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Ben Stein Wants Your Money - Open Knowledge — LiveJournal

May. 13th, 2006

05:30 pm - Ben Stein Wants Your Money

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Well, not exactly. Stein wants the Fed's to tax rich people more (1).

For reason's that I'll explain below, I think that's an unsound idea. However, let me tell you a story about "J" first.



Almost every family has a J, it seems. My friend B, for example. His parents are well-to-do, his father having spent most of his career as a C-level executive for Fortune 500 corporations. B's brother J is 19 years old. He lives at home while he attends college nearby.

That is, that's what his parents thought he was doing. Turns out he had flunked out months ago, and instead was spending his days smoking pot bought with his income as a part-time Walmart clerk, and boffing his Brazilian girlfriend.

J's parents don't know what to do with him. Should they kick him out? Will he straighten up, and fly right? Or will he become even more dissolute? At least if he stays at home, they can keep an eye on him.

Whether he stays or goes however, one thing everyone agrees on: don't give him more money. Any money given him now would just go up in a cloud of pot smoke.


But giving money to J pales in comparison to what Stein asks us to do in his most recent column.


Stein, of course, wants to raise taxes on "the rich" and give it to the government.

He trots out the tired nags that liberals have ridden to power for the past century. The rich make too much money. They're not paying their fair share of the government bill. He writes:


"But if they are superrich, they derive special benefits from life in the United States that the nonrich don't. For one thing, they can make the money in a safe environment, which is not true for the rich in many countries. It is just common decency that they should pay much higher income taxes than they do. Taxes for the rich are lower than they have been since at least World War II — that is to say, in 60 years.

This makes no sense in a world at war, in a nation with so many unmet social needs, in a nation with so many people without health care, in a nation running immense and endless deficits."


First of all, nothing's stopping Ben Stein from voluntarily giving more money to the Federal government. Anyone think Ben Stein actually does this?

[crickets]

If he doesn't think that the government is the best place to voluntarily invest his money, that wouldn't change if the money were taxed instead. It's still not the best place to put his money.

After all, Stein's wealth is not sitting under his mattress. It's profitably invested in companies that produce goods and services that other people voluntarily pay for. I'm sure that Stein very carefully picks and chooses his investments. If he makes a mistake, he will personally feel the pain of loss. (And conversely, the thrill of gain.)


Yet if that money were extracted from him, that decision-making would no longer be in his hands, but in the hands of Congress. What reason do we have to think that they would invest the money better than Stein himself would?

Let's look at one example of how our money is currently being spent.

On August 10, 2005, President Bush signed the $286.4 billion transportation bill. (Bush, incidentally, has never vetoed a spending bill. So much for Republican thriftiness.) The bill was packed with more than 6,371 special projects valued at more than $24 billion. Alaska, the third-least populated state, got the fourth most money for special projects -- $941 million.

Why?

Because Alaska House representative Don Young chairs the Transportation Committee.

The bill included $223 million for the "Bridge to Nowhere", a bridge that would've connected the city of Ketchikan (pop. 8,000) with Gravina Island (pop 50, plus bears and deer). The bridge would've been longer than the Golden Gate bridge and would've stood taller than the Brooklyn bridge. Only after intense negative media attention did Rep. Young and Sen. Ted Stevens agree to release Alaska from the obligation to build the bridge. However, Alaska still gets the money, and they can still build the bridge if they want to. (6), (8)

In 2004, our federal government taxed U.S. citizens 1.88 trillion dollars. Thus, for every man, woman, and child in the U.S. the feds extracted $6,285. On a per capita basis, more is spent on taxes (state and federal) than on food and housing combined. How much more money does Stein think the fed needs? (2)

Yet despite collecting 1.88 trillion dollars in taxes, it wasn't enough. They spent 2,292 billion (19.8% of our GDP). As a result, the deficit increased by 412 billion dollars. (3)

If the federal government were held to the same standard as corporations, it would be in bankruptcy and its executives would be in jail for accounting fraud. (7)

Why does Stein want to give money to a shady, bankrupt debtor? If the Feds can't stay within a 1.88 trillion budget, what makes Stein think that they will stay within a even larger budget?

Stein claims that the rich aren't paying their fair share of the total tax burden. How does Stein know this? By what criteria does he judge fairness?

