What Makes a Miserable Country?

miserableVenezuela is the world’s most miserable country, according to a team of researchers at Johns Hopkins University who have calculated a World Misery Index. “Misery” is measured as the sum of a country’s inflation rate, unemployment rate, and interest rate, minus the annual percentage change in real GDP per capita. The higher the total of these four numbers, the higher a country’s misery score. The index ranks 108 countries.

As the table at the bottom shows, the five most miserable countries in the world are: Venezuela, Argentina, Syria, Ukraine, and Iran. Venezuela’s misery score is almost 40 points more than second-worst Argentina.

The five least miserable countries in the world are: Brunei, Switzerland, China, Taiwan, and Japan. The United States ranks as the 14th least miserable country, but somebody living in Detroit or south Chicago might think differently, meaning the index relies on aggregates and ignores regional differences.


It’s Called Recovery, but Where’s the Beef?

Many economists and other analysts have recognized that the recovery from the U.S. economy’s most recent contraction has been unusually weak—weaker, for example, than any other since World War II. But analysts have disagreed in characterizing the current recovery, which according to the National Bureau of Economic Research, the semi-official arbiter of business-cycle chronology, began in mid-2009 after a contraction that had continued for ten quarters. Some aspects of the economy, such as real GDP and consumer spending, have recovered their pre-recession highs and continued to increase. The rate of unemployment has fallen by several percentage points from its high of more than 10 percent. Net private business investment, which took an especially steep tumble during the contraction, has regained much of its loss.

Some of the most-cited indexes of recovery, however, are ambiguous, at best. The rate of unemployment, for example, has fallen in large part because millions of potential workers have left the labor force. The employment/population ratio, which fell by about 5 percentage points during the contraction, has barely budged from its new, much lower plateau. A growing GDP, despite its near-universal acceptance as the best measure of economic growth, actually tells us little about changes in the public’s well-being. Some components of GDP, especially some of the elements that pertain to government spending, actually should be deducted from, rather than added to, the domestic product, inasmuch as the related government activities—military aggression abroad, domestic spying on the entire population, enforcement of counter-productive and even destructive regulations, prosecution and incarceration of people whose “crimes” have no victims—harm the public, rather than improving their welfare.


Let Them Eat Cake

In January of this year, a Denver bakery found itself at the center of a civil rights controversy. The crime? The bakery refused customer Bill Jack’s request to put an anti-gay message (“God Hates Gays”) on a cake. He reported that he felt as though the bakery discriminated against him based on his “creed.”

In response to the claim, the bakery’s owner, Marjorie Silva, stated that, “it’s unfair that he’s accusing me of discriminating when I think he was the one that is discriminating.”

Almost immediately, people came to Silva’s defense. Her supporters claimed that she had every right to deny Jack’s request. Her personal convictions differed from those of her customer, so why should she be forced to cater to his request? There are a multitude of other bakeries who would have likely supplied the requested confection.

This isn’t the first time a Colorado bakery has come under fire for its decisions regarding the LGBT community. In fact, a judge recently ruled that Colorado’s Masterpiece Cakeshop had unlawfully discriminated against a gay couple for refusing to sell them a wedding cake.

In this case, however, the sympathies went to the customers, and not the store’s owner.

This is puzzling. In both cases you have a store owner refusing to serve a particular client because their personal beliefs conflict with those of their customer. However, the reactions have been very different. In both of these cases, however, the parties have called upon the government’s anti-discrimination laws to compel the other party to compensate them.

Why is it that we should be discussing whether or not we should force bakers to make gay wedding cakes, straight wedding cakes, anti-gay cakes, etc.? Allow me to argue that there is another way to deal with this issue—let the market sort this one out.


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Above is a quick Google search of the bakeries in Denver. Every one of the red dots represents a bakery. As you can see, that’s a lot of pastries. Now, let’s suppose that some of these bakeries, say 25%, have a problem making wedding cakes for same-sex weddings. This means there are 75% of bakeries that would make the cake. Perhaps a subset of these bakeries specialize in same-sex wedding cakes (to answer your question, no, I don’t know what a same-sex wedding cake looks like vs. a traditional one other than maybe the cake topper…work with me).

What would happen in this case? Certain bakeries would get reputations for making particular cakes and serving a certain clientele. After word gets out, those in search of same-sex wedding cakes go to bakeries that will make them and avoid the ones who don’t. Those who are offended by the idea of same-sex marriage don’t have to compromise their convictions–producers or consumers. Same goes for those who are offended by a strictly heterosexual interpretation of marriage.

