Into the Eye of the Debt Hurricane

George Noga

Update on the Crisis of Spending, Debt and Deficits
By: George Noga – September 20, 2014

     By some metrics the debt storm has abated. Compared to earlier deficit projections published herein, the USA is slightly better off, with the difference due entirely to the massive Obama tax increases. The deficit this FY ending September 30 is $500 billion, equal to 3% of GDP; meanwhile GDP is increasing around 2%, meaning the deficit is growing only slightly faster than the economy, a marked improvement. However, great damage already has been done; moreover, we are merely in the eye of the debt hurricane – it may appear sunnier at the moment, but the deficit storm will soon resume with even more ferocity and we will all be blown away.

The Seen and the Unseen

     The US economy already has sustained massive body blows. The reason we don’t clearly see the damage is due to the difference between the seen and unseen – or, more to the point, the difference between the reported and unreported.

  • In past recoveries following major recessions, the US economy has grown by an average of 5% for the subsequent 5 years; this results in a compound growth rate of 27.6%. Instead, we have experienced 2% compound growth yielding only 10.4%. The difference of 17.2% is the growth deficit. Simply, the average American today is 17% worse off than he/she should be; but we don’t see what should be; we only see what is. Nevertheless, the reality is that every American has been impoverished by 17% just during the past 5 years.
  • We see the increase in federal tax revenue and the concomitant reduction in the deficit. Unseen are the massive tax hikes that produced the revenue. Individual tax brackets increased with the top rate going to 39.6 % – a 13% increase. Investment related taxes were savaged with capital gains rates going from 15% to 23.8% (59% increase) and dividends from 15% to 43.4% (289% increase). Medicare taxes increased 62% and the upper limit was removed. There was a new surtax on investments of 3.8% and the death tax went from zero to 40%. New individual and employer Obamacare taxes took effect along with scores of other Obama tax hikes. The 35% corporate tax rate (world’s highest) is responsible for shifting jobs and investment abroad and businesses keeping $2 trillion overseas. The unseen effects of these massive tax increases will hobble the economy until abnegated.
  • We can see the reduction in the official unemployment rate; what is unseen is the jobs disaster that is America today. There are 12 million out of work, 12 million on disability and nearly 50 million (one in 5 households) in breadlines – err, on food stamps. The labor force participation rate hit a 35 year low. All (net) jobs being created are part time; there are legions of 29ers and 49ers. The true rate of unemployment is 15%, not the 6.2% reported.
  • We see Social Security and Medicare meeting their current obligations but we do not see the demographic time bomb looming for both programs. There is nothing on earth as certain as demographics; 77 million more boomers will retire (10,000 every day) and begin Social Security and Medicare. Spending on both these programs will grow by 8% compounded – doubling every 9 years. Within 10 years we will spend our entire budget on entitlements and interest on the debt leaving nothing left over for defense or for the rest of the government.
  • We see interest rates on federal debt hovering around record lows costing only $225 billion currently. We blissfully do not see what the interest would cost given a return to average interest rates, i.e. interest cost would increase $500 billion per year to $725 billion, or triple today’s cost. And that’s the rosy scenario. This is a no-win situation: keep rates low and the economy is grotesquely distorted and savings and investment are savaged or raise rates where they should be and the budget deficit goes thermonuclear.
  • We see government regulation exploding, uncertainty rampant and the scepter of Obamacare hanging over all of us like the sword of Damocles. We do not see the stultifying effects of all these on job creation and the economy.

     Looking at the gestalt paints a funereal picture. Average Americans already are 17% poorer over the last 5 years than they would have been in a normal economic recovery – and they will continue to get relatively poorer and poorer each year without any end in sight. The tax and regulatory burden, particularly on investment, has skyrocketed, halting new investment and job creation. Behind the “official” 6.2% unemployment rate lays a dystopian jobs nightmare; we are turning into a country of part time workers. We are reaping a demographic whirlwind still in its early stage. We are living on the razor’s edge regarding interest rates; we have a Hobson’s choice: ballooning interest costs or maintaining negative real interest rates. Finally, all this exists within a milieu of hyper-regulation, vast uncertainty and, of course, Obamacare.

Current CBO Projections for Spending, Debt and the Deficit

     Recently (July) the CBO released its latest forecast. The CBO alternate baseline forecast (its most realistic) assumed the average middle class family’s tax burden doubles over the coming generation; it also assumed no more recessions, wars, terrorist attacks, natural disasters and that interest rates remain low perpetually. Despite these horrific (taxes doubling) and grossly unrealistic assumptions, the results are disastrous. The deficit increases by over $100 trillion and the CBO stops forecasting because it can’t conceive of a functioning economy under those circumstances. And all this, dear readers, is based on an uber-optimistic forecast; the reality is much, much worse!

     We have been grazing on the fiscal commons for a long time; the pasture is about to give out and the spring lambs are doomed to a life of quiet desperation. We can muddle through for a few – perhaps several – years with temporizing and half measures. Soon enough time will run out and the ineluctable tipping point (Minsky Moment) will be reached. It will get ugly for an extended period, i.e. a lost generation., Eventually, when we emerge from the rubble, we may get it right again – only because there are no other choices – and America will again enjoy more liberty and less government!

Why I Write This Blog?

George Noga
By: George Noga – September 10, 2014
        This posting marks the beginning of the end. Between now and mid-December I will publish the final MLLG posts. I often have been asked why I have taken the trouble. Why have I spent 1,000 hours writing 300 posts filling 900 pages containing 500,000 words since November 2007? Why have I written fact-based and principled tracts about public policy even though I am unenamored with politics and politicians? This post answers the question: why. In the Federalist, Alexander Hamilton questioned and challenged his fellow Americans thusly:
“Whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend on accident and force.”
       If any society of men fails to get its politics right, it affects every aspect of life and life itself. Get politics right and we live our lives in freedom, prosperity and pursuit of our dreams. Get politics wrong and liberty, happiness and property are forfeit and life itself is nasty, brutal and brief. Politics, grubby as it is, is the sine qua non to having a life worth living.
      Examples abound of those who got their politics wrong: Hitler’s Germany, Mussolini’s Italy, Imperial Japan, Mao’s China, Pol Pot’s Cambodia and Stalin’s USSR were all black holes where life and liberty were trampled. Today we have,inter alia, Putin’s Russia, the Jongs’ North Korea, the Castro brothers’ Cuba and Mugabe’s Zimbabwe. And don’t forget the entire Arab world, nearly all of Central and South America, Africa and any place ending in “stan”.
       If you believe the western world is exempt, think again. WWI was a senseless slaughter with 40 million casualties; its politically inept conclusion led to WWII with its 150 million casualties. This was due to a failure of politics in Europe and also in the USA. In the past century and continuing to the present, “civilized” Europe has experienced 100 genocides, pogroms and ethnic cleansings. Vietnam was a  colossal failure of American politics to get it right; it cost 58,220 American lives and 303,644 more wounded. Nor have we learned; we continue to get it wrong right up to this day.

