Bad Incentives Yield Bad Government

It is one of the few great truths that Economists will agree upon that people respond to incentives. If you want to change behavior, change the incentives. If you have a system where people are incentivized to behave in a perverse and destructive manner, guess what happens? A bad system of incentives caused the financial meltdown (a system, by the way, that has not been fixed!!!), and it is now doing the same thing in the debt ceiling crisis.

Sane people would see that the debt limit must rise, and come to some agreement on doing this. Then, they would go about fixing the long-term budget problems that pose a threat to our solvency down the road. That is, sane people with a sane set of incentives. But our current Congress is operating under a situation that causes most of the assholes in Washington to act in a destructive way. The sad thing is that it is not easily fixed.

Here is what is going on. First, we must understand that the primary interest of politicians is to remain in office, or to step up to a bigger job, where the bribes.....er, campaign contributions....are bigger. Most members of the House are elected from districts that have been gerrrymandered to be be safe for their party. Safe GOP seat, safe Dems seats. And the nation is now so divided between red and blue states that many Senate seats are also certain to go to one party or the other.

So, if a House member wants to stay in office, chances are his biggest fear is not losing to a member of the other party by going to far to the right or left and being unreasonable. While that type of behavior violates good sense, good government, and the wishes of most of the electorate, our Congresspersons have been incentivized to do exactly that. Why? Because they don't fear that sane folks in the center won't re-elect them, they fear a primary challenge from the extremists who tend to vote in primaries.

While this is somewhat of a factor in the Democratic Party, the ignorant d-bags in the Tea Party are now the the real threat to sane government. They challenged a lot of incumbents in the last election who were not nutso enough for them, and are threatening to do the same in the next election. John Boehner knows he should make a deal with the Democrats, but fears if he does that the Teabaggers will attack, and he will lose his leadership role and perhaps even his seat in the house.

And, since the Tea-D-Bags have decided that Obama is the root of all evil, they threaten anyone who would even hint at making a compromise with him. Oh, and then there is the House GOP leader Mitch McConnell, a complete lying scumbag who has only spoken the truth once in his life: When he said his goal is to make sure Obama doesn't get re-elected. That's a really great way to negotiate!

Politicians suck, but remember, we let them do this to us. But, if you see a member of Congress on the street this week, kick him in the nuts!!!

New Stuff from The Standup Economist

"The Tea Party believes in social darwinism, but they don't believe in Darwin". And other fun stuff.

Another Example of Why Soccer is a Great Sport

OK, I admit it. I haven't been to an MLS game in a few years, even though the defending champions play here in Colorado. Mostly that is because they seem to play their home games when I am busy, but it is pretty tough to get too excited about an MLS regular season game.

But, I will continue to proudly admit to being one of America's only soccer fans over 50. And if you watched yesterday's US-Brazil Women's World Cup game you should be joining me.

This was just a great game from start to finish. Two very good and evenly matched teams trying to overcome a horrible officiating job, matching each other's moments of brilliance. The amazing Marta, who is probably good enough to play in MLS, scores minutes into overtime, and tough and skilled Amy Wambach heads in a perfect cross as the game is about to expire. If you are a sports fan and missed this.....well, this is the reason we are sports fans. It also demonstrated what makes soccer exciting, the fact that it only takes one miracle play to change a game. This game had several.

Kudos to the American girls for never giving up, even after they had tripply screwed by the ref in what looked like a disaster. They kept working, kept their composure, and seemed to wear down the Brazilians, as there is no way that Megan Rapinoe should have been given the time she had to play that heavenly ball right onto the head of the Wambach. Great stuff girls. You are now America's Sweethearts, which makes me happy that we are celebrating women who play a real sport (yes, I am talking about YOU, gymnasts and figure skaters!).

Can't wait until Wednesday's game!

In Praise of The Woodman

I will admit to having been a Woody Allen fan since I saw "Bananas" in college, back in the days when phones were attached to walls and had dials. In fact, one of my favorite movies is "Annie Hall", which I think all film makers should be forced to watch before they fill their films with a bunch of time-wasting nonsense.

As much as I admire his films (and, his standup comedy, if you can find it!), he has made some stinkers. He has been up and down in the past 20 or so years, making some brilliant stuff like "Deconstructing Harry" and "Match Point", and some that just leave you scratching your head, like "Small Time Crooks".

As a patriotic American, I thought there would be no better way to spend our nation's birthday than seeing Woody's latest "Midnight in Paris". If anyone was worrying that Woody had lost his fastball, well, this movie is proof that he is still brilliant.

