Saturday, July 29, 2006

So Communists Aren't Bullies?

Stuart K. Hayashi


When I was at the theater, I saw a trailer for a movie called The Ant Bully that I found rather ominous.

At first, I was a bit hopeful for the movie, because the computerized drawings looked remarkably similar to the drawings from the Woody Allen cartoon Antz, which was surprisingly pro-individualist.

But the preview made The Ant Bully look like the opposite. When the little boy becomes ant-sized, the ants teach him the values of collectivism and about putting "Society" above the individual.

Sure enough, the only Hollywood movie reviewer to see through that kind of trite propaganda is James Ward of the Louisville, KT, Courier-Journal. He writes,

Once the boy is downsized to an ant, he learns such valuable lessons as worshipping an ant queen, the importance of becoming an unquestioning member of a team and subverting your needs for the good of the whole. Of course, that good is determined by, you guessed it, the queen.

If you think this sounds like some sort of totalitarian society -- Stalin's Soviet Union, for example -- you'd be right. All that's missing is a bunch of stern secret police ants that drag anyone who doesn't subscribe to the colony's groupthink off to the ant version of Siberia.

Oh, well. It's kind of sad that only one reviewer can see through collectivism. But it's better than none.

I guess we know which movie critic wouldn't be too popular in that aforementioned ant colony.


FOLLOW-UP from Thursday, August 3, 2006: Oh, it looks like Objectivist movie critic Scott Holleran also took the movie to task for its propaganda.

It is for that very reason that most critics love it.

Peter Canavesse and Eric D. Snider praise the movie on account of its hamfisted preachiness.

Fortunately, Justin Chang and Lou Leminick don't.

Wednesday, July 26, 2006

Asking Tali

Stuart K. Hayashi

In today's Honolulu newspaper, I saw an Associated Press article about the U.S. federal Government Accountability Office (GAO) ["government accountability?"; talk about oxymorons] calling for an audit of American Samoa's judicial system.

I found a similar article on that here.

When I went to Google News to find sites about this, I came across other strange news items about American Samoa.

Like this:

A bill in American Samoa says sponsors of foreigners allowed into American Samoa will have to pay a daily fine if those foreigners are found to be overstayers.

The Senate President, Lolo M. Moliga, has outlined the bill which he says should curtail and hopefully eliminate the ongoing problem of overstayers.

Tali, what's the story behind this?

Interesting that the Senate President's first name is "Lolo." You know what that means in Hawaiian, don't you?

And lots of odd news bits are coming out about the American Samoan Power Authority (ASPA) you wrote about.

Today -- Wednesday, July 26, 2006, this came out:

American Samoa’s police department has been asked to investigate allegations against John Marsh, the former acting CEO of the American Samoa Power Authority (ASPA), the government-owned utility that operates and manages electric, water, sewer system and trash collection in the territory.

The allegations against Marsh, who is also ASPA’s chief financial officer, surfaced two weeks ago when Common Cause American Samoa president, Dr. Trudie Sala, in a July 5th letter informed Gov. Togiola Tulafono that Marsh allegedly diverted more than $2,8000 worth of materials purchased with ASPA funds to his home in Aua Village.

And then this happened today as well:

The chief operations officer for the American Samoa Power Authority Fonoti Perelini Perelini has been sacked.

Fonoti has confirmed that he was handed a termination letter signed by the Chairman of the ASPA board when he arrived from Samoa yesterday.

Tali, what's going on? Could you please enlighten me and everyone else about this? This is all very esoteric news for those of us who are not from American Samoa but are neverthelss rivted to news about it thanks to your writings.

So Taligraph, what's the story?

THE BOARD OF ALL BOARDS

Another legislative session means another round of meddling by the Senate into our semi-autonomous agencies. Obviously, there is no need for an ASPA board, a LBJ board, a board of education, a DBAS board, or an ASTCA board. They only serve a nominal purpose; the Senate has declared upon itself the board of all boards.

Instead of mere oversight, Senator Moliga aims at setting actual policy at ASPA. Through his new tax proposals, the Senator plans redistribute wealth from two sectors of the economy to subsidize another: the solid waste division. All of this is a result of his disagreement with the ASPA board’s decision to use profits to lower the price of other consumer needs. Therefore, the Senator seeks to use his senatorial position to impose his vision on the ASPA board and the rest of us.

