Good News - More trade connections

There are more connections between the stable, developed countries and the developing countries. This enables development where it is needed and doesn't hurt the developed countries. It's good news for everyone. It would be better if the Doha round of World Trade Organization talks had succeeded; it failed. But the United States under President Bush is completing free trade accords with individual nations - bilateral accords. Michael Barone reports at Real Clear Politics:

... the zone of free trade continues to expand as the United States, during this administration, negotiates one free-trade agreement after another -- Oman and Jordan, Central America and Australia, Peru and Colombia. All are increasing connectivity and shrinking the gap.

Barone quickly covers US immigration, the spread of Hugo Chavez's Communism, and the growth of China and India:

Third, immigration. The bill sponsored by Rep. Mike Pence and Sen. Kay Bailey Hutchison, with border security and free-market guest-worker provisions, has some small chance of passing the Senate and House. A law that regularizes illegal immigrants would close the internal gap we have with 12 million illegals. Fourth, Latin America. Venezuela's oil-rich demagogue Hugo Chavez continues to pal around with dictators and tries to stir up trouble. But Latin American voters have been rejecting Chavezism. The victories of anti-Chavez candidates in Peru, Colombia and Mexico in the past few months show that irresponsible demagogy is not popular in the region. Connectivity is increasing, not decreasing, to our south. Fifth, China and India, with one third of the world's population, continue to have scorching economic growth -- 11 percent in China, 8 percent in India. And they're growing increasingly interconnected with the thriving economies of the core. Hundreds of millions of people are rising out of poverty, and despite high oil prices, we have solid economic growth in North America and Latin America and even some growth in sclerotic Europe. The world economy has never been in better shape.

Thomas Barnett has develped the view of the "old core" of developed countries and the "new core" countries and "the Gap" between them. Good news. We could use more, but let's celebrate what we have. Update: Barone's piece is expected in Newsweek on 8/7.

Welfare reform after 10 years

The Republican Congress passed welfare reform for the third time 10 years ago. President Clinton vetoed the first two bills. Facing his 1996 reelection he signed this one. Democrats in Congress assailed the bill has "mean-spirited," etc. Even God was against it according to the Children's Defense Fund, says Ron Haskins of Brookings Institute in the Wall Street Journal:

Marion Wright Edelman of the Children's Defense Fund said that no one who believed in the Judeo-Christian tradition could support the bill.

The big excitement was about ending the entitlement to welfare for single mothers:

Kate O'Beirne, now of National Review, perfectly captured the philosophy of entitlement in 1995 testimony before the House Ways and Means Committee, saying that the nation's welfare system operated on the principle of "spend more, demand less." Republicans wanted to demand more by breaking the entitlement and making the cash contingent on serious attempts to find work and achieve self-support. After three decades of failed federal "work" programs, Republicans had spent years behind the scenes--under the leadership of Newt Gingrich, Clay Shaw, Rick Santorum, Jim Talent and others--developing ideas about how to encourage, cajole or, when necessary, force mothers on welfare to work. Specifically, Republicans proposed to end the entitlement to cash, impose a five-year time limit on benefits, require mothers to prepare for and search for work or have their cash benefit reduced or terminated, and require states to place half their welfare caseload in programs that lead to employment.

What have been the results? Success.

In the decade that has passed since the 1996 reforms, the welfare rolls have plummeted by nearly 60%, the first sustained decline since the program was enacted in 1935. Equally important, the employment of single mothers heading families reached the highest level ever. As a group, mothers heading families with incomes of less than about $21,000 per year increased their earnings every year between 1994 and 2000 while simultaneously receiving less money from welfare payments. In inflation-adjusted dollars, they were about 25% better off in 2000 than in 1994, despite the fall in their welfare income.

How about poverty? Down.

Over the same period, the child-poverty level enjoyed its most sustained decline since the early 1970s; and both black-child poverty and poverty among female-headed families reached their lowest level ever. Even after four years of increases following the recession of 2001, the child poverty level is still 20% lower than it was before the decline began.

