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… than they are of the U.S. Congress. That’s the conclusion that I draw from two Wall Street Journal articles: “Crisis Spurs Migration to Israel” and “Building Peace Without Obama’s Interference”. Despite the threat of a devastating nuclear attack from Iran, which would presumably reduce the value of any investment to zero, the Israeli economy has lower unemployment than the U.S. and strong economic growth. The West Bank Palestinian economy is doing even better, with a Chinese-style growth rate estimated between 7 and 11 percent. What does it say about the regulatory and tax environment here in the U.S. that an investor would rather build a factory in a war zone?

Separately, the WSJ has an interesting opinion piece explaining why low interest rates may be hurting U.S. companies’ ability to get capital:

“the Fed is still promising near-zero interest rates for an extended period and buying over $3 billion per day of expensive mortgage securities as part of a $1.25 trillion purchase plan. Capital is being rationed not on price but on availability and connections. The government gets the most, foreigners second, Wall Street and big companies third, with not much left over.”

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Barack Obama gave a speech last night proposing to grow the U.S. troop presence in Afghanistan from 70,000 to 100,000 and the amount of spending from roughly $70 billion per year to close to $100 billion (excellent nytimes.com graphics). The Afghan GDP in 2008 was $11.7 billion (source). In other words, we will be spending 8X the total Afghan GDP on our nation-building efforts in Afghanistan. Per my earlier posting “Who finances the Taliban?”, some percentage of whatever we spend in Afghanistan will inevitably find its way into anti-American hands. If, for example, 5 percent of our spending found its way into Taliban and Al-Qaeda’s coffers, that would be sufficient to pay 40 percent of the Afghan population to take up arms against us, i.e., virtually every man of military age.

Here is my summary of the transcript of Obama’s speech:

• Afghanistan has been an important training ground for Muslims who have attacked Americans
• Pakistan is also been a place where angry Muslims can do whatever they want, including plan attacks on Americans
• The U.S. will do whatever it takes to prop up the corrupt, unpopular, and incompetent government of Afghanistan so that the local police and military will kill or imprison angry Muslims before they can arrive in the U.S.
• The U.S. will scale back this effort starting two years from now

The speech raises more questions than it answers. If an unlimited number of Muslims can train and plan attacks on Americans in Pakistan and there are no practical restrictions on an anti-American Afghan emigrating to Pakistan, what difference does it make whether or not we turn Afghanistan into some sort of pro-U.S. client state? [let’s ignore for the moment the fact that there are plenty of other countries in the world where an angry Muslim can plan Jihad, including right here in the U.S. in the case of Major Nidal Malik Hasan] If the Afghan government became suddenly honest, popular, and competent, why would it imprison Muslims who are anti-American? Is it against the law in Afghanistan to hate Americans or to plan violence against Americans outside of Afghanistan?

I have been reminded of the lyrics of the classic Vietnam-era Jazz song “Compared to What“: “The President, he’s got his war; Folks don’t know just what it’s for”.

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In the interest of serving my Weblog readers, I decided that I could not live another day without Windows 7. From a Dell XPS 420 with its preinstalled completely legitimate Windows Vista I purchased an upgrade to Windows 7. The software downloaded itself and installed after I answered a handful of questions that required a moderate amount of computer experience. When the machine rebooted for the last time, after about four hours of downloading and hard drive grinding, it demanded an authorization code, which the dialog box helpfully suggested might be on the side of the PC.

After bending down to the floor and flipping the PC on its front, I found a sticker on the back, printed in a font size that would be readable by the average teenager. I copied 25 letters and numbers from the sticker and then typed them into the dialog box. The code was “invalid”. I went back down to the floor and copied a second set of letters and numbers, these supposedly for the TV portion of the operating system. I typed these in. They were valid.

One question remained: if Microsoft could verify that the Windows Vista installation was authorized, how come it couldn’t transfer that over to the Windows 7 installation?

Usage report: Google Chrome works.

