Brian Gongol
Podcast: Updated weekly in the wee hours of Sunday night/Monday morning. Subscribe on Stitcher, Spreaker, Apple Podcasts, Google Podcasts, or iHeartRadio
With Hurricane Ike headed towards Florida, it's worth observing that natural disasters are getting bigger, not necessarily because they're becoming more intense -- but because we're putting more expensive stuff in the way. It's really our responsibility to prepare for those things to happen and to invest responsibly in disaster preparation steps and tools that will help preserve life and property when the inevitable disasters do happen. Like the hurricane that will strike New York City someday, probably sooner rather than later.
One of the beautiful things about a free market is that you have the freedom to do things that you love -- and you're under no obligation to do more of them than you choose to. So even if you make a fantastic pizza, the government can't step in and force you to make more of it. That may sound like an absurd proposition, but consider these observations: As tax rates rise, the government is (in a de facto way) forcing the pizza-maker to work harder in order to maintain his same standard of living. And when the government mandates that smoking be prohibited virtually everywhere, it tells him that he may own his pizza shop, but that doesn't mean he gets to decide what to do with it. And when the government bans foods with trans fats, it tells the pizza guy that he doesn't have the right to choose the ingredients he thinks make the best pizza in the universe. So even though the taxes may be paying for popular programs, and the smoking ban makes the restaurant more appealing to non-smokers, and the trans fat ban may prevent some pizza connoisseurs from getting heart disease, the accumulated impact of those regulations isn't really a lot different from forcing the pizza guy to make more pizzas at the barrel of the sheriff's gun.
The government has announced that it's nationalizing the country's two largest mortgage companies, because they've reached the point of insolvency. Nationalization is a really awful path to go down, but the real nationalization happened years ago when the government created the companies and took away the risk by giving them government backing. There are still many Americans being foreclosed out of their homes, and to the extent that the foreclosures mean that good people are left homeless because of forces beyond their control, that's a profoundly sad thing. But at the same time, the nationalization puts the American taxpayer at considerable risk and expense, even if it's the most dollar-efficient option available. Perhaps the best outcome from this would be a much freer, much more market-sensitive mortgage economy. Part of the blame for all of the unsustainable sub-prime loans that were issued belongs to the government's intervention, which has meant the giants of the mortgage industry could gamble (badly) without feeling the pain when their risks went wrong.
Imagine living to 110 years old. It's already happening more often than ever before, and it's not unthinkable that with progress against our biggest killers, like heart disease, cancer, stroke, and diabetes, that we could put 100-year lifespans within reach of many of us. That would be a grand achievement, but it could also get very expensive. We can make the costs affordable, but only if we're smart enough to use the power of market economics to do it. Europe is facing demographic trends that mean its population is expected to peak in 2035, and paying for their generous social safety net is going to be difficult -- especially if some of their smartest and most innovative workers move to the United States or elsewhere in pursuit of lower taxes and greater economic freedom. We need to read the writing on the wall and realize that our population is following some of the same trends as those in Europe -- and that unless we're about to start encouraging people to have much larger families, or opening the borders to larger numbers of new immigrants, we're going to have to expand our economic freedoms so that smart people will have the incentives to build a better financial future.
Speaking of the future, we've added some new items to the Future Scale, including the note that Vietnam will still be clearing mines from the war we fought there until 2070. Vietnam, believe it or not, is one of the fifteen largest countries in the world. And the United States is today Vietnam's third-largest trade partner. The land-mine story serves as a reminder that the side effects of war can last decades after the combatants have come to peace.
Take a listen to our podcast from this show.
Keywords in this show:
demographics •
Europe •
Fannie Mae •
Florida •
foreclosures •
Freddie Mac •
free markets •
free trade •
future •
futurism •
heart disease •
hurricanes •
land mines •
life expectancy •
mortality •
mortgages •
nationalization •
natural disasters •
New York City •
regulations •
smoking •
smoking bans •
small business •
social safety nets •
sub-prime lending •
taxation •
trade •
trans-fats bans •
Vietnam