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Thursday, February 16, 2012


Is Camelot Ending?

First, I need to thank Dr. C. for appending his comment to my last post, wherein he questioned what better way there might be to subsidize birth control if not through health insurance. Actually, I thought that question was anticipated and answered in the excerpts I provided from Professor Cochran's essay. But since it is a worthy question, and since, if anything, my response would be even pithier than the worthy professor's, I'll respond here.

1. Contraceptive devices, whether pills or condoms, should not need to be subsidized by insurance, since they hardly constitute a major purchase nor an "insurable risk." Sexually active folks who don't want children should be motivated enough by personal responsibility to make these purcahses. If someone is too poor to do so, then by definition, they are jobless and don't have group insurance. If we decide through legislation that medicaid should cover these things, fine, that resolves that problem. But I am against HHS, a regulator, mandating a statist requirement that substitutes its judgement for the employer's and its insurer, just as I oppose prohibition of alcohol and recreational drugs and other value judgments made by government elitists. Similarly, even though dental coverage is a good thing, the government has no business mandating it.

2. I agree that there is a living victim when unwanted births occur. Clearly adoption is a solution in that situation. However, I don't think the birth control mandate will prevent any meaningful amount of such pregnancies, largely for the reasons stated above. The fact is that we have a major problem in our poorer communities with one-parent families, but this seems to be largely a choice, and represents a failure of values that has occurred in our culture over the last five decades. That cultural failure has largely been promoted by the same people now imposing statist solutions for all of society's perceived ills. No thanks.
More on this further down.

3. Sometimes the worst thing you can do for people is to "give them a fish." Today, there is an expectation among younger people that they are entitled to free this and free that, when in fact, nothing is free, every free product and service is a transfer payment. If you don't see this, you are consigned to continuing to treat symptoms instead of diseases.

It was just over a year ago that the weekend WSJ interviewed Professor Walter Williams, the George Mason University economist and syndicated columnist who, along with the great Thomas Sowell, drives liberals crazy by telling truths statists would rather ignore. The interview followed publication of his autobiography, "Up From the Projects." Here are excerpts from the interview.

"We lived in the Richard Allen housing projects in Philadelphia. My father deserted us when I was three and my sister was two. But we were the only kids who didn't have a mother and father in the house. These were poor black people and a few whites living in a housing project, and it was unusual not to have a mother and father in the house. Today, in the same projects, it would be rare to have a mother and father in the house." During reconstruction and up until the 1940's, 75% to 85% of black children lived in two parent families. Today, more than 70% of black children are born to single women. "The welfare state has done to black Americans what slavery couldn't do, what the harshest racism couldn't do. And that is to destroy the black family."

Williams earned his doctorate in 1972 from UCLA, which had one of the top economics departments in the country, and he says he "probably became a libertarian through exposure to tough minded professors - James Buchanan, Armen Alchian, Milton Friedman - who encouraged me to think with my brain instead of my heart. I learned that you have to evaluate the effects of public policy as opposed to intentions..."

Analysis of this issue (the Davis Bacon Act of 1931) launched Mr. Williams career as a public intellectual, and in 1982 he published his first book, "The State Against Blacks," arguing that laws regulating economic activity are far larger impediments to black progress than racial bigotry and discrimination. "Racial discrimination is not the problem of black people that it used to be. The 70% illegitimacy rate is a devastating problem, but it doesn't have a damn thing to do with racism. The fact that in some areas black people are huddled in their homes at night, sometimes serving meals on the floor so that they don't get hit by a stray bullet - that's not because the Klan is riding through the neighborhood."

Mr. Williams' writings have sought to highlight "the moral superiority of individual liberty and free markets. I try to write so that economics is understandable to the ordinary person without an economics background. I think it's important for people to understand the ideas of scarcity and decision-making in everyday life so that they won't be ripped off by politicians. Politicians exploit economic illiteracy."
Which is why, he adds, the tea party is a positive development in our politics and long overdue. "For the first time in my lifetime, you hear Americans debating about the Constitution. You hear them saying, 'This is unconstitutional' or 'We need limits on government' - things that I haven't heard before. I've been arguing them for years, but now there's widespread acceptance of the idea that we need to limit the government."

He hopes the tea party has staying power, but "liberty and limited government is the unusual state of human affairs. The normal state throughout mankind's history is for him to be subject to arbitrary abuse and control by the government. A historian writing 200 years from now might well say, 'You know, there was this little historical curiousity that existed for maybe 200 years, where people were free from arbitrary abuse and control by government and where there was a large measure of respect for private property rights. But then it went back to the normal state of affairs.'

"You (do) find more and more black people - not enough in my opinion but more and more - questioning the status quo. When I fill in for Rush (Limbaugh), I get emails from blacks who say they agree with what I'm saying. And there are a lot of white people questioning ideas on race too. There's less white guilt out there. It's progress."