This idea makes many people uncomfortable. In response to this idea, many people would say that we should just ban this idea all together because “discrimination is wrong.” If we allowed businesses to refuse service to particular groups based on sexual orientation, or race, age, etc., then we’d wind up with a pre-civil rights era world of restaurants, theaters, bakeries, etc. completely excluding particular groups.

Perhaps we should let them. Why? Because they bear the full cost of that choice.

Here’s an example.

Let’s say a restaurant owner is a misogynist. He just can’t stand women. As a result, he makes his eatery a “men only” establishment. What are the consequences of this decision? First, he loses out on the business he might earn from women coming to eat in his restaurant. Since women make up about 50% of the population, he’s eliminating a potentially large source of revenue. In addition to this, he loses out on a variety of male customers who want to bring their wives, girlfriends, etc. Further, many people, including a lot of men, will find the owner’s policy offensive. As a result, they will refuse to eat there. The owner sees his profits fall. Most likely, he will be forced to close his business.

So what can the owner do? He can continue to indulge his preferences of discriminating against women and lose a ton of business or he can serve women and potentially increase his revenues.

Put simply, the market tempers his discrimination. The market forces of profit and loss mean that he bears the full cost of his bias against women.

Let’s bring this back to the idea of bakeries and wedding cakes for same-sex marriages. If a bakery refuses to make a cake for a gay wedding, or refuses to put an anti-gay message on a cake, they bear the cost of those preferences. As a result, they will lose the business of a particular group of people. In addition, just as in the example above, they will likely lose additional customers who identify with the group or find the bakery’s policy offensive. It will negatively impact the bakeries. They will either a. continue to refuse service to the particular group and lose business or b. relax their restrictions.

The current policies of anti-discrimination doesn’t eliminate bigotry. As I’ve discussed elsewhere, anytime you prohibit something you merely succeed at pushing it under ground. Moreover, current policies require monitoring and enforcement costs. As the example above illustrates, the market acts as its own monitor and enforcer–putting financial and competitive pressures on those with extreme (and unpopular) preferences.

Put simply, allowing people to indulge their preferences, or discriminate, have significant consequences in the marketplace. In this case, allowing the market to handle the situation means that everyone gets to have their cake and eat it too.

GAO: Medicare, Medicaid and Veterans Health Administration at High Risk for Fraud, Waste, Abuse


The Government Accountability Office (GAO) has published its annual update of federal programs “that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement…”

Healthcare programs feature high on the list. Medicare, the entitlement program for seniors, and Medicaid, the joint state-federal welfare program for low-income households, are longstanding members of the list; and the GAO notes that legislation will be required to fix them:


Obama’s Dangerous Call for Collaboration

President Obama held a much-publicized White House Summit on Cybersecurity and Consumer Protection at Stanford last Friday, culminating with his signing onstage a new executive order calling for “collaboration” between government and technology companies to fight cyber crime.

Tech executives from Google, Yahoo, and Facebook to their credit declined invitations to attend, while Apple CEO Tim Cook took the stage to advocate for privacy rights.

A far cry from days past when President Obama used Silicon Valley as an ATM machine to refill his campaign coffers. Regardless of how much Obama’s now being a lame duck may account for the change, we can but hope this shift in sentiment in the Valley remains permanent.

The audience attending the summit apparently saw no irony in Mr. Obama’s declaration that:

When people go online, they shouldn’t have to forfeit the basic privacy we’re assured as Americans.

A noble sentiment, agreed, but Mr. Obama bears much of the responsibility for this forfeiture himself, having authorized the government programs under which these basic rights are violated—not once, but repeatedly, including annual re-authorizations of the NDAA, and multiple other programs that result in the wholesale capture and indefinite storage of every detail of every innocent American’s life. Every email, phone call, everyone’s location at any given time, every internet transaction, online search, etc.: you name it, Mr. Obama’s administration is purposely depriving every American of privacy rights every minute of every day—with tech and telecom companies duly “collaborating.”

The further irony apparently lost on the president is that these increasing vulnerabilities to hacking about which he professes to care so much are a direct result of government programs carried out under his authority.

As I had earlier detailed:

“for the past decade, NSA has led an aggressive, multipronged effort to break widely used Internet encryption technologies,” and “vast amounts of encrypted Internet data which have up till now been discarded are now exploitable.” Decryption, it turns out, works retroactively — once a system is broken, the agencies can look back in time in their databases and read stuff they could not read before.