       If we don’t get our politics right, our children and our children’s children will live in an Orwellian torpor with their lives, liberty and property constantly at risk because of obeisance to failed ideologies, fantasies, vote buying, political correctness and the never ending and fruitless search for Utopias. Politics is inherently personal. Following are but some of the ways I have been directly harmed throughout my life by our failure to get politics right.

  • I had no father at home for 4 years during WWII which resulted from government ineptitude in fighting and ending WWI. Father was in Korea, also the result of political blunder, for another year during my childhood.
  • I received an execrable, pathetic non education in government schools from age 5 to 18.
  • The Federal Reserve created economic conditions that resulted in severe cycles, bubbles, panics, meltdowns and deep recessions throughout my life continuing to the present.
  • I was subject to income taxes of over 90%, creating perverse, uneconomic incentives.
  • It now requires $15,000 to buy what cost $1,000 when I was born due to government currency debasement.
  • Regulation run amok made owning my business onerous. The regulations, all in the guise of protecting consumers, in actuality, caused them (and me) great harm.
  • The politically micromanaged Vietnam War disrupted my life for the 6 years I served in the military.
  • The Fed has brutally devalued a lifetime of hard work via chronic negative real interest rates intended to protect a feckless government from the consequences of its ongoing debt binge.
  • A torpid, Europesque economy has been imposed, dooming me to economic stagnation instead of robust  growth.
  • The current crisis of spending, debt and deficits ultimately will result in a lost generation.
  • Our government has recklessly created and/or exacerbated dangerous situations throughout the world by weakening our military and appeasing tyrants. An existential crisis likely will result.
  • Obamacare death panels will ration and deny medical care and ultimately could kill me.
       Due entirely to failed politics I was fatherless for five years and lucky I wasn’t orphaned into a life of poverty. I survived utterly wretched government schools, incessant and severe economic cycles, debilitating inflation, astronomical tax rates and hyper regulation. Vietnam discombobulated my life. And all this was because of a government most consider one of the best extant. And all because we failed to get our politics right.
       Now, in my eighth decade of life, our once vibrant economy is riven by government-created anemia. America has transmogrified into sclerotic Europe where men lead lives of quiet desperation. Government has created a crisis of spending, debt and deficits, one consequence being sustained negative real interest rates that savage my decades of prudence. My final indignity is Obamacare; its rationing and death panels may end my life prematurely.
       Unfortunately, it doesn’t end with me. Our children and our children’s children are doomed to a much poorer and more dangerous future; they will be a lost generation. They will pay for our debt binge and generational theft with vastly reduced opportunity. They will inhabit a Clockwork Orange world where nuclear arms proliferate in places committed to our destruction and solely because we weakened our defense and kowtowed to tyrants. Our weakness invites terror and slaughter for which they will pay dearly, perhaps with their lives. And all this from a government most consider one of the best extant. And all because we failed to get our politics right.
“The correct answer to Alexander Hamilton’s question may be in the negative.”
       As you can see, if we don’t get our politics right, our lives are vastly diminished and trivialized in countless ways; we condemn our progeny to economic stagnation and loss of freedom. Their lives and liberty are at grave risk because we failed to get our politics right. It appears the correct answer to Alexander Hamilton’s question may be in the negative.
       I have tried mightily through this blog to show that the answer lies in more liberty and less government. Hopefully, my efforts have given our children’s children that infinitesimally better chance for liberty. And that is my answer to the question: why I write this blog.
        Note to readers:  I am striving to make the final postings between now and mid-December special as I seek to end my MLLG blog on a high note. I hope you enjoy them.

Reviving the Citizen Grand Jury

George Noga
By: George Noga – June 20, 2014
        Grand juries trace their inception back to 12th century England. King Henry had problems with the pope’s ecclesiastical courts which, in Henry’s view, failed to charge or indict to his satisfaction. King Henry therefore instituted a citizens grand jury. Fast forward to the USA. The Bill of Rights (5th Amendment) states: “No person shall be held to answer for a capital, or otherwise infamous, crime unless on the presentment or indictment of a Grand Jury.” The Bill of Rights introduces grand juries although they are never mentioned in the main body of the Constitution. Hence, grand juries are a constitutional construct in their own right. The founders intended them as a fourth branch of government that belongs  solely to the American people and serves as a buffer between the people and the government.
“Any citizen could bring a matter directly before a grand jury.”
       In the decades immediately following ratification of the Constitution, grand juries played a major role in public life. Any citizen or layman could bring a matter directly before a grand jury including complaints about the conduct of public officials. Grand juries then could (and did) conduct their own independent investigations; if they found sufficient evidence to bring charges and if the act was a crime under law, the grand jury would return an indictment. Of course, the grand jury also screened out charges which were unfounded or of malicious inspiration.
“A prosecutor can get a grand jury to indict a ham sandwich.”
       It was not until the second half of the nineteenth century that the current paradigm emerged in which prosecutors control grand juries. Today there is so much abuse of grand juries by prosecutors with an agenda that it has given rise to a now-famous bon mot linking grand juries and ham sandwiches. The origin of this aphorism can be traced to comments made by Supreme Court Justice Robert Jackson in 1940. However, many attribute it to Judge Saul Wachtler who stated: “A prosecutor can get a grand jury to indict a ham sandwich.” Once empanelled however, grand juries have independence and great power; they occasionally go off on their own – thus giving rise to the term “runaway jury“.
Movement to Return Grand Juries to Citizens
       The widespread abuse by politicians of the grand jury system has led to a growing movement to return grand juries to ordinary citizens – much as they functioned in the first half century of our republic. In fact, six states currently allow citizen (or common law) grand juries in one form or another. These function in different ways. In Oklahoma citizens can petition to request a county grand jury to convene. Montana law allows judges to call grand juries. In other states, citizen grand juries can report their findings to prosecutors or to regularly empanelled grand juries.
        Current state laws do not go near far enough for many. There is a powerful movement afoot to revive the citizen grand juries of the 19th century – not under the control of prosecutors. In recent years a  number of such self-styled citizen grand juries have been formed – including at least one in (Ocala) Florida. One case in Gallatin County, Colorado garnered much attention with over 30 law enforcement officers representing 10 agencies on hand for one proceeding. In Montana different groups are forming advisory grand juries to report findings to judges and also to publish them for the record.