The longer this GOP campaign goes on, the more aghast I am at how often Mr. Romney says exactly the wrong thing. It's no wonder his handlers try to restrict him to "the script." The latest gaffe was redoubling his muted, if reasonable criticism of the auto company bailouts. I mean, why does this make any tactical sense on the eve of the Michigan primary? Polls now show him behind Santorum there. Really, if he can't win the Republican primary in the state where his father was a popular governor, one has to question the viability of his candidacy. And viability was the campaign's main selling point.

Mr. Santorum has campaigned with energy and spunk, and he is attracting voters as his exposure increases and people see that he is not the second coming of Dan Quayle, i.e. an ignorant fountain of malaprops. But not being Quayle is hardly sufficient reume to be President. So where will the party turn? I offer again (at the risk of being repetitive) the "draft Daniels" alternative. But now it's time to get serious about this. Mitch, your country needs you.

This has been a hard week for celebrity passings. Say what you will about Whitney Houston's personal demons and her inability to cope, she was a staggering talent and young enough to produce a lot more good work. Still I was never a fan, and I have to admit to being more shocked and crestfallen by the sudden passing of WSJ writer and ghost writer Jeffrey Zaslow in a traffic accident. One letter in today's Journal correctly pointed out that we felt like we knew Randy Pausch, Gabby Giffords, Mark Kelly, Chesley Sullenberger and the "Girls from Ames" because of Zaslow's sensitive work. A second letter from Steven Sherman of N. Bethesda, MD is too good not to simply quote:

I joked with Mr. Zaslow a few years ago that I wished he would stop writing such touching human - interest stories in the Journal because I was getting really tired of having to explain to my office mates why I was teary-eyed after a lunchtime reading of a business newspaper. They never could understand what could be so emotional in the Journal. The irony is that Jeff's obituary ran on a Saturday, so I could have a good cry on my own this time, no explanation needed.

Then today, we lose Gary Carter, which we all knew was coming, but that doesn't help much. The face of the Montreal Expos, Carter brought his luminous smile to the Mets and was a leader on their best teams, even though well past his prime. "Kid" was almost too good, too squeaky clean in an era when baseball was on the threshhold of moral decay - silly contracts, steroid use and other forms of fan abuse. Fortunately, Gary is immortalized in Cooperstown.

On Monday, we bought 20 more shares of the TIP ETF for the IRA at a price of
118.30. Yesterday, we bought 1700 shares of the beleagured, but hopefully recovering, Frozen Food Express (FFEX) at 1.26. Technically, a value buy, but not for you to try at home. Remember the disclaimer.

Thursday, February 09, 2012


Mittmobile Tuneup Time

It was all supposed to be over after Florida, and it sure looked like it was, until Tuesday night, when inexplicably, the Mittmobile was driven off the road, not by Newt but by Rick Santorum. The erstwhile Pennsylvania Senator, unabashedly campaigning for the pro life, religious right vote, got enough votes out to easily win all three of Tuesday's "beauty contests," including, most shockingly, Colorado, but not very many delegates, which Missouri and Minnesota pick later. The Romney people were justly penalized for taking a victory lap following their Florida triumph, and now they have to get back to work.

Besides Mitt, the real loser for the night was Newt, who seems to have pretty much worn out his welcome. The winners, besides Rick were Obama, who still lacks for a dangerous looking opponent, and those diehards in the "draft Governor Daniels" movement, who take heart the longer Mitt takes to wrap this thing up.

So now Santorum has fully inherited the mantle and also the supporters of Mike Huckabee, and we'll see how far it takes him. At least he should get a cable show out of all this.

The Obama people have also been cheered by better employment and economic figures, and that has boosted the President's standing in the polls a bit. Nevertheless, one shouldn't get too cocky, since we still face a huge deficit, and there is no progress being made of any kind against it. We are about to begin another kabuki dance over the extension of the payroll tax reduction, as if that is really important to consumer spending. For those still holding out hope for the obvious political solution (Simpson, Bowles), I am afraid it will be 2013 before anything meaningful is done about much of anything.

It's not much better in Europe where the populous is outright antagonistic to the spending reductions that are needed to achieve deficit reduction. The Greeks complain about austerity, but they will need to be on austerity for over 300 years to make any progress at the rate they are going. And this while their government has to pay MID-DOUBLE digit interest rates to borrow money! Of course maybe in the context of Greek history, a few hundred years doesn't seem like a terribly long time.

Since there was such positive reader reaction to Professor Brad Smith's excerpted column in our last post, I thought I might excerpt a very interesting op ed from today's WSJ penned by University of Chicago Professor John Cochran. Entitled, "The Real Trouble With the Birth - Control Mandate," the opinion piece made points that impressed even this 21st century blogger who generally accepts a world with contraception, birth control, and other sinful practices. Here's a sampling:

"When the administration affirmed last month that church-affiliated employers must buy health insurance that covers birth control, the outcry was instant. Critics complained that certain institutions should be exempt as a matter of religious freedom...Critics are missing the larger point. Why should the Department of HHS decree that any of us must pay for "insurance" that covers contraceptives?

