Tag: money

Fundraising Tells Us a Story

Post author By David
Post date October 16, 2009
No Comments on Fundraising Tells Us a Story

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The third quarter just ended which means its time that the public can start learning how candidates have done on fundraising for the last quarter. The fundraising reports are pretty dry and generally boring. They always result in reports about which opponents in any given race are getting the most cash such as Bennett outpaces Shurtleff in fundraising, but the fundraising reports also tell us stories about the state of politics in general and specific races in particular.

The big race in Utah right now is the 2010 race for the senate seat currently held by Bennett. The story on that particular race is that Bennett is raising more money than Shurtleff or any of his other challengers. This should hardly surprise anyone because of his incumbency. Money spent on a challenger is a sign of support and hopes for what that challenger will do in the future if they win. It might also be a bit of a statement against the incumbent, but disappointment with the incumbent does not tend to appear as a large campaign donation to a challenger this early in the race. Money spent on an incumbent is support for the future and an opportunity in the present to weigh in on the issues between now and election day next year – that extra year of getting an actual legislator to listen to you is bound to attract more cash.

Bennett’s only Democratic challenger raised “about $19,600 in the third quarter” demonstrating that Utah is still solidly Republican and few people are even looking to the Democrats for serious consideration.

Another story in that particular rage is this:

A shotgun shooting event raised $88,600 for the Shurtleff Joint Fund. That total includes $25,000 from Provo-based company Success Multimedia, $20,000 from Nu Skin, and $10,000 each from EnergySolutions and USANA Health Sciences.

The fact that Shurtleff raises large chunks of cash from a few organizations for individual events tells us that Shurtleff is almost guaranteed to be the same type of politician as Bennett no matter how different he claims to be on the campaign trail. Some people will like that, others will not, but that’s the story told by the money. Hopefully nobody expects more than cosmetic change if Shurtleff succeeds in replacing Bennett.

It was a later portion of the article that tells the story of the state of politics generally:

The Hatch campaign traded in an old Cadillac for a newer, but still used, Cadillac, spending $36,900 at Young Chevrolet. The senator will use the car when he is in the state.

I doubt that there is anything unusual about this for a sitting member of Congress – which is what irks me. Do I have any reason to complain about how Hatch spends money that is not taken from taxpayers by force? No, but the story this tells is instructive.

I have no problem with Hatch buying a Cadillac. I have no problem with him spending more on a used car that I have spent on cars in the whole of my life. (I’ve purchased 3 cars myself and if you added those prices together plus all my repairs and gas purchased for the last 10 years it still probably comes out to less than $36K.) The thing I have a problem with is that we pay this man $180,000 a year – which should be enough to afford a car for D.C. and a car for Utah – and on top of that salary he still gets to use his campaign fundraising money as a permanent expense account. If he’s getting a $600,000 per year expense account (notice that his election is 3 years away right now and he’s still taking in over half a million per year) why are we paying him another $180,000? Is it any wonder that sitting members of Congress can so easily get completely out of touch with reality when we pay them that much and still allow them to take many of their basic expenses out of a completely separate fund?

If I believed that was an honest way to make a living I would start permanently campaigning for high profile offices as soon as I believed that I could attract even a fraction of the donations that Hatch receives in perpetuity.

The moral of the story about politics generally is that freeloading is alive and well at all levels of society – we give our leaders precisely what many people in society wish they had.

Tags 2010, Bob Bennett, Mark Shurtleff, money, Orrin Hatch, Salt Lake Tribune, senate

General

How Economies Work

photo credit: unforth

When Adam Smith wrote The Wealth of Nations he was not writing about how economies and markets should work, he was writing about how they do work. Anyone who wants to know how they do work must read that book. Be prepared – it’s long and very detailed and you must be committed to doing a good deal of intellectual work if you are going to really understand it. The copy I have been reading is over 400 pages of small print and it is completely lacking in filler material.

