How to Help Skinny Ethiopians

An article in the Denver Post, written on September 29, 2007, is titled: Hunger to do good helps Ethiopian kids. During this interview Noel Cunningham, a local entrepreneur and restaurant business owner, helped buzz his own program that aims at helping the "unfortunate" of Ethiopia. Cunningham's program,"Quarters for kids", collects money from high school students and donates them to needy Africans. The program also attempts to impress the value of the US dollar and their own economic "fortune" into their minds. I find this article to be inconsistent with an effective means of helping "unfortunate" Ethiopians.

Cunningham says, "In Ethiopia, here's the significance of a dollar: A quarter will buy breakfast, a quarter will buy lunch, a quarter will help pay for education, and a quarter will help to pay for a school uniform and shoes." Giving for the sake of giving, with no expectation of return or gain, is fine. Nevertheless, I suggest that this seemingly harmless act of giving money to Ethiopians is the wrong way to create positive economic improvement. Two specific arguments support this thesis: First, giving money or food to African countries does nothing to solve the most basic economic problem in the region: corrupt/predatory government. Second, charitable donations do more than quench hunger pain, they also quench the fire for change that is needed for African economic and political upheaval. If hungry Ethiopians want change badly enough, THEY must fight it themselves.

Instead of promoting programs that mask instead of create real change, the American people are perpetuating a growing problem. Government should allow economic freedom for the success of all African entrepreneurs. If young risk-taking Africans feel as though their investments will be left to the guns of militant militia, there will be little growth! Allowing Africans to feel the pains of hunger, help fight predatory governments, and providing economic and business education, will allow a country with an abundance of resources to drastically increase its GDP and quality of life.

It may seem harsh to promote an idea that says, "Don't give!" Yet, giving a hand "up" is always better than a hand "out".

A City Within the Springs

A city within the Springs
A huge new subdivision kicks off growth on Colorado Springs' east side


This article highlights the debut of Colorado Springs' newest community and prominant example of sprawl: Banning Lewis Ranch, located on the northeast side of Colorado Springs. After years and years of awaiting zoning approvals, the 24,000 acre property is finally breaking ground. The developers are promoting a picture perfect reality.

"That's why you'll find things like tree-lined streets and open-rail fences. Natural green spaces and feathery wild grasses. A new community center complete with pools and ball fields. The new Banning Lewis Ranch Academy, a K-8 charter school. And beautiful new homes in a variety of architectural styles, displaying rich character and neighborhood crafting. All interconnected by a network of trails and footpaths. It's the kind of place you just don't find much anymore. (banninglewisranch.com)"

This new community is promising much more than just a place to live, potential buyers are paying for small town living in the midst of city chaos. With a high emphasis being placed on 'small', prepare to pay for schools, parks and other commuity features like coffee schops and movie theaters; all within walking distance from home. Local trails and exercise centers that invite the community to come and get to know each other; enjoy a fresh breath of Colorado air, as long as you dont mind sharing that fresh breath with the dozen otehr neighbors scrambling for that same 'Leave it to Beaver' lifestyle. The houses will also follow suit with the small scene, the average size home for this community will be 2,400 sq ft. According to Colorado-Springs-realestate.com, the average size home for this area is closer to 3,200 sq. ft; however, at a starting price of about $220,000 are you really getting the most bang for your buck or are you being swept away by sprawl?

America’s Addiction to Cheap Money and the Resulting Effects on Sprawl

America seems undoubtedly addicted to cheap money, since 1984 the Federal Funds rates has not gone above 10% and has spent the majority of that time below 6%. The current rate, 4.75, is still lower then LIBOR, which is the rate that most of the rest of the developed world borrows at. There has also been a trend developing, the spread between the Fed Funds rate and the LIBOR rate has been widening. Although there has recently been a small correction down in the LIBOR rate, the spread and the trend still exist. This means that most every other developed country realizes that this rate is too low to sustain without dramatic inflation and other consequences.

In a supply and demand world, however, these low rates have been a blessing to our economy and real estate. Being one of the primary drivers of our economy, real estate values have seen large appreciation values in the past 20 years. This is due in part to people making more money then they were 20 years ago and wanting to have a bigger house, but with such low interest rates it is possible for people to demand more expensive houses then they could have otherwise afforded. This has not only caused an increase in property values inside the city, but also in the suburbs, leading to some people moving even farther away from the center of the city.

Sprawl is, among other things, the outward expansion instead of the upward growth of a city. This is undoubtedly being caused by our addiction to cheap money. Since 1984, rates have dropped from their highs and stayed relatively low, this is where we get into the supply and demand issue. Since price of money had been falling people have been spending more (Americans on average spend more then they make) and with a house being the most expensive good that most people buy, home prices have been greatly effected by this increase in demand. With the low price of money more people have been demanding newer, bigger, nicer houses, resulting in higher prices and greater appreciation of house values. This higher demand has lead to people moving to where they could build the same house for cheaper, the suburbs. People will even move out to a small town just outside the city and commute in to work (i.e. Monument, CO). But now, as the two cities have grown together, even they have a small suburb developing, Flying Horse. Good or bad, sprawl is happening and is due, in part, to the low interest rates.

The demand supply equation is out of balance in this case, although the housing supply has reacted accordingly to demand, the money supply has not. It is being kept at low levels to feed our addiction. This is not just one person’s opinion, but the majority of the world also agrees with me. This can be seen from exchange rates (found at finance.yahoo.com) and the dollar’s weakening value compared to other stable currencies. For example one US dollar is now worth one Canadian dollar, where as just five years ago, it was worth almost 1.6 Canadian dollars. There has also been a steady trend in this direction, not just in Canadian dollars but also in Euros, Yen and other major currencies. This shows that other people around the world see the inflationary potential that keeping a borrowing rate this low has.

Blogging Assignment Illustrated

If you want to see a couple of examples of what I'm looking for with your blogging assignments, then you might take a look at this post of mine as well as this post by a former student.

Hitler youth buttons

Last Thursday U.S District Judge Joseph A. Greenaway Jr. sided with two kids from New Jersey saying the kids can wear buttons featuring a picture of the Hitler youth to protest a school uniform policy.
The students had been threatened with suspension last fall for wearing the buttons and the students parents then proceeded to file a federal lawsuit claiming the district violated the children's free speech rights. The Judge also added that the students could not distribute the buttons.
When deciding this case the Judge cited a 1969 case in Iowa involving students who wore black armbands to protest the Vietnam war, saying students have the right to express themselves as long as it is not disruptive to the work and discipline of the school.
This case seems to be a classic example of organizations that possess a little bit of power going crazy. I am thrilled the kids won. I don't agree with the hitler youth, but threatening to suspend students because they were wearing buttons is a clear violation of the 1st amendment.
This case also shows how the students parents were useing the coercive power of government to get what they wanted. Normall I am aginst people trying to use government to get their way but in this case the parents were just protecting their kids right to free speech.
It is good to see that the judges in Washington don't screw up all the time.

Goofiness Sweepstakes

You might be interested in "health zoning."

Stormwater bills are public, after all

I have paid my storm water bill. Is it a tax? Well, I'm not sure. Many think it is and if it turns out it is, then we should vote on it. The city says no, but this article tells how a lien can be put on your house if the bill is not paid. Now, when I received my bill, I was suspicious. Here I am, paying my property taxes, when I get a bill out of nowhere. The bill says that if I do not pay the bill, the city will put a lien on my house. So, using the knowledge I did in class, I analyze the bill.

If I enter into a contract with a lender, such as my mortgage company, then they can use government's coercive force to enforce the contract. But what contract did I enter into with the city concerning storm water runoff? This is a classic case of governments coercive power. I agree with those who see this as a tax. In Colorado, we have to vote on new taxes- we didn't vote.

My next question is why didn't we vote on it. The city says it doesn't have the money to do the projects concerning storm water and runoff. My first question is why? Is this a new problem that has surfaced? Why hasn't the city been planing for this for years, why such the urgency. The answer, I believe, is the city does not know how to budget. Can the city really tell us this came as a surprise?

The city has not taken into account if there is any actual runoff form the property to the city drains. There is no mention in the bill I received to contest if I were saving any run off of rain. And another thing, what if there is a drought and there is no run off, then what are we being charged for. Probably the reason it was not introduced as a tax might be because there is not a efficient amount of run off. If this goes to the Colorado Supreme Court (if challenged), I would hope that they have a corrective state of mind in deciding the case.

I also think this issue will coincide with the issue before the state right now concerning the new education bill- many think it is a new tax, supporters (like the storm water bill) disagree. I suppose the courts will decide.

Burrowing increases. fed out of touch?

And article on Yahoo recently posted that comsumer borrowing in the month of march rose at an annual rate of 6.7 percent. this shows good growth after a slight slump in the first quarter this year.

