Growthology

Kling meta analysis

Arnold Kling:

I think that perhaps the most important trend of the past thirty years is the increased importance of cognitive skills relative to physical labor. Obviously, this has been going on for more than just the past thirty years, but during the past thirty years we saw an acceleration. This has had a number of consequences:

1. It changed the role of women. Their comparative advantage went from housework to market work.

2. This in turn, as Wolfers and Stevenson have pointed out, changed the nature of marriage. Men and women look for complementarity in consumption rather than in production.

3. This in turn leads to more assortive mating, with achievement-oriented men looking for interesting mates rather than for good maids.

4. This in turn leads to greater inequality across households. It also fosters greater inequality among children. The children of two affluent parents are likely to have much better genetic and environmental endowments than the children of two (likely unmarried) low-income parents.

5. Inequality is exacerbated by globalization and technological change. If your comparative advantage is basic physical labor, you have to compete with machines as well is with workers from the Third World.

The net result is an economy that has improved considerably for people with high cognitive skills, but which has improved only somewhat for people with relatively low cognitive skills.

Picturing U.S. GDP growth Q3 (data from this morning)

Growth is back, and we can all hope this is the start of the rebound:

The main surprise to me is that imports have started weighing down GDP growth so quickly in the recovery. Exports added roughly 1.5 points while imports took away 2.0. All this happens while the dollar is losing value?  Maybe.  Maybe just rebalancing the wild swings of the last 3 quarters. 

Back to the VC Future?

The future of the venture capital industry? With ten-year returns tumbling toward negative numbers, lots of people rightly wonder where the venture business goes from here.

My argument has been that its future needs to look a like its decade-plus ago past. Josh Kopelman of First Round echoes that, with a post up that (in addition to saying nice things about me) has some great nuggets about the venture industry’s early days.

Among other things, Josh points out “… that in the 1980's there were just 12 venture funds above $250M.  Today there are over 408 - and 30 over $1B.  And most of this fund-size growth took place in the last 10 years.”

And one more nugget:

“the initial funds of Accel, Kleiner Perkins, CRV, Mayfield, Venrock, Greylock, NEA, TA & Sequoia COMBINED were under $125M!“

Spot-on, Josh. Bringing the venture industry back to health doesn’t mean financial engineering, exotic funding options, or entrepreneur-unfriendly deal terms. It means, more than anything else, a return to its roots.

More here.

Pernicious Dystopian Myth, October edition

Try to fill in the blanks (I know, I know, this kind of boilerplate crosses my eyes every few weeks as well, so it could truly be anything ... but this is from a very legit news organization, seriously).

They hope that a set of theories they call "________ economics" will improve upon neoclassical theory, or even replace it altogether.  But even this nascent field finds itself divided, as evidenced by the vigorous and candid back-and-forth debate last week over where to go next. One camp says its models prove the world is headed toward a dramatic economic collapse as ________ takes hold, while another camp believes there is still time to turn the ship around. Still, all ________ economists see only very bleak prospects for the future of modern civilization, putting a whole new spin on the phrase "the dismal science."

Your choices are:

A. Singularity / technological acceleration and automation
B. Rawlsian / globalized labor arbitrage
C. Heterogenous / insolvent overconsumption  
D. Biophysical / energy scarcity

Skip below to the see the answer ...

 

 

 

 

The answer is D.  And it comes from the New York Times, hat tip Free Exchange / Tyler Cowen. And here's more:

In 1926, Frederick Soddy, a chemist who was awarded the Nobel Prize just a few weeks before, published "Wealth, Virtual Wealth and Debt," one of the first books to argue that energy should lie at the heart of economics and not supply-demand curves.

Soddy also criticized traditional monetary policy theories for seemingly ignoring the fact that "real wealth" is derived from using energy to transform physical objects, and that these physical objects are inescapably subject to the laws of entropy, or inevitable decline and disintegration.

The sharpest difference between biophysical economics and the more widely held "Chicago School" approach is that biophysical economists readily accept the peak oil hypothesis: that society is fast approaching the point where global oil production will peak and then steadily decline.

