National Institute of Health – budget does not need to increase.

On 9/29/2014, The Des Moines Register reported on its front page, “The budget for the National Institute of Health… has shrunk about 20% over the past decade…”  The article went on to describe the reduction in medical research dollars flowing to the University of Iowa and Iowa State University.  What was not stated was the the reduction in spending was not a reduction in the actual dollars.  It was only after adjusting for inflation that there was any decrease.  Over the last decade (2003 – 2013) the dollars increased by $2.2 billion from $27.1 to $29.3 billion, an increase of 8%.  Adjusted for inflation, this equals a cut of about 15%.  If we look at the prior decade, (1993 – 2003), the appropriations increased from $10.3  to 27.1 billion – an increase of 164%!  Taking the two decades together, the increase is 67%.  Over the same two decades inflation totaled 61%.  So, it appears that funding has mostly kept up with inflation plus a little more.

The demand for medical research funding paid for by taxpayers is almost unlimited.  Therefore we must first decide how much we can spend, and then select research projects based on our priorities.  Maybe the research that U of I and ISU have been proposing is not as high on our priority list as other proposals.  Or, maybe we don’t have as much political power as some of the other research institutions.

Source NIH appropriations: http://www.nih.gov/about/almanac/appropriations/part2.htm

Source inflation – see table 24:  http://www.bls.gov/cpi/cpid1408.pdf

Auto dealers want government force to protect them against competition

The Des Moines Register reported that the Iowa Department of Transportation, at the urging of the Iowa Automobile Dealers Association, has stopped Tesla Motors from allowing Iowans to test their all-electric car.  Under Iowa law, it is illegal to sell new cars without going through a dealer.  Auto dealers have a strong lobby in the Iowa Legislature. They want to use the force of government to prevent free market competition and voluntary free market transactions. Just like they lobby to keep it illegal for a dealer to be open on Sundays. Nobody wants these laws except the dealers.  Let your Iowa legislator know what you think.

 

Link to Register article:  http://www.desmoinesregister.com/story/money/companies/2014/09/25/tesla-test-drives-iowa-dot-west-des-moines-laws-illegal/16192477/

Inequality is unjust and immoral – if government force is used.

Today, 9/16/2014, The Des Moines Register once again reinforced the idea that there is something inherently wrong with increasing income inequality.  (See “Ag economy cited in study showing growth in rich-poor gap” – link below.)  In a free market, where government does not interfere except to stop fraud and force, people only become wealthy by producing things that others value and purchase voluntarily.  Under free market capitalism, voluntary trade only makes every participant richer.

Unfortunately, we don’t have a free market in much of our agricultural sector.  So, an important question is how did the wealthy gain their wealth. If they gained their wealth by receiving subsidies from our government, then they gained their wealth by making others poorer. Today, farmers receive various kinds of government subsidies, both directly and indirectly.  For example, crop insurance premiums are subsidized 60% by taxpayers, regardless of the income or wealth of the farmer. And, crop insurance not only covers losses from natural disasters, it also covers loss of profits due to lower crop prices. There should be no subsidy at all for crop insurance, but it is particularly distasteful when the subsidy goes to the rich.  So, we must blame our own government’s policies for at least some of the unjust and immoral aspects of income and wealth inequality.

Export-Import Bank need to end.

 

 

The essay in The Register on 9/15/2014, by Mary Andringa and Jay Timmons in support of reauthorizing the Export-Import Bank (Ex-Im Bank) was well done.  The fact that the Ex-Im Bank returned $1 billion in profits to the U.S. Treasury is very persuasive.  Of course the same thing could be said about the U.S. government getting into about any business.  If our government ran a grocery store or a tractor manufacturing plant, it is very likely that it could make a profit.  But we don’t (or shouldn’t) do things that way in the United States.

In this case, there is good reason to believe that privately owned banks could provide this kind of financing for our manufacturers who want to export their products to other parts of the world.  The manufacturers should be willing to guarantee the debt of their customers if that is what is needed to secure financing for their buyers.  The fact that Ex-Im Bank financing, “is available to any exporter of any size” does not mean that this isn’t an example of crony capitalism.  In this case, the crony capitalists just happen to be a very large group of manufacturers who want the government to guarantee loans for their foreign customers.

We have created a crutch for these businesses.  We need to take away that crutch and move towards free market capitalism.

Link to Register article:  http://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2014/09/15/iowa-view-export-import-bank-economic-engine/15650761/

Bitcoin – no historically proven value is a problem

Bitcoins (BTC) have relatively high value for the same reason that tulips had high value in the 1600s.  All things have exactly as much value as the good and services that people are willing to exchange for them.  Today, (9/14/2014) 1 BTCs can be exchanged for about $475.  The USD and BTC have one thing in common: Neither is backed by any commodity with historically proven value.  The USD is no longer backed by gold and BTC has never been backed by any physical commodity.   The U.S. Dollar does have one thing that BTC does not have: acceptance by the U.S. government for payment of debts owed to the government.   As long as the federal government taxes people, and as long as the federal government accepts  the USD in payment of taxes, then the USD will have that value.  The same is not true for BTC.   Unfortunately, in our current economy, I must hold a certain amount of USD in order live a reasonable life. But, most of my assets are held in the form of stock in businesses.

I believe that the future value of BTC will be about the same as tulip bulbs.  It would make sense to me to have and to own a cruuency that was backed by, for example, a specific number of shares of an S&P500 index fund, or by a total stock market index fund.  That kind of money would actually represent ownership in both physical and intangible assets that produce products and services that have historically been valued by many people.

Kurt Johnson, Urbandale, IA

Welcome Uber to Des Moines!

Des Moines and surrounding communities should welcome Uber, the internet based company that coordinates ride sharing as an alternative to taxis and limousines.  Uber is now available in the Des Moines area for both drivers (car owners) and for riders.  Uber takes advantage of the fact that most privately owned cars are very under used, and that many car owners have available time to provide a ride to those who need one.  What a great way to earn extra income, or to start your own business full time.  Uber does extensive background checks on people who want to provide rides in order to ensure a high level of safety.  Beyond that, Uber actively solicits riders to rate drivers on a scale from 1 to 5 with 5 being excellent.  It has been reported that Uber stops working with drivers who’s average rating falls below 4.6.  So, Uber strives for high quality.  (Uber drivers also rate passengers, so it is possible that Uber can also stop serving customers who are abusive.)  Although Uber will be very upsetting to existing taxi companies, the City of Des Moines and surrounding communities should make whatever legal and regulatory changes are needed to allow Uber to operate in the metro area.  If Uber is not doing enough to provide for reasonable customer safety, then laws and regulations should address those issues.  Licensing should not be necessary.  Generating tax revenues or protection of existing businesses should be considered in the process of making any needed changes.