This sounds to me like the fed is out of touch, after a year of holding the target rate constant, they recently announced that they are continuing to hold the target rate constant. This seems out of touch with the economy.

The article in Yahoo claimed that the high consumer borrowing is remarkable, due to high prices and rates. For this reason and the fact that the first quarter had been week, (growth around 1.3 percent) the fed should have been lowering the rate. It would have helped last quarter and strengthened the consumer spending that had been strong in march, making it potentially even stronger.

Senate Panel approves higher required feul economy

The nationwide fleet fuel economy required for cars and truck has been increased by the Senate Commerce Science and transporation rom 25 to 35 miles per gallon.

"This is not a perfect bill, but I think we have reached a stage where most parties would say this is fair," said Sen. Daniel Inouye. My problem with this is that if "most parties" involved would be ok with this, and I am assuming that "most parties" he means businesses and firms who are in the transportation industry. If this is true and if businesses could easily comply with these standards then competition would have already induced them to have done this already.

If this bill is to improve the industry, then it is just a regulation that will do more harm than good, reducing the number of cars that can be sold, since, now we have both fuel efficient and non- fuel efficient cars in the market. The higher requirments won't dramatically increase the number of efficient cars, just dramatically reduce the number of innefficient cars.


The only way this bill would work is if it is INTENDED to reduce the number of cars one the road. this however does not seem to be what the bill's intended consequence is. It seems like they are trying to turn the innefficient cars being produced, into efficient ones, but if all cars could be efficient already, then they already would be.

Imus suing CBS

As many of us may remember Don Imus was somewhat recently fired for his comments about the Rutgers basketball team. Well now Don Imus is suing CBS for 40 million dollars which was the amount of his contract that he was left unpaid due to him being fired. Imus and his lawyer are filing a breach of contract, citing a specific part of his contract, "Imus' services were "unique, extraordinary, irreverent, intellectual, topical, controversial." Now I must make clear that I do not agree with what Imus did but the 1st amendment does guarantee freedom of speech and even if what he says does offend others, this was acknowledged in his contract. So again, although I do not agree with what Imus has done, after looking at his contract and the 1st amendment I would side with Imus in a court case and would award him his 40 million.

On a side note. Personally I think contriversial topics are the best to discuss and need to be addresed and I beleive that everybody is offended by something and as long as you market your talk to show to be offensive you should be able to discuss these topics. Look at the howard stern show, he was donig all sorts of crazy things, but that was expected becasuse it was the howard stern show. Personally I would not have fired Imus.

Senate Discusses Overhauling PDUFA Act; Disincentive to Investment.

The Senate has been recently debating the possibility of overhauling the FDA. It would do this by amending and extending the Prescription Drug User Fee Act created in 1992. The Act was originally created to defray the costs the FDA incurred while reviewing prescription drugs. The FDA's proposal to Congress would have the drug industry pay $393 million in annual fees (Bridges, Associated Press). This spending would go to new drug and food safety measures. It would include provisions to ensure the safety of child drugs and devices as well as the safety and effectiveness of drugs currently on the market. The renewal of the Act also promises to make the approval process of drugs more quick and predictable. The provisions set forward however, do not allow for the importation of drugs nor generic drug approvals (all facts, from attached link, Andrew Bridges, the Associated Press).

This is sort of a grey area of market failure. There is market failure, but it may protect consumers to an extent. It creates a barrier to entry through government licensing, therefore violating perfect competition. It also violates the PC model by heterogeneous products and asymmetrical information. Generic drug companies and foreign companies have been left out of the new provisions so far. This renewal and amendment to the PDUFA Act was brought to the Senate by the FDA itself. There may be rent seeking on the part of the FDA and possibly the large drug corporations. The FDA can not act efficiently, so it seeks legislative coercion for additional aid. The larger drug corporations may not necessarily be too adversely affected by the increased costs, but may benefit from reduced competition. Although the Act promises to cut costs the FDA incurs by reviewing drugs, the Act is still economically inefficient. It seems to limit competition in the prescription drug market. It also promises to make the approval process faster by introducing more legislation into the drug industry.

High-Speed Police Craziness

In a case dated April 30, 2007 the Supreme Court decided that police are now able to use force in a high-speed pursuit to stop an individual that is driving recklessly from harming others. The 8-1 decision in Scott v. Harris No. 05-1631 that gives police extended powers during high speed pursuits was not found to be a violation of the Fourth Amendment. This amendment gives an individual the right to be free from unreasonable searches. Justice Scalia said that this decision by the court holds true “even when it places the fleeing motorist at risk of serious injury or death.” Deputy Scott had hit the car that the 19-year-old Harris was driving. Harris lost control of his vehicle. He is now paralyzed and has attempted to sue. Since the Fourth Amendment was not violated he cannot sue for damages.

Harris was being chased because he was speeding. I know that the job of the police is supposed to be to protect all people. I wonder though, how well are they protecting all people if they are including themselves in the high-speed chase over speeding tickets? Could more people possibly be harmed from police forcing drivers off of the road for crimes such as a speeding ticket? Could the outcome not have been perhaps an extra fine of some sort for Harris? I’m kind of torn over this case. I want the police to be able to protect me, but at the same time I want my rights protected and not to see a police chase every time someone goes speeding down the highway. The courts have decided to give the police force more police power in order to “protect the people.” I just wonder where it ends. Hopefully it won’t go beyond this point.

Large Acres of Land Selling to the Rich

For the very rich billionaires and the millionaires there is a new fad of buying up open land in the US. Brad Kelley has almost 800,000 acres of land that he is purchasing for ranching. There are others, like Roxanne Quimby, who buy forest landfrom logging companies and open land used for ATV trails, and plan to use it as conservation land. It seems the rich are beginning to do the opposite of what Americans were doing in the early 19th century, of preserving the land and maintaining it not selling.

It seems that most of the private property owners are protecting the land from development, not preparing it to be sold to developers. If we consider economic prosperity of this effort, it clearly support the right of private property. It is also a good example of the corrective state involving preservation of land and natural resources. Maybe this fad will catch on.

As James Madison stated in his Essay on Property in 1792, "Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government which impartially secures to every man whatever is his own". So how is the Government going to react to these land purchases? Will they press for more eminent domain to take over the land to sell and make a profit, keep it as a public use? Even though it seems most of the private landowners will protect it. How will the Supreme Court react when faced with a case for the Takings Clause that has no grounds? Will they redefine takings and public use language again to come up with a public purpose policy? Or will they agree with common sense and let the private property remain private without government intervention?

Hmmmm Can she do that?!

In early April of 2007 House Speaker Nancy Pelosi went over to the Middle East to conduct foreign policy. The concern that myself as well as author Frank Salvato has is that the Constitution does not authorize the Speaker of the House to conduct foreign policy in the manner in which Pelosi did. That power is strictly delegated to the Executive Branch of government. As Salvato writes “this isn’t to say that Congress doesn’t have any authority over the formulation of US foreign policy, it certainly does.” Article 2, section 8 is the part of the Constitution that gives Congress the power to regulate commerce with foreign nations, States, and Indian Tribes. However, Salvato notes that it is Article 3, Section 2 that authorizes the President to make treaties, appoint Ambassadors, Judges of the Supreme Court, etc. Congress has the power to regulate business in the US and foreign nations and the President has the ability to appoint individuals to represent the US in foreign affairs.

Knowing all of the information presented above leads me to ask why the Speaker of the House thought it was appropriate for her to go over to the Middle East. She took an oath to uphold the Constitution of the United States. So why, then would she even take this step? Some have suggested that this is an attempt by Congress to undermine President Bush or for Congress to overpower the Executive Branch period. I guess that it doesn’t really matter why she chose to do it. The point is that the Constitution clearly leaves that area of foreign policy to the Executive Branch. It is the choice of the Secretary of the State to go to foreign countries for diplomatic reasons, not the choice of Nancy Pelosi. I agree with author Frank Salvato that this situation has created a constiutional crisis.

Abortion battle...Again.

The supreme court has recently upheld the 2003 partial birth abortion ban act. The decision was 5-4 in favor of the laws constitutionality. The Democrats are appalled, the Republicans applaud. Several people are arguing that the decision would have gone the other way if O'Connor will still on the bench. The dissent argued that the main problem with the law was that it does not allow any exceptions for medical reasons. President Bush said the prohibition "represents a commitment to building a culture of life in America. Today's decision affirms that the Constitution does not stand in the way of the people's representatives enacting laws reflecting the compassion and humanity of America," The article also seems to take offense to the conservative nature of the court and repeatedly points out that two members of the majority were nominated by Bush.

Personal feelings aside I believe that the court has made the wrong decision. The court has turned over Roe v. Wade. Obviously, as it has proven several times, the court has no respect for precedent. The country is founded on the principles of life, liberty and the pursuit of happiness. Of course there is the age old argument, does a fetus have a right to life? Are they people until they are born? At what point do they become people. Either way there is no statement in the constitution that can be used to justify banning abortion.