Let's take this seriously, and take it apart carefully.

1. I suspect a great many economists agree with the notion of peak oil, and it is a question of when and how, not if. Given a finite energy source and its increasing usage rate, will it deplete? Yes. The more interesting question is what happens to oil prices, and here I think neoclassical supply & demand is a great tool to understand the consequences.

2. Just labeling your straw man as the "Chicago School" is not much of an argument. Please. Stop.

3. The core argument of BPE is that all economics, and hence economic growth, is about physical goods. That all wealth, all consumption, all value comes from physical things and their production.  This takes energy. And since energy is finite, QED, there is a thermodynamic limit. I think there are four problems in that chain of logic. (1) efficiency in energy consumption will continue (see Obama, smart energy grid), (2) efficiency in goods consumption is a dominant trait of economic growth, and impossible to violate (see the fixed quantity of atoms on Earth, endogenous growth theory, Paul Romer), (3) services are non-physical and an expanding component of GDP (see Poetry, Music, Medicine, Art, Athletics ...), (4) the Sun's energy is finite but not in our time horizon (see Sun).

4. Before the hate mail starts rolling in, keep in mind that I am a member of the Pigou Club. I'd love to see the U.S. replace taxes on labor with taxes on energy. It would do the world a world of good. And help economic growth! 

Advice for Jeff Bezos (Amazon on the Mississippi?)

The eBook is getting very, very interesting. It has inspired one of the wackier posts I have ever written ...

WIRED blog epicenter says the Barnes & Noble brick and mortar locations gives it a huge advantage, which is my gut instinct, too. 

This eBook latecomer, founded in 1873, has something Amazon cannot replicate: 1,300 or so physical locations (including college stores) across all 50 states. Ironically, the same high-overhead stores that helped Amazon undercut Barnes & Noble’s book prices could give the bricks-and-mortar retailer an advantage at selling e-book readers, for at least three reasons.

First, Barnes & Noble’s stores give consumers a place to play with the nook, the Que, and other e-book-reading devices the chain plans to sell, before taking the e-book plunge. This is crucial, because e-books represent a far bigger leap for readers than the one music fans made when they switched from CD to MP3 players that let them use the same headphones. Readers who are reticent to forgo “dead tree” reading material for some new-fangled gizmo might change their minds after seeing the nook and Que proReader in action.

On the other hand, the only way to test a Kindle before you buy is if you can borrow one. And while you can test-drive the Sony e-book reader at Sony Style stores, there are only 50 or so of those nationwide, and other retailers that sell that device don’t allow customers to try them out

The intermix of online and meatspace retailing is, well, mixed. Gateway famously faceplanted with its meatspace effort. I even visited one, and was a loyal Gateway(2000!) customer. (I loved them for the ads in PCMag, but those were the days, eh Jimmy?). And then there's the Apple Store. A huge success so far, and probably the engine for continuous near-term dominance in iPods and now smart phones.

Sony Style has been a mixed effort, I think. Of course, I did get my first physical touch of an e-Book there. And I've been fascinated by the undead nature of Radio Shack. What DO they sell? I mean, I bought my first laptop there actually - a Tandy? And I keep finding myself there once a year. But every time I walk by a Radio Shack in the mall (any mall), it just feels like a massive decades-long missed opportunity.

Keep in mind that I am, as many Kauffman folks are, a Kindle early adopter.  My 1.0 Kindle is here beside me as a write. (I know, I know, I said I never early adopt. But if this hint doesn't get me a free review version of a 3 or, dare I say, 4 -- which I apparently have to disclose or refuse or something, as if I were a President getting honored by foreign royalty -- then what is this blogging any good for?)

Speaking of missed opportunities, maybe the marriage of virtual and actual reality is an essential part of any 21st century business plan. If so, what should online retailers do?

My advice: Jeff Bezos should get Amazon in the brick and mortar space in a big way. He knows better than to get tied down with a chain of stores in malls and strip malls where his baby would morph into the Radio Shack of tomorrow. No, what he needs is a theme park sized Ultimate Store. Like the Pyramids of Giza and the Library of Alexandia combined.

