Trust and the Level Playing Field: Local Newspapers

Posting is light due to work and weather.

Hit the title above, or this link, to be taken to an article I think you should read.

Carrots, Bikes and Gresham's Law

There are fundamentals in economics. As the current financial problem continues to point out. But maybe, not in ways that are apparent.

It is hard to see what effect the massive infusion of federal funds into markets is having. With one exception; you can see market effects by examining clearly defined markets, markets like the New York Stock Exchange, the Chicago Merc, and the NASDAQ.

One of my biggest concerns about our President has been his willingness, almost in terms of preference, to market intrusions by the federal government. Rather than reform government, we have seen major increases in the role government plays in our daily lives. Had the President remained dedicated to his attempt to reform Social Security, he may not have had a loving Congress, but here we are today and Congress still doesn't love him.

Governments, especially our federal government, have incredible powers. But this recent round of intrusions by the government--through actions by the Federal Reserve Bank and Treasury--are rocking the markets we defined above.

It has always been my opinion that there are two types of people, those smarter than me and everybody else. And there are a lot of smart people who work the markets in New York and Chicago. And they are very aware of how difficult it is to value money when so much of it is coming into the market.

Consider carrots. If there were only ten carrots and millions of people who desired carrots, we would tend to see that the price or value of the carrot would be higher than if no one desired carrots.

So, too, with cash. Everybody wants cash. And the government is handing it out by the truckload, no, by the carload. Investment into financials? Another 700-billion? Another 300-billion? How much more tomorrow?

It's hard to guage how much the money you're holding is worth when you compare it to the value of money being put into the market through federal action. It creates pressures to continually short the values of stocks, in financials, but not only in financials. What does this cash shock mean in terms of valuing equities? With every intrusion by the federal agencies, the result has been to re-value all equities, and not just the financials.

In a market where there are no losers, what is the value of a thing? Remember Gresham's Law? Why would I put my money into a market when the federal government has signalled its willingness to put its money into the market? How can we begin to establish good pricing signals while the government infuses billions upon billions of dollars into markets?

I am not a non-interventionist. But its going to take a guy like Kudlow to explain to me why this unparalled intrusion by the government into markets, and the guarantee that there will be no losers, is good for rational markets. I can't see it. And if you've checked the Dow Industrials Average, you'll see that I'm not alone.

We must allow for failure. And, my top two picks are Fannie Mae and Freddie Mac. Sell the assets. Take the hit. Let markets adjust.

End the federal intervention.

Vote Early and Often: The Oregon Senate

I had originally titled this piece "The International Lifestyle of the Rich and Famous." Well, not so much international. If you think I would deliberately mis-lead you, it wasn't so much that you won't be mislead; it seems the whole purpose of elections is to present a kind of magic show, full of misdirection. Get used to it. More in the Second Half, as sports announcers say.

Half the Senate and all of the House has to face election this year. In Oregon, Senators are elected to four-year terms...State Representatives to two.

The State Senate is pretty easy. There are thirty senate districts. There are two representative districts in each senate district. This used to make some kinda sense back before gerrymandering completely destroyed common sense in districts. If you've ever wondered what a "non-gerrymandered" state looked like, I offer you Kansas.

Kansas leads the United States in rectangularity. And they are proud of it.

Yannow, Oregon is a pretty rectangular state. So how do you explain this?If you really want to be thrilled, click on the pic and be taken to Secretary of State Bill "One of Fifty" Bradbury's place. There you can find your particular House or Senate District, and ask yourself why normal borders, like counties and communities, are forgotten, nay, ignored, in our current districting plan.

The reason? Democrats controlled the last gerrymandering. And with the courts--that is, the Oregon Supreme Court--firmly in the hand of Democrats, the ordinary guy has no shot at a fair deal.

So, given that if you're a rural guy, a "Blue" Democrat or a Republican, chances are that your vote is being swarmed by metro areas within your district, to dilute your concerns with those of metro folks.


So, without any further ado, let us get into who should win, and who should lose. Starting with Senate District #1.


Winner in District #1 is incumbent Jeff Kruse. Roseburg guy. Okay guy.


Winner in District #2 is incumbent Jason Atkinson. Grants Pass guy. Okay guy.


