Bubba Island, Episode II The Britney Menace

When last we checked in on our infant economy, Slash had just planted his beans and Bubba and Earl had invested in bean futures and were working on getting their livestock ventures off the ground. Well while we were away, Slash brought in a bumper crop of beans, giving Bubba and Earl a pretty good return on their investment. Bubba and Earl streamlined their livestock operations in order to increase production to meet new demand. Oh, yes, the new demand. During our absence, a small ship wrecked near the island and a few more people washed up on shore. While none of the newcomers brought any new products to trade, they all possess a specialized job skill. Frank is logger who immediately began harvesting the island's trees to provide Betty the carpenter with lumber. Two friends, Gary and Steve have joined forces to produce sweaters and leather goods from the by-products of Earl's sheep farm. Gary is the creative force behind the enterprise and Steve is a whiz with leather goods and knits a mean sweater. Britney, is a twenty-something former teen pop-star who possesses certain skills essential to a society consisting of a bunch of men and Betty.


Betty built Bubba a new chicken house in exchange for some eggs, Earl a new barn in exchange for some leather, and Gary and Steve a design studio in exchange for some leather pants and a new handbag, which she traded to Frank for the wood to build the buildings. Anyway, now everyone is busily trading with their neighbors, and enjoying a cornucopia of goods and services; the variety and quality of which none of our islanders could have hoped to produce individually.

The increase in islanders and in goods and services, however, is causing more than a few problems. For example, Britney is really fond of eggs. However, Bubba has no interest in Britney's services, but he does fancy a new designer handbag and a pair of tight leather pants. Neither Gary nor Steve has much use for Britney's services, either but they do need a new showroom and they are both terribly fond of beans. In direct contradiction to the island's founding charter, Slash has recently become a vegetarian and has decided to save himself for marriage. Frank, Slash, Betty and Earl all like Britney well enough, but Frank, and Betty have no use for handbags or leather pants, and Earl is betting government will soon be invented and thinks he'd best not risk ruining his chances of being elected by being seen doing business with Bubba or Britney or seen wearing leather pants.

Britney is trying really hard to figure out a way to get her eggs, but she may end up having to steal them. Our little island doesn't yet have a police force, after all. However, it also doesn't have a court system and its citizens are therefore subject to vigilante justice.

Will Britney get her eggs? Will Earl realize his political ambitions? Will Frank be voted off the island for his vegetarianism? Stop by next when these and many more questions might just be answered.

Getting up to Speed

Before we continue the story of our little island, I think a little history is in order.  Here is the post in which our island got its genesis (with a couple of corrections).

The computer is an amazing machine. With the exception of the airplane, the grilled cheese sandwich, and possibly the wheel, it’s man’s greatest invention. Computers allow us to communicate almost instantly with anyone on the planet; they’ve increased productivity in almost every industry while creating new, high-paying jobs. Oh yeah, and they offer us nearly unlimited access to mindless entertainment.


With all that computers can do, the most amazing thing is how they do it. You see, at the most basic level, computers can really only do one thing; they can add. Not only are they limited to addition, they only get to use two digits, 1 and 0, to do so. Actually, if you want to be picky, it’s just two electrical states, on and off. If you think about it, though, the principle’s not much different than that of a light switch. Programmers and computer engineers use this basic principle to make computers do all of the cool stuff computers do-computer aided design, complex structural analysis, Grand Theft Auto, etc.

If something as powerful and complex as a modern computer can be reduced to such a simple idea, maybe other complex things can be as well. Perhaps the key to understanding things like government and the economy is to ferret out these simple, first principles and understand them.
Let’s start with the economy. We’ll create our own little, imaginary economy and use it to try to understand the big economy which our government seems Hell-bent on screwing up.
In his book Basic Economics, economist Thomas Sowell defines an economy as "a means for distributing scarce resources", so we’ll need some scarce resources and a distribution network.

We’ll start out using chickens and sheep as our scarce resources, and our distribution network will consist of a couple of farmers, Bubba and Earl. In this sort of exercise, most folks would probably call their farmers Farmer A and Farmer B or some such. I’d like our economy to have a little more color, though, and I don’t know any farmers named A and B, so we’ll stick with Bubba and Earl. We will follow standard convention in not naming our sheep or chickens, however. We won’t even bother to give the animals letters as they’re really just extras in our little exercise and we don’t want to grow too attached to them just in case our farmers get hungry. We’ll have no vegetarians in our economy. It’s unnatural. If God didn’t want us to eat animals, He wouldn’t have made them out of meat.

Anyway-our economy. We’ll let Bubba raise the chickens and Earl can raise the sheep because, as we all know, you can’t trust a guy named Bubba around a bunch of sheep. It’d be like Temptation Island with wool sweaters. Oh, I almost forgot to mention that our economy takes place on an island. This will be important later on. Right now let’s concentrate on livestock.
Earl raises sheep and Bubba raises chickens. But Earl likes eggs for breakfast and fried chicken for dinner (our economy doesn’t have any doctors, so cholesterol hasn’t been invented yet), and, as we mentioned above, Bubba is particularly fond of sheep. Bubba can’t raise sheep, though because he has no place for them to graze, and Earl can’t raise chickens because…well, he just can’t.

