The Heritage Foundation offers a list of 50 Examples of Government Waste (link via Club For Growth), including a $2.6 million grant to train Chinese prostitutes to drink more responsibly on the job and the $73,950 that a recent audit showed had been billed to Air Force and Navy credit cards for services at "exotic dance clubs and prostitutes." There's also the $998,798 that the Pentagon spent "shipping two 19-cent washers from South Carolina to Texas." There's plenty of waste, fraud, and abuse in the private sector, too, and given the size of the federal budget, it's expected there would be some in the government. Some of the examples on the Heritage list are examples in which the system worked, and the waste was caught by internal government auditors or law enforcement. Still, it's hard not to shake your head in exasperation at some of these examples. The interesting thing now is that it isn't just the political right that thinks there is a lot of waste in government; President Obama is going around claiming that Medicare is full of "hundreds of billions of dollars in waste and fraud." These arguments are often made by those calling for a reduced government role in the economy, but now they are also made by those advocating an expanded government role in the economy.

A post on the Web site of Reason magazine comments on the spate of suicides by employees of France Telecom (link via Instapundit.) Reason passes along the Agence France Presse's reference to the company as "the former state-owned giant," and the New York Times's reference to legacy contracts with employees "dating to the time when the company was owned by the French state." But state ownership isn't in the company's ancient history. As we've reported here, The France Telecom Web site says, "At June 30, 2009, the French State owned 26.97% of France Telecom S.A.'s share capital either directly or indirectly through ERAP and 26.98% of the voting rights." In France even the formerly state-owned companies are state-owned. This is not to belittle the accomplishment of reducing the amount of state ownership, but just to point out that the company is by no means what we'd consider in America to be a private, non-government company.

The Church of England is joining with several charitable foundations in speaking out against the European Union's plan to impose stricter regulations on hedge funds, the Financial Times reports:

The foundations singled out three areas of concern: proposals to limit EU investors to investing in EU-domiciled funds, requirements for funds to use EU-registered depository banks, and limits on funds' use of leverage. Instead of "imposing restrictions" which would "reduce our freedom", said the foundations, the EU should concentrate on enforcing transparency, in order to enable investors to "make a judgment".

The New York Times turns its account of the demise of Gourmet magazine into a kind of class-war fairy tale: "In choosing Bon Appétit over Gourmet, Condé Nast reflected a bigger shift both inside and outside the company: influence, and spending power, now lies with the middle class. Advertising support for luxurious magazines like Gourmet has dwindled..." The Times article tries to fit the facts into this explanatory framework: "Their editorial approaches differed, too: a recent Bon Appétit cover line promised "America's Best Hot Dogs," while Gourmet ran an article on how restaurant critics would spend $1,000 in their hometowns." Not mentioned by the New York Times was the article in that same issue of Gourmet that appeared under the headline "What's Your Favorite Hot Dog?" and included Gourmet editor Ruth Reichl's endorsement of the hot dogs at Gray's Papaya in New York. The same feature included a quote from a Manhattan hot dog cart vendor and Tommy Lasorda's paean to Dodger Dogs. And the magazine carried Jane and Michael Stern's monthly column on road food. Whatever the cause of Gourmet's demise, it wasn't a failure to adequately cover hot dogs, no matter what the class warriors over at the New York Times tell you.

FutureOfCapitalism.com item headlined "A Nobel for American Medicine" -- October 5, 2009, 9:46 a.m.

Wall Street Journal editorial with headline "A Nobel Prize for American Medicine" -- October 6, 2009.

The federal government has awarded the University of California, Santa Cruz a $615,175 grant to digitize its "Grateful Dead Archive," which the university says "includes materials related to the phenomena of the Deadheads, the band's extensive social network of devoted fans, and the Grateful Dead's highly unusual and successful musical business ventures." Which raises the question -- if the Grateful Dead were such successful businessmen, why do they need taxpayer help to take care of their old stuff? A New York Times article from April 2008, when the material was donated by the band to the library, reported, "Mr. Weir said the band had decided to donate the memorabilia in part to keep it from getting lost as years went by." Lots of ordinary taxpayers would like to preserve their own family or personal or business memorabilia in a storage unit or a scrapbook or some extra space at home. But the money those ordinary taxpayers might spend on such activities has been taken from them by the government in taxes and used to preserve Mr. Weir's memorabilia. It's the latest example of what we call the "Reverse Robin-Hood." (I learned about the Grateful Dead grant by reading about it on the Club for Growth Web site.)

Earlier coverage here has noted that for an American government agency, the Federal Reserve is unusually independent. It's not funded by Congress, and its governors are not elected by the public. Rather, they are appointed for 14-year terms, during which they "may not be removed from office for their policy views." An article in the Financial Times today observes, however, that because of various factors, President Obama will by the end of 2011 have the opportunity to appoint six out of seven members of the Fed's board of governors.

To hear some of the health care reformers tell it, American medicine is so badly broken it needs a total overhaul. Nobody would say it is perfect, but it's a nice little reminder of the strengths of American medicine that the Nobel Prize in medicine, announced today, went to doctors from Harvard, Johns Hopkins, and the University of California, San Francisco. All three institutions get lots of federal money. Harvard and Johns Hopkins are non-profits, and UCSF is part of the state of California's public education system, so it's not as if this is a victory for unalloyed free market capitalism. The scientists don't work as full-time employees of for-profit drug companies. But neither do they work for the national health service in Britain or Canada or Cuba.

Paul Krugman has a column in today's New York Times faulting Republicans for a lack of "consistency" in criticizing plans by Democrats to cut Medicare. He says it is "bizarre," given that "In the 1990s, Newt Gingrich tried to force drastic cuts in Medicare financing." It is bizarre and inconsistent -- but no more bizarre and inconsistent than the fact that the same Democrats who were protesting the Gingrich "cuts" -- really just reductions in the expected growth rates -- are now the ones calling for cuts themselves. Mr. Krugman is correct to point out the Republicans aren't exactly principled on this issue. But it isn't just the Republicans whose positions vary based on the political situation -- Democrats play the same game, though Mr. Krugman does not call them on it.

Does federal deposit insurance help contribute to bank failures? A professor at Columbia Business School, Charles Calomiris, has a new working paper out from the National Bureau of Economic Research making the case. As a historian, I was particularly interested in his account of how federal deposit insurance was created -- even President Franklin Roosevelt was against it:

The chairman of the Federal Deposit Insurance Corporation, Sheila Bair, gave a speech today in Istanbul in which she floated a proposal to limit the claims of secured creditors of failed banks. Here is how she put it:

A more far reaching proposal to consider is limiting the claims of secured creditors to encourage them to monitor the riskiness of the financial firm.

This could involve limiting their claims to no more than say 80 percent of their secured credits. This would ensure that market participants always have 'skin in the game'.

This would be very strong medicine.

It could have a major impact on the cost of funding for companies subject to the resolution mechanism.

A major advantage is that all general creditors could receive substantially greater advance payments to stem any systemic risks without the extensive delays typically characteristic of the bankruptcy process.

Obviously the advantages and disadvantages need to be thoroughly vetted.

Thank you to David Warsh of Economic Principals for the very nice write-up, and welcome to those visiting because of the mention there. Economic Principals joins a slew of other news outlets that have recently written about or mentioned FutureOfCapitalism.com, including, most recently, Russian State Television (!), The National newspaper in Abu Dhabi, the United Arab Emirates (!), and the Manhattan Institute's Point of Law blog. Welcome to new visitors; if you like what you see, please sign up for the email list using the box toward the upper righthand side of the page, bookmark this Web site, or subscribe to the FutureOfCapitalism.com RSS feed using the button on the righthand side of the page. And please help spread the word yourself by telling your friends about the site.

For all the commentary on the case of fugitive director Roman Polanski, not much has been said about the parallels between the Polanski case and that of Marc Rich and his partner Pincus Green. Richard Cohen, writing on the Washington Post Web site, says:

I would bet that included in those now protesting on behalf of Polanski are many who went bonkers when President Clinton pardoned Marc Rich, the fugitive commodities trader who was indicted while overseas and has taken his time -- 26 years -- in coming home. The pardon created such a ruckus that Rich apparently has yet to claim it. As with Polanski, he maintains a home in Switzerland. (It is total mystery to me why the Swiss could pick up Polanski for possible extradition to the U.S., but not -- until the pardon -- Rich.)

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