Winner in District #5 is Joanne Verger. Looks like what you'd want your Gramma to look like. Take a look at her votes. She's not as dangerous as most Democrats. She wants to fix things. Mebbe it's time we re-elected someone who wants Oregon to go to work. Huh? Yep. Work.


Winner in District #9 is Fred Girod. Fred has one of those districts that defy description, and yet he's done a great job of holding onto the fundamentals of what makes Oregon great. You and me working, and taking care of our families.


Winner in District #12 is Brian Boquist. Brian is going to take over the district previously represented by Republican Gary George.


Winner in District #14 is Lisa Michaels. She went to Kansas. Rock. Chalk. Jayhawk. 'Nuff said. And she's a fit for the Sunset District. (Note to Lisa: you may want to change the front page of your website. Look, I wanna get rid of David Wu, too. But you're running against Mark Hass. Mark is a dick, too. Wu is a dick. I wanna get rid of all dicks. But you're not running against Wu. Lose the front page thingy, okay?)


Winner in District #18 is John Wight. Right in the heart of what used to be Phil Lang's district, no? Another former Kansan. While the D's keep finding former New Jersey mobsters to run, somehow the Republican party has tapped into the native intelligence of Jayhawkism. (Unless, of course we find out that Mr. Wight went to KSU. Then we gotta fight.) The incumbent? Can you say Karl Marx?


Winner in District #21? There are no winners in District #21. The incumbent is an environmental lawyer. Running unopposed. We lose. The entire state.


Winner in District #22? Again, no winners. Only losers.


Winner in District #23? No winners. As long as Oregonians are viewed as needing rehabilitation instead of opportunity, we're just going to continue to throw resources down the drain. Standing up means standing up.


Winner in District #25? Laurie Monnes Anderson. Or, Ron Sunseri. See? It's a win-win. Senator Anderson's claim to fame, though, is what she attempted last session. She voted for the annual audit of state funds. Actually, keeping Anderson is a good idea.


Winner in District #27? Chris Telfer. She's smart, she's hot. Yeah, I said it. I'm older. She's hot.


Winner in District #28? Doug Whitsett. Incumbent. Deserves re-election.


Winner in District #29? Dave Nelson. Incumbent. Deserves re-election.


Winner in District #3o. Ditto. Incumbent. Works for you. Deserves re-election.


Vote for these guys, and Oregon will get better. It's time for us to take back our state. If we don't do it now, when will we get around to it?

Oh, and the latest economic news? Oregon faces a shortfall in funding that is currently estimated at more that two billion dollars. The Unigovernor, Ted Kozingoski has announced his goals for the next legislature. They are:

"* Education, from pre-school to graduate school;

* Economic stimulus in the form of green and sustainable transportation systems;

* Making Oregon a world leader in renewable energy and the use of electric cars; and

* Health care, “especially for every Oregon child up to age 19.”

Fundamentals, like roads, law enforcement, not so important. Opening up our forests? Nope. Working for our fishermen? Nope. Making Oregon a world leader in "renewable" energy? Yep. Wasting money on "stimulating" green and other stuff. Yep. Reforming our public schools? Nope.

Fundamentals. We won't get back to fundamentals, even in an economic crisis, without adults in Salem. Men and women who have had to write a paycheck. Who have worked in jobs where people made--and lost--money.

Astoria Vandalism: FBI and Terrorism

From RoguePundit.

"your laws will have no meaning past the setting of the sun."- -VSE

Hey...take a look at what you're neighbors are doing.

It's Direct Action. It's "Change!"

Some may think I accuse the Left of having no decency. That's not true. It's just not a quality that is expressed often.

Vote Early and Vote Often

(Do me a favour and click on the pic...open a new window, and place it into the background while you read this post. It's a little catchy tune to listen to while you read my "Vision" for the future. We all love Visions, don't we? Oh, and I owe this little ditty to my fellow blogster, Max.)

If you live in Oregon, chances are you've received your November General Election Ballot.

Time for some review.

If you live outside of Oregon, here's two reasons to never adopt a "vote-by-mail" election. One is, as that we all receive our ballots before the rest of the nation, no candidate will ever search for our votes. How do you build a campaign when the worst of us never wait for the campaign to build?

Second, because we "vote" by mail, there is no sense of ritual that attends the rest of the nation as they approach their vote. Getcher ballot, mark it, senselessly, and mail 'er in. There. Democracy.