Haskins concludes: The irony of welfare reform is that it firmly implanted the conservative principle of self-sufficiency in federal policy which, in turn, brought the liberal principle of government support for the poor into its most effective form--namely, encouraging work. Above all, welfare reform showed that work--even low-wage work--provides a more durable foundation for social policy than handouts.

More oil drilling

I am watching the sunset on Whistler Mountain, B.C., Canada. Great spot. And it cooled after about 95F on Sunday. Good news: It appears the deals are in place for a US Senate bill allowing resumed off-shore oil drilling. The House has passed a different version, so there will be a conference after the Senate bill passes. Senator Nelson of Florida is slowing things. But they gave him a lot for this deal. Wall Street Journal (paid).

... to allow drilling in some eight million acres in the eastern Gulf of Mexico, which boasts at least 1.25 billion barrels of oil and five trillion cubic feet of natural gas. But his price was a moratorium on any other projects within 125 miles of Florida's coastline, as well as sending 37.5% of certain new federal leasing royalties to the four Gulf states of Louisiana, Texas, Mississippi and Alabama. The oil and gas industry is understandably underwhelmed. The bill is still worth passing, however, if only to get to a conference with the House, which last month gave the states authority over offshore drilling up to 100 miles out. The House bill provides for a permanent ban (versus today's limited federal bans) on drilling for the first 50 miles offshore, which could only be lifted if a state legislature explicitly voted to do so. From 50 to 100 miles, states would be responsible for defining what drilling could occur. Anything beyond 100 miles would be the federal government's mandate.

Again the environmentalists seem to care more about big government than the people most affected.

In short, the House bill offers greater protections to anti-drilling states, which would no longer be at the mercy of federal policy whims. Yet this is precisely what seems to worry environmentalists, who hold disproportionate sway in Washington and fret that state voters might actually support more drilling if it were safe and profitable.

Let's hope it passes quickly.

Porkbuster - Stem-cell veto

Red State says that the Stem-cell research bill President Bush signed was pork. I agree. I was offline, so I didn't follow this. But if this research makes as much sense as the sponsors claim, then for-profit pharmaceuticals would be pouring millions into it. ------ Senator Tom Coburn wants to enable you and me to view federal spending online, where it is accessible to everyone. Mark Tapscott reports at Tapscott's Copy Desk, quoting Coburn's letter seeking cosponsors.

This bill would create a single, searchable website with access to virtually all government spending - a publicly-accessible online tool for all Americans to find out how their tax money is spent. As Thomas Jefferson wrote back in 1802, "We might hope to see the finances of the Union as clear and intelligible as a merchant’s books, so that every member of Congress and every man of any mind in the Union should be able to comprehend them, to investigate abuses, and consequently to control them." According to government statistics, the federal government spends approximately $1 trillion each year on various grants, procurement contracts, and loans. However, there is currently no single searchable website or resource that provides access to information about each transaction. American taxpayers deserve better. As various investigations into the federal response to Hurricane Katrina have shown, a lack of accountability and transparency in federal spending can lead to massive waste, fraud, and abuse. Every dollar that is wasted is a dollar that is unavailable to support our troops and veterans, improve America's global competitiveness, or reduce tax burdens and the federal deficit. Greater transparency and accountability can directly reduce waste, fraud, and abuse, while also enabling us to improve the quality and efficiency of government services and to help those who depend on us.

Update: Senator Obama, the Democrats' hope for the future, is lead cosponsor with Coburn. Tapscott also points to Mary Katherine Ham's article in Washington Examiner on the need to control pork.

On one hand, Porkbusters can highlight the ridiculousness of spending federal money on municipal pool maintenance. On the other, the pork-passive can ask, “Why are we talking about municipal pool maintenance when there are so many more important things going on?” The quick answer is, “No, why are we funding municipal pool maintenance when there are so many more important things going on?” But there are several problems with this argument. One is that it assumes that the American public and Congress can properly talk about the war on terror and other important issues only at the exclusion of all others. This is not the case and can never be the case. In large part because Congress’ power has extended to cover municipal swimming pool maintenance, Capitol Hill is always juggling a thousand issues at a time, debating 67 amendments on the floor, pushing a handful of bills through committee in any given week....

