Well, my friend "Surrender" was back commenting on my P/N blog one more time, and I must say that, even though I got a little snippy with him yesterday, he was very nice today.

"Sorry...here is where I was getting the Obama budget. http://www.onlineforextrading.com/blog/federal-budget-broken-down/Perhaps the site has dubious information. I don't view this discourse between you and I as a contest. I view it as a chance for acquiring new ideas and modifying my beliefs. You correctly pointed out that I am not a true conservative...yes...and I am not a liberal either. Does that make me a moderate? Nope. Who cares what my label is! My goal is not to be right, but to gain better insight and let my beliefs evolve as they will.Look, you are clearly well educated in things economic and militaristic.  I am not. That is why I read your blogs.... I learn. That is the value for me. I listen to the left and the right on radio, (I have XM), Fox and CNN, I read Noam Chomsky and William Bennett. My point is I don't cut off any possible avenues to learning and understanding our world. When a topic arises I feel like I am free to form an opinion without limiting myself by internally saying, "oh, I am a conservative, so I have to take this position". It's been a good exchange and I think I have served as an adequate stimulus for you to represent your views. I hope you got as much value from that as I did from some of your information. Good day!"

So, I replied back, of course:

"O.K.  I looked at that web site, and I'm not sure where they get the $671 billion number from.  It may include Iraq/Afghanistan plus-ups, but it's hard to pin those kind of things down.  Anyone who's ever tried to analyze the federal budget, even just a portion of it, knows how difficult it can be.  In any case, their statement that the DOD budget is almost half the federal budget is clearly wrong.  

They may mean that it's almost half of discretionary federal spending, which is probably true when viewed from a certain perspective.  That perspective includes Medicare and Social Security as non-discretionary spending, but I think we could reduce those outlays if we came up with a better system.  In particular, George W. Bush proposed what I thought was a very reasonable plan in 2004 to salvage Social Security, and the Dems and their lackeys in the media immediately cried, "George Bush hates old people" or words to that effect, and G.W. just gave up rather than try to educate people as to why his plan was a good one. In a few years, though, those chickens will come home to roost, anyway.

I thank you for your comments, and I hope I'm helping you in some small way.  Reading other points of view is a good idea - I do it myself - but I'll caution you that Chomsky (since you mentioned him) is a fine linguist but has little understanding of why people actually do what they do.  He's a Utopian socialist, and those folks see the world from a viewpoint that's completely unrealistic.  They should have learned from the experience of the Soviet Union and Eastern Europe, but the only "lesson" they've "learned" is that the "wrong" people implemented socialism there, which is why they think it failed."

And, yes, I find these exchange useful, especially as they force me to think about how things work to defend my views.  I'll reiterate one more time that I have plenty of compassion for the people who deserve it, but I believe in tough love for everybody else.  I've had plenty of real-world experience to convince me that this is the right way to go.  Thanks again for your comments, and tell all your friends about me.  Good day to you, too."

This was a good exchange, because these are exactly the kind of people I'm trying to reach.  I hope I'll succeed eventually, but in the end, I'll have at least done my best.

Mr. "Surrender", a commenter from my Patriot News blog, has come back again for another beating.  He says:

"Well, I am not an economist, and as I've mentioned before, I don't support a single payer government health program, but if I did,  I would suggest a good place to start searching for potential reallocation optioins [sic] might be at this bullet point in Obama's budget....$671,100,000,000. I am sure you already know where I am going with this, but for other readers, this represents just under half of our entire federal budget. and it is of course the Department of Defense budget. If you want to know what brought the U.S.S.R to its demise, check out their economy and their defense budget during their last years. They couldn't afford to keep up with our spending.When you say that the current healthcare system is the best we can have, what you are really saying is...that it is the best we can afford to have at this time given our decision to allocated our tax money to other programs. So long as we choose to spend half on Defense (whether I agree or not is of no consequence), then you are correct...this is the best we can do without raising more tax money. As far as I can tell just like in my household, our country decides what is most important and spends accordingly.  We have decided defense is the number one priority. So be it, but don't tell me there aren't other options. There are, we just haven't made the choice to do it any other way."

And my reply:

Interesting that you admit you're not an economist, nor are you an expert in military affairs, though you don't admit to that.  I, on the other hand, have two particular areas of expertise:  1) economic analysis and 2) military affairs.  I'm not sure where you get your $671.1 billion number; the DOD (White House) budget website claims a $515.4 billion  budget for FY 09:

http://www.whitehouse.gov/omb/rewrite/budget/fy2009/defense.html

I can't tell if this includes plus ups for Iraq, but I believe it does, since the standard budget was always somewhere aroung $300 billion.  The infoplease.com web site, on the other hand, claims an FY 09 DOD budget of $494.3 billion, a minor difference probably explained by rounding and cat and dog expenditures that could be accounted for different ways.  

http://www.infoplease.com/ipa/A0873746.html

On the other hand, again according to infoplease, the federal budget totals $2,921.8 billion, so some quick arithmetic (I'm a mathematician, too, as it turns out) shows that the DOD budget therefore comes to some 17.6% of the federal budget, which is, in my humble opinion, much less than 50%.

You're right, however, in saying that the American people, in their infinite wisdom - the same infinite wisdom that caused them to elect Barack Obama President - could choose to spend less for national defense, through their selection of various government officials.  In fact, in the 1990s, they did just that, as one William Jefferson Clinton presided over an overall reduction of almost 40% in DOD spending.  This reduction in government spending, even with an increase in social programs, allowed Clinton and the Republican Congress to balance the budget, with the happy result that the economy continued its 20-year (at that time) boom.  Of course, in the new millennium, the reduction in our armed forces caused DOD to have to continually deploy the few soldiers we had left to hot spots in Iraq and Afghanistan, but you can't have everything, can you?

I already know what caused the demise of the USSR.  They couldn't afford to keep up with us, as you said, because as a socialist country, their economy lacked the productivity provided by entrepreneurship that ours, as a capitalist free market system, had and has.  That entrepreneurship is fueled by capital available from private investors, capital that exists only as long as it remains in the hands of the private sector.  Increasing taxes to fund other government initiatives causes a one-for-one reduction in investment dollars available to the private sector to spend to work its magic.  Oh, and by the way, one of the beneficiaries of our outstanding productivity is the medical sector, for which modern medicines and improved diagnostic systems are continually being developed.

Of course, reductions in spending could come from DOD, as you have said.  I read what I wrote, and I have never said or even implied otherwise.  I believe you're coming up with this because I asked you what you would do.  Now you have replied that we could reduce DOD's budget, although your numbers are wrong.  I don't agree, because the world is too dangerous a place, in my opinion, to reduce our armed forces any further than they already have been, but knock yourself out trying to sell that idea to the American people.  Maybe you can convince the majority of them.

One final thought here.  The Constitution grants very limited and narrow powers to the federal government, but one of those that is explicitly granted is national defense.  Taxing some of the population to pay the doctor bills for another segment, however, isn't mentioned, or even hinted at, anywhere.  That makes expenditures for national defense constitutional, and expenditures for "national health care" unconstitutional, in my opinion.  No true conservative would say otherwise, and that means that you, sir, are no conservative.

Well, my fan on the Harrisburg Patriot News was back with another reply, so I answered point by point this time.

First, his reply:

"Terry I didn't say anything about expecting the taxpayer to pay for my debt. You assumed I was a "libbie" responding in disagreement with you, and as a result jumped to the wrong conclusion. I was merely pointing out that in many cases...certainly not the majority...that the system is broken. I had and continue to have medical insurance through my employer, but insurance doesn't cover all situations nor is it unlimited. I am grateful for the resources I could gather to help my son. I will dutifully and graciously pay it back little by little.Your assumption that those that don't have healthcare are in that situation because of some moral ineptitude...they bought a boat or a bigger house instead of health insurance...does indicate a lack of understanding regarding the most common reasons many honest hard working middle class folks don't have insurance. I understand all the points you made in both posts. This is the situation we have...I understand that...I live with that...I am ok with it. I am not advocating a government single payer system, just pointing out that what we have could be improved. Compassion indicates a desire to have empathy with other folk's situation's and perhaps even trying to help them improve their situation. I definately get the Conservative part of your tag line, but nothing in our exchanges indicates any Compassion element to your concern. "

Then, my response:

O.K.  Responding, point by point:

"I didn't say anything about expecting the taxpayer to pay for my debt. You assumed I was a "libbie" responding in disagreement with you, and as a result jumped to the wrong conclusion."  I read what you wrote about "bandwagons" (your word) and, yes, when you say "I'll get on your bandwagon when..." I have to assume that you're talking about getting some kind of help with your debt, so I think I reached a logical conclusion.  Your initial response left me free to do so.

"I was merely pointing out that in many cases...certainly not the majority...that the system is broken."  Not <em>nearly</em> the majority.  My original column points out, I believe, why, although some claim the system is "broken", there is in fact no logical, workable fix.  It's just one of those unfortunate situation in life where we have to do what helps the most people.

"I had and continue to have medical insurance through my employer, but insurance doesn't cover all situations nor is it unlimited. I am grateful for the resources I could gather to help my son. I will dutifully and graciously pay it back little by little."  O.K., well, this is information that wasn't contained in your original post, so I wasn't aware of it.  I will say again that I'm sorry for your misfortune, and I congratulate you for you positive attitude.  I don't know why your insurance left you so much to pay, because you haven't addressed that.  I've had a couple of situations where I had major family medical emergencies, but I was fortunate that the co-pays didn't exceed a couple of thousand dollars.  I now have co-pay insurance as well, having learned my lesson in this regard.