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I spent the early morning at our town hall paying property tax, about 33 percent more than last year, which brings the cost of property tax up to about half of what the house would rent for. I had a discussion with the assessor about why our basement has doubled in value since last year and why the rotting detached garage has appreciated almost as much.

I spent the late morning affixing previously purchased annual registration stickers to our airplane and helicopters at Hanscom Field. These are required by the Massachusetts Aeronautics Commission, recently reorganized into the Registry of Motor Vehicles. I spent the afternoon driving to a U.S. Department of Transportation certified drug testing lab where I underwent an alcohol and drug test (drive time was about one hour round-trip; wait time was 45 minutes; test time was about 10 minutes). The lab promised to forward the results to the person in charge of our drug testing program… i.e., me. We do a handful of sightseeing rides around Boston every year, which means that all pilots and mechanics are required to be on a random drug-testing program. As far as I know, there has never been a crash of a commercial aircraft that was attributed to a pilot or mechanic being on drugs; the regulation was put in place about 20 years ago for millions of workers in all forms of transportation.

I spent the evening on the phone with Medco, a prescription drug insurance provider. One of the benefits of living in Massachusetts is that it is illegal to pay for health care, at least unless you’ve already paid for health insurance that you would expect to cover that care (though it seldom does). A woman, let’s call her “Donna” to preserve medical privacy, had previously attempted to get a prescription filled at CVS for her infant. The pharmacy demanded $40 instead of the usual $5 co-pay because Medco had denied coverage. The dosage was too high. A 35-minute phone conversation ensued between Donna, Medco, and the pharmacist. Medco would not pay because the dosage was over their daily limit. It was coming up on time for a refill, so I decided to take on the challenge of getting Medco to pay up. I called up a wonderfully intelligent and helpful claims representative. He first explained that Medco provided all of its customers with an easy-to-understand formulary. If I had a copy I would surely see the dosage limit plainly written out. I responded that I did not have a copy. He referred to his own copy. “This is very confusing and I can’t figure it out. Let me get a pharmacist on the line.”

It turns out that Medco employs numerous pharmacists who never dispense drugs to patients. Their only job is to sit in an office and figure out how various rules and regulations apply to whether or not their employer will have to pay for a prescription. The first pharmacist figured out that the limit was quite low, about one quarter of what the pediatrician had prescribed. How could this make sense, I asked, when the drug was prescribed by weight and was taken by people from infancy through adulthood. “You’ll have to file an appeal with the plan administrator who came up with the formulary,” said the Medco folks. The claims representative thought this answer did not make sense, so he decided to talk to a different pharmacist in another branch of the company. The second pharmacist explained that the computer system wasn’t advanced enough to figure out how much an infant should be taking by age so they put in an arbitrary limit for the drug. Whenever it was prescribed to a young patient, the pharmacy filling the prescription was supposed to call a special help line and learn how to put in an “age override”.

The phone call lasted approximately 30 minutes, including a lot of hold time waiting for pharmacists.

Soon this kind of experience will be required by federal law for every American (though it may be unconstitutional according to this article; my personal argument would be that dealing with insurance companies constitutes cruel and unusual punishment and requiring it is therefore unconstitutional). I wonder if politicians are enthusiastic about health insurance because none have ever tried interacting with an insurance company. Surrounded by interns, assistants, and a non-working spouse, and provided with the most comprehensive coverage imaginable, a Senator could be excused for thinking that health insurance is as simple as car insurance.

How much business did we lose at the helicopter branch of the flight school because we had to comply with all of these regulations? None. Due to the state of the economy, we didn’t have any customers. Maybe I should thank the government for giving me something to do…

[I mentioned the Medco story to a doctor who runs clinics in Haiti, Peru, and Rwanda. “That’s a generic drug,” he responded. “Been around for 40 years. We pay about 1 cent per pill. You were having a discussion about less than 50 cents worth of medicine.”]