If Earl wants fried eggs and chickens, and Bubba wants companionship-I mean mutton, our two farmers must work out a deal. After much haggling, our heroes decide that one of Earl’s sheep is worth two of Bubba’s chickens and a dozen eggs. All is well in our little world. Earl has his eggs and yard pimp, and Bubba…well, let’s move on.

By and by, another farmer, we’ll call him Slash, washes up on our island. Now Slash doesn’t have a clue about raising sheep or chickens. Even if he did, it wouldn’t do him any good because the only thing he has to trade for the livestock is a small bag of dried beans that he managed to hang onto when he was thrown overboard (while Slash’s story prior to his washing up on our beach is full of adventure, romance and intrigue, it has little bearing on our current subject and so the telling of it must wait for another time). Even though Slash doesn’t know beans about raising livestock, he knows quite a lot about raising beans. And honestly, after years of eating nothing but chicken, eggs, and mutton, Earl and Bubba really need some fiber in their diets.

Since Slash’s beans aren’t magic, and our economy really can’t develop much farther until Slash gets his first bean harvest, we’ll have to leave off here for now. Don’t worry, though. Our farmers got together and invented credit so that Slash won’t starve before his beans come in. Bubba and Earl will trade Slash some chickens, eggs and sheep for bean futures.

Judge Roger Vinson's Ruling on Obamacare

This is a very informative ruling and, believe it or not, a very good and easy read.  Not only does the ruling give insight into the new healthcare law and the debate surrounding it, the text sheds some light on how Congress has used the Commerce Clause of the Constitution to expand its power over the last century or so.  It's pretty amazing how, during the New Deal, the government pushed the boundaries of their power and how the Supreme Court stretched the Commerce Clause to allow them to do so. 

With Obamacare Congress is asking that the Commerce Clause be stretched, yet again.  Vinson's decision against the mandate that all individuals buy health insurance hinges on the question of whether  or not Congress has the power to regulate an individual's decision not to act in a certain way.  It's long been accepted that Congress has the power, via the commerce clause, to regulate almost any economic activity.  If something is produced, bought, sold, or moved and it affects, even tangentially, interstate commerce, the Supreme Court has ruled that Congress can regulate it.  With the individual mandate, for the first time, Congress is interpreting it's power as being able to regulate inactivity if it affects interstate commerce.  The government's argument is that an individual's choice not to purchase healthcare affects the healthcare market, and because of that they can regulate that decision. The government can, in essence, make you buy something you don't necessarily want because it deems that purchase beneficial to interstate commerce.  As Judge Vinson points out, this opens up the possibility that Congress could make people do all sorts of things because of their positive impact on the healthcare or other industry.  For example, if they're granted the power they seek, Congress could require Americans to buy and consume broccoli three days a week or exercise for a minimum amount of time or...well you get the picture. 

Such a slippery slope argument is a bit of a logical fallacy and normally I wouldn't buy into it.  However, this is the federal government we're talking about and they do tend to push the boundaries of their power when given a chance-case in point, the, for now, unconstitutional healthcare law.

Well, it's time I head off to the salt mines. 

Enjoy.

http://www.scribd.com/doc/47905274/Vinson-Ruling

How to Start a Train

Mr. Obama has spent a lot of time talking about trains recently which made me think of a train story I've heard.  I’ve actually heard this story told a few different ways. My favorite version was by the late Southron Raconteur, Jerry Clower. It’s his version I’ll try to relate here.  Hopefully I won't make too much of a mess of it.


One day, many years ago, a steam locomotive broke down on the tracks running through the middle of a small Southern town. The train effectively divided the town in half and brought all activity to a standstill. The engineer had tried everything to restart the boiler, but to no avail. The townspeople who had gathered around the engine had begun discussing what to do about the train when one of the older gents in the crowd spoke up.

“What about Old Man Brown? He worked for the railroad for thirty years. Surely he knows how to get the thing running.”

So Mr. Brown was sent for. When he arrived Mr. Brown didn’t say anything; he just walked up to the engine and looked at it. He walked first along one side and then the other, tapping on the plating as he went. He’d occasionally lean over and place his ear against it the engine as he tapped it. He climbed up in the engineer’s compartment and examined the gages, turned levers and pulled chords. After about ten minutes of this he turned to the mayor, pointed to a strong-looking lad and said, “Send that boy to the hardware store for a sledge hammer and a piece of chalk”.

The boy was dispatched and, after a while, returned with the requested items. Mr. Brown took the chalk, walked up to the engine and marked a big X right on the side. He then turned to the boy and said “take that hammer and hit the engine as hard as you can, right where I made that mark”.

The boy walked up to the engine and swung the hammer with as hard as he could, hitting the engine right in the middle of the X. The engine gurgled and sputtered a bit then roared to life. The townspeople cheered, jumping up and down and slapping each other on the back. One woman fainted dead away. The mayor turned and grabbed Mr. Brown’s hand, shaking it vigorously. “Wonderful piece of work, Mr. Brown, how much do we owe you?”

