Point of No Return: 90% Debt/GDP

When a nation’s debt reaches 90% of its GDP, it crosses a bright red line after which recovery is nigh impossible. We explain why that is true.
Point of No Return: 90% Debt/GDP
By: George Noga – February 18, 2018

       Our last post (Fiscal Gorillas) was a lead-in; if you missed it, try to read it first; go to our website: www.mllg.us. It is accepted economic wisdom that once a nation’s debt exceeds 90% of its GDP, there is no recovery. Is 90% an arbitrary ratio plucked from the ether? No. Governments have been borrowing money for 600 years and not one has recovered from a 90% ratio without experiencing social and economic upheaval and a lost generation. Why is this so and why is 90% the magic threshold?

       We begin with some numbers. The US public debt is now $14.8 trillion (total debt is $20.5 trillion) and GDP is $19.7 trillion. This makes the public Debt/GDP ratio 75%. The total Debt/GDP ratio is 104%, but that is not the relevant metric, as the $5.7 trillion difference between public and total debt consists mainly of non-interest bearing intra-government debt. If GDP grows at 2% (it is growing faster, but we must factor in recessions) and if debt grows at 5% (its current rate), the ratio will reach 90% in 2023 and 100% in 2027. Even if my assumptions are off, it is clear the US is on a trajectory to breech 90% and then 100%  in about 5 and 10 years respectively.

Mathematics of a 100% Debt /GDP Ratio

      I discovered a simple but gripping way to look at the Debt/GDP ratio. When the ratio is at 100%, i.e. debt and GDP are equal, it is easier to grasp the crisis. In 2027 both GDP and public debt are projected to be $24 trillion. When these metrics are equal, the economy must grow at an identical rate as the debt to prevent a death spiral.

     If GDP increased only 2%, we would have to limit the debt increase to the same 2% merely to maintain the ratio at 100%. However, if debt continues to grow 5%, there would be added debt of $720 billion per year (compounded) and the ratio would skyrocket. Given our aging demographic, out of control Social Security and pensions along with exploding health care costs, we will be lucky if debt grows only 5%.

     GDP historically has grown about 3% – but much less in recent years. The debt is growing at 5% and that is under highly sanguine economic conditions. When we have the inevitable recession (we are now in the 9th year of an expansion), GDP growth will turn negative and debt will balloon to 8% of GDP or even higher. It doesn’t take advanced econometrics to quickly see this is a recipe for disaster.

      Then there is the matter of interest rates on the national debt. As the US slouches toward a 100% Debt/GDP ratio, buyers of Treasury bonds will require ever higher interest rates to compensate for the greater peril. The historic average composite rate (across all maturities) on Treasury debt is 6%; if that went to just 7.5%, it would mean interest on the debt would constitute $1.75 trillion per year, or over 30% of the budget. Long before that happened, the Minsky Moment (point of no return) would have passed and the United states would begin to resemble Greece, Zimbabwe and Venezuela.

      The only possible ways to avert default are: (1) massive spending cuts on the order of 30% which would shatter the social contract; (2) draconian tax increases which would halt economic growth; (3) runaway inflation, the cruelest tax of all; and (4) repudiation of the debt. The ensuing crisis would not be limited to the economy. We will be lucky to maintain the rule of law and America as we know it will disappear.

    The World Bank asserts that the Debt/GDP tipping point is reached at 77%. No nation has ever escaped a 90% ratio. The United States of America today stands at 75% and will reach 90% circa 2023. The clock is ticking but the band plays on.

Our next post February 25th revisits Antifa and fascism.

The 900-Pound Fiscal Gorillas in Our Midst

America’s crisis of spending, debt and deficits is a slow motion train wreck; we are sleepwalking into a fiscal death spiral and are near the point of no return.
The 900-Pound Fiscal Gorillas in Our Midst
By: George Noga – February 11, 2018

       During this year I will write more about the crisis of spending, debt and deficits; this primer identifies the 3 root causes of the impending train wreck. The trigger will be a fiscal crisis when the debt bomb explodes, rendering the US insolvent; however, the crisis will rapidly transmogrify into civil chaos and jeopardize the rule of law.

Health Care – Root Cause #1

       It is impossible for any society to pay for all health care demanded if it is free or heavily subsidized. It must be rationed in one form or another. Private insurance rations it by cost, while government rations it by denying care, lengthy waitlists and death panels. The problem is exacerbated by third party payments; when government pays, costs skyrocket. If we eliminated or reduced third party payments, as is the case with dentistry, laser eye surgery and cosmetic surgery, costs would be stable. The only hope for controlling health care costs lies in free markets; all else is doomed.

       Medical progress is astounding. In 1900, infectious diseases caused 37% of deaths; today it is 2%. People over 65 were only 18% of deaths; now it is 75%. We have gone from conquering disease to managing chronic conditions; half of Medicare patients have multiple chronic diseases – any one of which once would have killed them. Of all medical spending, 80% is on four chronic ailments: cancer, heart disease, Alzheimer’s and diabetes. One-third of all Medicare spending is in the final six months of life. Federal health care spending has ballooned from 3% 50 years ago to 30% today.

Social Security and Pensions – Root Cause #2

     Social Security faces myriad problems. (1) It is caught up in a demographic time bomb; as the population ages, there are ever fewer workers to support ever more retirees. (2) Life expectancy keeps rising, from 60 when SS began to nearly 80 today. (3) Chronically low bond yields have savaged SS. (4) Congress is gridlocked and refuses to act. SS is now 25% of the budget and heading for the stratosphere.

    Social Security is but one part of the pension bomb. State and local pensions are vastly underfunded. Mushrooming pension costs (due to public sector unions) threaten future retirees. The goosed up spending on pensions (and health care) has crowded out infrastructure spending; our roads, bridges and airports are a disaster. Health care and pensions suck all the oxygen out of the budget, leaving behind only chump change.

Interest on the National Debt – Root Cause #3

    The ratio of US debt to GDP is 104% for total debt and 75% for public debt. No country, in 600 years of government borrowing, has survived a public debt/GDP ratio above 90%. We will exceed 90% in a few years. Interest currently consumes 9% of the budget but is headed for 15% by 2020. When (not if) we experience another recession or higher interest rates, that number easily could snowball to 20% or even more.

The Fiscal Train Wreck in Our Future

     By 2020, Social Security will suck up 36% of the budget, health care 34% and interest 15%. That adds to a gobsmacking 85% and they will continue to burgeon after 2020. Defense is 12%, leaving only 3% for the rest of the government. During the 2020s, the three root causes will gobble up the entire budget and then some. It won’t stop until the train goes over the cliff. If something cannot go on forever, it won’t!

     America is sleepwalking into an existential crisis and a fiscal death spiral that is totally predictable. The train that is America is barreling toward a fiscal cliff. Almost everyone sees the train about to go over the cliff, but is inured to the terrible tragedy unfolding before their eyes – and there is no deus ex machina anywhere in sight.

Our February 18 post presents a unique perspective on debt and GDP.

