The Story So Far

Please read Part One and Part Two of this article series, if you have not already read them. Also, take a look at the U.S. National Debt Clock. At the time of this writing, the statistical average of assets per citizen is at $236,944; but the statistical average of liability per citizen is at $353,865. That means that the average citizen has $116,921 in public debt liabilities that are not covered by public assets. Translation: unless you have no debt and $116,921, you owe more than you can pay, when it comes to paying for public goods. Think about that, while you read this article.

Analyzing the Battlefield

"I've inherited $12 TRILLION in debt."

One of the most important things a socially conscious individual can do is make himself aware of the principles according to which his society operates. For human beings, this means an awareness of and a certain degree of familiarity with economics, because economics is the science of human decision-making. Nearly all – if not all – decisions can be couched in economic terms and understood through economic principles and theory. Accordingly, application of economic analysis should be applied to the role of government in society. Three authors that have done this are James D. Gwartney, Richard L. Stroup and Dwight R. Lee (of Florida State University, Montana State University and the University of Georgia respectively), in their book Common Sense Economics. In Common Sense Economics, Gwartney, et al., present “ten elements of clear thinking about economic progress and the role of government.”

These ten elements and their antitheses represent the two opposing points of view about the role of government that are at war for control of the United States government and its economy. The ten elements are as follows:

1. Government promotes economic progress by protecting the rights of individuals and supplying goods that cannot be provided through markets.
2. Government is not a corrective device.
3. The costs of government are not only taxes.
4. Unless restrained by constitutional rules, special interest groups will use the democratic political process to fleece taxpayers and consumers.
5. Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.
6. Government slows economic progress when it becomes heavily involved in trying to help some people at the expense of others.
7. The costs of government income transfers are far greater than the net gain to the intended beneficiaries.
8. Central planning replaces markets with politics, which wastes resources and retards economic progress.
9. Competition is just as important in government as in markets.

10.  Constitutional rules that bring the political process and sound economics into harmony will promote economic progress.

Promoting policies that support these ten elements of clear thinking about economic progress and the role of government will benefit taxpayers, because doing so will reduce wasteful spending – indeed, it will reduce or eliminate any spending that is not strictly necessary to fulfill the “legitimate object of government,” as Abraham Lincoln put it – and promote the efficient expenditure of taxes that are collected. The Tea Party movement, as an advocacy group for taxpayers, is much more likely than special interest groups which exist solely to fulfill rent-seeking objectives to promote economically sound policies which, in turn, will promote economic progress in ways that maximize individual liberty and economic freedom through limited government. This pits them against rent-seeking special interest groups and the politicians that are in the pockets of lobbyists for rent-seeking special interest groups.

And so the battle lines are drawn. On one side of the field of conflict, we have taxpayers and their allies and on the other, rent-seeking special interest groups. In the middle, up for grabs, is the heart of America, which has for over one hundred years been tossed about like a skiff in a hurricane of progressivism, its crew bruised, battered and nearly ready to give in to the destructive storm and relinquish any hope of survival. The only hope for the crew is to hold fast to their first principles, their training and their wits – in this metaphor, the Declaration of Independence, the Constitution, and free-market capitalism.

The Source of the Tea Party’s Power and the Way Forward

The Tea Party’s power comes from its nature as a grassroots organization dedicated to taxpayer advocacy. Since its inception, it has been devoted to opposing high taxes and wasteful spending.

“The tool of politics (which frequently becomes its objective) is to extract resources from the general taxpayer with minimum offense and to distribute the proceeds among innumerable claimants in such a way to maximize the support at the polls. Politics, so far as mobilizing support is concerned, represents the art of calculated cheating or, more precisely, how to cheat without being really caught.” James R. Schlesinger, “Systems Analysis and the Political Process,” Journal of Law & Economics (October 1968): 281.

Schlesinger is right when he says that the tool of politics frequently becomes its objective. This is why constitutional rules are so important. They provide a standard against which the pressures of politics should have no effect. It is important to note that constitutional rules cannot serve this function if the Constitution is viewed as a “living document.” Only when the Constitution is interpreted as its writers intended – in other words, when it is given an originalist interpretation – can it be a bulwark against the corrosive effects of politics on the economic and moral fiber of the nation. For this reason, many of the Tea Party activists are also Constitutional Originalists.

Returning to the source of the Tea Party’s power, and how it should proceed going forward, observe that if the Tea Party were to become a true political party, as some no doubt wish it would, it would necessarily lose its way and fall into the same trap that has ensnared the Republican Party and the Democrat Party. The Tea Party, if it were a true political party would need political support and funding for its candidates. It would gain such support and funding by aggregating special interest groups and making political compromises, which would, over time, have the effect of diluting the Tea Party’s original potency in pursuit of its advocacy of taxpayers’ interests. An extremely large advocacy group representing the interests of taxpayers has the potential to be the single most powerful group in America, because both of the largest political parties need taxpayer support in order to continue to remain in power (which is, if you recall my first essay on the Tea Party, the main goal of a political party – to acquire and retain political power) and to finance the spending projects politicians direct the government to undertake. By consolidating taxpayers into a union-like group, the Tea Party gives taxpayers a louder, clearer voice than they could ever have individually. Taxpayers are the most important part of any society, because they create wealth, and they generate government revenues. Without wealth for government to take and redistribute, the government is like a gun with no ammunition… it’s a complex paperweight, only useful for tasks requiring a blunt, forceful response. For an organization, like the Tea Party, to represent taxpayers and taxpayers’ interests is revolutionary, because for over a century taxpayers have been fleeced by politicians and special interest groups seeking only to take from them the fruits of their labor, rather than performing the legitimate object of government, which is to protect their lives, the fruits of their honest labors and their opportunity to freely pursue happiness.