If you've ever wondered why we vote like we're the dumbest people in America, it's because we vote like we're the dumbest people in America! We don't need to percolate our thoughts. We're Oregonians! We do things differently here.

If you haven't dealt with your ballot yet--like it's a past due J.C. Penney's bill--then I'd ask you to take some time to look at your ballot with me. Let's go over it together.

First, the "National" ballot:

Sure, you could vote for Cynthia McKinney, but I'd recommend that if you view Ms. McKinney as your number one choice, you vote instead for Barack Obama. They're both Socialists, although one is running as the Democrat candidate. And really, if you're a Green, you're voting for the Father of Green, Ralph Nader.

If you have any sense of self-worth, you're going to vote for John McCain. I know there are those of you who think you should vote for Bob Barr--sort of a "statement" vote--but you're smart enough to know that a vote for Bob Barr is a vote for Ralph Nader. And you don't want to do that, do you?

Then there's the Senatorial campaign. I would have, until today, given you advice to vote for Jeff Merkley. That is, until I saw this. Then I realized that Merkley really is a dick, and only a dick would try to foist off this kinda advertising as "truthful". Folks who deliberately mis-represent are dicks. Jeff Merkley is a dick.

Next up? Congressman for the 1st District. See, I live in Northwest Oregon. The balance of my state recommendations will follow my local recommendations. Think Globally, Act Locally.

David Wu is a waste of good air. A recipient of Freddie Mac and Fannie Mae lobbying dollars, Congressman Wu is a good reason to vote for Goli Ameri. Only Goli isn't running again. Sure, David beat the rape charge, but more importantly, he has been silent on issues that would help Oregon lead in economic development. But I guess looking for a Democrat to lead anything in economic development is kinda an oxymoran. Let's just deal with Dave as a moron. Anyone but Congressman Wu. My fav is H. Joe Tabor. No chance of winning, but WTF, eh?

Secretary of State is a lot easier.

I remember a time past when my calls to the Secretary of State's office were responded to with a certain competence and alacrity. The Secretary of State enforced Oregon's election laws. Since whatzhisname has been Secretary of State, we've ignored the law. But, what do you expect from guys who adore AlGore?

So, vote for Rick Dancer. Not the brightest bulb in your drawer. But honest. It will be a nice change.

State Treasurer.

Probably the most important post in Oregon during the next four years. Really. Just hit this link for our current state treasurer. If elected officials were guys you could sue, you'd be hearing "Ka-Ching" during the next four years. Our current state treasurer has been dealing in deriviatives, and lost billions of dollars in state funds through his investments. But we can't sue him. But we can elect an honest, fair dealer. That would wake up our Governor.

Commissioner of Labour, Supreme Court Justices? Who cares? Brad Avakian is one of those guys pushing for a "new" Oregon constitution. I'm not sure he's a feller I'd vote for. And the Supremes are running unopposed.

Friday I'm heading up to Forest Grove for a meeting. The state's Forest Advisory Committee is meeting. So, I've got some work to do before showing up there.

Tomorrow why don't we look at individual house and senate races across the state. I know that it won't impact those of us who live in God's Country, but it will impact us.

Here's the info on Friday's meeting:

WHAT – Discussion of the Oregon Department of Forestry's development of management strategies for the Tillamook and Clatsop state forests to meet performance measure targets set by the Oregon Board of Forestry.

WHO – State Forests Advisory Committee, made up citizens, interest group representatives (timber, environmental and recreational groups). Committee membership is listed at: http://egov.oregon.gov/ODF/STATE_FORESTS/docs/SFAC_Roster.pdf

WHEN – 8:30 a.m. to 3 p.m. on Friday, Oct. 24

WHERE – Forest Grove Community Auditorium, 1915 Main St., Forest Grove. SFAC meetings are open to the public, and an opportunity for public comment is provided at 9:20 a.m. and 2:30 p.m.

WHY – A forum to discuss issues, opportunities and concerns, and offer advice and guidance to ODF on implementation of the forest management plan approved for northwest state forests in 2001. The plan calls for ODF to actively manage the state forestlands for economic, environmental and social benefits. A balanced approach is used to generate revenue for trust land counties that deeded lands to the state, while maintaining environmental and social values for the citizens of Oregon.

MORE INFO – Contact: Jeff Foreman, Oregon Department of Forestry, 503-945-7506

Carrots and Bicycles: Entry Into Markets

(Previ0us posts here, here, here and here.)
What is the price of a thing?