My Alar Epiphany Thanks to Meryl Streep

Junk science flourishes because progressive dogma is antithetical to objective reality.
My Alar Epiphany Thanks to Meryl Streep
By: George Noga – February 4, 2018
       The zeitgeist of 21st century America (and the world) is the increasing inability to distinguish fantasy from reality, junk science from genuine science, witch doctors from authentic doctors and fake news from real news. Like most Americans, I once trusted science and the media; however, I had an epiphany during the 1989 Alar hysteria. I will share my personal journey with you; but first, bear with me as I remind you about some of the more notable examples of junk science during my lifetime.
       Laetrile, pesticides, fluoridation, overpopulation, BPA, organic food, EMFs, global cooling, acid rain, ozone hole, Alar, silicon breast implants, falling sperm counts, killer bees, GMOs, vaccines and autism, global warming, swordfish overfishing, mad cow, SARS, landfill shortage, avian flu, thiomersal, swine flu, dioxin, satanic day care child abuse, PCBs, pink slime, campus rape crisis and artificial sweeteners.
      The list goes on: paper consumption, cell phones and brain cancer, gender wage gap, Superbowl spousal abuse, anti-packaging paranoia, fracking, plastics, acrylamide, ethanol, bio energy, infant mortality worse than Cuba, Keystone XL Pipeline, Arctic sea ice, antibiotics in animals, caffeine, Dakota Access Pipeline, baby powder and cancer, E-cigarettes, electric blankets, X-ray scanners, sodium and ad infinitum.
      I still trusted science and the media in the mid-1980s when a neighbor, whose children attended the same day care as ours, contacted me about EMF (electromagnetic field) risks from high voltage transmission lines – then being hyped by the media as the panic du jour. Our children’s day care facility was located directly under such lines. I researched the issue and concluded there was nothing to worry about; nevertheless, we both withdrew our children. The EMF scare turned out to be 100% junk science.
       Although chastened by my EMF experience, I continued to drink the kool-aid until 1989 when mass hysteria erupted over Alar, a chemical sprayed on apples to prevent rotting. I was in agriculture and knew people who used Alar. After much research, I concluded Alar was harmless; my conclusion soon was ratified by, inter alia, the UN, AMA, Surgeon General, FDA, WHO and the National Academy of Sciences.
      The Alar panic began when 60 Minutes ran a segment claiming 6,000 preschoolers may get cancer caused by Alar-treated apples. CBS showed an image of an apple with a skull and crossbones. Phil Donahue said, “We’re poisoning our kids“. Meryl Streep, a NRDC stooge, testified in Congress and raised the panic to a new crescendo. People worldwide quit buying apples and apple juice; both disappeared from grocery stores. The industry lost $2 billion. Hysterical parents called state troopers, who dutifully stopped school buses to confiscate apples from students’ lunch boxes.
      The Alar episode was a media-fueled hoax based on junk science perpetrated by the National Resources Defense Council (NRDC), an extremist environmental group backed by Robert Redford and Meryl Streep. Alar never posed any risk whatsoever to health. Despite the Alar panic being a total fraud, extreme environmental groups today regard it as a success story. Neither 60 Minutes, Redford nor Streep has ever recanted.
     Since my Alar epiphany, I am uber-cynical about science and media. All the science scares listed supra proved to be either totally or mostly junk science. We are in a new age of unreason because progressivism is antithetical to objective reality; it much prefers dogma, mythology and political correctness. Progressives have transmogrified into 21st century witch doctors, corrupting science, the media and now sports. I learned to distrust science and the media in 1989 – thanks to Alar and Meryl Streep.

Our February 11th post takes on the cosmic issues facing government.

Why I Write This Blog

Are societies of men capable of establishing good government from reflection and choice, or are they forever destined to depend on accident and force?  (Hamilton)
Why I Write This Blog
By: George Noga – January 28, 2018

      This personal narrative is the first of several intermittent posts on the relationship of man and the state. Periodically, I must remind myself and my readers why I have spent thousands of hours over 10 years writing 400 posts filling 1,000 pages. This post answers that question. The Hamilton quote (above) from the Federalist poses an eternal question – the answer to which, my friends, still is blowin’ in the wind.

       Whether any society of men gets its politics right or wrong affects every aspect of life, and even life itself. If we get politics right, we live our lives in freedom, prosperity and pursuit of our dreams. If we get politics wrong, liberty, happiness and property are forfeit and life is brutish and brief. Since man first walked upright, there have been 110 billion homo sapiens of whom less than 1% lived their lives in liberty. Even today, only about 10% of the 8 billion humans extant live in relative freedom.

       I promised a personal narrative and here it is. Following are but some of the ways my life has been directly impacted by failure to get our politics right.

* Both world wars and Korea resulted from political ineptitude, appeasement and failure to heed existential threats. I was fatherless during WWII and Korea.

* I was the victim of an execrable education in government schools for 12 years.

* I was subject to a mind-numbing array of taxes including income taxes of 94%.

* Throughout my lifetime and continuing to the present, the Federal Reserve unleashed numerous cycles, bubbles, panics, meltdowns and economic disasters.

* The politically micromanaged Vietnam War totally discombobulated my life for many years including 6 years I served in the military. I could have been killed.

* Government-spawned inflation reached 14% and interest rates exceeded 20%. That and the ensuing correction massively disrupted my personal and financial life.

* It requires $20,000 today to buy what cost $1,000 when I was born due to intentional currency debasement by the government.

* Unnecessary hyper regulation made owning my regulated business for 35 years a living hell. Instead of protecting the public, regulation caused them great harm.

* A lifetime of hard work and thrift has been diminished by chronic negative real interest rates to protect a feckless government from its ongoing debt and deficit binge.