For me personally I am in favor of banning partial birth abortion. I would support a medical stipulation to the ban. Still, I am not sure that there would be no awareness of health risks that far along in a pregnancy. This is causing a paradox for me between liberty and morals. Who's to say that anyone has the right to tell someone whether or not they can have an abortion. I do not know if one could say that an abortion causes negative externalities and therefor justifies government interference. If we could say that it was a negative externality to the fetus then the solution would be to tax abortion, it seems like a strange solution but maybe it is the correct one. There seems to be no concrete answeres to these questions. It seems that whoever has the power of the White House determines which way this law will go. We will continue to see laws on abortion change.

Slacking of the ropes

A recent article in the New York Times said that the Occupational Safety and Health Administration (OSHA) was leaving many of its regulations to be regulated by the industry. This article was about workers that worked in a microwave popcorn plant who started getting sick after the popcorn manufactures added and additive that gave the popcorn a more buttery taste. The workers were complain about the action not being taken saying someone needs to be monitoring the health and safety of the workers basically that if OSHA does not do it than no one will, since the beginning of the Bush administration OSHA has issued the fewest standards in its history. While reading this article I could not stop thinking about a case we talked about in class Holden v. Hardy. In this case the Court dealt with the unhealthy working conditions in the mine. The miners did not like the new regulations that were placed on them, so they filed suit. The only thing different about this is that government is not using its coercive power to regulate--some people are asking them to regulate it. To me the government is doing the right thing. Letting not only the industry control the regulations but also the market. The industry is not being coercive by forcing people to work in such conditions that it endangers their health. The workers have entered into a contract voluntarily. I also do not see any externalities. The workers received higher wages for working in the part of the factory that mixed the additives together. Though they did not know the risk associated with this type of work the manufacturers did not either. The workers were part of a market transaction with the higher pay.
I also believe their is some rent seeking behavior on behalf of the industry. Some of the biggest industries that OSHA regulates gave more than $630 million in political contributions since 2000, with more than half going to Republicans.

Cablevision appeals network DVR ruling

Cablevision appealed a case recently that prohibited the company from rolling out their next-generation digital video recorder in NY. The new recorder would dramatically increase the rate at which the company could distribute DVR capabilities. Essentially, the new system would allow any household with a cable box to record their favorite show and play it on their computer later. The system would allow any cable subscriber access to DVR technology without expensive equipment installations. The Hollywood studios that successfully sued Cablevision claimed that they filed the suit in order to prevent additional broadcasts of their programs. However, the real reason probably lies in the fact that DVR owners can fast forward through commercials when watching their recorded programs. Obviously, if subscribers can fast forward through commercials then the companies that buy spots during shows will be less inclined to spend top dollar on commercials that people aren’t going to watch. Hollywood studios would lose money and therefore are probably trying to protect their pockets.

Legally, Cablevision should be able to rollout their new product without any interference from the New York government. That is, NY should not be able to prohibit the production and selling of any product. The only question is whether the new recorder violates the liberties of any specific person or group. For the most part, I think not. I believe that 99% of the people who use the system will just be watching the shows that they missed or re-watching the shows that they enjoyed the most. However, since the new system would allow people to put the programs on their computer, there is a significant probability that the television shows could end up on a website (You-Tube?). Again though, this is not the major concern for Hollywood studios. They don’t make their profits from individual consumers. Rather, they make their billions from the companies who buy commercial time. So, while the case and the ruling seem correct, there seems to be a case of rent-seeking involved. Either way, I think that the courts decided correctly in protecting the television studios that could possibly go out of business if a system like that was provided to such a large number of consumers.

Automakers challenge Vermont emission law

This article concerns the emissions law that congress told the Bush administration to rethink. Vermont as well as ten other states wants to cut the carbon dioxide emitted by automobiles by 30%. However, Vermont is the first state that will take their case to trial against the auto industry. The auto companies (GM and DaimlerChrysler) claim that the 10 individual states pushing for the law are overstepping their boundaries in trying to regulate vehicle emissions. Charles Territo, A spokesperson for the auto manufacturers states; “This trial is about whether or not states have the authority to set their own fuel-economy standards. And we will argue that they don't."

The Constitution doesn’t give congress the power to regulate production (Although in many cases The Supreme Court has granted congress this very power). The new law would involve individual states regulating the production of cars in their respective state in order to lower carbon dioxide emissions. As long as the state government doesn’t create a monopoly or a market failure, they should be able to regulate (not prohibit) the production of automobiles. As far as I can see, there is no market failure of any sort involved. Nor do I see any infringement on the liberties of the auto manufacturers. All that Vermont and the other nine states are asking is for manufacturers to lessen the emissions that their cars produce. Under the constitution and using my general understanding of liberty, I see no reason why any court would rule in favor of the auto companies.

Jailed journalist to be freed

Joshua Wolf spent more than seven months in a federal prison after refusing to obey a subpoena to turn over his videotape of a chaotic 2005 San Francisco street protest during the G-8 summit. The Government had been investigating how a police officer's skull was fractured during the incident and who set a police car on fire. Wolf's lawyer argued that the First amendment gave him the right to refuse the subpoena for the unaired video. U.S District Judge William Alsup cited a 1972 supreme court ruling that the U.S. constitution does not entitle reporters, or anybody else, to withhold confidential sources or unpublished material from a grand jury during an investigation in a criminal trial. Wolf refused to hand over the video tape and was jailed. After 226 days later the unaired video tape was posted online and it had been decided the Wolf had complied with the subpoena and was released.

After reading this article I am confused as to what exactly our government thinks it is doing. We have already learned about all the great things congress has the power to regulate, like global warming for example. Now it seems that pretty much anything we own is actually congresses. Apparently they can take our private property for whatever use they please and if we refuse we can be thrown in jail. It was believed that this video tape had some evidence on it of some sort and I guess that was the reasoning behind the taking. In the article it mentions that it turned out the video tape did not even show what investigators were looking for. So why exactly was Joshua Wolf jailed for over seven months? Well, I guess I can't say. I never read anything that says if you don't surrender your private property to the government you can be thrown in jail. I understand the concept of takings for public use with just compensation but this case doesn't seem to make any sense. Apparently the government has a lot more power than what has been specifically given to it by the constitution.

Global Warming and the Courts

Last Monday the Supreme Court ruled in a 5-4 decision that the Environmental Protection Agency (E.P.A.) has the power to regulate carbon dioxide (CO2) and that they could not neglect the right for regulating greenhouse gases unless they could provide scientific basis for not regulating. The explanation from E.P.A. on why they had not regulated greenhouse gases was because the emissions from American cars were insignificant in the big picture. The court dismissed this explanation as inadequate. The decision does not force the E.P.A. to regulate CO2, but would most likely face more legal action if it does not. The dissent delivered by Chief Justice Roberts said that the Court should have never given the plaintiffs standing to sue and that it lowers the requirements for standing.
I agree with Chief Justice Roberts. I am not sure how the plaintiffs passed the three prong standing test. To be granted standing you must prove: first that injury was sustained; second that the injury was caused by the action in question; and third it is likely that the outcome will favor the injured party. How did the state of Massachusetts prove that injury was sustained? Justice Stevens said it met the requirements because global warming was raising the see level along its coast, if the government did something then harm would be reduced. I don't believe this is enough to prove the first two parts of the test. It sounds ridiculous to me that justice Stevens and the other five in the majority would agree with him. The rising sea level could be because of other countries failing to regulate greenhouse gases. I also don't think that the Clean Air Act that was passed in 1963 had anything to do with regulating CO2 from cars, but rather combating smog in cities. I think that the Court has overstepped its constitutional boundaries. The President and congress should be passing legislation to combat the effects of greenhouse gases not the Court. Even at a state level Massachusetts could better control how much CO2 they want to emit with harder emissions test. The E.P.A. can not hold full responsibility. California, for instance, has stricter emissions for regulating CO2 than the federal government. Massachusetts could do the same if they were really worried about their rising coast line.

No legal obligation to shareholders, or protection from over regulation?

The supreme court is set to hear debates between the bush administration and shareholders of fiber-optic company Tellabs. The Bush administration is claiming that there should be a limit in lawsuits for corporate scandals, like the ones in 2002 involving companies like Enron. Their reasoning behind this is that too many lawsuits will “bog down” business and make Financial firms less competitive and less productive.The argument presented by the shareholders is that The “lost millions” when then CEO made false statements.Essentially, since 2002 regulatory laws on financial firms since 2002 have allowed shareholders to sue extensive class action lawsuits.This seems like a case of Rent-Seeking big corporations are looking to “ease” there business practices by making them unaccountable for their own actions. Sure competition should be encouraged in business, because it HELPS the economy. If, however, it is a kind of competition that comes from hurting shareholders, than it seems to be HURTING the economy.I see no justification for violating the personal liberty of share holders, making themselves unable to legally defend themselves, just to increase production.It seems like rent-seeking o the part of the financial businesses, to lower costs by taking away legal barrier

Court Packing Cartoons

You might be interested in checking out a number of cartoons that were published around FDR's court packing scheme.

