Richard J Grant

Published in The Tennessean , March 28, 2010 Government hand crafts progressive fairy tales by Richard J. Grant In a world where the word "diversity" is uttered in tones normally reserved for worship, we might wonder why all truly meaningful signs of diversity are in retreat. We are told that we are to be color blind in our social relations, yet we are reminded in the new census forms, and in the plethora of affirmative action programs, of our government's obsession with race and gender. But shouldn't our government be less interested in race and gender than any one of us as an individual would be? There was a time when diversity was more valued in human ideas and achievements, rather than in terms of those characteristics, such as gender and race, that are givens and that we would not likely change even if we could. Although many would object that we do indeed value new ideas and great achievements, the real trend of recent times is toward centralization of standards...

Published in The Tennessean , March 21, 2010 Constitution was intended to protect citizens from harmful change by Richard J. Grant The exceptional nature of the United States in world history is a reflection of the values and conservatism (in the sense of caution, not ideology) that were embedded by the framers in the Declaration of Independence and the Constitution. The intent, and for much of US history the result, was to protect Americans from a constitutional anarchy in which an individual's liberty is largely dependent on the arbitrary (and sometimes ephemeral) preferences of rulers, politicians, or even a voting majority. In the Federalist No. 51, James Madison offered an explanation of the reasons for, and methods by which the Constitution would partition power and place the several constituent parts of the government in relation to each other such that they would be most likely to keep each other "in their proper places." Madison clearly states that the importance...

Published in The Tennessean , March 14, 2010 A health-care reform honeymoon won't last long by Richard J. Grant We're about to get a health-care wedgie. But at least we see the perpetrators coming; and most Americans don't like what they see. As Democrats stalk us with the thin end of another wedge to drive more government interference into our health-care system, a majority of Americans remain firmly opposed. They know that wedges always get wider at the other end. All government programs have a tendency to expand. Governments already control more than half the dollars spent on US medical care. Government regulations already restrict most of what doctors, hospitals, and insurance companies can do. Apparently this is not working out well. But instead of reducing the dose, Democrats want to increase the level of government control and interference. Those with socialist eyes cannot see. Those with socialist hearts do not care. Whether or not it is recognized, the biggest sing...

Published in The Tennessean , March 7, 2010 The marketplace relies on profit to reduce costs by Richard J. Grant There is a moral asymmetry between the two main visions of the role of government in our lives. Those who favor the minimization of the state would not interfere with those who choose voluntarily to join a communal society within the larger society. But those who favor the maximization of the state would not reciprocate: They would not permit a free society within their larger society. Statists just can't leave people to get on with their lives. They can't imagine civil society existing and prospering without extensive government control. This is what the rhetoric and policy proposals of the Obama administration are clearly telling us. We learned early that the president does not understand the roles of profit and loss in our economic affairs. He seems to believe that profit is a burden that is best removed so that costs might be lower. He either doesn't understa...

Published in The Tennessean , February 28, 2010 Social Security is based on poor business model by Richard J. Grant Suppose you decide that you need a vacation, and the price of that vacation just happens to be $5,000. But you don't have enough cash, so you borrow the $5,000 from your retirement account and place an IOU for that amount in your account. Now you can go enjoy your vacation and pay yourself back later – perhaps with interest. What is the effect of this action? Instead of $5,000 in cash assets, you now have a $5,000 IOU from yourself, as well as a $5,000 liability to yourself. Instead of a $5,000 net-asset position, you have happy vacation memories. Also, you might be pleased that you do not owe the money to a bank: you "owe it to yourself." If you are happy with this outcome, that is fine. But what does it mean for your future? If the IOU is still in your account when you retire, what is it worth? Let's pretend you could sell it for $5,000. But you would ...

Published in The Tennessean , February 21, 2010 Government regulations limit consumers' options by Richard J. Grant A business succeeds by moving resources from less-valued uses to higher-valued uses. The willingness of customers to pay for the product is a visible sign of its value to them. If customers provide a stream of revenue that significantly exceeds the firm’s expenditures, then the managers can conclude that the business is worth continuing. If the managers believe that the firm's capital could be better used in another line of business, then they will shift into that other use. Again, customer reaction will guide them in their decision as to whether or not to continue. If customers are not willing to pay enough to cover the firm's expenses, then the managers must act on that information and change course. Though we speak in terms of "businesses" and "managers," all commercial activity involves individual people interacting directly with one an...

Published in The Tennessean , February 14, 2010 Raising tax rates eventually results in smaller tax base by RICHARD J. GRANT Ibn Khaldun, the 14th-century historian, observed that, "It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments." Throughout history, governments have tried to squeeze more revenue from the people by progressively increasing tax rates. But beyond a certain point, and in the long run, increases in tax rates reduce the growth of the tax base. The amount of tax revenue the government is able to reap will be less than it would have been. The modern geometric representation of Ibn Khaldun’s observation is called the Laffer Curve (after the Nashville-based economist, Arthur Laffer, who has done a superb job of explaining the benefits of lower marginal tax rates). The curve shows that for any tax base, such as capital gain...

Published in The Tennessean , February 7, 2010 Liberals take Bush's few foibles and multiply them by Richard J. Grant In January 2001 when George W. Bush was sworn in as president, it probably never occurred to him that his administration’s economic policy would become the new standard of excellence for liberal Democrats. All of Bush's fiscal excesses, and there were many, are now the established benchmarks of liberal best practice. It is as if he has taken his place in history as the giant upon whose shoulders liberals now stand stretching out toward new adventures in profligacy. Of course liberals won't express it that way: they really can't quite see Bush as one of their own. But they are very quick to use him as justification for their own excesses. Not having a coherent theory of how the world works, they are unable to distinguish between what is a relevant "fact" and what is not. Without a coherent defense of their proposals, and unwilling to admit that ...

Published in The Tennessean , January 31, 2010 Obama's inexperience, arrogance endanger country by Richard J. Grant In the early 1990s, while working in South Africa, I met Nelson Mandela for the first time. He was gray and wizened, but distinguished, bright-eyed, and energetic. I liked him. But then he went on stage and gave a speech. Whatever hope I had been given by the solid nature of the man that I had just met soon evaporated. His words betrayed the fact that he still lacked the understanding needed to be leader of a prosperous country. He spoke of nationalization and redistribution as if they were natural and to be expected. Everyone knew that Mandela had been a socialist and that many of his colleagues and supporters were still card-carrying Communists. But it had been barely two years since the Berlin Wall had come down, and the faith of most socialists had been severely shaken. It was that event that had opened the way to the unbanning of the ANC and to Mandela's rele...

Published in The Tennessean , January 24, 2010 The Fed's philosophy creates financial dragons by Richard J. Grant George Santayana's admonition, "Those who cannot remember the past are condemned to repeat it," is much-quoted and sometimes taken to heart. But it does not imply its often-assumed corollary, "Those who remember the past are guaranteed not to repeat it." The trouble with experience and the study of history is that neither presents us with self-evident life lessons. The lessons learned depend on the intellectual makeup of the observer. It depends on what we have within us to interpret the workings of the world. Although history never repeats exactly, we do see the same kinds of mistakes recur. Despite having a "student of the Great Depression" on the Federal Reserve Board during the past 10 years, we still found ourselves being threatened with economic depression. In his writings and speeches, we see that Ben Bernanke, now Fed chairman, ...

Published in The Tennessean , January 17, 2010 People still believe 'no cost' actually means free by Richard J. Grant Sign in a French hotel: "Breakfast is free." Sign in a German hotel: "You will pay for breakfast whether you eat it or not." Regional differences in breakfast habits aside, both signs say the same thing. In both hotels the same person pays for breakfast: you, the customer. That is what we must remember whenever the government offers us something "free." We must also be wary of promised cost savings. There are very few services that any government is able to offer more cheaply than could be done in the private market. In fact, we are lucky when a government can provide a service at only double the cost found in the private market. Many voters still believe they're getting something for nothing — and for some this could be true. But it can never be true for everyone in total. The "something-for-nothing" mentality, especi...

Published in Business Day , Thursday, January 14, 2010 Why SA would find weak rand more of a burden than a boon by Richard Grant THERE is an unfortunate tendency to blame currency strength for the relative slowness of SA’s recovery from economic recession. This assignment of blame is unjustified, but it is the mantra of the perpetual lobby for a weaker rand. During the past year, the rand has risen against the dollar, the euro, and a trade-weighted basket of currencies. But the exchange rate with gold remains volatile and, though the five-year uptrend in the rand-gold price seems to be slowing, it is too soon to declare the rand “strong” by that measure. The dollar, the euro, and all the other fiat currencies are, by definition, man-made currencies. This characteristic, which they share with the rand, makes them all susceptible to inflationary bias, especially during a recession. As a standard by which to judge the rand’s performance, they are a slow heat. The commodity money — gold — ...

Published in The Tennessean , January 10, 2010 Government interference led to financial crisis by Richard J. Grant What is the purpose of most government regulations? Answer: To correct the problems created by previous government regulations. This should be a big lesson of the recent financial crisis. Government regulations, like drugs, have side effects that can accumulate and overshadow the benefits. Also, it is not mere cynicism to note that there are interest groups that support particular regulations precisely because of the side effects. In politics, there are goals that are publicly stated and that appear, on the surface, to be desirable. There might also be effects that would be extremely unpopular if voters knew about them. From the perspective of stated public policy, these undesirable effects would be seen as “unintended consequences.” A familiar example is minimum wage laws. The publicly stated, and publicly acceptable, motivation for such laws is to help low income earners...

