Government

Who Should Bail Out the Auto Industry?

This entry was posted in Economics Government Judiciary Politics on by

The other day Laurie David, writing at the Huffington Post, suggested that the oil industry rather than the us government should bail out the auto industry:

“The best idea I’ve heard in the last few days comes from an unlikely source, the actor Ashton Kutcher on the Bill Maher show, who repeated the suggestion that the auto industry go meet with the oil industry – their partner in crime – and ask them for a bailout. At least we know ExxonMobil can afford it.”

Laurie and Kutcher are partially correct. The oil industry is a partner but, alas, it is not the only partner and not even the main partner.
The big 3 were at their normal and largest trough, congress. The difference now is that the play is visible to the rest of us. Normally the industry’s subsidies are indirect, yet massive, and by some strange perversion of perspective we do not typically lay the consequences at the feet of the auto industry which is much broader than the big 3, the oil industry or their federal, state and local government accomplices.
A subsidy example: like it or not, the thousands of miles of concrete spread across previously fecund land that the vehicles require to be useful are massive subsidies to the auto industry.
A consequence example: over 40,000 people/year die in the US as a result of traffic accidents. Unfortunately, these deaths are diffuse; one or two or three at a time and widely dispersed geographically. We ignore them. Yet, after a concentrated 3,000 die in the World Trade Center the country goes to war.
This is not the only subsidy nor are the fatalities the only consequence.
The appropriate approach begins with not a bailout but eliminating all subsidies at all levels of government…starting with, but not ending with, auto industry subsidies.
In time we will, then, start seeing the best results socially and economically. Amongst other things the former fat cats will no longer get to feed at the public teat; income disparities will start diminishing; legislative types will spend most of their time at home; lobbyists will go in search of real work; government can get back to basics, e.g., providing an accessible judicial system.

Choking On My Coffee….

This entry was posted in Economics Government on by

In his notes on today’s theft bailout hearings Mike Nizza says in the 9:51 segment:

It may come as no surprise that the world’s greatest deliberative body is expressing a bipartisan feeling against rushing things too fast.

The rest of the world is really in deep doodoo if the us congress is the world’s greatest deliberative body.
Perhaps it is. It is also an abject failure at everything but serving its masters and its masters are not the people.

The british parliament is good at serving its masters as well but at least it gives us the prime minister’s Questions.

Who’s Going to Pretend to Solve Our Financial Problems?

This entry was posted in Anarchism Economics Election 2008 Federal Government Government on by

Well, of course, the folks who created them in the first place:

The ruling class is the state. The state exists to serve the interests of the ruling class, and only the interests of the ruling class. They may promise you greater unemployment benefits, better health care, and a host of other government benefits — all benefits also paid for by you, please note (the ruling class does have a sense of humor, after all; vampires are often crudely funny creatures) — and those promises will cause most Americans to fall for the con still one more time.
Whatcha gonna do? Not a goddamned thing. Vote for McCain! Vote for Obama! It doesn’t matter. The ruling class wins either way. The ruling class always wins. That’s how the system was designed, and that’s how it works. For the ruling class, it works very admirably.

You really should be reading Arthur regularly!

Why Galveston?

This entry was posted in Anarchism Economics Government Insurance Libertarianism on by

There is much ado about the devastation of Galveston by hurricane Ike. However, there would be little chatter about this if Galveston were not there and Galveston would not be there in anywhere near the form it was in before the storm without some failed incentives for people to build on that barrier island. From the above linked Fox News story:

Barrier islands like Galveston are particularly vulnerable to storm damage because they are made of sand, as opposed to the hard bedrock that underlies larger islands and the mainland.
They also tend to have very low elevations, making it easy for water to wash over and submerge the island.
Many have questioned the wisdom of choosing to build on and develop barrier islands, given their risks.

Why, then, have so many ignored what look to be obviously significant risks?
Perhaps someone has reduced the risks for the folks who have built out Galveston. One way of doing that would be for insurance companies to offer wind insurance.
But any wise insurance company would surely charge such a high annual premium that it would be prohibitive for any one to build on Galveston Island. If they can’t charge a high enough rate they won’t offer the insurance. To wit:

Allstate dropped windstorm coverage for nearly 65,000 policyholders last year, and other companies, such as State Farm, stopped coverage within 2,500 feet of the coast.
In the wake of the disastrous 2005 storm season in which hurricanes Katrina and Rita battered gulf coast states, many private insurers abandoned the coast, forcing their clients to seek “insurers of last resort.”

Yes, there is an insurer of last resort: the Texas Windstorm Insurance Association. These folks note on their web site:

TWIA’s purpose is to provide Texas citizens adequate wind and
hail coverage when it is not available in the insurance
marketplace;and pay insured’s claims when losses occur.
The Texas Windstorm Insurance Association is a ‘pool’ of all
property and casualty (P&C) insurance companies authorized to
write coverage in Texas.
TWIA is neither a state organization, nor a for-profit company,
and therefore does not seek to increase its market share.

Oh, where to begin.
First, here is the failed incentive. The market, yes, the market makes it clear that it does not make sense to build on this barrier island (inter alia). But someone one has decided that even though it is pretty stupid to build here the risks of doing so should be alleviated. Who, might that someone be?
Well, this so called association is not a voluntary outfit*. It was created by the Texas legislature and the referenced property and casualty insurance companies do not participate voluntarily; they are required to by law to participate. As noted* its too low fee structure is set by the Texas legislature; it’s members can be assessed (taxed) for losses and they will charge higher rates to their other customers to recover these losses (more taxes); and what isn’t covered by the initial funding mechanisms will be picked up by the rest of the Texas taxpayers. Hmmm, this is beginning to sound like Fannie Mae and Freddie Mac.
So the TWIA tells us that it is not a state organization. Well, it walks like one, it is funded like one, it is constrained like one, it provides false incentives like one, ….
Like the duck, it is a state organization and no amount of doublespeak is going to change this.
Why Galveston? The state of texas decided it should support stupid investments: construction in areas that have a high likelihood of repeated severe storm damage. There really is no excuse for this.
That the TWIA exists is a perfectly good example of government failure and is a perfectly good reason to impeach, heck, just toss out the folks that implemented and continue to support such wasteful programs.
There is no good reason to replace them either.

* See this article for background: Reforming the Texas Windstorm Insurance Association (PDF)