"But think of child labor laws ..."e

This is one of my favorite insights about such things as child labor laws - they take effect at the point that they are almost not needed. 

"Actually, it wasn’t child labor laws that let them escape from child labor: it was economic growth. As people grew wealthier, parents no longer needed their children to be productive. Instead, they could support the family without their children’s income and so instead could send their kids to school. And incidentally, as E.G. West showed in Education and the State, the state in Britain was not a major funder of education and yet schooling was widespread.

"It is true that child labor laws reduced child labor around the edges. But they’re an instance of what is almost a general law in economic policy. I’m using “general law” in the sense of regularity. The laws that pick up enough support are usually ones that require people to do what the majority are doing already. I believe for example, although I can’t find the source immediately, that the legislated 40-hour work week came about only after it had become standard practice."

https://www.econlib.org/orourke-on-the-millennials-and-socialism/

History Lesson and Proper Consideration of Human Incentives

A second factor slowed rehiring in the United Kingdom: newly powerful unions, and the governments behind them. Determined young labor leaders demanded and got relatively high wages. Employers found they could not sell their products at prices high enough to offset their higher-wage contracts. So employers simply adjusted by rehiring fewer workers. The result of these two ostensibly pro-worker conditions — relatively generous unemployment payments and relatively high wages — was double-digit unemployment for the United Kingdom throughout the 1920s.

https://thehill.com/opinion/finance/499367-no-dole-for-america-how-to-recover-from-covid-19

Grow or Die

With 4% growth, most of the federal government's shortages - the ones we fight over - would go away. I don't know if an economy as large as ours can grow at that rate, especially when the rest of the world is stuck in the economic muck of authoritarianism. Growth rate increase should be the priority, it nudges every other lever for humans to thrive.
http://www.wsj.com/articles/the-entrepreneurial-way-to-4-growth-1479254382

What Did You Expect?

It seems to me that you are making the error that was the norm in textbooks and the profession fifty years ago, before public choice theory. You are evaluating proposals for government policy on the basis of what they could do if optimally implemented not on what one can expect them to do given the incentives of the people making the decisions—what used to be referred to as the philosopher king model of government. It makes no more sense than evaluating the market alternative on the assumption that all the decision makers in that case will act to maximize social welfare rather than in their own interest. The question is not whether an optimal carbon tax designed and enforced by wise and benevolent economists would produce net benefits—very likely it would. It's whether passing a carbon tax designed and implemented as we can best expect it to be would produce net benefits.
http://daviddfriedman.blogspot.com/2014/01/me-vs-mankiw-on-global-warming.html

Organize Via Guns or Cooperation?

To do so would have been naive, because history — and common sense, along with a large catalog of economic theory — tells us that central planning has not and cannot work.

What works and always has is voluntary cooperation among free people. Consumers and producers don't need functionaries in Washington managing their transactions. Groceries, wrist watches, cheeseburgers, bowling balls, aspirin and any number of other goods and services are bought and sold just fine without government involvement. These markets organize themselves.

Buyers and sellers speak clearly to each other through price signals. Government planners would only wreck what has developed efficiently on its own.

It's foolish to believe a group of planners in Washington, D.C., or anywhere else, could organize a market as large and complex as health care.

Read More At Investor's Business Daily: http://news.investors.com/ibd-editorials-obama-care/101413-675070-ezra-klein-admits-obamacare-a-big-failure.htm#ixzz2hsx4ZNYV
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Touchingly Naive

The President summed up his economic priorities close to the top of his hour-long address. "This growing inequality isn't just morally wrong; it's bad economics," he told his Galesburg, Illinois audience. "When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country."
http://online.wsj.com/article/SB10001424127887323610704578626142861572144.html?mod=WSJ_Opinion_LEADTop

RIIIGGGHHHT. Because the government's track record for shaping economic outcomes for the better is SO compelling; world over, governments are making dynamic, positive changes for the better!! We in the US just a few more tweaks to make the middle class more wealthy and everything will be better.

Or as the author said: For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth. As even Mr. Obama conceded in his speech, the rich have done well in the last few years thanks to a rising stock market, but the middle class and poor have not.

Jeezus, who could believe this President about any economic issue at this point? Isn't it completely clear he has no insight?

Detroit - What Lessons?