Read it.

Pork Alert - Cash 170 miles from earthquake

Beef and dairy farmers got checks for damage that didn't occur 170 miles from the 2002 Nisqually Earthquake in Puget Sound. KOMO News in Seattle reports:

Jim Zwiers lives 170 miles away from the epicenter in Lynden. In 2001, he owned a dairy farm. He got an application form for a federal payment and thought it was a joke, until his son convinced him to mail it in. Asked if he suffered any any damage from the earthquake he replied, "I don't even know if we even felt the earthquake." But he says he got a check and cashed it.

This is a standard pork technique. The politicians in Congress make a very broad definition for the area affected by a natural disaster, then give benefits to everyone in the artificially defined area. Then the bureaucrats write checks. "But I shouldn't get a check; I had no damage," the beneficiary says. "Congress says you get it; I am doing my job. If I don't give you this check I am violating an act of Congress." This one has a different form. The governor of Washington asked the president to declare every affected county a "disaster." Gary Locke was then governor and this shows how he performed on an intelligence test. President Bush believed Locke and declared every county on Locke's list a disaster including Whatcom County on the border with Canada. More on pork busters

Summer in Puget Sound and British Columbia

We hit a home run on our vacation. In four days at our church's camp we had overcast mornings and beautiful afternoons, evenings. And stars at night. My friends Arthur and John set up telescopes and showed me the sights. The Coat Hanger, too small for the naked eye, but so large we needed to use binoculars, not the telescopes. Ring Nebula, Andromeda Galaxy, another galaxy to the lower right of Casseopeia. Now 3 days at the beach, then to Whistler, BC, Canada. Staying at Twin Peaks.

Priority for Nuclear Energy

Energy Crisis? It is President Bush's priority, so he is taking action and working to find energy sources. The Washington Post reports:

If presidential willpower can end eras, the generation-old fear of nuclear energy born in the catastrophes of Three Mile Island and Chernobyl is marked for extinction. The world will move instead into a confident time of nuclear power plants helping to reduce global warming, prevent energy shortages and curb atomic arsenals from being developed by rogue countries. That is a tall order even for the nuclear genie. But the importance that George W. Bush and Vladimir Putin attach to atomic energy as the fuel of the future is already a strategic fact of life. It guides U.S. foreign policy, Russian economic ambitions and cooperation between the White House and the Kremlin on a global agenda.

Good for you, President. Keep it up.

Pray for Jerusalem

Pray for the peace of Jerusalem. Israel has been attacked on both the Gaza border and from Lebanon. Hezbollah (various spellings) is part of the government of Lebanon and it invaded Israel; they crossed the border and kidnapped two soldiers. That is an attack. Can Israel protect its borders? Kofi Anan's United Nations is "very concerned." But you can bet that wherever Koffe Can lives he is protected. The international rules are different only for Israel. Any other country can protect its borders, but not Israel. Pajamas Media has coverage of developments. For links to bloggers in Israel and the Middle East go to Truth Laid Bear Added.Animated map of cities in Israel being hit by rockets from Lebanon.

Spending your money to elect themselves

Congress is in full porker mode. The Republicans excel at pork appropriations that have no sponsor. There is no one to blame for raiding our tax dollars. But when it passes the Congressman whose district benefits will brag that he/she fought for his reelection, I mean, for the voters he is devoted to. One appropriations bill for labor, health and human services (HHS) has 1700 earmarks. There will others Rep. Jeff Flake, an Arizona Republican, wants to help us! He is threatening to offer amendments strike each of the 1700 earmarks that doesn't have a sponsor identified. Good for him. The Hill reports on a bold Congressman who defends spending tax dollars to benefit himself:

The district-specific projects, totaling about half a billion dollars, are tied to a Democratic minimum-wage increase that is anathema to the GOP, and no proposed solution has taken root. Few lawmakers publicly concede the importance of earmarks to their own campaigns, but several acknowledge the benefit of voting to bring federal money home before the midterms. “I think it’s helpful on the campaign trail,” said Rep. Mike Simpson (R-Idaho), whose projects include $600,000 for the College of Southern Idaho in Twin Falls. “It’s important, particularly for members in tight races.”