Insurance is supposed to mean a contract (covering) large, unanticipated expenses in return for a premium...There are good reasons that your car insurance company doesn't add $100 to your premium and then cover oil changes and that your health insurance doesn't charge $50 more per year and cover toothpaste. You'd have to fill out mountains of paperwork, the oil change and toothpaste markets would become less competitive and you'd end up spending more...

How did we get to this point? It all leads back to the elephant in the room: the tax deductibility of employer provided group insurance...The pre-existing condition crisis is largely a creature of tax law. You don't lose your car insurance when you change jobs...

Why did HHS add this birth control insurance mandate to its implementation of the new health care reform law? 'Because it promotes maternal and child health by allowing women to space their pregnancies,' says the HHS advisory panel. 'To increase access to important preventive services,' echoes White House Press Secretary Jay Carney. Notice the doublespeak of "access" and "cost." I have "access" to toothpaste because I have two bucks in my pocket and a competitive supplier. Anyone who can afford a cell phone can afford pills or condoms... HHS isn't limiting this mandate to the poor anyway. We all have to pay. The very poor typically don't have employer-provided insurance in the first place...It's not about access and it's not about insurance...Americans choose to spend their money on other things. They prefer a new IPod to a "wellness visit" to a doctor...There is a liberal dream that by mandating coverage, the government can make something free. Sorry. Every increase in coverage means an increase in premiums. Your employer could be paying you more in salary instead. Or, he could be lowering prices and selling his product to you and all consumers more cheaply...

Perhaps there is a social interest in subsidizing birth control? If so, this is an awful way to do it. The minute pills are "free," under insurance, the incentive for drug companies to come up with cheaper versions vanishes. So does their incentive to develop safer, more convenient, male-centered or nonprescription birth control. And by making pills free but not condoms, the government may inadvertently be contributing to an increase in sexually transmitted diseases...

The critics fell for a trap. By focusing on an exemption for church-related institutions, critics effectively admit that it is right for the rest of us to be subjected to this sort of mandate. They accept the horribly misnamed Patient Protection and Affordable Care Act, and they resign themselves to chipping away at its edges. No, we should throw it out, and fix the terrible distortions in the health-insurance and health-care markets.

Sure, churches should be exempt. We should all be exempt."

So the Super Bowl was an entertaining game, and the Giants narrow victory was about what we expected given that the Pats most potent offensive weapon this year was playing hurt and ineffective. Still it was ironic that on the final Hail Mary pass, Gronkowski was the guy who nearly came up with it. The Giants deserved to win the game though, and they certainly played very well from the point they were
7-7. One disappointment was the commercials, which I thought were mainly a festival of inanity. On the other hand, Madonna acquitted herself quite well for a middle aged lady, though I feel she did not displace Tom Petty from the top spot for Super Bowl halftimes.

At our party, someone actually asked who those people were singing America the Beautiful to open things up. I was incredulous. As a country music fan, how could it be that someone might not know who Miranda Lambert and Blake Shelton are? Of course I would have committed a similar faux pas had just about anyone come out to rap the venerable tune.

We're a little late on February jazz in NYC, but here are highlights still coming if you're so inclined. Birdland has John Pizzarelli Feb 28-March3. Reservations a must for most of those shows. Anat Cohen leads a quartet at Columbia University's Miller Theater this Saturday. Next weekend, the Mingus Big Band headlines at Jazz Standard. Also this weekend, Charles McPherson and the legendary Tom Harrell bring their quintet to Dizzy's Club Coca Cola while Benny Golson, 83 years young, leads a quartet at Jazz Standard. And of course all of the great regular fare at Birdland, Bar on Fifth, etc. throughout the week.

We have a lot of transactions to report. On January 30, we sold 100 shares of Barnes Group (B) at 25.60, a nice gain from the split adjusted 8.31 we paid on 3/22/99. The next day, we bought 500 shares of TAT Technology (TATT) at 4.50, a value buy of a stock that has so far been a big zero for us. On 2/1, we bought 300 more shares of IDT at 8.84, a "zero" buy. Since then, we have been selling: On 2/3, we sold 100 shares of Standex International (SXI) at 43.64. We paid 30.25 way back on 5/11/98. It must be said that previous management teams were pretty passive. On 2/6, we sold 200 more shares of Presidential Life (PLFE) for 12.04. We had bought them for 8.84 on 6/17/09. Today, we sold 300 more shares of Pulte Home, (PHM) which has been doing much better, but these were shares we had a huge cost basis because they were actually Centex shares that came in the merger. We paid an average price of 48 for these shares between 2005 and 2007, so this is a nice loss in the taxable account. Today, we also saw our ADPI shares tendered away, as American Dental Partners has been merged out of existence. We received 19 per share for all 1100 shares purchased in 2006, 2007, 2008 and 2011 at an average price of

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