RULES MORE IMPORTANT THAN PERSONALITIES

I think the thoughts that Walter E. Williams has are brilliant, must be way I read him a lot.

This article has to deal with the role the Supreme Court has in making laws. In particular, the role lobbyists play in our government. Williams essentially boils down the role of congress to a football team, and of course (as he does in all of his articles it seems), economics.

His conclusion of the role the Supreme Court now plays fits perfectly with our recent discussions involving FDR and how he stacked the court. Professor Eubanks discussion of jurisprudence also comes into play. If we had a Court which held previous decisions true and did not "flip flop" on decisions, then stacking the court would not be an issue. Then, if Congress wanted to impose a law that favored a group (such as farmers (see "Economics & Government" blog) or sugar beet farmers), they would have to add an amendment to the Constitution. Thus, putting earmarks in budget bills favoring one group over another, might stop. Of course, what then would our Congressmen and women do all day?

Should price floors always be illegal?

A retailer in Texas ( Kay's Kloset) was selling products from Leegin Creative Leather Products in their store. To maintain competitive pricing with other larger retailers they discounted the products 20%. Leegin demanded that they and other retailers offering the discount prices put the prices back up or leegin would no longer ship them products. All of the retailers but Kay's Kloset raised the prices. Leegin, as promised discontinued sending them products. Kay's Kloset lost half of their business. The lower court ruled in favor of Kay's Kloset and awarded them $3.6 million. Kay's Kloset was suing for price fixing. Leegin holds that the prices were pro-competitive because they fostered competition with other brands. The Bush administration holds that it is inappropriate to automatically prohibit price floor agreements when they are not necessarily anti competitive. The case is now before the supreme court.

There are several things that I take issue with in this case. First lets look at the seller buyer relationship. Leegin was unhappy with the market for their products. They seem to feel that their products are worth more. The retailers seemed to disagree. Once the retailers have bought the goods they are theirs and should be allowed to resell them as they see fit. If the manufacturer wants the goods to sell for more they should make their selling prices higher forcing the prices that they want to be charged. After the retailer has possession of the goods I do not believe that the seller should hare anything further to do with the transaction. Furthermore, The retailer opted not to charge the higher prices and so no longer received shipments. Certainly, a manufacturer has the right to their goods and who they sell them to. The retailer opted not to fit into that criteria they have no right to compensation. If the prices that the seller wanted to charge were too high then people would not have bought them and the seller would lose money and change its prices. All indications of this case seem to suggest that the market should be allowed to correct itself.

Now we need to consider if the government is correcting a market failure? Price floors and price ceilings seem to go along with monopoly power. Is the regulation of this particular price floor within the scope of governments power? It does not seem to me that the manufacturer is trying to create a monopoly. If their claims are true and they are just trying to stay competitive in the market then there are substitutes for their goods. Entry into the leather market is not particularly difficult. the retailer claims to have lost half its business so it would seem that perhaps the prices asked for are in fact the market prices. No other retailers had a problem charging the higher prices. Perhaps I am mistaken but it seems to me that there is no cause here for government intervention. The actors made market choices and they should be allowed to play out. I cannot see that this price floor is of the kind referenced in the Sherman Anti Trust Act. People may chose to buy other leather products.

Is a DVR Recording Copyright Infringement?

Cablevision developed a new way to use DVR systems by providing remote storage instead of hard drive storage on the system itself, one storage unit per person. This remote storage would allow for easy access and probably more storage space than current DVR systems. The problem is that the pseudo-monopolized market, which includes studios and cable networks, believe that this DVR storage is causing infringement issues. To try and downplay the havoc being created by the studios and cable networks, Cablevision is going out of its way to prove that they are not infringing on current copyright laws. Cablevision is using the Supreme Courts decision in 1984 regarding VCR's, that the VCR recordings were legal media. This new system is no different than current DVR's like TiVo that record media and store it on the hard drives, only these hard drives are remote. The studios and cable networks disagree, and state that the process allows the recording to be re-played for free and without approval for those transmissions, referring to them as video-on-demand services. They are still fighting for revenues lost to other competition such as Netflix, Podcast, etc. that is downloadable by consumers and can be replayed after paying only once, not several times.

This has rent-seeking written all over it! The studios and cable networks had a monopoly in this market for years and it has been crumbling because of new technology. So they are fighting this DVR market, Podcast, satellite television, downloadable movies and Internet movie rentals. This is causing a limitation to competition. Because of rent-seeking the Government could intervene and cause this new technology to withdraw, or push license or fees on it so much that it may not survive. It goes against Mancur Olson's economic prosperity system and causes an inefficient economy.

High Court tests limits of student speach rights

As the Olympic torched passed through Juneau, Alaska, in 2002, a high school senior Joseph Frederick along with some friends unveiled a banner which read "Bong Hits 4 Jesus" as an attempt to get on TV. The principal of the school (Deborah Morse) tore down the banner and suspended Frederick for 10 days saying that because the word "bong" was a reference to marijuana, the sign violated the school's anti-drug policy. On March 19th the U.S. Supreme Court will hear the arguments in Morse V. Frederick. Similar school policies, many inspired by Colorado's Columbine incident, have banned students from wearing clothing or posting signs that focus on drugs, guns or incendiary topics such as homosexuality, abortion and religion.

In a similar case in 1969 three Iowa students who wore black armbands to school to protest the Vietnam War were suspend and went to court saying their first amendment rights had been violated. The Supreme court ruled in favor of the teenagers, saying, " it can hardly be argued that either students or teachers shed their constitutional rights to freedom of speech or expression at the schoolhouse gate."

When the U.S. Court of Appeals for the 9th circuit ruled in favor of Frederick last year in the Juneau case it cited the "Newsom decision" saying, "our sister circuits have similarly held that student speech that is neither plainly offensive nor school-sponsored can be prohibited only where the school district demonstrated a risk of substantial disruption."

I believe the Court of Appeals was correct and just because we enter a school building we do not loose our Constitutional rights. I would hope the supreme courts finds in favor of Frederick, because if we give up our first amendments rights in school, whats next?

O'Malley Endorses State Ban On Smoking

In Maryland, the state government is attempting to pass a law that would ban smoking in public establishments. Most people would agree that this law is not only beneficial to non-smoking customers, but also to the businesses that have allowed smoking in the past. Obviously, non-smokers would no longer have to suffer foggy smoke clouds that most bars and many restaurants have become accustomed to, and business owners are likely to see a boost in overall sales since non-smokers will no longer be avoiding their establishment due to smokey conditions.

Some have said that non-smoking laws will lose businesses money because the smokers wont want to go to the establishments their accustomed to if they cant smoke inside. A bogus argument i think. Smokers aren't going to boycott public establishments all together because of a minor inconvenience. Colorado passed the same law not to long ago. The restaurant that I bar tend for saw an obvious increase in sales. Our smoker regulars still came in just as frequently as they had before except they were smoking outside. And new customers also came in clearly stating that they had come in because they didn't have to worry about the smoke anymore.

While this law may infringe on the liberty of some people, its better for society as a whole to adopt this. Not only will public establishments make more money through higher sales, but people will be able to enjoy cleaner places to go blow all their money. And as we know, the more money that people spend, the more money businesses make, the better the economy becomes.

Supreme Court denies Writ of Habeas Corpus and Constitutional rights.

Mathew Musladin was denied the petition of habeas corpus by the Supreme Court earlier this month. He was convicted for the murder of Tom Struder in the case of Carey v. Musladin. Musladin thought he was denied a fair trial because family members of Struder wore buttons bearing the victims picture. He had asked the judge to have the family remove their buttons, but the judge would not comply. According to the article (link attached); One could argue, on the one hand , that when jurors observe the grief and solidarity of a victim's family members- evident in the buttons they wear- each day of the trial, the jurors are likely to feel obligated to do something to acknowledge and ameliorate the grief (Colb, 1).

The Supreme Court stood by the judge. It felt that the actions of the family were not within the control of the court system. The only way to effectively petition the court for writ of habeas corpus is to prove state action. The state action doctrine says that a person must be acting on behalf of the government to compel bias towards a defendant. As the families were not under the employ of the state, their actions did not violate Musladin's constitutional rights. This distinction, however, should not carry much force in the context of a trial... A judge controls a courtroom, so once a defendant has specifically asked the judge to order that some display be stopped, the judge's refusal to grant the defendant's request qualifies as state action (Colb, 2).

