Sunday, April 26, 2009

Comment on Wall Street Journal

In case they don't publish my comment (I'll be crushed), here it is:

Comment on "A Crisis of Ethic Proportions " by John C. Bogle

Essentially, Mr. Bogle is proposing that we try harder to be more moral and in that misses the point of Adam Smith. Adam Smith's statement, "[M]anagers of other people's money [rarely] watch over it with the same anxious vigilance with which . . . [they] watch over their own" is an indictment of human nature. Smith's position is that man's essential nature is a given, not something which can be altered. It is from this base that the invisible hand is derived. Setting up structures which rely on what man ought to be compared to what he is, is like building a house upon sand.

Yea, they published it!

Saturday, April 25, 2009

Unemployment Insurance

As a New Liberal Democrat I want to propose an improvement to Unemployment Insurance and explain the rationale behind it.

Insurance is a mechanism for transferring risk from those who don't want it to those that do. This means that as individuals we don't want to bear the risk of losing our jobs and consequently our income streams. We transfer that risk to a third party who can profit by aggregating or pooling many individual risks and making a small profit. This is a win-win situation and the reason all types of insurance exist.

Unfortunately unemployment insurance has a few flaws. First, because you get benefits for a specific period of time (say six months), there is little incentive to find new work quickly. In fact, it has been shown empirically that the length of unemployment after a job loss is positively correlated with the duration of unemployment benefits. The second problem is that unemployment insurance isn't paid directly by those who benefit from it. Instead the government forces employers to pay for it. This is a fallacy of course because the reality is that employees are paid that much less than they would be paid because of the hidden cost of their employment. Once again this creates a perverse incentive.

What I propose is this: Have employees directly pay for their unemployment insurance so that it is visible how much they are paying every month. Secondly, Let's have a sliding scale for benefits received for an unemployed person. This means that if you find work sooner than your benefits expire you don't lose the income stream you would have received had you stayed unemployed.

Unemployment is a bad thing for everyone. Our goal is to create a safety net which catches you when you fall but doesn't accidentally keep you down. This means altering incentives to motivate everyone to get off the ground as quickly as possible.

Tuesday, April 14, 2009


This is a test. Only a test. Let's try to link macroeconomic reality with specific investment recommendations and see the results. Very simply, I believe that due to the increased spending we will have inflation. Based on this the value of the dollar should decline relative non-inflatable commodities. Demand for oil should remain fairly constant or increase. Therefore a good investment opportunity would be to invest in oil. This is not really an investment in the sense that no true growth is occurring but for an individual investor you should be able to exploit this reality.

Monday, April 13, 2009

And Your Little Dog Too

Telling are the actions we take. Mr. Obama has fulfilled his promise to his daughters and given them a dog, but not a mutt like him. Given the opportunity, Mr. Obama displayed his true character, an elitist and a hypocrite. He "wanted" to rescue a dog from a shelter but alas, he didn't. He had good intentions but intentions won't cut it for Scruffie. Scruffie's days are numbered and there is no hope left. Soon, Scruffie will be euthanized, a euphemism for an ever long sleep.

How hard would it have been to have kept that promise, to fulfill the noble ideal of helping a downtrodden canine? Not hard, but harder than the minuscule sacrifice required. Obama, the embodiment of symbolism, sent a strong signal with his choice. Mr. Obama's symbolic failure unmasks the veil of shared sacrifice. He preaches shared sacrifice, but neglects to tell us to whom we are sacrificing. God does not give himself sacraments and he doesn't get a mutt.

Friday, April 10, 2009

Racial Profiling to its logical conclusion

I am watching C-span and I hear condemnation of racial profiling. They are talking about illegal immigrants and I couldn't help thinking about the inevitable conclusion. Check everyone's status because it wouldn't make any sense whatsoever to check hispanics even though they make up the majority of illegal aliens. That's brilliant.