"Your assumption that those that don't have healthcare are in that situation because of some moral ineptitude...they bought a boat or a bigger house instead of health insurance...does indicate a lack of understanding regarding the most common reasons many honest hard working middle class folks don't have insurance."  I don't believe, having been an honest hard-working middle class person myself, that I don't understand the reasons why middle class people don't have insurance.  I reported on what I've personally seen and, although I'm aware that there could certainly be other reasons that middle class people might not have health insurance, studies have shown that many potential health care consumers have in fact made the choice to forgo coverage due to the desire to spend their money elsewhere.  I don't consider this moral turpitude; the moral turpitude comes in when they expect other people to pay, and, as I stated, not all of them do expect that. For the people who are simply unlucky somehow, I'm sorry for them, but I'll reiterate that I don't believe there's a workable fix.

"I understand all the points you made in both posts. This is the situation we have...I understand that...I live with that...I am ok with it. I am not advocating a government single payer system, just pointing out that what we have could be improved. "  O.K.  Now we're getting to the constructive part.  Please tell me how you think it could be improved.

"Compassion indicates a desire to have empathy with other folk's situation's and perhaps even trying to help them improve their situation. I definately get the Conservative part of your tag line, but nothing in our exchanges indicates any Compassion element to your concern."  Yes, it does, which is why I'm writing this blog.  The problem is, it's pretty much impossible to help everyone, which means you have to pick courses of action that help as many people as possible.  As for the "compassionate" part of my conservatism, please read my bio for the explanation.  I adopted that byline because I get tired of liberals who claim conservatives have no compassion, when in fact all the liberals' compassion is reserved for people on whom it's wasted, instead of the hardworking folks who make this country great.

Please feel free to write back again.  I'm particularly interested in your plan for fixing the parts of the health care system that you say are "broken." and thanks for your interest in my blog.

A commenter named "Surrender" posted a comment to my latest article (to the Patriot-News blog), and in keeping with my standard practice, I'm posting a reply of my own.  First, the comment:

"You are definately [sic] correct in your assessment of the human nature. In fact I will get on your bandwagon and and get off of mine as soon as I pay off the $72,000 dollars my wife and I owe to various (and I do mean many various) medical providers at this time. But my son is alive for now and he did get the best medical care money could buy. Thanks for the insight."

Next, my reply:

I must be missing something, but I sure don't see any bandwagon here, only an analysis of why national health care has failed, essentially, in other countries, and why it will fail here.  Yes, some countries have achieved something like "universal" health care coverage, but due to cost constraints, which always exist for any service provider, they have had to resort to regulations restricting access to care in one way or another.  In Great Britain, for example, a government medical board decides what care is "worth" providing, and in Canada, private coverage and medical care are illegal.

I take it your "bandwagon" is that you think the taxpayer should pay your $72,000 medical bills for you.  I'm truly sorry for your misfortune, but without more information, I can only guess as to reason you failed to provide health insurance for your family.  I don't want to make assumptions, so I won't, but let me give you some of the reasons I've seen for people not providing health insurance for themselves.  Most of them involved wanting to pay for other, things, such as bigger houses or cars or boats or any number of things they thought were more important to them.  Most of them were young and healthy, at least at the time, so most of them won their gamble.  Some didn't, but not even all of them think the taxpayer should pay to bail themselves out of a predicament of their own making.

However, fear can cloud even the most intelligent people's judgment.  (Just look who sits in the White House, for example.)  One story I find particularly revealing in this regard involves a guy I used to work with, a man who is a normally sensible person but who's judgment was clouded on the health care issue by personal experience.  The conversation on this topic started with him averring that government could and should do something about health care.  He wasn't sure what it was, but he was dead certain there was "something" "they" could do.  When I pushed him for a reason why, it turned out that his daughter and son-in-law have no health care insurance because his son-in-law's employer didn't provide it, and his daughter just worked part time (or something like that.)  Well, that's easy, I said, the son-in-law could find another job with an employer who provides coverage as part of their benefits package.  No, he replied, that wasn't possible, because this company paid a much higher salary than its competitors.

Well, of course they pay more salary, because they don't have to pay for health insurance.  When I pointed out this obvious trade off, and that his daughter and son-in-law had made a choice (as do we all), he wasn't too impressed.  He stood firm, saying that government should at least dictate maximum prices.  In a previous conversation, this same gentleman indicated that he well understood what price caps meant in, say, the petroleum industry - shortages.  When I reminded him of this fact and asked him why he thought the health care industry was any different, he returned to the liberal mantra:  "'They' should be able to do something."