The Supreme Court failed to protect Mathew Musladin's Constitutional rights. It could be argued that his right to due process of law was violated under the fourteenth and possibly fifth amendments. One may not speak out of turn in court, as this could lead to a contempt charge. The same follows for the actions and attire of the courtroom audience. The Judge could have made the family remove the buttons. Once the judge opts to act in any way which effects the court, the state has intervened. State intervention is almost implied when a person stands trial. If a person such as Musladin must face punishment by the state, the state must have the responsibility to make sure that punishment is meted appropriately.

Religion or Liberty?

Peter Schwartz wrote an article on February 20, 2007 on the website for Capitalism Magazine titled Religion vs. Liberty. In that article he listed a condition needed for individual freedom and the direction to which our government is currently going with each religion and liberty. Schwartz believes that secularism is a condition that must be present in society in order for freedom to exist. The Constitution seems to agree with his belief, as do I. Freedom includes the right of an individual to control their own lives and to pursue their own means of happiness. Many individuals would be upset if rule by religion was able to take this away. I would be one of them.

While it doesn’t seem so clear to me to say that there can be no religion in government, it seems logical to think that if our government ruled by protecting our rights, instead of making decisions based upon religion, that liberty would be better protected. However, does this mean that we wouldn’t be better off overall with a faith based government to guide us? I imagine some might think so. The true question is do we believe that we have to be at one extreme end or another, or can we find a place in the middle to meet.

Merck Suspends Lobbying for HPV Vaccine to Become Law

What a great idea this was!!! When I first heard about this initiative, I heard it was being introduced by a Texas lawmaker. My first thought was an obvious case of rent seeking. Merck was the first to develop the vaccine, therefore, by requiring it to be law, Merck's sales would be through the roof. My immediate second thought was the implications on liberty and freedom. Could this law be Constitutionally correct?

When there is a public concern for health, such as the flu, which is transmitted by casual contact, then there can be a case for mandatory vaccines, even those subsidised by the government. However, in this instance, this is a vaccine for HPV which is contracted through sexual contact. This is immediately recognizable as a controllable type of disease- abstinence works best. There would be absolutely no instance for the government to force parents of girls, as young as 9, to get this vaccine. One of the arguments against this is that it could promote sexual activity among young girls. I think this follows the same logic as distributing condoms in public school.

I don't think it is the job of the state to police sexual activity of our children. It was wise for the government to prepare for the bird flu, but we did not get mandatory vaccines for it and, as it turns out, there have been few, if any, cases here in the U.S. (It just so happens that the market actually worked in getting the bird flu under control- economic pressure was put on states (et. China) to get control of the situation, otherwise business and commerce would stop coming to that part of the world). HPV can be prevented by abstinence, testing of partner, use of protection.

Since this was a blatant attempt by Merck to gain profits. it was wise for them to back down. No, if only the lawmakers can see their errors and back down as well.

The government and their power of eminent domain.

In his article Taking Away Your Property on MSNBC.com author Dan Caplinger discusses the different aspects of eminent domain in the United States. He explains that while the power of eminent domain is very old and is supposed to allow the government to take private property from individuals for the benefit of the public with just compensation, this doesn’t always happen. Sometimes they take the land so that it can be used to build bridges, roads or schools on, which is okay for the public. But in other instances the government takes ownership of a private parcel of land from an individual and gives it to a contractor to develop. In this situation many people believe that the land was taken for private use and that they were wronged.

The Fifth Amendment of the United States Constitution states that “no person shall be “deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use, without just compensation.”(1, l.10) Our government should not be going beyond what is deemed to be their constitutional right. Infringing upon individual’s rights by taking land for private use is wrong. It will be interesting to see how the signing of a bill by President Bush to limit takings to where they only benefit the general public affects future takings. The hope is that future takings by the government will be minimal and only out of necessity for public use.

Eminent Domain Abuse Issues in WA

The author of this article Mr. William Maurer, is the Executive Director of the Institute for Justice, Washington chapter. Mr. Maurer also recently wrote a book regarding eminent domain issues that the nation is facing as a result of the decision from the Supreme Court ruling in the Kelo case. That ruling prevents Federal courts from interfering with local governments regarding the condemning of private property for economic development. In this article Mr. Maurer discusses the effects of the Kelo case on Washington state.

The Kelo case regarding private property issues in the state of Washington (and other states) are really more of abuse of police and state powers. For example, an old statute called Washington's Community Renewal Act has been used to condemn whole neighborhoods and transfer the property rights to the city development contractor. The city planners simply describe that a particular neighborhood is one that is "blighted" -a word which has a very vague meaning but leads one to believe that the neighborhood is in desperate need of repair- and they have the power to remove the neighborhood and replace it entirely. Because of the Kelo case decision the Supreme Court cannot intervene regarding this city enforced "blight" issue. Although in the Kelo ruling the Supreme Court stated that the local governments could provide more protection from such abuses of private property if it deemed appropriate. The biggest issue now is that citizens cannot sue the city or state for breach of the Constitution in order to protect their property. There is no chance for the citizen to win. Mr. Maurer believes that if cities and states were more responsible and if the courts enforced the local government constitution, there would not be such an abuse of power.

Constitutionally, this is a blatant abuse of police power. It is perplexing to me as to how can a state allow this to happen. Maybe the people of the cities and states in WA and other areas affected are not doing enough to raise this issue. Where is the city getting its approval to begin these developments or re-developments? Economically, the city is negatively affecting the ability for its own future growth. These "blighted" neighborhoods may be in an area that, if left alone, could become larger and provide more housing and economic growth. The economy of the real estate market could take a very large downturn if the city decided not replace the neighborhoods it removed, preventing more people from moving to the city.

Philip Morris

Jessie Williams a chain smoker died at age 67 of lung cancer after smoking three packs of Marlboro cigarettes a day. His widow sued Philip Morris, the maker of Marlboro cigarettes, accusing them of misinforming of the dangers of smoking. A jury awarded the widow $821,485.50 in compensatory damages and $79 million in punitive damages. The case was eventually brought before the Supreme Court on October 1, 2006 and decided February 20, 2007. In a 5 to4 decision the Supreme Court overturned the $79.5 million an Oregon jury awarded the widow because they thought the jury over calculated the harm smoking caused to other individuals other than the widow who brought the case.

The case's constitutionality was based on the due process clause of the Fourteenth Amendment and how it imposes the states from imposing grossly excessive punishments (BMW v. Gore and State Farm v. Campbell)

I agree with the decision; however, I do not read this in the Fourteenth Amendment. I read that "nor shall any State deprive any persons of life, liberty, or property without the due process of law." I don't see anywhere where states can impose fines or punishments. I see that they can not deprive these things without due process of law. The damages were excessive to say the least. This case seems ridiculous to me that a jury would award so much money to a widow because her husband died from smoking cigarettes. Smoking was his choice! Philip Morris did not send a representative to sit there with a gun to his head making him smoke three packs a day. He could have quit when reports came out the smoking may not be that good for you.

"Issue Ads"

The supreme court is deciding a case that deals with campaign ads and their rules. In the 2004 campaign there were three ads run by "Wisconsin right to Life" that did not adhere to funding rules. Ads funded by businesses, labor unions, and other groups -- can be banned 60 days before a general election, and 30 days before a primary. Issue ads cannot mention any candidates or party affiliations. The ads asked people to call specific senators and support certain ideas. The basis for these rules is the campaign finance reform laws from congress.

The appellate court acknowledged the entities first right amendment to free speech, but maintained that the Campaign Finance Reform laws were constitutional. the supreme court will rule whether or not these specific ads apply to the rules. I do not believe that they will overturn the laws set forth by congress.

My reading of the powers of Congress does not suggest to me that they have the power to make laws relating to campaign finance reform. The organization used its right to free speech and spent the money on the ads. The message of the ads are not directly causing harm to anyone. The government is attempting to regulate trade in this industry. The organization is willing to buy the ad space and the tv/radio companies are willing to sell it. The government is not protecting the liberties of these individuals.

Wal-Mart Discrimination Case

The article refers to a lawsuit by women that claim discrimination against Wal-Mart of salaries and promotion eligibility. Initially there were 6 women with the claim, but through the appeals processes at the Ninth Circuit Court of Appeals in San Francisco, there is the potential for up to 1.5M women to be part of the now class action lawsuit. They claim that from 1998 forward, the women's salaries were 5-15% lower than that of their male counterparts, and the women were overlooked for promotions that they had the qualifications and requirements to fill, but were not considered. Since the Court of Appeals in San Francisco decided that the number of plaintiffs could increase by up to 1.5M women, Wal-Mart is now considering an appeals hearing at the US Supreme Court level.

This is more of a protective state appeal if it does end up going to the Supreme Court. The plaintiffs could affirm that since it is concerning individual liberty under Amendment XIV in the "privileges or immunities" clause would apply. Whereas Wal-Mart could appeal to the same Amendment, but use the "due process of law" clause.