Mr. Brown replied “It’ll be $100.00. Give the boy what swung the hammer a dollar and give me ninety-nine.”

“But Mr. Brown,“ the mayor exclaimed, “the boy really did all the work. He went after the hammer and the chalk and carried them all the way back from the store. Heck, he even provided the blow that brought the engine back to life. Why should we pay him so little and pay you, who didn’t so much as pick up the hammer so much?”

Mr. Brown replied “Pay the boy a dollar for hitting the engine, pay me ninety-nine for knowing where to hit it.”

I may have muddled the story a bit, but the moral should still be clear.

A Couple of Interesting Links

An interesting little essay:
http://www.econlib.org/library/Essays/rdPncl1.html

A very educational website:
http://www.iep.utm.edu/category/s-l-m/logic/

Back to the Island

A couple of years ago I started writing a little story about an island community somewhere in the South Pacific.  I initially had great plans for this odd little society, but got sidetracked by another project after only two posts.  Recently one of the two and half people who read the two island posts suggested I add another chapter or two-I think he's hot for Betty. 

Anyway,  I've decided to check in on the island.  So in order that you won't be lost, I suggest you check the archives for April and May 2009 for the opening two chapters of the story.  Or not. 

Now that I think about it, I'm kind of curious myself as to what will happen.

Cutting the Big Dogs (or ticking off the geezers and the defense contractors)

My last couple of posts have dealt with the topic which has been foremost in the minds of Americans over the last few months-the federal debt.  At the end of my last post, I said I'd look at some cuts we could make to reign in the federal budget.  Before I do though, let's review a bit.

To this point, I've demonstrated how, because borrowed money grows at an exponential rate our current practice of deficit spending is unsustainable.  Eventually we'll all be working to simply service or pay the interest on the debt.  Though I didn't mention it, given current deficits, in less than 20 years, servicing the debt will be the single largest government expense, eclipsing Medicare, Social Security and Defense.  The only way to prevent our debt from growing to such a level is to deeply cut spendins.  Unfortunately any meaningful cuts must be made to programs that most politicians in Washington don't want to touch with a ten-foot-pole. 

Two major areas of spending make up over 2/3 of the federal budget.  Entitlements, including Medicare, Social Security and federal pension programs account for about $1.9 trillion of the proposed $3.7 trilliion proposed 2011 budget.  Defense adds another $738 billion.  Together these programs, along with interest amount to about what the feds anticipate taking in this year.  Everything else Washington will spend on things like education, roads, space exploration and Nancy Pelosi's chocolate-covered cherries next year must be borrowed-at interest.

So how does one cut these sacred cows without killing the animals?  Let's take a look. 

We'll start with Social Security because, though it's probably closest to everyone's hearts, it's also the easiest to fix.  It must be eliminated-not all at once, but it's got to go. 
Social Security is a scam that Bernie Madoff would have been ashamed to have dreamed up. Though one might argue Social Security was ole Bernie's inspiration. 

Anyway, the sad truth is, we can't just chuck Grandma out on the street.  That would be littering (for those of you offended by this, please reference "sarcasm" and "humor" in your handy Funk and Wagnell's).  After all,  our government sold her a bill of goods and it's our responsibilty to make sure they pay up.  So if Granny's getting her check, she should keep getting it.  Also if Granny was a child of the Sixties, and is almost eligible to receive her benefit, it would be bad form to yank it from her pot-stained claw when it is just within her grasp. I know some of you might think that the Baby Boomers deserve to be left in the cold to die for their role in screwing up our perfectly good country, and, in the abstract I might agree.  However even hippies are human beings of a sort and it is beneath us to hold a grudge. 

So, those already retired and those about to retire-say 60 and older get their checks based on current laws and policies.  For all those 60 and under, the retirement age must be raised.

When Social Security was first formed, the retirement age was only a couple of years younger than the average life expectancy.  However, thanks to our woefully inadequate healthcare system, the average life expectancy now outstrips the retirement age by more than a decade, with many retirees living well into their eighties and nineties.  And, unless Obamacare isn't overturned, the average life-expectancy can be expected to increase, at least a little, for each new group of retirees.  So, starting with folks who are now between 50 and 60 years of age, the retirement age should be raised 1 year, for folks between 40 and 50 3 years, between 30 and 40 5 years.  Hopefully by the time the folks who are now 30 reach retirement age, Social Security will have gone the way of the hippy. 

There must also be a means test.  For all practical purposes, Social Security must be turned into a program only for the poorest of our elderly before it is eventually phased out.  Not only are the Boomers who are about to retire members of the most spoiled generation in the history of the world, they're also one of the most affluent.  Yet, they will all get a Social Security check when they retire.  So, any person with a net worth and private retirement savings deemed sufficient to live on must not get a Social Security check.

Raising the retirement age and making Medicare means tested will also greatly lower the costs of that program.  The program could see a major cost savings if real reform of government policies toward the healthcare industry were undertaken (not Obamacare).  However, such reform is another topic for another day.

The next time we visit the debt topic, we'll look at Defense cuts.