So, I'm sorry Mr. "Surrender", but there's no bandwagon here.  The laws of economics are as inexorable as the laws of physics.  When Newton saw the apple release from the tree, it fell, and when government interferes with the market for health care, there will be rationing and other forms of shortages.  You can take that to the bank, and you're welcome for that bit of insightful analysis, too.

The current signature issue for liberals is national health care, through which they hope to provide full health care coverage for everybody, regardless of whether they want it or not, which will of course be paid for by everybody with an income in the top 50%, whether they want to or not.  Liberals justify this initiative by saying that it’s the “caring” thing to do.

And don’t you dare question the logic of this program, because logic doesn’t apply here; liberals know that it’s just the “right” thing to do.  Do you happen to think that the proposal to provide government insurance to everyone who doesn’t have private insurance will eventually drive private insurers out of business?  Well, you might come to that conclusion because, after all, government insurance will certainly be a lot cheaper.  It won’t be cheaper because it’s more efficient, though.    Government is the epitome of inefficiency.  No, it will be cheaper because, just like the existing Medicare coverage that senior citizens use, it will pay doctors less through legislated pay caps.

And when it becomes obvious that government insurance is, indeed, less expensive than private insurance, and that it furthermore is available to anyone without private health care coverage, it’s not a big leap to assume that any rational person – and yes, consumers are rational, or at least accountable for their own investments, as I’ve demonstrated in previous entries – will give up his private coverage in favor of the government variety.  The only way this won’t happen is if government coverage, because it’s cheaper, creates such a demand for medical services that they have to become rationed due to the short supply that will inevitably result when doctors, who will be paid less, begin withholding their services.  This is what happens in, for example, England, where private insurance is the only option for some people to receive some types of medical care within any reasonable time frame.  Of course, we should all ask ourselves just how caring is it to inflict such a system of rationed care on the poor, anyway?

But if you try to argue that human nature will inevitably and inexorably lead to these results with a liberal, one of likeliest comebacks will go something like this:  “We’ll put our smartest people on it.  They’ll figure it out.”  And when you then point out, as you should, that the smartest people in history couldn’t figure out how to change human nature, another likely response is to say, “We figured out how to put a man on the moon.  Surely we can figure out universal health care.”

That response captures the “logic” of liberalism in a nutshell, because it’s a true “apples to oranges” comparison.  Putting a man on the moon, while difficult, involved surmounting obstacles with technological innovation that was tractable through scientific research, for example developing bigger rocket boosters.  Making universal health care work is going to involve surmounting obstacles of a much less tractable nature, those that are driven by the nature of a human being to try to maximize his or her own wealth and welfare.  It reminds me of when the Soviet Union, which was determined in its early years to implement “to each according to his needs, from each according to his abilities” Marxist socialism, only to find that people weren’t putting forth a determined effort to help state-owned industries to succeed.  Instead, they were working on their own time to create wealth for themselves, either by stealing from their state-owned employer or by creating goods on their own to trade on the black market.  The Soviet’s answer to this was to try to create a “New Socialist Man”   –  someone who embraced socialist welfare over his or her own self interest.  We saw how that worked out.

So comparing health care to the space race really is an “apples to oranges” comparison.  One involved improvements in technology, and the other requires changes to human nature.  It's much easier to upgrade machines than it is humans, and it's arguable whether such upgrades would even constitute improvements in the case of people, given the experience with the "new socialist man" experiment.  It's best, in my opinion, to work with people just as they are.

One final point.  When your libbie pals’ best response is to say, “We’ll figure it out,” they’ve just lost the argument, because they’ve admitted that they’ve failed to reason out exactly what the inevitable consequences of their silly ideas are.  Just remember, hope and belief are no substitute for analysis and logic.

Time, the news magazine that never met a liberal economist it didn't like, has produced yet another article (not all by Time - see my posts from two or three weeks ago) concluding that markets are irrational.  The implicit conclusion, hinted at by the article's last sentence - "markets stand no chance of ever getting prices right" - is that we need - need - government regulation of the financial markets.  Pretty soon, liberals hope, enough people will reach this same conclusion that it will be converted to explicit policy, and not just for financial markets.

To give Time some credit, they do mention that Milton Friedman, probably the greatest economist that ever lived and a proponent of financial market freedom, understood quite well that markets aren't rational; he believed only that, quite logically to anyone who's ever worked in government, they were more rational than government regulators.  This is logical because investors, who generally put up their own money - have some "skin in the game," as the saying goes - while government regulators don't.