The politics are thick here, with an increase in the minimum wage involved. Anyone who has studied the effects of the minimum wage knows that it takes jobs away from entry-level workers. Hopefully this mess won't pass before the election in November. It is for the budget year that starts on October 1. So our elected representatives will sit on it until two months after it is due. Tip: Instapundit

"Who's Who" not Rove

The Associated Press is misquoting Robert Novak. Their headline says Karl Rove was Novak's source on Valerie Plame, Wilson's wife. That's not what Novak says.

I learned Valerie Plame's name from Joe Wilson's entry in "Who's Who in America."

That is a direct quote from Novak's column today at Human Events. Can the AP tell it straight? It appears not.

Main Street Investors

There are fewer individual investors today than in the past. More funds are in pension funds and mutual funds managed by the professionals. Dominic Basulto writes at TCS Daily.

"The Wall Street juggernaut's in control, and America's 95 million investors are relegated to a footnote in market history, like a museum piece no longer popular, packed away, out of sight, deep in the archive vaults."

It sounds bad. NOT.

Which all might be a bit disturbing, one supposes, if it were actually true. Does anyone really believe that citizen investors are destined to be "powerless non-entities in a land of nothingness," as Farrell suggests? That might have been the case fifty years ago -- or even twenty years ago; but today? If anything, the individual investor is more empowered than ever before. Thanks to Regulation FD, individual investors know as much as "Wall Street insiders" and have access to the same type of information as Wall Street analysts, including real-time access to conference calls and annual shareholder meetings. Moreover, thanks to the popularity of low-cost online trading platforms, it's now possible to do a formidable amount of research on any financial market in the world, all while sitting at your PC in your pajamas at two in the morning.

In the heydey fo the individual trader they were losing much of their investment to transaction costs. Even with "discount brokers" the cost is considerable. But today investors can invest in funds with very low costs, so the gain goes to the individual investor instead of his stock broker. Basulto says it well:

There are hopeful signs that the investment pendulum is swinging in favor of the citizen investor. Technology and innovation are two powerful forces that are helping to empower the citizen investor and erode some of the advantages enjoyed by large institutional investors. While technology is helping to drive down transaction costs for individual investors, innovative new solutions offer these investors a way to experience the magic of compounding returns without, as Bogle calls it, the "tyranny of compounding costs." The future of an ownership society ultimately depends on the empowerment of the citizen investor, and not the enrichment of the professional money manager.

Latin America rejecting socialists

A few months ago it looked like Fidel was conquering Latin America, but he suffered two large set backs in the past few weeks. Hugo Chavez, after being elected in Venezuela, called a Constitutional Assembly which closed the elected National Assembly. Then it "It also increased the presidential term of office from five to six years, allowed for two consecutive presidential terms rather than one, introduced a presidential two-term limit." How convenient for Hugo: instead of being limited to 5 years he could rule, I mean serve, for 12 years. That was just his first year in office. He has done more since to consolidate all power in himself. Chavez embraces Castro openly, saying:

"Fidel Castro's Cuba ... (had) been far more influential in Caracas than George W. Bush's mighty US"

In Peru Ollanta Humala is a leftist who ran for president, but lost last month. And last week in Mexico in a very close election the voters rejected leftist candidate Andreas Manuel Lopez Obrador, electing Felipe Calderon of the PAN political party of Vincente Fox. Dick Morris and Eileen McGann report:

The Mexican result - driven in part by strong female support for the reform party of Vicente Fox, the PAN - is a sobering indication of the intelligence of the country's impoverished electorate. While the Mexican middle class population has expanded from about one-tenth of the nation in the mid 1990s to about 40% today, more than half of the people still have incomes of less than $1,000 per month. Obrador promised these poor people an immediate increase of 20% in their incomes, as well as free gas and electricity, and a doubling of old-age pensions. But the Mexican voters listened instead to the warnings of Calderon's PAN that Obrador's policies would cause a crippling debt and a renewal of the path to self-destruction that Mexico experienced in the 70's and 80's which led to the peso collapse in the 1990s.