The last time I raved about a comedy film on this page was a few years ago, when I compared "The Hangover" to "Animal House". Well, this comedy can best be compared to.......the best of Woody Allen. Smart, clever, makes you laugh from start to finish without ever making you feel dirty for doing so. The fun of revelation of who the main character hangs out with as he goes to Paris in the 1920's is hilarious, and the only disappointment is that the main character turns down Hemingway's challenge to a boxing match (oh, and Corey Stoll is fantastic as Hemingway!).

And clearly Woody Allen could care less about selling tickets to his movies. Do you see him on Letterman or Colbert promoting? Never. And in this case he has made a film for a group of people who barely exist anymore.......people who read books. If you are one of those people, put the book down for 90 minutes (yes, Woody still knows that a comedy film should only last that long!) and go see "Midnight in Paris"!!

Afganistan and Viet Nam

I was reading Leslie Gelb's piece in the Daily Beast today, and it occurred to me how much like Viet Nam the war in Afganistan, and Iraq too, are to the situation 40 years ago. In all cases we are fighting an unconventional enemy in a war that our troops were not trained to fight. Like then, we are supporting corrupt political regimes that have been "elected", but don't seem to have the legitimacy to govern. Like then, the locals dislike our presence, and do not appreciate whatever it is we think we are trying to do for them. Like then, it is probably time to go.

Many still debate our exit from Viet Nam. In hindsight, it is not at all clear what we were doing there. We had no vital interest in Viet Nam, just as today in Afganistan (I guess you could say oil is our interest in Iraq). And it is very unclear how life for Americans was negatively effected by leaving, or how it would have been better if we had stayed and "won", whatever that might mean in this case.

We have spent over $1 trillion on these wars (hey, Tea Partiers, TARP, which you hate, only cost $130B and IT WORKED!) and it is hard to imagine the situation in these two backward countries being "fixed". It is time to cut our losses, stop sending our youth to be killed, and re-tool our military for the challenges of the 21st century. Oh, and a real re-evaluation of when and why we should use military force would be a heck of good idea. Certainly the "Bush Doctrine" should be trashed, another expensive failure of the worst President in our history.

Politicians on the right and the left are now starting to see the folly of these wars......and politicians are usually the last to admit a war related policy is dumb. This could give Obama political cover to do the right thing and pull out, without worry about appearing weak on defense. Now, if we can just get the morons to see how dumb the war we are still fighting from 40 years ago, the one on drugs, is!

I Agree With a WSJ Opinion!

The WSJ Opinion page is usually so off the tracks crazy to the right (they employ the criminal Karl Rove for one thing) that it precludes any need for the paper to have a comics section. However, today Mary Anastasia O'Grady brings a rare light of sanity to the page with this piece comparing the end of Prohibition with the call last week by many important people to end the moronic War on Drugs as we know it. Read it.

Best quote is this quote about the border with Mexico:

The border is unfriendly not because of too few fences, drones or soldiers, but because American drug habits finance the traffickers. "These dollars, and nothing else," writes Mr. Codevilla, "are responsible for the near collapse of law and order south of the border and for the insufficiently publicized corruption on the northern side."

How about we use market forces to curb our drug use, you know, like we did with tobacco. Legalize it, regulate it, tax it, educate, provide treatment. Can't work any worse than what we have been doing!

A Challenge to My Conservative Friends

I am agnostic about most things. I don't believe in God because there just isn't enough evidence to convince me that God wasn't cooked up by humans as a way for primitive people to explain what they didn't understand (the reaction of religious people to science is further proof of that to me!).

So, when conservatives try to convince me that tax cuts are what needed to fix the economy, I want some proof. Same goes for liberals who might think we need to raise them. What evidence ya got? Do you just not like paying taxes, or can you somehow prove that lower taxes will lead to economic growth and benefit the country?

So, here is an intellectual challenge, mostly in this case for my conservative friends. Read this post by Bruce Barltett, who was an economic advisor to Reagan and Bush the less dumb (so you can't dismiss him as a liberal who hates America) and convince me that tax cuts are what is needed to turn out economy around.

Here is a summary of the facts in Bartlett's post:

The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget.

The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan’s administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984.

corporate taxes are expected to raise just 1.3 percent of G.D.P. in revenue this year, about a third of what it was in the 1950s.

So, there you go. Those facts would lead me, and Bartlett (Did I mention he worked for REAGAN?!) to believe that tax cuts would not do much for our economy.

So, convince me otherwise. I am an open minded guy with no dogmatic beliefs. I used to believe in Santa and the Tooth Fairy, but facts convinced me I was wrong. Or, if you are a lefty and don't want to leftied out, then convince me why we need to raise rates.