Shlaes does not want us to compound the problem of economic illiteracy

Amity Shlaes invokes the theater, history, and economics in arguing for National Review Online readers about the importance of teaching the value of compound interest.

For their first encounter with the principle of compounding, many Americans have Walt Disney to thank. It is his and the Sherman brothers’ 1964 version of the musical Mary Poppins that includes the song “Fidelity Fiduciary Bank.” A row of senescent bankers, led by Dick Van Dyke playing an asthmatic in a false beard, conjure for the child Michael Banks what the tuppence in his hand can generate if left to grow undisturbed. “Railways through Africa,” the men and Michael’s father tell the boy. “Dams across the Nile,” and, most evocative of all, “plantations of ripening tea.”

Never mind that the Shermans and Disney made sure to offset that lesson in markets with another number, “Feed the Birds,” so manipulatively redistributionist that it could have been scored by Thomas Piketty himself. What matters is that young people got some exposure to the rhythm of markets. They take in, after a while, that money growing 9 percent a year takes only seven years to double, a mysterious expression of the so-called Rule of 72. And that as they stare at their screens and move about their mutual funds, they can mutter Van Dyke’s famous line to themselves: “Tuppence . . . [pause to wheeze] will [pause to wheeze] comPOUND.”

These days that balance is gone from Poppins. Producers of the recent Broadway show kept “Feed the Birds” and the compelling near-vagrant lady who argues for spending today. The “Fidelity Fiduciary” number, however, is omitted. The recent film Saving Mr. Banks, about the making of Disney’s Poppins, does reference “Fidelity Fiduciary,” but it spends much more time reminding us that the author of the original Mary Poppins book, P. L. Travers, herself didn’t care for money.

The missing compounding principle in the Broadway Poppins in turn reflects the absence of this principle in our political culture. Compounding and redistribution used to be conveyed in tandem. Now, our culture pounds the theme of redistribution 24/7 and skips the rest. …

… The children of the wealthy still get herded quietly to the bank and learn about the Rule of 72. But the rest of the children in the country learn only about fairness, tax breaks, and evil plutocrats. Whatever is wrong with banks and banking law, and there is plenty, and whatever is wrong with markets, they still have the power to do for people much more than any tax committee can.

To restore the tarnished bank in the American mind requires more resources, political, legislative, and financial, than 1,000 Disney musicals. Banks should be allowed to fail, as “Fidelity Fiduciary” nearly does in the Poppins film. But a first step in the right direction might be to provide a little exposure of the compounding principle wherever possible, highlighting the historical record. Compounding, after all, is such a powerful engine of social mobility that it leaves the tax code in the dust. No one ever became rich from the EITC.

Carson urges return to American exceptionalism

Neurosurgeon and freshly minted political rock star Ben Carson offers National Review Online readers a history lesson about American exceptionalism.

What is disturbing in the pursuit of goodness is the turning of a blind eye toward corruption, much like the Romans did before the fall of their empire. Episodes such as the Internal Revenue Service scandal should alarm all Americans, regardless of political affiliation. The fact that one party has characterized it as a “phony scandal” tells you a great deal about the loss of honesty in our society.

The fact that one party is willing to use its majority status to cram a health-care bill down the throats of the minority party and the American people and then refuses to acknowledge the obvious illegitimacy of a bill passed largely on the basis of false information provides a barometer on the lack of importance placed on virtue in our society today. How can such a society in any way claim to be good?

How can a society that kills millions of innocent unborn babies and then labels anyone opposing the practice “anti-woman” claim even a modicum of goodness? How can a nation that uses its news media to subtly trash traditional families, promote a drug-filled lifestyle, and ridicule faith in God claim the mantle of righteousness?

I could go on pointing out how far we have strayed from our Judeo-Christian roots. For some, such a departure cannot come soon or dramatically enough. However, I believe the majority of Americans understand that we are different from everyone else, and that difference had a great deal to do with our rapid rise to the pinnacle of world power and wealth.

As we depart from our former values of decency, honesty, compassion, and fairness, our status as a blessed nation will also be diminished.

Our decline is not necessary if we can learn from the mistakes of others and reclaim the values upon which our nation was built. I am not advocating a national religion, but I do think we should seriously consider the words of John Adams, who said, “Our Constitution was made only for a moral and religious people. It is wholly inadequate for the government of any other.”

America can be great, but it requires real courage and conviction to resist the urge to be “cool.”

New Carolina Journal Online features

Barry Smith reports for Carolina Journal Online on the heated race for the Republican nomination in the 7th District congressional election.

Roy Cordato’s Daily Journal explains how a faulty theory known as Keynesianism has hurt the minimum wage debate.

Latest McKinsey Report: less than 1/3 enrollees previously uninsured.