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Suppose that you were fortunate enough to be born beautiful. You’ll be able to date, sleep with, and marry pretty much whoever you want. People, especially those of the opposite sex, will be happy to listen to you prattle on about whatever you’d like to talk about, whether or not you’ve studied the subject. As a consequence of your beauty, you’ll earn between 5 and 12 percent more money (example study).

With improved medical technology, however, ugly people have been gradually gaining some options for closing the gap. By working harder and saving some money, a plain or old-looking person can visit a plastic surgeon and improve his or her romantic, social, and career prospects.

Now the federal government proposes to further hobble the unattractive by taxing cosmetic surgery (nytimes). Could this be the unkindest cut of all?

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According to this Aero-News.Net piece, Sikorsky’s Chinese partner has just produced its first S-76 airframe. This is one of the most sophisticated American-designed products, a helicopter that costs close to $12 million and faces little competition due to engineering and regulatory barriers. For the past 30 years it has been produced exclusively in the U.S. The Chinese announcement comes on the heels of Sikorsky’s major investments in Poland, where factories are producing Blackhawk helicopters for the U.S. Army (more).

I’m wondering whether Sikorsky’s offshore expansion should make us think a little harder about what it will take to restore our manufacturing economy. Rust Belt states have millions of surplus workers. A Sikorsky helicopter faces less competition than almost anything else that we make and labor costs are a relatively small part of its retail price. Sikorsky’s manufacturing operations are subject to FAA regulation, which is easier to deal with when nobody has to get on a plane to Asia or Europe.

If Sikorsky does not want to set up shop in Michigan or Indiana, or expand its existing operations in Connecticut and Florida, why would we expect any other manufacturer to do so?

An alternative statement of the same facts would start with the observation that an American is unemployed when no company believes that, in the current regulatory and tax environment, it is possible to hire that person and make a profit. The American will become employed when he or she gets more education and skills, when the regulations and tax rates change, or when the global economy booms so much that every qualified worker in a foreign country has already been hired. Our government is not doing anything significant with education. Our government is making the regulatory and tax environment harsher for business. Thus we can infer that the government is counting on a global economic boom and an exhaustion of the supply of workers in other countries, which effectively means that whether or not the U.S. employment situation improves is primarily controlled by foreigners.

[A second example is EMC choosing to invest $1.5B in India rather than near its headquarters in Massachusetts (press release).]

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Folks: I have a handful of DVDs that are moderately important, e.g., instructional videos for how to use a household appliance. I would like to rip all of these to a hard drive so that I will no longer be responsible for keeping the original DVDs organized, accessible, and scratch-free. I’d like to be able to play these back on a PC or a TV via a PC-to-HDMI output. The total size of the collection will be fewer than 100 disks.

Question 1: What is the best software to use on a Windows Vista machine for ripping the CDs? It would be nice if the software compressed the data, but not if that will result in a noticeable quality reduction (DVDs are already compressed and look moderately crummy on an HDTV; how much more can I throw away before it looks like VHS?)

Question 2: What is a good card to buy and plug into the PC that will put out audio and video on a single HDMI connector? I have an ATI Radeon 2600 XT that purports to be able to do this (came factory-installed in a Dell XPS desktop), but (1) though I bought the special adaptor from ATI that converts DVI to HDMI, no sound is pushed out to the TV, (2) the ATI Catalyst software that I downloaded from their Web site fails to install, and (3) the Windows OS does not recognize the ATI card as an audio device, leading me to believe that there never will be sound.

Question 3: Will this make me a felon? From what I recall of the Clinton Administration’s Digital Millennium Copyright Act, doing anything with a DVD was a federal crime.

Thanks in advance for your comments and advice.

