Tuesday, December 30, 2008

Organizational Tip: What to do with Winter Break

Hopefully you've been enjoying your relaxing winter break by now. Even though this is a break from your regularly hectic schedule, it is a perfect opportunity to get caught up on much work and prepare your organization for the spring semester. Just because your organization is not meeting every week doesn't mean you can't get work done. Here are five suggestions for how to make your winter break a valuable experience:

1. Create a Strategic Action Plan. Now is the time to plan out what you are going to do next semester. A Strategic Action Plan should guide your semester by outlining your goals, activities, timeline, and responsibilities. Draft one now and garner support from the rest of your executive board to start implementing it as soon as you get back on campus.

2. Send invitations to speakers. To get high quality speakers to your campus this spring, you need to start inviting people now.

3. Create an Executive Board Handbook. Your executive board elections should have already occurred for the year (if you are going by a calendar year term) or are coming up (if you go by an academic year term). While you should be transferring knowledge of how to run the organization to next year's executive board in person as much as possible, writing down the lessons you have learned, best practices for the organization, and other pertinent information for the future executive board is a great way to ensure an easy transition of leadership.

4. Have an organizational trivia contest. Keep your members involved in the organization by coming up with 10 questions about your organization and emailing the list-serve with them. Announce a prize for the person who responds to you before school starts with the most correct answers. Not only does this get your members excited about the organization, but it helps to develop an institutional memory.

5. Encourage your group to apply for the Second Annual International SFL Conference! This conference is the premiere event of the year for students dedicated to liberty and you don't want to miss out! Registration fees double on January 1st, so apply now!

Happy Holidays!

Monday, December 29, 2008

Tax Cuts > Gov't Spending

Over at Greg Mankiw's blog, he recently posted an analysis on the impact of tax cuts vs. Keynesian-style spending on the growth of GDP.

Citing a study by Susan Woodward and Robert Hall, it turns out that, using WWII and the Korean War as a case study, that every dollar spent by the government translates into roughly one dollar of growth of GDP.

Meanwhile, a study by Christina and David Romer indicates that, for every dollar in tax cuts, three dollars of GDP growth is stimulated.

Mankiw analyzes:

One hypothesis is that that compared with spending increases, tax cuts produce a bigger boost in investment demand. This might work through changing relative prices in a direction favorable to capital investment--a mechanism absent in the textbook Keynesian model...

My advice to Team Obama: Do not be intellectually bound by the textbook Keynesian model. Be prepared to recognize that the world is vastly more complicated than the one we describe in ec 10. In particular, empirical studies that do not impose the restrictions of Keynesian theory suggest that you might get more bang for the buck with tax cuts than spending hikes.

Saturday, December 27, 2008

After a Full Investigation, I've Found Myself 100% Innocent

People often warn that one should never forget one's beginnings.  So, at this turn-of-the-year, I'm remembering my own: Chicago.  Of course it's Hope and Change, but it's also I've-done-nothing-wrong-and-you-can-believe-me-because-I-say-so-myself.  After everything with my dear Mr. Governor, the rest of the world has another glimpse into the world of Chicago politics, but it's just a glimpse.  People have forgotten Mr. Rezko and how Obama made a shady real estate transaction with the indicted, well-known mafioso, and now we trust his team to conduct their own investigation into their own misconduct.  It's no surprise that they found themselves innocent of wrong-doing, as reported in this article.

I'm not upset about a person or team finding himself/itself not guilty.  I'm upset because this is the same kind of leadership we grew tired of before.  They don't launch a proper investigation, but it's okay, because everyone already jumped on the anti-Blago bandwagon and the prObama magic carpet.  Students have been looking for accountable administration, and we're not finding it.  What kind of example is being set when the so-called arbiters of justice don't hold themselves accountable to the same standards as their opponents?  Not a democratic one.  The dodgy investigation is an embarrassment to us Illinoisans who actually value liberty and honesty.  

For more info on what's being done (or not done) to hold the politicians accountable in the Blago Bonanza, please visit the Illinois Policy Institute at http://www.illinoispolicyinstitute.org.

Wednesday, December 24, 2008

Merry Christmas from "Santa Congress"

With Christmas approaching, perhaps we should mull upon how politicians have an affinity for putting on the red suit and fake beard and being Santa Claus year round. Okay, maybe they don’t dress up like Santa, but they do act like him as they give out “presents” out of their own benevolence—after all, nobody shoots at Santa Claus, as Al Smith used to say of FDR. Some politicians use this message literally:

Comedian and conservative/libertarian P.J. O’Rourke has a funny take on this habit in this speech, approx. 7:45-9:02.

The thing is that the mythical Santa Claus makes his gifts at his own factory. Politicians merely take from Peter to give to Paul, so to speak. Maybe we should elect more of these guys into office:

How about a little more "bah humbug" to wasteful spending and unsustainable entitlements? Anyway, on this Merry Christmas Eve, let's hope that the North Pole bailout passes through.

The Open Door and the Even Hand

Originally published in the Korea Times.

From the window on the Pyongui line, I caught my first glimpse of Pyongyang, and my first thought was how different this place was from Seoul. Even the train ride here was a far cry from the KTX I took from the APEC summit in Busan. I remember being struck by the sheer dynamism of the city as it celebrated, and was celebrated by, the global economy. The difference with Pyongyang could not be more apparent.

While North Korea chose to close its doors to the outside world, South Korea chose otherwise, and has become Asia's fourth largest economy. Yet as the U.S. financial crisis sends shockwaves in international capital markets, Iceland and Pakistan near sovereign default, and a looming global recession, openness now seems a liability: Korea faces weakening external demand, rising inflation due to import prices, and a liquidity crunch from foreign capital flight.

This is not the first time Korea has faced global economic instability. Ten years of post-crisis reforms have prepared it to weather the storm ahead. But how well has it learned the lessons of 1997?

A fundamental principle of international economics is the ``impossible trinity'': a country cannot have capital mobility, an independent monetary policy, and fixed exchange rates simultaneously. Many Asian countries learned this the hard way in 1997. Yet Korea is trying to have all three in 2008: the economy needs foreign investment, the central bank targets inflation, while the government has intervened in currency markets in both directions.

1997 taught us that successful currency intervention is extremely difficult. The global financial system is too complex for anyone to foresee, let alone manipulate. Government intervention not only drains foreign reserves, it also risks overcorrecting, bad timing, and having unintended consequences. It often does more harm than good.

Given the complexity of the global economy, countries that benefit from international trade and finance must also accept some vulnerability to forces beyond their control. Risk and reward are part and parcel of capitalism. Though we cannot eliminate this risk without unacceptable costs, we can manage risk by strengthening the domestic economy and institutions, preparing it to stand against the tide of the global business cycle.

Korea has prepared well. Early warning systems keep an eye on economic conditions, and its financial institutions are far more robust today: Although some banks have U.S. exposure, their credit ratings are unchanged. Conglomerates have undergone painful restructuring and emerged stronger: for example, Hynix, formed from Hyundai and LG's semiconductor businesses, was billions in debt after the dotcom crash. Now, it is the sixth largest semiconductor manufacturer.

Yet one variable has been neglected: Small and medium enterprises. 99 percent of businesses, 88 percent of employment and 50 percent of added value in Korea come from small and medium-sized enterprises (SMEs). But while conglomerates restructured, SMEs were protected by the government and never went through Schumpeter's ``creative destruction.'' SME restructuring was merely delayed, and many, which should have adjusted long ago, now face bankruptcy.

The government should help SMEs weather the crisis, but it should not allow this support to be abused. In 1997, leverage and derivatives were the problems. Then, conglomerates over-leveraged with short-term foreign-denominated debt, precipitating the crisis when creditors called. Now SMEs are over-leveraged, with trillions in losses from debt financing through Knock-In Knock-Out (KIKO) derivatives.