Justices Breyer and Scalia Converse on the Constitution

You might be interested in listening.

The US Supreme Court as a Referee

Frederick Sautet

"If so, then the highest institution in the US is slowly moving in the direction of only interpretating the law (rather than the more active role it took in the progressive era). It is a very important sign, a slow move towards a position emphasizing the “original intentions” of the US Constitution. This move is important not because judicial conservatism is good for its own sake, but because it is one of the best ways to force the state back into its role as a referee—thereby limiting (and reversing) its growth. . . ."

You should read all of this short post.

The Rise and Decline of Mexico

As part of an assignment for our Power and Prosperity course, I reviewd Alvaro Vargas Llosa's publication Liberty for Latin America: How to undo Five Hundred years of State Oppression. In the book, Llosa presents a theory of Latin American economic underdevelopment in which the Latin American State is pointed to as the most significant obstacle for the region's progress. The author subscribes to an argument for economic prosperity similar to the one proposed by Mancur Olson in the book Power and Prosperity. In my own interpretation of Olson's and Vargas's thesis of development, I would say that they both believe economic productivity and prosperity depends on motivating the economy's individuals to be as productive as possible. Because people always act in a rational and self-interested manner, the most effective and enduring incentive for productivity is to allow them to accumulate and/or enjoy the benefits of their own production.
In the Logic of Collective Action, Olson explains how collectivities, or groups, are not as able to define and pursue an interest as individuals are. He presents a 'book-long' explanation of why collective action is a difficult objective, but one simplistic way to sumarize it would be to say that individuals assume the full costs and benefits of their actions, on the other hand, groups of individuals can not assign costs and benefits within their membership in the same 'automatic' manner. As a result, when said groups pursue collective action, their objectives, their costs, and their benefits are not shared equally by all individual members. The term "collective action" is misguiding because such action can not and does not represent the intentions and/or interests of the entire collectivity, but only those of one or a few members. That is why individuals play such an important role in the general prosperity of a collective economy. Collectivities are not 'well-equiped' to manage resources because only the interests of some of its fractions will be considered in doing so. From this logic one can conclude that allowing and protecting individual property rights is a very good way to ensure that economic resources will be administered properly and that they will be as productive as possible. Individuals must be the protagonists of the economy, not the government, not any other collectivity. Olson's theories conclude that a nation in which individual ownership of assets is fostered and protected and there is no 'predation' on the economic 'efforts' of individuals, productivity will be closer to optimal and prosperity can occur. Vargas applies this concept to the case of the Latin American economies and proposes that the State's dominant position as the central character and main conductor of the economy is the reason why no 'antidote' for economic retardation has worked in the subcontinent.
As I found out by reading Liberty for Latin America, practically every Latin American nation can be used to support Olson's (and Vargas's) thoughts on the recipe for prosperity, although these cases would be found in the section listing the 'bad' examples, those instances in which the prescription is not followed and 'undesirable' things happen. I think the case of Mexico is probably the one of most interest for people in the United States, so I decided to take a quick look at the economic/political model in Mexico and try to identify a few of the symptoms diagnosed by Vargas and that would go against Olson's optimal model of prosperity.
In a previous posting I discussed the post-colonial legacy imprinted on the political culture of Nigeria. The case in Latin America is very similar. The Spanish and Portugese monarchies also utilized very centralized and authoritarian units of government in order to mantain a stable regime that incorporated different corporate groups into one, universal, mission to extract wealth and chanel it back to the royalty back in Europe. This culture of authoritarian central government has proven hard to ellude for a country like Mexico.
After independence, the southern nation struggled to create a unifying national identity and 36 different heads of state attempted to take possesion of power until Porfirio Diaz came to power in the 1870s. Diaz established a very powerful dictatorship that lasted more than three decades. One of his most important goals was to develop the Mexican economy and Diaz's autocracy was characterized by an incredibly interventionist state. He saw foreign investment as a vehicle for development and also as a very effective way to enrich his personal coffers. Foreign penetration of the economy and ownership of land and other resources was a great source of discontent and eventually became one of the driving themes of the revolution that ousted Diaz in 1910. The Mexican revolution is known as the first great social revolution of the twentieth century, approximately 2 million Mexicans died as a result of the violence and the economic devastation. This revolution is the single most important shaping force of the modern Mexican State.
In addition to many other significant transformations that the revolution caused and that would not be very useful to mention right now, a constitutional democracy was established in Mexico in 1917. However, the emerging system did not overcome the nation's legacy of authoritarian and corporatist political culture. In fact, in order to appease the different factions that had carried out the revolution, an even more sophisticated and rigid corporatist structured was designed and implemented in Mexico: The PRI, the Institutional Revolutionary Party, which came to dominate Mexican politics and held a power hegemony that lasted 70 years. The Mexican government, and more specifically the PRI, was succesful in creating a system of groups' representation that ensured submission to a very authoritarian regime that, as mentione previously, ruled Mexico for seven decades. Just like in many other Latin American nations at the time, the emerging "democracy" of the early 1900s relied on appeals to nationalism and as a concequence, to economic nationalism. Mexico adopted a model of development consistent with Import Substitution Industrialization (ISI) which yielded very impressive growth rates and development. However, the Mexican industry eventually reached the inevitable 'bottlenecks' that characterize this type of model and the Oil bust and ensuing debt crisis of the 1980s forced the State to redesign their approach to economic development and prosperity. Liberalization and privatization have since replaced the ISI strategy. In 1994 Mexico signed the North American Free Trade Agreement with the U.S. and Canada and in the last decade the government has privatized more than 1000 enterprises. However, the last ten years have also been marked by very low rates of growth.
Throughout its history of development, Mexico's powerful and interventionist State has mantained its status. All attempts to create a new economic path are not only designed, but also controlled and dominated by the 'all-mighty' Mexican state. According to the Constitution of 1917 (still standing), the Mexican state reserves 'discretion' with regards to all property rights. This document was used, in fact, to nationalize the oil industry in 1938 and the national banks in 1992, just to mention the two most famous cases. As long as the government mantains its postion as main administrator of the economy and the State's institutions do not function in relation to individuals, fostering and protecting their property rights, Mexico is not likely to overcome its longstanding affiliation with economic underdevelopment.

The market for oil

OPEC said yesterday that "it planned to reduce its output by nearly 2 percent in February". This is the group’s "second production cut in two months." Opec is doing this in order to keep oil prices "above $60." The way this is going to work is each of the OPEC countries are going to cut their production down to "26.3 million barrels" in order to decrease the supply to raise prices. It is important to note that OPEC has already "agreed to a 4 percent production cut in October."

The Saudi oil minister reports they are doing this in order to aid the market for oil by keeping it 'in balance'. “I hope the market appreciates we are working so diligently to bring supply and demand in balance, to have inventories at a reasonable level so that we do not have gyrations.” This is not going to help the oil market, the only thing this will do is raise prices, and since the cartel holds a virtual monopoly on oil, consumers are forced to pay those prices or not drive- for most that is not a feasible alternative. The market on its own will set price and quantity and for the most part it should not be messed with unless there is a market failure. Oil producers are tying to make more money by supplying less product which they have the power to do because they are a cartel.

OPEC accounts for "40 percent of the world’s oil exports" and it has a new member to add to its 11 member group. Angola will be added next year which is the "first new member since 1975."
Angola is "Africa’s fastest-growing oil exporter" which pumps "1.4 million barrels a day, ranking it above Qatar and Indonesia within OPEC." This is a surprising addition considering OPEC is worried about current levels of output because of the subsequent decrease in price. The chief energy economist at Lehman Brothers, Edward Morse says "this makes an incredibly tight market even tighter... It’s a very aggressive, assertive move. Clearly, some OPEC members want to keep a $60 floor.”

“They are jawboning the market and trying to show they are being aggressive,” said Roger Diwan who is a managing director at PFC Energy. OPEC explains its reasoning as “market fundamentals clearly indicate that there is more than ample crude supply, high stock levels and increasing spare capacity.”

Another issue with the price floor created by this Cartel is the problems with enforcement. It is very difficult if not impossible to discern the difference in oil between countries in the middle east. Given the Nash equilibrium, there is incintive for these countries to cheat. If Saudi Arabia decided to ramp up production, it would be very difficult for the other members of OPEC to know who was doing it. If Saudi Arabia did cheat, their output would increase and they would sell more units for the same price as everyone else; therefore their profits would sky-rocket. It has been estimated that "OPEC countries have actually pared production by only 700,000 barrels a day, instead of 1.2 million barrels, since the October meeting." This is a result of the difficulties in enforcement, every country wants to make the highest amount of profit that they can. Not only is there incintive to cheat but it is almost counter-productive to a country's profit margins not to.