"When people ask me why I moved from liberal to conservative, I have a one-word answer: Detroit."
"To get a feel for what this particular hell is like, you should read Charlie LeDuff's Detroit: An American Autopsy. LeDuff is a reporter who left the New York Times for the Detroit News and left the News when an editor took all the good stuff out of a story on a local judge. He's now a reporter for Fox 2 and you can get an idea of his personal style by watching his clips on YouTube. Detroit is a personal story for him: he grew up in the not-affluent suburb of Westland (named after a shopping center, as he notes) with a divorced mother who ran a florist shop on the east side of Detroit but who couldn't keep her children from dire fates. A daughter who became a streetwalker and died violently left behind her own daughter who would overdose on heroin. Three of LeDuff's brothers are working at just-above-minimum-wage jobs or not working at all (one pulled out a tooth with pliers). Charlie was lucky. He went into "the most natural thing for a man with no real talent. Journalism.""
http://www.realclearpolitics.com/articles/2013/06/21/the_unheavenly_city_118908.html

As I read this summary, I see how it illustrates everything forecast by "The Road to Serfdom." Central governments are unaccountable, don't have the information needed to apply tyranny to create good, and thus result in nightmare that is a city like Detroit.
But why didn't these things happen in every big city with too much government? Perhaps I could figure that out if I read the referenced book, which I may - though the prospect horrifies me.
My leading theory for now is that Detroit was built on a model of union tyranny that doomed the manufacturers to waste their time fighting unions when they could have been making better, less expensive cars that would have left them less vulnerable to competition from those world wide auto makers who understood what quality was.
One can also see how power corrupted, and how the poor pay more than the rich when politicians misbehave - the politicians all the while escaping blame for those who they've killed by their pretense of competence and compassion.

Economy Carberation

Nicely framed model describing why our economy has failed to bounce out of stagnancy.

"The analogy between our economy and a car engine holds in another important way. The power output of an engine is governed by controlling the airflow into the engine. A well-designed fuel injection system simply reacts to changes in airflow, spraying in the precise amount of gasoline required to match the mass of air moving through the combustion chambers. From the standpoint of power and efficiency, too much gasoline is just as bad as too little.

"In the case of an engine, the idea of an active, ad-hoc, discretionary "fuel policy" would be crazy. The engine would keep stalling, as it alternated between flooding and lean misfiring. Similarly, the very idea of a discretionary monetary policy is insane. Money cannot drive economic growth any more than gasoline input can determine the power output of an engine."
http://www.realclearmarkets.com/articles/2013/04/08/the_fed_is_quantitatively_easing_americans_out_of_their_jobs_100247.html


"As the months go by, it is becoming clear that the Federal Reserve's "QE3" program, which is supposed to be "doing something" about unemployment, is having the exact opposite effect. We can only wonder how long it will take Fed Chairman Ben Bernanke to realize this.

"Friday's "Employment Situation" report from the Bureau of Labor Statistics (BLS) was really, really, really bad. The reported 0.1 percentage point decline in the "headline" unemployment rate (from 7.7% to 7.6%) fooled no one. Total employment actually fell by 206,000. The only reason that the reported unemployment rate went down was because 496,000 Americans gave up on looking for jobs.

"The most striking feature of President Obama's so-called "economic recovery" has been the exodus of Americans from the labor force. The unprecedented 2.5 percentage point decline in labor force participation under Obama amounts to 6.2 million Americans being pushed out of the job market."

In The Laboratory

"When compared to Republican and swing states, respectively during the 11 years ending 2011, Democratic states suffered:  

"A loss of 1.6 million jobs (including government jobs) compared to a gain of 1.3 million jobs in Republican states, and a loss of only 139,000 jobs in swing states.

"A loss of 1.9 million private sector jobs compared to a gain of 671,000 private sector jobs in Republican states, and a far smaller loss of 515,00 jobs in the swing states;

"Greater declines in real median family income in both absolute and percentage terms than in Republican states, though they fell less than in swing states.

"In Democratic states, real median family income fell on average $4,460 to $55,325 (2011 dollars) in 2011 - a 7.5% decline since 2000.

"Over those same 11 years, average real median family income in Republican states fell by less - $2,603 to $46,730 - a 5.3% decline. Swing states suffered a more severe average decline of nearly 10%, due in large part to greater than 20% declines in Nevada and Ohio.

