Wednesday, June 30, 2010

Hillsdale College

Hillsdale College is one of the last true meritocracies. There's no place on its application for racial identity, and it doesn't know the racial make-up of its student body until it shows up on campus in the fall. 

'The purpose of education is not diversity,' Hillsdale President Larry Arnn says. 'It's truth.'

http://mjperry.blogspot.com/2010/06/quote-of-day.html

Money Illusion

TheMoneyIllusion A slightly off-center perspective on monetary problems.
America's amazing success since 1980: Why Krugman is wrong
Suppose you had gotten a room full of economists together in 1980, and made the following predictions:
1. Over the next 28 years the US would grow as fast as Japan, and faster than Europe (in GDP per capita, PPP.)
2. Over the next 28 years Britain would overtake Germany and France in GDP per capita.
And you said you were making these predictions because you thought Thatcher and Reagan's policies would be a success. Your predictions (and the rationale) would have been met with laughter. Indeed around that time most of the top British economists signed a petition asserting that Thatcher's policies would fail. For those of you not old enough to remember 1980, let me explain why. Labour rule of Britain had reduced their economy to a shambles. The government ran the big manufacturing corporations and labor unions were running wild. They had 83% MTRs, 98% on capital. There was garbage piling up in the streets of London. Britain had been the sick man of Europe for decades, growing far more slowly than Germany, France and Italy. The US wasn't doing as badly, but certainly wasn't doing that well either. We had also been growing much more slowly than Europe and Japan.
Unlike Britain, we were still richer than most other developed countries, so this convergence was viewed as partly inevitable (the catch-up from WWII), and partly reflecting the superior economic model of the Germans and Japanese.
Now let's look at what actually happened over the next 28 years. All GDP per capita data are from the World Bank, and are normalized as a fraction of US GDP/person:
Country  1980 1994 2008
USA       1.000 1.000 1.000
Australia .841 .770 .837
Canada   .905 .818 .843
Britain    .688 .705 .765
France    .780 .730 .713
Germany .803 .812 .763
Italy        .756 .754 .675
Sweden  .868 .777 .794
Switz.    1.146 .987 .915
Asia
HK        .547 .845 .948
Japan    .732 .815 .736
Singapore .577 .899 1.064
Latin America
Argentina .395 .300 .309
Chile       .210 .251 .311
Note that four countries gained significantly on the US, two were roughly stable (Australia, Japan) and the rest regressed. The four that gained were Chile, Britain, Hong Kong and Singapore. Of course lots of poor countries gained on the US, but that's to be expected. But I will show that the performance of every single country on the list is consistent with my view that the neoliberal reforms after 1980 helped growth, and inconsistent with Krugman's view that they did not.
Krugman makes the basic mistake of just looking at time series evidence, and only two data points: US growth before and after 1980. Growth has been slower, but that's true almost everywhere. What is important is that the neoliberal reforms in America have helped arrest our relative decline. The few countries that continued to gain on us were either more aggressive reformers (Chile and Britain), or were developing countries that adopted the world's most capitalist model. (According to every survey I have seen HK and Singapore are the top two in economic freedom.)

Australia: A traditionally rich country whose commodity export model started to sputter in the 1970s. They did major free market reforms (under a left wing government). Reforms continued when the conservatives took power. After 1994 they reversed their relative decline.
Japan: Just the opposite of Australia. Their free market export model did very well in the post war years, and didn't hit a wall until about 1990. After that their economy was unable to find domestic growth sectors, as their dysfunctional government refused to reform their statist domestic economy.
HK and Singapore: Both are in the process of becoming much richer than the US. Some of that is due to their status as city-states. But in modern developed economies the rural populations are small and not that poor, so I think in time people will recognize that Singapore's success is more than just demographics.
Chile and Argentina: Chile is the most famous Latin American example of neoliberal reforms. Note how in 1980 they were barely half as rich as their neighbor Argentina, and are now a bit richer. Almost every serious development economist attributes their relative success to their neoliberal reforms. BTW, there was a severe recession in Chile in 1974-75, but rapid growth from 1975-80. In addition, they were much poorer than Argentina in 1970 as well, so the starting date doesn't explain much.
Canada: Similar to Australia, except that they were not as statist as Australia in the earlier period, and their reforms occurred in the 1990s when they began dramatically shrinking the size of government as a share of GDP. The 1990s reforms worked as their relative decline to the US was reversed, and they started catching up after 1994.
France and Germany: Did some reforms, but much less than Britain. They suffered a decline relative to both Britain and the US. I think the 1980 German numbers include the East, but can't be certain. I do know that Germany's relative decline increased after 1994, by which time the East German incomes had definitely been incorporated in the data.
Italy: Did even less reforms than Germany and France, and has a more statist model. Fell far behind Britain.
Sweden: Had a bad recession in the early 1990s and had suffered decades of relative decline. Did major cuts in MTRs, privatization and deregulation during the 1990s, and its relative performance improved after those reforms.
Switzerland: Is the glass half full or half empty? Switzerland has always been regarded as one of the most capitalist countries in Western Europe, but has also been among the least aggressive countries in terms of neoliberal reforms. That pattern would predict high levels of GDP/person, but relative decline vis-a-vis the US. And that is exactly what has occurred. They rested on their laurels and slipped quite a few notches down the Heritage and Fraser rankings. I suppose the highly democratic system allowed them to avoid the worst socialist excesses of the 20th century, but also prevented them from reforming as fast as more dictatorial forms of democracy, such as the UK.
So there you are, all these countries support my hypothesis that neoliberal reforms lead to faster growth in real income, relative to the unreformed alternative.
There are two kinds of economists. Those who read the Economist (or FT) every week, and have a pretty good sense of what is going on in the world, and who know why some countries are doing better than others. And those who are lost in their ivory tower doing arcane research. The latter group is
often much more highly skilled than I am, and come up with more important new ideas than I ever will. But when talking to this group I often find they are totally oblivious to the neoliberal revolution of the past 30 years. (BTW, this isn't a jab at the left, most of the guys I am thinking of are right-wingers.)
You can't just take a single data point to evaluate a complex phenomenon. "Eh, you say there's a neoliberal revolution? OK, let me check to see whether most countries grew faster or slower after 1980. That should settle the argument." Actually it doesn't. The neoliberal revolution occurred precisely because growth was slowing almost everywhere in the 1970s and 1980s, and after 1980 growth slowed the most in those countries that reformed the least.
PS. I don't mean to suggest the left doesn't have any counterarguments.  Reasonable progressives would admit than some of the reforms were sensible (cutting MTRs below 90%, privatizing British steel and autos, abolishing the CAB, etc.) And they'd also point to the fact that leisure has increased faster in Europe and thus the hourly real wage numbers look somewhat better vis-a-vis the US. And then I'd respond that the French productivity numbers are inflated by the fact that their labor market keeps many of the least productive people unemployed (teens and immigrants.) And they'd respond by pointing to our large prison population. The debate never ends. But Krugman was using simple real income numbers in his recent post. And by that criterion the results are clear-neoliberal reforms produce higher
levels of GDP per capita.
HT: James, Marcus
Update: Several commenters mentioned median income rather than GDP/person. The median income data does show slower growth than GDP/capita, partly because of increasing inequality, but partly because of statistical problems with the data (health benefits are excluded, etc.) I believe consumption
data is far superior to median real income, and that shows Americans doing much better. Will Wilkinson has posted on this. The consumption data also show a much smaller increase in inequality. But I was primarily interested in international comparisons, for which all I had was GDP data in PPP terms.
The point was that countries that did more reforms did better than those that did fewer reforms. I am not denying that growth in US living standards slowed after 1973, rather I am arguing that it would have slowed more had we not reformed our economy.
http://www.themoneyillusion.com/?p=5164

Tuesday, June 29, 2010

Supreme Court keeps Privileges or Immunities in play

IJ is one of my favorite organizations.  They work to defend those who can't defend themselves from the depredations of an overly intrusive government. 

As for McDonald, thanks to all that's holy that we got this ruling!  Of course the right to keep and bear arms is an individual right.  I wonder - how far will this series of rulings will go in the future in establishing both the right and the limits on the right to keep and bear arms.  Will I be allowed to own, for example, grenades and grenade lauchers? 

June 28, 2010                                                                                                   
McDonald is More than Victory
For Gun Owners Alone

Justice Thomas Writes to Breathe Life
Into Important Privileges or Immunities Clause
Arlington, Va.-Gun owners today rejoiced as the U.S. Supreme Court today struck down the city of Chicago's ban on handguns in McDonald v. City of Chicago.  Today's ruling should be celebrated not just by gun owners, but by everyone who cares about liberty and the unique role played by courts in protecting it under our system of government.  The Institute for Justice (IJ) has for decades been among the most consistent defenders of an engaged judiciary and an appropriately originalist interpretation of the Constitution, including particularly the Privileges or Immunities Clause of the 14th Amendment.  As today's ruling makes clear, the right to keep and bear arms is a uniquely American, and decidedly fundamental individual right.  That will be the result for which the McDonald decision will be remembered and, for many, celebrated.
But McDonald is about much more than just guns.  At its heart, McDonald is a case about liberty.  The Court was deeply divided over whether the Constitution protects a right to own guns from improper interference by state and local governments-just as District of Columbia v. Heller in 2008 held that the Second Amendment protects such a right against federal interference.  Four justices voted to strike down Chicago's handgun ban, finding a right to keep and bear arms under a doctrine called "substantive due process."  Four disagreed, voting to uphold the gun ban.
The pivotal fifth vote was Justice Clarence Thomas, who noted that, for all the disagreement between the two groups of four Justices, "neither side argues that the meaning they attribute to the Due Process Clause was consistent with public understanding at the time of its ratification."  Justice Thomas agreed that the gun ban should be struck down, but instead proposed "a more straightforward path to this conclusion, one that is more faithful to the Fourteenth Amendment's text and history"-namely, the 14th Amendment's "Privileges or Immunities Clause."  That Clause states that "[n]o State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States."
"The most important takeaway from today's decision is that it remains an open question which provision in the 14th Amendment protects the right to keep and bear arms against state infringement," said IJ Senior Attorney Clark Neily, who was one of the three attorneys who litigated District of Columbia v. Heller, the 2008 case that struck down the D.C. gun ban.  Neily, who co-authored IJ's amicus briefs throughout the appellate process in McDonald, explained, "Today's outcome is a tremendous victory for liberty, and we are pleased that it hinges on Justice Thomas's compelling account of the history and purpose of the 14th Amendment, including the central role of the Privileges or Immunities Clause."
The phrase "privileges or immunities" may be unfamiliar today, but as Justice Thomas's concurrence shows, 19th-century Americans used it synonymously with a term modern Americans know very well:  rights.  After the Civil War, officials throughout the South systematically violated the rights of newly freed blacks and white abolitionists in their states and sought to keep them in abject poverty and terror.  The whole point in amending the Constitution to add the 14th Amendment-and with it the Privileges or Immunities Clause-was to end the pervasive culture of oppression and tyranny by state and local governments.  As the Institute for Justice explained in its amicus brief, two rights the Privileges or Immunities Clause was clearly intended to protect were armed self-defense and economic liberty.
But the Supreme Court essentially wrote the Privileges or Immunities Clause out of the 14th Amendment in an 1873 decision called the Slaughter-House Cases.  The result was predictably disastrous:  Those who were politically disenfranchised would continue to be economically marginalized and stripped of any meaningful ability to protect themselves from the vicious reprisals and Klan violence that soon became a shameful hallmark of Reconstruction. 
"When the Institute for Justice was founded almost 20 years ago, it was unthinkable to most people that the Supreme Court would ever revisit the Slaughter-House Cases," said Chip Mellor, IJ's co-founder and general counsel.  "Today's divided opinion shows the enormous distance we have covered since then and sends a strong signal that the Court cannot remain out of step with the original meaning of the Constitution forever."
The other Justices who voted to strike down the gun ban did not join Justice Thomas' interpretation of the Privileges or Immunities Clause.  Justice Samuel Alito, writing for the four-justice plurality, found "no reason to reconsider [Slaughter-House's] interpretation here," instead relying on a set of precedents outlining a "substantive due process" inquiry into "whether the right to keep and bear arms is fundamental to our scheme of ordered liberty." 
Justice Thomas rejected this sort of free-floating inquiry, suggesting that the Court should focus on questions of what the text of the Constitution means, rather than on which rights judges find sufficiently fundamental.  "To be sure, interpreting the Privileges or Immunities Clause may produce hard questions," Justice Thomas' opinion acknowledges. "But they will have the advantage of being questions the Constitution asks us to answer."
"People who are worried about judicial activism should be worried about the fact that eight justices today argued that the question of whether Americans enjoy a right to keep and bear arms would come down to the abstract question of how 'fundamental' that right is," said IJ Staff Attorney Robert McNamara.  "Justice Thomas' opinion points toward principled judicial engagement.  Judges will be constrained by what the provisions of the Constitution actually meant when they were adopted, but at the same time they must give full force to the powerful protections for individual rights encompassed in the 14th Amendment."
"Overturning the Slaughter-House Cases was one of the Institute for Justice's founding goals, and today's decision gives that mission new vigor," concluded Mellor.  "IJ has fought and will continue to fight for principled judicial engagement, which means that courts should strike down when the executive or legislative branches violate individual rights or exceed powers enumerated in the Constitution.  Today's divided Court opens the door to restoring the 14th Amendment as a crucial bulwark of individual liberty against overreaching government power. We are confident the Court's understanding of the law will soon catch up to the scholarly consensus, and IJ stands ready to help defend the rights of all Americans to live their lives free from abuse at the hands of state governments."
Journalists can find comprehensive material on the Privileges or Immunities Clause by visiting:  www.ij.org/PorI <http://click.icptrack.com/icp/relay.php?r=6640673&msgid=189153&act=ZGYO&c=155019&destination=http%3A%2F%2Fwww.ij.org%2FPorI> .
#  #  #

Thank Goodness for Krugman

I feel grateful for his unique ability to stimulate an easy economics lesson with almost every column he publishes.

Obsessed With Aggregate Demand, Posted: 25 Jun 2010 08:03 PM PDT
Here's a letter to the New York Times:
If Beijing doesn't further raise the value of the renminbi, Paul Krugman wants Uncle Sam to impose trade sanctions on Chinese producers ("The Renminbi Runaround <http://www.nytimes.com/2010/06/25/opinion/25krugman.html?adxnnl=1&ref=opinion&adxnnlx=1277521277-Zv9PxouL+YbwH0TW23oA8A> ," June 25). Mr. Krugman justifies his embrace of protectionism by pointing to today's high unemployment rate: by making Chinese goods less costly for Americans to buy, Beijing's monetary policy allegedly reduces "demand for goods and services to generate the jobs we need."
If Mr. Krugman is correct that access to inexpensive goods and services from abroad causes unemployment by reducing demand for domestically produced outputs (and, hence, for workers who produce those outputs), it must also be true that access to inexpensive goods and services from labor-saving technology causes unemployment. In both cases, fewer domestic workers than before are required to make outputs available to consumers.
So here's a question for Mr. Krugman: does today's high unemployment rate also justify Uncle Sam imposing punitive tariffs on R&D teams, inventors, and other sources of labor-saving technologies?
Sincerely,
Donald J. Boudreaux
http://www.cafehayek.com/

Dr. B on Keen Reporting (Not)

Crack Reporting
Posted: 01 Jun 2010 10:24 AM PDT
Here's a letter to the New York Times:
Dear Editor:
Suppose Uncle Sam orders you to raise by 41 percent the price you charge for subscriptions to your newspaper. Would you be surprised to find a subsequent fall in the number of subscribers? If you assigned a reporter to investigate the reasons for this decline in subscriptions, would you be impressed if that reporter files a story offering several possible explanations for the fall in subscriptions without, however, once mentioning the mandated 41 percent price hike?
Unless you answered "yes" to this last question, I wonder why you published Mickey Meece's report on today's record high teenage unemployment rate ("Job Outlook for Teenagers Worsens <http://www.nytimes.com/2010/06/01/business/01jobs.html?pagewanted=1&%2334&sq&st=cse&%2359;&%2359;fading%20summer%20job&scp=1> ," June 1). Between 2007 and 2009, Uncle Sam ordered teenage workers (who are mostly unskilled) to raise the price they charge for their labor services by 41 percent. (That is, the federal minimum-wage rose from $5.15 per hour in 2007 to its current level of $7.25 in 2009 - a 41 percent increase.)
Does it not strike you as more than passing strange for your reporter - assigned to help explain why teenagers today have an increasingly difficult time finding jobs - to ignore the fact that these teenagers are ordered by government to raise significantly the wages that they charge their employers?
Sincerely,
Donald J. Boudreaux

Monday, June 28, 2010

Classic Quotes, Jefferson

"When we see ourselves in a situation which must be endured and gone through, it is best to make up our minds to it, meet it with firmness, and accommodate everything to it in the best way practicable. This lessens the evil; while fretting and fuming only serves to increase your own torments."
- Thomas Jefferson



Courtesy of CrossFit.com

Three Questions to Frame A Problem

Mark Thoma writes,
Regulators certainly made mistakes, and there is plenty of room for improvement, but does that mean we should abandon attempts to regulate? Of course not.

It is hard to argue against the proposition that better regulation would be better. But for regulation to be better, I think there has to be some correspondence between the narrative of what went wrong and the proposed regulatory change.
I am to be talking on this at a conference in a couple of days. My current thoughts.
1. My own narrative is that the causes of the problem were a) clumsy capital regulations, which induced a lot of financial innovation that was primarily aimed at regulatory arbitrage; b) housing policy that encouraged lenient, subsidized mortgage credit; c) the suits vs. geeks divide, with people in power (in both large banks and among regulators) having too much confidence and too little knowledge.
2. My policy recommendations match my narrative. Assume that regulation will be clumsy, and aim for a system that is easy to fix as opposed to hard to break; get rid of all policies that encourage lenient subsidized mortgage credit. and break up the 10 largest banks into about 40 banks.
3. The current financial regulation bill matches nobody's narrative. I will explain this view in more detail subsequently. Briefly:
--if the problem was that we deregulated too much over the past 20 years, then why doesn't the bill simply reset regulations to what they were 20 years ago? or 30 years ago?
--if the problem was that house price increases and mortgage leverage got out of hand, then why does government policy continue to try to push mortgage loans with low down payments?
--if the problem is that lenders were exploiting borrowers (which would justify a focus on consumer protection), then why is it that we ended up bailing out the lenders?
http://econlog.econlib.org/archives/2010/06/matching_narrat.html

Sunday, June 27, 2010

Classic Quotes, Kling

"-if the problem was that we deregulated too much over the past 20 years, then why doesn't the bill simply reset regulations to what they were 20 years ago? or 30 years ago?" Arnold Kling
http://econlog.econlib.org/archives/2010/06/matching_narrat.html

Saturday, June 26, 2010

Oil - Green Fuel

http://mjperry.blogspot.com/2010/06/green-oil-nearly-perfect-fuel.html
"Fossil fuels have been one of the great boons both to humanity and the environment, allowing forests to regrow (now that we don't use wood for heating fuel or grow fuel for horses anymore) and liberating billions from backbreaking toil. The great and permanent shortage is usable surface land and fresh water. The more land we use to produce energy, the less we have for vulnerable species, watersheds, agriculture, recreation, etc.
As counterintuitive as it may be to say so, oil is a green fuel, while "green" fuels aren't. And this spill doesn't change that fact."
~Jonah Goldberg, "Oil: The Real Green Fuel"

Friday, June 25, 2010

Fabulous Post on PS Unions

"Public unions’ traditional strength – the ability to finance their members’ rising pay and benefits through tax increases – has become a liability. Although private-sector unions always have had to worry that consumers will resist rising prices for their goods, public sector unions have benefited from the fact that taxpayers can’t choose – they are, in effect, “captive consumers.”"
http://butwhatthehelldoiknow.com/?p=159

"There’s nothing wrong with unions. But public-employee unions aren’t real unions. They’re collusive cartels that use campaign donations, organized get-out-the-vote onslaughts and sometimes physical threats to literally buy the acquiescence of those with whom they should be “negotiating”. The politicians are supposed to be working for we the taxpayer. But we the taxpayer have no seat at the table between the public employee unions and their political benefactors. Did I mention that public employees make more than the average private sector work that pays for their largesse?"

His conclusion - it's time to ban public sector unions. I couldn't agree more. Our servants have become our masters.
It's easy to think it can't be done. It's easy to think "we cannot afford to fail." Will we have the political chutzpah to stay inside that tension long enough to be ready when the solution emerges? We are doing that in Korea ... so far.

The forever war
By ARTHUR HERMAN

Last Updated: 5:00 AM, June 25, 2010

Posted: 12:22 AM, June 25, 2010

On June 25, 1950, 90,000 North Korean soldiers backed by 150 Soviet-built T-34 tanks poured across the border into South Korea. The Cold War had suddenly turned hot, and America found itself drawn into the longest war in its history.

Vietnam used to claim that dubious title. Now it's Afghanistan. But the surprise communist invasion 60 years ago today began a Korean war that eventually saw an armistice but still no peace treaty.

Indeed, since major fighting stopped in 1953, more than 90 Americans and 300 South Korean soldiers have been killed in clashes along the DMZ barbed wire between North and South Korea -- in addition to the 46 ROK sailors killed by a North Korean torpedo in March.

That summer of 1950 tested America's commitment to the cause of freedom as never before, not even in World War II. There was no Pearl Harbor, and no American interests at stake in Korea but one: that other peoples should never be enslaved against their will.

The Soviet-backed invasion came just five years after V-J Day. It was the first serious test of America's post-World War II strength of will and its new strategy of containing communism. Would America step up to protect an impoverished nation so far from any vital shore? Many feared the Truman administration, with its attention focused on Europe, would not.

They were wrong. President Harry Truman got off a plane in Washington and immediately agreed to swift action to save South Korea. He had been thinking about Hitler and Mussolini on the plane, Truman said; this time, the totalitarians would not get away with it. America would send in troops at once.

The problem was, there were no troops -- or very few. In 1945, America had spent $50 billion on defense, in 1950 $5 billion. Its 8.25 million-strong military had shrunk to less than 600,000, most of them still in Europe. The Eighth Army's four undermanned, underequipped divisions would somehow have to stem the massive communist tide, as Gen. Walton Walker fed his troops in piecemeal.

The shortage of manpower also forced the integration of African-Americans into front-line combat units. Indeed, the all-black 24th Regimental Combat Team scored the first American success, on July 20 at Yochen, where Lt. William Bussey became the war's first African-American Silver Star.

By the end of July, 94,000 US and South Korean troops were clinging to a narrow perimeter around Pusan, at the southern tip of the Korean peninsula. One infantryman from the 34th Regiment remembered: "We stacked our dead around us for protection." Gen. Walker told his men there was no retreat, because there was nowhere to go. "We must fight to the end." If they had to die, he said, "at least we die together."

But they held on, while waves of carrier-borne Navy planes pounded the sputtering North Korean attack. By now, Walker's men were joined by the British, Canadians, Australians and New Zealanders of the 27th British Commonwealth Brigade, as Truman's decision to seek support from the United Nations began to kick in -- and nations America had liberated in World War II, like Greece and France, stepped up in her support.

To relieve Pusan and reverse the war's course, Gen. Douglas MacArthur launched his dramatic amphibious landing at Inchon on Sept. 15, and the long slow slog of retaking South Korea began.

For a year and a half, the fighting in Korea would range like a yo-yo up and down the peninsula. When MacArthur's victorious forces pushed too close to the Chinese border, communist China entered the war and pushed the Americans down the peninsula again. After months of more slaughter came stalemate.

Finally, when the Soviets learned that Truman's successor, President Dwight Eisenhower, was ready to use nuclear weapons to secure victory, they forced North Korea to the negotiating table. The endless truce was the result.

The war saw plenty of American mistakes. Our fighting men were undersupplied and overstretched. Some broke and ran, even as many more fought like heroes.

Korea also set the precedent for formally undeclared wars, from Vietnam to Iraq to Afghanistan, wars that divided more than united public opinion, and for relying on the UN and international coalitions to lend moral support to US military muscle -- with steadily diminishing returns over time.

But above all Korea had shown that America would stand by its commitments, even through a seething maze of obstacles and setbacks. Korea was the worst possible place for a war, one Truman advisor, Averell Harriman, observed; but "no weakness of purpose here." It's a powerful lesson for another worst possible place for a war, Afghanistan, 60 years later.

The Berlin Wall is gone, but the DMZ on the 38th parallel remains, the dividing line between totalitarianism and freedom, between the Stalinist darkness of North Korea and prosperous and open society of South Korea. Thirty-six thousand Americans gave their lives to establish it, and 28,000 Americans are holding it there still.

Many more would die trying to hold a similar line in Vietnam, and still others in Iraq and today Afghanistan. America learned from the harrowing experience of Korea that US weakness and retreat is not an option -- not just for us but the rest of the world.

Arthur Herman's most recent book is "Gandhi and Churchill."
http://www.nypost.com/f/print/news/opinion/opedcolumnists/the_forever_war_owKrHVEzEU9wlo5uy19eqJ

Better Land Mines Than Wind Farms

"Greenpeace should require members to carry a picture of J. D. Rockefeller with them at all times to remind them of who the real whale saving hero is"...
"there's an industry in the world that deserves to be stigmatised more than any other, it's the despicable, reprehensible, money-grubbing, mendacious, taxpayer-fleecing, bird-mangling, landscape-ruining, economy-blighting wind farm business. At least you could argue that blood diamonds make nice jewellery and that land mine manufacturers are making a valuable contribution to infantry defence. But wind farms are not merely worthless but actively evil - and anyone involved in them deserves to be as pilloried and despised as estate agents were in the Eighties or bankers are now."

http://blogs.telegraph.co.uk/news/jamesdelingpole/100042830/id-rather-my-wife-made-land-mines-than-worked-in-the-wind-farm-industry/

Thursday, June 24, 2010

"Mancession"

The charts in the link below "display monthly jobless rates by gender, and the third chart displays employment levels by gender, with the following key points:

1. Between 2002 and 2007, jobless rates were roughly equal by gender, except during the "jobless recovery" of 2002-2003 when male unemployment exceeded female unemployment, but never by more than 0.9% (July 2003).   

2. Male unemployment reached 11.4% in October 2009, a record all-time postwar jobless rate high for men, exceeding the previous record high of 11.2% in December 1982.

3.  Female unemployment is currently at 8.8%, and has been at that level for four out of the last eight months, but never higher.  That's far below the record-high female jobless rate of 10.4% set in December 1982.  

4. The May 2010 male-female jobless rate gap of 1.7% (10.5% male vs. 8.8% female) is down from the postwar record-high gap of 2.7% last August, but is still very high by historical standards.  During (or following) the three previous recessions (1981-82, 1990-91, 2001), the peak male-female jobless rate gap averaged about 1%, and never exceeded 1.2% (April 1983).   

5. During the 1970s, the female unemployment rate was generallyhigher than the male rate, and jobless rate gaps exceeded 2% during recessions, but in favor of men (see middle chart).  

6. Between December 2007 and December 2009, household employment fell by almost 8.38 million jobs, and 68.5% of those were jobs held by men (5.74 million) and 31.5% were jobs held by women (2.64 million).  During this two-year period, 217 men lost their jobs for every 100 women who lost jobs.  

Read more here about The Great Mancession of 2008-2009 (and it's still not yet over)."


http://mjperry.blogspot.com/2010/06/happy-fathers-day-its-still-mancession.html

Tuesday, June 22, 2010

Minimum Wage and Economics


Quote of the Day: Minimum Wage

"The inverse relationship between quantity demanded and price is the core proposition in economic science, which embodies the presupposition that human choice behavior is sufficiently rational to allow predictions to be made. Just as no physicist would claim that "water runs uphill," no self-respecting economist would claim that increases in the minimum wage increase employment. Such a claim, if seriously advanced, becomes equivalent to a denial that there is even minimal scientific content in economics, and that, in consequence, economists can do nothing but write as advocates for ideological interests. Fortunately, only a handful of economists are willing to throw over the teaching of two centuries; we have not yet become a bevy of camp-following whores." 

~James M. Buchanan, 1986 Nobel laureate in economics, writing in the Wall Street Journal on April 25, 1996
http://mjperry.blogspot.com/2010/06/quote-of-day-minimum-wage.html

The questions is, who do you want to help and who do you want to hurt.  MW hurts those unskilled laborers who get priced out of the market, while helping the politicians and the patrons.  

Paying People Not To Work?

What could go wrong?
Well, how about the fact that the money has to come FROM someone to go to someone?!?
http://online.wsj.com/article/SB10001424052702303828304575180243952375172.html#printMode

MW and Jobs Killed

Bottom Line: As much as politicians and other advocates of the minimum wage might pretend otherwise, the laws of supply and demand (like the law of gravity) are NOT optional. 
http://mjperry.blogspot.com/2010/06/job-killing-impact-of-minimum-wage-laws_18.html

How Much? What Limits?

http://www.realclearpolitics.com/articles/2010/05/17/how_much_should_the_government_spend.html
How Much Should the Government Spend?
By Robert Samuelson
WASHINGTON -- You might think that Europe's economic turmoil would inject a note of urgency into America's budget debate. After all, high government deficits and debt are the root sources of Europe's problems, and these same problems afflict the United States. But no. Most Americans, starting with the nation's political leaders, dismiss what's happening in Europe as a continental drama with little relevance to them.
What Americans resolutely avoid is a realistic debate about the desirable role of government. How big should it be? Should it favor the old or the young? Will social spending crowd out defense spending? Will larger government dampen economic growth through higher deficits or taxes? No one engages this debate, because if rigorously conducted, it would disappoint both liberals and conservatives.

Confronted with huge spending increases -- reflecting an aging population and soaring health costs -- liberals would have to concede that benefits and spending ought to be reduced. Seeing that total government spending would rise even after these cuts (more people would receive benefits, even if benefit levels fell), conservatives would have to concede the need for higher taxes. On both left and right, true believers would howl.
The lack of seriousness is defined by three missing words: "balance the budget." These words are taboo. In February, President Obama created a National Commission on Fiscal Responsibility and Reform (call it the Deficit Commission). Its charge is to propose measures that would reduce the deficit to the level of "interest payments on the debt" by 2015 so as "to stabilize the debt-to-GDP ratio at an acceptable level."
Understand? No? Well, you're not supposed to. All the mumbo jumbo about stabilizing "debt to GDP" and according special treatment to interest payments are examples of budget-speak. It's the language of "experts," employed to deaden debate and convince people that "something is being done" when little, or nothing, is being done. For example, Obama's target for 2015 would involve a deficit of about $500 billion, despite an assumed full economic recovery (unemployment: 5.1 percent). The commission is also supposed to "propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending," a mushy mandate. But actually balance the budget? There's no mention.
In a classroom, limiting government debt in relation to GDP can be defended. The idea is to reassure investors (aka, "financial markets") that the debt burden isn't becoming heavier so they will continue lending at low interest rates. But in real life, the logic doesn't work. Governments inevitably face deep recessions, wars or other emergencies that require heavy borrowing. To stabilize debt to GDP, you have to aim much lower than the target in good times, meaning that you should balance the budget (or run modest surpluses) after the economy has recovered from recessions.
Interestingly, Europe's experience discredits debt-to-GDP targets. The 16 countries using the euro were supposed to adhere to a debt target of 60 percent of GDP. Before the financial crisis, the target was widely breached. From 2003 to 2007, Germany's debt averaged 66 percent of GDP, France's 64 percent and Italy's 105 percent of GDP. Once the crisis hit, debt-to-GDP ratios jumped; by 2009, they were 73 percent for Germany, 78 percent for France and 116 percent for Italy.
The virtue of balancing the budget is that it forces people to weigh the benefits of government against the costs. It's a common-sense standard that people intuitively grasp. If the Deficit Commission is serious, it will set a balanced budget in 2020 as a goal, allowing time to phase in benefit cuts and tax increases. It will then invite think tanks (from the Heritage Foundation on the right to the Center on Budget and Policy Priorities on the left) and interest groups (from the Chamber of Commerce to the AARP) to present plans to reach that goal. Their competing visions could jump-start a long-overdue debate on government's role.
The odds seem against this. The Deficit Commission may embrace debt-to-GDP targets and aim for a "primary balance" (excluding interest payments), because it's easier politically. Consider. In 2020 the deficit will be $1.254 trillion on spending of $5.67 trillion, projects the Congressional Budget Office. Closing that gap would require steep tax increases or deep spending cuts. But $916 billion of the projected deficit represents interest payments. Ignoring them instantly "solves" three-quarters of the problem.
The message from Europe is that this approach ultimately fails. Intellectually elegant evasions are still evasions. Though financial markets may condone lax government borrowing for years, confidence can shatter unexpectedly. Lenders retreat or insist on punishing interest rates. Markets pressures then impel harsh austerity -- benefit cuts or tax increases -- far more brutal than anything governments would have needed to do on their own. We are, by inaction and self-deception, tempting that fate.

Monday, June 21, 2010

Classic Quotes, Beecher

"If anyone, then, asks me the meaning of our flag, I say to him - it means just what Concord and Lexington meant; what Bunker Hill meant; which was, in short, the rising up of a valiant young people against an old tyranny to establish the most momentous doctrine that the world had ever known - the right of men to their own selves and to their liberties."
~Henry Ward Beecher

"Of Course I Don't Want Government To Run Health Care"

But those who have to live with the NHS and its “bottlenecks’’ don’t always find them so admirable. The British press has been reporting horror stories about the realities of government-run health care. Some recent headlines give a sense of the coverage:

“Overstretched maternity units mean mothers face a 100-mile journey to have baby.’’

“Hundreds of patients died needlessly at NHS hospital due to appalling care.’’

“Cash-strapped NHS trust introduces rationing for common children’s conditions.’’

“Standard of care in some wards ‘would shame a third world country.’ ’’

“Stafford Hospital caused ‘unimaginable suffering.’ ’’

No one can deny that America’s health care system is flawed in many ways. But when it comes to the standard that matters most — the quality of health care provided — our haphazard, expensive, insurance-based system towers above the NHS.

“In Britain 36 percent of patients have to wait more than four months for non-emergency surgery,’’ wrote journalist James Bartholomew in The Spectator. “In the US, a mere five percent do.’’

By one metric after another — cancer survival rates, performance of diagnostic tests, availability of CT and MRI scanners, consultation with specialists — US health care is superior. “British state-run health care,’’ Bartholomew concluded, “is so amazingly, achingly, miserably, and mortally incompetent.’’

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/06/16/dangerous_to_our_health/

John Stossel - Liberty Hero

"It's that joyous time of year: income tax time. So I spend time with my accountant. I don't want to see him, but I must. I could not do what he's doing. The tax code has grown so complex that today most Americans hire someone to do their taxes.
For the money I pay my accountant, I could get a hundred massages. I could buy a fancy motorcycle. I could take a cruise ship to Venice and back.
Better yet, I could do some good in the world. I could pay for two Habitat for Humanity homes or help three kids escape government schools by paying their tuition at a good Catholic school.
What a shame that I pay my accountant instead."
--This is pure loss - time, energy, human capital wasted - flat wasted, dead weight loss as they say - repeated for millions of tax payers, not to mentions businesses.  How can we stand for this?  This is statistical murder!  It's a weaker national defense, it's more poverty and less productivity, it's like throwing virgins into volcanoes to appease some angry god we don't understand, it's barbaric and rotten and nationally foolish.

"What are we to do? Some people say scrap the income tax for the Fair Tax, a national sales tax. Others want a flat income tax of, maybe, 17 percent. One form; no deductions.
There's always danger in proposing a replacement for the income tax: We could end up with two taxes. I wouldn't put it past our greedy Congress to promise that a national sales tax-or worse, a value-added tax-would replace the income tax then, once the new taxes are in place, to say that the need for revenue is so great that they must retain the income tax, too.
Let's not take our eye off the ball: lower and much simpler taxes."
John Stossel is host of Stossel on the Fox Business Network. He's the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.

http://ow.ly/1yToJ

Sunday, June 20, 2010

To Save the Economy, Convert

As the post that follows shows incontrovertibly, conversion to Mormonism would do much more for the health of Americans than Obama Care possibly could.  Convert and live well, America!


http://super-economy.blogspot.com/2010/06/mormons-in-america-live-longer-than.html
"As everyone knows, West Europeans live longer than Americans. In 1994-1998, the years for the study I am citing, Swedes lived 79.0years, compared to 76.8 years for Americans. That is a 2.2 year advantage.

Generally, this difference is attributed to the health care policy. As you know, I believe that the public debate over-attribute effects to policy, and under-estimates other factors, including culture, norms and demography.

What fewer people know is that within the U.S, 
Mormons live far longer than non-Mormons. In Utah, LDS members live 6.5 years longer than non-members. This is a massive difference, indicating that life style, rather than health care system, is dominating the effect.

Overall, 
Utah (with low per capita income) has the third highest life expectancy in the U.S, after Hawaii and Minnesota (both incidentally states that are demographically unique).

What is even more impressive is that Mormons in the U.S lived 
79.75years, or 0.7 years longer than people in Sweden. (data again for 1994-1998. Sweden is above average in Europe, so the finding from this comparison applies even stronger to most other Europeans countries).

Do all the people who think the U.S should adopt the Swedish health care system to live longer advocate that Americans and Swedes convert to Mormonism to live longer?

I somehow doubt it.

Terrible American life style, combined with high crime and traffic deaths, are more likely explanations for the gap in life expectancy between the U.S and Europe than health care policy. An especially powerful piece of evidence for this is that rich Americans, who have access to all the health care they want, also live shorter than rich Europeans, who do not have access to better health care than the rest of the population.

Another fact that surprises most people is that the gap between the rich and the poor in the U.S in use of health care is not larger than the average of other OECD countries. Equal health is more a political slogan than reality in Europe, where the poor live much shorter than the rich."

US Recovery - Faster

"The long-term decline of the U.S. economy has been greatly exaggerated. America is coming back stronger, better, and faster than nearly anyone expected—and faster than most of its international rivals."
http://mjperry.blogspot.com/2010/04/amercias-comeback-story-destined-to.html

Saturday, June 19, 2010

"War" on Obamacare

April 15, 2010 4:00 A.M.
Waging War on Obamacare
Obama and his allies won the first battle. Market-oriented reformers can still win the war.
The cloud of Obamacare has a faint silver lining. Both the substance of the bill and the way it was passed have boosted the electoral prospects for right-leaning candidates in November. That's a critical first step toward repealing the most consequential expansion of government's role in our daily lives in many decades.
Let's be clear, however: To repeal or even defang Obamacare will require a combination of skill, luck, and the right political environment. And it will require conservative reformers in both parties (yes, both parties - the only bipartisanship on display this past year, it is worth recalling, has been bipartisan opposition to Obamacare). It's doable, but it won't be easy.
As long as President Obama is in the White House, his veto pen can stop any reform bill. A veto override requires two-thirds supermajorities in both House and Senate - a wholly unrealistic prospect unless Republicans make unprecedented electoral gains and scores of politically queasy moderate Democrats openly rebel against their party leaders.
But each day seems to bring news that should make moderates queasier and liberals less cocky. Less than a week after passage of the bill, major U.S. companies like AT&T, Caterpillar, and John Deere announced billions of dollars in writedowns to account for the new law's financial impact. And thousands of Americans eager to sign up for their "free health coverage" learned they'd have to wait four years before Washington would start delivering on that promise.
More negative news is on the way. A long list of new tax burdens and regulations will create additional unintended consequences. The CEO of Medtronic Inc., for example, believes the new 2.3 percent excise tax on medical devices will force his firm to eliminate a thousand jobs. The CFO of Massachusetts-based Zoll Medical Corp. warns that his company may have to relocate 650 Bay State jobs overseas.
This fall, millions of seniors enrolled in Medicare Advantage plans will receive notices of benefit cutbacks or even the termination of their plans, thanks to Obamacare's $200-billion cuts in the popular program.
With these developments looming on the horizon, President Obama and his Hill allies hope to focus attention elsewhere: on jobs and the economy. If Republicans, the conservative grassroots, and the media become preoccupied with other concerns, they hope, the voters will soon calm down.
Center-right America should not let itself be distracted.
A coalition of Republicans and a few courageous Democrats can jettison Obamacare if they gain the trust of voters on health-policy issues. That's already starting.

Obamacare has not won the people's hearts and minds. Despite wildly positive media coverage and the triumphant White House signing ceremony, surveys find public support for the new law dropping like a stone. Support in the most recent CBS poll has fallen to a dismal 32 percent, with opposition up to a new high of 53 percent. The same trend was apparent in polls conducted by Fox News and Rasmussen. Nearly six of every ten voters now support outright repeal, according to the most recent Rasmussen survey.
The polls reveal that frustration is particularly acute among political independents. Over half of the independents in the CBS poll, for example, thought the new law would increase their health-care costs; only 13 percent thought their costs would come down. Similarly, 42 percent expect Obamacare to deliver lower-quality care; only 13 percent expect it to deliver better care. By six to one (67-11 percent) they dismiss outright the claims by the president and Hill leaders that the new law will cut federal deficits.
Such intense animosity offers an opening for lawmakers who want to build voter enthusiasm for a market-oriented approach to health-care reform, which would be far less costly and would give Americans far greater freedom.
Democrats used to have an advantage in public opinion on this issue. Over the past two decades, however, Gallup surveys that have asked voters which party they trust to handle the health-care issue found that the gap between Republicans and Democrats narrowed whenever the GOP actively promoted its market-oriented alternative view.
The gap shrank in 1993 (after Republicans fought the Clinton health-care bill). It narrowed again in 1997-98 (when the GOP promoted a balanced budget, including provisions to slow the growth of health-care entitlements). Now, after a year of debate on Obamacare, the gap has closed once again.
A recent Rasmussen survey echoes the Gallup findings. It found that likely voters give Republicans a significant edge over Democrats (53 to 37 percent) on health care, a sea change compared with a year ago. The same poll shows that the GOP enjoys an even larger advantage among independents (58 to 22 percent), also a considerable improvement compared with November 2008.
In the past, lawmakers espousing free-market ideas on health care would abandon the playing field to liberals once the media ceased focusing on health care. Like a scrum of six-year-old boys following the soccer ball, they would pursue the next hot issue while liberals kept plugging away, adding new layers to Medicaid and transforming what once was a relatively modest program for children's health insurance into a mushrooming entitlement that now covers childless adults with middle-class lifestyles.
This time must be different. Republicans and the moderate Democrats who opposed Obamacare must remain on the playing field. They must keep highlighting the many problems with this legislation and work tirelessly to convert nascent voter trust into a more permanent attachment. Only then will we have a realistic shot at replacing Obamacare with a better, market-oriented alternative.

The best way to do this is to broaden that playing field. Obamacare, after all, will not just lower the quality and increase the cost of our health care. It will also wreak havoc in many other areas of our lives. Federal and state budgets will explode; new tax burdens on investors and medical-device innovators will stifle job creation; tomorrow's students and young workers will have to shoulder even greater fiscal burdens. And so on.
Specifically, reformers must:
Understand that the repeal effort should be waged at the state level as well as in D.C. Work closely with governors and other state officials in both parties to highlight the negative budgetary consequences and likely unconstitutionality of Obamacare. Recall that Tennessee governor Phil Bredesen, a Democrat, was the first governor to openly criticize Obamacare's impact on his state Medicaid program;
Educate younger voters on how the new insurance regulations will increase their costs and dim their prospects for upward mobility;
Draw in the 9 million or so seniors who will bear the brunt of the Left's crusade to destroy the only competitive corner of Medicare: Medicare Advantage;
Give platforms to entrepreneurs in the health-care sector to explain how the regulatory spawn of Obamacare will impede the development of next-generation medical breakthroughs;
Ditto for employers, who, as they encounter the harsh realities of Obamacare, will opt to scale back their workforce, farm out operations overseas, or simply leave their employees to the tender mercies of the Obama health exchange; and, finally
Give a voice to the tens of thousands of practicing physicians who see how Obamacare will eviscerate the doctor-patient relationship, robbing millions of patients of the quality care they deserve.
It's hard to keep public attention focused on an issue once Congress acts. But history demonstrates that lawmakers who tout commonsense solutions to difficult problems gain credibility and trust when they persevere.
When it comes to health care, the GOP and like-minded Democrats must stay engaged and active, or else Democratic progressives will press ahead with implementing Obamacare, in the process exploding state and federal budgets and hindering upward mobility, while making health care more expensive and reducing quality for everyone.
- Michael G. Franc is vice president of government relations for the Heritage Foundation. Gary Andres is vice chairman of research for Dutko Worldwide.
http://article.nationalreview.com/print/?q=YzZiYjA5ZDMxY2E1NWFjMmJmZTNjODVkOTZmMGJhZjA=

Friday, June 18, 2010

How Many Opinions Of How Many Scientists Are Required for Science?

"A majority of scientists maintain that global warming is a man-made phenomenon."
http://www.telegraph.co.uk/comment/telegraph-view/7591286/Climate-change-always-room-for-doubt.html
Opinions are not related to science except as a means to decide what to measure, how to set up and execute experiments, or how to build models. Otherwise, the opinion of every single scientist drawing a breath is completely unrelated to the scientific method. It is not the opinion of scientists or anyone else that the Laws of Thermondynamics hold - those laws were derived from the application of the scientific method, from which opinions are conspicuously absent.
The opinion of a majority of scientists is to science what CO2 levels are to increasing global temperatures - "a trailing indicator!" (Quote is borrowed from Dr. Jeff Glassman, www.rocketscientistsjournal.org).
Not to mention - how in the world would one go about quantifying the statement that "a majority of scientists maintain" anything? Define scientist, show the data that they were accurately polled, and clarify which scientific opinions on the matter are relevant - are we going to poll for example, those with a doctorate in modern art? Who then? This entire subject is so riddled with unclear thinking it's virtually impossible to find a thoughtful discussion on the matter.

Tuesday, June 15, 2010

The Plight of the Worker

This is not going to end well for anyone.
http://www.usnews.com/articles/opinion/mzuckerman/2010/05/14/the-crippling-price-of-public-employee-unions.html
Mort Zuckerman: The Crippling Price of Public Employee Unions
By Mortimer B. Zuckerman
Posted May 14, 2010
The American public feels it is drowning in red ink. It is dismayed and even outraged at the burgeoning national deficits, unbalanced state and local budgets, and accounting that often masks the extent of indebtedness. There is a mounting sense that taxpayers are being taken for an expensive ride by public sector unions. The extraordinary benefits the unions have secured for their members are going to be harder and harder to pay.
The political backlash has energized the Tea Party activists, put incumbents at risk in both parties, and already elected fiscal conservatives such as Republican Gov. Chris Christie of New Jersey. Over the next fiscal year, the states are looking at deficits approaching hundreds of billions of dollars. The Center on Budget and Policy Priorities, a liberal think tank, estimates that this coming year alone states will face an aggregate shortfall of $180 billion. In some states the budget gap is more than 30 percent. The result is a crowding out of the state role as the supporter of adequate infrastructure, education, and healthcare.
How did we get into such a mess? States have always had to cope with volatility in the size and composition of their populations. Now we have shrinking tax bases caused by recession and extra costs imposed on states to pay for Medicaid in the federal healthcare program. The straw (well, more like an iron beam) that breaks the camel's back is the unfunded portions of state pension plans, healthcare, and other retirement benefits promised to public sector employees at a time when federal government assistance to states is falling-down by roughly half in the next fiscal year beginning Oct. 1.
It is galling for private sector workers to see so many public sector workers thriving because of the power their unions exercise. Take California. Investigative journalist Steve Malanga point out in the City Journal that California's schoolteachers are the nation's highest paid; its prison guards can make six-figure salaries; many state workers retire at 55 with pensions that are higher than the base pay they got most of their working lives. All this when California endures an unemployment rate steeper than the nation's. It will get worse. There's an exodus of firms that want to escape California's high taxes, stifling regulations, and recurring budget crises. When Cisco's CEO, John Chambers, says he will not build any more facilities in California, you know the state is in trouble.
The business community and a growing portion of the public now understand the dynamics that discriminate against the private sector. The public sector unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening with California is happening in slower motion in the rest of the country. It must be one of the reasons the Pew Research Center this year reported that support for labor unions generally has plummeted "amid growing public skepticism about unions' power and purpose."
There has been a transformation in the nature of our employment. Labor is no longer dominated by private sector industrial workers who were in large part culturally conservative and economically pro-growth. Over recent decades public sector employment has exploded and public workers have come to dominate the labor movement. These public sector employees have a unique and powerful advantage in contract negotiations. Quite simply it is their capacity to deliver political endorsements and votes for the very people who are theoretically on the other side of the negotiating table. Candidates who want to appear tough on crime will look to cops, sheriffs' deputies, prison guards, and highway patrol officers for their endorsement.
These unions will naturally back a candidate willing to support better pay and benefits for their members, and this means as much as, or more than, the candidate's views on law enforcement. The result has been soaring pay and the ability of state police and other safety officers to retire with pensions that place an increasingly unbearable financial burden on the states. In California, such retirees at age 50 often receive pensions at 90 percent of their pay; comparable retirees in most other states get about half their final working salary.
In New York, public service employees have received gold-plated perks for much of the 20th century, especially generous health insurance benefits. Indeed, where once salaries were lower in the public sector, the salary gaps in the public and private sectors have disappeared in the last two decades, or even reversed for most job categories. A Citizens Budget Commission report in 2005 showed that for most job categories in the greater New York City region, public sector workers received higher hourly wages than private sector workers. And according to a 2009 survey by the same group, this doesn't even count the money that New York City pays in full premiums for comprehensive health insurance policies for workers and their families. Only 8 percent of workers in private firms enjoy that subsidy. Moreover, in virtually all cases, the city also pays the full healthcare premium costs for retirees and their spouses. And the city pensions are "defined benefit" plans, which are more expensive since they guarantee specific benefits on retirement.
On the other hand, private sector workers in the survey were mostly in "defined contribution" plans, which means that, unlike their cushioned brethren in the public sector, they do not have a pre-determined benefit at retirement. If New York City were to require its current workers to pay contributions toward health insurance equal to the amounts paid by the employees of local private sector firms, the taxpayer savings would approximate $628 million a year. In New Jersey, Christie says government employee health benefits are 41 percent more expensive than those of the average Fortune 500 company.
What we suffer is a ruinously expensive collaboration between elected officials and unionized state and local workers, purchased with taxpayer money. "Scratch my back and I'll scratch yours." No wonder the Service Employees International Union has become the nation's fastest-growing union: It represents government and healthcare workers. Half of its 700,000 California members are government employees. More and more, it wins not on the picket line but at the negotiating table, where it backs up traditional strong-arming with political power. It spends vast amounts of money on initiatives that keep the government growing-and the gravy flowing. Similarly, for the teachers unions-with the result that California and its various municipalities, especially Los Angeles, face budget shortfalls in the hundred of millions of dollars. California can no longer rely on a strong economy to support this munificence. Its unemployment rate runs about several points higher than the national rate and its high-tech companies are choosing to expand elsewhere. Why stay in a state with such higher taxes and a cumbersome regulatory environment?
California is a horrible warning for the nation of how dreams can turn to dust. In most states, politicians face a contracting local economy and shortfalls in tax receipts. Naturally, they look to cut expenses but run into obstruction from politically powerful unions that represent state and local government employees, teachers, and healthcare workers who have themselves caused pension and healthcare insurance costs to soar. It is not an accident that in framing the national stimulus program, Congress directed a stunning percentage of the $787 billion to support public service employees.
The lopsided subsidies for pension and health costs are a large part of the fiscal crises at the state and local levels. The subsequent squeeze on education and infrastructure investment is undermining the very programs that have made it possible for our economy to grow-thousands upon thousands of teachers let go, schools closed, mass transit slashed.
Between New York and California, the projected deficits run about $40 billion-and that doesn't account for projected billions of dollars in the operating deficits in the states' mass transit systems or the multibillion-dollar unfunded liability in many of the state pension plans. New York is badly hit because it is being deprived of tax revenues by the government's indiscriminate attack on the securities industry, which has been so critical to the economy of New York State and to the United States.
City government was developed to serve its citizens. Today the citizenry is working in large part to serve the government. It is always hard to shrink government spending. It is particularly difficult when public sector unions have such a unique lever of pressure.
We have to escape this cycle or it will crush us. One way is to take labor negotiations out of the hands of vulnerable legislators and assign them to independent commissions. They would have a better shot at achieving a fair balance between appropriate salary increases and the revenues and services of local municipalities. The electorate won't swallow any more red ink.

Monday, June 14, 2010

Tea Partiers - Normal or Extreme?

I have felt a great relief that folk would be willing to get out and demonstate their dis-satisfaction with the growth of the Federal Government. It's beyond me that some folks actually see something sinister in that. But they do, just as I saw something sinister in the politically based opposition to the Iraq War - that is, opposition based on an opposition to then Presdent Bush, which seemed to exceed by a wide margin the opposition of those who had genuine philosophical issues with the war. This author nails it:
"Yet to read in much of what remains of the mainline press, many tea partiers at Tax Day rallies are nothing good -- racists, fascists, gun nuts, gay-bashers, militant separatists. They are described as generally hateful, ignorant, unhinged, and of course extreme.
Most are none of those things. Rather, they are largely independent voters angry at relentless Democratic leftism, frustrated by big-spending Republicanism (primarily under Bush II), and outraged by the hubris, pretension, shameless immoralism, and patronizing arrogance so widespread among the lofties in both political parties."
http://www.realclearpolitics.com/articles/2010/04/19/tea_parties__the_inconvenience_of_truth_105223.html

Sunday, June 13, 2010

Bigotry's Half Life

At least there's some intelligent discussion of this topic.  My bottom line - without government's backing of bigotry via law, and if not for the Federal Government's failure to enforce it's charter to defend the rights of the individual, the CRA of 64 would not have been necessary.  Negative unintended consequences of govt intervention always becomes the justification for additional govt intervention.

"But while the libertarian argument against anti-discrimination laws is certainly not racist, it sometimes seems uncomfortably nave (in 1964 or today) about the social realities of Jim Crow. As some strong champions of free markets, such as legal scholar Richard Epstein, have pointed out, racial segregation and discrimination by private businesses in the South was not simply the result of owners' personal choices but of powerful societal pressure as well as coercion by state governments. Businesses that refused to discriminate were targeted for officially sanctioned or condoned harassment and intimidation.
Would "whites only" business practices have crumbled fast, as some libertarians believe, if the federal government had limited itself to dismantling the public foundations of segregation? Or was bigotry too pervasive, too deeply entrenched in minds and morals? The latter seems more likely. Moreover, for generations this private bigotry had been not only enabled but fostered by public policy, from slavery onward. Writing in The New Republic, John McWhorter, an insightful, iconoclastic black commentator, defends Paul's and Stossel's right to express their unorthodox views but also asserts that "the social rejection of racism was driven in large part by the head start, authority, finality, and even the drama of the legal banning of segregation.""
http://www.realclearpolitics.com/articles/2010/06/11/racism_civil_rights_and_libertarianism_105934.html

Saturday, June 12, 2010

I Hope K's Wrong


"And the world's response? Did it rally behind us? The Russians and Chinese bargained furiously and successfully to hollow out the sanctions resolution. Turkey is openly choosing sides with the region's "strong horse" -- Iran and its clients (Syria, Hezbollah, Hamas) -- as it watches the United States flailingly try to placate Syria and appease Iran while it pressures Israel, neglects Lebanon and draws down its power in the region.
To say nothing of Brazil. Et tu, Lula?
This comes after 16 months of assiduously courting these powers with one conciliatory gesture after another: "resetting" relations with Russia, kowtowing to China, lavishing a two-day visit on Turkey highlighted by a speech to the Turkish parliament in Ankara, and elevating Brazil by supplanting the G-8 with the G-20. All this has been read as American weakness, evidence that Obama can be rolled.
The result is succinctly, if understatedly, captured in Wednesday's Post headline "U.S. alliance against Iran is showing new signs of vulnerability."
You think?"


http://www.washingtonpost.com/wp-dyn/content/article/2010/06/10/AR2010061004110.html

Interesting Stats on the Drug War

Cloaked in a debate on The Factor.
http://reason.com/blog/2010/06/11/sting-cant-be-right-about-the

"A 1994 study (PDF), based on data from the National Comorbidity Survey, estimated that 17 percent of cocaine users qualify for a diagnosis of "substance dependence" at some point in their lives, suggesting that Kelly is off by a factor of more than four. The same data indicate a lifetime addiction rate of 15 percent for alcohol. Data from the National Survey on Drug Use and Health also indicatethat addiction rates for alcohol and cocaine are similar.


The entire situation is gut wrenching, and we're a long long way from being willing to admit we're wrong and facing up to the massive change that would result from de-criminalization."


But the simplistic answers are still simplistic.  The affronts to liberty and compromises of government inherent in drug criminalization are too large to pretend they don't exist.

How Big Do You Like It?

Every time anyone predicts how much money a VAT will raise, ask yourself "are the considering the depressive impact of this tax on consumption?" "How will they adjust the tax so that it does not penalize exportation (as the Euro VAT does)?" "How much will this tax depress the growth rate of the economy?"
If effect we're already paying a VAT, only we pay it through corporate taxes. You don't know you are paying corporate taxes, but as the Fair Tax folk point out, "income taxes now make up about 23% of the cost of goods sold. Take away that tax and the cost of a $100 good, they say, would drop to $77." (http://articles.moneycentral.msn.com/Taxes/Advice/IsHuckabeesFairTaxReallyFair.aspx)
The Fair Tax idea is to make this tax visible, and use it to replace the income tax. The VAT is another beast entirely. Corporations are still taxed if they profit, a tax which of course you and I pay when we buy anything from a profitable corporation, but in addition, the government would add a Federal VAT. In other words, in addition to profit, a tax is paid for the amount of value added by any corporation in the manufacturing process. If an auto maker turns a ton of steel into cars, and so doing increases the 'value' of that steel by 10%, they pay a tax accordingly. It's a sneaky politicians way to get us to pay more without noticing.
Why do they need more money all of a sudden, enough to be talking about an entirely new form of taxation?
"The basic budget problem is simple. For decades, the expansion of Social Security, Medicare and Medicaid -- programs mostly for the elderly -- was financed mainly by shrinking defense spending. In 1970, defense accounted for 42 percent of the federal budget; Social Security, Medicare and Medicaid were 20 percent. By 2008, the shares were reversed: defense, 21 percent; the big retirement programs, 43 percent. But defense stopped falling after Sept. 11, 2001, while aging baby boomers and uncontrolled health costs keep retirement spending rising.
A VAT could not painlessly fill this void. Applied to all consumption spending -- about 70 percent of GDP -- the required VAT rate would equal about 8 percent. But the actual increase might be closer to 16 percent because there would be huge pressures to exempt groceries, rent and housing, health care, education and charitable groups. Together, they account for nearly half of $10 trillion of consumer spending. There would also be other upward (and more technical) pressures on the VAT rate.
Does anyone believe that Americans wouldn't notice 16 percent price increases for cars, televisions, airfares, gasoline -- and much more -- even if phased in? As for a VAT's claimed benefits (simplicity, promotion of investment), these depend mainly on a VAT replacing the present complex income tax that discriminates against investment. That's unlikely because it would require implausibly steep VAT rates. Chances are we'd pay both the income tax and the VAT, making the overall tax system more complicated."
http://www.realclearpolitics.com/articles/2010/04/19/how_big_a_government_do_we_want_105225.html

Friday, June 11, 2010

McArdle - Wishes He Hadn't Said


"It's not mentioned much now, but in the late summer of 2008, a major hurricane, Gustav, was in the Gulf of Mexico and headed toward New Orleans, threatening a replay of the disastrous Katrina experience.  On September 1, 2008, Barack Obama, fresh from his Roman-colonnade speech on the final night of the Democratic convention in Denver, talked to CNN's Anderson Cooper about Gustav and the Gulf.  The question: As president, could he handle an emergency like that?  Obama pointed to the size of his campaign and its multi-million dollar budget as evidence of his executive abilities.  "Our ability to manage large systems and to execute, I think, has been made clear over the last couple of years," Obama said. That executive ability, he added, "indicates the degree to which we can provide the kinds of support and good service that the American people expect."

Let me reiterate that I don't blame Obama for failing to "do something" about the Gulf spill.  But his rhetoric opened him up for the expectation that nothing serious could go wrong during his presidency, because the main problem with the Bush presidency was the Competence Deficit.  I can't feel too bad for a man who was only too happy to exploit the public's tendency to assign responsibility for all major problems to the presidency--as long as he wasn't the president under whom things had gone wrong."
http://www.theatlantic.com/politics/archive/2010/06/things-obama-probably-wishes-he-hadnt-said/57752/

Will on the Progressive President


"Obama is the first president whose presidential campaign was his qualification for the office he sought. He almost said so on Sept. 1, 2008, as a large hurricane made landfall on the Gulf Coast. Megan McArdle of the Atlantic has resurrected Obama's answer when he was asked whether could handle such a crisis.
Using perhaps the royal plural -- a harbinger of grandiosity to come -- Obama cited the size, cost and complexity of his campaign: "Our ability to manage large systems and to execute, I think, has been made clear over the last couple of years," and "indicates the degree to which we can provide the kinds of support and good service that the American people expect."
Progressives generally, and Obama especially, encourage expectations as large as the 1,428-page (cap-and-trade), 1,566-page (financial reform) and 2,409-page (health care) bills they churn out as "comprehensive" solutions to this and that. For a proper progressive, anything short of a "comprehensive" solution to, say, the problem of illegal immigration is unworthy of consideration. For today's progressive president, the prospect of a jobless recovery is a comprehensive nightmare."
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/09/AR2010060904786.html

The Amazing Will also comments concisely and with relevance on the uncertainty Obama's reign produces, and why that negatively impacts economic growth.

CO2 Cause and Effect

There have been arguments made for increased plant growth due to rising atmospheric CO2 levels, while others have argued against it. Now it seems that green plants and ocean algae are not the only forms of life involved. Opportunistic microorganisms are stepping in to sop up excess carbon. A new report in the Proceedings of the National Academy of Sciences (PNAS) has identified soil fungi as a major player in accelerating CO2 absorption. Arbuscular mycorrhizal fungi (AMF) have been identified as an intermediary between plants and other bacterial and fungal populations, acting as a buffer for other soil-borne communities. Existing organisms are not just working harder, new communities are developing to take advantage of increased CO2 levels, demonstrating that nature possesses self-regulation mechanisms science did not anticipate and has yet to discover.

"Great (Moral) Leader"? Or Politician?

Or Just Get a Dog
Posted: 11 May 2010 08:02 PM PDT
Here's a letter to the New York Times:
Today on your Blogginghheads <http://video.nytimes.com/video/2010/05/10/opinion/1247467817642/bloggingheads-is-obama-a-great-leader.html?ref=opinion> , Daniel Schultz and Mark Kleiman debate "whether President Obama is a great moral leader." A much more interesting question - one likely to probe, not facile disagreements over political strategy, but genuinely interesting phenomena such as human irrationality - is "Why on earth does anyone look to the President of the United States for moral leadership?"
Barack Obama is a full-time politician. Like every member of this breed, he specializes in winning popularity contests called "elections." To this end, he hones his skills at posing for cameras and at making pretty speeches in which he prattles platitudinously in tones that trick uncritical ears into hearing whatever it is they wish to hear. He specializes also at twisting arms behind closed doors in order to transfer taxpayer booty to those interest groups that are most crucial for his and his party's future electoral success.
Anyone earnestly searching for moral leadership would do better to spurn all counsel on ethical matters offered by the likes of Mr. Obama and, instead, pick the brains of a neighborhood plumber or hairstylist. These people, at least, specialize neither in deception nor in spending other people's money.
Sincerely,
Donald J. Boudreaux
www.cafehayek.com

Unregulate, Liberate, the US Economy

"Last year, Americans paid $989 billion in income taxes. Add to that sales taxes, property taxes, excise taxes, and other taxes, and the total tax burden comes to nearly 27 percent of national income. The Tax Foundation calculated that you work from the beginning of the year until April 9 just to pay off your taxes. Tax Freedom Day is moving alarmingly close to Tax Day. Yet taxes aren't the whole picture when it comes to measuring the size of government.
The federal government spends far more than it taxes. Last year alone, the deficit was $1.4 trillion. This year's deficit is expected to grow to around $1.8 trillion. Add in the burden of federal deficit spending, and we're working until May 17 to pay for the growth of government (and that's not even counting state and local deficit spending).
Yet even that's not all. The hidden tax of federal regulation cost businesses and consumers an additional $1.187 trillion last year-none of which shows up in the federal budget. Regulation eats up an additional 8.3 percent of GDP. We have to work an additional 34 days to pay for the federal regulatory burden."
http://www.foxnews.com/opinion/2010/04/15/warren-crews-ryan-young-tax-day-regulation-tax-freedom-day/