       There are a number of organizations competing to revive the common law grand jury in the USA. They range from the serious and well organized to some with marginal (at best) credibility. For the time being however, citizen grand juries are limited to advisory and public relations roles. Although it is unlikely grand juries will return to their 19th century roots anytime soon, it is not hard to discern that some major changes – such as the following – may come in the years ahead.

  • The beauty of our federal system is that there are 50 states and citizen grand juries may need to catch on only in one or two states to spread like wildfire. Also there are over 3,000 counties and since most grand juries operate at the county level, it is possible significant changes could even originate at the county level.
  • The movement could inspire more and more regularly convened grand juries to become runaway juries.
  • Significant marginal changes are possible. At one time ordinary citizens were allowed to pass information directly to a sitting grand jury. Bringing back this feature could really shake up politicians prone to abuse their power.
  • It is easy to foresee rapid growth in citizen grand juries with an advisory role, i.e. they could report their findings to a regular grand jury and/or independently publish their findings – similar to the present situation in Montana.
       At bottom, the movement to resurrect citizen grand juries is a manifestation of a much broader and more significant reaction by a growing number of Americans against the size, power and arrogance of government. As such it is a welcome trend and could play a significant role in bringing about more liberty and less government in America.

America’s Greatest Threats

George Noga
Power Grid, EMP Attack, Coronal Mass Ejection
 By: George Noga – June 10, 2014
      Weakness, not strength, invites conflict and war – a truth known throughout human history and included in George Washington’s farewell address when he said: “The best way to keep the peace is to be prepared for war“. It is a lesson which America forgets regularly. We (along with Europe) forgot it is the 1920s and 1930s; we had amnesia again under Carter in the 1970s. We deeply regretted it both times. Now under President Obama we have not only forgotten but we fail to take even inexpensive measures that could stave off disasters with potentially 100+ million American casualties.
      Obama displays weakness and appeasement at every possible opportunity. He cancelled our missile defense in Europe to the chagrin of our allies and received nothing in exchange. He manifested weakness in Libya, North Korea, Egypt, Iran, Syria, Crimea, Ukraine and the Middle East. He has savaged the defense budget and made unilateral reductions in our strategic forces. Everything he (and his acolytes Clinton and Kerry) do and say signals weakness. He refuses to recognize the attacks in Benghazi, Ft. Hood and San Jose (power grid) as terrorism.
        Alexandr Solzhenitsyn understands; he said the following when accepting his Nobel Prize. “The spirit of Munich has by no means retreated into the past; it was not merely a brief episode. The timid civilized world has found nothing with which to oppose the onslaught of a sudden revival  of barefaced barbarity other than concessions and smiles. The spirit of Munich is a sickness of the will of successful people; it is the daily condition of those who have given themselves up to the thirst after prosperity at any price, to material well-being as the chief goal of earthly existence. Such people – and there are many in today’s world – elect passivity and retreat, just so as their accustomed life might drag on a bit longer, just so as not to step over the threshold today – and tomorrow you’ll see, it will be all right. But it never will be all right! The price of cowardice will only be more evil.”  Solzhenitsyn preternaturally was describing Obama.
Protecting the Power Grid Against Terrorism and Natural Phenomena
        This post (space limitations) deals only with EMP and power grid threats, but it is: (1) one of the greatest threats in terms of possible casualties, i.e. 100+ million; (2) the most likely to happen sooner or later; (3) the most imminent; (4) accomplishable on a low budget with existing technology; and (5) difficult to trace the source. One threat is an attack on our electrical power grid. Such an attack can be carried out exactly by doing what was done in San Jose on a larger scale; it also can be carried out via an EMP (Electro-Magnetic Pulse) attack involving only one low-grade nuclear device. Shockingly, the same damage can result from a coronal mass ejection or “CME” – more about this infra.
        April 16, 2013 at 1:00 AM near San Jose, California, a group of 2 to 6 terrorists attacked and knocked out a major electrical transmission substation. The terrorists first cut underground fiber optic cables, cut communications and disabled security systems. All skilled marksmen, they commenced a highly disciplined, coordinated attack with high power rifles knowing precisely where to aim. When police arrived 50 minutes later, the terrorists were long gone, left no evidence and never have been found. This likely was a rehearsal for a broader attack that could knock out America’s entire power grid.
        It would require fewer than 10 such teams of terrorists (20 to 60 people in total) under 30 minutes to kill 100 million Americans. Because of the interconnectivity of America’s power grid, knocking out a small number of facilites would shut down the entire country. It took several months to repair the damage in San Jose as key components are manufactured in Korea and not readily available. In that amount of time a broader attack could have killed 100 million. Note: You may have missed the San Jose incident in the news because it happened the same time as the Boston Marathon bombing.
       The same effect can be achieved via an EMP attack by detonating a single low power nuclear device at the right altitude; it would create an EMP that would knock out power in America except for Alaska and Hawaii. Moreover, it recently has been understood that a massive solar storm (CME) could also knock out much of the power grid. Such storms occur every 150 to 300 years and there has not been one since the advent of electricity. Scientists believe we are due for a CME; in fact, one just missed Earth in July 2013. Lloyds of London estimated  a CME would affect 20-40 million Americans for up to two years.
        Some readers may be wondering how there could be 100+ million casualties from an attack (either EMP or San Jose style) on the power grid that knocked out power for months – and that is how long it would take to restore power. Without electricity, the US can provide for less than 10% of Americans; the other 270 million are out of luck. Virtually nothing would work; there would be no food and water; nuclear power plants would melt down because they require power for cooling. Most deaths would come from starvation. Society, civil authority and the rule of law would disappear.
The Good News
       The good news is that it is possible to attain a high degree of protection from all three of these perils at low cost. The quickest, easiest and cheapest is protection from terrorist attacks against our power grid. All that is required is to build high enough fences around our principal power transmission stations that would preclude snipers from knocking them out San Jose style. We also shock stockpile and store all critical spare parts near each facility. This could be accomplished in less than one year at a cost of under $1 billion.
       Protection could be achieved against a CME by hardening our power grid; this also could be accomplished quickly and for under $1 billion.  There is a bill now in Congress, the SHIELD Act, which stands for Secure High-Voltage Infrastructure from Lethal Damage. Finally, deterrence and defense against an EMP attack can be accomplished via missile defense which is well within America’s current capability. Potential adversaries contemplating an EMP attack and knowing we had effective missile defense would decide not to pursue such an attack, and if they did, we likely could prevent it as it would be only one missile. Note: An EMP attack could be launched via balloon from within the USA; for that reason we need to harden the grid as a backup and also in case missile defense fails.
The Bad News
        President Obama refuses to spend the money to protect America’s power transmission stations against terrorist attack – even though it is a shovel ready project. Heck, he won’t even call San Jose a terrorist attack because it goes against his political narrative that terrorism is receding – the same reason he falsely attributed the story about an internet video being responsible for the Benghazi attack. Obama refuses to spend money on missile defense because he considers it destabilizing and would rather spend the money to buy votes. Congress also needs to pass the SHIELD Act which currently is stuck in committee, although there is no reason to believe Obama would sign it.
“Obama won’t call Benghazi or San Jose terrorism; he won’t invest in  missile defense; and he refuses to spend even one day’s borrowing to protect 100 million American lives.”
        The USA borrows $2 billion each and every day to fund a massive government deficit but we won’t spend one day’s borrowing to protect America against the most imminent, likely and deadly threat we face by building walls around our key power stations, stockpiling spare parts and hardening our transmission infrastructure. The most important function of government, and one with which all agree, is to protect America against outside threats. Obama refuses to do this – he won’t even spend $1 billion to possibly save 100 million lives – that works out to a  paltry $10 per American life. How would you feel, while watching your family dying an agonizing death from lack of food and water, to know that $10 per person could have prevented it and our president refused to spend it and for all the wrong reasons?