"In the states Democrats dominate, the need for revenue to support their belief in the primacy and goodness of government have been used to justify imposing significantly higher taxes on middle-class families.

"In exchange for their votes, Democrats promise greater economic security and a more just society. But, as the results show, this is a false promise that leads to a less secure economy, less opportunity for low and middle-income people, and higher middle-class taxes."

http://www.forbes.com/sites/charleskadlec/2012/10/22/the-democratic-part
ys-secret-attack-on-the-middle-class/

Interesting correlation vice causation questions.

It's the Spending, Stupid

"Don't think for a second that California's chronic deficits are caused by low taxes. Even before last Tuesday's tax hikes, California had the most progressive income tax system in the nation, with seven brackets, and the second-highest top marginal rate. Now it has the nation's highest top marginal rate and the nation's highest sales tax. And the budget still isn't balanced."
http://washingtonexaminer.com/can-conservatives-prevent-the-u.s.-from-becoming-california/article/2513695#.UKoiFod9Kh0

"What are Californians getting for all this government spending? According to a new census report released Friday, almost one-quarter, 23.5 percent, of all Californians are in poverty. One-third of all the nation's welfare recipients live in the state, despite the fact that California has only one-eighth of the country's population. That's four times as many as the next-highest welfare population, which is New York. Meanwhile, California eighth-graders finished ahead of only Mississippi and District of Columbia students on reading and math test scores in 2011."

"Figures lie and liars figure." So, does the poverty happen because California's excessive regulation make it harder for folks to get ahead, or because poverty stats are a joke, or because Cali's a great place to be if you are "in poverty", a veritable poverty magnet?

"Middle-class families that want actual jobs, not welfare, are fleeing California in droves. According to IRS data compiled by the Manhattan Institute, since 2000, almost 2 million Americans have left California for other states. Their most popular destination: Texas."

This stat, coupled with the one above, will just make all the "progressives" lobby for more Federal interventionism. Obviously, if you do the right thing with other people's money in your own state, you get all the freeloaders while the louts who don't "do the right thing with other people's money" attract all the performers.

"It isn't a tough move to make. Thanks to low taxes and simple regulations, Chief Executive magazine ranked Texas as the best state to do business in for 2012. Guess who ranked dead last? That's right, California. And not only does Texas (6.8 percent) have a far lower unemployment rate than California (10.2 percent), but, according to the Census Bureau, income inequality is worse in California than it is in Texas."

These unemployment stats reflect the same dichotomy - are people in Cali out of work because it is such a good place to be unemployed? Or, does the lower regulatory burden and decreased tax burden of Texas make that a place that draws the folks who demand to be employed?

"He's No Carter"

http://fivethirtyeight.blogs.nytimes.com/2012/05/30/economically-obama-is-no-jimmy-carter/

This blog shows a very interesting comparison of the economy from the Carter years and now - and thank goodness, it's not anything like as bad as it was then. 

A really interesting stat is the 15% inflation in conjunction with the very low consumer demand, which I suppose implies it was all about the monetary policy.  

Gasoline: Why's the Price So High

What?!?! Government regulations are not working as intended?
http://cafehayek.com/2007/05/moreiss_on_gaso.html

Supply and Demand

Last week, McCluskey put out a paper that concluded that when government bestows more aid, institutions benefit far more than students. The College Board figured that real average tuition rose some $5,500 for public colleges and $17,800 at private institutions from 1980 to 2010, while total student aid increased comparably, by $8,165. The phenomenon predates this administration. The College Board reports that for the past decade, college tuition and fees have exceeded inflation by 5.6 percent a year. That's where McCluskey believes increased financial aid goes.
"There is no question," McCluskey wrote, "that colleges and universities have been raising their prices at a very brisk pace in recent decades, and that those increases have largely nullified aid increases."
http://www.realclearpolitics.com/articles/2011/10/30/student_loans_--_forgive_and_forget_111860.html

"Average" student debt is $24,000.  This is the realm of wondering whether a degree is worth what it costs.  Can you get enough technical skill to get a career for half that level of debt?  How much non-debt expense is represented in that $24,000 figure?  What is the purpose of a college degree anyway?  Education?  Technical training?  An experience of transition that is stimulating and enriching and perhaps a bit safer than otherwise being 18-22?  A chance to hobnob with the peers of the wealthy? 

