Picto Diary - 23 October 2017 - Hoover Retreat Notes

I spent full day, 23 October 2017, attending Hoover Institution October Retreat. Stanford University, Palo Alto, CA.

Note taker (Mwah [sic]) is fallible. Errors (commission and omission) are his.

RUSS ROBERTS, Econ Talk Podcasts creator/moderator

Restoring faith and prosperity.

Consensus: Growing income inequality. Economy distorted to the richest. Perception. Economy only serves the elite.

Not so. Evidence for the opposite.

The poorest people, from point to point, show the largest % gain in prosperity.

Average Chinese is flourishing.

I'm skeptical that lower taxes will spur economic growth.

Not much political demand for policies that lead to growth when perception exisist that only rich benefit.

How do we restore belief in growth?

3 ways.

1. Educate. Change narrative

2. Reduce barriers

Licensing
American cities costly, rural struggling
School improvement

3. Prosperity more about material well being. For some, now is the greatest time in human history.

WE NEED TO FIND WAYS TO MAKE MORE PEOPLE BETTER OFF. Not now doing enough.

 

PETER BERKOWITZ, 2017 Bradley Prize Winner

Restoring Prosperity: Contemporary and Historical Perspectives

Classical liberalism under assault these days. Classical liberalism and economic prosperity inextricably linked.

Milton Friedman: The only prosperity that has ever occurred is by productive activity unleashed by free enterprise. Greed yes, but greed, more narrowly construed, is self interest.

Free market also depends on qualities we bring. Character, generosity, charity etc.

We don't want government to enforce virtues, but to create space where people themselves can exercise self interest.

How is classical liberalism under threat?

1. Liberal critique: By limiting its role, government allows for humanity to abase itself by pursuing profit.

2. Conservative critique: We've mixed up conservatism and classical liberalism. We need to jettison classical liberalism. Leads to cosmopolitanism that leads to deterioration of local loyalties.

CLASSICAL LIBERALISM

Two rights. Religious liberty and economic liberty.

Principle function of government: to secure these rights.

To accomplish main task: government must be limited. We limit government via federalism, separation of powers, because it prevents abuse.

And provides room for faith, community, self initiative...eg. virtues.

John Locke: chapter 6. Paternal power is to equip your children to think and live for themselves.

How reconcile limited government and the virtues? The Federalist. Constitution based on institutions designed to help regulate self interest. Separation of powers. Each branch in a position to prevent other branch from overreaching.

Federalist 55. Madison. Not system that is oblivious to virtue. Our system says that people have capacity for virtue when living in freedom.

Mill. We benefit from freedom of speech even if we are correct. Opinions need to be challenged, lest we lose sight of underpinnings for our opinions.

By keeping government out of regulating speech we strengthen pursuit of truth. But, we do want government to promote virtues of limited government.

Need to support religious freedom, family friendly policies. We want school system to encourage freedom of expression. We want to encourage young to think for themselves. Youth so trained will be more entrepreneurial.

UNIVERSITY. How do we reconcile diversity inclusion and freedom of speech? There is no contradiction. Open environment dedicated to pursuit of truth benefits all.

SOCIAL MEDIA. Sad paradox. Never before have we had such an opportunity to explore world outside our cocoon. Yet we use social media to strengthen our cocoon. We create polarization that threatens freedom and economic prosperity.

 

CLINT BOLICK, Associate Justice Arizona Supreme Court

Constitutional Conditions for a Free and Just Society.

Rule of law under attack as never before.

1. Chief justice of China Supreme Court rejects western influence. Affirms court's role to support regime.

2. Venezuela. court system abolished legislature.

3. Poland. Presidential veto of legislature abolish judiciary.

Contract
Prop rights
Free enterprise..

All three above expressively protected in US Constitution.

Supreme Court, since 1867, has weakened constitutional protections for free enterprise, contract and property rights. Privilege and immunities clause of 14th Amendment has never been used to strike down a law.

Kelo. New Lindon, CT. Right to private property has been eviscerated by the government.

Good news. Pillars of Constitution now being rebuilt.

Ego Brown. DC shoe shiner. 1989.