MLLG Special Posting – The VA Scandal

George Noga
By: George Noga – June 3, 2014
        The MLLG blog, usually written far in advance of distribution, has never devoted an entire post to a current, breaking news story. The Veterans Administration (“VA”) scandal is the exception because it is the perfect storm: (1) it is the poster child for public choice economics – a frequent topic of MLLG posts; (2) the VA is a sacred cow beloved by liberals; and (3) the scandal provides a stark preview of ObamaCare. Finally, the VA issue fits MLLG’s forte, placing a complex issue in perspective through fact-based and principled analysis – and all in about 1,000 words.
“The VA is a government jobs program that incidentally provides health care.”
        To be fair, the problems with the VA go way back – preceding the Omar Bradley Commission of 1955-1956. There have been 18 reports warning of the wait time problems just since 2005 – of which 70% occurred during the Obama Administration. Although Obama did not create the problems, his ineptitude and obeisance to public unions raised them to a new level. Also to be fair, the VA is not uniformly dismal and enjoys support among many vets – not altogether unsurprising from an agency that has $154 billion to dispense and which often certifies routine aging problems (heart disease) as service related and certifies maladies of dubious provenance as eligible for tax-free disability pensions.
“The real scandal is that the VA considers a 14 day wait to be very satisfactory. Throughout the private sector, wait times are measured in hours and not in days.”
        The VA problems have nothing to do with money. The VA budget has gone from $49 billion in 2001 to $154 billion in 2014. Just since 2003 the VA budget is up 106%, while the number of vets increased 30%. The government tends to throw money at the problem; but, just as with failing schools, no amount of money can ever fix the problem.
Real Causes of the VA Problems
        The cause of the VA mess is easily and fully explained by pubic choice economics which teaches that people respond to personal (not public) objectives. An illustration from the Soviet Union is instructive. Glass manufacturers in the USSR made windows too thin and they tended to break easily; they did this because they were evaluated based on the number of square feet of glass produced. To fix this problem, the erudite commissars changed the evaluations from square feet to pounds of glass produced. Thereafter, the factories began to produce uber thick windows with limited translucence.
       We can chuckle at the clueless Soviets, but the VA is no different. They were evaluated based on patient wait times and they responded in accordance with public choice theory – they rigged the system for their personal benefit. This is no different in principle from changing the thickness of glass due to different incentives. No one should be surprised. Of course, private sector workers also respond to personal incentives; however, business does a much better job of aligning personal incentives with those of the organization. Hence, it would be rare in the corporate world for endemic problems like those at the VA not to be immediately reported up the chain of command where action would be swift and where the failure to report negative information also would carry swift and strong personal disincentives.

        Following are some other more salient causes of the VA problems, although all are readily explainable by the theories of public choice economics.

