I am writing to ask you to withdrawal your support for the Senate Health-Care Bill. This bill will soon come to a vote in the state senate and for reasons outlined below I urge you to withdrawal your support.

Deal making is career breaking
No matter how appropriate the majority of a bill is, deal making of the type thrown within this bill will never be accepted by VA citizens. It is utterly inappropriate to support a bill that provides support and monies to other states in the manner that this bill does. It is extremely inappropriate that Senators’ Nelson, Baucus, and Dorgan received last minute deals, among other Senators.

Unknown Costs
There is no reliable study on the exact implications on the costs or savings of this bill. In fact you mention in your support statement that it will, “reduce the deficit by more than three-quarters of a trillion dollars over the next 20 years.” Whereas your colleague Senator Webb states, “will lower the federal budget deficit by $133 billion over the next ten years, and by more than $1 trillion over the decade following.” It is insightful that not even a member of your same party elected in your same state can agree on the projected savings.

Reform Yes, but not this type of reform
Your statement also correctly identifies that our current system is not sustainable, “Most importantly, the status quo of our present system, which is damaging our national economy at many levels, is unacceptable.” However, voting for a change because a change is necessary is an extremely weak position. How about voting for change that is right, that correctly fixes the issue (a position I think only a fine minority in your party would state about this bill).

The passing of this bill will affect the ability of democrats to get elected in the next election cycles. Mainly because (1) people don’t like last minute deals (2) people really don’t like to pay for something in year 1 that may or may not save money 20 years in the future (neither young people nor old people) (3) the bill doesn’t actually put in place reform that is favorable.

People are smart, and they are getting smarter, they understand that senators want to show their constituents that they did something that helped, but they are smart enough to analyze if what was done actually helps and prefer to support people who make the right decision not those who just make a decision.

This letter went to Senator Warner whereas a similar letter was sent to Senator Webb.

Thomas Geisel, chief executive of New Jersey’s Sun Bancorp Inc., says the bank paid back its federal money in June because of legislation that imposed limits on bankers’ pay, among other areas. “Lawmakers let emotion and ego get in the way of making good business decisions,” he says.

“I was elected to represent the interests of Montana, not General Motors, which is something that GM should have considered before letting the federal government assume control of their company,” Rep. Rehberg said recently.

The best way to repay taxpayers is to run the business as efficiently and cost-effectively as possible,” Mr. Socia wrote. “Uncompetitive supplier agreements do not support this priority.” [In response to Montana senators' insistence that GM source supplies from a Montana mine].

I am not sure how much of GM’s ‘decision’ to let the federal government assume control was ultimately GM’s decisions, but regardless they now do have control and it will be interesting to see how what will happen with GM. Hopefully we’ll continue to have some transparency around the whole issue, so that we can tell if the government is able to run GM well. But from the sounds of it the federal government pushing GM around to chose certain suppliers who are constituents or reinstate a constituent’s contract for a dealership is putting the odds in favor of those libertarians who think the government has no role in running a business.

To quote the WSJ article:

If the FCC does force U.S. wireless carriers to open their networks to data-heavy applications like streaming video, it could push them beyond the limited capacity they have. Already, in areas like New York and San Francisco, a high concentration of iPhones has caused many AT&T customers to complain about degrading service.

Its a wonderful thing to have additional content on a wireless carriers network. I would suggest that this is one part of the service offering from a carrier that a consumer looks at when deciding on which carrier to use (although phone model offerings, and plans are likely more important). Although I’m no expert in the wireless industry, I just don’t see the market failure here. Why is it necessary for the government to step in and force an industry to do something that it doesn’t want to do, that it hasn’t done, and for which there are competitive pressures for them to be doing?

On the competitive pressure point. I imagine that one carrier would like to provide access to more websites and online content than their rivals. It provides more value to their customers making them more happy. I am fairly sure that they would want to properly balance this with network reliability and consistent access. I trust that they are doing a good job at balancing these issues or else someone else would do a better job and the company doing a bad job would go out of business (or at least loss market share). That’s competitive pressure, their is pressure within the industry to do this correctly. And I don’t see much evidence of the contrary.

One cited reasons for these new rules is that wireless providers are now in the content generation market, and they favor their own content and sites by slowing or speeding up certain sites. If their content is not good content and they favor their sites too much compared to their competition then customers would switch service providers, or at least bitch to their current service provider.

My point is basically, if consumers found this to be a problem such that they were not being served properly, then some company would realize this and offer a service which fulfilled that consumers needs. Or at the minimum you would here complaints from consumers rather than other businesses.

The Obama administration is taking the side of Google, Amazon.com Inc. and an array of smaller businesses that want to profit from offering consumers streaming video, graphics-rich games, movie and music downloads and other services.

WSJ article

My interpretation is that for some reason it is believed that government officials, be it representatives, appointees, or career bureaucrats, are somehow better suited to run things than a private market (think all of our social institutions not just companies). Milton Friedman in the below quote said it well, by asking, in an interview with Phil Donahue, why is it believed that politicians have a nobler self-interest than the self-interest of market participants (think, you and I).

“Do American Presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler, somehow, than economic self-interest? You know, I think you’re taking a lot of things for granted. And just tell me where in the world do you find these angels who are going to organize society for us? I don’t even trust you to do that.”

