Wednesday, January 31, 2007

Uses of Tax Dollars

As much as I try not to read anything in the Waco Tribune Herald, I usually read the Letters to the Editor. One letter caught my eye this morning:

Teachers need boost
Carolyn Vardeman is right [Letters, Jan. 20]. The Teachers Retirement System needs a big boost from legislators for a cost-of-living increase.
Health insurance premiums and the basic cost of living are going up. Meanwhile, legislators use tax dollars for less important things.

The last sentence is what interests me. One person's less important thing is another's prized cause or desire. Hence one of the problems with government spending and the difficulty in reducing it. While this person finds subsidizing the teacher retirement pension system a worthwhile cause, I find it less than ideal and would much rather the legislature use the funds to increase the salaries of interim instructors in the TAMU system. Each of us has expressed our desire. Now which is more worthwhile? The rational way a politician will calculate which is more worthwhile will be how many votes he can garner from the affected parties. There are many more retired and current teachers as well as sympathizers than there are interim instructors and sympathizers, so the teachers will win the day.

Is there any economic calculation (aside from the little public choice exercise I just die) here as to which cause would benefit society more? No, just a calculation of which group will yield a greater benefit to the interested politicians in terms of support. Considerations based on this line of thinking, which is common to almost all politicians regardless of affiliation (Ron Paul might be an exception), seriously complicates the socially optimal dispersal of government funding.

Monday, January 29, 2007


The President made a big push for renewable sources of energy in the State of the Union address, including ethanol. Jerry Taylor and Peter Van Doren at the Cato Institute take a look at the claims the President made for ethanol.

For ethanol to completely displace gasoline consumption in the U.S., we would need to plant every cultivated acre in corn plus bring 20% more into cultivation. The USDA estimates that it costs $2.53 per gallon to produce ethanol. It would not be competitive without the $1.05-$1.38 per gallon subsidy it receives. Basing the eventual success of ethanol on switchgrass is also risky given that a switchgrass industry does not exist yet.

Combining this with the fact that it takes 1.25 gallons of petroleum to produce 1 gallon of corn based ethanol (other grains are even worse) makes corn ethanol an energy and environmental non starter. Making ethanol out of sugar cane is economically viable and a net energy winner and Brazil has a thriving sugar based ethanol market. However, given import restrictions on sugar and ethanol, we can't import sugar based ethanol into the U.S.

Right now, I don't see ethanol being the energy savior that the President hopes for and farmers crave. If it wasn't for the subsidies, ethanol in the U.S. wouldn't even exist in any significant quantities. The subsidies and associated increased demand for corn are also causing some unintended consequences.
Go down to January 19 and read about the price of tortillas in Mexico. Although I do benefit some from high corn prices, I predict that eventually the ethanol bubble will burst.

Friday, January 19, 2007

Signs that I'm Out of Place

I think I'll make this a regular feature of the blog.

Today I told the 21 students in my intro class who bothered to show up that before taking this job, I was an analyst for the KGB. Only four of them got it.

Thursday, January 18, 2007

Stuck Mojo and CAIR

I called it. Stuck Mojo got themselves in trouble with The Council on American Islamic Relations with the song Open Season. CAIR claims that the song advocates violance against Muslims. It's pretty obvious if you read the lyrics, that they are only addressing the Jihadists.
The lyrics are here as well as the song:
You can read Rich Ward's response to CAIR at:

Charles Murray on Education

Charles Murray of The Bell Curve and Losing Ground fame has written a three part series on education over at Opinion Journal.

In the first article, he discusses the enfortunantly controversial fact that half of all children are below average in intelligence and there is only so much any teacher can do with them. This should temper our expectations of what education can accomplish. In addition he points, and many of his critics never mention this, that he views the importance of IQ in living a good life as overrated. Intelligence is no guarantee of moral conduct.