In 2000, the top 1% paid 25.6% of all federal taxes, the top 20% paid 66.7% of all federal taxes. The bottom 60% paid less than 16% of all federal taxes. (5) Yes, the rich in the U.S. enjoy many advantages by living here. But they're paying far more than anyone else in the country. If anyone is not paying their fair share, it is the bottom 60%, who enjoy almost the same benefits as the rich, but only pay for 16% of the cost.

And if 66.7% isn't enough, what percentage must the rich pay before Stein thinks that the rich are paying their "fair" share. Seventy-five percent? A hundred? How does he arrive at this figure?

Stein argues that we need to pay our police and troops better. Lockheed Martin was just awarded a $6.1 billion contract to build 23 VH-71 helicopters. (4) One of those $110 million dollar helicopters will become Marine One, the presidential helicopter.

Assuming total compensation worth $75,000, just one of those helicopters would pay for 1,400 soldiers for a year. At 5% interest rates, the total for the fleet would pay for 4,000 troops indefinitely. Sure, the new helicopters have a "fold-down stair [that] spares the president from ducking during photogenic entrances and exits." But perhaps that money would be better spent on troop salaries?

Even if Stein favors the spending patterns of the current government, what happens when the next Bill Clinton and Democratic congress win power? The tax burden will probably not go down. Instead of going to pay for troops and police that Stein favors, how does Stein know that money will not go toward funding regulatory agencies that stifle new businesses, counter-productive welfare programs, and asphalt for the roads of West Virginia?


Stein's both a father and an economist. As a father, I'm sure he recognizes that J's parents should demand that their son shape up and start spending the resources he's got more wisely before giving him any more.

I just wish that, as an economist, he expected the same thing of our government.

(1) Ben Stein, New York Times, May 7, 2006 "Everybody's Business" column entitled "You're Rich? Terrific. Now Pay Up."
(2) http://www.whitehouse.gov/omb/budget/fy2006/tables.html
(3) http://www.nemw.org/taxburd.htm
(4) http://www.livescience.com/technology/060507_marine_one.html
(5) http://www.taxpolicycenter.org/publications/template.cfm?PubID=1000566
(6) http://www.washingtonpost.com/wp-dyn/content/article/2005/10/20/AR2005102001931.html
(7) http://www.mises.org/freemarket_detail.asp?control=395&sortorder=title
(8) http://www.taxpayer.net/Transportation/gravinabridge.htm(8)

Comments:

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From:crasch
Date:May 14th, 2006 12:55 am (UTC)
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Under this argument, nobody should pay any taxes, because anybody's individual contribution could be mismanaged.

Yes, and? In my view, ethically speaking, taxes are little different from the protection money collected by the mob. The less they get the better.

Until we can eliminate voters' unfortunate "they're all corrupt except my guy" attitude, the latter seems a lot more likely.

What makes you think that any additional taxes raised would go toward paying off the debt, and not toward more boondoggles, like domestic spying programs, military adventurism, or a continent wide wall across the Mexico border?

Since neither the Democrats or Republicans are likely to reduce spending, the most likely scenario is that the Feds will inflate the money supply until they can pay off the debt with devalued currency. (Assuming they bother to pay it off at all.)


The Republicans have demonstrated that they are no better than the Democrats when it comes to wasting money.

Yes, I agree. The Bush administration and Republican Congress is worse than Clinton. Though had he had a favorable Congress, I have no doubt that Clinton would've been just as bad or worse.

And Libertarians' insistence on eliminating useful social programs and important regulatory agencies makes them a completely unpalatable alternative for Americans....

Yes, that's true, libertarians might be more popular if they abandoned their beliefs. However, most voters are both ignorant and irrational on most issues. For example, according to the National Survey of Public Knowledge of Welfare Reform and the Federal Budget (1995), 41% of Americans believe that foreign aid is one of the two largest areas of federal spending. (In fact, it makes up less than 1%.) Three time as many believe that Christ was born to a virgin as believe in evolution (83% versus 28%). And 63 percent of Americans said they found the NSA [domestic spying] program to be an acceptable way to investigate terrorism.

Sure, libertarians might win more elections if they changed their platform. It sure seems to have worked for the Republicans. But what would be the point of winning elections only to implement a platform you believe to be ethically wrong and economically nonsensical?


...who like the idea of Social Security....

Government welfare reduces your incentives to be responsible and take care of your self. After all, if you can shift payment for your old age onto other people, why not be profligate with your money now?

Moreover, , as I mentioned previously, I don't think getting old or sick entitles you (or your agents) to take someone else's property.

and bottles of penecillin that actually contain penecillin.)

Libertarians are against fraudulent labelling. In a libertarian regime, that would still be illegal. Unlike pro-FDA supporters however, we think you should be able to decide for yourself what risks you take with your own body (and bear the costs). If a woman is competent enough decide on an abortion, she's also competent enough to decide which pills to take.
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From:crasch
Date:May 14th, 2006 05:48 am (UTC)
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Riiiiight. The government that is primarily made up of rich folks is going to inflate the currency so that their own money becomes valueless, all to pay off the national debt.

Well, they're still going to own hard assets -- real estate, gold, company shares. Moreover, inflation is not going to happen uniformly, all at once. As the money rolls off the presses, those first in line will get to spend the money at pre-inflation prices. I expect that wealthy cronies of the whoever is office will be first in line. As the increased money supply ripples throughout the economy however, prices will rise and the currency will be debased. Worst case scenario, the wealthy will transfer their wealth to legal regimes with stable currencies.

It's not as if it hasn't happened before.

To be enforced how?

All good questions. First, let me note that I hardly expect the sketch below to be persuasive to you, given your intellectual priors. Most of what I describe are, as yet, theoretical possibilities. If you want to pursue it further, I recommend reading some of the books at the end.

In the long run, I would like to see humanity organized as a multitude of small communites, bound loosely together by trade, and mutual defense treaties. There would be a wide variety of legal regimes. However, in most communities, most decision-making authority would be in the hands of individuals. Travel and trade between most communities would be easy. Secession would be as widely recognized as a fundamental right as freedom of speech is now.

To get there, I would like to:

a. radically downsize the federal government, and devolve power to individuals, and secondarily to the state and local governments. Only the courts and the military would remain at the federal level.

b. add a formal secession mechanisms to the federal legal system. If successful, I expect the U.S. to break up into a number of smaller, more managable states. (This may happen anyway, due to economic collapse, war, etc.)

c. increase the use of sortition, idea futures markets, and social policy bonds as alternative means of governance and funding of public goods.

d. support the development and growth of ocean and eventually space colonization technologies. For the reasons described in Patri Friedman's paper, Dynamic Geography: A Blueprint for Efficient Government, I expect ocean and space colonies to result in much more liberty friendly governments than land-based regimes.

Now, given current public attitudes, I expect the success of a) and b) to be in the distant future. However, most of the ideas in c) and d) can be profitably experimented with now.
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From:crasch
Date:May 14th, 2006 05:49 am (UTC)
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What's the point of being a party that consistently polls around 2% and will never have any real power? The ability to smugly point out where other people are going wrong?

You're quite right. However, given current public opinion, libertarians have few good options. In my opinion, if they want to win directly, libertarians should form a caucus within either the Democrat or Republican party. However, the more you compromise, the less the results are what you actually want. Certainly, the victory of the Republicans, who mouthed adherence to many libertarian ideals of small government, has done little actual good for libertarian causes and much harm.

On the other hand, as you point out, a principled third party will be a barely noticed loser.

In my opinion, libertarians should 1) concentrate their forces in a single state. 2) work toward demonstrating the technolgies in c) and d) above 3) check the growth of leviathan as much as they can within traditional party politics 4) work to change the culture through TV, books, movies, blogs, etc.
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From:crasch
Date:May 14th, 2006 05:54 am (UTC)
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f you want more information for why I want the goals above, and why I think they're feasible, I recommend the following books/articles. I realize that it's a lot of info, and if you were to read just one book, I would make it The Voluntary City.

The Voluntary City : Choice, Community, and Civil Society by Alexander Tabarrok. "....The Voluntary City investigates the history of large-scale, private provision of social services...Among the fascinating topics covered are: how mutual-aid societies in America, Great Britain, and Australia provided their members with medical care, unemployment insurance, sickness insurance, and other social services before the welfare state; how private law, known historically as the law merchant, is returning in the form of arbitration; and why the rise of neighborhood associations represents the most comprehensive privatization occurring in the United States today...."

See also Fred Foldvary's book, Public Goods and Private Communities.

Machinery of Freedom by David Friedman - How a polycentric legal system might work.

Free Market Environmentalism by Terry L. Anderson. - How markets and property rights can protect forests, air quality, etc.

FDA review How the FDA causes more harm than good.

Mutual Aid Societies -- How social services (welfare, care for orphans and the indigent) were provided prior to the introduction of the Great Society programs of the 60's.

Railroads and Regulation by Gabriel Kolko. Shows how regulatory agencies come to be captured by the industries they regulate, and are then used to bludgeon competitors.

The Medical Monopoly: Protecting Consumers Or Limiting Competition? by Sue Blevins. Shows how the AMA took control over the medical industry, and limited the supply of doctors by shutting down medical schools, many of them servicing blacks and women.

Child Labor and The Industrial Revolution by Clark Nardinelli. Shows how child labor laws were irrelevant at best, and harmful at worst.

Myth of National Defence edited by Hans-Hermann Hoppe. A collection of essays which describe how national defense could be privately produced. Available online here. An extended positive review: The National Defense Myth by Llewellyn H. Rockwell, Jr..

Anti-Jitney Laws Take People for a Ride by Lawrence W. Reed. How jitney cabs could provide cheap, flexible transportation --- and how they're regulated out of existence by taxi monopolies.

Home Economics. Profile of Harvard Economist Edward L. Glaeser, whose research demonstrated that most of the regional difference in housing prices is due to restrictive zoning.

Economic Laws of Scientific Research by Terence Kealey. How scientific research could be better funded by private organizations.

The Calculus of Consent : Logical Foundations of Constitutional Democracy by Gordon Tullock and James Buchanan. Applies economic analysis to politics. Explains why government 'solutions' to market 'failure' are often nothing of the sort.
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From:altamira16
Date:May 13th, 2006 11:08 pm (UTC)
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The fallacious part of this argument is that wealth is acquired by being virtuous and poverty is caused by not being virtuous. The person in your story wasted opportunities that were available. Not all people have the same opportunities.
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From:ernunnos
Date:May 13th, 2006 11:22 pm (UTC)
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While you can always find outliers and exceptions, in a decent system that is generally true. I grew up in poverty. I rode my blue lunch tokens and my public education to where I am today. The system was there, it worked, and I took advantage of it. A lot of people I knew didn't even bother to do that. I wouldn't call myself virtuous, just sick of being poor.

I'm firmly convinced that some people want to be poor. Or want to not be poor less than they want other things.
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From:altamira16
Date:May 13th, 2006 11:33 pm (UTC)
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Why does Paris Hilton deserve to be wealthy, or why do people who win the lottery deserve to be wealthy? Do they just want it enough?
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From:sgtkane
Date:May 14th, 2006 12:32 am (UTC)
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No one deserves to be wealthy any more than anyone deserves to be poor.

Paris Hilton is wealthy because her father and his father busted their asses to become wealthy. How they distribute that wealth (including giving it away to Paris) is their choice.

Or rather should be. They earned it.

I like ernunnos, grew up in a home where mac and cheese was a staple of our diet because its all we could afford. If it wasn't for the charity of our local church there were times when I wouldn't have had decent shoes or clothing.

I didn't like that life and I did what it took to make sure that my kids wouldn't have that life. Its not easy, but its well worth it.

And I resent the growing attitude of "You are doing better than others, so you owe those who aren't doing as well something".

I don't.

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From:altamira16
Date:May 14th, 2006 12:54 am (UTC)
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I have thought about the attitude of "owe others who aren't doing as well." That argument has an emotional appeal. For example, I support local theater because I feel that I should, but more importantly I enjoy theater (I hate musicals.) The deeper motive for giving to others is self-preservation. Create a gap wide enough, and someone will want what you have more than you do. That is happening now with jobs in the US. By giving out some of your wealth, you reduce reasons for other people to come along and take it away from you.
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From:sgtkane
Date:May 14th, 2006 01:13 am (UTC)
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I don't want to pay protection money and if someone can come along and take my job, then they deserve it.

As for supporting the things you enjoy, I have to be honest. After last years raise, I jumped a tax bracket and am now taking home less than I was before. The direct result of this is that some things and activities I supported before are no longer receiving that support. All because the government decided that it knew how to better spend my money than I did.

And then people like Ben Stein come along and say "Hey because we know how to better spend your money, we want to spend more of it!" and I cringe. And then I rage.

Pretty soon that rage will have to translate into action with unfortunate results.
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From:altamira16
Date:May 14th, 2006 12:09 pm (UTC)
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After last years raise, I jumped a tax bracket and am now taking home less than I was before.


I think that you are mistaking the effects of withholdings and tax brackets. For every extra dollar you make, your take home pay increases (it just doesn't increase as much as it used to.)
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From:sgtkane
Date:May 14th, 2006 04:42 pm (UTC)
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I don't mean to be rude, but please don't tell me I'm mistaken when after a 6% raise my take home pay actually dropped by 1.5% and tell me that what I'm seeing is that my take home pay isn't increasing as much as it used too.

I'm the one who has the paycheck and watches the deposits each month in my account. I'm the one who spoke with my tax accountant and financial planner to figure out what happened, and I'm the one who finds it about as amusing as the fact that some of my relatives received a larger tax refund than what they paid.

For example, last year if each of my paychecks was $100, this year after my raise I am now bringing home $97.5. Granted I will hit the max deduction on my Social Security sooner than I did last year, so it is quite possible my take home at the end of the year will in fact be higher than last year, but currently, on month to month my pay check is lower than it was last year.
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From:gustavolacerda
Date:May 15th, 2006 12:59 am (UTC)
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after a 6% raise my take home pay actually dropped by 1.5%

I would be interested in hearing what is causing this.
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From:ernunnos
Date:May 14th, 2006 04:00 am (UTC)
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The deeper motive for giving to others is self-preservation.

I do not consider "Your money or your life" a valid social contract.

If someone wants to take it they're welcome to try, just remember a few things. Freedom's just another word for nothing left to lose. I've had nothing to lose before, and I can do it again. But you put me in that situation, the same resourcefulness that got me out of poverty will be turned to making those who survive by threats suffer.

The poor aren't the only ones who can fight for self-preservation. And they can't afford as much ammo.

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From:ernunnos
Date:May 14th, 2006 03:50 am (UTC)
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Paris Hilton? Because her dad worked hard and has the right to spoil his daughter rotten if he wants. I think that's a horrible way to treat a daughter, but from an economic standpoint she's just a temporary rest stop for that money on its way to people who actually work for a living.

Lottery winners? Well, there are a lot more lottery losers than there are winners. The lottery is a tax on people who can't do math. In that sense, payouts to lottery winners are merely overhead, like the wages of IRS agents. We pay it because it brings back so much more. Do they deserve it? Sure, that was part of the deal. Someone's got to win every once in a while to keep the other suckers paying in. They took the chance, they're doing their part, they deserve it.

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From:herbaliser
Date:May 14th, 2006 03:06 am (UTC)
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You should read The Blank Slate.
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From:crasch
Date:May 14th, 2006 05:26 am (UTC)
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Thanks! It's on my list. Why do you think it's relevant?
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From:herbaliser
Date:May 14th, 2006 05:33 am (UTC)
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there are a few chapters on how taking human nature into account would help us form relevant policies on welfare, education, etc.
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From:crasch
Date:May 14th, 2006 05:54 am (UTC)
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Okay, thanks!
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From:perich
Date:May 14th, 2006 04:48 am (UTC)

This has to be a gag.

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This has to be a gag. Is this Ben "Bueller?" Stein? The same Ben Stein who had a column in the American Spectator for years? This has to be a gag.
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From:crasch
Date:May 14th, 2006 05:22 am (UTC)

Buehler? Buehler?

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Yep, it's that Stein.


He is an extremely well known actor in movies, TV, and commercials. His part of the boring teacher in Ferris Bueller's Day Off was recently ranked as one of the fifty most famous scenes in American film. Starting in July of 1997, he has been the host of the Comedy Central quiz show, Win Ben Stein's Money, a unique game show that pitted successful contestants against the titular host in the final rounds of play. Win Ben Stein's Money was a hit for the cable network, and the popular Stein additionally hosted his own talk show Turn Ben Stein On (also Comedy Central), which enjoyed a limited run from 1999 to 2000.

In 1973 and 1974, he was a speechwriter and lawyer for Richard Nixon at The White House and then for Gerald Ford. He has been a columnist and editorial writer for The Wall Street Journal, a syndicated columnist for The Los Angeles Herald Examiner (R.I.P.) and King Features Syndicate, and a frequent contributor to Barron’s, where his articles about the ethics of management buyouts and issues of fraud in the Milken Drexel junk bond scheme drew major national attention. He has been a regular columnist for Los Angeles Magazine, New York Magazine, E! Online, and most of all, has written a lengthy diary for ten years for The American Spectator. He also writes frequently for The Washington Post, The Wall Street Journal, op. ed. and almost every other imaginable magazine.
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From:perspectivism
Date:May 14th, 2006 06:59 am (UTC)
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and, great commentary!
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From:crasch
Date:May 14th, 2006 08:15 am (UTC)
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Thanks!
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