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Since the rollout of Obamacare’s exchanges in October 2013, McKinsey and Co. has surveyed a national sample of individuals eligible for an Obamacare qualified health plan within the individual health insurance market.

The slide above illustrates just one snapshot of the study’s main mission: to understand eligible consumer behavior when selecting/purchasing  individual health policies both on and off the ACA exchanges.  McKinsey notes:

Of all February respondents who reported they selected a new 2014 product (insured who switched, previously uninsured who enrolled), 27 percent were previously uninsured, compared with 11 percent in the earlier surveys.     

More and more reports are being released that focus on the impact of Obamacare in the individual health insurance market.  These studies are asking the critical questions that will remain unknown for some time: How many previously uninsured are now gaining coverage?  How many individual policyholders were previously insured but had to switch to an Obamacare compliant policy?  Who has yet to pay their premium? How many individuals will consistently pay their monthly premium over the year?  Results will certainly vary due to different sample sizes and methodologies, but they are still worth observation.

King Puritan thinks he’s banned his way into heaven

And my heaven will be a big heaven
And I will walk through the front door.
— Peter Gabriel, “Big Time”

Former New York City Mayor Michael “Arbitrary and CapriciousBloomberg made a very telling boast recently.

He gave the New York Times, in the course of announcing a $50 million campaign against the National Rifle Association, the following vision of heaven:

Pointing to his work on gun safety, obesity and smoking cessation, [Bloomberg] said with a grin: “I am telling you if there is a God, when I get to heaven I’m not stopping to be interviewed. I am heading straight in. I have earned my place in heaven. It’s not even close.”

As George Mason professor of law F.H. Buckley observed in his book The Morality of Laughter, “The modern Puritan devotes himself to political rather than religious duties.”

So apparently Bloomberg, who isn’t even sure God exists, had been using his public office trying to please his conception of what a god would be “if there is” one, by becoming the greatest Puritan of all through sheer political zeal. Ban sugar, ban salt, ban smokes (even e-cigarettes, since they look like real cigarettes), ban choice after choice after choice that might be used for “sin” so as to … um … skip the interview process for a joyless, priggish conception of heaven?

A heaven that, don’t forget, would ruled by a god who smiles on withholding food donations to homeless and poor people following a natural disaster since, after all, “the city is too busy with disaster recovery to properly assess salt, fat, and fiber levels in the donated food, and therefore can’t ensure that it meets nutritional standards.”

The most important graphic you’ll see today

Later today, the N.C. General Assembly’s Program Evaluation Division will discuss their new report, “Improved Administrative Program Monitoring by the Department of Public Instruction Can Save Over $19 Million Annually.”

The report is noteworthy for those of us in the education policy world, but one figure, in particular, should be of interest to all taxpayers:

(Note: FTE=full-time equivalent employees.)

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The key to escaping poverty is VPC

VPC stands for voluntary private cooperation and in this Freeman piece today, Duke professor Michael Munger makes the case that the key to escaping poverty and making economic progress is exactly that. Where VPC is little obstructed by coercive forces, people make headway against the natural condition of poverty; conversely, where coercive forces get in the way of VPC to a great extent, they can’t.

The US benefited from VPC throughout most of our history, but the relentless growth of government with its mandates and prohibitions and taxes and subsidies increasingly obstructs VPC.

Dispatches from the campaign trail, April 16, 2014

• The latest ad supporting the Senate candidacy of House Speaker Thom Tillis, R-Mecklenburg, from the Karl Rove-founded American Crossroads emphasizes Tillis’ opposition to Obamacare and incumbent Democratic Sen. Kay Hagan’s repeated use of the “lie of the year.”

• Fundraising numbers are trickling in from the first quarter of 2014, and in the 2nd Congressional District race, Keith Crisco ($450,000) outraised Clay Aiken ($233,000) on the Democratic side. Crisco burned through a lot of his money on advertising, leaving him with $38,000 cash on hand, compared with Aiken’s $125,000. Incumbent Republican Rep. Renee Ellmers raised nearly $325,000 and has nearly $450,000 on hand. Figures for her GOP rival Frank Roche were not available.

• In the 7th District, former state Sen. David Rouzer raised nearly $300,000 in the quarter and has $419,000 on hand. His main GOP rival, New Hanover County Commissioner Woody White, sent a press release reporting raising $400,000 in its “first 100 days” and having $100,000 cash on hand. All told, Republican Chris Andrade and Democrats Jonathan Barfield and Walther Martin Jr. reported roughly $50,000 among them.

• A recent poll from Hart Research Associates for CNBC paints a bleak picture for Democrats nationally. The percentage of the “Democratic base” — women, minorities, young people, and low-income voters — who are pessimistic about the economy has risen since President Obama’s re-election; moreover, the percentage of voters who think the minimum wage increase Obama and Washington Democrats are pushing would increase prices and make the economy “less fair” has gone up as well.