And it was the Senate President who said that “overcharging the people for one activity so the cost of other unrelated activities are defrayed is morally and ethically wrong.” Then how is the overcharging of our construction projects and our automobiles with his new taxes to “defray” the costs of the ASPA solid waste division not “morally and ethically wrong” as well?

In Lewis Wolman’s “UTILITY RATE COMPARION”, he shows us how the local governments in Colorado charge for services. You pay for what you receive. If the Senate doesn’t want one activity subsidizing another, then fees for everything from water to sewer should rise to reflect their true costs.

Before the Senate makes charges against other government entities, it needs to clean up its own backyard first. If the ASG needs new revenue sources, then the Senate should first propose taxing their own 100% increase in Fono allowances before demanding that the people give it more of our money. Moreover, how can the Senate criticize how ASPA runs its business when the Fono can’t control its own budget? Look at the out-of-control spending at the Political Status Commission. If the Senate didn’t have the power to tax, its clubhouse would have been out of business a long time ago.

Tuesday, July 18, 2006

Freedom vs. Unlimited Majority Rule, 7/18/06

America helped empower Hezbollah by confusing the idea of freedom, which rests on the principle of inalienable individual rights, with the idea of democracy, which rests on the principle of unlimited majority rule.

Peter Schwartz


Hezbollah, which has been waging war on Israel, and America, for years, is the immediate cause of the current fighting in the Middle East. The broader cause, though, is the United States government.

When Washington declared that freedom could be advanced by elections in which Hezbollah participated, and by which it became part of Lebanon's government, we granted that terrorist entity something it could never achieve on its own: moral legitimacy.

We gave legitimacy to Hezbollah -- just as we did to such enemies as Hamas in the Palestinian Authority and the budding theocrats in Iraq and Afghanistan. These people all came to power through democratic elections promoted by the U.S. But a murderer does not gain legitimacy by getting elected to the ruling clique of his criminal gang -- nor does anyone gain it by becoming an elected official of an anti-freedom state.

The premise behind the Bush administration's policy is the hopeless view that tyranny is reversed by the holding of elections -- a premise stemming from the widespread confusion between freedom and democracy.

The typical American realizes that there ought to be limits on what government may do. He understands that each of us has rights which no law may breach, regardless of how much public support it happens to attract. An advocate of democracy, however, holds the opposite view.

The essence of democracy is unlimited majority rule. It is the notion that the government should not be constrained, as long as its behavior is sanctioned by majority vote. It is the notion that the very function of government is to implement the "will of the people." It is the notion espoused whenever we tell the Lebanese, the Iraqis, the Palestinians and the Afghanis that the legitimacy of a new government flows from its being democratically approved.

And it is the notion that was categorically repudiated by the founding of the United States.

America's defining characteristic is freedom. Freedom exists when there are limitations on government, imposed by the principle of individual rights. America was established as a republic, under which the state is restricted to protecting our rights. This is not a system of "democracy." Thus, you are free to criticize your neighbors, your society, your government -- no matter how many people wish to pass a law censoring you. You are free to own your property -- no matter how large a mob wants to take it from you. The rights of the individual are inalienable. But if "popular will" were the standard, the individual would have no rights -- only temporary privileges, granted or withdrawn according to the mass mood of the moment. The tyranny of the majority, as the Founders understood, is just as evil as the tyranny of an absolute monarch.

Yes, we have the ability to vote, but that is not the yardstick by which freedom is measured. After all, even dictatorships hold official elections. It is only the existence of liberty that justifies, and gives meaning to, the ballot box. In a genuinely free country, voting pertains only to the means of safeguarding individual rights. There can be no moral "right" to vote to destroy rights.

Unfortunately, like President Bush, most Americans use the antithetical concepts of "freedom" and "democracy" interchangeably. Sometimes our government upholds the primacy of individual rights and regards one's life, liberty and property as inviolable. More often, however, it negates rights by upholding the primacy of the majority's wishes -- from confiscating an individual's property because the majority wants it for "public use," to preventing a terminally ill individual from ending his painful life because a majority finds suicide unacceptable.

