Tuesday, April 27, 2010

Motivational Recessions?

My levels of motivation follow a cyclical pattern. Some weeks I cannot wait to get out of bed and begin my day. These weeks are precious and represent the best version myself. When in this mindset I can absorb information and churn out ideas at a frenetic pace. Other weeks, I get out of bed when I have to and do enough work to prevent feeling guilty.

During these slow times I wish for the fast pace times of high motivation but it doesn't seem to translate into action. I've found a useful tool to make these slow times productive. I look at this period as a time of retrenchment, where I look over my vast list of ideas formulated during the 'fast times' and pick the best ones. I then write out strategies and objectives to advance those ideas. Some ideas are put on the backburners, or put out of their misery. But, I know that a period of high motivation is around the corner, and I don't sweat the loss of ideas, they will be replaced.

Saturday, April 24, 2010

Unseen Victims of Democrat Policy

A WSJ article today, written by Anne Jolis, presented Paul Kagame, the warlord of Rwanda, who led an army outnumbered two to one and ousted a genocidal leader who had slaughtered 800,000 of his own citizens. During an interview with Jolis, Kagame made is attitude about foreign aid quite clear: they don't want it.

Instead of asking for aid, Kagame boasted of his nation's attainment of self-sufficiency in feeding itself and of their slashing of foreighn aid by half over the past 15 years. Kagame told Jolis that Rwanda's greatest needs were for other countries to stop subsidizing their own agriculture and to get rid of import tariffs.

Domestic agricultural subsidies in the United States lower the price of domestically grown produce while import tariffs make the price of foreign produce imports higher. This combination of policies helps domestic agricultural producers but hurts the citizens of developing countries.

Developing nations have limited options for exporting goods. Often, they lack the technological sophistication to export anything other than what they can grow on their own soil. Their labor is cheap and their land worth little, thus the price of their exported goods should be very low compared to rhe same good produced in a technologically advanced society where labor is expensive and land comes at a premium.

In economics, when one country can produce something at a lower cost (opportunity cost, actually, but thats another lesson) than another country, we say that country has a comparative advantage in producing that product. The US can produce technologically advanced goods at a lower cost than most other countries, but it is relatively expensive for us to produce such things as corn and wheat compared to how cheaply other countries can produce the same good. That is, Rwanda has the comparative advantage over the US in producing cheap agricultural products.

Devoting resources and taxpayer wealth to subsidizing the production of goods we don't have a comparative advantage in is wasteful, inefficient, and damaging to developing economies.

The US should lower it's agricultural subsidies and abolish import tariffs.

Tuesday, April 20, 2010

First Things First

A recurring criticism of U.S. Foreign policy I often hear from rhe political left is that we often engage in lop-sided transactions, using our political, military, and economic clout to coerce developing and/or weaker nations into accepting unfavorable terms.

There are several problems with this critique, but one suprcedes the others. Why would one criticize a country's leaders for advancing their nation's interest at the expense of others? That is their job.

The world has limited natural resources. Once a border is drawn on a map and two groups made distinct, those groups are in direct competition with each other for those resources. With limited resources, for one group to gain, the other must lose.

Few leaders actively pursue transactions with other countries that hurt their citizens, why should we expect them to?

SEC Actions

The SEC filed charges of fraud against Goldman-Sachs yesterday, which immediately dropped GS shares fueling a 'flight to quality' in the stock market. After the dust cleared the Dow had fallen 100+ points.

The SEC is under enormous political pressure to find evidence of wrongdoing in the financial services sector. The charges filed against GS Are the first of many, I suspect, but will ultimately backfire.

While the SEC and GS battle it out, a massive destruction of wealth is getting little attention. Most unsophisticated investors rely on mutual funds as their primary investing tool. Many mutual funds are well-diversified and have interest in many stocks. As a result, their returns typically mimic the return on the Dow. When the SEC responded to political pressure and filed charges against what many see as the flagship company of our financial services sector, they induced a panicked sell-off, knocking the Dow down and wiping out enormous amounts of wealth. And this, just after the deadline to file taxe returns.

Saturday, April 17, 2010

SEC Actions

The SEC filed charges of fraud against Goldman-Sachs yesterday, which immediately dropped GS shares fueling a 'flight to quality' in the stock market. After the dust cleared the Dow had fallen 100+ points.

The SEC is under enormous political pressure to find evidence of wrongdoing in the financial services sector. The charges filed against GS Are the first of many, I suspect, but will ultimately backfire.

While the SEC and GS battle it out, a massive destruction of wealth is getting little attention. Most unsophisticated investors rely on mutual funds as their primary investing tool. Many mutual funds are well-diversified and have interest in many stocks. As a result, their returns typically mimic the return on the Dow. When the SEC responded to political pressure and filed charges against what many see as the flagship company of our financial services sector, they induced a panicked sell-off, knocking the Dow down and wiping out enormous amounts of wealth. And this, just after the deadline to file taxe returns.

Tuesday, April 13, 2010

Unions and the Destruction of High Culture?

A recent interview on CNBC with Nina Munk, a contributing editor with Vanity Fair, outlined the budgetary problems plaguing the New York Metropolitan Opera.  This interview was fascinating.  Ms. Munk oscillated between bemoaning the loss of high culture if the opera were to close and reprimanding its management for running a horrible, horrible business.

According to the interview, the NYMO brought in around $250 million in revenue, but its costs were nearly double that amount.  Faced with bankruptcy, management is negotiating with various labor unions (hammer users, voice users, electricity conjurers, light manipulators, and others) to cut costs.  As unions are known to do, they will not budge.  

Unions, while starting out as advocates for their constituents, almost always end up mauling the hand, if not destroying it utterly, that feeds them.  If this example does not convince you of the veracity of this claim, then I would point out the following examples: Greece and California.
A recent article in the WSJ outlined the woes felt in Europe at the high levels of youth unemployment. The article asked, is the United States headed in the same direction?

Let's see. The minimum wage increased from $5.55 or so, to $7.50 or so, over the past couple of years. Higher minimum wages increase unemployment among the young. The federal government is increasing taxes on the wealthiest households, which will hit many small business owners and restrict new investment and hiring. The federal government is running up large amounts of debt, and increasing the yields required on two and ten year treasury notes, which will increase the rates at which investors can borrow funds.

Despite the current administration's stated goals to decrease unemployment, so far their actions seem designed to promote long-term high unemployment.

Thursday, April 01, 2010

This past Monday, I happily joined the University of Central Oklahoma chapter of Student's In Free Enterprise for their regional championships in Dallas, Texas. Our squad acquitted themselves admirably. They were professional in appearance and manner and took home a trophy for 'Rookie of the Year.' Our SIFE team has already begun generating ideas that will help them win regionals next year and compete at the national level. I look forward to the coming year.

While several experiences in Dallas are noteworthy, one stands out. During the faculty adviser luncheon, a SIFE representative announced changes to the SIFE mission statement/areas of focus for next year's competition. A question and answer session followed, and rather quickly someone noted that the term 'free-enterprise' was stricken from the new format. The representative hemmed and hawed, stating that 'free-enterprise' was redundant with the rest of the phrasing. Quite a bit of scoffing followed her explanation and a professor raised their hand and asked "How many present would like to see the term 'free-enterprise' put back into the mission statement?" All, or almost all, present raised their hands.

SIFE's removal of 'free-enterprise,' to me, represented a little bit of political hedging. I understand. But the faculty adviser response to that removal was rather...cheering.