I could not even pretend to give a summary of the book (as Wikipedia does) but I would like to point out one crucial detail that few people seem to realize and which shreds virtually every economic move our government makes. Money is a representation of value. Value is a representation of work and the only accurate determiner of price. Price controls and subsidies cannot alter the actual value of goods and services – all they can do is distort the representation of value and confuse the consumer by manipulating the data. Anytime there is a manipulative force in an economy the economy will respond, it will conform to the manipulation, but it still operates on the same universal laws.

I can easily understand how people today would be confused about the laws of economics because we have pundits, professionals, and even many economists who talk about the forces of economics as if they were under the control of men. The fact is that men can operate in accordance with those laws or they can try to manipulate them, but regardless of what we may observe the laws of economics will be obeyed and we will receive the consequences of our actions even if we are not sophisticated enough or have long enough lives to recognize those consequences. No matter how hard or how high we throw a ball – even into (or out of) orbit, it still must obey the laws of gravity.

The laws of economics are exactly as universal as the laws of physics. You can stand around all day arguing with a physicist about how gravity operates but at the end of the argument gravity will be unchanged. In your argument you can propose many great new ideas about how gravity should work, but gravity will be unchanged. If you have a misunderstanding of how gravity does work and operate based on that misunderstanding it will not preclude the possibility that you could design an airplane that flies, but designing an airplane that has not crashed yet does not prove that your understanding of gravity is correct and odds are pretty good that if your understanding is flawed the plane will have a flaw in its design that will either cause a crash or make the plane less functional than a plane designed by someone who understands the laws of physics.

What we have today in Washington – among both political parties – are a bunch of people most of whom grossly misunderstand the laws of economics and who believe that the laws of economics are no less subject to revision than the speed limit on an interstate highway. They mistake the reference to an invisible hand and believe that it refers to sleight of hand. The do not recognize the fact that there is nothing tricky or supernatural about the laws that Smith explained centuries ago. He did not make them up, he simply wrote them down after decades of study and observation – like any good scientist. In fact, the name of the book is “An Inquiry into the Nature and Causes of the Wealth of Nations.”

Tags economics, free markets, government, history, laws, money

General

Legislator as Fundraiser

When it comes to raising money to run a campaign an ideal legislator needs to understand the real value of money in politics. They need to accept that a serious campaign will require more money than they can personally supply (unless they have significant personal wealth). They need to be comfortable asking people to support them financially – that requires not only being comfortable making the request, but also confident in the message they are promoting in their campaign. On the other hand, an ideal legislator should never fall into the trap of thinking that money can overcome the absolute necessity for them to be putting in hard work on the ground making their case among the people who will be casting their votes.

Here is where I know some people will disagree with me. I contend that a campaign even for federal offices can be financed entirely through personal donations by people residing within the jurisdiction of the office being sought. Contributions from businesses should be refused. Businesses and industries that are part of the district for the office being sought should make any desired contributions through the individuals within those companies. Money from Political Action Committees should not be given to specific candidates. Committees that wish to help a candidate should spend their own money in whatever way they feel will best help the candidate without the candidate ever receiving any money from them. “Abc PAC” can endorse a candidate, can buy booths saying they support that candidate, can make and distribute literature and other advertising materials for the candidate, but should not write a check to the candidate. Anything they produce should never have the candidate saying that they approved the message – in other words, the PAC and the candidate should be independent of each other with full right to voice their support of the efforts of the other.

Personally I would prefer that a candidate never run a campaign on debt although I am not ready to say that I could never support a candidate that uses debt to help finance their campaign. I would say that no good candidate should ever carry debt from one campaign to another. If they have not paid off their expenses from a previous campaign (for the same office or another office) they should not be running a new campaign.

I know that there are people who would argue that this ideal is not feasible in our current political environment and I am open to thoughts on what can and should be done, but please don’t just shoot down my ideal without explaining why we should not desire it.

Tags campaign promises, campaigns, change congress, ideal, money

General

Legislator as Candidate

My experience with many campaigns – especially for any office higher than state legislator – is that the majority of them spend their time talking about a) the fact that they need your money to run the campaign, and b) the fact that whoever they are running against is not the right person for the job. Few of them talk about the seat they are trying to fill, or the issues that are relevant to that position.