Since OPEC has a virtuall monopoly on oil, when they set a price floor, consumers have little choice but to pay the higher price. They only way they could avoid it would be if they didn't consume gasoline and for most this is an unrealistic assumption. Consumers will be forced to pay this price until the price reaches the point where it is more cost effective to turn to energy alternatives. "Analysts at the energy agency, which represents consumers, have warned OPEC not to cut its production further as higher energy prices could erode economic growth."

It is a cautionary tale, decreasing output will raise oil prices but if OPEC goes to far they can end up shooting themslves in the foot. The president of the Petroleum Industry Research Foundation in New York said "OPEC ministers should be careful how they manage the market in coming months." He also suggested that "high energy costs could reduce consumption." If consumers start turning to energy alternatives, there will be a sharp decline in demand and prices would plumit. OPec would be stuck wondering where did everybody go? “That’s a trend OPEC and the Saudis should not be ignoring because at the end of the day they want to sell, and if you want to sell, you need a vibrant economy particularly in the United States.”

Political Economy

Political Economy
Developing countries never explicitly took one approach over the other, there seems to be noticeable differences between poverty reduction and wealth creation. In paved reduction focused countries, such as Madagascar, or Mali, systems tend to operate under a culture of control, monitoring, and bureaucratic procedures. Concern is put on socially oriented cost centers and manageable checks and balances to monitor those cost centers. This may look good interms of consumer confidence, but it is inefficient in terms of market responsiveness and competitiveness. Little effort is channeled towards income generating business activities, and managerial time and focus is on securing grants, rather than crating wealth. Very few companies survive on purely market driven business models, and when they try to , basic government services are not there to support them. In wealth creation focused countries such as Singapore or Mauritius, we see a tighter relationship between business and government. Leaders from both aids have a clear sense of the ir respective roles in the wealth creation process, and leaders on both sides are rewarded accordingly. As a result, organizations in such countries tend to directly or indirectly focus on supporting business. Public sector managers are asked to express clear and measurable wealth creation support objectives, and to claim the resources they need to achieve these objectives. Agencies in charge of critical income generating sectors become important agencies that work closely with the private sector and get priority support from other government departments. Where does this leave a country like Rwanda? It might help Rwandan public and private organizations be more conscious of the choices they inherently make every day. Aid-funded organizations that directly provide relief to the poor are necessary and will be needed in Rwanda for many years to come. However, it will be critical that Rwanda finds more sustainable ways to finance them. In the meantime, it is imperative for most other organizations to examine how their activities directly or indirectly contribute to the wealth of the nation. there are huge potential economic benefits from income-generating sectors like coffee and tourism. It is estimated that investments of $80 million and $100 million could, coffee and tourism could generate around $580 million in badly needed export receipts. Not to mention the thousands of jobs these high economic impact industries would create in the Rwandan economy. If these targets were achieved they would fundamentally transform the economy. Rwanda's path towards more competitive coffee and tourism industries will not be an easy ride, and the Rwandan public and private sector coffee and tourism leaders who have developed precise action plans for those industries all know that. Both they also fell that the risks and investments required are will worth the risk. The prospect of slowly crating prosperous coffee and tourism businesses in Rwanda is becoming more and more obvious and the country's stated goal to reduce reliance on foreign aid could eventually become a reality.

Is there a fundamental difference between poverty reduction and wealth creation?

Developing countries never explicitly shook one approach over the other, there seems to be noticeable differences between poverty reduction and wealth creation. In paved reduction focused countries, such as Madagascar, or Mali, systems tend to operate under a culture of control, monitoring, and bureaucratic procedures. Concern is put on socially oriented cost centers and manageable checks and balances to monitor those cost centers. This may look good interms of consumer confidence, but it is inefficient in terms of market responsiveness and competitiveness. Little effort is channeled towards income generating business activities, and managerial time and focus is on securing grants, rather than crating wealth. Very few companies survive on purely market driven business models, and when they try to , basic government services are not there to support them.

In wealth creation focused countries such as Singapore or Mauritius, we see a tighter relationship between business and government. Leaders from both aids have a clear sense of the ir respective roles in the wealth creation process, and leaders on both sides are rewarded accordingly. As a result, organizations in such countries tend to directly or indirectly focus on supporting business. Public sector managers are asked to express clear and measurable wealth creation support objectives, and to claim the resources they need to achieve these objectives. Agencies in charge of critical income generating sectors become important agencies that work closely with the private sector and get priority support from other government departments.

Where does this leave a country like Rwanda? It might help Rwandan public and private organizations be more conscious of the choices they inherently make every day. Aid-funded organizations that directly provide relief to the poor are necessary and will be needed in Rwanda for many years to come. However, it will be critical that Rwanda finds more sustainable ways to finance them. In the meantime, it is imperative for most other organizations to examine how their activities directly or indirectly contribute to the wealth of the nation.

there are huge potential economic benefits from income-generating sectors like coffee and tourism. It is estimated that investments of $80 million and $100 million could, coffee and tourism could generate around $580 million in badly needed export receipts. Not to mention the thousands of jobs these high economic impact industries would create in the Rwandan economy. If these targets were achieved they would fundamentally transform the economy.

Rwanda's path towards more competitive coffee and tourism industries will not be an easy ride, and the Rwandan public and private sector coffee and tourism leaders who have developed precise action plans for those industries all know that. Both they also fell that the risks and investments required are will worth the risk. The prospect of slowly crating prosperous coffee and tourism businesses in Rwanda is becoming more and more obvious and the country's stated goal to reduce reliance on foreign aid could eventually become a reality.

Islamic banking

Islamic Banking

In accordance with Shariah (Islamic Law), Muslims cannot charge interest. This is a very detrimental law or rule to Islamic Banking systems and Islamic countries. Markets are everywhere, and there is no doubt that Islamic countries benefit from transactions in a market. But, I don’t think an Islamic country can come close to benefiting from the full potential of the market without allowing interest rates. In Mancur Olson’s book, Power and Prosperity, Olson suggests that a country needs a full range of markets that will allow the society to capture the most gains from all types of transactions. Olson gives an example: Suppose there is a young man that is interested in starting some type of business and he is fully willing and capable to make the business prosper, but he has no money. Now suppose there is an older man that has the money, but is not enthusiastic enough or willing to start his own business. Both men, the economy, and the country have a potential to become better off if the older man loans the younger man the money. But, the older man will not do this unless he is sure that the young man will not just keep all the money for himself. An enforceable contract (with interest added in) will allow this type of transaction to take place. I think there is a lot of room for more advantageous transactions and economic growth in many Islamic countries, if they are willing to take advantage of it.

Policy Economics

Policy Economics The article i read was called "Hatcheries In Crisis." It stated that National Fish Hatchery System true federal role is hleping endangered species and native fish. The problem arises when talking about what constitutes an endangered species? According to the ESA if a fish can be included into the same distict population segemnt as the wild fish in ewhich they are genetically associated with, then they must be listed togheter. This is not the case with fish produced in hatcheries. Hatchery fish can be difined as fish fertilized or grown artificially in a production or conservation hatchery. Unfortunately these types of fish show domestications effects such as genetic adaptations to hatchery environments that are genrally maladaptive in the wild. Hatchery fish usually have poor survuavl in the wild and altered migration and feeding behaviors of natural fish. Hatchery fish also are typically larger and tend to compete with wild fish. Ultimately artificial fish of this type can overrun the wild fish type, driving the true wild fish DNA strand out of existence. How can conserving a fish species be done without altering its gentic makeup? One plan that could be implemented would be to create an sizeable environment for fish such as a private pond or lake , that produces food for its fish on its own, has areas inwhich breeding could be done naturally between fishes, and has no human contact(except for fishing season). Then wild fish could be caught and placed into these areas allowing them to develope into many. Once breeding season finished, fish then could be caught up to a certain ammount that fits the sustainable ammount in the pond.

Nigeria: Case Study

The African nation of Nigeria has long been a case of interest for the study of political and economic development. This country is a great example of a post-colonial developing nation and its developmental history contains very important lessons about the political and economic retardation of the developing World.
With a population of 130 million people and a total area of almost 360 thousand square miles, Nigeria is the most populous nation in Africa and ranks amongst the ten largest in the World. Nigeria's population in West Africa, its size, and its oil-producing status have made it the hub of regional economic activity. Demographically, it dwarfs the other fifteen countries in West Africa with a population that is about 60 percent of the region's total. Also, Nigeria's gross domestic product (GDP) represents more than half the total for the entire subregion.
Nigeria was a British colony until 1960 and the colonial experience left a powerful imprint on the design of the African nation. Darren Kew and Peter Lewis summarize the comparative significance of Nigeria:

Nigeria offers, within a single case, characteristics that identify Africa.
These opposing forces are rooted in the constant struggle in Nigeria
between authoritarian and democratic governance, the push for develop-
ment and the persistence of underdevelopment, the burden of public
corruption and the pressure for accountability (Kesselman 515).