There is more – much more – but you get the drift. Unfortunately, it doesn’t end with me. My children are doomed to a poorer and more dangerous future; they will be a lost generation leading lives of quiet desperation. They will pay for our debt binge and intergenerational theft with vastly reduced opportunity. They will inhabit a Clockwork Orange world where nuclear arms proliferate in places committed to our destruction. The gods of the copybook headings, with terror and slaughter, will return.

The horrors listed herein occurred during my lifetime. They were promulgated by a government most consider to be among the best in the world and one of the best in history. Although government has wrought great harm to me throughout my life, the root cause is not a failure of government; it is simply government being government. History teaches it is foolish to believe we can control government; we can only limit it.

The solution therefore lies not in more government or even in better government. The solution lies in more liberty and less government. And that is why I write.

The next post traces my epiphany resulting from the Alar mass hysteria.

The Trump Presidency at One Year

Despite Russia-collusion paranoia, tumult, drama, decorum lapses and inveterate tweeting, Trump racked up many impressive achievements. You may be surprised.
The Trump Presidency at One Year
By: George Noga – January 21, 2018
      Even I was surprised when I compiled the list of Trump’s achievements for this posting. It is easy to get so caught up in all the media sturm und drang that one fails to notice. For a counterpoint, reread my posting of January 20, 2017 about the Obama presidency, available on our website: www.mllg.us. Following is a list (in no particular order) of the main accomplishments of Trump’s first year; sic loquitur pro se.
1. ISIS has been defeated; the Caliphate has no remaining territory it controls.
2. Energy policy is transformed. The Keystone and Dakota pipelines are proceeding; ANWAR is open to drilling as are parts of the Gulf of Mexico and more federal lands.
3. Net neutrality has been reversed; the internet is once again free of regulation.
4. MS-13 gang members have been deported; 5,000 (about half) have been arrested.
5. The Veterans Administration has been improved via numerous measures initiated by the Trump Administration including its budget being increased to $186 billion.
6. NATO defense budgets were increased to 2% of GDP due to Trump jawboning.
7. Job creation is at a 20-year high, including jobs for blacks and Hispanics.
8. Obamacare’s individual mandate is ended. Men with guns no longer will come to force you to pay a $1,000 penalty for failing to buy a product you don’t want.
9. Stock markets/confidence are at all-time highs due to Trump’s pro growth agenda.
10. Tax reduction/reform is arguably the biggest achievement. This historic legislation will lead to sustained economic growth, job creation, investment and productivity.
11. The Syrian missile strike redeemed Obama’s ignored red line about poison gas and sent a message to our adversaries – current and potential – that Trump is not Obama.
12. Judicial appointments have been both numerous and inspired. In addition to Gorsuch, Trump has made 11 circuit court appointments and nominated 73 judges.
13. Decertification of Iran’s compliance with the Agreed Framework was bold.
14. The North Korea nuclear threat is being dealt with seriously and directly; Trump is not kicking the can down the road as his predecessors have done for decades.
15. The EPA is once again under control; it is reviewing the clean power plan rule and has killed the renegade (WOTUS) Waters of the United States regulation.
16. Cuba policy has been reversed; another one-sided Obama deal bites the dust.
17. Ukraine will be sold lethal defensive (anti-tank) weapons – another reversal of a weak kneed Obama diktat and a significant counter to Russian aggression.
18. Withdrawal from the Paris climate accord was a coup de maitre. Trump made a tough call despite fierce opposition by Tillerson, Kushner and even Ivanka.
19. Moving the US embassy to Jerusalem redeemed a pledge and was another bold stroke in the face of opposition by virtually the entire world. Bravo!
20. Economic growth over 3% has been achieved despite Obama remarking that the US would never again see such a rate of growth. The outlook for 2018 is 3% to 4%.
21. The Consumer Financial Protection Bureau is back under control via Trump’s interim appointment of Mike Mulvaney. It no longer can operate outside the law.
22. Obama, Clinton, DOJ and FBI illegality and impropriety are being uncovered. If Hillary had been elected, these would have remained buried – likely forever.
23. Hostages/prisoners have been freed in numerous countries by Trump intervention and all without plane loads of cash or dangerous terrorists being released.
24. Political correctness no longer reigns in America. Merry Christmas reverberated throughout the land once again and it is okay to say other formerly verboten words.
25. Illegal immigration is greatly reduced. Many are staying away voluntarily due to the increased enforcement. Chain migration and lottery visas are being ended.
26. Defense spending is being ramped up – after languishing under Obama.
27. States rights are being respected as in the roll backs of federal land grabs in Utah.
28. School choice and education policy under DeVos has reversed the horrors imposed by Obama such as his draconian and unconstitutional Title IX rules.
29. The travel ban and extreme vetting have made America safer while also exposing the fecklessness of Obama-appointed federal judges making clearly political rulings.
30. Donald Trump is not Hillary Clinton!