It should be a wonder of the world ...and could double as a warehouse if you think about it. Put the Amazon Pyramid somewhere in the middle of the continent... though astride the Missippi river would be ironically bizarre. Maybe Denver. Or hey, why not Kansas City?

• It could have rides like a theme park -- Disney did it for Milne's Pooh, why not for Rowling's Harry Potter?
• It could have amazing authors give guest lectures and shows every night and day -- Vegas does it for Celine Dion, why not Stephen King? Why not Steve Martin? Why not Steve Wozniak??
• It could have long tail sections for every four and five word category imaginable. SF/SpaceOpera/Hard/Postsingularity. There is no meatspace analogy here, which is why it would be so cool!
• And don't forget, comic books are BOOKS.  Marvel and DC would want to partner with Amazon instead of Disney. Wait, scratch that.

And best of all, I would go there. Every summer. With my kids. And we wouldn't lose them, like we do at Barnes and Noble sometimes. And instead of partnering with Starbucks, they could partner with Red Bull and party all night. Maybe it's just a small minority of us who are freaksih book lovers, but the final test of any genius idea is solpsistic: I think my idea is great. And remember: You read it here first!

Uncle Sam, Wage Czar

There are actually two wage control issues in play right now, and I'm not sure if anyone has noticed. One is the "Pay Czar" setting high-end pay caps at financial firms. The other is, um, health care (Does that count as being in the news still?  Or has it actually outgrown the news? Heck, whole news mediums may die off before this sucker gets settled).  Actually, the issue is bigger than health care but the concept is a broad attempt by the government to mandate not just how much employees at all firms are paid while also mandating how they are paid (i.e. what benefits are mandatory). 

An activist government will naturally want to enhance the welfare of its citizens, but absent the ability to legislate gold into their pockets, will instead demand that employers place the gold. That's why I love it when Congressmen say "Americans deserve a raise" and then demand that somebody else (small business) pay it. More precisely, governments will declare certain workplace minimums: minimum wages, workplace safety rules, and mandates to provide certain benefits. Economists have long noted that such regulations cannot do more than displace cash income. See Tyler Cowen's recent essay in the NYT:

The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages.

My takeaway: government efforts to slice the pay pie into mandated nuggets does violence to individual freedom, and probably to employment growth as well. Nine times out of ten it is an idea with unintended consequences (i.e. implicit marginal tax rates that approach or exceed 100 percent ... why work?).

Turning to executive pay, Scott Jagow reports on the PBS interview with Ken Feinberg, the Pay Czar himself.  Here is how he responds when asked why only the big seven firms (those that received “exceptional assistance” from the government: AIG, Bank of America, Citigroup, GM, GMAC, Chrysler and Chrysler Financial) are having their pay forcibly controlled by Uncle Sam: 

Because it — it is — the — the private marketplace should be able to have the flexibility to adopt these programs on their own. The president has said, the secretary has said, we do not want to micromanage these companies, beyond these seven.

Right answer, wrong logic.

Feinberg's dodge that the rationale for not controlling pay elsewhere is to give them "flexibiltiy to adopt" pay caps on their own is terrible.  Scary terrible. The real answer is that the government has no right telling a private firm how to pay its workers. 

Naturally, some voices warn that pay controls are a terrible precedent that can justify more controls with lower conditions, such as companies that have ANY loans from the government, or any SUBSIDIZED loans, or (next) any firms INCORPORATED in the U.S., or (next) any firms using U.S. CURRENCY. Welcome to the slippery slope. Other voices actually want those kind of pay caps now.

My sense is that Feinberg is getting it just right. The pay structures make a ton of sense, and have my support. And so long as the pay is only being czared at firms that are owned (or bailed out) from Uncle Sam, it is even better. There is a clear line (in the sand) dividing firms under fed control and not, with the emphasis on not. It is a great incentive not to be one of those firms! 