In the third article, Murray points out that our future depends critically on how we educate those with unusually high intelligence, especially in terms of encourging wisdom. Whether we like it our not, a cognitive elite runs the government, academia, the culture, and to a great extent the major institutions of the economy (This is the one part of the essays that I differ with him on slightly. I think the economy is so large that the cognitive elite do not run it per se, but they do they have a significant influence. However since the 80-20 Rule holds I could be wrong. If the smartest 20 percent of the population does 80 percent of the work, then he's probably right anyway). The fact that primary and secondary schools spend so little on educating the gifted should be cause for concern.

The second essay, and the best in my mind, looks at college and why even many of the cognitive elite shouldn't be in college. I think he hits on what maybe the biggest problem with college today and thats "the false premium that our culture has put on a college degree." So many people have college degrees who shouldn't that the value of a degree has dropped like a rock. You almost need a graduate degree now to really seperate yourself and even graduate degrees are way to common. I also think that employers place way too much reliance on college degrees. Who cares if you don't have an MBA if you can do the job and do it well? I agree with Murray completely that we need a major increase in vocational education.

I highly recommend this series of articles.

Sunday, January 7, 2007

How to Fix the Cowboys

I don't want to talk sports much here, but the way the Dallas Cowboys play certainly falls under the category of my fellow man's folly. Here's how I would improve the team.

1. Get rid of Terrell Owens. He's a cancer. Everything he does is a distraction and he should be shipped out of town. I wonder if the Raiders would do a straight up trade for Randy Moss? Probably not given all the problems they have. One way or the other, GET RID OF T.O.! Patrick Crayton is starting to show something, so releasing T.O. may not be a bad idea.
2. Get some help on the offensive line. Riveria's best days are past, but I don't know you could get better right now. Gurode is mediocre at best. Adams is overrated. Kosier and Columbo are decent, but not good enough. Either in the draft or free agency, the o-line has got to have some help. Getting rid of T.O. and Bledsoe will free up cap room.

1. GET A FREE SAFETY WHO CAN COVER!!! Patrick Watkins may develop into a good cover guy, but he's not there yet. Keith Davis is a special teams stud, but not a good free safety. They have to a have a really good coverage guy there because, and make sure you tell this to everyone who will listen, ROY WILLIAMS CAN'T COVER! He's a solid run defender. Nothing more. He'll occasionally intercept a pass, but even a blind squirrel finds a nut. Safeties have to be able to cover and Roy can't. That's why a ball hawk free safety is essential.
2. The D-Line has to get pressure. Maybe Canty, Spears, and Hatcher will show something next season. They didn't produce enough this year. It was a rarity to see pressure from the front 3.

Special Teams
1. Settle the kicker situation. Gramatica may be the guy. I don't know. Either way, the kicker situation needs to be settled by training camp.

Complicating all this is the status of Parcells. If T.O. is gone the probability of Parcells returning is better, but who knows. In addition, the coaching staff has got to get the defense lined up correctly. They came close to getting burnt several times against Seattle, and during other games, simply because no one went out to cover a running back.

On the plus side this year, Tony Romo showed that he can be a compotent NFL quarterback. If he can continue to improve the Cowboys may really have something. The running backs played well. DeMarcus Ware is turning into a monster. The rest of the linebackers also played well. Bobby Carpenter started to show something in the playoff game. Getting Greg Ellis back will also be a big help, if he's healthy. The kickoff return guys were solid all year, whether it was Thompson, Austin or someone else. McBriar's punting was outstanding.

Right now I don't think Dallas is a Super Bowl contender next season, but who knows. They may figure it out.

Solutions for Social Security and Medicare

Given the funding shortfalls that the two major old age support programs will face in coming years something has to be done. I propose that we subsidize the consumption of tobacco and trans fats. Consumption of both products reduces your life span on average. Studies have shown that every pack of cigarrettes sold is a net benefit to society when the additional taxes paid are factored in as well as the shorter life span of smokers, meaning lower Social Security and Medicare pay outs over their lifetimes even when higher medical costs at the end of life are accounted for. The same could very well be true of trans fats. Since a person who dies sooner pays in the same of amount of Payroll taxes, but takes out less, this a natural way to improve the solvency of Social Security and Medicare. A subsidization level should be found for both products such that life spans are shortened sufficiently to alleviate part of the pension fund shortfalls. Everyone under 35 should heartily support this measure.