And they say that much credit belongs to President Fox who combined social programs with a tiny touch of capitalism.

But the real lesson of the election is the success of the way President Fox - who boasts a 60% job approval that Bush can only envy - used Mexico's oil wealth to begin to lift his country up out of poverty. With the substantially increased additional national revenues, Fox created successful programs to invest in people, education, and the economy. He began by offering free health insurance to more than a third of the Mexican people who had no coverage at all. His Opportunity program extends micro loans to fledgling small businesses. He vastly expanded scholarship programs and helped to subsidize poor families to allow them to send their children away from the fields and factories and into the schools each day. It was by this merger of free market capitalism combined with vigorous social welfare policies that Fox was able to blunt the leftist offensive. The lesson of Mexico is that wealth will, indeed, trickle down, if it is irrigated and encouraged to do so by well conceived public policies.

And this can work elsewhere:

But the Mexico result shows that sound, solid economic growth, coupled with public education and good social policies, may offer an alternative that could yet save this continent from another round of boom-and-bust. Without such policies, we will soon be facing more Castros and Chavezes in the rest of our hemisphere.

Higher Ed - equal parts meritocracy and mediocrity

President Bush turned to improve K-12 education in his first year with "No Child Left Behind." Now his Education Department is looking into higher education. And there are big concerns, though Washington State might have escaped. The Commission on the Future of Higher Education issued a draft of their report last week. The University of Washington Daily reports:

The online journal Insidehighereducation.com calls it "a stinging first draft." After an initial reference to our nation's Rhodes Scholars and Nobel Prize winners, "We have found equal parts meritocracy and mediocrity," the report said. The report lists problems with the higher education system much as the No Child Left Behind Act did for the K-12 system. Critical findings include a "woeful lack" of publicly available information about colleges, a lack of access to the higher education system caused by inadequate preparation in high school and a failure to align high school and college standards.

....

Benefit Cindy Sheehan

Cindy Sheehan has absolute moral authority because her son died in Iraq. He was an adult and a volunteer, but still any nonsense she puts out trumps any evidence or argument, because of the pain in her heart. Look into her background and you find that she has a record as an extreme leftist. I just scanned Wikipedia for her background, but it conveniently omits her existence before her son's death in 2004. Cindy would rather live in Venezuela under Hugo Chavez than in the United States. She says he has been elected 8 times. But before he was first elected he lead a coup to overthrow the government in 1992. And except for the first, he has been elected like any other dictator, almost unanimously. Cindy wants to move to Venezuela. Let's help her. Michelle Malkin is leading the fund-raising benefit to buy a one-way ticket to Caracas. At Hot Air.

Inflation - Gold or Silicon?

We have a split among supply-side economists over the danger of inflation. Jerry Bowyer at TCS Daily says.

Forbes, Brian Wesbury, the Wall Street Journal Editorial Page and the New York Sun have tended to side with gold.

Among them Rich Karlgaard says since the price of gold has risen 8% in recent weeks we have to worry about inflation. But others say that we can get so much more out of silicon and knowledge that gold can not longer be "the gold standard."

Arthur Laffer, David Malpass, Larry Kudlow, Alan Reynolds and TCS Daily's Jim Glassman have been more reluctant to depend exclusively on this price signal, and have been much less alarmed about inflation. Some of these guys have been doing some shifting around lately too. ... The good guys are disagreeing with one another for a good reason: the data are mixed. What a pity! For two decades we had markets that spoke clearly and a Fed chairman that didn't. Now we have a Fed Chairman who speaks clearly and markets that don't.