Whew! There you have it – not too shabby for only one year. Progressives and their media puppeteers are too busy with their fake news, collusion theories and Trump vitriol and paranoia to realize that meanwhile Trump is cleaning their clock.

Our next post January 28th explains why I write this blog – don’t miss it.

Jack the Ripper and the Copycat Effect

The media bear much responsibility for the mass casualty attacks they blame on guns. The copycat effect is so widely recognized some countries ban reporting of suicides.
Jack the Ripper and the Copycat Effect
By: George Noga – January 14, 2018

       In our post of December 10, 2017, we promised to focus on the role of the media in spawning mass casualty attacks (“MCA”). There are many effective actions we can take to reduce MCAs; our December 10th post (available at www.mllg.us) addressed untreated mental illness as the single greatest cause. The second leading cause is the copycat effect, known at least since the 1774 publication of a Goethe novel.

       Nearly 250 years ago, Johann von Goethe wrote his classic “The Sorrows of Young Werther” wherein the hero commits suicide with a pistol. Following its publication, there was a spate of identical suicides throughout Europe at a time of low population when few could read, books were dear and news moved glacially. Now, there are seven billion mostly literate and interconnected people; the media are global and pervasive; and news travels at the speed of light. And when there is a copycat MCA, the media reflexively blame it on guns; this is as crazy as blaming pistols for Werther’s suicide 

        Even today, a spike in emulation suicides following a widely publicized suicide is known as the Werther Effect. Following Marilyn Monroe’s 1962 suicide from a drug overdose, there were at least 200 copycat suicides within 30 days. The copycat effect is so widely recognized that some countries (Norway) ban all reporting of suicides.

Jack the Ripper is to MCAs what Young Werther is to suicides. Jack the Ripper inspired many copycat attacks in his time and they continue (mostly in England) up to this day. Sociologists as early as 1890 understood that highly publicized crimes could be self-spreading and coined the term suggesto-imitative assaults.

      Much has been learned since Jack the Ripper; the following is accepted science: (1) The amount of attention paid to MCAs is directly related to their occurrence; (2) MCAs occur in clusters, not randomly; (3) A MCA is much more likely in the aftermath of a recent MCA; and (4) There is no contagion with 3 or fewer causalities.

      Recent studies also identify ways to reduce MCAs: (1) Do not glorify shooters or sensationalize their actions; (2) Use shooters’ names only when absolutely necessary; (3) Avoid use of superlatives such as “record number killed”. Also, the media should vastly limit (voluntarily) coverage except in the area the MCA occurred. No pictures or images of the perpetrator should be shown, especially in an iconic Che Guevara pose, like the photo of Dzhokar Tsarnaev on the cover of Rolling Stone.

    Progressives and the media (one and the same) blame guns for every MCA; however, they themselves are culpable. If we did not ignore untreated mental illness and took steps to reduce the copycat effect, MCAs would plummet. When subtracting gun deaths due to suicides and the failed war on drugs with its appurtenant gang violence, the US gun homicide rate would be among the lowest in the world.

       We have understood the copycat effect for both suicides and MCAs since at least the times of Young Werther and Jack the Ripper respectively. It’s beyond time we held the media to account for their significant share of the butcher’s bill.

The next post on January 21 analyzes the first year of the Trump presidency.

Taxation in America – Part V

The new tax law makes America competitive and will bring about a veritable cornucopia of new investment, job creation, productivity and economic growth.
Taxation in America – Part V
New Tax Law Analyzed and Dissected
By: George Noga – December 22, 2017
       I promised a final blog in our Taxation in America series immediately following final passage of tax legislation; otherwise, I would not post this close to Christmas. This is the final part; the prior four parts can be accessed on our website: www.mllg.us. We are taking a brief holiday respite; thus, our next post will not be until January 14.
     My “take” on the new tax law is similar to that of many other commentators; nonetheless, I hope to add some fresh insight and perspective. For corporations and businesses, the new law is utterly transformational. Lowering the corporate rate to 21%, expensing 100% (for 5 years), changing to a territorial tax system and the deemed repatriation tax all are highly salutatory. These changes make America competitive with most other nations and will result in a veritable cornucopia of new investment, job creation, productivity and economic growth for years to come.
      For individuals, there is little to cheer. There are modest tax cuts for most taxpayers and the $24,000 standard deduction, combined with the new deduction limits, will provide simplification to many. Repeal of the Obamacare individual mandate is a big winner. For individual taxpayers, Congress missed a once-in-a-generation opportunity to substantially lower taxes and to reform and to simplify the tax code.
    Regrettably, the law also contains many lese-majeste provisos: (1) seven tax brackets; (2) absurdly high (106%) marginal brackets due to recapture; (3) gaming potential and complexity on the business pass-through tax; (4) high capital gains rates; (5) sunset provisions after 8 years; (6) failure to repeal the death tax; (7) the enhanced and now partially refundable child care credit which is pure social policy; and (8) the tax treatment of carried interest remained unscathed. The changes to the individual parts of the tax code will produce little or no economic growth.

Tax Law Exposes a Deeply Flawed Political Process

     A parallel story about the 2017 tax legislation is the structural flaws it exposed in our political process. The Byrd Rule (no deficits beyond 10 years) hamstrings and contorts the ability of Congress to act. CBO scoring is pure voodoo; they are consistently wrong and highly political, yet they establish the parameters the law must follow. The PAYGO rule, requirement to offset higher spending, is also unleavened sorcery that thwarts the will of the people. Reconciliation is yet another political dysfunction that determines what can and cannot be considered a tax matter.
     The political process also is pregnant with demagoguery. No matter what the law contains, progressives were going to assert it favors fat-cat corporations and the rich and savages the poor. Recall that: (1) the top one-half of one percent of Americans pay 70% of all income tax; (2) America has the most progressive (by far) tax regimen in the world; and (3) the bottom 60% of Americans pay less than 1% (net of credits).

The Bottom Line

      As always, the proof is in the pudding. The 2017 revolutionary transfiguration of corporate and business taxes and the repatriation of trillions of dollars has the potential to bring about a Reaganesque revival. The best hope for America’s future lies in sustained, robust economic growth; it is not only the most important thing, it is the only thing that matters. Without strong growth, we cannot properly defend ourselves; we face an imminent debt and deficit crisis and the social fabric of our beloved republic will be further rent. All Americans should hope the pudding tastes good!
Best Wishes for a Merry Christmas and Happy New Year

Our next post is scheduled for January 14, 2018

2018 Preview – Gun Laws – Trump’s Decorum

After every mass casualty attack, the same suspects trot out the same fusty canards. New gun laws would be palliative, therapeutic, ineffective and would save no lives. 
2018 Preview – Gun Laws – Trump’s Decorum
By: George Noga – December 10, 2017
       As 2017 fizzles out, we evaluate the past year and plan improvements for the next. Total readership is robust but hard to pin down because most of the growth comes from other blogs that pick up our posts and from an incredibly large number of forwards – in some cases, four generations of forwards. We had 50,000 visits to our website in 2017. Our commercial email service reports we have one of their highest open rates. We have a strong presence on social media. Our Red October series achieved primo placement on Google’s search engine – competitive with that of The Wall Street Journal.
       We are taking a short holiday break from publishing; hence, this is our penultimate post for 2017. The final post likely will be in late December when the final outcome of  tax legislation is known. That will be the last part of our series: Taxation in America. Our weekly blog will resume in mid-January. Thanks again to all of you for your loyal readership, forwarding and financial support during this past year.
      Changes are afoot. Most of our posts have followed a pattern: we identify issues, marshal facts, draw logical inferences and present perspectives not often found elsewhere, always fact based and principled. We will continue doing some of that but plan to take more of a cosmic approach. In addition to issues, we will write about the juxtaposition of man and state – sometimes from a highly personal perspective. We will reprise our popular Montana Moments segments during the summer and will continue shamelessly flogging what has become our signature issue – climate change.

Mass Casualty Attacks and Gun Laws

      The US has suffered many mass casualty attacks and after each one, gun control advocates engage in the same kabuki. They espouse antediluvian bromides that would be palliative, ineffective and would not save lives. Proposing futile laws apparently is therapeutic for liberals. Not one law they ever proposed would have prevented any mass casualty attack. They mask their real goal of banning and confiscating all guns.
       The mass casualty problem is – first and foremost – one of untreated mental illness. WND News has compiled a list of 24 mass shooters with untreated mental illness during the past 20 years, which accounts for a large percentage of such events. In recent shootings in Sutherland Springs,TX and Charleston, SC, the killers were able to obtain weapons because of government failure to post data to the National Instant Criminal Background Check System. Progressives’ solution is to place more trust in government – the very same government that failed abysmally in TX and SC.
     The dirty truth is that progressive beliefs are responsible for the large number of people with untreated mental illness roaming the streets. Liberal dogma forbids forcing treatment or institutionalization. The number of hospital beds for psychiatric patients in the US is down over 95% in the past 50 years – thanks totally to progressive ideology.
Note: There are 2 main causes of mass casualty attacks. This post addressed untreated mental illness. A future post will focus on the second leading cause – copycat attacks.

The Dignity and Decorum of Donald Trump

      My liberal friends like to complain about the lack of dignity and decorum of The Donald. They often ask if I too am turned off by it; here’s my answer to them.
       In the 1970s you called Richard Nixon “tricky dicky” and mocked him incessantly. During the 1980s you labelled Ronald Reagan, arguably the best president of our time, an “amiable dunce“. During the 2000s you referred to George W. Bush, a man of quiet dignity, as stupid and evil. You called him a chicken hawk, liar and an international embarrassment. You savaged John McCain, a man who sought collegiality. You turned Mitt Romney, a genuinely nice human being, into an unrecognizable monster.
    Now you come and attack Trump as evil incarnate. We have repeatedly tried collegiality, dignity and decorum; where has that gotten us? We are locked in a bitter, divisive culture war and, unlike the others, Trump is fighting back. Yes, sometimes he can be short on decorum but I am not shedding crocodile tears over it. Trump is our president during the midst of the culture war and he is a fighter. Get used to it!

Our next post will follow final disposition of tax legislation.

The Four Presents of Christmas

The story of four Christmas presents is an economics primer. It also applies to government health care and indeed to government spending in general. 
The Four Presents of Christmas
By: George Noga – December 3, 2017
     The process of shopping for Christmas presents contains valuable lessons about economics and government. The four presents fall into three economic categories.
        Present #1  The most felicitous gift is the one you buy for yourself with your own money. Clearly, you know better than anyone precisely what you want as well as how much you will spend. Your priorities are both price and quality; you want the highest possible quality for the lowest possible price. There are numerous trade offs between product features, quality and cost and many places to shop. You are uniquely qualified to evaluate all the permutations and to make the correct choice. Gifts like this are never returned. This is a first party purchase; the person paying is the person using.
       Present #2  Your Great Uncle Warbucks sends you a generous check with the proviso you buy a gift for yourself. Although you remain the best judge about what to buy for yourself, you now are tempted to purchase something you would not have bought with your own money. You still want high quality because you are consuming the product, but now you are not quite as concerned about the price. When someone is buying your dinner, you order the lobster rather than the brisket. When using OPM (other people’s money) the temptation is great to splurge. This is a one example of a second party purchase; the person using is not the person paying.
       Present #3  This is the arch-typical Christmas present – you buy a gift for someone else with your own money. However, you often are reduced to guesses about the needs and wants of others – even those close to you. Because you are spending your own money, you care about cost but are less concerned with quality as you are not using the product. You are not very interested in investing much time comparison shopping. Frequently, you buy something that the recipient would not have bought for him/her self and your gift is very likely to be returned. This is a slightly different example of a second party purchase; the person paying is not the person using.
       Present #4  Now we have the situation where you buy a present for someone else with money supplied by a third party. Say your boss asks you to buy a present for a customer. You buy the present with money that is not your own; therefore, you do not care about the cost. You are not going to consume the present; therefore, you don’t care about the quality – or even the appropriateness of the gift. In any event, you have absolutely no idea about what the person may want or like. Therefore, you don’t waste any time shopping and promptly buy a ten-foot rubber elephant at the store next door. This is by far the worst of all scenarios; it is called a third party purchase.
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        All government spending consists of third party purchases. The government takes money from you and distributes it to others based on what government considers best. They are not concerned with either cost or quality. It is even worse; they have priorities of their own that often are directly opposed to the needs or wants of the recipients. Government employees respond to their own personal incentives and disincentives.
     The lessons of the four gifts of Christmas apply with a vengeance to health care. The cost of government funded health care continues to skyrocket while at the same time, the service and quality deteriorate. Compare this to private health care as is the norm in dentistry, ophthalmology and cosmetic surgery. The inflation adjusted cost of all of these is either stable or decreasing while quality and service are good. The difference is easy to explain. Government health care consists entirely of third party transactions while dentistry, plastic surgery and eye surgery are first party transactions.

Our next post previews MLLG’s plans for 2018

The Politics of Harvey, Irma and Maria

“Blow, winds, and crack your cheeks! Rage! blow! You cataracts and hurricanes, spout till you have drenched our steeples, drowned the cocks!”  (King Lear)
The Politics of Harvey, Irma and Maria
By: George Noga – November 26, 2017
      The lines above are from King Lear’s famous diatribe against the storm. The once mighty Lear, now powerless, urges nature to bring on another apocalypse. The storm symbolizes Lear’s state of mind. Shakespeare’s words could easily have been spoken by politicians following Harvey, Irma and Maria, ranting about climate change, price gouging and, in Puerto Rico, blaming others for their lack of preparedness.
     Harvey was the first major (cat 3) hurricane to make US landfall since Wilma in 2005, the longest hurricane-free period ever. Irma was the only major hurricane to hit Florida in 12 years, toppling a 165-year record. What happened next was as predictable as it was pathetic. There were climate change diatribes worthy of King Lear about how 12 hurricane-free years somehow proves hurricanes are more (not less) frequent.
       Meanwhile, a 2017 peer-reviewed study (D’Aleo, Wallace, Idso) found man-made adjustments to temperature readings account for all reported warming in the past 75 years. The study’s authors said when numerous adjustments are made, it is reasonable to expect some to have the effect of increasing warming and some of decreasing warming. Instead, nearly all adjustments increased warming; i.e. the data underpinning global warming are based entirely on human adjustments – not on actual data!
       EPA Administrator Pruitt and Energy Secretary Perry have suggested red-blue team exercises (used by military and intelligence services) to expose vulnerabilities in climate science. Climate alarmists went ballistic, arguing it would be a dangerous attempt to elevate minority opinions and to undercut the legitimacy, objectivity and transparency of existing climate science. Why would legitimate scientists be afraid to debate any issue? They should welcome debate. Newton is spinning in his grave.
       Politicians also mimicked King Lear in castigating price gouging. Florida Senator Nelson and AG Bondi were the best Lear impersonators. Bondi vowed to prosecute and to shame gougers and established a hotline for reporting violations. They are economically illiterate; economists universally agree price gouging is beneficial.
       Americans understand prices for the same product fluctuate in different conditions. Hotel rooms in a college town cost more during a big game. Americans openly flaunt anti-scalping laws. A poor ghetto kid risking scarce capital to broker tickets should be honored, not incarcerated. We readily accept Uber’s surge pricing and viscerally grasp it is beneficial. Government engages in price gouging at, inter alia, airports, toll roads, turnpike rest stops and sporting venues – Nelson and Bondi take note.
      Prices in free markets convey accurate, truthful and useful information about the value of a good or service; government prices are lies; consider the following:
  •    Market prices are determined by voluntary cooperation among people. Government prices are coercive and based on the naked police power of the state. Markets enforce themselves; government prices must be enforced by men with guns.
  •   Market prices alleviate shortages by directing resources to where they are most needed; government prices (rent control) lead to rationing and create shortages.
  •   Market prices are logical, non-political, foster civility and encourage honest behavior. Government prices are illogical, political and strain the social fabric by criminalizing laudable and honest behavior. Government prices create black markets, incentives for illegal behavior and breed disrespect for the law as in Venezuela.
  •   Market prices result in more supplies being available during a crisis, storing extra goods beforehand and conservation. Government prices create shortages, rationing and empty shelves. Market prices are better for victims of natural disasters.
       Why should a hurricane somehow be different than a football game when it comes to the price of a hotel room? Market prices are truthful; government prices are lies. In what kind of society would you prefer to live – one based on voluntary cooperation of people in markets or one based on government lies enforced by men with guns?

Our next post describes the four gifts of Christmas