And herein lies the key point on which a liberal rag like Time will never elaborate, because as liberals, they simply don't believe markets can or should be free.  That point is that accountability is important in protecting the integrity of markets.  Investors who put up their own money are accountable for any disaster that befalls them - caveat emptor.  But if government officials err in their calculations and decisions, who pays the price for that?  You and I do, friends.  So taxpayers, as long as the Dems control the government, get out your checkbooks.

Anyone get to see CBS Sunday Morning Show last Sunday (Fathers’ Day)?  I just got to watch a tape of it, and I must say, the Mainstream Media’s fawning devotion to the image of Barack Obama hasn’t slackened one bit.  If anything, the liberal MSM is slavering over him more than ever.

Some of you might remember the positively rhapsodic descriptions of the Obama Presidency, then just a few days old, back just after Inauguration Day.  Comparisons to FDR were common, as in, "Barack Obama is here to save us from economic catastrophe," for example.  I remember thinking that in terms of domestic policy, the comparisons were probably more than apt.  In terms of foreign policy, however, there is little similarity.  I can't, for example, imagine FDR, who was at least a strong President, coddling outlaw states such as Iran and North Korea.

Well, the latest iteration, as seen Sunday on CBS, is Barack Obama, superparent.  The show devoted a whole segment to what a great father Obama is, in spite of the fact that he led a deprived childhood, his natural father having left him and his mother when he was but 2 years old, the poor baby.  CBS’ fawning host even went so far as to say, “Every parent in America is watching you raise your children.”

I think I’m safe in saying that every parent isn’t doing that.  Some of us are busy trying to win the election in 2012 in an attempt to limit the damage he’s doing selling us out to Iran and Korea and igniting inflation in the economy a la 1979.  Can anyone say, “Welcome back Carter?”

But come on, MSM.  Can we try reporting, once in a while, some of the negative things occurring as a result of Obama’s misguided policies?  After all, the negative vastly outweighs the positive, and some of it is even a little bit more important than the Obama kids.

Last week I published a preliminary review of Dan Ariely's new bestseller, "Predictably Irrational," in which the author starts out by trying to establish that supply and demand equilibrium, the foundation of classical economic theory, is a "fallacy."  I believe I rebutted that argument, or at least showed that it's irrelevant because accountability still matters, no matter what the state of mind of the individual consumer when he or she makes a purchase.

Earlier this week, I finally finished the book.  While it was generally interesting and credible, I did still find that Ariely is making extrapolations of his research that are probably unfounded.  Chapter 4, for example, details some experiments on social norms vs. market norms as a motivational tool.  Social norms govern those tasks that are performed as a "favor" for those receiving the benefits, while market norms govern those tasks which are performed for money.  Ariely claims that social norms are more cost-effective, and his experiments seem to bear this out:  subjects performing tasks as a "favor" to the researchers perform about as well as those receiving substantial monetary compensation and much better than those receiving nominal compensation.

Ariely then extrapolates these findings to the real world, noting that monetary compensation can often be exorbitantly expensive and that companies who treat their workers and customers as "family" frequently get better results, both in productivity and in customer relations.  He also cautions that trying to transition abruptly from the "family" model to the market model can cause severe disruptions, such as when a bank that presents itself to customers as "family" suddenly charges a fee for an overdraft check.  The negative reaction to such an event, which is hardly how "family" members treat one another, can be worse than simply maintaining a non-family business environment with customers.  These conclusions I can buy, and they're worth noting.

However, Ariely steps over the line when he rhapsodizes over attending the "Burning Man" festival, an annual socialist gathering in Nevada where all goods and services are exchanged directly in a barter economy, saying, "Burning Man was the most accepting, social, and caring place I had ever been."  He seems to think that classical economists can learn something from this non-monetary economy, but he does go on to admit that "I'm not sure I could survive Burning Man for all 52 weeks of the year."  However, he clearly he thinks that a society relying more on social norms and less on market norms would be a better place.

Well, sure it would, professor, right up until the time that two people in this barter economy can't agree on what a fair exchange would be.  Is a massage worth two meals or vice versa or should they be exchanged one for one?  Or are some meals of sufficient quality that they're worth two massages but other, lesser quality meals only worth one?  These are the issues that the pricing system, relying on monetary exchange, works out quite well using that "fallacious" supply and demand mechanism.

But the ultimate blow to the Burning Man barter economy will come when someone receives good and services from other individuals and then refuses, for whatever reason, to pay them back at all - the freeloader!  It only takes one freeloading individual to turn the whole system on its head, because as soon as one person gets away with it, almost everyone else will see the advantage and try it, too.  And you know what these freeloaders will say:  I just can't pay you back, because I'm sick, hurt, depressed, etc. due to my bad childhood, mean people, bad judgment that wasn't really my fault, etc., and if you don't keep letting me freeload, well, then you just don't care, and that makes you one of the mean people, and you suck!

Of course, we've heard this kind of whining before, haven't we?  And since we're not at Burning Man, we know what to do about it, don't we?

Another letter to the editors of the Harrisburg Patriot-News:

For years, conservatives have been complaining that the main stream media (MSM), over 90% of whose reporters admit to being registered Democrats, slants the news to be favorable to liberal causes.  This slant can take the form of using positive descriptions of liberal policy initiatives and negative ones to describe conservative causes, or it can be playing up positive results due to liberal policies (however few those may be) while downplaying their disasters (which are many) and vice versa for conservative initiatives.

I've seen many examples of all these, but in Thursday's Patriot-News, I saw another outstanding example of the latter phenomenon:  downplaying what can at the very least be described as extremely poor judgment on the part of the nation's leading liberal, Barack Obama.  Obama's beloved pastor of over 20 years, the "Reverend" Jeremiah Wright, was quoted as saying that Obama hasn't talked to him since their "relationship" was "severed" but that currently, "Them Jews [sic] aren't going to let him talk to me."  So it seems that "Rev." Wright's affinity for Louis Farrakhan hasn't lessened any, and it appears that neither has his affinity for Barack Obama.

The Patriot-News wasn't the only MSM organ to ignore this story; I didn't see it anywhere else, either.  If one of John McCain's close associates had made such a statement, you can bet at least some of the media would have given it some coverage.  When the President of the U.S. exercises such poor judgment (at least, if not more than that), it's news, because who knows in what other arenas he's using poor judgment.  And poor judgment on the part of the President can be extremely harmful to this nation.  Come on, MSM, let's play fair.

I just started my summer reading with an interesting book my daughter gave me.  She's about to graduate with a BA in Economics, and she's interested in pursuing a graduate degree that combines the disciplines of Economics and Psychology, so it's no surprise she gave me the book "Predictably Irrational" by MIT Psycho-Economist Dan Ariely.  The book, which was a New York Times bestseller, consists of descriptions of Ariely's psycho-economic experiments with students at various universities - the exact one depending on who his collaborators were for that experiment (and he has many collaborators) - and his extrapolations of their observed behavior to players in the American economic system, which is to say, every American.

I'm somewhat familiar with the kind of experiments Ariely has been conducting, having participated in some similar ones as an undergraduate.  The participants generally play a game, usually on a computer (or, in my day, a computer terminal) and usually with some actual small monetary payoff, which then records their responses and enables the researchers to draw conclusions about their behavior as it relates to economics.  The payoff, which one can be sure the participants are trying to maximize even if it is small, ensures that their behavior is responding to economic incentives.

Although I'm not finished with it, I'm finding the book quite interesting.  Probably the most interesting part is the author's attempt to generalize the conclusions from his experiments,  because these experiments, although the results are driven by the subjects' attempt to optimize payoffs, just like economic behavior in real life, are far more simplistic than the problems one actually encounters in trying to optimize real-life decisions.  For example, the second chapter, entitled "The Fallacy of Supply and Demand" ("fallacy" - there's a loaded word if I ever heard one) deals with what the author calls "arbitrary coherence," by which he means that companies can essentially create demand for their goods and even ensure elevated prices by associating them high-priced and/or other desirable features.  One of the examples he uses is a dealer who had the market in black pearls cornered - in that he had the only supply of them - in the early 1970s, except that there was no demand for black pearls, only white ones.  This businessman therefore ensured that pricey Manhattan jewelers displayed the black pearls in their stores, thereby associating them with high-priced jewelry and creating a "must-have" item for the Manhattan jet set, a crowd well-known to have a lot more money than brains.

This idea isn't new.  In fact, over 50 years ago, the well-known Keynesian John Kenneth Galbraith first wrote about dastardly corporations creating demand for unnecessary items in his book "The Affluent Society."  Galbraith reasoned that Americans in the post-war world were so affluent that they were trying to find ways to spend money, and conniving corporate marketeers were finding ways to help them spend it, on "useless" products for which demand was contrived by marketing wizards.  Ariely takes this notion one step further by saying that while traditional economic theory asserts that price is determined when "informed" consumers enter the marketplace to bid for goods and services produced by "competitive" suppliers, this assertion is a fallacy.  He claims that consumers are influenced by psychological factors that trick them into overbidding for goods and services, but unfortunately, the examples he provides to demonstrate this fall a little short.  In none of the cases he presents is there any true market in the sense that enough consumers and suppliers are interacting to drive an equilibrium price, a condition necessary for economic theory to operate.  In the case of the black pearls, for example, there is only one monopoly supplier, so that he can charge whatever people with more money than they can spend will pay.