As Bowyer says it:

We're not much better at getting gold out of the ground than we were last century, but we're much better at getting wealth out of electrons. Our economy can now grow at a faster pace, by far, than the mining industry can. Our economy now grows faster than our gold supply. This means that gold prices, reflecting gold scarcity, will be an imperfect messenger. Think of it this way: imagine two economies. One is made up entirely of jewelry stores. The other is made up entirely of iPods. Gold and silver prices would be a great inflation predictor in the jewelry-world. The price of metals would translate fairly directly into rings and chains. Gold would be a terrible predictor of inflation in iPod-world.

Let's watch this. It matters immensely for our financial future.

Independence Day

When, in the course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature's God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation. We hold these truths to be self-evident: that all men are created equal; that they are endowed, by their Creator, with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness. ... The Declaration of Independence

Fighting poverty with property rights

Farmers in many less-developed countries cannot own the land they farm. Not because they can't afford to buy it, but because their countries don't have a clear system of titles for real property - land, homes, etc. Not being able to establish ownership of the land messes up the economy. Your family has been farming the same land for 3 generations. But you want to move to another area or stop farming and start a business. How do you sell the land? Who would pay you for the land you say you own when you can establish that you have title to it? So people are restricted from moving. Land has less value; I mean, the land's value is locked up and can't be used. Prof. Roy Prosterman of University of Washington is in the middle of the fight to fix this problem. Rural Development Institute

is an international land law and policy group fighting one of the chief structural causes of global poverty—rural landlessness—with passion, professionalism and great effect. Over the past 38 years, RDI professionals have worked with the governments of 40 developing countries, foreign aid agencies, and other partners to design and implement fundamental legal, policy, and programmatic reforms resulting in large-scale transfers of land ownership or ownership-like rights to the world’s rural poor.

Hernando de Soto of Peru has also worked getting third-world countries' legal systems corrected also. See De Soto's Institute for Liberty and Democracy.

ACLU against speech

ACLU doesn't allow its board members to speak. Unless they spout the party line. Oh, you thought the ACLU defends speech. In certain cases they do. On a rare occasion they defend a Christian or conservative. But the rule is: enforce the liberal party line. The LA Time has the story, told by Wendy Kaminer who left the ACLU's board over this.

Recently, the ACLU again considered censoring its board members, weighing new rules that would prohibit them from criticizing the organization publicly. This startling proposal was the culmination of a bitter internal battle over the organization's integrity and fidelity to principle that has spilled out into the media. Why would such a rule even be considered by a free-speech organization? According to ACLU leaders, some board members had been abusing their right to speak. They were referring to me and my former colleague on the ACLU board, Michael Meyers, so I don't approach this subject as an observer. Meyers and I had been threatened last year with removal or suspension after we publicly criticized the ACLU's reported use of data-mining practices to gather information on members and donors. The effort to punish us was aborted only after a New York Times reporter inquired into it; the board then established a committee on the fiduciary rights and responsibilities of its members in an apparent effort to pass rules that would keep us in line. The committee's proposal, issued in May, was a stunning repudiation of the ACLU's core principles. It included provisions that prohibited board members from criticizing the ACLU board or staff publicly and that disparaged whistle-blowing (conduct the ACLU often applauds when it occurs in other institutions). Individual board members were admonished not to "call into question the integrity of the process in arriving at the board's decision."

That says it. The ACLU was using data-mining techniques to gather information on donors and contributors. Two directors objected. The organization tried to shut them up. It's the old rule: "Do as I say, not as I do." You know "Get in line! We are busy criticizing President Bush for limiting the speech of Al-Qaida."

One Lighthouse

I didn't have to search to find the lighthouse background I use for this page. But I am a lighthouse fan. Not the kind who travels to a distant state or country, then arranges a boat or flight to one. But I am familiar with most of those in Washington - Pacific Ocean, Puget Sound and San Juan Islands - and have seen many of them. Washington now has about 30 picture license plates, including the one I just got: