1 + 1 = 11

There was a time when math was taught using....mathematical concepts. Those days are now long gone.

First came "new" math. Then, in the 1990s, the National Council of Teachers of Mathematics got behind "new, new" math, also called "rainforest algebra" - using politically correct word problems. Now the Wall Street Journal reports yet another new method, "ethno-mathematics."

Educators calling themselves "critical theorists" believe students learn math best if it is taught "in ways that relate to their ancestral culture." In their view, traditional math (i.e. the math taught in all serious universities around the world) is the "math of the oppressors."

One textbook, Rethinking Mathematics: Teaching Social Justice by the Numbers, has topics like sweatshop accounting, the unequal distribution of wealth, and environmental racism.

The current generation of children won't know how to add, subtract, divide and multiply, but they will know liberal talking points. In other words, they will be dumb as rocks.

Mathematics is a discipline of "absolutes" and is not subject to individual interpretation or "shades of gray." Most serious industrialized nations of the world, particularly those in Asia, understand this. However, there are those in the United States who are more concerned about making a political statement than educating the country's future scientists, physicists and engineers.

The only people that ethno-mathematics will benefit are engineering student from Asia who will have unlimited employment opportunities in the United States. And you wonder why the U.S. economy relies upon cross-border outsourcing.

Regressive Thoughts on a Progressive Tax

We all know the income tax can be complicated, burdensome, even infuriating. But how does it square with the principles of the Constitution?

The founders of the United States were profound students of politics and history. They saw the protection of property rights, in the words of the most famous of the Federalist papers, as "the first object of government." Yet they saw that history had shown all known democracies to be "incompatible with personal security or the rights of property[.]"

Given the fact that the poor everywhere outnumber the rich, political philosophy had held that a government based on majority rule was likely to lead to the misappropriation of the property of the few rich by the many poor.

The founders therefore included numerous provisions in the Constitution and bill of rights to protect the property rights of citizens. The Constitution also empowered the federal government to impose indirect taxes on commerce, such as tariffs, duties, and excise taxes, so long as such taxes were imposed uniformly throughout the United States.

Direct taxes, such as "capitation" or "head" taxes had be apportioned among the states according to their population.

The Constitution seems to have discouraged the adoption of any federal income tax until the Civil War. In 1861, Congress for the first time adopted a federal income tax to finance the war, but allowed it to lapse in 1872.

In 1894, Congress again adopted an income tax--a two percent flat tax on incomes over $4,000. The following year, however, the Supreme Court held the tax to be unconstitutional because it was an unapportioned direct tax.

This decision holding the federal income tax to be unconstitutional is one of the few Supreme Court cases ever to have been overturned by constitutional amendment. In 1913, the adoption of the sixteenth amendment removed all limitations on the imposition of federal income taxes.

Congress immediately enacted a federal income tax with low rates that affected only a few people with relatively high incomes. Over time, however, the federal income tax system has given rise to a situation much like that described by the Federalist, in which a majority appropriates the assets of the minority.

Every year for roughly the past 25 years, the Internal Revenue Service has compiled data regarding the share of all income taxes paid by tax filers from the highest to the lowest income earning families and individuals.

Despite the perennial rhetoric of class warfare that accompanies every political discussion of cutting income taxes, the IRS data show that the highest income earners pay a strikingly disproportionate share of all income taxes. The data also show this state of affairs has worsened over the past 20 years.

The most recent available tax data cover the year 2001. That year, the top one percent of taxpaying families and individuals earned over $292,913; the top 10 percent earned over $92,754; the top 25 percent earned over $56,085; and the top 50 percent earned over $28,528.

Any one or all of these income categories are variously referred to as "the rich" in political debates regarding income tax levels. It is nevertheless unlikely that many families who do the hard work (frequently in multiple jobs) think of themselves as rich.

The data for 2001 show:

* The top 1 percent of taxpayers earned 17.5 percent of all adjusted gross income, but paid 33.9 percent of all federal personal income taxes.

* The top 10 percent of taxpayers earned 43.1 percent of all adjusted gross income, but paid 64.9 percent of income taxes.

* On the other hand, the bottom 50 percent of taxpayers earned 13.8 percent of all adjusted gross income, but paid only 4 percent of income taxes.

In other words, the top 10 percent of tax filers were responsible for two of every three dollars paid in income taxes in 2001, while the bottom half of all those who file tax returns paid essentially no income taxes.

For the bottom half of tax filers who receive hundreds of billions of dollars in government benefits but pay essentially no income taxes, political debate about taxation has little personal meaning except insofar as they may aspire to earn higher incomes in the future.

Many Americans would see the present system of federal income taxes to be unfair if they knew the facts. These facts, however, are almost never reported in the mainstream media.

The so-called progressivity of the federal income tax system is both fundamentally unfair and inconsistent with the principle of equal rights that underlies the Constitution.

The Role of Prices

The fallout from Hurricane Katrina has featured a lot of ignorance and demagoguery about prices. Let's look at some of it. One undeniable fact is that the hurricane disaster changed scarcity conditions.

There are fewer stores, fewer units of housing, less gasoline and a shortage of many other goods and services used on a daily basis. Rising prices are not only a manifestation of these changed scarcity conditions, they help us cope, adjust and get us on the road to recovery.

Here's a which-is-better question for you. Suppose a hotel room rented for $79 a night prior to Hurricane Katrina's devastation. Based on that price, an evacuating family of four might rent two adjoining rooms. When they arrive at the hotel, they find the rooms rent for $200; they decide to make do with one room.

In my opinion, that's wonderful. The family made a rational economic decision, which made a room available for another family who had to evacuate or whose home was destroyed. Demagogues will call this price-gouging, but I ask you, which is preferable: a room available at $200 or a room unavailable at $79?

Rising prices get people to voluntarily economize on goods and services rendered scarcer by the disaster.

After Hurricane Katrina struck, gasoline prices shot up almost a dollar nearly overnight. Some people have been quick to call this price-gouging, particularly since wholesalers and retailers were charging the higher price for gasoline already purchased and in their tanks prior to the hurricane.

The fact of business is that what a seller paid for something doesn't necessarily determine its selling price. Put in a bit more sophisticated way: Historical costs have nothing to do with selling price.

For example, suppose you sell the house that you purchased for $100,000 in 1990. If you sell it for $250,000 (today's price for its replacement), as opposed to what you paid for it, are you guilty of price-gouging?

Recovering from Katrina means resources will have to be moved to the Gulf Coast. There is one simple question to ask, how does one get electricians, plumbers and other artisans to give up their comfortable homes and livelihoods in Virginia and Pennsylvania and travel to Mobile and New Orleans to help in the recovery?

If you said pay them higher prices, go to the head of the class. Higher prices, along with windfall profits, are economic signals of unmet human wants. As such, they encourage producers to meet those human wants.

Politicians of both parties have rushed in to exploit public ignorance and emotion. Last week Illinois Gov. Rod Blagojevich (Democrat) threatened to prosecute gas companies. Texas Attorney General Greg Abbott (Republican) is threatening legal action against what he called "unconscionable pricing" by hotels. Alabama Attorney General Troy King (Republican) promises to vigorously prosecute businesses that significantly increase prices during the state of emergency.

Even the Bush administration has called for the Justice Department and the Federal Trade Commission to look for evidence of price-gouging, and Congress plans to hold hearings on oil company "price-gouging."

There's an important downside to these political attacks on producers. What about the next disaster?

How much sense does it make for producers to make the extra effort to provide goods and services if they know they risk prosecution for charging what might be seen as "unconscionable prices"? Politicians would serve us better by focusing their energies on tax-gouging.

FEMA versus Wal-Mart

Whatever later investigation may turn up about the mistakes of the Federal Emergency Management Agency (FEMA) in New Orleans, it is unlikely to show the shrill charges of "racism" to be anything other than reckless political rhetoric.

FEMA has bungled other emergencies where most of the victims were white and in previous administrations. Like many government bureaucracies, FEMA is an equal-opportunity bungler.

Many people who think that government is the answer to our problems do not bother to check out the evidence. But it can be eye-opening to compare how private businesses responded to hurricane Katrina and how local, state and national governments responded.

Well before Katrina reached New Orleans, when it was still just a tropical depression off the coast of Florida, Wal-Mart was rushing electric generators, bottled water, and other emergency supplies to its distribution centers along the Gulf coast.

Nor was Wal-Mart unique. Federal Express rushed 100 tons of supplies into the stricken area after Katrina hit. State Farm Insurance sent in a couple of thousand special agents to expedite disaster claims. Other businesses scrambled to get their goods or services into the area.

Meanwhile, laws prevent the federal government from coming in without the permission or a request from state or local authorities. Unfortunately, the mayor of New Orleans and the governor of Louisiana are of a different party than President Bush, which may have something to do with their initial reluctance to have him come in and get political credit.

In the end, there was no political credit for anybody. There was just finger-pointing and the blame game.

Politics is only one of a number of reasons why governments are not the best handlers of many emergencies. Nor is the United States unique in this respect.

A few years ago, more than a hundred Russian sailors paid with their lives for their government's reluctance to accept an offer from the U.S. government to have our navy rescue the crew of a Russian submarine that was trapped under water. How would it look to the world if the American navy could save Russians who could not be saved by their own navy?

Public outrage within Russia after that episode caused the Russian government more recently to allow British naval experts to carry out a rescue of Russian navy men trapped under water in another submarine.

In both emergency times and normal times, governments have different incentives than private businesses. More fundamentally, human beings will usually do more for their own benefit than for the benefit of others. The desire to make money usually gets people in gear faster than the desire to help others.

This is not true of everybody. Virtually nothing is true of everybody. We rightly honor those who do their utmost to help others, in part because not everyone acts that way. It would undoubtedly be a better world if we all loved our neighbors as we love ourselves and acted accordingly.

But in the real world that we actually live in, the question is what set of incentives has the better track record for getting the job done -- and especially getting the job done promptly when time can be the difference between life and death.

The country does not have one dime more resources available when those resources are channeled through government. The resources are just handled less effectively by government and dispensed in an indiscriminate way that encourages people to continue locating in the known path of predictable disasters.

In Praise of 'Price Gouging'

One test of leadership in a crisis is whether politicians keep cool enough to resist populist furies, especially when it comes to the inevitable economic fallout. Sadly, that's not what we're seeing in the current demagoguery over alleged oil-profiteering.

"Price gouging," says Missouri GOP Governor Matt Blunt, "is unconscionable and illegal ... and should be rooted out and punished." In Georgia, Republican Governor Sonny Perdue has signed an emergency executive order imposing sanctions on service stations that raise their prices too much. In Illinois, Democratic Governor Rod Blagojevich has pledged to prosecute gas companies that profit from the price spike, as has Ernie Fletcher, his Republican counterpart in Kentucky.

Some 20 states, most of them in the south, already have anti-price-gouging laws on their books -- and many governors have declared emergencies to invoke them. These de facto price controls typically place ceilings of between 10% and 25% on how much companies can raise prices in the wake of a natural disaster. In almost all cases such laws are wrong-headed, because they exacerbate supply problems by short-circuiting the price system that matches supply with demand.

As infuriating as higher gas prices will be over the next weeks and perhaps months, there is one economic certainty here: If governments will not allow the price system to ration the demand for gas, a new "price" system will emerge called gas lines, which have already appeared in many locales.

Let's explain why prices have been rising. Katrina has knocked out about 90% of Gulf crude oil production and about 80% of natural gas output. That translates into about two million barrels a day that are not available to consumers, an 11% decrease in supply. This means that in the near term Americans are going to have to consume two million fewer barrels of gas every day, at least until the refineries are brought back on line and increased output and supplies from other nations arrive. The way the market achieves this reduction in consumption is through a higher price.

The argument is also made that energy companies are reaping windfall profits from the Katrina catastrophe. That is in one sense true -- the oil they've already extracted and refined is more valuable now, but artificially holding down the price of gas makes a bad situation worse.

This is also why many of the nation's governors are misguided, even if well-intentioned, in their attempts to suspend state gas taxes. Given the high demand for gas and constricted supply, this gas tax cut will have one of two undesirable consequences. If the savings are somehow passed on to consumers at the pump, demand will be elevated, thus heightening the risk of gas lines and/or "sold out" signs at service stations. The alternative is that energy companies will keep the market-clearing pump price the same, and pocket the 10 to 20 cents a gallon reduction in the tax -- which would only increase their windfall. Either way, consumers won't benefit.

So are the gas sellers guilty of "profiteering?" Price gouging laws say companies can't charge significantly more than their "cost." But what matters for wholesalers and gas stations isn't what they paid for the last tanker of fuel but what they expect to pay for the next one. Economists call this the "replacement cost," and any gas station owner would soon be out of business if he charged $2 a gallon for gas that he knew would cost him $2.50 a gallon to replace. As these replacement costs soar, it is entirely appropriate for gas stations to raise prices on a daily, or even hourly, basis.

"If prices do not increase," explained the White House Council of Economic Advisers in a section on "unexpected shortages" its 2004 Report to the President, "consumers do not receive a signal to cut their consumption and suppliers might not have the proper incentives to increase supply adequately."

Anti-gouging laws also punish companies for building excess capacity and reserves in advance of a crisis like the one we're now having. One lesson of Katrina is that we should reward companies for stockpiling oil and gas for the times when it is most urgently needed. Price gouging laws give them no incentive to endure the costs of carrying this excess inventory.

This page could be filled with all the ways government has undermined U.S. energy security and raised production costs. These include reformulated gas mandates, prohibitions on offshore and Alaska oil drilling, and environmental regulations and price controls that go a long way to explaining why not a single new oil refinery has been built in the U.S. since 1976. Not one -- in 29 years.

These are the longer-term causes of the post-Katrina price increases. And they are energy policy dysfunctions that Congress would do well to fix before the memory of this catastrophe fades. In the meantime we can only hope politicians don't make this crisis worse by engaging in profiteering of their own, at everyone else's expense.

Katrina Exposes the Man-Made Disaster of the Welfare State

It took four long days for state and federal officials to figure out how to deal with the disaster in New Orleans. I can't blame them, because it also took me four long days to figure out what was going on there. The reason is that the events there make no sense if you think that we are confronting a natural disaster.

If this is just a natural disaster, the response for public officials is obvious: you bring in food, water, and doctors; you send transportation to evacuate refugees to temporary shelters; you send engineers to stop the flooding and rebuild the city's infrastructure.

For journalists, natural disasters also have a familiar pattern: the heroism of ordinary people pulling together to survive; the hard work and dedication of doctors, nurses, and rescue workers; the steps being taken to clean up and rebuild.

Public officials did not expect that the first thing they would have to do is to send thousands of armed troops in armored vehicle, as if they are suppressing an enemy insurgency. And journalists initially did not expect that the story would not be about rain, wind, and flooding, but about rape, murder, and looting.

But this was not a natural disaster. It was a man-made disaster.

The man-made disaster is not an inadequate or incompetent response by federal relief agencies, and it was not directly caused by Hurricane Katrina. This is where just about every newspaper, television channel and Democrat political operative has gotten the story wrong.

The man-made disaster we witnessed in New Orleans did not happen over the first four days after Katrina hit. It happened over the past four decades. Hurricane Katrina merely exposed it to public view.

The man-made disaster is the welfare state.

During the first few days, the news from New Orleans was confusing. People were not behaving as you would expect them to behave in an emergency—indeed, they were not behaving as they have behaved in other emergencies. That is what has shocked so many people: they have been saying that this is not what we expect from America. In fact, it is not even what we expect from a Third World country.

When confronted with a disaster, people usually rise to the occasion. They work together to rescue people in danger, and they spontaneously organize to keep order and solve problems. This is especially true in America. We are an enterprising people, used to relying on our own initiative rather than waiting around for the government to take care of us.

I have seen this a hundred times, in small examples (a traffic light has gone out, causing ordinary citizens to get out of their cars and serve as impromptu traffic cops, directing cars through the intersection) and large ones (the spontaneous response of New Yorkers to September 11).

So what explains the chaos in New Orleans?

To give you an idea of the magnitude of what is going on, here is a description from a Washington Times story:

"Storm victims are raped and beaten; fights erupt with flying fists, knives and guns; fires are breaking out; corpses litter the streets; and police and rescue helicopters are repeatedly fired on.

"The plea from Mayor C. Ray Nagin came even as National Guardsmen poured in to restore order and stop the looting, carjackings and gunfire....

"Last night, Gov. Kathleen Babineaux Blanco said 300 Iraq-hardened Arkansas National Guard members were inside New Orleans with shoot-to-kill orders.

" 'These troops are...under my orders to restore order in the streets,' she said. 'They have M-16s, and they are locked and loaded. These troops know how to shoot and kill and they are more than willing to do so if necessary and I expect they will.' "

The reference to Iraq is eerie. The photo that accompanied this article shows a SWAT team with rifles and armored vests riding on an armored vehicle through trash-strewn streets lined by a rabble of squalid, listless people, one of whom appears to be yelling at them. It looks exactly like a scene from Sadr City in Baghdad.

What explains bands of thugs using a natural disaster as an excuse for an orgy of looting, armed robbery, and rape? What caused unruly mobs to storm the very buses that arrived to evacuate them, causing the drivers to speed away, frightened for their lives? What caused people to attack the doctors trying to treat patients at the Superdome?

Why did people responding to natural destruction cause further destruction? Why did they attack the people who were trying to help them?

While watching the coverage one night on Fox News Channel, the "crawl"—the informational phrases flashed at the bottom of the screen on most news channels—gave some vital statistics to explain the scene I was watching: 75% of the residents of New Orleans had already evacuated before the hurricane, and of those who remained, a large number were from the city's public housing projects.

I then heard reports from CNN and Fox, which indicated that the city had no plan for evacuating all of the prisoners in the city's jails—so they just let many of them loose.

There is no doubt a significant overlap between these two populations--that is, a large number of people in the jails used to live in the housing projects, and vice versa.

There were many decent, innocent people trapped in New Orleans when the deluge hit—but they were trapped alongside large numbers of people from two groups: criminals—and wards of the welfare state, people selected, over decades, for their lack of initiative and self-induced helplessness. The welfare wards were a mass of sheep—on whom the incompetent administration of New Orleans unleashed a pack of wolves.

All of this is related, incidentally, to the incompetence of the city government, which failed to plan for a total evacuation of the city, despite the knowledge that this might be necessary. In a city corrupted by the welfare state, the job of city officials was to ensure the flow of handouts to welfare recipients and patronage to political supporters—not to ensure a lawful, orderly evacuation in case of emergency.

No one has really reported this story, as far as I can tell. In fact, most are actively distorting it, blaming President Bush, for example, for failing to personally ensure that the Mayor of New Orleans had drafted an adequate evacuation plan.

The worst example is an execrable piece from the Toronto Globe and Mail, by a supercilious Canadian who blames the chaos on American "individualism." But the truth is precisely the opposite: the chaos was caused by a system that was the exact opposite of individualism.

What Hurricane Katrina exposed was the psychological consequences of the welfare state. What we consider "normal" behavior in an emergency is behavior that is normal for people who have values and take the responsibility to pursue and protect them.

People with values respond to a disaster by fighting against it and doing whatever it takes to overcome the difficulties they face. They don't sit around and complain that the government hasn't taken care of them. And they don't use the chaos of a disaster as an opportunity to prey on their fellow men.

But what about criminals and welfare parasites? Do they worry about saving their houses and property? They don't, because they don't own anything. Do they worry about what is going to happen to their businesses or how they are going to make a living? They never worried about those things before. Do they worry about crime and looting? But living off of stolen wealth is a way of life for them.

People living in piles of their own trash, while petulantly complaining that other people aren't doing enough to take care of them and then shooting at those who come to rescue them—this is not just a description of the chaos at the Superdome. It is a perfect summary of the 40-year history of the welfare state and its public housing projects.

The welfare state—and the brutish, uncivilized mentality it sustains and encourages—is the man-made disaster that explains the moral ugliness that has swamped New Orleans. And that is the story that no one has reported.