However, Ariely's biggest leap comes at the end of Chapter 2, when he states, "If we can't rely on the market forces of supply and demand to set optimal market prices, and we can't count of free-market mechanisms to help us maximize our utility, then we may need...the government (we hope a reasonable and thoughtful government) must play a larger role in regulating some market activities, even if this limits free enterprise."  Actually, this is two big leaps.  The first leap is the one I alluded to above; Ariely's examples and experiments have in no way, shape, or form demonstrated that free market equilibrium can't be reached through intelligent, or at least thoughtful, decision making.  But the second leap is even bigger, at least to anyone who's ever worked for or with any government agency - a reasonable and thoughtful government!  Does such a thing even exist in real world?  If it does, I've never seen it.

Government isn't "reasonable and thoughtful" because it doesn't have to be.  When consumers make the wrong choices, who pays?  They do!  When government makes wrong choices, everyone pays, which is the same as saying no one pays.  So, Professor Ariely, the real issue isn't one of thoughtful or intelligent decision making.  The real issue is accountability.  The great advantage of the free market system is that decision makers - individual consumers - are the ones who pay the price for mistakes.  That provides a tremendous incentive to not make mistakes.  When government inserts itself into the free market to "regulate" it, that incentive is gone.  Ariely has unwittingly provided a blueprint for the Obama administration's economic policies, and the next few years should provide a good look at what a fallacy "The Fallacy of Supply and Demand" really is.  Liberals are so irrationally predictable.

Another letter to the Patriot-News Editor:

"It seems Paul Krugman is concerned about what he terms an "explosion of debt" over the last quarter century, which he contends set the stage for the latest international financial crisis.  Although he never explains how they're related, Krugman is certain that, somehow, the crisis began when the Reagan Administration both ran up public debt while deregulating the banking industry, which caused a concomitant explosion of private debt.

Liberal need to quit harping on the so-called "Reagan deficit" and the so-called "Clinton surplus" because, in accordance with Article 8 of the U.S. Constitution, Congress legislates budgets.  The President only executes them, and the deficit of the 1980s occurred when big-spending Democrats controlled Congress, which the surplus of the 1990s occurred under the Republican Party.

As for private debt, no one in government ever held a gun to the head of investors to force them to make bad investments, either in overpriced houses or under performing stocks.  People need to take ownership of their own bad decisions and stop expecting government to bail them out all the time, and that goes for individuals as much as it applies to corporations.  So please, people, stop crying about your bad luck and start taking responsibility by voting for a return to constitutional government.  We'll all be better off for it in the long run."

You know, the Teens, the upcoming decade that will include the years Twenty-Thirteen through Twenty-Nineteen  Will they look like the Nineteen-Thirties or the Nineteen-Eighties?

The Nineteen-Thirties were arguably the worst decade this country has ever experienced, at least economically.  They began with the Great Depression in full swing and ended with it still going strong, but, remarkably, the same party was in power for most of a decade marked by economic failure.  How did this happen?  A glib career Democrat politician convinced the American voter, with high-flown rhetoric, that he was doing a great job fixing a problem that was all the making of a hapless Republican President.  Somehow, he persuaded the nation while standing for election for President for the third time that in 1940 the Great Depression was the fault of Herbert Hoover and the Republicans, who had left office almost eight years earlier.

The Nineteen-Eighties, on the other hand, were arguably the best decade this country has ever experienced economically, and the prosperity continued for most of the next two decades as well.  The followed the era of "malaise" in the 1970s, a decade marked by "stagflation" which ended with the one-term presidency of Jimmy Carter.  The complete failure of both Carter's domestic and foreign policies led to the upset election in 1980 of one Ronald Reagan, a bold communicator who could make the American people understand why conservatism was good for them.  Reagan jumpstarted the stagnant economy with tax cuts and then went on to defeat the Soviet empire in the Cold War to begin not only a new era of prosperity but also of American dominance in international affairs.

In its economic policies, the current administration resembles the free-spending Roosevelt Administration, and Barack Obama certainly has been successful in convincing average Americans that he represents a "change" for the better.  Of course, FDR, a strong President even if his economic policies were extremely flawed, would never have countenanced appeasement of dangerous foreign regimes.  In that, Obama much more closely resembles Carter, and his combination of weak economic and foreign policies should be setting up a scenario very much like 1980, where we will elect this generation's answer to Reagan in 2012.  In any case, at this point, the best we can hope for is that we have a new President by Twenty-Thirteen.  That way, we can have some hope that the Teens will look like the Eighties and not the Thirties.

Fauxconomist Paul (The Kroog) Krugman actually published a column with a good idea last week.  Go figure.  His idea was presented as the prologue to a discussion of the Waxman-Markey bill, characterized as "centrist" by the Kroog.  Kroog says that since "global warming" is dooming us, this "disappointing" bill is better than nothing because, I guess, it will ensure that we are less doomed.  I also can't determine which leftist Kroog thinks is the centrist, Leftifornia's Waxman or Taxachussets's Markey.

But anyway, in the prologue, the Kroog states that "it was easy to take stands during the Bush years" because "one could, with a clear conscience, oppose all the administration's initiatives."  This got me thinking.  I've never read one thing that this internationally-acclaimed (in socialist circles) fauxconomist has written, and it actually floors me that some "university" awarded this guy a doctorate in economics.  Oh, wait, it was MIT, land of the economic tweakers, people who think they can model the economy with mathematics well enough to use tax money to turn it on a dime.  Never mind.

But here's where the Kroog has, perversely (ha ha!) hit the proverbial nail on the head.  Since he lives in the liberals' opposite-land universe of delusion, it's possible for me to read anything he writes and automatically oppose it.  I've been doing that for years anyway, so this will definitely save me some time.  Try it, and if it works for you, be sure to thank Paul Krugman for his brilliant idea.

Another letter to the P-N editor.

You just published a letter from one Andrew George claiming, among other things, that wages are lower now than for any time since World War II.  This is misleading.  According to the Department of Labor website, real hourly earnings (in 1998 dollars) were just under $8 in 1947, while today they are just over $13.  Of course, this includes benefits, but as any intelligent person knows, to get the true picture American workers' compensation one must also include benefits.

American workers' earnings actually peaked at about $14 an hour in 1973, just before the first OPEC oil embargo.  This is easy to understand, since the oil embargo represented a major shift in resources away from the Western world to oil-rich nations.  This trend will continue until we find some significant efficient alternative source(s) of energy.

However, some workers in some industries do considerably better than $13 an hour.  According to ABC News, UAW members working in the American auto industry receive over $73 an hour, vs. about $43 an hour for foreign auto manufacturers' U.S. plants.  Those numbers represent benefits as well, but they represent real costs for U.S. auto makers currently struggling to compete.  And why do they pay so much?  Because those benefits were extorted by the UAW in the late '80s and early '90s under the threat of strikes.

So yes, Mr. George, unions are to blame.  Don't believe the claims of people like Andrew George, who say that deregulation is to blame.  Deregulation forces American companies to compete for customers using such incentives as lower prices and/or better service, and that's a good thing for the American consumer.

So President Barack Obama has now taken full control of his new automobile manufacturing business, having mandated that U.S. automakers attain the so-called Corporate Average Fuel Economy (CAFE) standard of 35 miles per gallon by 2016 while also reducing "greenhouse gas" emissions by 30% by the same time.  Apparently, Obama the mechanical engineer believes that achieving these two standards is a related effort, which, I admit, it may well be.  Better fuel economy might well lead to 30% lower emissions, although it really would take an engineer to figure out the exact relationship.

Combining the achievement of these two standards represents the marriage of two of the fondest delusions of the left wing.  First, leftists are convinced that Detroit automakers are failing only because they don't produce vehicles that are sufficiently fuel-efficient.  It has nothing to do with the fact that GM, Ford, and Chrysler pay almost $75 an hour, including very generous benefits, while U.S.-based foreign auto manufacturers pay less than $45 an hour for the exact same work.  No, it's the mpg, stupid, say the Jim Carville clones, and pay no attention to the fact that foreign-made gas-guzzling SUVs sell quite well, too.  Therefore, mandating a CAFE of 35 mpg by 2016 will save Detroit automakers from themselves, and our auto industry, too.

Second, liberals have completely bought into "anthropomorphic global warming" as a way of saying that humans are causing the Earth to warm due to carbon dioxide emissions which will cause catastrophic warming of the atmosphere.  No matter that the Earth was actually warmer 1000 years ago than it is today, with no widespread coastal flooding or tropical storm activity.  In fact, the only provable anomaly due to higher global temperatures 1000 years ago was the presence of vineyards in England, which at that time had a wine making industry that rivaled that of the French.  No, man-made climate catastrophe is just around the corner, unless we somehow contain the outrageous excesses of capitalism by enforcing the emissions standards mandated by the Kyoto accords.  No matter that two of the world's biggest economies, China and India, don't have to meet those standards.  No, the evil capitalist empire America must be forced to meet them, or the human race is doomed.

In a few years the folly of both these claims will be obvious, as the climate fails to respond to reduced carbon emissions as it continues to respond to the many more significant climate drivers, such as solar activity, for example, and as UAW-dependent Detroit automakers continue to need infusions of taxpayer dollars to operate.  Unfortunately, as Americans get more and more used to surrendering their freedoms in response to the outrageous claims of the anti-American left, one has to wonder if our country can survive this socialist onslaught.  The Democrats are betting not, but let's make them lose that bet.