The reset button

Have you ever had an experience that convicted you, illuminated your actions, and pushed you back on some course you had originally set?

When these experiences come from God they are just amazing and make me praise Him all the more. When I discover a particular "reset" on my own, I just kick myself. And when the reset comes from a friend, from realizing that by straying from my previous course I may have hurt someone I care about or caused them turmoil, I grieve for them and feel great remorse regarding my actions.

This afternoon something from one of my friends triggered this third kind of reset, and believe me, seeing how far and fast I can go from where I want to be when I try to take matters into my own hands just makes me all the more glad for God's grace and the constant advice/companionship of the Holy Spirit, and all the more committed to relying totally on the provision of my Father.

My friend - - I am deeply sorry, and thank you for (whether or not you intended to) setting me back on track.

In other news, I had a meeting/interview at the Tax Foundation this afternoon. Talking with several of the staff I discovered that one of their major points in the discussion on what attracts businesses to states is almost exactly the same idea I had and wrote a little about back in June. Now I really wish I had turned that thought piece into a full paper or article for MCPP. Good news though - it appears that I am moving from having "original" ideas that were first written about sixty years ago to simply not getting my ideas on paper fast enough to be the first. Guess I should write about my thoughts and ideas more, huh. :)

Went hiking with several friends yesterday. Fantastic day, so wonderful to be out and among God's forests, hills, and rocks again. The group hiked about 7.5 miles (one of the young ladies and I hiked about 1.3 miles more than the group). Here are a couple of pictures.


















Just a stream I really enjoyed hiking along. The goofy camera said the picture was blurry, but I like the picture the way it is.

Below is most of the group. The standing guy (Mike) and seated gal (Carolyn) both go to my church.
















And here's me, playing with the rocks again.

Behind the politics

More and more evidence continues to surface that we must give decentralized disaster relief more freedom in responding to crises. It seems as though worries over jurisdiction, licenses, and other bureaucratic nonsense hampered various small scale initiatives to provide assistance (article). Could there really be something to the wisdom of free-market economists' saying that a central authority has no hope of efficiently (or even workably) coordinating all relevant information and making the right decisions? Ok, so why do people clamor for stronger government response and protection after disasters? That's right, because then they do not have to take responsibility for their own actions and safety.

Apparently there is also a dispute over whether Amtrak was available to help move people out of the city (article), substantial emergency funds were unaccounted for or mis-spent before the fact (here and here), and my favorite of all religious groups in America - the envirowackos - strike again, causing more death and destruction (article).

More red tape (article). Just makes me upset.

No real profound economic thoughts, just been doing lots of reading lately - mostly about voting methods, rent-seeking, and various other facets of public economics and public choice. Played football (among other things) with friends from church yesterday, very sore all over today. So much fun....

YeeeeeHaaaaaaah!!!!!

I passed my Macro Economics Preliminary Exam!

I feel as though I should write something.

A possible bias may be a work here, but I find it rather sad that those most responsible (if anyone is) for the troubles in New Orleans most try to pass the blame while the one least responsible is the only one who has taken responsibility. I have actually heard people saying (and writing) that no blame rests on anyone except the President, while I strongly feel that, due to the evac plans that were not followed, the delays in requesting federal help (National Guard, etc...), and other various factors, what blame exists is to be found in lower levels of government.

Anything I could say has already been hashed to death, but you may have missed several points that I feel are crucial. First, the death toll stands at 659. Tragically high, yet not nearly the cataclysm that was initially feared. Second, to the best of my knowledge (and limited time), neither city evacuation plans and state response plans were followed completely. Third, everything that happened in New Orleans had been predicted and warned about for decades - expect perhaps the looting - and nothing was done by the "responsive and compassionate" leadership of the city and state. Fourth, it is the responsibility of the state governments to call for federal aid - especially when that aid involves military personnel. National Guard units are under the command of the governor. Neither was requested until after President Bush called and urged the governor to do so. Fifth, the talk about blacks being "targeted" in some way is preposterous. Look at the inner city of most urban areas. Anything that affects that inner city area is going to affect a greater number of "racial minorities" than "racial majorities".

There may be other salient points, and I make no assurances that the above is 100% correct, but it is true to the best of my knowledge given the limited time I've taken to be informed.

Now to some interesting economic thoughts - again, not original, but with my own spin.

First - the response of the free market, even though there are some tacit restrictions on prices, has been terrific. WalMart, Home Depot, cell phone providers, and other major retailers began preparing for the hurricane before it made landfall by stocking stores around the area expected to be hit with food, water, and relevant supplies (mobile cell towers and generators moved into the nearest safe zones in the case of the cell providers). Positive press was probably part of the story, but there was also money to be made. Survival items were given away, but markets existed for vastly increased quantities of "hurricane related but not survival" items.

Second - private relief efforts aside, the government spending/rebuilding/assistance/relief in disaster scenarios significantly decreases the costs of living in areas prone to disasters. My intelligent but non-economist mother saw this as a problem, and any economist worth his/her salt will heartily agree with her. Put in simple "economist speak", government disaster relief distorts the true costs of living in such areas, allowing more people to live in such areas than is best for the society as a whole. Instead of accounting for the true cost of potential ruin, they count on government relief to defray their costs. I have heard several economists who are concerned with the growing trend of increasing relief efforts and setting up special funds for victims of disasters. I agree with them. It is always easier, politically, to increase the amount of relief and be seen as "compassionate" than to decrease the relief and be decried as "heartless", "racist", and whatever else your political enemies will attempt to crucify you with. If we set up special funds for Katrina victims, al la 9/11 funds, where do we draw the line? At least with 9/11 you could draw a line at "victims of foreign attack during time of peace", though even that line is tenuous at best. Looking at things from a public choice perspective, it seems likely that more and more tax money will be spent on disaster relief of various kinds, and the costs of living in a disaster-prone area will continue to decrease.

Third - should we rebuild New Orleans? No, we should not rebuild it. Should it be rebuilt? Perhaps, but only if the costs of rebuilding are born by those who will live/work/have businesses there will we really know. Only then will we know if the benefit the residents expect to receive is greater than the costs of rebuilding.

Fourth - will the average income/wealth of New Orleans increase, stay the same, or decrease as a result of the hurricane? My bet is that average wealth will increase. If it is truly months before people are allowed back in to the entire city, I would expect that a lower proportion of low-income individuals will return to the city than the proportion of high and middle-income individuals.

All right, that's enough for tonight. I still have to read for class tomorrow. Do your homework, be willing to look beyond the major sources for news and information, and you won't need me.

NR

Enough!

In an ideal world, rescue would have come to all individuals trapped in New Orleans almost immediately, law and order would have been maintained, and the survivors would have been spared the trial that so many have born over the past five days. Instead, despite their best efforts (the US Coast Guard alone rescued 22,000 survivors and assisted with a further 9,400 rescues) the available rescue assests were overwhelmed by the magnitude of the disaster, worries about political correctness allowed looting and armed banditry to reach such a point that US military units have been conducting "combat operations" in the city, and the scale of flooding combined with the lawlessness contributed to the length of time required to extract all survivors taking shelter within the city. Yeah, things could have been done better, but I would argue that human factors have made things substantially more difficult than they otherwise would have been.

But wait!! What's this!? It looks as though, prior to the hurricane, all residents were warned that in the event that New Orleans was hit by a hurricane they (residents) would be responsible for their own safety and evacuation. Here's the article. Draw your own conclusions - I respect you enough to let you think for yourself.

Oh, and by now I am sure you've heard about Senator Clinton's request for a 9/11 commission style investigation into Katrina and the disaster response. Does that mean the commission would get to selectively ignore embarrassing revelations? It remains to be seen whether her request has true merit or whether it is a political maneuvering device to distract the administration.

'Nough for now. I was pleased to read that many of the Gulf refineries are beginning to restart operations, that crude oil prices have fallen below pre-Katrina levels, that we got through the Labor Day weekend without serious fuel problems, that various utility crews have made strides of progress in restoring service, and that engineers have been able to plug more of the levees around New Orleans and begin pumping operations.

Food for the hungry………..graduate student.

Yes, I went to the grocery store today. Buying food has become an unexpected pleasure, but also a little of a frustration as my mind glides over the many things I could make – if only I had the time, the reason (ie, guests), or the budget to purchase the ingredients. This economy we live in is truly amazing though. Bananas (fresh of course, and very tasty) were priced at $0.39 per pound. Stop and think about that for just a moment. What would be a reasonable real price for a pound of delicate fruit grown thousands of miles away, picked and rushed practically to your doorstep while still fresh, and available in such quantities that everyone has as much as they want?

How about less than five minutes of work by a low-skilled worker earning $5.50 an hour! Is that not incredible? Price is a marvelous signal of how resources need to be moved around in the market. Imagine if suddenly people began eating more bananas. At the low price of thirty-nine cents it would be easy to add several pounds of bananas to your weekly diet, and suddenly the grocery store would be running out or stock. Grocers would both increase the price they charge customers (but not too much or customers will shop elsewhere), which marginally reduces the poundage of bananas purchases, and the grocers would increase the price they pay their suppliers to provide a few extra boxes of bananas. By a similar mechanism, the increased money flowing to the suppliers would reach the growers (who may actually be one and the same, making the transmission of price very simple indeed), giving the growers - who until this time had been planting quantities of bananas and pineapples such that a box of one earned the same return as a box of the other - a very good reason to put more effort and land (resources of production) into growing bananas. Of course this story is highly simplified, but because prices were allowed to freely adjust at all levels, the increased demand for bananas was soon met with an increased supply. If price hadn’t been allowed to adjust shortages would have developed, there would have been “banana lines” in the grocery, and society would have been worse off by the value of the spent waiting in line.

Now let me jump to hurricane Katrina. Right off the bat, let me say that I am deeply sympathetic of the hurricane victims’ plight, they are in my prayers, and I understand that the nation should respond and help these many people get back on their feet. At this time I will not even touch the issue of to what level the federal government should be involved. Though it is true that the analysis of the costs and benefits of living in areas susceptible to natural disasters is badly distorted, that is a topic for some other time. However I would like to make a couple of “economist’s observations” about things I expect to see.

First, price controls. Refer to my story above. Now apply the same lesson to a shipment of generators headed for Alaska, output from a bottled water plant destined for Seattle, or plywood intended for developers in the Midwest. If the prices of these and many other goods that will be required in the hurricane-struck areas are not allowed to adjust, these and other goods intended for areas where life-as-normal continues will go where they are intended. Sure, the goods that are regularly supplied to the Gulf coast will continue to go there, but any increase in quantity will be slight regardless of how quickly stock sells out or how long the lines become. If prices are allowed to signal demand, generators, bottled water, plywood, and a thousand other goods will suddenly be freed-up from less vital requirements and made available to help with the recovery of the affected area. This reasoning also applies to the Atlanta gas panic on Wednesday. Though I hate to see gas prices going this high, I would rather see high prices than long lines at the station – even though I do have virtually no spare cash and lots of flexible time to wait in line.

Second, the economics of rebuilding. If anyone ever tells you that the rebuilding is somehow good for the economy, that it stimulates the economy, that it’s good for jobs, or any other such claptrap, they are wrong. As the great classical economist Fredrick Bastiat explains in his article, “What is Seen and What is Not Seen”, the resources that a society invests in restoring destroyed or damaged property are in essence wasted because they are expended merely to regain what was once had. So no, the rebuilding in the wake of Katrina is not a boon to the economy – resources and labor are merely being drawn from whatever other use they would have been put to in the absence of the destruction.

President Bush is absolutely right. It will take years to recover. My hope is that sound economic principles will be allowed to guide that recovery along as rapid a road as possible.

Well, I’m done writing for now. More later. Today I went to the VA DMV and officially became a Virginia resident. More on that too.

So yeah, 20 days later...

No, I haven't been sent on some secret venture to far off places. Instead I have been inward, in beyond the teeth and fingernails, through the epidermis, under the skeletal structure, into the very mind of man. What man? Why, me of course! Back in VA as of one week ago, but studying all the while for prelim exams. Last exam on Saturday. I promise I'll feed you shortly thereafter.

Published!

Ok, so it's not exactly the AER, but I'm happy nontheless. This is my first time published since writing about lasers and the future of warfare (don't laugh) for the Hillsdale Collegian. You can read my article for yourself here. I highly recommend poking around the rest of the Mackinac Center for Public Policy website as well.

"Think-tanking"

Just got out of a brainstorming session with a few of the other policy, communication, and advancement staff here at the Mackinac Center. The more I am here the more I begin to realize what a team has been assembled here. I'm off to Lansing (taking an early day) to attend the swearing-in of 6th US circuit court of appeals justice David McKeague, but you should check out the MCPP website.

A few more pictures

Here are the pictures of the "pit" and a couple more bursts.

More Fireworks Pics

Hello dear friends! Thought I'd share some pictures from the fireworks shoot on July 3rd at Delta Township. Some of the pictures are of setting up. You'll be able to see the racks and mortars that we hand-light and fire the shells from. Each tube contains one shell of either 3, 4, or 5 inches in diameter. The shells in the racks next to the fence are the finale. The finale is fused together so that several hundred shells can be fired with only a couple of lightings. I lit the finale in this show.

Davidson (16 yr old brother) took several pictures during the show. We are still learning the camera, so bear with us. Several of the pics show bursting shells. I hope these are obvious. A couple of the pictures show the environment we work in on the ground around the racks as we are lighting shells. In short it is loud with firing cues and the explosions of the lift charges, hot with our heavy gear and the flaming debris falling on us, busy with carefully thought-out but rapid movements, and such an incredible experience.

Enjoy!

fireworks

The fireworks shows that my family worked on this past week went very well. The show at Delta Twnshp on the 3rd went smoothly and normally. I shot the finale. On the fourth, setup was normal, but we had a significant amount of rain again (third year straight). I stood on the hill during the drenching to maintain the tarping and protect the shells, but even I was forced down when the lightning got just a little close. We only lost one shell in the main body during an hour of rain! Parks and Rec lost their nerve though, and the show was delayed 'till the fifth. Unfortunate this was, as I was unable to be there during the shoot or clean-up.

There were news-crews at both setups. Links to the shorts are below. Click the video link at the top of each article. One clip is entirely about fireworks, featuring Clayton, Davidson, Larry, and Roger Bonney. The second clip has several Russell boys in it and show some of the action on the hill in Lansing.

July 3rd - Delta, Sharp Park
July 4th - Lansing, the hill.

edit: belay that - the video seems to have been taken off the news site for the 3rd.
2nd edit: video now seems to be down from the 4th as well. Too bad.

Economically Speaking

Working here at the Mackinac Center for Public Policy, I have become convinced that Michigan needs to settle down. Or at least, that Michigan political executives and legislators must settle down. Instead of continually making and changing statements about what they intend to do to "fix" the state economy, there should be some sensible reforms enacted, then things should be left alone for a while. Thus would businesses, business owners, and entrepreneurs be shown that Michigan is stable enough to support long-term business investment. Instead, what we have right now is a climate where pols are proposing significant shifts to our business environment, the established rules are not always followed, and the future prospects of new businesses in Michigan are unstable. Instead of giving MEGA incentives and legislative handouts to those who would provide Michigan jobs we should provide them with a stable and predictable legislative base. Unfortunately, our governor and legislator seem intent on creating fault-lines.

Another imagination paper.

Hey gang. Probably the last of the short papers for a couple weeks at least - writing group is done for now and we'll see what I come up with over the summer. As opposed to the last paper, I'm actually reasonably happy with this one.

Imagination Required

Atop a slight ridge overlooking a large field a young officer sit on his charger. Briefly surveying the two armies locked in mortal combat, he couches his lance and leads his unstoppable cavalry in a charge to rupture the enemy’s lines. Suddenly he is brought up with a jerk as his horse goes down with a broken leg. As the charge sweeps around him an attendant brings up another horse. The young officer quickly remounts and leads his cavalry into the fray at the crucial time to turn possible defeat into decisive victory. After receiving the commendation of his general for his contribution to the victory, the young officer returns home to his loved ones.

Later that same evening the young officer’s mother is dismayed to find that the chain on his bicycle has ruined the cuffs of yet another pair of his pants.

What is imagination?

Nearly everyone is familiar with imagination in the context of childhood. In the role enabling and enhancing play it is truly important, it is the ability to create realities far beyond the merely physical, yet imagination does not lose its usefulness after one’s 18^th birthday, or even after the 98^th. Imagination remains incredibly important for any adult who hopes to solve the unexpected or create the unprecedented. It is seeing things where they are not. Imagination is that intangible ability that allows an individual to create something ‘new’ – a solution, product, or theorem that has never before existed. In particular, it is this last quality that prompts us to assume the other benefits of imagination as proven to be of value to the “grown up” world and focus on the value of imagination to economics.

Why is imagination important to economics and economists?

The economist who lacks imagination may be successful, able to analyze data and perform all the tasks normally expected of an economist. They may even be able to write papers that other people consider being helpful and contributory to the literature, but they will never make a truly revolutionary advancement of theory or ideas. The individual’s facility of imagination is what allows an answer to the query “what if…?” Though individual economists may be able to function without imagination, economics as a whole will wither if imagination ever fails. Lacking the spurs to analysis and research provided by imaginative innovations in economic theory, the discipline would quickly become stale, irrelevant, merely a method of analyzing the problems of the day with the methods of yesterday. Whereas, with imagination assisting theorists, economics as a whole drives ahead, seeking to analyze and understand the issues of today with the best methods of yesterday AND the new methods of tomorrow. For imagination to be available as a tool for the economists of tomorrow, it must be something they are accustomed to calling on throughout their lives. In today’s culture of provided entertainment, electronic and visual mediums that remove all necessity for imagination in entertainment and play, will there be a dearth of “imaginationists” in the future?

Is there a threat to imagination?

Cursory observation seems to reveal that every generation, every major shift in entertainment technology, has brought distraught cries that the children’s imaginations will atrophy. Robert E. Lee is known to have written home admonishing his wife to not allow their son access to many novels. It was Lee’s strong opinion that his son’s perspective on the world and his imagination would be weakened by reading accounts of another’s perspective of the world and life in a fictional book. Parents and elders have railed against television and more recent forms of childhood entertainment, decrying the lack of exercise and claiming a detrimental effect on young imaginations. Cave paintings probably met with similar criticism because they showed boys and girls images about certain aspects of life (hunting, skinning, etc) before the children experienced it themselves. Despite the concerns, from all appearances it would seem that the imagination of society has not suffered, with patents, inventions, and theories continuing to increase at an incredible rate. Economics in particular continues to develop new theories of markets and behavior, new ways to gather and analyze information, and new concepts of how mankind interacts with itself.

As economists, let us not distance ourselves from that little boy, riding his bicycle and waving a stick, who turns the tide of battle and wins the gratitude of a nation. We should all be so lucky.

slightly tardy

Ok, here's last weeks paper. I don't really like this one - it seems rather choppy and poorly written, but I don't have time to fix it right now. Yesterday's paper, the last for the semester, will follow later this week - prolly Friday.

The Role of the Selfish, Single, Working, Man

Who was the first person to purchase a DVD player? What brave soul paid hundreds of dollars for a device that could only play a very limited selection of movies? Were the first owners of DVD players willing to gamble that more movies would become available, despite witnessing the debacle of the videodisk player just a few years earlier? It seems rather amazing that people would make such a purchase. It is even more amazing that businesses would develop new technology and products that depart from previously established markets. There is risk. The company must start producing the new good before it can be purchased, cost must be incurred before the profit (maybe) arrives. The initial consumers must be willing to tolerate poor film selection, poor support, and an expensive piece of equipment that become obsolete very rapidly. Yet once enough people have purchased the good the benefits can be significant. Though this example specifically refers to DVD players, it can easily be seen how the same pattern has applied to many other goods.

A ‘networks effect’ is the term economists use to describe a good or process that experiences an increase in value as its use becomes more and more widespread. This also means that it is relatively less valuable to use/produce the good earlier rather than later. Companies would rather produce a good after it is seen to have market potential. Discerning consumers would rather wait to spend their hard-earned money until prices drop and use is sufficiently common to have raised consumer value to near its maximum level.

Companies can choose to develop new products or improve old. Each choice has its own risks and rewards. An old product has the advantage of an established market, but the risk that maybe something new will come along and supplant it. A new product has the advantage of perhaps developing a new market, replacing an old good, or gaining market share, but also has the risk of being, well, risky. Any new product carries uncertainty about whether it is a viable product.

So what gives a company the confidence to introduce a new good opening a new market such as some new gadget, equipment, or electronics device? Likewise, what possesses a consumer to purchase something so new no one really know how readily it will become a part of society? Why be the first to own a good that is expected to benefit from significant network effects, when at first the usage and network benefits will be rather small?

The answers to these questions are very intricate and require careful thought on the many factors involved, but I believe there is one element that has often been overlooked. This element can be summed up in two words. Boys. Toys.

Men, often relatively young and single but not necessarily either, seem to have a proclivity toward owning things that are “new” or “high tech” simply because they are. There is a strong flavor of competition in this – a man wanting either to have something before any of his friends does or wanting something because all of his friends already have it. Not all of this (generally) male behavior can be explained by competition though; a fair amount must be caused by just general male-nature. Gadgets, new “stuff, “toys” typically interest guys. All guys like new stuff that is high tech and interesting, but it is the single man, earning a decent wage, who can afford to indulge his taste for the latest new idea. Narrow selfishness causes him to purchase for his own enjoyment and to show off his new stuff for his friends, but in doing so he starts the ball rolling on network effects for the rest of us. It is the known existence of such consumers that give companies the confidence to delve into new products and new markets.

Back to the DVD player example. Starting from a small number of initial buyers, DVD makers have continued to develop and improve their products, numerous films have now been released on DVD, and we are well on our way to seeing the DVD burner become a normal method of recording data and video. Not bad for selfish young men with money to burn.

Meanwhile, in Fairfax

A young man was discovered permanently embedded in his Econometrics textbook this afternoon. Local police say it was most likely the result of studying indoors with temperatures reaching above 80* outside.

Today's random thought: Does business productivity go up in offices with windows on nice days? Or does productivity decrease?

Life is good, my God is good, friends are good, school is hard.

Private Military?

A [NR1] relatively recent addition to the American military industrial complex is the growth of the privatized military firm, or PMF. Classified in three major categories according to function, PMFs seek not to privatize the development and production of military goods, but to privatize the provision and application of military services. These military services range from logistical support and transportation, to training and advising, to armed para-military “security” forces and aerial reconnaissance or strike missions. There are even several foreign-based PMFs that have the capability to place a significant self-contained military combat unit on the ground anywhere in the world, complete with artillery and air support – all for the right price of course.

PMFs that openly perform combat duties have strong ancestral ties to the Swiss Guard and other organized mercenary companies of years past. Known as active or category one firms, the ex-Soviet Spetsnaz “Alpha Brigade” and the now-defunct “Executive Outcomes” of South Africa are prime examples. PMFs involved in training and advising of American and foreign military forces fall under the classification of advisory or category two PMFs. These are firms such as American-based MPRI, which in addition to running US Army ROTC programs has trained and developed the militaries of several foreign nations. Third category or administrative PMFs are firms such as Brown & Root Services, which has provided transportation, maintenance, and logistical support for the US military since its first contract in 1992.[1]

Though private military firms that hire themselves out to national governments for combat or training duties as an organized company of mercenaries is not a new idea, what the PMFs have begun to do in the United States is new and provokes, for perhaps the first time, the possibility of the United States privatizing a greater or lesser portion of its military combat power. Additionally, privatized military firms have become a very real part of the American military industrial complex as it stands right now by offering to provide certain capabilities more efficiently than the Department of Defense can provide for itself.[2]

Perhaps the most tantalizing possibility of the increased capability and usage of privatized military firms is the privatization of certain (or all) combat functions of the United States military. Militarily, a privatized system may be workable if the expectations for usage of the American military were radically changed to focus much less on overseas deployment and more on protection of the physical United States and our direct interests. Though a system in which, for example, Ford, Lockheed, and John Deer would compete to provide the Department of Defense with a combat wing of unmanned combat aerial vehicles would provide undeniable economic benefits, efficiencies, and more rapid adaptation of new technology, the concerns of such a system would outweigh any benefits. Questions could arise as to whether the private combat forces owed allegiance to the United States or to their direct employer. Other nations utilizing private combat forces have already experienced problems with “agent principal abandonment”, situations in which the hired forces either leave before contract fulfillment or pursue their own objectives to the detriment of the hiring nation[NR2] .[3]

The growth of PMFs will continue as companies show interest in developing or purchasing military components as a form of diversification. Evergreen Helicopter Services is an example of a firm that earns a large part of its income by filling civilian consumer needs. Evergreen provides helicopter services for firefighting, construction, rescue, and many other reasons. In addition to its civilian fleet, Evergreen maintains a capability to fly missions in support of peacekeeping operations – such as reconnaissance, transport, and even light attack. In another example CSC, a computer security and consulting firm, has purchased DynCorp, a para-military security firm. Here we see a firm with an established market in one area looking to add a military component, allowing it to now provide security services for physical as well as informational property. Before the era of privatized military firms Henry Ford did much the same thing by seeking certain military contracts for Ford motor company.[4]

Regardless of the future role of the privatized military firm, proper integration of the private and the governmental will be crucial to ensuring that PMFs are a factor that strengthens, not weakens, the armed forces of the United States in their role to protect the freedoms of the American people and to achieve success in the national military goals.

---

[1] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 138.

[2] Ibid, 133.

[3] P.W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry, (Ithaca: Cornell University Press, 2003), 159.

[4] Ann Markusen; Yudken, Joel, Dismantling the Cold War Economy. (Basic Books, 1992), 46.

---

[NR1]PMF chapter.

[NR2]MAIN ARGUMENT (tentative):

National defense need not be a purely public good.

It is conceivable that our nation would shift to reliance on 1^st degree PMFs.

This would force a more precise use of force away from the borders of the US

Tactical Pro; greater flexibility and adaptability of new methods / tech.

Tactical Con; less resilience to attrition.

CNTRPNT – both money AND “home” would motivate.

On defense yea, but not abroad.

US of A would be forced to severely restrict overseas deployments.

Just a short one, yeah right...

Hey folks! What a wonderful Saturday I had! Sunday wasn't too shabby either. Anyway, contact me if you want details.

So, I didn't post my writing group paper last week. I'll post last week's now, and this weeks in a day or two. Have fun Dame und Herr.

Is Michigan job loss really such a puzzle?

For over one hundred years, Michigan was an industrial and productive capstone. A wealth of natural resources launched Michigan to the top of lumber, copper, and iron production. The Michigan business environment allowed several major entrepreneurs to take root and flourish. Kellog, Dow, Ford, R.E.Olds, these men and others like them carried Michigan to a position of industrial and technological leadership. As recently as the mid 1990s, the city of Lansing produced more cars than any other city on earth.

Yet now Michigan has the 36^th most hostile business environment, with business taxes 50% higher than the average. Though still possessing key chemical and industrial capability, Michigan is certainly in a downward spiral. Unfortunately, the governor’s office is taking the route of government intervention and micromanagement, activities that do nothing to reassure businesses that the state government will not change the rules mid-game or raise taxes to pay for the next “great idea”.

Two instances in particular bear review, one because it is recent, and the other because of the sheer magnitude of the repercussions that can be expected.

The most recent ‘great idea’, and a prime example of the micromanagement that has become typical of this administration, involves further expenditure of state Medicaid money to create jobs in assisted living facilities. On April fifth, two thousand and five, WZZM News reported on Granholm’s "Jobs Today Jobs Tomorrow" initiative.[1] In a nutshell, this initiative would pay an additional five dollars per day for each Medicaid recipient residing at a facility. The governor intends that this money be reinvested in new construction and new staff, turned around and reanimated as additional Michigan jobs. Granholm is quoted in the article as stating that this program would provide approximately an additional $91,000 a year for each fifty residents on Medicaid at a facility. Though the program is labeled by the governor’s office as “revenue neutral”, it is unclear where, in a state budget $375,000,000 in the red,[2] the money to pay this extra $1800 per person would come from. Perhaps most dismayingly of all, Granholm is quoted in the article as saying that this initiative is anticipated to create five thousand jobs over the next three years, many of them temporary jobs relating to construction, but some nurses and other permanent staff. For a project that will currently cost an estimated $638,750,000 per year,[3] why settle for merely five thousand jobs of uncertain duration? What would happen instead if the state did not spend that money at all, but demonstrated restraint in tapping the pockets of residents and taxpayers – an effect, that if maintained, would surely increase the willingness of employers to locate in Michigan. Touted as a quick, temporary, fix, I see “Jobs Today Jobs Tomorrow” as instead becoming a permanent part of state Medicaid, ever more expensive as the allotment is pushed higher and higher.

The second example deserves more space than it will receive, but has also already been the subject of many writings and so will only be very briefly discussed here. 690 acres of land in southeast Michigan were put up for auction with two legislated requirements – that the bid accepted must equal or exceed estimated market price, and that the state retain water/mineral rights. Of the two bids; one met the criteria and one did not. The appraised value was $11.5M, the high bid was $25M, and the low bid of $9M was also contingent on obtaining all water/mineral rights. Despite the no-brainer that would seem to be dictated by constraints of the legislature, the governor’s office proceeded with selling the land to the low-bidder, supported by new legislation passed after the bidding.[4] Not surprisingly, the high-bidder filed suit, and, though rebuffed once, is continuing to appeal.[5]

Though there is still hope that the high-bidder will prevail, this incident has sent an unfortunate message to corporations; the only sure way of starting or expanding business in Michigan is to be the politically favored party, otherwise you may find the rug pulled out from under you. Businessmen do not like unpredictability. Nor do they like seeing signs that a state government cannot keep is hands in its own pockets. Result: Do business – and provide jobs – elsewhere.

---

[1] http://www.wzzm13.com/news/news_article.aspx?storyid=38387

[2] http://www.milhs.org/Media/EDocs/HandoutOprFeb05.pdf

[3] 350,000 eligible residents x $1825 per person, per year.

[4] http://www.mackinac.org/article.asp?ID=6946

[5] http://www.detnews.com/2005/autosinsider/0504/08/C01-144004.htm

Hooo RAH!

I have now been recognized in an academic paper for the first time! True, it is in a footnote, for help given with research, but still -- -- once this paper is published.... Of course, I expect that this will be only the first of many that will have my name attached to them in some way, shape, or form. Dr. Hanson has even suggested that I work on something similar to this piece.

Oh yeah, I guess you'd want a link. http://hanson.gmu.edu/PAMpress.pdf

Following up my last post.

Game theory and the Schliefen Plan: Part Two

Assuming that both Germany and Russia were rational actors at the start of World War One, Germany must have had a perspective on its payoffs for going to war with Russia in support of Austria versus not going to war and allowing Austria to be defeated that caused “war” to be the rational choice at the time. Despite the horror of war, and in hindsight the particular horror of World War One, Germany acted on the time-tested practices of sticking with good, reliable, military allies (Austria) and not allowing timeworn enemies (Russia) to increase its sphere of military and diplomatic influence – which a military victory over the Austrians would certainly do. Additionally, at the start of World War One very few military minds had any idea of the military quagmire that would result from the first major applications of chemical weapons, new artillery weapons and techniques, the massed use of machineguns, and the contrary fortunes of war. However, in deciding to go to war with Russia, Germany acted as if expecting that no other nation would use the same thought process and logic in deciding whether to declare war on Germany as a result of German military actions.

The Schliefen Plan was the plan by which the entire German nation would go to war. As a result of the political and military climate, the only conceivable situation was one in which Germany would find itself fighting both France and Russia simultaneously. As France was expected to be able to mobilize an effective army and invade Germany sooner, the Schliefen was fully structured around the idea of swinging all possible German military might against France and knocking them out of the war within six weeks, then rapidly moving the German army to the eastern front and confronting Russia. Such was the inflexibility of the Schliefen Plan that if Germany found itself facing imminent conflict with Russia, they would be forced to attack France. This firm commitment was expected to give France cause to exert pressure on their ally, Russia, to stay in line.

So when Germany decided to honor their treaty obligations with Austria, they found themselves virtually required to attack France and force a peace as quickly as possible – though France was not initiating conflict nor even threatening to do so (why not just skip to the “move the army east” phase I don’t understand). The German staff felt that their best chance at a quick victory in France lay in attacking through Belgium.

Though the Belgian people and king had taken a strong posture of fighting to maintain complete sovereignty, Germany expected that as German troops actually crossed the border the Belgian government and military would accede to German demands for uncontested passage through the little nation. After all, the whole point of such posturing is to keep other nations out, not cause the devastation of your own nation by refusing to allow passage once the invader is already in, right? Game theory sub-game perfection would say yes, once it is clear that your initial strategy has not worked, do that which is most advantageous. Instead, Belgium fought – and they did not fight alone.

Belgium had recently signed a treaty with Great Britain stating that the British would both respect Belgian neutrality/sovereignty and exert military force to ensure others did as well. Despite knowledge of this treaty, the Germans, using game theoretical reasoning similar to that above, in no way expected England to actually go to war over “a mere scrap of paper”, instead expecting that England would back down from the treaty once Germany actually invaded Belgium and Great Britain saw that war was reality. In short, though the Germans seem to have violated basic precept of game theory in going to war, they expected both Belgium and England to adhere to sub-game perfection and allow Germany to march through Belgium unopposed.

What this tragic episode from history show us it not a failure of game theory, but rather, assuming rational actors, that incentives and perceived payoffs must be clearly understood by all involved. Information is key. For the Germans, it made the difference between a quick victory over France and a long drawn-out catastrophic defeat.