Forex options are appropriate for exporters hedging against currency appreciation, or importers against depreciation, but that is not how KIKO options were structured. Instead of covering the downside from currency volatility, KIKO gave firms unlimited downside with limited upside from currency stability ― the opposite of a hedging strategy. Some subscribers were domestic-oriented firms with no direct exposure to currency risk in the first place. It is unclear whether they understood the risks involved or the instrument they bought. If they did, KIKO was a highly speculative bet that the government would intervene to stabilize exchange rates ― it did ― and that it would do so effectively ― it did not. But with the bailout of KIKO losses, they effectively won the bet.

SMEs were not solely responsible: Banks, which sold KIKO contracts, now face a class action lawsuit. There is a clear conflict of interest between their fiduciary duty and sales desk, and their corporate governance needs review. Yet as the government bailout proceeds, it should avoid distorting the market by rewarding misconduct and mismanagement. If good firms are to succeed, we must allow weak firms to fail, and taxpayers should not bear the burden of someone else's bad decisions.

Risk management in the global economy requires leadership that knows its limitations, and can make the tough decisions to do what is necessary, even if it is politically costly. The open door needs an even hand that is fair to exporters, importers, consumers, investors, and taxpayers alike. Risk management is not easy, but there's only one alternative to the open door: Just look north.

Monday, December 22, 2008

The Government, College Affordability, and You

As students, the cost of college education is perhaps the biggest political issue that hits closest to home for a large array of young people and their families. In the newspaper that I'm involved with on my campus, we received a letter to the editor about how the youth were not motivated for McCain like they were for Obama, partly because of how Obama/Biden made "college affordability" a larger part of their platform.

On Obama's "College Affordability Fact Sheet," he cites such issues as "60 percent of all college students leave college with debt," "the average graduate leaves college with over $19,000 in debt," and that "between 2001 and 2010, 2 million academically qualified students will not go to college because they can't afford it."

In fact, in a lecture, I heard one college professor ask, "In a nation as wealthy as the U.S., why isn't college education free?"

Yes, why indeed? Thomas Sowell, one of my favorite economists and an educator himself, has some thoughts on the matter.

"Why does college cost so much?

There are two basic reasons. The first is that people will pay what the colleges charge. The second is that there is little incentive for colleges to reduce the tuition they charge.

Those who want the government to provide subsidies to help meet the high cost of college seem not to consider whether government subsidies might have contributed to the high cost of college in the first place."

"The president of a small college once told me that, if he charged tuition that was affordable, even an institution the size of his would lose millions of dollars of government money every year.

In a normal market situation, each competing enterprise has an incentive to lower prices if that would attract business away from competitors and increase its profits.

Unfortunately, the academic world is not a normal market situation."

"The University of Colorado law school had its accreditation by the American Bar Association put in jeopardy simply because they did not spend enough money on books for their law library -- even though their students passed the bar exam on the first try at a higher rate than the law students at Harvard and Yale."

So it seems that the college market is getting the worst of both worlds--regulation and cartelization on the supply end, and enabling the high prices through mass subsidization of its demand. In the meantime, politicians vaingloriously point to how they've used taxpayer money to continue this system.

Since Obama has promised to examine the federal budget and eliminate wasteful spending by ending "programs that have outlived their usefulness, or exist solely because of the power of a politician, lobbyist or interest group." Let's hope that our approach to funding education is one of them.

Keynsian Economics is Wrong

I know, I know, the title seems pretty obvious to most of us, but a lot of people would disagree with it. Dan Mitchell, a senior fellow at the Cato Institute, has just finished this great video explaining why Keynsian Economics is wrong:

You can check out other great videos by Dan Mitchell and the Center for Freedom and Prosperity Foundation here: http://www.youtube.com/afq2007.

Friday, December 19, 2008

Blago Won't Resign

A press conference held by Illinois Governor Rod Blagojevich at 2pm C.T. revealed that the beleaguered politician has no intention of stepping down from his post amidst allegations of trying to sell Barack Obama's Senate seat. His approximately 3-minute statement, half of which being a lovely recitation of Rudyard Kipling's poem "If," concluded with no question-and-answer with reporters.

Monday, December 15, 2008

Happy Bill of Rights Day!

The Bill of Rights, adopted 217 years ago on December 15, 1791. The Independent Institute celebrates the anniversary of the Bill's ratification with a "Second Amendment Book Bomb" day.

Tax Havens: The Video Series

The Cato Institute's Dan Mitchell highlights the advantages of tax havens in this series of videos:

The Economic Case for Tax Havens

The Moral Case for Tax Havens

Tax Havens: Myths vs. Facts

Sunday, December 14, 2008

SFL Video Released

SFL has just released its first video: An Introduction to Students For Liberty. The video highlights SFL’s mission and activities. Its purpose is to spread the word about SFL, so please start sending this clip to all your friends and families! To lean about SFL’s new videos as they are released, check out SFL’s YouTube Channel.

Special thanks to Austin Petersen of the Libertarian Party and Mark Meranta of the George Mason University Students For Liberty for donating their time to produce, film, and edit this video.

Friday, December 12, 2008

Monday, December 8, 2008

A College Student and Health Insurance Costs

I just found an online search engine for health insurance plans: eHealthInsurance. Simply put in your area code, birth date, and a few other details, and it will find all the local plans for you, with information on copay, deductibles, etc. Try it out!

I searched for my criteria, a college student in suburban New Jersey. The rates aren't amazing (New Jersey is a guaranteed-issue state, which forces private insurers to accept high-risk customers) but I was able to find a few good deals, not limited to:

- $128.45/mo, with $0 deductible and 0% coinsurance
- $132.60/mo, with $0 deductible and 30% coinsurance, with the first $700 of doctor's visits paid in full
- $154.00/mo, with $0 deductible and 0% coinsurance, with $30 doctor's visits

Now, compare these monthly figures with some other expenses...

- I looked up the local individual cell phone rates from Verizon. The cost was $39.99/mo for the most basic plan, and $99.99/mo for unlimited minutes.

- I just called up the local cable company, the cost of cable with internet they gave me, after the rebates wear off, is $84.85/mo.

- According to this Canadian beer delivery site, I can get 24 bottles of Coors Light delivered for $37.50. Six beers a week isn't unreasonable at all for a college-aged male, so this figure can be considered monthly. Also, while not a local rate, I'll use this as a baseline to factor in pizza or some other beer-related variable.

Hmmm, now if I add these up--even if I use the very basic Verizon coverage--I get a figure of $162.34 per month, which is more than what health insurance would cost me. If I were faced with hard times, and I had to choose between these luxuries or having health insurance, I'd be able to go with the health insurance. Which is a nice segue into this Reason.TV segment...

Friday, December 5, 2008

Happy Repeal Day

75 years ago today, the 21st Amendment was passed, ending national prohibition in the U.S. It is a great day in the history of liberty. Radley Balko has some good stuff on it up on The Agitator.

Tuesday, December 2, 2008

Looking Back in History

I'm currently writing a paper on George Washington's "Farewell Address," and I came across some unexpected contemporary criticisms of his presidency near the end of his second term. On the man who would eventually become one of the highest-ranked U.S. presidents of all time, newspapers printed:

- There "are thousands among [us] who equal you in capacity, and who excel you in knowledge."
- He is no better than the right arm of "British agents, old tories,...the banks, and a long list of unprincipled speculators, who, like leeches, stick to him."
- He was "ignorant of war both in theory and useful practice."
- "A speedy death to General Washington."
- Louis XVI had "never treated his subjects with as much insult."
- "The American nation has been debauched by Washington."
- "The name of Washington has lost its magic."

Time heals all wounds, I suppose! Which makes me wonder, how will future generations look back at our time and leaders and what will they say? Seeing how nostalgia for Bush has already begun, we'll have to wait and see.