If you had carrots, what would it take to make your carrots my carrots?

Transaction is a word that we use to describe the process whereby you have a carrot and I end up with your carrot. That carrot was yours, it is now mine. A gift of carrots is a transaction. A purchase of carrots is a transaction. Theft is not a transaction. Theft, what lawyers refer to as larceny, occurs when property is taken against the will of the owner. Theft occurs even if the owner of property doesn’t know that theft has occurred.

Theft, or larceny, is an interesting topic and one well worth some time investigating. Let it suffice, for the purpose of our discussion, that we note that theft is not a transaction, but an illegal taking, the conversion of someone else’s property for our own use, without the consent of the owner.

Consent, too, is an interesting word. One of the key features of being an American is the legal standing that each individual has. You and I have grown up secure in our independence. Our freedom. We were the first nation on earth that was based upon the idea—or the ideal—that our government was based upon our consent. This was a huge break with the past, where citizens of a country were considered subjects of that country. This difference was so distinct that it was enumerated in the fundamental document of our national contract, our Constitution.

If you are going to take carrots to market, they are your carrots until you consent to transfer them to the control of someone else. Price is the word we use to capture the value of an item at a particular time. If you make a gift of carrots, you can describe the price of those carrots as zero. And a transaction has occurred.

What happens when you want five apples for a carrot?

If you don’t want to gift your carrots to me, can you be compelled to give me carrots?

No.

Even if I want to compel you to give me your carrots, I cannot.

This is the part that Leftists and Socialists don’t get. And yet history is replete with examples of the why and the how it doesn’t work. There is something about Leftists and Socialists that depends upon a type of thinking that separates them from the historical and economic lessons of the past.

When you compel a man to give the property he owns for any price less than what he wishes to sell, you’ve created a new class of existence within a society. When a man is compelled to work without the freedom of choosing his own economic outcomes, the system used is referred to as slavery. We know that compelling an outcome of property transfer without consent is theft. But theft is a legal description of an event. When laws are passed that require men to consent, can it legally be considered theft?

Well, yes and no. As a purely objective exercise, you cannot be free and be compelled at the same time. (Hold it! Above you said that “even if I want to compel you to give me your carrots, I cannot”. What’s up with that? Some of the class has it figured out already. But I’ll get back to this, since you ask!)

On a normative policy basis, your government can attempt to view it as “not theft”. This is because of what we refer to as the coercive power of the state. You are familiar with this. When we gave up the custom of carrying a weapon, we ceded the authority and control over crime and general lawlessness to the State. This was referred to in the West as our catching up with civilization. We went from being responsible for direct action against crime and criminals, to responsibility though proxy. This is because we accepted the fact that given comparative advantages, solving your own problems had a list of associated risks that were ameliorated by hiring a proxy to resolve your disputes. It was less likely that you’d kill an innocent man. It was less likely you would be killed by a faster draw.

So, essentially, the coercive power of the state is a simple statement that the government can use force to compel you. Whether it’s injury, imprisonment, or death, the power of the state is pretty broad, and pretty frightening.

And since legislatures pass laws that define what is legal and what is illegal, legislatures have almost unbridled powers to determine how that coercive power is to be employed.

This is important for you to think about when you ask yourself if you’re living in a Free Market economy, or whether you view yourself as living in a Command economy.

If we lived in a Free Market economy, how would we resolve the tension that exists between buyer and seller of carrots?

First, we notice a lack of compulsion. Second, we notice consent. So the quick answer to what resolves the tension between buyer and seller is the buyer’s willingness to pay whatever price the seller chooses. In a free market economy this could result in zero, one or all carrots being sold. When we started our examination of Carrots and Bicycles, one of the first things we noticed is that a lack of equilibrium in the market wasn’t a bad thing. Lack of equilibrium is simply a statement that describes a condition where either supply or demand of a thing—in our case, carrots—has left either sellers with unsold carrots or buyers with unpurchased carrots.

Another formal concept of free markets is referred to as entry, or in the converse barrier, to market.

What is the entry cost into the market for carrots? That is, what do you have to come up with to begin your life as a carrot producer? Let me introduce you to Joe.