Today, our foreign policy endorses this latter position. We declare that our overriding goal in the Mideast is that people vote -- regardless of whether they value freedom. But then, if a religious majority imposes its theology on Iraq, or if Palestinian suicide-bombers execute their popular mandate by blowing up Israeli schoolchildren, on what basis can we object, since democracy -- "the will of the people" -- is being faithfully served? As a spokesman for Hamas, following its electoral victory, correctly noted: "I thank the United States that they have given us this weapon of democracy. ... It's not possible for the U.S...to turn its back on an elected democracy." All these enemies of America -- Hamas, Hezbollah, the Iranian-backed Shiites -- abhor freedom, while adopting the procedure of democratic voting.

If we are going to try to replace tyrannies, we must stop confusing democracy with freedom. We must make clear that the principle we support is not the unlimited rule of the majority, but the inalienable rights of the individual. Empowering killers who happen to be democratically elected does not advance the cause of freedom -- it destroys it.



Peter Schwartz is a Distinguished Fellow at the Ayn Rand Institute ( www.aynrand.org ) in Irvine, California. The Institute promotes Objectivism, the philosophy of Ayn Rand -- author of Atlas Shrugged and The Fountainhead.



Copyright © 2006 Ayn Rand Institute. All rights reserved.

This release is copyrighted by the Ayn Rand Institute, and cannot be reprinted without permission except for non-commercial, self-study or educational purposes. We encourage you to forward this release to friends, family, associates or interested parties who would want to receive it for these purposes only. Any reproduction of this release must contain the above copyright notice. Those interested in reprinting or redistributing this release for any other purposes should contact media@aynrand.org .


Thursday, July 13, 2006

Net Neutrality vs. Internet Freedom

Alex Epstein


America's leading Internet service providers (ISPs) have spent many years and billions upgrading their transcontinental networks, which constitute the backbone of the Internet. Now they are eager to profit by offering new, compelling services. One plan is to give certain websites high priority on their data, so as to guarantee "quality of service" -- the speed, frequency, and reliability with which data is delivered. This would enable content providers to offer high-quality live TV and videoconferencing or advanced remote medical monitoring, without the delays and unreliability that plague the Internet today. Unfortunately, data prioritization is fiercely opposed by advocates of "Net Neutrality," who claim paradoxically that freedom and innovation demand that companies not be free to make this innovation.

Net neutrality is the idea that ISPs should not be able to favor some types of data over others; their networks must be "neutral" among all the data they carry. Net-neutrality supporters claim that if ISPs are free to give preferential treatment to certain websites' data, they might drastically slow down un-favored or less-wealthy websites, diminishing their ability to offer content and make innovations. A prominent net-neutrality coalition cautions: "If you are an aspiring entrepreneur, you may be impeded from providing the 'next big thing' on the Internet."

But such scenarios are nonsensical. For any of the nation's competing ISPs to offer customers slow, patchy, let alone nonexistent access to the websites they seek to visit, would be commercial suicide. As for innovation, websites are free to continue using standard, non-prioritized Internet service. The fact that this would be slower than premium service does not mean that it would be slow, just as UPS's decision to offer overnight delivery did not lead them to suddenly degrade their Ground shipping. Premium Internet services would enable, not stifle, innovation, by giving websites creative options they did not have before.

The specter of ISPs offering glacial access to certain websites is a smokescreen, designed to obscure the net-neutrality movement's goal: preventing anyone from having superior, unequal access to customers. In the minds of net-neutrality advocates, the Internet is a collectively owned entity, to which all websites have an equal claim and are entitled "equal access." As the title of a leading net-neutrality group proclaims: "It's our Net."

But it isn't.

The Internet is not a collectivist commune; it is a free, voluntary, and private association of individuals and corporations harmoniously pursuing their individual goals. (While it began as a government-funded project, the Internet's ultra-advanced state today is the achievement of private network builders, hardware companies, content providers, and customers.) Because the Internet is based on voluntary association, no one can properly compel others for their ad space, bandwidth, publicity -- or data prioritization. Those who create these values have the right to use and profit from them as they see fit. Google has no more right to demand that Verizon be "neutral" with its network than Verizon has a right to demand that Google be "neutral" with its coveted advertising space.

The only thing equal about the participants on the Internet is that all have equal freedom to deal with others voluntarily. This means they are equally free to compete for the bandwidth, dollars, and talents of others -- but not entitled to an unearned, equal portion of them.

It is the freedom of participants on the Internet to offer and profit from whatever products, services, or content they choose that has made it such a phenomenal source of content and innovation. Net neutrality would deny ISPs that freedom. It would deny their right to engage in creative, innovative, and profitable activity with those networks -- in the name of those who demand their bandwidth, but are unable or unwilling to earn it in a free market.

The widespread support for net neutrality among successful Internet companies -- including Google, Microsoft, Yahoo, eBay, and Amazon -- is short-sighted and contemptible. These companies, which have benefited greatly from the unimpeded freedom of the Internet, are now trying to deny the same freedom to innovative ISPs and ambitious competitors under the egalitarian banner of "equal access." This is an invitation for any clever moocher to demand "equal access" to their hard-earned resources; indeed, Google is already being sued because its proprietary search engine allegedly gives "unfair" rankings to certain companies.

The Internet is one of the great bastions of freedom and innovation in our civilization. Let us keep it that way by rejecting "net neutrality."


Alex Epstein is a junior fellow at the Ayn Rand Institute in Irvine, CA. The Institute promotes Objectivism, the philosophy of Ayn Rand -- author of Atlas Shrugged and The Fountainhead. Contact the writer at media@aynrand.org .


Copyright © 2006 Ayn Rand Institute. All rights reserved.

This release is copyrighted by the Ayn Rand Institute, and cannot be reprinted without permission except for non-commercial, self-study or educational purposes. We encourage you to forward this release to friends, family, associates or interested parties who would want to receive it for these purposes only. Any reproduction of this release must contain the above copyright notice. Those interested in reprinting or redistributing this release for any other purposes should contact media@aynrand.org .


Nooooooooooooooooooooo!!!! :-O

Stuart K. Hayashi

Note: This post originally appeared in The Fiftieth Star, as you can see here.


Atlas Shrugged is being made into a movie and the front runner for the starring role is . . . Angelina "The Lips" Jolie (referral from: Brown 7/13/06)

I recall Atlas Shrugged explaining that it was wrong for the federal government to extort people's money and then send it to impoverished people's republics.

Angelina Jolie famously demands that the federal government extort your money and then send it to the Third World.

And she makes that demand after having read and publicly praised this book.

Why is this woman getting the role? (Because she has more box-office clout than anyone else; that's why.)

I know that an actress doesn't necessarily have to agree with her character's philosophy, but . . . geez Louise!

What next? How about casting Al Franken as John Galt?

And how about a cameo from Prof. Cornel West as Hugh Akston?

Wednesday, July 12, 2006

Why Government Can't 'Price-Gouge': A Reply to Tali Satele's 'We Need Cheaper Government'

Stuart K. Hayashi

Note: This is a revised version of my Comment posted on "We Need Cheaper Government."


Hey, Taliphone call,

You write,

The biggest price gouger in American Samoa is the ASG. The taxes mainland Americans and locals pay is the price the ASG charges the people. . . . We need cheaper government. We can achieve it and should demand it now.

However, most people in the United States say that private companies "overcharging" customers is undeniably worse than the government overcharging taxpayers.

Why is that? Because most Americans judge people according to their stated motives rather than by the actual nature of their conduct.

Note that Mao Tse-tung killed even more people than Hitler did. Yet Mao is seldom regarded with the same level of abhorrence. Some years ago, Manoa's Revolution Books Store (which certain University of Hawaii professors coax their students into shopping at)sold T-shirts with Mao's face on them. Do you think people would be as tolerant of shirts with Hitler's visage?

Why does Mao still have a relatively positive reputation? Because of motives. Hitler murdered people for elitist reasons for his own benefit. Mao murdered people in the name of communism, which is considered a moral ideal because it is unselfish.

In short, people will make many excuses for an atrocity -- including murder or theft -- if its performed for unselfish purposes.

Private for-profit companies are created primarily to benefit their private owners. The government, meanwhile, is created for the purpose of helping "all of us."

That particularly applies to a democracy. In a democracy, who is the government? We are! We, The PeopleTM!

Thus, when the government taxes us, it is simply us taking care of ourselves by paying ourselves for amenities necessary for all our well-being. The collective "we" wins out.

When private entrepreneurs overcharge us, they do so for their own selfish gratification. When the government overtaxes us, it does so for the sake of benefiting everybody to provide public goods like fire protection and roads.

The government collective is supposed to represent everyone; private companies only represent their individual shareholders -- and we, being middle-class schlubs, probably don't own any stock!

When private companies "price-gouge," it only benefits them. When the government, in your words, "price-gouges" us, it is still on behalf of us.

That is the psychological difference. We don't side with "them"; we side with "us."

I believe that people will become more enlightened about this when they first realize:

(1) The government is not "us" and it doesn't "represent us all"; it only represents the will of those in power.

(2) There is no collective "us". As Margaret Thatcher understood, " 'Society' does not exist. There are only individuals" who independently choose if and when they will interact with one another.

(3) People should not be judged primarily by motives, but the manner in which they conduct themselves while seeking their goals. Thus, no unselfish intention can ever justify an immoral act of brutality like extortion.

WE NEED CHEAPER GOVERNMENT

The biggest price gouger in American Samoa is the ASG. The taxes mainland Americans and locals pay is the price the ASG charges the people. Mainland Americans have already started to refuse to pay ASG’s high prices leaving the burden to us. The question we should now be asking is not where are we going to find the money to pay for these high prices. It’s why should the ASG be so damn expensive in the first place?

Can we do without the 100% increase in Fono allowances? Can we do without the Segaula or the MV Sili when there are plenty of competitors servicing the Manu’a islands today? Should we continue to bear the burden of money losing assets like the Rainmaker Hotel and the Golf Course? Do we really need to pay for such a large government workforce when more money goes towards payroll rather than actual services to the people?

The island kingdom of Tonga is leading the way in making their government cheaper to its citizens. Unlike American Samoa, the Tongans don’t expect Uncle Sam to come bail them out and to hand out welfare. They’re facing the hard political choices and lowering the price of government on their own.

They’ve reduced with some success the size of the government workforce. Now they’re trying to sell its shares of its government bank, its phone company, the Post Office and the Tonga Chronicle newspaper. We can do the same.

Where is our politicians’ tough rhetoric and moral indignation when it comes to high price of our own fat government? Where are the Governor and the Senate President when it comes to grabbing the headlines against price gouging and the over-charging by the government of its own people?

We need cheaper government. We can achieve it and should demand it now.

Friday, July 07, 2006

The Unlearned Lesson of Ken Lay and Enron

Alex Epstein


Former Enron chairman Kenneth Lay has just died, just over a month after being convicted of fraud, and almost five years after his company's cataclysmic collapse. The common perception of Lay is that he and other Enron leaders brought about the company's fall because, eager to make money, they schemed to bilk investors. The ethical lesson, it is said, is that we must teach (or force) businessmen to curb their selfish, profit-seeking "impulses" before they turn criminal.

But all this is wrong.

Enron was not brought down by fraud; while the company committed fraud, its fraud was primarily an attempt to cover up tens of billions of dollars already lost -- not embezzled -- in irrational business decisions. Most of its executives believed that Enron was a basically productive company that could be righted. This is why Chairman Ken Lay did not flee to the Caymans with riches, but stayed through the end.

What then caused this unprecedented business failure? Consider a few telling events in Enron's rise and fall.

Enron rose to prominence first as a successful provider of natural gas, and then as a creator of markets for trading natural gas as a commodity. The company made profits by performing a genuinely productive function: linking buyers and sellers, allowing both sides to control for risk.

Unfortunately, the company's leaders were not honest with themselves about the nature of their success. They wanted to be "New Economy" geniuses who could successfully enter any market they wished. As a result, they entered into ventures far beyond their expertise, based on half-baked ideas thought to be profound market insights. For example, Enron poured billions into a broadband network featuring movies-on-demand -- without bothering to check whether movie studios would provide major releases (they wouldn't). They spent $3 billion on a highly inefficient power plant in India -- on ludicrous assurances by a transient Indian government that they would be paid indefinitely for vastly overpriced electricity.

The mentality of Enron executives in engineering such fiascos is epitomized by an exchange, described in New York Times reporter Kurt Eichenwald's account of the Enron saga, between eventual CEO Jeff Skilling and subordinate Ray Bowen, on Skilling's (eventually failed) idea for Enron to sell electricity to retail customers.

An analysis of the numbers, Bowen had realized, "told a damning story ... Profit margins were razor thin, massive capital investments were required." Skilling's response? "You're making me really nervous . . . The fact that you're focused on the numbers, and not the underlying essence of the business, worries me . . . I don't want to hear that."

When Bowen responded that "the numbers have to make sense . . . We've got to be honest [about whether] . . . we can actually make a profit," Eichenwald recounts, "Skilling bristled. 'Then you guys must not be smart enough to come up with the good ideas, because we're going to make money in this business.' . . . [Bowen] was flabbergasted. Sure, ideas were important, but they had to be built around numbers. A business wasn't going to succeed just because Jeff Skilling thought it should."

But to Skilling and other Enron executives, there was no clear distinction between what they felt should succeed, and what the facts indicated would succeed -- between reality as they wished it to be and reality as it is.

Time and again, Enron executives placed their wishes above the facts. And as they experienced failure after failure, they deluded themselves into believing that any losses would somehow be overcome with massive profits in the future. This mentality led them to eagerly accept CFO Andy Fastow's absurd claims that their losses could be magically taken off the books using Special Purpose Entities; after all, they felt, Enron should have a high stock price.

Smaller lies led to bigger lies, until Enron became the biggest corporate failure and fraud in American history.

Observe that Enron's problem was not that it was "too concerned" about profit, but that it believed money does not have to be made<: it can be had simply by following one's whims. The solution to prevent future Enrons, then, is not to teach (or force) CEOs to curb their profit-seeking; the desire to produce and trade valuable products is the essence of business -- and of successful life.

Instead, we must teach businessmen the profound virtues money-making requires. Above all, we must teach them that one cannot profit by evading facts. The great profit-makers, such as Bill Gates and Jack Welch, accept the facts of reality -- including the market, their finances, their abilities and limitations -- as an absolute. "Face reality," advises Jack Welch, "as it is, not as it was or as you wish... You have to see the world in the purest, clearest way possible, or you can't make decisions on a rational basis."

This is what Enron's executives did not grasp -- and the real lesson we should all learn from their fate.


Alex Epstein is a fellow at the Ayn Rand Institute in Irvine, CA. The Institute promotes Objectivism, the philosophy of Ayn Rand -- author of Atlas Shrugged and The Fountainhead.



Copyright © 2006 Ayn Rand Institute. All rights reserved.

This release is copyrighted by the Ayn Rand Institute, and cannot be reprinted without permission except for non-commercial, self-study or educational purposes. We encourage you to forward this release to friends, family, associates or interested parties who would want to receive it for these purposes only. Any reproduction of this release must contain the above copyright notice. Those interested in reprinting or redistributing this release for any other purposes should contact media@aynrand.org .

The Ayn Rand Institute, 2121 Alton Pkwy, Ste 250, Irvine, CA 92606



Thursday, July 06, 2006

The Estate Tax Is Fun . . . But It Won't Save You Any Money on Car Insurance

Stuart K. Hayashi


Note: This post originally appeared in The Fiftieth Star, as seen here.



Warren Buffett, the world's second-richest person, is yet another leftwing billionaire who goes around blabbing about the depravity of laissez-faire economics and the glories of the welfare state.

Lately, he has been demanding the retention of the estate tax, a.k.a. "the death tax."

And why shouldn't he? He brags that he won't let any of his kids inherit the vast fortune he's built himself, since he wouldn't want them to become spoiled wastrels who feel entitled to properties they haven't even managed.

That may very well be Buffett's conscious reason for opposing the repeal of the estate tax. However, there may be other reasons why an investor of his stature would fear an end to this law.

In a Wednesday, July 5 op-ed released by the Reason Foundation, J. Peter Freire observes,

The estate tax weighs heavily on those who have asset-rich businesses, typically family businesses that have taken years to break even and accumulate value. When the owner dies and the children take up the reins, the estate tax comes into play, sometimes costing as much as the business itself. The heirs are then forced to sell the business before losing any more money. This is how Buffett came to own Dairy Queen and the Buffalo News, among other businesses, as they were being sold at lower prices than their actual value. In the latter case, Buffett bought the paper for less than what it would wind up making him each year.

Beyond providing Buffett with a bumper crop of businesses to purchase, the estate tax also provides him with customers. Any financial advisor will tell you that the major component of a sound financial plan is composed of asset allocation, not blue chip trades on the stock market. And that is why they recommend you purchase some life insurance to shelter your money from large taxes such as the estate tax. And why not purchase that life insurance from Buffett's very own insurance company, GEICO?


So I have bad news and good news.

The bad news is that the estate tax has provided "corporate welfare" to the world's second-richest man.

The good news is that he saved a bunch of money on investments by purchasing GEICO.

Wednesday, July 05, 2006

ASPA as a Mutual Company

The last thing anyone should want is to have American Samoa Power Authority (ASPA) operate where it just barely breaks even (thereby being “devoid of profit motives”). The closer ASPA is to breaking even, the closer it is to suffering losses instead of making profits. When that happens, Senator Lolo Moliga will be complaining about the evils of the profit motive in the dark.

Again, comparing energy prices (and airline tickets) in American Samoa to mainland prices is comparing apples to oranges. The two markets differ in the number of customers they serve and the amount of capital used to serve those customers. Electric Utilities in the mainland have millions of consumers for whom more generators are justified for producing millions of megawatts of electricity. With that level of production, is it no wonder why they can charge 8.7 cents per kilowatt-hour compared to American Samoa’s 26 cents per kilowatt-hour?

The question we should ask when we see large profits is what the ASG can do to allow those profits to attract competitors. What hurdles at all levels of government stand in the way of competition and investment?

Think if ASPA were a mutual company, its customers would be the owners and the beneficiaries of any profits the entity makes. They would vote for the board members and have influence as to what the company’s profits can or cannot subsidize. Customers, as the new owners, would also take an interest in the now fully autonomous entity’s expenses (like the size of their workforce), because unneeded costs would cut into their dividend payments.

There are alternatives beyond the horizons of central planning.

Saturday, July 01, 2006

SENATORS SHOULD NEVER BE POPULARLY ELECTED

America’s founding fathers (a bunch of intelligent white men) knew that tyranny of a majority was just as dangerous as that of a dictator. In devising the separate branches of government, they took different sources of political power and instituted procedures that required one to check over the other. While they saw popular movements as a source of good, they also knew that the public could just as easily support harmful policies.

The Constitution of the United States is riddled with hurdles to protect against the mood swings of public sentiment. Examples include a two-third majority vote to amend the Constitution, an electoral college to elect the president, lifetime judicial appointments, and longer terms for Senators. Clearly, they saw that 51 percent doesn’t count as to what differentiates right from wrong.

In our own local government, our own forefathers (a bunch of clever Samoan men) found an ingenious way to protect against the majority in their own way. By using our own Samoan democratic institutions, we elect Senators through our district councils making our culture, customs and traditions relevant in local government.

What has been the effect of this? We have Senators who can stand up for the unpopular thing at unpopular times. We have Senators who have no fear of retaliation at the unreliable ballot box for unpopular investigations into the ASG and its many employees who are a large voting bloc by the way.

The House by comparison has proven to be a rubber stamp for the administration. On top of that, those who were involved in prior investigations were voted out of office last election.

I may not agree with the Senate’s many wrong positions on prices, taxes and immigration, but the greater danger is to have Senators who always want to do the popular thing, which is not always the right thing.

As Mel Gibson eloquently stated in his motion picture The Patriot: "Why would I want to exchange one tyrant a thousand miles away for a thousand tyrants a mile away?"