It seems pretty clear that the institutions of education, public and private, will get a day of reckoning when the Federal spigot begins to dry up.  Like airline deregulation and the housing bubble, federal intervation always leaves a hangover.

Students, though, may get it better when colleges can only charge an amount equal to how much their product is valued in the marketplace - vice 5.56% "more" annually.

Figure the Odds

Samuelson paints a bleak picture.  What are the odds that politicians would tell the truth - we don't know what to do, we never have, and we will now stop pretending to know that which cannot be known.  "But there has to be action, we can't cut spending, but we can't continue to spend without more "revenue" for fear of further debt driven market trauma!!"  We live in an age in which government spending is viewed as economic stimulus, thus we act like an addict.  We cannot stop spending because we instinctively associate pain to that choice - short  term pain, but sharp. 

Like any addict though, there's only one solution - stop spending, relinquish control, stop pretending to have control over that which cannot be controlled, let the body begin to heal.

http://www.realclearpolitics.com/articles/2011/09/26/repeating_mistakes_of_the_1930s_111465.html

A Juncture in the Financial Mess

As goes alternative scenarios, it is perfectly conceivable that had Bush cut taxes the right way – at the margin, immediately, and permanently, in 2001 – the Fed would have never panicked into taking rates so basely low for so long. The good tax cut would have been sufficient to ward off a recession in the context of normal interest rates, even given 9/11. There would have been no housing and commodities bubble, because rates would never have been so close to zero as to invite these things. And the quicker boom would have made unnecessary the desperate dollar-devaluation ploy that became a Bush administration hallmark.

The primary question we must ask about the 2000s is not what caused the crisis as the decade came to a close, but why was growth so subpar the whole time?

http://www.forbes.com/sites/briandomitrovic/2011/08/30/the-fingerprints-of-2000-01-are-all-over-the-crisis/2/

Cause and effect - the human mind was not made to understand this much complexity.  But this is an interesting speculation nonetheless.

What Can Be Done?

Reason asks economists, writers, and wonks for real ways to increase job growth.

http://reason.com/archives/2011/08/12/what-would-you-do-to-impro/print

The BLUF:

-Higgs:  Repeal Obamacare

-McClosky:  Eliminate the minimum wage for people younger than 25

-Shlaes:  Reform our Federal Reserve so that monetary policy is rules-based, not personality-based

-Stossel:  Close the Departments of Labor, Commerce, Agriculture, Energy, and HUD, then eliminate three fourths of all regulations

-Boudreaux:  Replace all income taxes, including that on capital gains, with a consumption tax. But do this only if the Constitution is amended to prevent government from taxing incomes and capital gains.

-Caplan:  Cut employers’ share of the payroll tax.

-Bartlett:  Typical Keynesian crap

-Miron:  Policymakers should stop worrying about job growth. Instead, they should focus on eliminating economic policies that impede economic efficiency—runaway entitlements, a horrendous tax code, excessive regulation, impediments to free trade

-Berlau:  Repeal portions of the Bush-era Sarbanes-Oxley Act, Repeal portions of last year's Dodd-Frank Wall Street Reform and Consumer Protection Act, Pass the bipartisan Small Business Lending Enhancement Act

-Meltzer:  A five-year moratorium on new regulation except for national security, a budget agreement that makes the debt sustainable, corporate tax rate reduction paid for by closing loopholes, and a credible, enforced inflation target.

-Stoll:  Stop extending unemployment benefits, and allow states to experiment with ways allocating the money so it creates an incentive for recipients to get a job.  Or, fold unemployment together with health, college, homeownership and retirement as expenses that people can save for in a tax-favored account.

-Olson:  Vaporize age discriminiation laws

-Schiff:  The government should pursue policies that allow the free market to set wages, benefits, and all issues related to employment. Just as employees are allowed to leave jobs for whatever reason, employers should be allowed to hire and fire based on any criteria without fear of litigation.

-Tabarrok:  QE3: Fed should buy lots of long term T-bonds.

-Smith:  Approve the Keystone XL Pipeline: 20,000 jobs created.

Quotes I love from this article:

"Employees do not qualify for special privileges (inappropriately labeled worker's rights) simply because they accept a job, and employers do not lose their rights and become subjected to special obligations just because they hire."  Schiff

""Jobs" are deals between workers and employers, and so "creating" them out of unwilling parties is impossible. The state, though, can outlaw deals, and has."  McClosky

The key - let free people make free choices to come to mutually agreeable terms, and they will do.  There are consequences associated with free humans making free choices.  These consequences are all better than those that result from government coercion.

Will "On the Money"

Five months ago he submitted a budget that would have accelerated indebtedness, and that the Democratic-controlled Senate rejected in May, 97 to 0. Just three months ago he was demanding a “clean” increase in the debt ceiling, containing nothing to slow the spending carousel. Now he calls for “the largest possible” debt-reduction deal. Today,he says, “If you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up.” Last year he advertised Obamacare as a sufficient reform of health care. He denounces Republicans as uncompromising regarding tax increases but vows “I will not accept” a deal that does not increase taxes.

Obama vaguely promises to “look at” savings from entitlements because “we need to find trillions in savings over the next decade.” But when McConnell learned that negotiations chaired by Vice President Biden had identified a risible $2 billion in 2012 discretionary spending cuts — a sum equal to a rounding error on the GM bailout — McConnell concluded that Obama’s frugality pantomime required a response that will define the 2012 election choice.

Obama’s rhetorical floundering is the sound of a bewildered politician trying to be heard over the long, withdrawing roar of ebbing faith in a failing model of governance. From Greece to California, with manifestations in Italy, Spain, Portugal, Ireland, Illinois and elsewhere, this model is collapsing. Entangled economic and demographic forces are refuting the practice of ever-bigger government financed by an ever-smaller tax base and by imposing huge costs on voiceless future generations.

Richard Miniter, a Forbes columnist, is right: “Obama is not the new FDR, but the new Gorbachev.”

http://www.washingtonpost.com/opinions/sustaining-the-unsustainable/2011/07/21/gIQAI6mtRI_story.html

Thank whatever is holy for George Will.

Reminiscent of the Great Depression

This is a repeat of the Great Depression, in which most major western economies had fully recovered after 18 months, whilst the US economic depression dragged on for 15 years due to the manipulations of the Hoover and Roosevelt administrations.

Germany's recovery from the global recession has been among the fastest of major economies, surging at a 6.1% annualized rate in the first quarter of 2011 alone. Its budget deficit is a small fraction of those in the U.S., Britain and Japan. Whereas the U.S. faces chronic unemployment, Germany's jobless rate is at a 20-year low.

http://online.wsj.com/article/SB10001424052748703509104576329643153915516.html
HT:  www.crossfit.com

That Is THE Question

Why is Greece such a basket case? And what are the implications for Europe and the U.S.?
http://www.forbes.com/forbes/2011/0718/opinions-steve-forbes-fact-comment-greek-bell-tolls.html

Why are Iran and North Korea at the bottom of the list for wealth? 

Why can't European nations compete with the Indias and Chinas?

Why is the US economy looking more like the Euro economies?

One answer - liberty.  Specifically, less of it.

Slower Than Slow

What was the secret to the outsized growth of the 19^th century, particularly its latter portion, the Gilded Age? There were great technological innovations and large population increases, to be sure – but these things came in the 20^th century as well. What was different back then was the absence of macroeconomic institutions.
There was no Federal Reserve, and there was no income tax – both would be created in 1913. Therefore, there were no instruments through which the government could conduct monetary or fiscal policy. Government’s role in shaping the economy was confined to regulating trade and enforcing contracts.
http://blogs.forbes.com/briandomitrovic/2011/06/07/back-on-the-road-to-serfdom-history-says-we-should-be-booming/

What?  You mean government might not be a help to economic growth?  And economic stalls were SMALLER before 1913?  So what is it that the Fed does to "help" things? 

What is to be done? As it happens, now on offer are serious suggestions in exactly this direction. Reps. Cantor and Ryan are both talking about capping the income tax at 25%, and there’s a new fascination globally with returning to the 19^th-century monetary system of the gold standard.
Dismissing these solutions, as the cognoscenti are prone to do, as reactionary, unrealistic, and not-quite-Ivy-League is to betray ignorance about the immense statics of American economic history. It’s in our sinews to grow at 5-6% per year. If we’re doing less, it’s because we’ve arrogated power to institutions that blunder around in the name of the public good.