Saturday, October 21, 2006

SCHOOL VOUCHERS NEEDED NOW MORE THAN EVER

I don't believe that it would be fair to say that Dr. Lui Tuitele is an inherently bad person who doesn't care about our children's education. The insufficient disciplinary action of DOE personnel and the lack of resources for our crowded public schools reflect structural problems of the system we use to provide education to our kids.

Unfortunately, it would seem that we will continue to keep our eyes closed, blame everything on the man in charge and keep our fingers crossed that our kids will one day get a proper and safe education.

Education is a service more valuable than fast food in my opinion, but we allow fast food service to be the best it can be by letting fast food restaurants face competition and pursue the profit motive. Not so with education. Instead, we choose to place one of the most important aspects of our lives into the hands of bureaucrats who don't face the same incentives as private businesses.

Where competition and the profit-motive drive the betterment of goods and services in the free market, a web of politics, personalities, bureaucracy, careerists, and Fono allowances (a 100% increase by the way) suck away at our children's chance to better access a world of opportunities.

If we are to improve education for our children then it only makes sense for us to harness some of the forces that continually improve services in the private sector everyday. It will require structural changes to the current system, not just trying to find the mythical "good person" who is pure of heart who can drive the broken car of public education forward. It will require taking the money out of the hands of the bureaucrats and putting that money into the hands of THE PARENTS.

With school vouchers in the hands of PARENTS, our kids will have the money to choose between all public and private schools. PARENTS, not the bureaucrats, will choose where our tax money will go. All schools will then have to compete with each other for the PARENTS and OUR CHILDREN.

School vouchers haven't had much in the way of debate in our territory. A lot of DOE officials' jobs, titles and prestige will hang in the balance if our resources were out of their control and sphere of authority.

But seeing how our resources go to protecting instead disciplining wrongdoing and the teacher-to-student ratio spiraling out of control, I rather place my taxes and my faith in the hands of us PARENTS to better the future of our CHILDREN.

Tuesday, October 17, 2006

The Coase Theorem Can Guard Against Any Adverse Effects of Global Warming

Stuart K. Hayashi

Shikha Dalmia has written many brilliant essays on subjects like illegal immigration, India's economic liberalization, and private financing of education in India.

Recently, I came across an intriguing piece she wrote about whether private property rights and market forces could alleviate any harm that global warming may impose in the next one hundred years.

I believe Coase theorem, devised by University of Chicago economist Ronald Coase, has important implications for addressing the extent to which carbon dioxide emissions from heavy industry may contribute to the harmful effects of global warming. That is to say that market economics and private property could be the most important tools to correct adverse effects of global climate change, if only so many government regulations did not stand in their way.

Three of the biggest problems that anthropogenic global warming will supposedly exacerbate are:

1. The spread of tropical diseases like malaria

2. Lands that were once arable no longer will be

3. Rising sea levels


Let us assume, for argument's sake, that the fossil-fuel emissions from the coal and oil industry really do worsen theese problems.

What should be done if an increase in average global temperature, which the coal and oil industries supposedly helped cause, causes malaria vectors to advance?

First, if malaria finds its way into the United States, then limited DDT use should be legalized. Fighting malarial mosquitoes in the U.S. would not lead to Americans spraying large clouds of malaria all over as was done in the 1950s. Malarial mosquitoes will stay away from a house if its walls are sprayed with DDT once every six months.

But the federal government has banned it in America.

Furthermore, if dangerous epidemics spread themselves throughout the U.S., then private communities should be able to find their own safeguards over whom is allowed to set foot on its grounds. Just as the state government of Hawaii has methods of inspecting visitor luggage to prevent "invasive species" from entering the Hawaiian ecosystem, private communities should be able to inspect newcomers or visitors for disease before entry.

If an infectious disease made its way into a private community, then its property values would drastically decrease. If an epidemic spread throughout America, then the owners of private communities may see fit to perform check-ups upon people before they move into the new community.

Also, a purely consistent laissez-faire night watchman state would hold individuals liable for spreading dangerous diseases. If someone gives me a terrible disease, then the infector has damaged the private property that is my body, and I should be able to sue for compensatory damages. This would mean that, if Person X carried syphilis and had sex with Person Y without informing Person Y, Person Y should be able to sue Person X to make up for the costs that this imposed on Person Y.

If such a legal system were implemented, people would take more precautions to ensure that they do not infect others.

Now we can move on to the agriculture argument.

Global warming alarmists say that the changing climate will harm agriculture because lands that are currently arable will lose their arability over decades, while other lands will become arable when they previously weren't.

If that is the case, then the "creative destruction" of the market should be allowed to commence. Owners of farmland that is no longer arable will liquidate their holdings in that real estate, selling it off to investors who can find a more profitable use for it. Meanwhile, investments will be made into the newly-arable lands in other parts of the globe.