DC tried to ban Ego Brown. We sued. They lost. Supremes struck down law preventing economic activity as a matter of civil rights.

Numerous other cases succeeding in restoring rights to free enterprise.

Clarence Thomas, at the Supreme Court level, most assiduous in protecting economic freedom.

I'm optimistic about Gorsuch.

State constitutions have protections not found in US Constitution. Such as, no corporate subsidies. Would that US Constitution have such a provision!

I'm an optimist about courts returning to limit restraint of economic activity consistent with Constitution.

We are a country devoted to rule of law. We must continue to work to eliminate areas where judicial overreach has impeded legitimate economic activity.

 

MICHAEL BOSKIN - Stanford Economist; Director Exxon Mobil

The Fiscal Reforms Imperative to Restore Prosperity

Issues threatening fiscal prosperity:

Spending
Debt

1. Debt and tax lead to Japan like economic torpor?

SPENDING CONTROL IS THE ONLY TRUE TAX REFORM.

Conventional wisdom: must raise taxes to cover projected spending. This is not a recipe for a prosperous society.

2. Demography overwhelm global position?

Greying population. Will transform society.

Medical costs as percent of budget expand. Other government expenditures crowded out by burgeoning medical expenses.

Demography less than Social Security in spending increase impact.

Warning. Entitlements crowd out defense and others.

TAX REFORM.

Trump tax plan. Will increase investment in US.

WHAT'S MISSING?

Spending reform.
Entitlement reform.

Cautiously optimistic. Historically, Americans have shown propensity to adapt, and to correct.

Diverse population supportive of earned success...despite Bernie Sanders' demagoguery.

Best universities, etc.

 

CAROLYN HOXBY, Stanford Economist

The Role of Education in Promoting Economic Growth

It's not just advanced education that drives economic growth. That's not what's holding us up. US advanced education the best in the world.

The other end is what's holding us up. Growing share of US population that doesn't have the education to support themselves during prime working years.

Under conditions of undereducated population we end up with more regulations (ACA, for example) and higher taxes.

40% of US population has no higher education (beyond high school). No change in 30 years.

World around us is becoming more educated. US stays the same. Ergo. US losing ground, relatively speaking.

60% of US 17 year olds cannot read and reason in moderately complex way.

Majority low skills population. They don't go out and support themselves.

Result:

Dependency. Disability, food stamps, out of the labor force. All categories growing. Very troubling. Burden on other taxpayers during their prime working years.

2015. 70% of all high school dropouts pay no Fed Income tax. All races. 68% of white HS dropouts pay no Federal income tax.

Burden of Federal support alone for low educated, working aged people is about 5% GDP (3% in 2000). This is primary drag on the American economic growth rate.

Tendancy to regulate. But regulation is also a drag on economy.

WHAT DO WE DO?

Let's not do what hasn't worked since 1960:

Class size shrink.
More money to schools.
More staff in classroom.

Let's do what will work:

Transformation of teacher labor market. Merit. Compensate for performance.

More choice (charters, vouchers).

More technology for individualized instruction.

Ideas from abroad...eg. single sex ed. vocational, tracking.

Cultural support for education.

GROWTH EMERGENCY!

We are making no progress.

 

DANIEL P. KESSLER, Stanford Business School, Health Policy

Health Care Reform

Bad incentives is elephant in the room.

90% of Americans receive open ended subsidies financed by federal deficit.

These open ended subsidies encourage low value care.

If we reduce subsidies someone will have to give up.

All income categories get subsidies.

Upper and mid income people get employer sponsored insurance which is exempt from taxes. 55% (largest Fed subsidy).

Low income. Medicaid. 15%.

Elderly Medicare 10%

ACA exchanges. 3%

OPEN END SUBSIDIES ENCOURAGE LOW VALUE CARE

OPEN ENDED SUBSIDIES GOTTA GO!

Action steps:

Cap or eliminate employer sponsored exclusion.

Block grant Medicaid to states.

Convert Medicare to premium support.

Limit market place subsidy growth.

OPPONENTS TO REFORM

AMA, Physians association, etc., NYT,, Hospitals Assns.

SUMMARY

Open ended subsidies must be reduced to eliminate low value care. Some care would be eliminated, but was it worth the cost?

 

Deregulation Panel

John Cocharan, Hoover Economist, Columnist.

Financial regulation.

We don't have well run financial system.

Wave of helpful technology being stymied by regulation.

Financial regulation at a cross roads.

Dodd Frank didn't define the crisis. A financial crisis is a run.

It's not necessary to regulate everything. We have to stop runs.

Two ways to stop runs.

1. Govt. bailing out creditors stops run, but doesn't solve problem. Ground hog day. One crisis follows the next. Owners have no skin in the game.

2. Make banks have more equity. Banks are safest portfolios on earth. Before deposit insurance, banks were required to have 40% capital.

#2 better. You can run our financial system with technology more effectively with less regulation by requiring more capital.

Sadly, big banks have grown happy with Dodd Frank. Its a barrier to entry for little guys.

What to do now?

Now, among others, we're trying to regulate asset prices! Crazy!

Runs can't be predicted.

Can count on bailout. Each bigger than the rest. Sooner than later financial authority won't have the capacity to borrow. Then...a sovereign crisis.

Trend, therefore, seems to be amenable to increasing capital and reducing extraneous regulation.

 

HENRY MILLER, Science and Technology Researcher, Hoover Institution.

Science and Tech Regulation

Overregulation has eliminated entire sector: biotech.

Can take decades to get product approved.

"Ice Minus" bacteria. EPA called it a pesticide.

"Franken fish." Mid 90's to 2017. Still not approved. Going gangbusters in Canada. Sector for genetically engineered animals suffering.

Genetically engineered mosquitos. FDA regulates as veterinary drug. Reduced mosquitos by 90% in Brazil. FDA finally ceded jurisdiction to EPA.

If you want less of something, tax it. Ronald Reagan.

Regulation tantamount to a tax.

Adam White, Research Fellow, Hoover Institution

Energy Regulation

Energy boom of last decade occurred despite many efforts of regulators to thwart.

We welcome efforts of Trump Administration, but need legislative plan for long term change.

Goal in environmental regulation should be to promote economic growth with environmental responsibility.

Congress should make regulatory choice, not EPA.

Need to do better on data. American public doesn't believe government on climate change. Need institution to research and evaluate the facts...trusted by people.

Climate change lobby has lost all credibility with bad forecasts and unwillingness to pursue debate.

Overregulation corrodes spirit if innovation.

 

CHRIS GIBSON, Former US Congressman. Colonel US Army (Ret). Combat Commander.

Dinner speaker.

Author: "Rally Point - Five Tasks to Unite the Country and Revitalize the American Dream"

Topic: Promoting a Flourishing Life: American Exceptionalism and the Unleashing of Human Potential.

IMAGINE! For eight years we lived under a president who didn't believe in American Exceptionalism!

55 men who had everything to lose gathered in Philadelphia.

Penned Declaration of Independence.

Government derives just powers from consent of governed.

Crazy talk in those days!

France, after reign of terror, called for return of monarchy.

Not here!

We said: All have God given right to rise to our potential. Government protects those rights.

This was radical thinking at the time.

Later they returned to Philadelphia. They refined the idea of the Declaration of Independence. They wrote the Constitution.

Separation of powers.

Federalism.

Americans are ctizens not subjects.

Channeled Rousseau. Celebrated individualism. But, also cited obligations.. to friends, family and communities.

To be born American is to win the lottery.

My own tradition is Irish Catholic. I'm the first Republican in my family.

Watched dad out of work during Jimmy Carter stagflation. Sad.

Then as a teen I saw Reagan. He seemed to be happy. I was mesmerized.

Dad, I said, this is our guy!.

Reagan got 60 % of vote. Conservative! Imagine!

Power of one person to communicate, stand on principle. Wow.

American Exceptionalism.

We have drifted away from America's founding principles over last 50 years.

We have started to believe the state can perfect man.

We have become believers in German idealism. Hegal.

Now pessimism prevails. State over individual. We're out of balance. Searching for answers in all the wrong places. We doubt ourselves for first time.

We drift towards authoritarianism. We must resist.

1. Keep faith.
2. Leaders.
3. Leaders must lead the charge.

WHAT should we do?