The bigger issue with wage controls is not high-end wages, but low end. In terms of total dollars, Feinberg isn't limiting pay so much as he is restructuring it: less cash, more long-term stock. Essentially, this isn't costing taxpayers a dime. But health care is a different matter.  Same with the "Recovery Act" that had a price tag of $787 billion. Both efforts are founded in part on the logic that Uncle Sam has the right to set private wages, in form and substance. 

Now maybe the whole health care debate will end up being worthwhile, as I have said many times -- IF it changes the tax treatment of health insurance (and levels the playing field for entrepreneurs). Likewise, the stimulus actually had some nice tax cuts on payroll that I have long advocated. But it really shocked me to learn that the main spending parts of the stimulus required private firms to pay "prevailing wages" in order to get any of the money, which has delayed getting money disbursed as recently as September (sayeth the GAO, hat tip Jay Hancock).

I think it is fair to say that when you spend 5 percent of GDP, you should do it with no red tape that favors one class of workers (unionized, politically connected) over other classes of worker (low-skill, fragmented). So if you want to be angry about wage controls, look at Main Street for the invisible backhand of Uncle Sam, not Wall Street.

A Modern Labyrinth, Only Without the Minotaur

The interminable debate over health care reform has understandably focused on the outcomes of patient care: life expectancy, survival rates from various diseases, etc. Frequently, these are discussed in comparative terms--Sweden spends X amount on health care compared to the United States but has a life expectancy nearly three years longer; patients in the U.S. have better five-year survival rates for this type of cancer but not that one. And so on. (Notwithstanding that comparisons of life expectancy across countries can be misleading. The U.S. has a more heterogenous population than other countries, particularly in Scandinavia. And historical inequities have undoubtedly contributed to the continuing disparities we see in the U.S., something no health reform bill will remedy. I also haven't seen much reference to studies showing that pharmaceuticals have added much more to U.S. longevity than actual programs. But the former is attacked while the latter are celebrated.)

Yet what about the process of patient care? Is it important? Should we care about it? I ask because we have a family friend who is now at the beginning of her third pregnancy. She has seen the same OB/GYN for the previous two pregnancies; she also has an endocrinologist who helps manage the pregnancy. She has seen both doctors for five years and has been on the very same medication for all those years. And yet, neither office seems capable of smoothly administering the necessary processes. After labs were drawn at her first OB/GYN visit, the office called the next day with the results yet didn't leave a message. Nor did they call back. Our friend only discovered that they had called, a week later, because she happened to scroll through caller ID. Worse, when she called the office, curious about her lab results, the nurse said, "Oh, yes there is a message here for you: your results are abnormally high."

So that's crazy. Lab results are out of whack and the office tries once, with no message, to contact the patient? This isn't about incompetence on the part of the physician: he knows nothing about the incommunication and if he did, would be quite upset at the lack of proper care for his patient. Once those results had been discovered, moreover, they needed to be relayed to the endocrinologist who prescribes the medicine. But could the OB/GYN do this? Of course not! Because we don't adequately share information across practices! So our friend had to call up the specialist and request a higher dosage herself. Fine: but lo and behold it turns out the the endocrinologist's office can only do that at the request of another physician's office--and they won't send over the delayed lab results! Still worse, the assistant at the second office says it's no big deal to be without the higher dosage (she's pregnant remember) since they can get our friend an appointment next week! How's that for patient care?

Granted, this is only one story from real life. Undoubtedly, plenty of readers have stories of both horror and helpfulness, and we can't really plan a comprehensive reform package based on a series of anecdotes that may not adequately convey the true state of things.

But our friend's dilemma illustrates a larger problem. Yes, we have issues of cost and uninsured and underinsured. But we have this giant administrative labyrinth built into health care that plagues the system and its core, patient care. The provider-patient relationship is often disrupted to the point of inadequacy and perhaps harm. Bureaucracy deadens accountability and our friend's plight perfectly illustrates this. Competition amongst insurers, controlling costs, a public option--these will not cut through the labyrinth. Neither, it seems, would more consumer-empowered care if consumers can't fight through the administrative maze.