What is the impediment to this? Federal farm subsidies and price supports. If the federal government finds that an agribusiness's productivity is dropping as a result of global warming depriving the agribusiness's land of its arability, then it would not be surprising if the federal government used taxes to bail out the agribusiness. his will erase the investors' incentives to liquidate their holdings in farmlands that are no longer productive.

Finally, it is said that global warming will cause sea level to rise and destroy the homes of people in coastal regions. Some scream that waterfront properties will be further devastated by an increasing frequency of Category 4 and 5 hurricanes.

If it is true that waterfront property is under such assault, then private insurance companies should be free to raise their rates so high that people will be discouraged from building homes so close to the shore. Furthermore, the fact that coastal properties may be submerged within a 30 year period will cause coastal real estate to decline in marketability, thus discouraging developers from continuing to erect properties that are too dangerously close to shore.

What would stop that from happening? The fact that the federal government implements a National Flood Insurance program that compensates people who imprudently build structures so close to shore that they are destroyed almost every single year. When these structures are destroyed, the National Flood Insurance program provides the property owners with the funds they need to re-build the structures . . . that will be destroyed once again. Without the government's financial crutch, these people would see that they only lose money from continually building too close to shore, and finally more further inland.

And, finally, there is the issue of liability for all of the property damage for which anthropogenic global warming is blamed.

Suppose that a group of attorneys call upon experts who scientifically prove that fossil fuel emissions from the coal industry and petroleum rock-oil industry contributed to global warming. And suppose that they could scientifically prove that it was these industries' carbon dioxide (CO2) emissions that caused the average temperature, since 2000, to increase by a margin that othewise would not have existed had only non-human natural factors been involved.

If it can be proved that it was this margin that caused so many people to be infected with tropical diseases, or to have depreciation in agricultural real estate and coastal real estate -- that, without all of these CO2 emissions, these tragedies otherwise would not have happened -- then all of the aggrieved parties can file a civil action lawsuit against the industries that have contributed to the Warming.

The more expensive the lawsuits are for these industries, the more these industries will have an incentive to find methods of providing energy without contributing so much to adverse global warming.

For example, there is something called "the gasification of coal." To "gasify coal" is to burn the coal so hot that it converts into a gas that can be transported through pipelines.

Gasified coal provides just as much energy as regular solid coal, but it emits much smaller quantities of carbon dioxide.

Yet the reason why businesses refrain from gasifying coal is that gasification is much costlier than emitting higher quantities of CO2.

However, if civil action lawsuits kept driving up the coal industry's costs, making the industry lose billions of dollars, then we may reach a point where it becomes cheaper for the coal industry to gasify its product -- thus reducing the number of big lawsuits -- than to continue harming people and paying out so much money in damages.

Here, a leftwing critic may respond that the big coal and oil industries would win every single lawsuit that middle-class victims filed against them, since Big Oil and Big Coal have so much more money at their disposal.

A solution to that would be to legalize champterty -- the practice of allowing individuals to invest their money into lawsuits. If venture capitalists believe that some farmers and beachfront home owners have a strong scientific case against Big Coal -- but that these aggrieved parties are woefully outmatched by Big Coal in terms of capital -- then the venture capitalist can finance the plaintiffs' case under the agreement that he receive a percentage of the damages if they win.

Now, I am well aware that, as attorney Walter Olson frequently points out, a ridiculously litigious society can easily penalize businesses that have not done harm. This is because, even if the business defendant wins a tort case that was filed against it, that business still loses money by having to pay for the cost of its defense. Thus, I would recommend that the United States adopts the "loser pays" system of England and many other industrialized countries -- the loser of the lawsuit should pay the legal fees of the other side.

With such reforms in place, businesses can be secure from frivolous lawsuits even as tort law can be used to "internalize" the "externalities" of industry-contributed greenhouse warming.

As Julian Morris writes,

I have argued elsewhere (Morris, J., 2003: 'Climbing out of the Hole: Sunsets, Subjective Value, the Environment and English Common Law' [read the PDF of that here --S.H.] Fordham Environmental Law Journal, Vol XIV, No. 2, 343) that much more could be done to enable private parties to resolve environmental problems through the legal system. Most legal systems in principle enable the owners of private property to recover damages when that property (or the beneficial use of that property) is damaged by the actions of another, whether intentionally or unintentionally.

Morris observes that it would be difficult to compensate the victims of such problems in Third World countries for such harm, as what makes these nations poor is almost always their lack of rule of law. The long-term solution, of course, is for these countries to finally develop a system of rule of law in which the courts bother to enforce individual rights to life and private property rather than to ignore them or abrogate them.

In the meanwhile, if only the First World more consistently adopted the principles of a "night watchman state," it would more effectively utilize the institutions of private property and liability to ameliorate the level to which industry may add to the global warming problem.