1. Political reform. Restore separation of powers. Reinvigorate Federalism.

2. Tackle hard things. E.g. deficits.

Interest on debt 2nd only to defense expenditure...and that's with low interest rates.

Voted for Trump, but he's taking deficit the wrong way.

Need:

Tax reform.

Regulation reform.

Health Care reform. I can't believe we conservatives can't win the health care argument. ACA destined to fail.

Energy. Where we do best.

Infrastructure.

Restore incentives for dignity of work.

Final point: Time tested enduring principles in founding documents. Most Americans believe in those principles. Bring them back to the forefront.

Addendum:

Great news, Steve! Stay with it - and if you do make it to NYC in December, don't forget to call - I'll buy dinner.

Best,

Montivideo, and Suzanne New York City, NY

 

I am glad you are back on our feet (so to speak) and traveling to your various venues. Great to hear of your adventures.

Bridge,
Palm Beach, FL


Glad your doing so well and, out & about! Can’t keep a good man down.
❤️the socks.

Spa-go
Los Angeles, CA


Really good reporting Steve thank you.

Brand,
Ventura, CA


Thanks. Great seeing you!

Stagecoach, San Francisco, CA

 

Steve,

Congratulations on your excellent progress on the recovery of the broken leg. I have found your regular progress reports of interest to me for as you will see below, I have gone through a similar saga. I, more than most of the recipients of your healing narrative, can be truly empathetic and of course sympathetic.

A year ago June, 2016, a staff infection presented itself in the prosthesis in my right knee. Lots of swelling and discomfort and on June 21st I went through the first of four surgeries. The first was what was called a wash out (very technical medical term) and replacement of a part with a new and hygienic part. A pick line was put in my arm and for six months I had an assortment of nasty antibiotics pumped through the pick line.

At the end of six months, we removed the pick line and I was off the antibiotics for two weeks. Then a biopsy to see if we had killed the infection and the result was no luck. Then surgery number two to remove the infected hardware and in its place a spacer filled with antibiotics to fill the knee cavity - and a new pick line and a new pump to deliver the antibiotics.

For three months, no weight on the right leg as there was no knee and no prosthesis. A walker and later crutches. At the end of the three months, surgery number three to observe, did we kill the infection this time and the result was success. So, two weeks after that, surgery number four to remove the spacer and put in a new prosthesis. That was at the end of April.

Then some hospital time and some time in a nearby hotel until the Doc said okay to return to Aspen. ( I had the first surgery in Aspen and the other three in Denver). Then, as you know all too well, starts the physical therapy to learn to walk again and to begin to rebuild the atrophied muscles. About three months of PT, and then back to the gym for regular workouts to continue to work on the muscles and rebuild some stamina. And here we are in mid October.

The leg turned out to be a half an inch shorter because of scar tissue from four surgeries so I have had to have my right shoes built up. I will have the ski shop put a half inch block under my right bindings and see how that works. My skiing days are a bit of a question mark just now. But, I killed the infection and I have a functioning knee so that is all good.

I know what you have been going through!!!

By the way, did you get to listen to the recording of the live performance of Hotel California I sent to you?

Keep up the healing and the PT and I hope you will be skiing this season.

Cheers,

Tom,
Aspen, CO


Big Dog Banker Steve:

I wrote here about how sometimes you eat the bear, and sometimes the bear eats you - as in how your BMW F800 GS fell on you.

Wishing you an expedited recovery.

My broken leg? I managed to kick start my 1988 Kawasaki KMX 200 to life after 10-15 tries. I was glad it was not the fire breathing, back-firing, AMF POS H-D I once owned (for about a month). Again, against doc's orders and that of my local plumber, I wrapped the busted leg with a full role of duct tape around a metal U that went under the boot and up two sides of the leg. Awkward and ugly looking, but got the little two-stroker to start after sitting for nearly a year.

I have noticed that between the two broken bones and need for a new knee, my right leg has a bit of a hook to it. If I return to the game of golf the bend might make it possible for me to use a 1 iron again :-)

Cheers,

Dr. G
Chief, World Adventure Affairs Desk, CITY BIKE Magazine
Crow Agency, Montana