  • In some VA clinics physicians see only one-eighth (12.5%) as many patients per day as in private practice. Each day the operating rooms are shut down by 3:00 PM. The VA is essentially a government jobs program that just happens to provide some health care – after patients wait 145 days and provided it is before 3:00 PM.
  • The VA is 70% unionized with over 200,000 unionized workers. Obama and the Democrats put the wellbeing of  unions above veterans. Public sector unions have hijacked the VA for their own aggrandizement.
  • Union work rules and seniority cause serious problems as, inter alia, unions have squelched outsourcing VA patients to reduce the backlog because outsourcing is a direct threat to union jobs.
  • VA scheduling software uses a DOS operating system – found only in museums – and 1990s era computers.
  • As to be expected, waste, fraud and abuse are endemic given the vast amount of funds and no accountability.
  • The wait time (Phoenix) to see a physician was 145 days from when a patient requested an appointment; much longer counting the entire process. The real scandal is that the targeted wait time (considered satisfactory) was 14 days. In much of the private sector, wait time is measured in hours, not days. In the early 1990s Kaiser Permanente had a 55 day wait but changed to same day scheduling. Within a year they reduced the wait time to one day.
Real Solutions to the VA Problems
        The near term future is as predictable as a Kabuki. First, liberals will claim the Shinseki resignation  brings closure to the problem. His resignation was forced not by Republicans but by Democrats up for reelection who desire to make precisely that argument. Second, there will be some short term patient outsourcing but it will end just as soon as the problem fades from view – the public sector unions will see to that. Third, government will throw some more money at the problem and they will claim victory. These raison d’etat actions will succeed in getting the issue off the radar screens of the toothless media watchdogs (and the public) until well after the next election.
“Worst of all, the VA is a precise microcosm and road map for ObamaCare. What is harming 25 million veterans today soon will afflict all 315 million Americans. Some, perhaps many, of us will die while waiting 145 days or more for an appointment.”

        The real solution, dear readers, will never happen. There is little or no raison d’etre to have a separate health care system for veterans; this makes no more sense than having a separate medical system for any other profession or line of work. To the limited extent veterans may need certain highly specialized care (such as for prosthetics), this could be accomplished via a small number of – preferably private – facilities. Care of veterans should be integrated into the civil health care system much the same as Medicare. At the very minimum, all acute care shoud be privatized and voucherized, with the VA maintaining only rehabilitation and long term care facilities. Following are the main takeaways:

  1. There is no logic for a separate VA health care system; it must be completely or mostly integrated into the  private economy – especially the acute care portion.
  2. The VA problems can never (and will never) be fixed because government is incapable of such fixes.
  3. Liberals and Democrats never fix anything – real fixes are not important; all that counts to them are intentions.
  4. Everything is predictable and explainable by reference to public choice economics.
       Worst of all, the VA system is a precise microcosm and road map for ObamaCare. Each and every problem identified in this post will be multiplied in spades for ObamaCare. The disaster that now is preventing veterans from getting care and, in some cases, has killed them, will be inflicted on all 315 million Americans. It is only a matter of time until ObamaCare makes all Americans wait 145 days (and likely more) to get an appointment and many will die waiting.

Product Safety: Government Versus Private Sector

George Noga
By: George Noga – June 1, 2014
        Who keeps us safe? Surely it must be government without whose oversight private business rapaciously would seek profit without regard to consumer safety. It seems axiomatic that bureaucratic watchdogs are required to set standards, police markets, punish miscreants and look out for the public. After all, government employees are benevolent and dispassionate, whereas private industry is greedy, self interested and profit motivated. So, who do you trust?
“Who do you trust; benevolent bureaucrats or profit-hungry businessmen?”
        There is a 120 year old organization dedicated to product safety; it has 152 laboratories employing over 10,00 people, many of whom are scientists; its sole mission is to protect consumers. This organization has evaluated 90,000 products and bestowed its approval on over 20,000 types of products made by 70,000 different manufacturers. It has conducted 600,000 inspections benefitting 700 million consumers. Of course, I must be referring to the US Consumer Product Safety Commission, the Commerce Department and/or the Federal Trade Commission.
        Actually, the organization I just described is Underwriters Laboratories (“UL”), a privately owned and operated company which no one is forced to use. It thrives solely by dint of its impeccable reputation – because of which it is despised by liberals. Yes, greedy businessmen voluntarily seek the UL certification and, if necessary, go to great lengths to make their products conform to the highest safety standards. In fact, many government regulators (including several states) shamelessly copy the codes and standards established by UL.
        Another private organization held in high esteem by the public is Consumer Reports (“CR”), an independent, non-profit organization whose mission is to empower consumers to protect themselves. Founded 78 years ago it eschews advertising to remain free of all commercial pressure. CR is the most trusted independent testing organization in  the world and has an extensive network of test facilities and scientists. CR’s work has consistently preceded and outshown government, particularly with regard to seat belts, cigarettes, microwave ovens, water supply, child safety seats, kerosene heaters, door locks , lawnmowers and vehicle rollovers. CR is relied upon by 8 million consumers.
“Government standards don’t assure safety and safe products fail to pass.”
        Perhaps readers by this point will concede that UL and CR bring something to the table. But surely government is at the forefront of consumer protection. Wrong! Wrong! Wrong! Government sets standards which are tinctured by politics, often contradictory and come with tens of thousands of pages of esoteric regulations. They tend to stress hard-edged enforcement and create an adversarial atmosphere. Government is concerned with standards – not safety. Products that meet government standards aren’t necessarily safe while completely safe products can fail to meet standards.
         Because government is inherently political, it often harms consumers. A case in point affecting all of us is sugar. Outside the USA soft drinks are made with cane sugar, whereas here they are made with high fructose corn syrup – which tastes worse – much worse. This is true for one reason: Archer Daniels Midland lobbied (think $$$) Congress to pass draconian quotas on sugar imports. Surprise: ADM is a leading producer of corn syrup. In another example of government fecklessness, its touted Energy Star program is a fraud. Government leaves it up to manufacturers to self certify Energy Star compliance. Hmmm – I wonder how that would fly at Underwriters Laboratories?
“Okay so now who do you trust – the CPSC and FTC or UL and CR?”
       Many (particularly the young and liberal) are infatuated with government even though we constantly see where private sector decision making is far superior. Human nature dictates that decisions are reached on the basis of personal risks, rewards and incentives – true in both business and government. Business understands this and does a much better job of aligning business and personal objectives so that the correct decision is reached. Government decision making as informed and explained by public choice economics is: (1) based on personal interests and incentives; (2) short sighted; (3) political; (4) rife with perverse incentives and unintended consequences; (5) misaligned with the public interest; (6) favors groups over individuals; (7) slow to change; and (7) within a perverse culture that never will admit failure.
        Most Americans voluntarily do business with Apple, Disney, Wal-Mart, FedEx, UPS and countless others; they have come to admire the quality, value and customer service these companies display each and every day. Americans also are forced to interact with DMV, IRS, USPS and a myriad of other government agencies. Immediately following Hurricane Katrina, Wal-Mart had trucks  loaded with food and water ready to assist victims; within 24 hours Verizon had 95% of its cell phone service running. Government did nothing. Yet, despite their direct personal experiences, many Americans demonize business and worship government; they believe business creates oppression and government creates prosperity.
        Also despite all evidence to the contrary, many Americans distrust business to make safe products and falsely repose their trust in government. Who really has the consumers’ interests more at heart – a faceless bureaucrat behaving in accordance with the tenets of public choice economics or a businessman who will go to superhuman lengths to protect the integrity and value of his brand? I will choose the businessman every time because I know his interests, incentives (and disincentives) and decisions are much more closely aligned with my safety than that of the government puke.