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Now that McDonald’s has started playing Christmas music, it is time to start thinking about Santa. The second-to-last paragraph of “Diagnostics and Therapeutics in Political Economy” by Robert Higgs offers a seasonally appropriate comparison:

Many Americans now believe many things about their government that are false, and they expect much from the government that the rulers cannot provide. The public at large embraces myths about what the government can do, what it actually does, and how it goes about doing it. Only people enamored of such myths can support, for example, a gigantically expensive health-care “reform” at a time when the present value of the government’s promised future Social Security and Medicare benefits alone amounts to several times the current GDP. (I am disregarding here the interested parties who expect to reap short-run pillage from an intrinsically doomed system.) Until more people come to a more realistic, fact-based understanding of the government and the economy, little hope exists of tearing them away from their quasi-religious attachment to a government they view with misplaced reverence and unrealistic hopes. Lacking a true religious faith yet craving one, many Americans have turned to the state as a substitute god, endowed with the divine omnipotence required to shower the public with something for nothing in every department – free health care, free retirement security, free protection from hazardous consumer products and workplace accidents, free protection from the Islamic maniacs the U.S. government stirs up with its misadventures in the Muslim world, and so forth. If you take the government to be Santa Claus, you naturally want every day to be Christmas; and the bigger the Santa, the bigger his sack of goodies. This prevailing ideology constitutes probably the most critical obstacle to reductions in the government’s size, scope, and power. Getting rid of this ideology will be diabolically difficult, if possible at all.

The author has a Ph.D. in Economics from Johns Hopkins (compared to my meager collection of econ courses taken), but I believe him to be wrong about Social Security and Medicare benefits. As pointed out in my blog postings on While America Aged, Congress has the authority to change the Social Security age of eligibility to 75 or 80 or to adjust Medicare so that anesthesia returns to the good old days of whiskey and a bullet to bite. It is states and local governments that are truly stuck with their pension and health care promises.

For Americans who don’t pay income tax, perhaps the government truly is Santa Claus. According to the Brookings Institution and the Urban Institute, roughly 47 percent of Americans either pay no tax or a negative tax (i.e., the government sends them money every year through such programs as the Earned Income Tax Credit). So you’d think that any new government spending program would attract at least 47 percent of potential voters. On the other hand, millions of people who do not suffer the scourge of income tax still get hit with assorted other taxes at both the state and federal level.

What am I telling people that I want from Santa this year? World peace, of course (because I want to win the Nobel Prize after Sandra Bullock gets hers). And that I want Barack Obama to become immortal and then to be elected President-for-Life.

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Imagine a group of engineers so gifted that U.S. taxpayers were willing to spend more than $50 billion to keep them together. These folks designed a vehicle that weighs 6000 lbs. empty and is advertised as having safety advantages over cars designed by companies that operate without continuous government assistance. Tiger Woods, a man whose physique is presumably far more durable than average, drives this vehicle across a lawn and into a tree at a pretty low speed. Did he bound out of his Cadillac Escalade without a scratch? According to the New York Times, “Woods was slipping in and out of consciousness. [the police] said Woods suffered lacerations to his upper and lower lips and blood in his mouth, and that he was treated on scene for 10 minutes before being transported to a nearby hospital.”

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Things I am thankful for today:

• to have been born into the United States, a country that has been blessed with tremendous natural resources, mineral, animal, vegetable, and scenic, as well as remarkable tolerance for people of different races and beliefs
• the American Indians, who welcomed European settlers into this country
• family members who remain alive and healthy
• close friendships with people whom I met as far back as the 1970s
• the friendship of dogs, especially Samoyeds, over the years
• to have spent the early years of my career during a time of tremendous economic prosperity (1980s and 1990s)
• the hard work of engineers, scientists, and mathematicians since the Enlightenment who have made our comfortable modern lifestyle possible
• to have seen my peculiar passion, the Internet, grow from a research curiosity when I started using it in 1976 to a worldwide utility
• to have lived in the age of photography, which has enabled almost everyone to capture and record the world around us
• to have lived in a time when humans can realize a dream that may date back many thousands of years: to fly (and to have been born into a country where almost anyone can get into an affordable aircraft and poke around curiously at low altitudes over most places)

And now off to friend’s farm in Vermont. He says “my aunts cook the Thanksgiving meal to a reference standard.” Weather at KVSF is overcast 600; the instrument approach minimums are 1000′. This will be a trip in a car, another product of recent years for which I am grateful.

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