Joe watched us attempt to buy and sell carrots and apples and had an idea. He looked at my apples and decided that he wanted some. You wanted five apples for a carrot. Joe talked to me and found out that I was willing to buy five carrots for an apple. And Joe said, “Yeah, I can do that.”

Joe had raised carrots in the past, but never enough for him to consider any of those carrots as being surplus to his needs. Always, in years past, had he planted one row of carrots in his garden. But now, looking at my demand for carrots, he felt it would be very easy to increase the amount of carrots he produced each year, and that that surplus was well worth it to him, in terms of apples that he would receive in the future.

Just in this past paragraph we have been introduced to several new terms used by economists. Surplus. Increase in production. Investment. Immediate gratification. Delayed gratification.

Let’s start with Joe’s surplus (actually, his lack of surplus.)

Joe annually grows a garden. In it he has two rows of corn, four rows of potatoes, two rows of green beans, one row with squash, pumpkins cucumbers and zucchini, as well as several other rows of the things you want to grow. I would think a row of tomatoes would be appropriate, but there are people who hate tomatoes and all they stand for. Each year he grows this amount of produce for his own use. Given the state of food preservation technology, this amount of produce can be stored through the year, and the nutritional benefit stored within these foodstuffs can be allocated for use until fresh fruits and vegetables reappear. Oh, and two rows of carrots.

Joe has never before had a surplus of carrots. He has never grown more than he has needed. How would we begin to describe what it takes for Joe to increase his production of carrots in order to create a surplus of carrots?

First, let’s look at the barriers to Joe increasing his carrot production. What does it take to grow vegetables? Soil and seed. What else? Tools. Sunlight. Water. (Have I told you the story about the economist stranded on a desert island? The reason I mention this, is that the punchline is, “Assume a can opener.”)

Assuming that the soil is of average quality, assuming that Joe has sufficient seed, water, etc., the only change that Joe needs to make is to increase his carrot production capacity by more than the previous two rows. Anything produced in excess of his previous harvest he can plan on as surplus to his needs. And off to market he will go for those sweet, sweet apples! So Joe needs to decide, do I add more land? Is there currently some produce that I plant in excess to my needs? Is there anything I can change in the way I go about planting my garden that will allow for greater productivity? Or, must Joe give up something that he has traditionally planted in order to increase his carrot production?

There are a lot of solutions available to Joe. Since we have already introduced the notion of ceteris paribus perhaps it’s time we make use of it. If we hold all other things equal—same number of beans, corn, etc.—what is it that Joe can do to increase the production of his garden patch? How about a change in technology?

Joe looks at his patch and determines that in past years he has planted all of his rows exactly 48 inches apart. If he has forty rows of vegetables, and plants his garden with a row-width of 46 inches, does Joe create enough new planting space to add a new row, or rows, or carrots? Well, yes, he does!

Given the same amount of land under production, all Joe has to do is decrease his row-width to 46 inches and he is able to produce another row of goods (carrots). This increase in carrot production is referred to as the “marginal” increase in production. That is to say, that given the amount of carrots previously produced, the increase in total carrot production is increased by some amount. And that “some amount” is referred to as the increase in the marginal supply of carrots. And since Joe didn’t need to increase his land-holdings, but was simply able to take advantage in the way he planted, this exogenous variable—the shift in planting technology—was able to provide him the capacity of increasing his output with a very small increase in cost. He is able to increase his productivity by simply digging another row and investing another row’s worth of carrot seed. (The additional labour required to dig a 41st row, and the additional seed he needed to plant is also referred to as a “marginal” increase in production cost.) Since Joe works cheap, and carrot seed is cheap, Joe is looking forward to lots of apples as a result of his labour and investment.

Before we leave Joe to his work, let’s take a moment and think about his decision to grow more carrots.

Who decided to grow more carrots? Not you. Not me. It was Joe.

If Joe is planning on selling his carrots for a lower price that you are willing to sell them, who is better off?

What was the variable that allowed Joe to increase his carrot production?

Who owns the product of Joe’s work and investment?

We’ve covered a lot. Next time let’s take a moment and look at product transformation curves. Some folks call them utilization curves. Bottom line is, Joe is smart. He knows what he wants and is willing to do what it takes to achieve his own, personal dream. There are lots of potential pitfalls ahead for Joe, so let’s wish him luck. Being free, making investments and planning for the future is never free of risk.

But, would you want a life free of risk?