Paul M. Jones

The ultra-poor not only feed, house, and clothe themselves; they raise children and work hard to give them a better life. Portfolios shows us how they do it, relying heavily on financial diaries kept by villagers and slum dwellers in South Africa, India, and Bangladesh.

The main lessons:

1. The income of the ultra-poor is not only low, but highly variable. They rarely have regular jobs in a "sweatshop." Instead, they desperately cobble together income from many different sources. Many days they earn nothing at all.

2. No one, no matter how poor, lives "hand to mouth." Even the poorest people save money, make investments, and plan ahead.

3. The poor also borrow a lot of money. Who would lend to them? For the most part, other poor people - family, savings clubs, small-time loan-sharks. The rates are astronomical - 20% per month is pretty common.

4. Even the poorest people spend a lot of money on things other than food. One of their main reasons for saving and borrowing is to pay for relatively lavish weddings and funerals.

When reading this book, I had two conflicting reactions.

One was optimistic: "Isn't it great to see all the clever strategies the world's poor use to better their lives?" It's inspiring - and humbling - to learn that people in dire straits see themselves as protagonists - not victims.

My other reaction, though, was frustration. Yes, the world's poor are striving to better their lot. But what they really need isn't small-scale entrepreneurship and micro-credit. It's employment in the formal sector, and access to international credit markets. What they need, in short, is globalization. Either they need to come to us, or our institutions need to go to them.

via Thumbs Up for Portfolios of the Poor, Bryan Caplan | EconLog | Library of Economics and Liberty.

GM's main problem is not that the market is unreasonably unwilling to finance a potentially profitable company. Nor that it can't produce an awesome small car that shockingly few people want to buy. (Believe me, as the owner of a tiny, ultra-efficient car, I would that there were higher demand for my rapidly depreciating asset). GM's main problems are

1) A terrible, bloated cost structure

2) A terrible, bloated bureaucracy

3) A bunch of meh car lines

Which of these is the government going to solve? That terrible, bloated cost structure supports a bloated union whose jobs are the entire rationale for the government intervention. Leaning on the parts suppliers just risks UAW jobs further down the supply chain. Maybe we can take it out of the budget for copy paper and pencils.

Forgive me if I am skeptical that the government is going to show GM how to streamline its bureaucracy. Nor do governments historically have a good record as cutting-edge auto designers.

All the government can give GM is money. Our money. Perhaps we should change the name to American Leyland.

via What's Good for GM isn't What's Good For America.

Currently before the House Judiciary Committee, "The Denying Firearms and Explosives to Dangerous Terrorists Act of 2009 would authorize Attorney General Eric Holder to deny the sale or transfer of firearms to known or suspected terrorists--a list that could extend beyond groups such as radical Islamists and other groups connected to international terror organizations," Fox News reported.

Who could argue about denying arms to terrorist? No one. Yet, with this bill, the devil’s in the details.

"Critics say the names of suspected terrorists could be drawn from existing government watch lists that cover such broad categories as animal rights extremists, Christian identity extremists, black separatists, anti-abortion extremists, anti-immigration extremists and anti-technology extremists."

In effect, any group or people who someone might want to label as "extremist" or "anti."

via Gun Digest - Federal "Terrorist" Legislation Could Threaten Gun Owners.

At best, the rising cost of the debt would intensify pressures to increase taxes, cut spending -- or create bigger, unsustainable deficits. By the CBO's estimates, interest on the debt as a share of federal spending will double between 2008 and 2019, to 16 percent. Huge budget deficits could also weaken economic growth by "crowding out" private investment.

At worst, the burgeoning debt could trigger a future financial crisis. The danger is that "we won't be able to sell [Treasury debt] at reasonable interest rates," says economist Rudy Penner, head of the CBO from 1983 to 1987. In today's anxious climate, this hasn't happened. American and foreign investors have favored "safe" U.S. Treasurys. But a glut of bonds, fears of inflation -- or something else -- might one day shatter confidence. Bond prices might fall sharply; interest rates would rise. The consequences could be worldwide because foreigners own half of U.S. Treasury debt.

The Obama budgets flirt with deferred distress, though we can't know what form it might take or when it might occur. Present gain comes with the risk of future pain. As the present economic crisis shows, imprudent policies ultimately backfire, even if the reversal's timing and nature are unpredictable.

The wonder is that these issues have been so ignored. Imagine hypothetically that a President McCain had submitted a budget plan identical to Obama's. There would almost certainly have been a loud outcry: "McCain's Mortgaging Our Future." Obama should be held to no less exacting a standard.

via Robert J. Samuelson - Obama's Dangerous Debt - washingtonpost.com.

A fun (and hypnotizing) audio/video mashup using Alice in Wonderland:

This music and video mash by Aussie band/guy Pogo is apparently built almost entirely from Alice in Wonderland audio/video.

via Yeah Right: Pogo.

Michael Shermer of Skeptic magazine talks about how he became a libertarian in two posts:

• Skepticblog » How I Became a Libertarian
• Skepticblog » The Other ‘L’ Word: Why I am a Libertarian.

First sign of a gun grab?

The Denying Firearms and Explosives to Dangerous Terrorists Act of 2009 would authorize Attorney General Eric Holder to deny the sale or transfer of firearms to known or suspected terrorists -- a list that could extend beyond groups such as radical Islamists and other groups connected to international terror organizations.

Critics say the names of suspected terrorists could be drawn from existing government watch lists that cover such broad categories as animal rights extremists, Christian identity extremists, black separatists, anti-abortion extremists, anti-immigration extremists and anti-technology extremists.

via Critics Deride Bill Designed to Keep Weapons Out of Terrorists' Hands - Presidential Politics | Political News - FOXNews.com.

Glad I have my Unholy Trinity already: .40 pistol, 12-gauge shotgun, and .223 semi-auto rifle. Maybe it's time to stock *more* ammo.

Here are two totally intuitive common sense arguments:

"Buying local is better than buying from a chain store--the money stays in the community."

"New products only benefit the inventor--the money he receives necessarily reduces the money available to other producers."

Both are intuitive and common-sense. Both are wrong. Both illustrate an additional fallacy--that economics is "just common sense."

via Cafe Hayek: Following the money.

Wait, I thought it was only the evil Republicans who wanted to limit freedom of speech?

A private citizen objects peacefully to a proposed government action, and, as a result, is not only forced to appear before Congress to explain but also to be threatened with further burdens if he doesn't cooperate with the arrogant power-mongers on Capitol Hill.

via Cafe Hayek: What Happened to Freedom of Speech?.

And here I thought that dissent was the highest form of patriotism.

Here is Adam Smith speculating in The Wealth of Nations on the dynamic nature of the British labor market if all tariffs and barriers to imports were removed. Surely, there would be mass unemployment and catastrophic disruption. Not so, says Smith. And he uses a very elegant natural experiment to make his case:

via Cafe Hayek: Sudden disruption.

In short, "free trade now" is an excellent plan, one that we stand only to gain from.