This is the source of the Tea Party’s power: it has the ability to bind together with one voice those who have been oppressed and coerced for far too long, so they may stand united against the rent-seeking special interest groups, their pet politicians and the wasteful and economically irresponsible spending of the federal government. It has this ability, this power, because it is not a political party; it is not divided along political, racial, religious or even socio-economic lines. It represents all taxpayers and their interests, regardless of race, religion or the amount of taxation imposed. The Tea Party demands, loudly and clearly, that the government promote policies that increase individual liberty and economic freedom through limited government, nothing more, nothing less. It is not a race-based or faith-based movement. It is not a movement for the rich, nor for the poor. It is for contributors, wealth-producers, wealth-maximizers, and those who yearn for liberty.

Understanding the power that comes from unity, and the values that motivate the people to use this power, specific goals should be articulated – a clear path forward in the dark night, as we trudge toward the dawn of a new era of prosperity. The foundation of this path is already in place, in the Contract from America, but it needs to be paved and painted. To do so, I recommend standing behind the “positive program for prosperity” Gwartney, et al. outlined in Common Sense Economics. These “seven provisions would provide an Economic Bill of Rights that would promote economic progress:

1. “No government shall use its regulatory powers to take private property, either partially or in its entirety, for public use without paying the owner the full market value of the property taken.”
2. “The right of individuals to compete in a business or profession and/or buy and sell legally tradable goods and services at mutually acceptable terms shall not be infringed by Congress or any of the States.”
3. “Congress shall not levy taxes or impose quotas on either imports or exports.”
4. “A three-fourths approval of both Houses of Congress shall be required for all expenditure programs of the federal government. At least two-thirds approval of the legislative branches of state government shall be required for the approval of expenditures by state governments.”
5. “A three-fourths approval of both Houses of Congress shall be required before the federal government is permitted to borrow any funds to finance a deficit in its annual budget.”
6. “A three-fourths approval of both Houses of Congress shall be required for the federal government to mandate any expenditures by either state governments or private business firms.”
7. “The function of the Federal Reserve System (Fed) is to maintain the value of the currency and establish a stable price level. If the price level either increases or decreases by more than 4 percent annually during consecutive years, the Governors of the Federal Reserve System shall be required to submit their resignations.”

Popular elections are not the distinctive feature of the American political process. It is one thing to elect our leadership by the vote of the majority, but it is something else entirely to decide what government will do by the vote of the majority. In other words, we are a republic; we elect our leaders, who then decide to do what they believe is in the best interest of all (idealistically) or what is in their best interests (realistically). We are not a democracy; we do not submit to popular vote each issue under consideration by the government. “When the government focuses only on those activities that provide broad public benefits, it will gain more respect and thus be stronger. Limited government, not majority rule, is the key to economic progress. The sooner we learn this important point, the more free and prosperous we will be.” Gwartney.

The Tea Party should follow its agenda as outlined in the Contract from America, but it should also push an Economic Bill of Rights. Additionally, replacing our current progressive income tax system with a Flat Tax or the Fair Tax system should be something the Tea Party movement supports with all the strength it can muster. Lastly, the Tea Party movement needs to learn how to manage its image by isolating fringe subgroups and individuals that align themselves with the Tea Party, by clearly communicating, “We are not with them,” when people who associate themselves with the Tea Party do or say things that could be damaging to the Tea Party’s reputation. Finally, the Tea Party should not support individual candidates; it should only support principles and values, and if a candidate clearly demonstrates that he is committed to those principles and values, individual Tea Party activists or subgroups should support that candidate. The movement as a whole should neither promote nor endorse candidates, however, because political candidates are or have a tendency to become a liability with which the Tea Party could become ensnared. People aren’t perfect, but ideas and ideals can be above reproach. It is much easier to demonize and ostracize a person and their associates than it is to fight an idea. The Saul Alinsky Rules for Radicals tactics progressives use are much less efficacious against ideas – particularly ideas that resonate with the majority of Americans who are hard-working traditionalists who value freedom and economic prosperity.

In summary, the power of the Tea Party comes from its ability to unite taxpayers to oppose rent-seeking special interest groups and politicians, and the best use of that power is to promote individual liberty and economic freedom through limited government. Those general goals are best accomplished, in the short-term at least, by promoting and pursuing the objectives in the Contract from America, Gwartney’s Economic Bill of Rights and the replacement of the progressive income tax with a flat tax or the Fair Tax.

Introduction

In Part One of this article series, I examined the nature of the Tea Party, demonstrating that it is not a political party, but a grassroots advocacy group representing the interests of taxpayers. At the end of Part One, I said I would discuss in this section the source of the Tea Party’s power, who its enemies are, and the layout of the battlefield on which the war for America will be fought.

In Part Two, I will be exploring the enemies of the Tea Party; and in Part Three I will wrap up this analysis by giving a clear view of the battlefield and the way forward for those who support individual liberty and economic freedom through limited government. If you’re upset that the government no longer represents the People of the United States, if you want to understand why, and if you want to learn how you can help restore America to a system of government that represents the people as it was intended to do, read on.

Understanding the Enemy

The enemies of the Tea Party movement are a three-headed Cerberus of economic and political destruction comprised of (1) internal attitudes, (2) external ideologies, and (3) public leeches – both individual and organizational. Let’s take these one at a time.

Internal Attitudes

There is a concept known as “rational ignorance.” “Rational ignorance occurs when the cost of educating oneself on an issue exceeds the potential benefit that the knowledge would provide. Ignorance about an issue is said to be “rational” when the cost of educating oneself about the issue sufficiently to make an informed decision can outweigh any potential benefit one could reasonably expect to gain from that decision, and so it would be irrational to waste time doing so. This has consequences for the quality of decisions made by large numbers of people, such as general elections, where the probability of any one vote changing the outcome is very small.” (“Rational Ignorance,” Wikipedia) Rational ignorance is important, because it is one of the heads of the Cerberus that is destroying our nation. Because people perceive – wrongly – that the cost of educating oneself about the economic issues that affect us all exceed the benefits of such education, they remain apathetic, if not voluntarily ignorant.

The Tea Party tries to combat apathy and rational ignorance about issues that affect taxpayers in an effort to show people that their votes do matter in the aggregate. That is, when you add them all up, they matter. Because each election is influenced by the aggregate force of millions of individual decisions, each individual decision matters. Each vote counts, because they all count, together. By organizing and mobilizing people to get involved in supporting taxpayers’ interests, the Tea Party combats apathy and tries to push as many people as possible over the threshold of rational ignorance that has kept them from becoming involved in the past.

It is vitally important that every American understand that, in order for anything to change in this country, the People must be involved. They must have faith that if we all stand together, we can have an impact. Without that faith, if apathy and (rational) ignorance prevail, our political system will become increasingly vulnerable to the external ideologies and public leeches that use the government to coerce taxes from wealth producers and wastefully and inefficiently reallocate them to political cronies to whom the general welfare is only an excuse to which they pay lip service in order to increase their own wealth, power and prestige.

External Ideologies

Ideologies that conflict with the values on which this country was founded – as expressed in all of our founding documents, including The Declaration of Independence and The Federalist Papers – are a danger to our national security, our political processes and our economic freedom. Removing the Constitutional safeguards that protected these values for roughly 100 years is and has been a main goal of the Progressive Movement since at least the (Woodrow) Wilson administration.

Socialists and Communists – those who believe central planning can distribute wealth more efficiently or fairly than can free markets – have labored for decades to dismantle the American public’s attachment to its history and its moral heritage, hoping that if they can detach the People from their most fundamental values – individual liberty, economic freedom, limited government – they can reorganize society in such a way as to benefit themselves. Whether this is altruistic naïveté or malicious subversion of the public for mere political gains is hard to tell in many cases. Some who support the Progressive agenda may be soft-hearted, misguided people who just want a utopian society, never realizing such a thing is an unworkable fantasy in a world of scarce resources. Others fully understand the economic realities individuals, communities and governments have to deal with, and they wish only to dupe as many people as possible into going along with a system of government that would put them at the top of the economic pyramid.

The motivations of individual supporters of Progressivism notwithstanding, it is important that each American understand that Progressivism is dangerous, because it undermines the trust we have in ourselves, placing the decisions about the things we value most – education, medical care, savings for retirement, moral instruction, management of the environment, etc. – in the hands of so-called “experts,” who have mismanaged our government and our economy for over 100 years. Progressive policies have had the effects of increasing deficits and inflation (robbing us of buying power); causing not one, but two major economic depressions; weakening our public values by promoting moral relativism (which has the real impact of increasing social ills and crime); and by weakening our resolve against those at home and abroad who wish to see America fall. Progressivism is dangerous, and it is the civic duty of every American to oppose it wherever it rears its ugly head.

Public Leeches

Abraham Lincoln once said, “The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot, so well do, in their separate and individual capacities.” The corollary point to President Lincoln’s observation is that any undertaking of government to do for a community of people whatever they need to have done, but can do or can so well do in their separate and individual capacities is illegitimate.

Thomas Jefferson said,

“A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvements, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”

Is that the government, today? James D. Gwartney, et al., wrote in Common Sense Economics that “government can promote social cooperation and enhance its citizens’ economic welfare primarily in two ways: (1) by providing people with protection for their lives, liberties, and properties … and (2) by supplying a few select goods that have unusual characteristics that make them difficult to provide through markets.” These goods are known as “public goods,” and they have two characteristics which distinguish them from private goods: “(1) supplying public goods to one individual simultaneously makes them available to others, and (2) it is difficult, if not impossible, to restrict their consumption to paying customers only.” (Gwartney.) There are only a few public goods of which national defense, flood-control projects, and mosquito-abatement programs are good examples; but most goods and services we consume can be sufficiently and more efficiently (cost-effectively) produced and distributed through free markets.

Progressives – people who support the conversion of private goods to public goods (central planners) – express an implicit mistrust of individuals’ ability to manage their own private affairs by arguing that private goods should be converted to public goods. These people are leeches, for they suck out the very lifeblood of a free market economy (capital), wasting it by using it to increase their own bloated wealth, power and prestige. For example, those who argue that education should be a public good are essentially saying that government can provide more education and higher-quality education to more people than private markets can. This has consistently proven false, and the myth is perpetuated by those who understand that their own political and economic gains would be diminished by the privatization of education, even if such privatization would increase the quality and availability of education.

The same principle has been applied to postal service (USPS), train service (AMTRAK), the automobile industry (GM), space exploration and development (NASA), and medical insurance (Obamacare). Ask yourself: could we do any of the things the above organizations do, and do them better than the government? FedEx and UPS have proven consistently, by remaining profitable and continuing to grow, that they can out-perform the USPS, which would die, if not for government subsidies (taxpayer funding). Amtrak is an abysmal failure; it has been a “mobile money-burning machine” since it was formed in 1971. (Wicker, Tom. In the Nation; Young David’s Tantrum. The New York Times, p. A31 (May 3, 1985).) It is propped up by taxpayer-funded subsidies, and would die (or be drastically reorganized in any private takeover) without government funding.

Ford didn’t take any government bailout money. GM was taken over by the government, after being bailed out, essentially being propped up by taxpayer funding, instead of allowing the economic Circle of Life to weed out those who have proven in the marketplace they cannot be competitive. Government life support for failing banks and automakers is a symptom of many political and social ills, not least among them our willingness to consider anyone “too big to fail.” This ignores the principle of creative destruction that the great economist Joseph Schumpeter argued formed the very core of economic progress. Would you prop up and support the dead limbs of a tree or would you prune the tree so that it could continue to grow and be healthy?

And can anyone argue that American medical care isn’t the best in the world? Why would we want to turn that over to the government, as will necessarily become the case, as government creeps into the medical insurance industry, pricing (and/or regulating) out all its competitors. Why would we want USPS health care, when we could have FedEx and UPS health care? What sense does that make?

What of NASA? Why can’t private individuals be freed to take up the burdens and reap the benefits of space exploration and development? Government should be doing all it can to promote private industrial expansion in space, by providing tax incentives (deductions) and easing or eliminating burdensome regulatory restrictions that would inhibit expansion into space. Privatizing space exploration would not only reduce the size of the federal budget, but allow commercial ventures to support large scale R&D that could qualitatively improve the lives of millions. Just think about all of the achievements that have been made possible through development of space, already – satellite communications, GPS, more accurate weather modeling… even Tang and Teflon (okay, those are humorous, but you get the idea)!

The point is, when it comes to most things, the private sector can look at the public sector (the government), and confidently sing , “Anything you can do, I can do better! I can do anything better than you!” Only those things that we consider so vitally necessary that we can ignore free rider problems because the economic and social benefits outweigh the costs should be considered public goods. If we ignore this common sense economic principle, we will end up paying more for “public goods and services” than they are worth, which will decrease our ability to efficiently allocate resources toward their highest and  best uses, increasing scarcity of resources, and decreasing prosperity.

As Jefferson said, good government “shall not take from the mouth of labor the bread it has earned.” The Tea Party supports economic freedom through limited government. Government cannot solve all of our problems. It is a necessary evil the “legitimate object of (which) is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot, so well do, in their separate and individual capacities” – no more, no less. It is the civic duty of each American to support in any way he can, a limited government that promotes economic freedom. In this way, we each contribute to the prosperity of all.

Luis Guzmán (left) as Jacopo

“Why not just kill them? I’ll do it! I’ll run up to Paris – bam, bam, bam, bam. I’m back before week’s end. We spend the treasure. How is this a bad plan?”

- Jacopo, The Count of Monte Cristo (2002)

All current cell phone (mobile phone) plans in the United States are terrible. They are, in a word, bad. What is wrong with them, you might ask? They are too expensive, and offer very little value to the end-user, relative to their cost.

I recently went to my local Verizon Wireless retailer to play an invigorating game of, “How Much Is That Gonna Cost Me?” I feel like I lost. Although I walked away with two new phones (for free) and a new 2-year contract to have Verizon Wireless handle my calls and text messages from those phones, I really wanted an iPhone or a Droid or some other new “4G” smartphone. The problem is that with both of the major carriers, if you get one of these fancy devices, it’s gonna cost you $29.99 per line just for the data package.

Like most people, I have broadband internet at home, for which I pay my service provider a pretty penny. The amount I pay is not any more outrageous than any other I’ve been charged for the same service when I’ve lived in other places (it’s actually a bit less). But adding what essentially amounts to another internet bill to my list of bills just seems like a bit much. Even if I just go for one of the “multimedia phones” with Verizon Wireless, even one of those now requires a $9.99/mo. data plan (This was not the case with this same class of phone a year or two ago, when I got my LG enV.)! So, just for getting a phone that does the sort of thing they advertise in all of the commercials – like it’s just part of what you get with normal service – these days, you have to pay between $10 and $30 dollars. And we haven’t even gotten to the calling plans, yet!

For the cheapest single-line calling plan with unlimited text messaging from Verizon Wireless (and who wants to count text messages, right?), it’s $59.99/mo. For the cheapest family calling plan with unlimited text messaging from Verizon Wireless, it’s $99.99. That’s with a couple hundred minutes (700, in the case of the family plan; more than you’ll likely need), but that’s where the plans start. So, if you’re normal, and you want calling + text messaging (without worrying about how many texts you’ve sent this billing cycle), you’re gonna start at either $59.99 for an individual or $99.99 for a couple (add $9.99 per line for those family plans, by the way), and that’s assuming you don’t have a “multimedia phone” or a “smart phone.” If you do, tack on the $10.00 – $25.00 for those!

Imagine you have an iPhone… that you’re a single person (not on a family plan). Say you have AT&T Wireless’s cheapest plan + an iPhone. Forget the cost of the phone (which is substantial) for just a moment, and let’s just look at the cost of the cheapest plan you’re required to have if you have an iPhone. AT&T Wireless now has a 200 MB plan for $15.00 (“It’s a trap!”), but most people will pay $10 more for 2 GB (1 GB = 1,000 MB; you do the math). So, unless you’re a fool, the $15.00 is not really an option, just a marketing ploy to get you to buy something you’d buy anyway (the $25.00 plan), or to sucker you into a penalty for your ignorance. Their cheapest plan is $39.99/mo for 450 rollover minutes. This is pretty good, considering minutes you don’t use don’t expire at the end of the month. If you’re like me, and your minutes-usage varies wildly from month-to-month, this could be a big benefit. If you want unlimited nationwide calling, though, it’s gonna cost you $69.99/mo. ($10 more than Verizon Wireless, by the way). For argument’s sake, we’ll say you take the cheap-o plan at $39.99/mo., but because you bought an iPhone (and you’re not a complete moron), you have to pay an additional $25.00, because they said so because you’re required to have a data plan with that phone. So, that’s really $65.98/mo. before you ever download “an app for that.” Oh, but unlimited text messaging is also $20.00/mo. Don’t forget that. That brings us to $86.98/mo.

Let’s say, too, that you also want to use the GPS function of your phone. That’s cool, right? And it’s in all the commercials. Is that included in your $25.00 data plan? No! Inexplicably, that particular data function is not part of the data plan; it’s an extra $6.99/mo. So your monthly bill just went up to $92.97/mo. before you ever send a text, download an app. or make a call.

ROFL i jst crshd into a wall

How is that reasonable? After taxes and “fees” and “surcharges” and all the other hidden “the government makes us charge that” nickel-and-dime crap, you’re paying over $100.00/mo. for your fragile mobile communications device. You still have to worry about overages on your minutes (but not texts, making it more likely that you’ll text-and-drive, rather than calling using a hands-free Bluetooth headset, which is much safer). You’ll still even have to worry about the cost of those apps and data overages (especially if you’re a heavy data user). So, it’s not crazy to imagine monthly bills in the neighborhood of $110 – $125. Even if you stick to your plan religiously, that’s $1,200/year.

Now, stop for just a moment before you say, “That’s not very much money, really.” It is, especially when you consider the opportunity costs of spending that much money on mobile communications instead of investing it. This is particularly startling when you consider the power of compound interest.

Allow me to share with you a passage from Common Sense Economics, by James D. Gwartney, et al.:

Consider a simple example. Assume a sixteen year old is deciding whether to start smoking. This is an important choice for a number of reasons, health considerations being the most important. However, in addition to the health factor, there is a financial reason for not smoking. The price of cigarettes is around $3.75 a pack in most states, so if our teenager, call him Roger Díaz, decides against smoking he will save $1,370 a year (assuming he would have smoked a pack a day). Suppose that instead of spending this amount on something else, Roger invests it in a mutual fund that provides an annual return of 7 percent a year in real terms – that is, after accounting for inflation. (Note: this 7 percent return is right at the annual rate of return of the Standard & Poor’s (S&P) Index of the five hundred largest U.S. firms since 1926.) If Roger keeps this up for ten years, when he is twenty-six he will have accumulated $18,929 from savings of $13,700. Not bad for a rather small sacrifice – one that is, in fact, good for Roger.

But this is just liftoff; the payoff from compound interest is just getting started. If Roger keeps this savings plan going until he is thirty-six, he will have $56,164 from savings of $27,400. Continuing until he his forty-six will find him with $129,411 from savings of $41,100. And when he retires at age sixty-seven he will have $597,301 from direct contributions of only $69,870. Thus, by choosing not to smoke, Roger accumulates almost $600,000 in retirement benefits – and this figure is in dollars with today’s purchasing power! …

Alternatively, consider what would happen if Roger smoked from age sixteen to twenty-six, then stopped smoking and started saving the price of a pack of cigarettes every day. It is good that he stopped smoking, and he will still benefit from the savings. But by postponing his savings program by ten years, instead of having $597,301 at age sixty-seven, Roger will have only $294,015. Delaying a fifty-one year saving program by ten years costs Roger $303,286 at retirement.

Alternatively, by saving just a little longer, you can derive benefits from the accelerating growth provided by compound interest.”

Compound interest is like magic, giving your savings an accelerated “snowball” effect. The amount that Roger, in the above example, was saving was $1,370/year; not that much different from the $1,200/year it would cost to have an iPhone plan. It’d be over $1,370/year, if you include the cost of the iPhone, by the way.

I’m not advocating some Luddite approach to 21st century communications. A cell phone is, in today’s world, an essential device. All I’m saying is that we’re literally throwing away hundreds of thousands of dollars in opportunity costs by having these over-priced plans for these devices. By sticking to a lower-priced “basic” or “feature” phone, and avoiding the extra expenses related to the “smart phones” and their attendant data plans and costs for GPS features, etc., one can save quite a bundle, which can be invested. Those investments could potentially yield extremely high returns, especially when coupled with other similar cost-cutting measures that we could probably all take in our daily lives. Less fast food. Netflix instead of movie ticket prices. The list is going to be unique to each individual’s situation.

Still, Jacopo’s words ring in my ear. When it comes to shooting wasteful spending in the head, “how is this a bad plan?”

So, I saw this on wimp.com a while back:

…and I got inspired. So, I’m trading my old Dell Dimension 4600 on Craigslist. It’s about 6 and 1/2 years old, and I’ve upgraded the heck out of it. It’s in better condition than when I got it. We’ll see what I get for it, I guess. If you’re interested, let me know.

I think this book I’m reading, The Year of Living Biblically, by A.J. Jacobs (available at fine booksellers everywhere) is making me feel more inclined to blog posts of a personal nature. In the first substantial post of the recent relaunch of my blog, I asked, “What prevents a blog from becoming a mere exercise in narcissistic exhibitionism?” I certainly intend to avoid that sort of blogging, but I feel compelled to share some personal insights… or, perhaps, even flaws.

I find that, from time to time, things sneak up on me. I’m not talking about people who tiptoe quietly behind you, just out of your field of vision only to yell, “Boo!” I mean big things… like the end of a semester of school. I think this happens to everyone in some fashion from time to time, but I feel particularly prone to it.

Today, I was leaving school, talking with a friend about the mini-term course I’ve been taking (Economic Analysis of Law), and he mentioned that tomorrow is the last day of class for the mini-term. “Oh, is it?” I asked, daftly. “Yeah, man,” said my friend, giving me a look that I suspect he usually reserves for situations like this:

“I know the final exam is Monday,” I said – and I’ve been consciously thinking about that fact for about a week – “But I didn’t realize tomorrow is the last day.”

“Yeah, no class on Friday,” my friend replied.

We went to have lunch, and everything was good; I didn’t get any more WTF looks from my buddy. It still bothers me, though, that I just don’t pay attention to things like when the last day of class is or – I don’t know – other things that people seem to be aware of and think are important that just don’t make their way onto my radar. I’m neither oblivious nor apathetic. I’m a pretty clever guy, I like to think. I just feel like I have a blind spot in my brain about things that don’t matter, relative to the other stuff I’m thinking about, for example, all the fascinating course material from the class I’m taking.

This recurring phenomenon in my mental life reminds me of something my favorite author, Douglas Adams, wrote about in his book, Life, The Universe and Everything. Indulge me for a moment, please.

“Something’s on your mind, isn’t it?” said Arthur.

“I think,” said Ford in a tone of voice that Arthur by now recognized as one that presaged something utterly unintelligible, “that there’s an S.E.P. over there.”

He pointed. Curiously enough, the direction he pointed in was not the one in which he was looking. Arthur looked in the one direction, which was toward the sight screens, and in the other, which was at the field of play. He nodded, he shrugged. He shrugged again.

“A what?” he said.

“An S.E.P.”

“An S …?”

“… E.P.”

“And what’s that?”

“Somebody Else’s Problem,” said Ford.

“Ah, good,” said Arthur, and relaxed. He had no idea what all that was about, but at least it seemed to be over. It wasn’t.

“Over there,” said Ford, again pointing at the sight screens and looking at the pitch.

“Where?” said Arthur.

“There!” said Ford.

“I see,” said Arthur, who didn’t.

“You do?” said Ford.

“What?” said Arthur.

“Can you see,” said Ford patiently, “the S.E.P.?”

“I thought you said that was somebody else’s problem.”

“That’s right.”

Arthur nodded slowly, carefully and with an air of immense stupidity.

“And I want to know,” said Ford, “if you can see it.”

“You do?”

“Yes.”

“What,” said Arthur, “does it look like?”

“Well, how should I know, you fool?” shouted Ford. “If you can see it, you tell me.”

Arthur experienced that dull throbbing sensation just behind the temples that was a hallmark of so many of his conversations with Ford. His brain lurked like a frightened puppy in its kennel. Ford took him by the arm.

“An S.E.P.,” he said, “is something that we can’t see, or don’t see, or our brain doesn’t let us see, because we think that it’s somebody else’s problem. That’s what S.E.P. means. Somebody Else’s Problem. The brain just edits it out; it’s like a blind spot. If you look at it directly you won’t see it unless you know precisely what it is. Your only hope is to catch it by surprise out of the corner of your eye.”

“Ah,” said Arthur, “then that’s why …”

“Yes,” said Ford, who knew what Arthur was going to say.

“… you’ve been jumping up and …”

“Yes.”

“… down, and blinking …”

“Yes.”

“… and …”

“I think you’ve got the message.”

“I can see it,” said Arthur, “it’s a spaceship.”

Perhaps Douglas Adams was onto something. Perhaps the S.E.P. wasn’t just a figment of his imagination. I was doing a bit of irrelevant (to most other topics on my reading list), perhaps even “random,” reading a while back, and I remembered, as I was writing this, reading something about a real kind-of S.E.P. function our brains naturally have. After a little digging, I found the article. It’s called The Dirty Secret of Science, by Jon Miller, and it says, “several behaviors and parts of our brain … are designed to help us ignore inputs that don’t fit with our expectations. The dorsolateral prefrontal cortex, or DLPFC, is particularly troublesome. This part of our brain edits out the bits of reality that don’t fit with our preconceptions.” So, I guess my questions should be (1) why do I have preconceptions about my schedule that make my brain block out information about that schedule that, one might reasonably assume, I need; (2) why would these preconceptions, if I do indeed have them, not fit with reality; and (3) how can I get rid of the preconceptions so I can see reality more clearly?

Number 3, at least, seems to have an easy, common sense solution: make an affirmative effort to consciously observe additions to my calendar, and keep up with changes more conscientiously. Laziness has thus far made this option seem unattractive, but as I become increasingly aware of this S.E.P. habit my brain seems to have developed toward my schedule, I am starting to become alarmed at the sorts of things my brain edits out. This could definitely incentivize a change in behavior.

Am I obsessing about something petty, perhaps even being a little neurotic; or do you experience this too? I’d be happy to hear some thoughts from anyone out there who also seems to have “mental blind spots” towards things they feel they shouldn’t.

I fully intend to finish the article on the Tea Party. I’ve got it all pre-planned and partially pre-written; it’s basically in pieces waiting to be assembled. So, if you’re actually interested (and I hope you are, because it’s fascinating, really), stay tuned, so to speak.

I want to take a moment just to say that, aside from my Economic Analysis of Law class, for which I am doing a monumental amount of reading, I don’t have a lot going on this summer. So, I’m reading a lot. A lot. Yesterday, I spent 11 hours in the law library. That was for Economic Analysis of Law, but still… here are the books I’m currently “in the middle of:”

• The Year of Living Biblically, by A.J. Jacobs;
• Devices and Desires, by K.J. Parker (what’s with the authors with the two initials + a last name?);
• Wish You Were Here: The Official Biography of Douglas Adams, by Nick Webb;
• A Patriot’s History of the United States, by Larry Schweikart;
• The Road to Serfdom, by F.A. Hayek (another author with the two initials + a last name, though this guy is head-and-shoulders above the others in terms of the quality of his work, though the other two I mentioned, supra, are extremely entertaining, and A.J. Jacobs is informative, to boot!);
• Economic Analysis of Law, by Richard A. Posner; and
• Restoring the Lost Constitution, by Randy Barnett (who, coincidentally, shares his name with the husband of one of my mother’s friends).

Go out, right now, and buy this book. I mean it! Now!

I recently finished Glenn Beck’s Arguing With Idiots and Common Sense Economics by James Gwartney, Richard L. Stroup and Dwight R. Lee. Probably the only other book – aside from The Bible – I consider as important for everyone to read as Common Sense Economics is Richard M. Weaver’s Ideas Have Consequences.

I feel like I have so much information to absorb, process, digest and incorporate into my worldview; it’s a little overwhelming. I’m trying to heed the words of Francis Bacon who sagely observed, “Some books are to be tasted, others swallowed, and some few to be chewed and digested.”

I hope you – my readers, my friends – are taking some time to do a bit of reading, to feed your mind. If you are not, please allow me to suggest that you pick up a copy of Common Sense Economics or Ideas Have Consequences. Both are short, easy to read and immensely valuable. Also, A Patriot’s History of the United States is a tome I highly recommend for anyone who wants to understand U.S. History, but who hates the names-and-dates approach to history most people are usually exposed to in school. A Patriot’s History of the United States is extremely readable, interesting and even humorous (for example, I recently read about a naval battle in The War of 1812 in which an officer was knocked unconscious by a decapitated seaman’s head; how weird is that for what is, essentially, a shrapnel injury?). Given that this is an election year, and that most of us are shamefully ignorant of our own national history, picking up and reading A Patriot’s History of the United States would probably be a good idea for anyone who has – or can make – time to read.

I picked up The Year of Living Biblically in Barnes & Noble, in Atlanta, this last weekend. I was meeting a law school buddy of mine there. He’s clerking for a couple of attorneys near his hometown about an hour north of Atlanta for the summer. When we met up in Atlanta, we were walking through the Barnes & Noble, just killing time, trying to think of where to have lunch, and I walked past a copy of The Year of Living Biblically. I picked it up, not entirely sure whether the author was going to mock religion or whether he was making a good faith effort to understand it through some sort of experiment in cognitive dissonance. It turns out the answer is: a little of both. He says, on p. 119,

“As I mentioned in the introduction, one of the reasons that I embarked on this experiment was to take legalism to its logical extreme and show that it leads to righteous idiocy. What better what to demonstrate the absurdity of Jewish and Christian fundamentalism? If you actually follow all the rules, you’ll spend your days acting like a crazy person.

I still believe that. And I still plan on making a complete fool of myself to get this point across. But as with everything involving religion, my project has become much more complicated. The spiritual journey now takes up far more of my time.

My friend Roger was right. It’s not like studying Sumo wrestling in Japan. It’s more like wrestling itself. This opponent of mine is sometimes beautiful, sometimes cruel, sometimes ancient, sometimes crazily relevant. I can’t get a handle on it.”

It’s really a great book. Next time you’re in Barnes & Noble or your bookstore of choice, pick it up and just read a few pages. It’s written in a very journal-like style, “Day 95…” and so on. So, it’s the sort of book that you can read selections from, usually without missing a whole lot, and it’s hilarious!

People have been asking me, when I speak with friends and family, “What have you been up to.” The answer is, really, not much – except reading. So, I thought I’d say a little about that here so we can all be on the same page. Pardon the pun.

I have signed up for hosting with BlueHost. If you’re reading this, you’re reading it on my “freshly hosted” new home at noelbagwell.com/blog! I hope you’ll come back regularly for the most recent content I offer here!

If for some reason it goes bust or I cancel my service with BlueHost, my blog will probably return to a WordPress.com hosted blog. Hopefully, however, that won’t happen. See you next time!

I recently had a discussion with my mother, a teacher, about the benefits of charter schools. She seemed resistant to the notion that charter schools were better than district schools, because, if I understood her point-of-view correctly, she believes that charter schools increase some sort of disparity of fairness in the dispensation of educational resources between students who perform well and students who perform poorly academically.

This point of view is demonstrably mistaken. Consider an example from Posner’s Economic Analysis of Law (Richard A. Posner, Economic Analysis of Law, Aspen Publishers, New York, NY, 2007):

“Suppose there are two farms, and the soil of one is (untreated) twice as productive as the soil of the other (untreated). A chemical will double the yield of whichever farm it is applied to, but there is only enough chemical for one farm. Should it be applied to the farm with the poorer soil, on the theory that that farm needs it more? Should it be applied between the two farms? (Half the chemical will increase the output of a farm by 50 percent.) Or should it all be applied to the farm with the better soil? The last. Suppose the output of the farm with the richer soil is (before treatment with the chemical) 2, and the output of the other farm 1. If the chemical is applied all to the poorer farm, the total output of the two farms will be 4 (2 + 2); if applied half and half, 4 (3 + 1); but if applied all to the better farm, 5 (4 +1).”

Now, let’s apply this to education. Imagine there are two schools -- a district school and a charter school. The administrative and teaching methods of one (the charter school) are twice as productive as the administrative and teaching methods of the other (the district school). “Productivity,” in this example, is measured by the academic performance of students. Putting the students who score highest on a standardized test in a school will double the academic performance of whichever school those students attend, but there are only enough students for one school. Should the students attend the district school, on the theory that that school needs those students more? Should the students be divided between the two schools? (Half the students will increase the output of a school by 50 percent.) Or should they all attend the charter school? The last. Suppose the output of the charter school is (before the students arrive) 2, and the output of the district school 1. If the students all attend the district school, the total output of the two schools will be 4 (2 + 2); if they are divided half and half between the charter school and the district school, 4 (3 + 1); but if they all attend the charter school, 5 (4 +1).

This is why the argument that because charter schools only perform better because they receive more students who score well on standardized tests they are not actually better than district schools is a poor argument for having fewer charter schools and more district schools. Not only is the assumption that charter schools only perform better because they receive more students who score well on standardized tests factually incorrect, but even if you accept that fallacious argument, it would seem, from our examples, above, that concentrating the students with the most potential in the environment where they can be most productive will increase overall academic performance more than by splitting them between the environment where they can be most productive and a sub-optimal environment.

This analysis shows that directing more human resources, in this case bright students, toward more efficient production centers (i.e. charter schools) will increase over-all academic performance for a school district. Conversely, by splitting bright students between charter schools or by leaving bright students in district schools, the over-all academic performance for a school district will be lower than it would if the brightest students were actively directed toward charter schools.

Finally, the truth is that charter schools out-perform district schools -- while costing around 33% less -- even when they receive students selected at random from the school district.

Charter schools clearly increase the academic performance of school districts in which they operate. This is not less true even if higher-performing students are actively directed to charter schools instead of district schools, even though in many charter schools, like North Star Academy in Newark, NJ, students are admitted by a random lottery. One bold step toward improving education seems to be to adopt the charter school model as our primary model for education in this country, meaning most publicly-funded schools would be charter schools, and district schools would only be operated in cases where charter schools could not operate as efficiently as a district school.

Educating yourself about public education is part of your civic duty as a member of the voting public, and if you are a parent, it is part of your responsibility as a parent to understand how your children are (not) being educated. If you haven’t seen The Cartel, the documentary from which the above clip was taken, you should make every effort to do so. You may think that spending more money on education is the answer to solving the education crisis in America, but as with most resource allocation problems, the goal shouldn’t always be to spend more, but to spend most efficiently! Only by understanding common sense economic principles can people be educated, enlightened and empowered to make wise decisions about public spending, including, but not limited to, spending on education.

Flags of Our Fathers: The Pine Tree Flag ("An Appeal To Heaven"), the Gadsden Flag ("Don't Tread On Me"), a colonial New England flag, the Bunker Hill flag, and the Flag of the United States

Introduction

The Tea Party is a unique type of social movement in modern America, one that no one, not even those associated with the Tea Party movement, appears to fully appreciate. If the mainstream media, the Democrats and the Republicans understood the true power of the Tea Party movement (hereinafter “Tea Party”), they would soon realize that it is in their best interest to work with, rather than try to marginalize, those who participate in Tea Party activities in accordance with the principles and values of the movement.

This series of articles will analyze what the Tea Party really is, what its goals are, and how it is our best hope for the return of liberty and prosperity. Written entirely by me, Noel Bagwell, a registered independent with no political allegiances or agenda, this article will provide an analysis of the Tea Party’s role in modern American politics based on economic – not religious or political – arguments. If you can’t stand the politics of the status quo, this article series is for you, because it will give you a clear understanding of what the Tea Party is without any political bias or agenda baked-in.

Part One: What Is The Tea Party?

To understand the power of the Tea Party, one must first understand what it is; to understand what it is, he must understand what it is not. Despite its name, the Tea Party is not a political party. Read the rest of this entry »

David Platt’s Radical is merely an expression of economic ignorance, rather than malevolent social justice propaganda.

“I think the best way of doing good to the poor, is, not making them easy in poverty, but leading or driving them out of it. In my youth, I travelled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less that was done for them, the more they did for themselves, and became richer. There is no country in the world where so many provisions are established for them (as in the United States of America); so many hospitals to receive them when they are sick or lame, founded and maintained by voluntary charities; so many alms-houses for the aged of both sexes, together with a solemn general law made by the rich to subject their estates to a heavy tax for the support of the poor. Under all these obligations, are our poor, modest, humble, and thankful? And do they use their best endeavours to maintain themselves, and lighten our shoulders of this burden? On the contrary, I affirm, that there is no country in the world in which the poor are more idle, dissolute, drunken, and insolent. The day you passed that act, you took away from before their eyes the greatest of all inducements to industry, frugality, and sobriety, by giving them a dependence on somewhat else than a careful accumulation during youth and health, for support in age or sickness. In short, you offered a premium for the encouragement of idleness, and you should not now wonder that it has had its effect in the increase of poverty. Repeal that law, and you will soon see a change in their manners. … SIX days shalt thou labour, though one of the old commandments long treated as out of date, will again be looked upon as a respectable precept; industry will increase, and with it plenty among the lower people; their circumstances will mend, and more will be done for their happiness by inuring them to provide for themselves, than could be done by dividing all your estates among them.”

Benjamin Franklin, On the Price of Corn, and Management of the Poor (1766)

Dr. David Platt, a well-meaning and, I believe, sincere minister of The Church at Brook Hills recently published a small book called Radical. It’s only a couple of hundred pages long, easily readable in a couple of hours. I read it in about 2.15 hours, sitting in Barnes & Noble; don’t buy it unless you want to share it or use it as a reference (or financially support the author).

In Radical, Dr. Platt takes the point of view that the American Dream is the product of greedy materialism, and that greedy materialism, generally, is bad, because poor people are constantly starving to death and dying of preventable diseases all over the place – in our own nation, sure, but all around the world, too.  Dr. Platt argues that Jesus wants you to downsize as much as you possibly can – and he says it should hurt, it should be a sacrifice – and give anything you don’t need in order to actually live (food, clothes, personal belongings, money, et al., etc.) to the poor as an expression of God’s love.  Dr. Platt says this sort of sacrifice stands as a contradiction of the American Dream, which, as he seems to (mis)understand it, would have us merely accumulating as much unnecessary stuff as we want in order to live what we perceive to be a comfortable life full of as many pleasures and conveniences as we can afford (and sometimes more).

Dr. Platt’s book essentially instructs his audience to err on the side of anti-materialism, economic sacrifice and “giving” to the poor and needy. While, on the surface, there is nothing wrong with giving to the poor and needy or with frugality, Dr. Platt is ignoring both some economic lessons that even the most economically illiterate person should be able to easily discover and understand.

Read the rest of this entry »