And F.A. Hayek sums up the concept that people in power like to exercise their power.

“The probability of the people in power being individuals who would dislike the possession and exercise of power is on a level with the probability that an extremely tender-hearted person would get the job of whipping master in a slave plantation.”

In fact the United Steelworkers couldn’t get any trade complaints passed through the Bush administration so their hoping for some traction with Obama (particular since he pledged to increase trade enforcement). They are currently trying to get ‘trade enforcement’ considerations by Obama on imported Chinese tires.

Well Obama ended up signing a 35-percent tariff on imported tires (a tariff acts like an additional tax on tires from China, read more about tariffs via wiki). The action provides a 35-percent tariff the first year, beginning September 26; 30 percent the second year; and 25 the third. That’s on top of the four-percent tariff that the U.S. already imposes. Then the statute expires completely at the end of 2013. The reason for the increased tariff is that current trade laws have a anti-dumping law which in this case has been investigated by the US International Trade Commission which has determined that (see their report),

On the basis of information developed in the subject investigation, the United States International Trade Commission (Commission) determines, pursuant to section 421(b)(1) of the Trade Act of 1974,1 that certain passenger vehicle and light truck tires2 from the People’s Republic of China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products.

So basically the Chinese are able to import tires that are less expensive and that this causes market disruption. I wonder if saddle makers made similar complaints to their US representatives in the advent of the automobile, claiming that automobiles will subject their industry to market disruptions.

I thought a quick overview of why this hurts all of us would be beneficial. China can produce tires with less expenses than a US company. They can do this because of differences that exist within their economy, like lower wages and lower costs of production. This provides the US market with less expensive tires. When a tariff is enacted it increases the price of imported tires and limits the number of imported tires that come into the US market (this later point is because Chinese firms profit margin decreases because the demand for their tires decreases due other additional costs imposed by the tariff and they produce less tires for export).

In fact, I just purchased a set myself, and was happy to buy a reliable well made tire from China that costs less money. If these tires were more expensive due to a tariff or not available because the Chinese companies can no longer remain profitable, then I would have to purchase more expensive US made tires, or pay for more expensive tires from China. That would leave less money in my pocket, and every other consumer who picked out less expensive Chinese tires. This makes me less well-off, there is less money to spend on other things like donations to universities or going out to dinner in my neighborhood.

Well, one my ask, why would a President want to hurt all of the consumers of tires in the US. Its not that the President wants to hurt consumers, but rather the US Steelmakers and a few other special interest have convinced the President that they are worth helping. Too bad US consumers can’t get the attention of the White House like special interest do.

I agree with a WSJ blog that this shouldn’t be viewed as a beginning of a Trade War, as it may just be a warning shot, but it still is unnecessary and doesn’t allow me to freely contract with a company providing me a more favorable alternative to US made tires.

To quote the president in a speech given Aug. 2, 2008,

When special interests put their thumb on the scale, and distort the free market, the people who compete by the rules come in last.

Well I’m following the rules as is every other consumer who wants to purchase less expensive tires, and we are coming in after the special interest. Hopefully people will start to learn that politicians manipulate public sentiments to get elected (i.e., they tell us what we want to hear which does not follow what they end up doing).

Why Should One Get Support While the Other is Hurt

I came across a good article on Soft Paternalism on NPR, Using Psychology to Save You from Yourself.

The basic concept of Soft Paternalism, or so its supports claim, is derived from Behavioral Economics, which is,

a school of economic thought greatly influenced by psychological research — which argues that the human animal is hard-wired to make errors when it comes to decision-making, and therefore people need a little “nudge” to make decisions that are in their own best interests. And that is exactly what Obama administration officials plan to do: By taking account of human psychology, they hope to save you from yourself.

The argument against Soft Paternalism is often along the lines of government also being made up of error prone individuals, so that the government should remain out of the business of making decisions for individuals.

“Just understanding that human beings don’t make perfect decisions does not make the case for government by any stretch of the imagination,” Glaeser says. “After all, governments are made up of people, too. They are subject to the same foibles and weakness as the rest of us.”

The retort provided by one of the article’s subjects brings up an example of Soft Paternalism in Britain.

Any American who goes to London realizes that they are endangering their lives every time they try to cross the street, because the traffic comes from the wrong direction. Our instinct is to look left, but if you look left, you’ll get run over by a double-decker bus. To help us, Thaler says, someone in the British government decided to write on the sidewalks of busy intersections filled with American tourists the words “look right.”

The problem I have with this is not that government officials are error prone, although I realize they are error prone (on top of incentives that are not aligned with my well being), but that this type of intervention in individuals lives can lead to a lazy populice, which can become even more error prone.

The reason we are taught to walk across the street safely, is so that we can become independent adults, pursuing what makes us happy in our own way. If we no longer need to be taught to walk across the street, or how to choose a doctor, or what to do with our money, then we are no longer individuals pursuing our own happiness. We are merely mechanisms of a society which has robbed us of our path to empowerment and self fulfillment, the maturity to take responsibility for our actions. I would prefer to live with people who feel responsible for thier own actions and felt empowered and esteemed for being able to do things like, walk across the street.