This blog features information about the political campaign nationally and in the state of Pennsylvania. it will discuss congressional races western PA, but it won't restrict comments to those jurisdictions. On many occasions, it will feature humor, but its main purpose is to "cut the legs off" political jihad. This is a site for political grown-ups of all ages.

Location: Ambridge, Pennsylvania, United States

I have a Ph.D. from the University of Rochester (English and American Literature). I taught for 10 years at various educational institutions (Univ. of Rochester, my alma mater, College of William and Mary, and University of Georgia, where I was also Asst. Ed. of the Georgia Review. Later, I worked as a speechwriter and "thinker" at various large companies, including Phillips Petroleum, Gulf Oil, Aetna, Merck (consultant), and Eli Lilly (consultant), among many others. I'm a full-time writer and political commentator/analyst. Favorite company: AudioTech Business Books. Favorite female: my wife, Patricia Ann Maloney. Favorite politcal candidate: Diana Lynn Irey (PA's 12th congressional district)

Friday, November 17, 2006

Democrats and the Economic Philosophy of Homer Simpson

We just fought a campaign in an idea-free zone.” (A Republican congressman, November 16, 2006)

"Ideas have consequences." (Richard Weaver)

A possible solution to one cost problem? In a town with only one undertaker, people disliked him so much they absolutely refused to die.

Why am I a Republican?

In modern times – say, post John F. Kennedy – Republicans have had only a few ideas: low taxation, a reliance on individuals and families making their own decisions, a respect for life at all its stages – start to finish, and strong national defense.

Modern Democrats essentially have one idea: the redistribution of income from people who generally vote Republican to those who generally (or always) vote Democratic.

The Republicans’ few ideas are very good ones. The Democrats’ one idea may sound good in theory, but it’s bad in practice – bad economics, bad public policy.

It’s not for no reason that some call economics the “dismal science.” Most people – voters – are as up on economics as they are on astrophysics and that definitely includes politicians.

Redistribution goes up against a major force of nature, Pareto’s Law. Named after an Italian economist, the Law says that in any given economy – at any given time – roughly 20% of the people will hold roughly 80% of the wealth.

That was true in Renaissance Italy, and it holds in modern America, and even in Communist China. It was true before the Democrats regained control of Congress, and it will be true when that control slips from their hands.

For those of us not in the 20% -- and for people like me who don’t really like most rich people – there’s some good news. The 20% also pay approximately 80% -- the figures are close, but not exact in every decade – of the taxes.

At times, the figures may be 10% and 90%, or even 30% and 70%, but in general, the 80/20 Principle holds true. If there are laws of nature, and presumably there are, this is a major one.

Some politicians believe we should be able to adjust this system, basically giving the affluent 20% less – and the less-well-off 80% more. But economics turns out to be a cruel taskmaster, something like Mother Nature in a bad mood.

Consider higher education. It’s not exactly news that the costs of educating people at colleges and universities has been rising like the sales of the new Sony Play Station 3.

By the way, how do we explain the fact that some people are paying $3,000 to $9,000 (!!!) for a PS 3 that retails for $500-$600? We explain it by saying that they really, really want one and the supplies of the new product are tight.

When many are buying and few are selling, it's a great sellers' market.

For similar reasons, people will pay a lot for a college education. That's because they really want their children to have the economic and social benefits of college degrees.

Finite resources – think education at a good college or think a petroleum product like gasoline –balance supply with demand through price. Economists call it the price elasticity of demand, a fancy phrase meaning that when prices go up for a product, demand goes down.

If you raise the cost of a Harvard education from today’s $45,000 annually to $300,000 a year – or a Sony Play Station to say $20,000 – you’ll notice demand drying up, although not disappearing.

So, what do federal legislators do when the rising cost of a college education begins to hurt the pocketbooks of their constituents? They authorize more government spending on higher education, doling out more money to college students and academic institutions.

Larry Arnn, president of Hillsdale College – a rare institution that accepts NO federal aid -- recently noted that federal spending on higher education had gone up since September 11, 2006, by 133%.

In the exact same period, spending on national defense, fuelled by two wars, had gone up only 47%.

In other words, the federal government is flooding higher education with money, but that’s not stopping the costs from rising rapidly.

(By the way, we see the same kind of thing happening in health care – lots more federal spending coupled with fewer people able to afford the care.)

How can this be? Systems such as education and health care are like huge buckets with big -- and growing -- holes in them. The more money you pour in, the more that drains out.

If you as an individual have more money, you’ll probably find the costs of things you value going up. That especially holds true for those heading off to college.

It’s an economic variation on the old Parkinson’s Law: that work expands to fulfill the time allotted for completion. Maloney’s Law is that costs increase to consume the amount of money available to make purchases.

President Arnn of Hillsdale points out the irony: in trying to help students and their parents, the government actually is hurting them.

Colleges can increase the amounts they charge faster than the government can throw money in their direction. People who run educational institutions know that their price increases will result in more government expenditures for higher education.

Parents and governments become like the racing greyhounds chasing the mechanical rabbit. Hard as they try, they never catch up.

The situation is bizarre. The government is trying hard to help, but instead of gratitude it’s getting hostility and demands that are impossible to meet.

Thus, we now have Wall Street lawyers making $175,000 to $200,000 a year demanding financial “aid” for their childrens’ educations, and in some cases they’re getting it.

What that leads to a bus driver or fireperson from Pittsburgh helping pay for a Philadelphia lawyer’s kid to go to Princeton or Bryn Mawr.

People like, say, Pennsylvania's new Senator Robert Casey, Jr. think the solution is more federal spending on education. In other words, they have the problem confused with the solution.

Do the bright-eyed new Democrats in Washington understand this basic economic principle? They don’t seem to, and neither do a lot of their Republican colleagues.


Economic issues have special importance for Pennsylvania, especially the western part of the state. We've recently elected two people, Casey to the Senate and Jason Altmire to the House of Representatives.

Both men have economic views compatible with those of Homer Simpson.

A well-regarded Pittsburgh economist told me he's especially concerned about Casey's protectionism -- and the "anti-foreigner" bias of many Pennsylvania voters. The economist points out that the state's economy increasingly depends on foreign-based companies like Sony, Bayer, Glaxosmithkline, Erriccson, and many others.

He adds that such companies provide tens of thousands of good high-tech jobs.

By the way, Pennsylvania company Westinghouse is now chasing a nuclear power plant contract in China that is worth $8 billion -- and would produce 5,000 new jobs. According to Dan Fitzpatrick of the Pittsburgh Post-Gazette, most of those jobs would end up in Pittsburgh.

I wonder if Senator-elect Casey believes this deal with China "makes no sense," ond of his favorite sayings. I wonder if the Bush Administration is offering (shudder) "tax breaks" -- another pet hate of Casey -- to Westinghouse?

In close to home issues like higher education and health care, people like Casey and Altmire go to Washington with the hopes of "reforming" such matters. The reforms I fear will throw federal money at such issues, and somehow the costs will continue their relentless rise.

Note: It's true that I consider Bob Casey and Jason Altmire to be almost total dunces, and in that regard I'll have more to say about these men. My main problem with them is their running of "Hate Campaigns" against Rick Santorum and Melissa Hart. Unfortunately, in politics the "Big Lie" sometimes works. However, as the Bible suggests, what does it profit a man (or woman) if they gain the world (a seat in Congress) and lose their immortal soul? Rick and Melissa kept their souls.

Tomorrow (Saturday), the ever-popular Joe Biden. His problems go far beyond economics.


Post a Comment

Links to this post:

Create a Link

<< Home