Published in The Tennessean , January 3, 2010 Health-care debate shows liberalism has lost way by Richard J. Grant If you could choose the country of your birth, would you choose a free and prosperous republic where your neighbors would respect your right to life, liberty and property, or would you choose a socialistic country where none of these rights is truly respected and life is very different? If you were to be born with a congenital ailment, say a heart defect, which country would you choose? Would your answer change in any way? In the free republic, no one would speak of your "right to health care." But in the socialist, workers' paradise, the right to health care would be an article of faith. So which would you choose? Whatever your condition at birth, your location will affect your life expectancy and quality of life. People like to imagine that proclaiming a "right to health care" will guarantee everyone a longer and better quality of life. But this a...

Published in The Tennessean , December 27, 2009 Those who take medical risks get Congress' help By RICHARD J. GRANT "When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean — neither more nor less." "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master — that's all." We can only wonder what Humpty Dumpty would have said about health insurance. The word "insurance" used to have a clear meaning. But as insurance has come increasingly under the control of our masters in the various levels and branches of government, the thing itself bears less and less correspondence to the word we use to describe it. Life comes with a natural uncertainty, and each of us must find a way to handle this fact. We can identify and, in many cases, measure the various risks that we face....

Published in The Tennessean , December 20, 2009 Constitution keeps us on the straight and narrow Richard J. Grant In Homer's epic, The Odyssey, Ulysses knows that he, like other men, will not be able to resist the Sirens' song and the temptation to get closer and turn his ship into the rocky shores of destruction. He wants to lead his ship and crew safely past the land of the Sirens, but he also wants to hear the Sirens' song and to know when he has passed the danger. So he orders his men to fill their ears with beeswax and to bind him tightly to the mast so that he can take no action that might endanger the ship as his men continue to row. Each of us has lived a similar story in that we have adopted rules of conduct that might at times clash with our temptations but guide us safely through the challenges of life. Sometimes we adopt these rules consciously and take responsibility for living up to them. But for the most part we absorb such rules, as part of our growing up, f...

Published in The Tennessean , Sunday, December 13, 2009 Don't confuse environmentalism with science by Richard J. Grant Truth is not determined by majority vote. Any talk of a "consensus" in science is best not taken as the final word. As Somerset Maugham once put it, "If 40 million people say a foolish thing it does not become a wise one, but the wise man is foolish to give them the lie." Climatology is a science, not to be confused with environmentalism. The heart of environmentalism is not to be found in the natural sciences. It is ideology and nothing more. That is why it ends in "-ism." Environmentalism is itself not a monolith, but its dominant strand is distinctly statist in character. As such, its main nemesis is the science of economics, not climatology or any of the other natural sciences. A sound understanding of economics is all that is needed to discredit the emerging interventionist social agenda of the environmental movement. The methods...

Published in The Tennessean , Sunday, December 6, 2009 Fudged global-warming data melt under scrutiny by Richard J. Grant Have you noticed how often it is assumed that people in business are ruthless, greedy and unprincipled in their pursuit of profit, but that people in government are assumed to be selfless, benevolent and unerring in their pursuit of social justice? Is there something about the two types of service that magically transforms human nature, or is there just some mysterious sorting mechanism? Here's an example. A corporation, let's say a big oil company, gives a monetary grant to a group for the purpose of funding research related to the issue of climate change. Around the same time, a government agency gives a monetary grant to another group, also for the purpose of funding research related to the issue of climate change. Is there a difference? Are the results of the two grants portrayed in the media in exactly the same way? If the research results cast doubt on...

Published in The Tennessean , Sunday, November 29, 2009 Government intrusion is not the American way by Richard J. Grant When talking to Canadians about the drawbacks of their universal healthcare system, I often heard the retort, "But I sure don’t want an American-style system!" My honest response was, “Don't worry, Americans don’t have one either.” “American-style” used to connote “free and prosperous.” Respect for economic freedom has always been associated with the American way of doing things. Now, although this association persists in our minds, it does not persist in the reality around us. Government is already the largest medical "insurer" in the country, and pays at least half of all US medical expenditures. It is also the most wasteful. The Medicare program is an actuarial disaster that, within five years, will begin running deficits that will increase rapidly over time, leaving it no way to cover its trillions of dollars of unfunded liabilities. Attem...

Published in The Tennessean October 11, 2009 Peace without freedom is no source of pride By Richard J. Grant "Peace" can mean different things to different people. At the superficial level, we speak of being at peace when we do not see actual war or acts of violence. But peace comes in at least two forms. There is the peace of free, voluntary cooperation; and there is the peace of subjugation. The first is the idealized American version: As individuals, we are free to associate or disassociate with others as we choose. We are free, and "have the right," to defend ourselves and our property against aggression, but we do not have the right to initiate the use force against those who respect our rights to life, liberty and property. Such a social environment fosters cooperation between fellow countrymen, even though they may be strangers. I might be friends with the local butcher, but loathe the baker; and I might never have met the candlestick maker. But I can find c...