The reality of modern Nigeria represents a very common case in Africa; its boundaries have little to do with the borders of precolonial African nations, instead, these boundaries merely mark the point where British influence ended and France's began. The geographic design of the African colonies corresponded to the interests and convenience of their ruling powers and not according to any cohesive concept of race, ethnicity, demographics or natural geographic divisions. In addition, the British played off ethnic and social divisions to keep Nigerians from developing organized political resistance to colonial rule, and where resistance did develop, the colonizers did not hesitate to emply repressive tactics. The British ensured that ethnicity would be the primary element in political identification, mobilization, and competition. In the words of Kew and Lewis, "Nigeria, like all other African countries, has sought to create a viable nation-state out of the social incoherence created by its colonial borders" (Kesselman 516).
As a result of its colonial legacy, Nigerians have been unable to form a true national identity around which the citizenry could rally around and develop stable political and economic institutions. Since their independence in 1960, Nigerians have witnessed six succesful military coups, one violent Civil war, and the design of nine different constitutions. The modern republic of Nigeria has supposedly adopted a model of "federal democracy" as a strategy to ensure national unity; however, as a concequence of many years of colonial and military rule, a unitary system emerged: a system with an all-powerful central government surrounded by weak and economically insolvent states.
Political instability and undervelopment has been accompanied by economic instability and underdevelopment. Despite being endowed with vast amounts of natural resources (including huge oil reserves), the World Bank lists Nigeria among the poorest 20 percent of countries in the world and according to Kew and Lewis, "instead of independent growth, today Nigeria depends on unpredictable oil revenues" (Kesselman 525). It is a sort of 'old paradox' amongst oil producers in the developing world: rich endowments on oil reserves provide a potential solution to economic struggles, but they also allow for nations to become overdependent on the exports of a very volatile product. In addition to the overdependence, the large revenues from oil production allow States to increase their involvement in domestic production and in the economy in general. Nigeria is a case and point of these downfalls and the "State plays the central role in making decisions about the extraction, deployment and allocation of scarce economic resources." Because the central government controls access to most resources and economic opportunities, the state has become the major focus of competition among all groups in society (Kesselman 535).
As it would be expected. and predicted by Olson's theories, the government's role in the economy naturally leads to the many groups to engage in rent-seeking behavior. The ability to accumulate wealth is determined by the success that individuals can have in the arena of political competition. Gaining the favor of the State, or getting the government's coercive power on 'your side,' is more important than being a productive member of the economy. Individulas, following their competitive instincts and their rational self-interest, learn to operate in an economic context that awards political connivance, and often flat out trickery, and not productivity.
The authors previously mentioned elaborate in their article:

Nigeria exemplifies the harsh reality of authoritarian and unaccountable
governance. Corruption, fraud, mismanagement, and the restriction of
political liberties were tolerated in the past by populations numbed into
complacency by political repression and the daily struggles for economic
survival (Kesselman 567).

One crucial lesson Nigeria provides is that rich endowment of resources is not enough to ensure economic development. In the book Power and Prosperity, Mancur Olson theorizes that a nation must comform to two "general conditions" in order to reach a prosperous development. The first of the conditions is "the paradoxical condition of secure and well-defined individual rights." The second one is that there is no "predation of any kind" (Olson 195-196). However, the political and economic model of Nigeria makes it very hard for these conditions to be met. All property rights, in said nation, emanate and revolve around the State. The property rights of individuals are trumped by the supremacy of the government, which can appropiate or nationalize any number of resources at any time. Also, because a small group (without an encompassing interest in the economy's welfare) can gain access to government and manipulate to its benefit, the State is generally a predative force on the economy. It is no coincidence that despite a constant struggle to meet the basic needs of its citizens, many of the heads of state of the Nigerian nation have ended up in the lists of the wealthiest men in Africa.
Once a diagnosis is proposed for the possible causes of underdevelopment in Nigeria, a much more complicated question arises. How can the post-colonial African nations escape their persistant and seemingly inescapable retardation? If lack of development is a result of the models of governance and economic production imposed by 'alien' colonizing cultures, would the path to development have to be derived from a purely domestic process? In other words, can the nations and peoples from the developed world lend a helping hand in finding a new way for the African economies, or should they learn from the pitfalls of imposing a foreign system on nations that have not undergone their own progression of development? Should nations like Nigeria be left alone to work out their internal conflicts in hope that they can develop a better suited framework of political and economic interaction and then forge their way out of poverty?

Citations:

Kesselman, Mark. et all. Introduction to Comparative Politics. Houghton Mifflin Company:
Boston 2004.

Olson, Mancur. Power and Prosperity. Basic Books: New York 2000.

Ideology in politics

We all know that in the recent November election the Democrats won control of the House of Representatives. This transition of power was due to a change in voters’ ideals about how the war in Iraq is going. Author Llewellyn H. Rockwell, Jr. states in the article Ideology Still Matters that “elections come down to contests between two groups,” Republicans and Democrats. Each party promises to meet the interests of those groups to which they think will get them elected to office. Usually the party that does a better job of promising to protect interest groups will win. Groups benefit on behalf of all of the people of the country. It is believed that for this election voters’ interests were broader rather than that of the usual self-interested beliefs. I am not sure if more of the votes were for the Democrats or against the way Republicans were running the government. Either way, a transition in power has occurred. The author talks about the thought of ideology and how we should see the recent transition as a sign of hope. The change that occurred should be seen as a win for liberty. The ideas that people have for themselves and the government that oversees them should determine the future of the country, not special interests.

ethics watchdogs

Recently, with Fidel Castro missing his own birthday parade, conditions seem to be moving towards a tipping point in Cuba. As Raul Castro takes charge, an adamant anti-Castro group of Cuban Americans have had complaints filed against them for ethics violations. The group, which is almost totally prototypical of Olson's theory, works to lobby Congress for harsher sanctions against Cuba and Castro's regime. I say they're prototypical not simply because of their explicit lopbbying purpose, but also because of their formation, and the various mechanisms that occured which further prove Olson's point.
The group, which is called Cuba Democracy Advocates, was formed by a group of business men. This makes me think of Olson's theory for two reasons. The first, which I have always felt was tacitly implied throughout Olson's work, is that there is some specialization required in organizing action, and that this sort of know how is commonly found within the private sector. Essentially, I believe that Olson comments time and again about the effectiveness of leaders from the private sector in organizing lobbying groups. Additionally, within the Cuban lobbying group scenario, there may be a more sinister role in play, which Olson would characterize as a Baptist and Bootlegger situation. It seems that it is certainly possible (probable?) that these business men perhaps have an ulterior motive in increasing sanctions. I merely point it out as a possible outcome, and one which I think Olson's theory points towards.
The Cuba Democracy Advocates also use lobbying of both political parties suggesting a broader agenda of the group, despite the fact that the right is typically more favorable of such sanctions. I think, however, that the story itself truly proves an interesting point of Olson's. Within this story, the anti-Castro group broke a procedural rule involving funding their organization, and this is the third such complaint brought against them by an ethics watchdog group (this is why I suspect the possibility of bootleggers). The Cuba Democracy Advocates claimed that the ethics watchdog group was heavily funded by an opposition group. Regardless of the actual facts, I can't help but take notice of all the resources being used in this conflict which could surely have had a more productive use. Sanctions are a dubious tool at best from an efficiency standpoint, when we add the resources needed to purchase favorable legislation, and run an organization, then take into account the rival groups and all the groups meant to ensure ethical behavior, and THEN all the resources likely used in purchasing the ethics watchdogs, the amount of wasted resources is truly staggering. I never before considered that the ethics watchdogs are less likely to be part of the solution, but rather worsen the situation by adding one more layer of corruption and paperwork.

Trade policies

President Bush recently meet with his top trade negotiator in keeping to the plan of achieving a bipartisan support on aggressive trade in the next Congress meeting even with the Democrats still in control. U.S. Trade Representatives have been pushing for the conclusion of global trade talks and by early next year to have negotiations worked out on free trade with several countries. The U.S. Chamber of Commerce has sent out warnings that if we dont keep the high barriers to enter the import market then we will see record high trade deficts and it will continue to cost Americans jobs. Many of the Democrats ha ve campainged against Bush's trade policies stating that the administration had failed to do enough about the loss of manufacturing jobs to low wage in other countries. With the Democrats taking over the House and Senate there will be a huge obstacle that will be faced by Congress in there trade agenda. Reported by Dan Griswold a trade expert for the Cato Institute, he predicts that the trade agenda is headed for very"rough waters." The word out is that Bush in order to win trade deals he will have to make a policy to show that benefits to workes laid off because of foreign competition and Democratic demands to increase jobs so our jobs are not moved to low wage countries. In the end Bush has to do a great deal of work to win over Congresses approval on trade policies.