All the time spent soliciting money is time not spent promoting the candidate. It is universally understood that campaigns need funding and the candidates do have to mention that at times, but when that is the primary focus of the campaign it indicates a shallowness of purpose that seems to degrade the office they are seeking. Requests for donations should always be the sideshow of the campaign message.

Secondly, I have no reason to trust what Candidate A says about Candidate B unless I have already chosen to support Candidate A – in which case Candidate A is probably wasting time preaching to the choir.

A good legislator should not be spending their time running against an opponent, they should be running for a position. This does not mean that they cannot say anything against their opponent(s) but whatever they say against another candidate should demonstrate why the criticism is relevant to the office they are seeking. This same principle applies to what a candidate says about themselves. It doesn’t matter if a candidate bases their positive platform on “I’m a Republican” or “I’m a Democrat” or “I’m an Independent” or “I’m pragmatic” or “I’m experienced” in all cases what they say should be reinforced with evidence of why what they are (or claim to be) is relevant to the position they are seeking.

If the platform or message of the campaign revolves around anything other than the position they are seeking (even if it revolves around the Constitution) then the message of the campaign is distracting from the purpose that should be driving the decisions of the voters.

Tags campaigns, ideal, message, money

National

Big Government = Big Solutions

Post author By David
Post date August 25, 2009
11 Comments on Big Government = Big Solutions

photo credit: angel_shark

If you want to walk a thousand miles you do it one step at a time. If you want to eat an elephant you do it one bite at a time. The genius of big government is that Congress believes that since there are more than 500 of them they can swallow any elephant-sized problem in one bite time after time. They forget that putting two geniuses to work on one problem does not double their IQ nor guarantee that their solution will be twice as good. Not only do they forget that but they go further and assume that 100 Senators must produce legislation that is 100 times as good as what any one of them would propose, that 400 Representatives will produce a law 400 times as good as what one of them would come up with, and that the combined efforts of the House and the Senate will generate results better than what either chamber had passed in isolation.

Tags change congress, Elevated, government, legislation, money

National

Money Down the Drain

A little statement from an article titled “Cash For Clunkers”: Did It Work? got me wondering about the fate of three hundred million dollars.

When the $3 billion is exhausted, roughly 600,000 vehicles will have been swapped for more fuel-efficient models, based on statistics released from the government so far.

Do the math there and we find that if every single “Cash for Clinkers” deal returned the maximum $4500 to the person trading their car in there was still another $500 paid by the government for the deal. For 600,000 cars that makes $300,000,000 that went into someones pocket. (This does not count any other hidden costs of the system which may never be revealed in losses to other businesses or interest paid by people who already had a working vehicle that they owned outright.) I’d like to know how much of it went to dealers, how much went to paying for the destruction of the “clunkers” and how much was government setting up a website and processing paperwork.

One thing is for sure, we have a huge double standard operating when insurance companies are considered greedy when 2% of their gross income is profit while government is considered efficient when only 10% of their cost goes directly to program overhead.

Tags economics, government, money, taxes, waste

culture National

Government Can’t Do Charity

Post author By David
Post date July 30, 2009
12 Comments on Government Can’t Do Charity

Those pushing the need for health care reform spend a lot of time talking about the uninsured and the many unfortunate people who cannot or will not afford to pay for health care. (Mostly they talk about the “cannot pay” people except when they are proposing to have individual mandates, then they start talking about “freeloaders” who don’t get insurance even though they can afford it.) These people claim that health care is a right and (although they don’t use the word) they are proposing that the government can and should provide charity care for those in the “cannot pay” camp. The only problem is that government has been trying to do that for a long time through medicaid and medicare. The fact is that government cannot provide charity care – government can only take from those it chooses to burden and give to those it chooses to help. This warps the system even when it is meant to level the playing field.