Copyright © 2006 Stuart K. Hayashi. This piece may not be reproduced by any means without the author's expressed written permission.

Wednesday, October 11, 2006

WHEN IT USED TO BE PUBLIC SERVICE

Public service used to mean serving the public, not having the public serve the politicians. But it’s hard to see how that’s the case today when public “servants” put their careers before cost savings to the people who pay the taxes.

Public service used to mean sacrifice. Sacrificing greener pastures, bigger opportunities and better pay because government was always meant to be small and frugal. Now many view service in government as a path to a nice retirement check, and everybody wants to jump aboard a sinking ship.

Government cannot give without first taking from someone else. That’s why we expect government to use as little as possible to get the job done. If government gets too big, it would suck up resources from other priorities.

Is our government too big and too fat? I’d say so. The kids in Tafuna High School take a back seat to spending on a government airplane, a government golf course, a government bank, a government broadcasting station, a government telecommunication company, and a government boat. All of these things that the private sector can do and do better if they didn’t have the government competing with them with their own tax dollars.

Public service used to mean doing what’s right. But even doing the right thing takes a back seat to extending careers at all costs at the expense of taxpayers, of the people.

Thursday, October 05, 2006

MARKET CONDITIONS, NOT MARKET PLAYERS, MATTER

I wonder what George Washington would think of today's politicians. Or better yet, what Thomas Jefferson or John Adams or Ben Franklin would think of our government. I hope these great white men do rest in peace, but I sure would like to know what they would think about today's politicians not adhering to our Founding Fathers' ideas of limited government and individual rights to life, liberty and property. And if they were alive, I love the opportunity to personally thank them for giving birth to the United States of America.

Anyways, having the government investigate every cranny and nook of the airline business and conduct a cost analysis to justify prices is a tried and failed policy of the American regulatory regime from before the 70's. It's a tried and failed policy of Communism.

The idea behind regulatory agencies was to protect consumers against some supposed monopolistic behavior of industries like telecommunication and the airlines. The problem was that the regulators operated in the following fashion: They would take all of the factors that affected prices today to justify prices for tomorrow and the day after until the agency came out with their new calculations. This process is likened to solely looking into the rear view mirror to drive the economy forward. Many important factors change on a dime, which could then render once certain forecasts inaccurate, useless or even harmful.

Another problem with regulatory agencies is that once the "well-meaning" politicians have moved on with their lives and on to other interests, businesses affected by the regulators would still be there. Businesses will then have every reason to influence the government department to change the rules in their favor. Consumers then suffer from rules that limit competition that protect the now vested interests of these regulatory agencies.

One way a monopoly arises is when it's cost prohibitive for competitors to enter the market. Yet as long as the monopoly makes a profit, the industry will always entice people to lower the costs that prevent them from competing and obtaining some of that market share. But having the government step in, bash the virtue of profit maximization and trample all over their property rights could only discourage investors and would-be competitors from even making the effort.

People give market players too much credit for being able to dictate prices in the marketplace. If demand for flights ceased to exist tomorrow, it doesn't matter what HAL's costs are, they're not going to get a penny from us consumers. For the same reason, if demand is high and people continue to find the money to pay, it doesn't matter what HAL's costs are, they going to charge as much as the demand curve says to charge.

It's market conditions that dictate prices. A market condition our politicians can change is supply. We can increase supply with foreign airlines, whose lower labor costs due to automation and outsourcing can be passed on to us in the form of lower airfares. Yet we have a congressman who says that the international designation is nonnegotiable and a governor who focuses our territory's resources on attacking a private company for over two years instead of fighting US Cabotage laws.

I want lower airfares, but never at the expense of property rights. I believe that what goes around comes around, and I don't want to see businesses use the government to trample on our property rights later on because they see how we're doing it to HAL today. I believe property rights to be a pillar of freedom, and freedom in the marketplace will always work as long as government is limited to protecting our individual rights and enforcing contracts.

IF ASG WERE A PRIVATE COMPANY

HAL gets smeared everyday for its freedom to charge what it wants. A lot of people don't like that freedom. But in a market that is only open to domestic competition, HAL is the only institution to make air travel to AS a viable business.

But could the ASG run the airlines better, and how would we treat the ASG if it operated under the same conditions as the private sector? It's not hard to see how this scenario would play out. We can just look at how the ASG runs the government today.

An ASG airline would spend most its money on personnel and salaries than on much needed equipment and services. An ASG airline would spend money on things other than providing air travel like a Political Status Commission and all its learned men, a Veteran's memorial, a 100% increase in Fono allowances, a golf course, a government hotel and so on and so on.

An ASG airline would, because of all of the above, fall short in funding for its essential functions and then claim that the only solution to solving their budget woes is more money. An ASG airline would then come before taxpayers with a big stick and say, "give me more." Property taxes, fat taxes, alcohol and cigarette taxes, bottle taxes, excise taxes and anything-that's-not-popular taxes.

Worse yet, the ASG airline would fly to Washington and cry to Uncle Sam for more money in the form of low-interest loans or grants or both. Or they may put telecommunication consumers and government retirees on the hook with a $20 billion bond loan.

All the while, an ASG airline couldn't account and audit its own finances. Investors would take their money elsewhere leaving the ASG airline without capital and forcing it into bankruptcy. The ASG airline's accounting would be so fraudulent that it would make Enron look like an angel by comparison.

Such faulty accounting would rightly bring charges against ASG airline CEO Togiola and excuses such as "things are getting better after so many years" won't cut it. He and his administration would see prison time for failing their fiduciary duties.

I think American Samoa needs to wake up.

HAL is the best we can get out of domestic competitors. ASG likes to pretend that it knows the airline business better than HAL, but look at how the Togiola administration and the Fono run the government. If ASG were a private company, a lot of politicians would be in jail because they wouldn't have their political immunity shielding them from their actions or the lack thereof.

But the people are starting to recognize this flagrant hypocrisy of our government. Because of this hypocrisy, people are beginning to question whether the Fa'asamoa serves the people or just lines politicians' pockets with benefits from the federal gravy train. This, not free speech, is eroding our culture.

Nevertheless, there is a looming financial crisis ahead of us folks. The federal government has nearly $9 trillion in debt and trillions in unfunded liabilities in Social Security and Medicare obligations. But instead of making us more independent of federal funding that will disappear, our politicians love the status quo and only want to pork it up.

A military base in the Great Manu'a, where our people once prided themselves of their independence from Tonga, (Western) Samoa and Tutuila, demonstrates the change in attitude and the times.

I wonder what Tuimanu'a Elisara would think of our politicians today.

AIR TRAVEL IS NOT A RIGHT

It was not too long ago when the Wright Brothers amidst competing inventors gave birth to the aviation industry. An industry that has saved us trillions of dollars in transportation costs. Yes, you read my estimation right. I say “trillions” because before there were planes, there were coal-powered boats, and can you imagine living in a world where we have to pay boat fares instead of airfares?

Without air transportation the costs of doing what we take for granted today would be in the “trillions” if not impossible. But everyday, HAL serves our route, and they neither ask for a “thank you”, a monument or a statue, or to set aside a holiday in their remembrance or to name some government building in their honor. They only ask to make revenues above their expenses and to go on their merry way.

Expenses such as soaring fuel costs over the last 5 years, low occupancy rates, ASG taxes on jet fuel, a deteriorating and dangerous ASG airport and an international designation have not deterred HAL from making air travel to American Samoa available. Meanwhile, such conditions have forced different airlines around the world to pull out of certain markets. Polynesian left Niue. Air New Zealand is about to leave Singapore and the same will soon be true for Japan Airlines concerning its Northern Marianas route. Go research the reasons why they chose to leave and proclaim that such impediments don’t matter.

But instead of thanking HAL for battling the above costs and still providing us with a service that allows our ill to visit market-based health providers in America, our separated families to occasionally visit one another around the world and our entrepreneurs to do business in the territory, we accuse the company of economic rape. Instead of looking at air travel as a blessing of capitalism that have made the above examples possible, many now use those examples as justification to forcibly lowering airfares. Flying is now somehow an economic birthright that should have a “reasonable” or “fair” price.

But “reasonable” and “fair” to whom? Would a $500 air ticket be “fair” to the investors who put up the capital, the management who makes the tough decisions or the employees who labor under the hot sun? Would that price be “reasonable” for all of the supporting industries of HAL? Who knows but to allow suppliers to seek the highest price for their services possible while consumers seek the lowest price or best service possible. The only objective standard for prices is the end result of free market negotiation. Anything else is arbitrary.

But our market is not completely free. It’s closed off to foreign competitors because of the type of outdated trade protection policies Faleomavaega continuously supports for America. But instead of focusing our time, money and efforts fighting to open up our market to forces that can really lower airfares, Togiola chose to fight HAL for over 2 years while Guam labored successfully to win exemption from US Cabotage laws that prohibit foreign competition. While Guam will be getting results soon enough, we’re now in front of the DOT debating this issue like a bunch of little children.

We are a US TERRITORY. That’s supposed to mean we respect and protect each other’s rights to life, liberty and property. Read Section 1 Article 2 of our Constitution. Instead our government acts more a SOVIET TERRITORY where everything from air transportation to healthcare is a right afforded at someone else's expense and the role of government is to set “fair” and “reasonable” arbitrary-up-to-Togiola prices.