Why Government is Inherently Evil

George Noga
By: George Noga – May 24, 2014
       James Madison in Federalist 51 famously wrote: “In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.”  More recently Milton Friedman put it thusly: “How can we keep the government we created (primarily to protect our freedom) from becoming a Frankenstein that will destroy the very freedom we established it to protect?” Very few realize how rare, delicate and fragile are liberty and freedom in the entire history of human experience. Of the estimated 110 billion humans who have ever lived, fewer than 1% have enjoyed liberty.
“Over 99% of humanity has lived only in tyranny and repression.”
       The first step in protecting liberty is awareness of just how venal are all forms of power even the lowest. Let’s begin by looking at fraternities, homeowners associations and country clubs. In my college fraternity, elections for officers were corrupted; once elected few voluntarily relinquished power; elections for fraternity sweetheart were fixed; and those in power stole money – all this from a group of brothers.
       Homeowners associations are a microcosm of government. Generally, the wrong people run for office and, once elected, abuse their power and transmogrify into power-hungry wannabe dictators. Even a small group of neighbors in the same socio-economic group cannot govern collegially. I once belonged to a club that had a committee for selecting the wines to be served in its restaurants. The committee became as permanent as the Soviet Politburo; new members were precluded from joining; and they instituted frequent parties for themselves to taste new wines. They, of course, needed food to go along with the wine tasting and they expected all this extravagance to be paid by the club. Bottom line: all power corrupts; it is endemic in all organizations beginning with the most basic. It is endemic because it is an inextricable and immutable part of the human condition.
“A government’s maleficence increases exponentially with its size and power.”
       The bigger a government, the more corrupt. Local governments in my area have raised corruption to an art form. They find myriad ways to benefit from the public weal, albeit likely without technically violating the law. The schools are abysmal and dominated by (also corrupt) public employee unions. My state government is incapable of fixing a long running property insurance fiasco that threatens to bankrupt it. Our federal government (Amtrak) sells hamburgers for $9.50 to a captive audience and incredibly loses $6.50 each. Not to worry: they will make it up in volume. As to be expected, international organizations are the worst. The UN engages in child rape in Africa and the Nobel Committee admittedly awarded peace prizes solely for vindictiveness to punish Reagan and Bush.
Four Keys to Better Government

        Some level of government has proven to be necessary to protect us from outside threats, domestic violence and to enforce contracts and property rights. We face the same dilemma as Madison and Friedman: how do we cede government a legal monoply on the use of force while simultaneously controlling it and making sure it protects (rather than destroys) our liberty?  Following are universal truths constant throughout time and space and applicable to all governments:

  1. The first step is understanding and internalizing the truth that power corrupts. Understand that government is inherently evil and requires eternal vigilance to keep it inside its constitutional box.
  2. Because the evil in government is inherent (embedded in human nature), it can’t be eliminated or reformed. Part of the evil manifests itself in widespread waste, fraud and abuse – which also never can be exterminated.
  3. Government maleficence cannot be eliminated, but it can be reduced. The only way is to shrink government, ipso facto creating less evil along with less of its miscegenistic stepchildren: waste, fraud and abuse.
  4. The only way to make government smaller is to take away its money; the less money it has, the less harm it can perpetrate. Nothing else will ever work.
       Upon accepting the Nobel Prize in economics, Friedrich Hayek said: “To act on the belief that we possess the knowledge and the power to shape the processes of society to our liking is likely to make us do much harm. . . The recognition of the insuperable limits of (man’s) knowledge ought indeed teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society – a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization. “

Fukushima and the Risks of Nuclear Power

George Noga
By: George Noga – May 16, 2014
        Following the Fukushima accident 3 years ago, Japan shut all its 54 nuclear reactors although, recently and very quietly, they have restarted a few. Germany pledged to shut down all its reactors within 8 years and some utilities in the USA are under pressure to close reactors. Many countries, particularly in Europe, have vowed never to build new nuclear plants. All this was in response to an accident in which no one died due to radiation.
        Let’s recap the major nuclear power plant accidents throughout history. Three Mile Island (1979) resulted in severe damage to the core but there were no fatalities. Chernobyl (1986) was by far the worst accident; it resulted from a deeply flawed reactor design that never would have been built anywhere outside the former Soviet Union. Despite everything going wrong that possibly could go wrong at Chernobyl, the only known fatalities 28 years later are about 50 highly exposed rescue workers (5% of the 1,000 thusly exposed) and fewer than 10 thyroid cancer deaths. A UN study estimated thousands of future cancer fatalities; however, that represents only a 1% increase in the normal amount of cancer deaths in that population over the relevant time period and is impossible to measure.
“More people died at Chappaquiddick than at Three Mile
Island and Fukushima combined (from radiation).”
       In 70 years with hundreds of mostly old reactors in place there have been fewer than 60 deaths due to radiation and all in the dysfunctional USSR. Why therefore was there such a dramatic reaction to Fukushima? There are 20 coal mining deaths each year in the USA and hundreds involving natural gas. However, we are accustomed to these and they don’t panic us. Each year 100 people die from both lightning and bee stings. A natural gas accident at a Texas school (1937) killed 425 children, yet there was no movement to ban natural gas following that tragedy.
Evidence Shows Higher Levels of Radiation are Beneficial