So why do we think that the cure for bureaucracy is more bureaucracy? This is a Washington solution, of course: any broken system can simply be repaired by affixing a new system on top of it. Our laws are written by people who have forgotten (or never knew in the first place) what it's like to be without insurance, to be one catastrophe away from financial disaster, or even to have to attempt to navigate bureaucracy in trying to get your necessary medicine or your own lab results. Instead, Senate delegations journey to hospitals to view "mock code" situations and then issue grave statements on the need for such and such reform. This is their insight into health care? Please.

Where Have All the Loans Gone?

Last week the Obama Administration announced the expansion of a few Small Business Administration (SBA) loan programs, raising the cap on 7(a) loans, increasing the size of "microloans," and offering more aid, via TARP, to community banks. Questions will persist about the efficacy of SBA loan programs for new and small companies, as well as the effect of TARP restrictions on community banks, but two things are immediately clear. 

First, business loans have plummeted during this recession (via Econompic):

Worse, they show absolutely no upward trend in recent months:

(Source: John Mauldin.)

Any expansion of capital for businesses, even from the SBA, should theoretically help in some way. Credit is the oxygen line of new firms and they have been courting asphyxiation in this recession. 

Second, new and young businesses are the primary source of net job creation in the United States, yet this fact of economic life has for the most part been lost on policymakers (and media) obsessed with restarting the hiring process at large, established companies. Any recognition, therefore, of the importance of new firms and their access to capital can only be a good thing.

These steps aren't a silver bullet, mind you, and officials in Washington and every state capital continue to cast around for anything that will address (or appear to address) the dire employment situation this country faces. Nonetheless, President Obama's announcement is a step in the right direction and it comes on the heels of the creation within the Department of Commerce of a new Office of Innovation and Entrepreneurship. New firms are the drivers of job creation, and now Washington is finally turning to them.

Wildavsky on Global Ed Rankings

Here's a great new article by my Kauffman colleague and friend, Ben Wildavsky:

The [University of Malaya]'s moment of glory was fleeting—one year long, to be exact. When the next international ranking came out, UM had plummeted, from eighty-ninth to 169th. In reality, universities don’t change that much from year to year. And indeed, UM’s drop turned out to be caused by a decline in a questionable measure of its reputation, plus the discovery and correction of an error the university itself had made. After the drop, UM was pilloried in the Malaysian press, and widespread calls for a royal commission of inquiry into the unfortunate episode followed. Within a few months, the vice chancellor, who had been vilified in the media, was effectively fired when he was not reappointed to a new term.

The instrument of Yaacob’s rise and fall was a periodical called the Times Higher Education Supplement, published by Rupert Murdoch’s News Corp (until a 2005 ownership change). For the past five years the newspaper has offered a ranking of universities around the world in a more-or-less open effort to duplicate internationally what U.S. News & World Report has done in the American higher education market. The impetus for the rankings was straightforward: “Particularly where research is concerned,” John O’Leary, the creator of the Times Higher rankings and the publication’s former editor, explained in an essay accompanying a recent installment, “Oxford and Cambridge are as likely to compare themselves with Harvard and Princeton as with other UK [institutions].” Universities are operating “at a time of unprecedented international mobility both by students and by academics”; furthermore, “governments all around the world have expressed an ambition to have at least one university among the international elite.”

Although Times Higher Education, as the publication is now called, wasn’t the first effort at producing international rankings, it has become the most controversial; its assessment of the global university pecking order is widely read not only among university administrators and students, but among government officials and politicians keen to assess their place in a world where educational achievement is a proxy for power. And for understandable reasons. Like most other economic sectors, higher education is fast becoming a global enterprise. Students and professors hopscotch from nation to nation more than ever. Western universities set up branch campuses in Asia and the Middle East, catering to huge demand for the best diplomas. In places like South Korea, Saudi Arabia, France, and Germany, a fierce race is in progress to create world-class research universities. Times Higher is now one of the chief de facto arbiters of who’s winning the knowledge industry competition.

Economist.com video on migration and remits

Very interesting.  Notice how the Latin to North American flow is on screen for just a few seconds.  Recommended.  http://www.economist.com/blogs/freeexchange/2009/10/video_of_the_day_1.cfm

Early Adopter Tax

Why buy a product for a premium price when it is first launched?  Among my friends, I am a notorious late adopter, but the iPhone changed my mind.

Reading this post from Patrick at cashmoneylife.com reminds me of my old ways.  Good stuff.

I’m not the kind of person who needs the latest gadgets. I don’t enjoy constant upgrading, tinkering, and tweaking, and I don’t want to buy something when it launches, only to see the performance double and the price drop by half in the first year. But I understand why some people do, and that’s cool too. Early adopters spur the industry and lead to the development of new and cheaper technology. It comes with a price though, which is often known as the early adopters tax… and it’s something I try to avoid.

Thoughts on the iPod Touch

First off, I can say this was definitely worth the wait and now I understand what all the fuss is about! The functionality is intuitive, the apps are great, and it’s just plain fun. I’ve already downloaded apps from the iTunes Store, including the Kindle Reader, Stick Wars, and a couple other games and tools. I look forward to getting a lot of use out of my iPod Touch. But of course, new technology leads to a new dilemma…. now I want an iPhone! But I’m not getting one… yet.

Entrep Movement Video

A few weeks ago, Kauffman launched what I call the 'Entrepreneur's Movement" at the INC500 conference. The website is http://buildastrongeramerica.com/.

I had to miss it the launch event but heard it was awesome (Inc and the Movement stuff both) -- I loved the INC event last year and hope to be there again in 2010.  One aspect of the launch was a video area where entreps could give voice to policymakers, and here is a summary of those clips.  As usuall, production quality from our small team of guys is great.

What the Future Will Look Like

Via here.

In Defense of Venture Capitalists

Paul Kedrosky has a wonderfully amusing and insightful piece over at TechCrunch on why VC-bashing may have run its course:

Wouldn’t it be nice if venture capitalist drove more innovation? Of course it would. But that’s like saying “Wouldn’t it be nice if supermodels followed you home?” Of course it would, but it’s fanciful. Innovation is one input into the startup business, not its main output. For startups or VCs to pretend otherwise is a speedy path to going bust. Venture capital investing is hard enough without turning it into a Disney-style dream factory for self-styled social engineers.

Sectoral reallocation is real (and often painful)

A survey published today by the Springboard Project (hat tip WSJ Realtime Econ -- go there for link to survey release) is fascinating reading. Labor demand is shifting towards higher skills.  Workers are open to retraining but unsure which skills will be in demand. History says the understanding the jobs of future is elusive (WSJ: "An article on Monday pointed out that in 2003 a quarter of Americans worked in jobs the Census Bureau didn’t even list as occupations in 1967").

This doesn't mean that the sectoral model in macro is superior to the hydraulic view, per the excellent discussion Jim Hamilton covers here. But it does tell me that the natural dynamism of job churn -- anxiety inducing in the best of time -- is especially painful now.

Will more troops help Afghanistan grow?

That is the question.  Ultimately, the American strategy for counterinsurgency in Afghanistan, Iraq, or any other failed/post-conflict nation has to be centered on economic growth as the objective.

The shame of the current debate over U.S. troop levels in Afghanistan is that I can't even tell if it matters. Peter Beinart makes a compelling argment that Afghanistan is not Vietnam ("It's worse," he says).  Beinart's piece is a brilliant analysis on multiple leves, but I tend to come back to the numbers (see this old piece here on Iraq v Vietnam troop levels) and see a stark difference.  500,000 versus 20,000!

Finally, in Vietnam, we tried. In 1968, the US had over half a million troops there, and was spending 2.3 percent of GDP. In Afghanistan, as a percentage of GDP, we’re spending less than one-seventh that, and only recently got much above 20,000 troops. When doves say that what America needs in Afghanistan is a smaller force that eschews nation building and focuses merely on killing terrorists, they are proposing the same minimalist strategy that Donald Rumsfeld pursued for almost five years.

Does all this mean we should flood Afghanistan with U.S, troops? Not necessarily. Given the massive rise in Afghan corruption; the decline in support for NATO’s occupation, and the disastrous presidential election this summer, perhaps it is too late. But even if it is, let’s not flatter ourselves with Vietnam comparisons. In Vietnam, we lost because the war was unwinnable from the start. In Afghanistan, we had a grateful population, an unpopular enemy and a just cause, and we frittered it away.

I tend to blieve that the troop ask from General McChrystal is just not quantitiatively a big deal. It is surely a big deal politically! But isn't a bigger deal the question of longevity? If the Afghans and Pakistanis had a sense of firm resolve that U.S. forces intend to stay for the duration, that would probably matter a lot. And isn't a bigger deal whether we continue to mix the war on drugs with the war on terror? My guess is that we can win one of those wars, or lose both.

Benevolent Social Planner? (a comment on David Brooks' column)

Greg Mankiw says this is "David Brooks at his best", but I was appalled. I usually admire Brooks, his insights, his reporting, his writing. But this?  Everything from the characterizations to the predictions are unimpressive. The essay sets up two figures as icons of benevolent social planning (Mr. Bentham) and libertarianism/federalism (Mr. Hume).

Apparently, Bentham is "a great lunch partner" while Hume is frozen by indecision over the complexity of the menu and, when it comes to policy advice, the world. Bentham has terrific advice about what policies work best to organize energy policy, health care policy, with confidence and expert insight. Hume, on the other hand, can be found "at his desk with his head in his hands. 'I don’t know the best way to generate clean energy,' he’d whine, 'and I don’t know how technology will advance in the next 20 years. Why don’t we just raise the price on carbon and let everybody else figure out how to innovate our way toward a solution? Or at worst, why don’t we just set up a simple cap-and-trade system — with no special-interest favorites — and let entrepreneurs figure out how to bring down emissions?' On health care, he’d be much the same. He’d spend a few days reading reports. Then one day you’d find him in the fetal position, weeping. He’d confess that he doesn’t know enough to reorganize a fifth of the economy."

Isn't a little offensive to characterize the philosophy of George Washington, James Madison, and Thomas Jefferson as a whimpering egghead? 

It is not the daunting complexity of society that stays the voice of liberty, it is the respect for thousands of years of human history with the countless plans gone bad.

Brooks anticipates that Bentham will win and that the big, technical plans to reduce global warming and provide universal health care will pass Congress. Now that's funny, because I think the big planners are about to experience 12 months of crushing legislative defeats (there are enough libertarians in the Democratic party to scotch the big plans). But ti doesn't matter. The battle of ideas is not won or lost in Congress, or even in elections, but in the long assessment of history. Just ask Qeng Ho.

Cato's Downsizinggovernment.org

DC is filled with hot air about controlling spending, but the think tank CATO takes that mission seriously. Here is the main text from the page of the Dept. of Agriculture:

All agricultural and rural subsidies in the Department of Agriculture’s budget should be abolished to save taxpayers $25 billion annually. In addition, agricultural trade barriers should be repealed. Current agricultural and rural policies are economically and environmentally damaging, and they create unfair transfers of wealth.

The department's food subsidy activities—food stamps, school lunches, and WIC—are properly local and private functions. They should be devolved to the states, with each state determining appropriate policies for its own residents. Such reforms would save federal taxpayers $79 billion annually. Some states may decide to fund food subsidies on their own, but competition between the states would likely result in smaller, more innovative programs.

Forest Service subsidies to state governments and private businesses should be ended. Congress should also explore options to transfer the national forests to the states or to new independent trusts that would be self-funded from forest-related receipts.

The table shows that these reforms would eliminate more than 90 percent of the USDA’s budget, saving federal taxpayers $108 billion annually, or about $923 per U.S. household. Under the proposal, the USDA would retain responsibility for animal and plant health inspections, food safety, grain and packing inspections, and conservation activities.

Check out downsizinggovernment.org.

The site is an impressive piece of work, on substance and style. Makes me wonder what other government related websites have you seen with such an efficient, informative, and clean design?