14 July 2009

Remembering McNamara

As we struggle to find the best avenue out of our current recession, a Robert McNamara quotation always seems to percolate in the back of my head. In rememberance of his recent death, I'll take this opportunity to share.

"The government is not in the business of putting small business out of business."

A good way to intepret this quoatation is the following. In every industry and every market that the government participates (either the government provides a good or service, purchases a good or service, or regulates non-government to non-government transactions of goods or services), its participation influences the market, generally making it more difficult for small businesses to survive.

When the government provides a good or service it is very hard for private industry small businesses to compete with them. The government does not have to be profitable and is financed by a large and captive audience.

Less directly, consider the market effect when the government regulates a market. OSHA, the government office that tries to regulate labor markets to make working conditions better, may at first glance appear to do no wrong. in reality however it can be a very subtle and very manipulated agency by large business victimizing small business. Large businesses give politicians campaign funds. One way politicians may reward such businesses is to make code overly protective and convoluted so that the entry of a new small business competitor is prevented by compliance costs. They are repaying the business by eliminating competition, and to the unaware citizen, these policies can seem glorious. In public finance terms, government regulation can act as a significant and highly regressive corporate tax.

As an alternative, if we simply allowed the worker to choose for himself if he were willing to work a particular job for a given wage, two competing firms would have to ultimately compete to lure workers by providing them higher wages and safer work environments on their own. Suddenly government safety regulations no longer appear as necessary or innocuous.

A bad way to interpret this quotation is as i was instructed during my military acquisitions training. sometimes when the government hires private defense contractors to provide goods or services the government knowingly provides them a profit. i suggested that the government could save taxpayers money by not paying that profit, to which the instructor quoted McNamara "the government is not in the business of putting small business out of business." But, as long as the government isn't requiring a firm to provide a good or service, they should never take a contract that's not in their interest anyway.

in conclusion, for those large-government command & control democrats who want lots of government interaction in a variety of markets, remember the impact on free enterprise encapsulated in this McNamara quotation. "the government is not in the business of putting small business out of business"

For sell-out Republicans who espouse policy that favors the big businesses that wine and dine them, remember you are just as guilty of creating an environment unfriendly toward American small business free enterprise. i offer a parallel quoatation "the government is not in the business of making big business bigger"

the business of the government is simple, and was simply identified by Arrow in the 1950s. The government is in the business of simply correcting market failures.

thanks to mcnamara for inspring today's conversation.

01 July 2009


A couple of buddies of mine from econ grad school at UT, Jason DeBacker and Rick Evans, have a very successful blog with good insight and a running compilation of the best econ jokes available. their blog was recently cited as an officially sanctioned AEA blog, and perhaps more importantly referenced by Mankiw's blog (see ad hominem post).



btw, if you check out Rick's professor page
he has a link to UT econ intramural sports recaps.
(i was the first receiver on that hook and ladder.
rick to me to Debacker for a TD!)

22 April 2009

little POLCO growing up


21 April 2009

Bandwidth Limitations

It was recently announced in local news (Austin Statesman) that Time Warner Cable was considering imposing customer bandwidth limitations. When customers use more than a specific amount of bandwidth, Time Warner would begin to charge extra fees. This means that if you watch just a little streaming video, use YouTube or Pandora a lot, you would probably be paying some fees. Time Warner argues that they are experiencing more bandwidth demand than they had previously anticipated.

Below is my comment to the Austin Statesman article. Maybe you agree.

If Time Warner is having bandwidth demand it can't handle, it needs to re-assess it's bandwidth supply. Everything but live or real-time events should be accessible on demand only. This would free up tons of bandwidth, no need to continually broadcast thousands of channels no one is watching. We know time-warner is a regulated industry, but still try to provide service like a competitive industry. when you have problems, don't just charge the user more and decrease consumer surplus.
this will unnecessarily blemish Austin's tech reputation, and Texas's efficient markets reputation.

08 April 2009

academic final stretch

well folks, a chapter in my life is drawing to a close.
i have scheduled my dissertation defense for 5 May 2009 (yes, Cinco de Mayo).
Last week was a pretty busy week preparing for 3 presentations and 3 conference submissions, but the oncoming weeks will be even more intense.
Even so, i don't view it as stressful, i enjoy the research
The official graduation is 24 May 2009.

But as chapters draw to a close, new ones open. Even though i thoroughly enjoyed learning how to do professional economic research here at UT graduate school, i am excited about the new unfolding chapters. Hopefully it will have much to do with application of learned tools, implementation of conclusions drawn from research, and participation in the American free-enterprise system. However it turns out exactly, i look forward to tackling it with enthusiasm, passion and vigor with my wife Bobbie.

16 February 2009

TX Senator about Bailout

you just got to see Sen Cornyn's first response about not being partisan to the reporter.

Libertarian Stimulus

I stole this link from Prof Mankiw's Blog (http://gregmankiw.blogspot.com)

here it is http://www.cnn.com/2009/POLITICS/02/05/miron.libertarian.stimulus/index.html

people have been asking me my perspective on the bailout, and in short, i agree with the vast majority of the article. the the items Miron lists would be hugely more helpful, less beaurecratics and less intrusive.