        Everyone knows too much radiation can kill. However, most people take this factoid and extrapolate that therefore even small doses can be harmful. Consider the following facts:

  • Highly radioactive cobalt accidentally was mixed into a batch of steel in Taiwan in the 1980s and used to build apartments housing 10,000 people; it delivered 30 times normal radiation. When the error was discovered 15 years later, the cancer rate of the residents was 97% lower and birth defects 94% lower than the general population – they were, in effect, immunized against cancer. The Fukushima evacuation zone had 10 times less radiation (equal to a few CAT scans) than the Taiwan apartments.
  •  The Rocky Mountain plateau (Denver area) has 10 times the background radiation of the Mississippi Valley yet has far lower cancer rates. There are areas in the USA with background radiation 100 times higher than the forbidden zone at Fukushima. Some scientists believe we have too little radiation for optimum health.
  • The Atomic Bomb Disease Institute of Nagasaki University studied 120,000 people who received low doses of radiation and compared them with unexposed Japanese. Conclusion: low doses of radiation increased the lifespan of atom-bomb survivors.
Nuclear is the Most Environmentally Friendly Energy
        What makes nuclear energy so attractive is its power density. Biofuels are low in density. If  the USA replaced just 10% of its oil consumption with switchgrass, it would require 37 million acres of land – about the size of Illinois. The power density (energy derived from a given volume or mass) of biofuels is a small fraction of a watt per square meter (“SM”). Wind turbines have a power density of 1 watt per SM. A small natural gas well delivers 30 watts per SM. Nuclear energy generates over 2,000 watts per SM. To get the same energy as one nuclear plant would require 800 square miles of wind turbines – about the size of Rhode Island.
       Nor is storage of nuclear waste a monumental issue. The USA to date has produced 60,000 tons of waste – which could be stored (to a height of 20 feet) in a building the size of a football field. France, which produces 80% of its electricity via nuclear, stores all its high level waste in a single building the size of as soccer field.
       The present perception and public policy about nuclear energy reflects panic rather than facts. For example, the (“ICRP”) International Commission on Radiological Protection (yes there really is such a thing) recommends an area be evacuated whenever the excess dose of radiation exceeds .1 rem per year. This ICRP standard would require the immediate evacuation of Denver. In many designated radiation hot spots in Japan (near Fukushima) the radiation level was much lower than in Denver – yet people panicked and were evacuated. More people died in the ensuing evacuation than in all the nuclear accidents in human history.
       Aversion to nuclear energy is based on panic, misinformation, ersatz environmentalism and political correctness. In 70 years of nuclear energy, deaths from radiation have been nearly nonexistent and far less than coal and natural gas deaths which continue to this day – not to mention lightning and bee stings. Future generations of advanced reactors would be even safer. And no other form of energy is remotely as friendly to our environment!

Liberalism is for the Birds . . .

George Noga
Liberalism is for the Birds . . . 
Except When It Doesn’t Suit Their Purpose 
By: George Noga – May 8, 2014
       Liberals (and their sycophant media) go ga-ga over birds whenever it suits their purpose. During the BP oil spill we were saturated with images of a pelican dripping with oil, only later to learn the photo had nothing to do with BP. One year after the BP spill, credible estimates of bird deaths varied from a low of 1,200 to a high of 6,000; the Audubon Society estimate was 2,300. Nevertheless, liberals used the birds to limit or to stop new offshore drilling. Similarly, a 2013 oil pipeline rupture in Arkansas was used by activists as a cause celebre to stop new pipelines even though the verified toll was only a handful of ducks. Birds are being used as a major argument for stopping the Keystone XL Pipeline. In fact, saving birds is an argument progressives use to oppose every fossil fuel project from drilling to pipelines to fracking.
       Today, green activists are invoking the Endangered Species Act to list the lesser prairie chicken and sage grouse as threatened species. These birds are found in 11 western states where the federal government owns most of the land – 48% of California, 62% of Idaho and 82% of Nevada. Hold your breath: activists are trying to list another 757 species between now and 2018. Never mind the 757 other species; the prairie chicken and sage grouse alone are enough to stop drilling on federal land. The restrictions are so severe, it would also effectively stop drilling on private land. To be clear about this, liberals could use the prairie chicken and sage grouse to stop all drilling in 11 western states.
The Mathematics of the US Bird Population
       This post uses many numbers about bird deaths; therefore, some perspective about bird population would be helpful. Every year in the USA there are 10 billion new birds hatched. Fewer than 1,000 birds are killed each year as a result of fossil fuel activities, whereas 500,000 are killed in wind turbines including bald eagles, and golden eagles. Thus, wind energy kills 50,000% more birds than fossil fuel. Collisions with windows kill about 500 million birds (midpoint estimate) – 100,000 in New York City alone. Cats kill another 500 million annually. Cars, power lines and habitat loss kill another 1.5 billion or so. Every day in the USA nearly 15 million birds meet their fate. The best way to protect birds would be to ban cats. In any event, these numbers provide perspective; fossil fuels kill .0000001% of birds versus cats’  5.0%.
 Liberal Hypocrisy About Birds
       Okay, so liberals pretend to be birds’ best friend when it suits their purpose; what about when it doesn’t fit their agenda? I already pointed out how wind turbines kill 50,000% more birds than fossil fuels. Let’s expose several other liberal hypocrisies about birds.
       The $2+ billion Ivanpah solar project recently opened in the California desert; its 350,000 mirrors span 5 square miles. It was financed by federal tax credits and cost 400% more than a gas fired plant; the electricity it produces costs twice as much. The Ivanpah project is scorching birds that fly overhead with its 1,000 degree heat. The massive death toll has included peregrine falcons and great hawks. So far, nary a peep from environmentalists.

  • The wind industry enjoys de facto permission to violate the Migratory Bird Treaty (protecting 1,000 species) and the Bald and Golden Eagle Protection Act. The Interior Department has brought one token enforcement action against wind energy but it aggressively pursued criminal cases against the oil and gas industry in North Dakota for killing a single bird – a Say’s Phoebe. At California’s Altamonte wind project 70 golden eagles are killed annually.
  • The Interior Department granted wind farms 30-year take permits to kill eagles. The government expects to receive 15-20 applications for the new eagle kill permits. Wind and solar farms and hydroelectric facilities often destroy the ecosystem but they get a pass – essentially because they are politically correct. Get this: the liberal argument is that climate change ultimately will kill even more eagles; therefore, we have to kill eagles now in order to save them.
  • Since Obama took office 17 major solar projects have been approved on public land and received expedited approval. Not one liberal or environmental group protested this rush to build, even though these groups moved heaven and earth to protect snail darters, delta smelts and spotted owls. However, these same groups are willing to sacrifice bighorn sheep, desert tortoises and other critters on the altar of the green energy gods.
      Wind energy soaks up an obscene amount of tax dollars. It raises the cost of energy – 40% since 2003, rips apart rural communities, despoils views, kills eagles and falcons and creates noise for miles. It pollutes pristine lakes in Mongolia (where neodymium is mined and refined) with toxic radioactive tailings. The average wind turbine requires a ton of neodymium. Despite all this, wind energy accounts for less than one half percent of all energy.
“We have to kill the eagles in order to save them.”
       Above all, this documents the utter bankruptcy and depravity of liberalism. Liberals shed crocodile tears for birds on cue but are ready to throw hundreds of eagles each year into the wind turbines and scorch them to death while flying over solar farms all because they deem it politically correct. Liberals lie about birds because liberalism is all based on lies.

Reflections: Yesterday Versus Today-Has America Become a Pusillanimous Nation?

George Noga
By: George Noga – May 1, 2014
      Many decades ago it was commonplace for us kids (with parents’ consent) to run behind mosquito foggers spraying DDT to inhale the aromatic fumes – same when dispensing gasoline. We ate raw hamburger, rode bicycles and motor scooters without helmets, played baseball sans helmets and with real spikes. There were no warning labels on anything. We owned BB guns, pellet guns and .22 rifles and carried them everywhere day and night in residential neighborhoods. Both boys and girls hitchhiked day and night; there were no seat belts, shoulder harnesses or airbags.
        We walked miles to school in first grade without crossing guards; we were not afraid of strangers. We kept score in all games and only winners received awards. There was only one valedictorian. There were no safety caps and we eagerly consumed candy cigarettes. Homes and cars rarely were locked. Only one kid of the hundreds I knew at school, baseball and scouting was overweight. We played tackle football without protection. We were not shielded from adversity and were expected to overcome it by our own devices. We were paid to babysit as early as age 11.
        We operated circular saws, jigsaws and planers without supervision or goggles. Halloween was entirely on our own including entering strangers’ houses. We were left to ourselves all day and evening to roam a wide area without parental supervision or knowledge of our whereabouts. We solved all our own problems – sometimes by fighting. I had a paper route at age 12. The papers were delivered at 4:00 AM when I got myself out of bed and they had to be delivered before 6:00 AM. Inevitably there were many times when it would rain, sleet, snow and be bitter cold. My parents never once offered to drive me and asking them to do so never crossed my  mind.
        In sixth grade, a classmate’s (Jimmy) father was killed in a plane crash. When Jimmy returned to school all of us were uncomfortable as no one knew how to act. No teacher or anyone else told us how to respond or what to say; that misanthropic creation, grief counselors, thankfully did not yet exist. Nevertheless, we all knew intuitively that saying nothing was inappropriate and not an option. I did the best I could however lame it may have been.
Today in America
        There is a war on childhood in America; age 10 is the new age 2. Many school districts don’t permit children to get off a school bus unless there is a guardian waiting to walk them home – even if home is a few blocks away. Libraries don’t allow children under 12 to be unaccompanied. Parents are advised not to let children under 14 blow up a balloon. Parks and schools everywhere have removed see-saws, merry-go-rounds and monkey bars. Day care centers have been ordered by OSHA to saw off tree branches below 8 feet to prevent kids climbing trees.
       Recently Amtrak raised the age for travel by unaccompanied minors from 8 to 13; moreover, kids ages 13-15 cannot travel unaccompanied unless they meet a lengthy list of restrictive conditions. In reality, travelling alone is not feasible until age 16. Before Amtrak’s policy change, kids 8 could travel unaccompanied and a 15 year old could serve as a guardian for even younger kids. Now, the 15 year old cannot even travel alone. Meanwhile in Japan, eight year olds travel unaccompanied without restriction all the time and without incident.
       Recently a school bus had an emergency evacuation because the driver saw one peanut on the floor. No one on the bus was known to have a peanut allergy. Peanuts are disappearing from many ballparks and elsewhere. Schools now provide grief counselors for the death of a pet. It is becoming common for schools to have multiple (up to 70) valedictorians – to avoid hurt feelings. Need I mention grade inflation? Even nursery schools now routinely have graduation ceremonies replete with caps and gowns. Our national pusillanimity extends to pets. Some animal shelters won’t permit dog adoptions unless the owners have a fenced in yard and pledge to accompany the dog whenever outside the yard. There was time in America when dogs guarded people, not the other way around.
        The marketplace now caters to parental fears by selling leashes for kids and alarms that sound if the kid wanders 10 feet away. New GPS devices for kids are coming on the market. One company sells a “Piggyback Rider“, a backpack for kids up to age 7 and 60 pounds – nearly old enough to ride a train in Japan. Laws about  babysitting have changed. In Illinois a child under 14 requires a babysitter, while the minimum age for babysitting escalates. In kindergarten 20% of kids are obese and adult diabetes appears as young as age 3.  Many parents instruct schools not to allow their children outdoor play; they are to be kept indoors to read a book instead. The Consumer Product Safety Commission decided to rid all US houses of that terror – window blinds with cords – because of a handful of accidents annually. Next time you see a new window blind, read the safety label; you won’t believe what you see.
    Inevitably, this pusillanimity affects our policies and actions as a nation. Could this be why we have become appeasers in Crimea, Ukraine, Syria, Iran and North Korea? Appeasement is the sickness of the will of successful people. Has the thirst for prosperity, material well being, comfort and, above all – safety at any price – led to passivity, caution and retreat? The price of cowardice is always more evil. Perhaps this is to be expected from a nation whose president has stated: “If I had a son, I’d have to think long and hard before I’d let him play football.“