In short, NSA actively and purposely sets out to weaken encryption standards by “every means available:”

The fact that large amounts of the cryptographic systems that underpin the entire Internet have been intentionally weakened or broken by the NSA and its allies poses a grave threat to the security of everyone who relies on the Internet—from individuals looking for privacy to institutions and companies relying on cloud computing. Many of these weaknesses can be exploited by anyone who knows about them—not just the NSA.

Mr. Obama’s now disingenuously traveling to the heart of Silicon Valley to pose as a champion for online security and privacy thus deserves nothing but for him to be publicly ridiculed.

Further, his call for technology companies to “collaborate” with government ought only call to mind the experience of victims of previous collaborations:


The call should thus be for competition, not collaboration: Individuals’ privacy will be far more likely and better secured by tech companies competing to provide services and devices that protect our privacy—from government as well as hackers.

Why Americans Should Celebrate President John Tyler

JohnTyler[The following is from “Freedom’s Presidents,” a symposium for Presidents’ Day 2015, published by The Freeman. Reprinted with permission.]

John Tyler was generally in favor of limiting government — both domestically and internationally — much to the chagrin of his own Whig Party. It advocated a revival of the national bank and high tariffs, both of which would fund federal canals and roads. As an unelected president who had taken over after William Henry Harrison had died only a month into his term, Tyler exhibited amazing political courage in vetoing his own party’s platform. In the process, his cabinet resigned. His party expelled him and then unsuccessfully tried to impeach him. Tyler, like many of the best American presidents who stuck by their principles, was not asked back for a second term.


On U.S. Foreign Policy

Grave threats over there

President’s words will save us

He says, bombs away!


Copies of Kuran

Body parts of boys and girls

Blood of one and all


Do unto others . . .

But this is a special case

Shoot first, sleep soundly

LAPD Targets Citizens’ Free Speech Rights

17877676_MAs tech CEOs gather with President Obama and other government officials at today’s White House Cyber Summit at Stanford University, it is important for entrepreneurs to keep in mind who they are breaking bread with.

A case in point: Charlie Beck, chief of the Los Angeles Police Department (LAPD), wrote a letter recently to Larry Page, CEO of Google, to complain about the Waze app’s ability to track the location of police officers.

Waze is a wildly popular mobile app, owned by Google, that lets users type in their destination address, and, while driving with the app open on their phone, passively contribute real-time traffic data. Users can also actively report accidents, traffic jams, police locations, or any road hazard by tapping buttons, giving other users in the area a heads-up.

It’s the police-location feature that Beck opposes.


U.S. Government Debt Is Now at a Once-Unimaginable Level

Earlier today I was looking through some old records, and I came across a flyer for a symposium in which I participated at Seattle University early in 1990. The flyer announced the symposium topic by asking: “A $3 Trillion National Debt: Does It Matter? What Can We Do About It?” The topic seemed timely enough, given that the gross federal debt had just passed the $3 trillion mark for the first time and was rising at a brisk pace. Back then, $3 trillion seemed like “real money,” so some people were rightly concerned about the consequences of such large and growing public indebtedness.

At the time, I occupied the Thomas F. Gleed Chair in the university’s Albers School of Business and Economics. The symposium was sponsored by the Political Science Department and featured three speakers: besides me, there was my friend and colleague Richard Young, a professor of political science, and a political hack by the name of Mike Lowry, who had a loose attachment to the university under the aegis of its Institute of Public Service. Lowry had previously served five terms in the U.S. House of Representatives and had twice failed in his attempts to gain election to the U.S. Senate. Being a man who almost visibly lusted after high office, however, he did not give up his attempts to get elected to some political position, and in 1992 he managed to get himself elected governor of the state, a position he held for a four-year term (1993-97). A sexual-harassment scandal derailed his desire for reelection as governor. (In Washington state, allegations of sexual harassment go further to ruin a man than such run-of-the-mill offenses as conviction for robbery or murder.)


“Site-Neutral” Medicare Payments: A Good Idea from President Obama’s Budget

Medicare_200Imagine that there are two providers of the same service. Their quality and timeliness are comparable. However, one provider charges significantly more than the other. In a normally functioning market, you would expect that the more expensive provider would have to significantly change its cost structure to stay in business.

What if the more expensive provider argued that it had higher overhead, and therefore needed and deserved to be paid more? He would be laughed out of the marketplace. Yet, this is exactly what happens in Medicare. Because of different fee schedules, doctors in independent practice are paid less for the same procedure than hospital-based outpatient facilities. Unsurprisingly, this has resulted in hospitals buying up physician practices, in order to profit from this arbitrage: