution of wealth within society, you cannot do it yourself. You are actually voting for the government to do it. You are thus giving a central source of power a progressively greater say in the overall wealth in the nation. There is absolutely nothing that I have seen in my life that leads me to believe that anyone within this institution possesses some sort of superior moral or market insight.
Just remember, when you vote for a bill to save hurricane victims or provide healthcare to children, you are actually voting to give the government the power to take money from someone and use it to provide these services. This makes the government more powerful. It also means that any mistakes by the middle man prevent the actual implementation of the lofty goal (Katrina *cough* *cough*). It also makes it less likely that a progressively more powerful government will actually be held accountable for its failures. We might ask whether using the government to implement our desires is necessarily the best thing.

#4: The government is only force. The origins of government lie in defense. The only difference between the government and a private organization is that we let the government use force to accomplish its goals. What's the difference between the government providing health insurance to children and a private charity doing so? The government can use force to fund its program. Without the force, the government would be nothing more than an EXTREMELY inefficient form of charity in this instance. Voting for a bill to provide health insurance to children (as an example) DOES NOT provide health insurance to children. It gives the government the power to use force to take money from the taxpayers with orders to provide health insurance to children. This is an EXTREMELY important distinction.

Remember, magic doesn't make it happen. It's all about implementation. No matter how many warm fuzzies you get thinking about some political agenda, it doesn't change what the agenda actually means. We can want something until we are blue in the face, but nothing will actually happen unless we do it. Likewise, you cannot vote to make things magically happen in society. You can only vote to give power to the government to do things and hope for the best. Next time you hit the polling station for a proposition, ask yourselves whether whatever you are voting for is worth the cost of implementation. Ask yourself whether whatever you are voting for has any practical chance of happening at all. We could all vote by consensus that everyone gets a Mazzerati and a trip to Mars. Magic doesn't make it happen.

Monday, November 05, 2007

A Quick Note to Mr. Greenspan

Dear Mr. Greenspan,

I would just like to write and thank you for some of what you managed to accomplish during your tenure at the head of the Federal Reserve. I've heard that a whole lot of people used to care what you had to say. Unfortunately, I'm pretty sure that most of them didn't really understand what you were doing. It's okay, all of my praise is sincere and related in the utmost to things that I really do understand.

1. Thank you for the housing bubble. Without the housing bubble, most of the people I know in Miami wouldn't have had the opportunity to borrow huge amounts of money against an aging structure and use it to take fancy trips and buy Hummers. This brief period allowed many people with lagging self esteems to delude themselves into thinking that they were rich. Some even believed that they possessed some kind of superior economic savvy due to their brilliant real estate investments. Yeah, so now foreclosures are at an all time high, and some of those buildings down by the beach are 50% empty, but it was all worth those 5 years of delusional glory.
Now, between the two of us, we both know that any time you drop the interest rate that banks borrow at to 1%, that there is going to be a run on money. We know that banks want to lend this money out to any takers and that it found its way into the housing market. We both know that this is fake money, and that it is all coming off of the printing press with absolutely no justification in the real economy. It's okay though, what could possibly be the harm in reproducing large amounts of the world's most powerful currency with no justification? Well, I guess that brings me to #2.

2. Thank you for the inflation. I was personally getting tired of being able to buy soda for under $1, a house for under $200,000, or a meal for $5. This made me feel poor. I feel much better now. We can all complain about the rising cost of EVERYTHING (This includes healthcare, oil, education, food, milk, travel, shelter, etc...). Between the two of us, I know that rising prices amongst all goods is probably a reflection of diminishing value of the currency, rather than mythical price hikes in every sector. The fact that we've been printing about 8% of our money supply in a year makes this more likely. It's okay, we'll keep it to ourselves.
One thing however. I'm as big a fan of Canada as anyone else. I've got good Canadian friends. I've visited and enjoyed my stay in the past. However, did you HAVE to devalue the US dollar below the Canadian dollar. I seem to recall buying Canadian dollars for about $0.70 10 years ago. My friends from the country haven't said anything about a great Canadian economic boom, so I suspect that the 40% increase the value of the Canadian dollar is really more of a 30% decrease in the value of the greenback.

3. Even though it's not really your fault, I'd also like to thank you for continuing the central banking-capitalism association. We both know that central banking and free market capitalism are antithetical to each other. However, you've kept the two so tied together in the minds of the average person, that they actually blame the free market for the failures of your central economic control schemes. They blame the market for your boom-bust cycles. They blame capitalism for you making the rich richer by giving them first access to the fake money you print, which gives them the option to purchase resources at lower prices before inflation takes hold. I've got to pat you on the back for this one. You've got them all fooled.
We'll add your association in with all modern oxymoron double speak. The free market is now central economic control by one bank. It fits in with how racism is now a failure to discriminate based on race or how charity is now being forced to give against one's will. It's not purely your victory Mr. Greenspan, but I'll give it to you.

4. You've got great timing. You gave the entire Federal reserve over to Mr. Bernanke right before the housing bubble that you helped create started to deflate. Now we'll all blame him. That sure is brilliant. I don't like getting blamed for things that are my fault either. I notice that he's cutting interest rates too. That's great. He'll continue all of the great policies that got us to where we are now in the first place. I don't really like leaving the country anyway, so I'll never need foreign currency. Besides, I'm sure the rest of the world will just take an ever devaluing dollar forever.

I have so much more to say, but I just have so little time. Feel free to write back.

All the best,