Tags Elevated, government, health care, ideal, liberty, money, religion, thoughts

National

The Cost Issue is MIA

Matthew Piccolo has a good summary of some of the major issues that are attached to the current health care proposal. That seemed like a good complementary article to what I wanted to point out about the Health Care Reform Freight Train™ speeding through the halls of Congress – there is a major issue that has failed to be attached to the current discussion – cost reduction.

Back in ancient history (2007 through mid 2008), while the presidential election was in full swing but before the economy and the urgent need to bail out anyone with pockets deep enough to hold quantities of money starting with “$” and ending in “Billion”, health care was seen as the most important domestic issue on the campaign trail – does anyone remember that time? If you do you should remember that one of the few points of consensus on the issue between all parties was that health care was too expensive and that any attempt at a solution would have to include measures to cut the overall amount that we spend on health care. Here is a clip from Obama’s campaign website on the issue of healthcare:

we want to make health insurance work for people and businesses, not just insurance and drug companies.

Reform the health care system:
We will take steps to reform our system by expanding coverage, improving quality, lowering costs, honoring patient choice and holding insurance companies accountable.

Improve preventative care:
In order to keep our people healthy and provide more efficient treatment we need to promote smart preventative care, like cancer screenings and better nutrition, and make critical investments in electronic health records, technology that can reduce errors while ensuring privacy and saving lives.

(emphasis added)

Tags change congress, Elevated, health care, issues, liberty, money, Obama

culture National

An Affordable Health Care System

Post author By David
Post date July 8, 2009
7 Comments on An Affordable Health Care System

On Sunday, July 5, Paul Krugamn laid out his argument that affordable health care for everyone was an achievable goal.[quote] Many people would be surprised to learn that I agree with him on that. He correctly argues that we already cover the bulk of the most expensive health care patients by covering the elderly under Medicare. He also argues that the uninsured already receive much care that we are already paying for so we are already paying much of the costs for their care. Finally he argues (as a corollary to the first point) that many of the uninsured are generally young and healthy so that insuring them would cost less per person than our current per-person cost of public insurance (bringing down the average cost per person and increasing the overall cost only slightly).

His conclusion is that “extending coverage to most or all of the 45 million people in America without health insurance — should, in the end, add only a few percent to our overall national health bill.” He would be right at the beginning but eventually the nightmare spiral of skyrocketing costs would take over because the fundamental problem in our health care system would not be addressed – overuse and the disconnect between the source of payment and the subject of care.

Tags Elevated, government, health care, money, New York Times, Paul Krugman

General

Economic Contradiction

Paul Krugman and I agree on little politically (I have at times agreed with him when he was arguing that TARP was a bad idea – although we disagreed on the reasons why) and despite the fact that my assumptions about the nature of sound economics differ from his most of the time I recognize that he has a lot of expertise in the field that I can learn from. For example, I have not known enough about economics to be aware of the Setser point that he is looking at. For those like me who are new to the term, the idea is this:

high government borrowing is more than offset by net negative borrowing from the private sector

As far as I can tell, Krugman is among those who believe that the flow of money defines the health of the economy – the more the money moves (borrowing, spending, and creating) the healthier the economy. Krugman and those who believe like him will doubtless argue that when the private sector borrowing declines governments must borrow more to keep the economy healthy. In other words, lower private sector borrowing causes (or rather necessitates) higher government borrowing. Unfortunately for them the numbers appear to paint a different story. If the cause and effect relationship is not simply the reverse of that assertion then the relationship is at least symbiotic with governments trying to manage or compensate for the actions of the private sector causing an opposite, but more than equal, reaction as the private sector tries to outguess the government.

On the other hand, I believe that people in the aggregate (meaning many individuals over a sustained period of time) make economically beneficial decisions (not always the best decisions necessarily, but better than rolling government loaded dice).

What the Setser point tells me is that government borrowing drags the economy down because of the opposite but more than equal principle noted by Sester and Krugman and it prolongs the agony when those in the private sector – for whatever reason – determine that we need to slow the borrowing to set the economy back on a fundamentally sound foundation.

Tags economics, free markets, government, money, New York Times, Paul Krugman