Oh, Canada!

Our friendly neighbors to the north have been following a path to economic recovery that is exactly the opposite of the one the U.S. has been following: tax cuts, fiscal discipline, free trade, and energy development. The result is also the opposite: high growth, low unemployment, and rising incomes. Hmmm. Might there be a lesson in this?

Ron Paul and Morton Downey Jr.

If you can stomach this sort of thing, this video from 1988 of Ron Paul on the Morton Downey Jr. Show is entertaining in a creepy sort of way.  At the time, Paul was a former Republican congressman running for president as a Libertarian.

Progress in the battle against corporate welfare

One of the dumbest, wasteful, wrongheaded, destructive, and ludicrous policies in a long line of similar policies is set to end.  I'm speaking, of course, about the $6 billion per year in subsidies to produce corn ethanol, which are set to expire at the end of the year.  That's the good news.  The bad news is that the equally foul mandate to mix ethanol with our gasoline, remains, and the dumbest, most wasteful, most wrongheaded, most destructive, and most ludicrous policy of them all remains in place.

Mitchell's law strikes again

Last year, Dan Mitchell "came up with a saying that 'Bad Government Policy Begets More Bad Government Policy' and labeled it 'Mitchell’s Law' during a bout of narcissism." His examples are legion, but obvious ones are (1) paying people to be unemployed, which increases the length of unemployment, thereby requiring the unemployed to be paid for longer periods; (2) subsidize homeownership for those who can't afford it, which leads to record mortgage defaults, thereby requiring policies to keep people in the homes they can't afford; (3) impose rent controls, which reduces the amount of affordable housing, thereby requiring publicly owned housing.  You get the idea.  But whether or not these are good or bad policies, the point is that any policy has unintended consequences and the solution always seems to be additional policies with their own unintended consequences to fix the problems with the original ones.

Mitchell has uncovered another example, this time involving the taxation of individuals and firms overseas. 

The latest example of this process involves the Foreign Account Tax Compliance Act, a piece of legislation that was imposed in 2010 because politicians assumed they could collect lots of tax revenue every single year by getting money from so-called tax havens.

This FATCA law basically imposes a huge regulatory burden on all companies that have international transactions involving the United States, and all foreign financial institutions that want to invest in the United States. It is such a disaster that even the New York Times has taken notice.

FACTA has the bonus effect of annoying our allies and trading partners:

Indeed, what’s remarkable about Obama’s FATCA policy is that the world in now united. But it’s not united for something big and noble, such as peace, commerce, prosperity, or human rights. Instead, it’s united in opposition to intrusive, misguided, and foolish American tax law.

Do warmists believe in global warming?

Louis Woodhill says that "Even the Warmists Don't Believe In Global Warming." If they did, they would try to actually reduce CO2 rather than only trying to extort money and "move to a centrally planned world economy managed by experts, 'just in case'?"

I don't have a settled stand on the issue, but the article has a nice discussion of how there is no such thing as settled science.

“Science” consists of nothing but theories that have not yet been disproved by evidence, but which, in principle, could be so disproved. Even Einstein’s theory of relativity, which has been validated by thousands of experiments and measurements over almost a century, was recently called into question by experiments involving neutrinos that appeared to travel faster than light.

If something is “settled”, it is not science. It is religious dogma, and an assault upon freedom of thought and inquiry.

But don’t the climate scientists’ computer models prove that carbon dioxide emissions from burning fossil fuels are causing climate change? No. First, no computer model can ever prove anything (see the definition of “science” given above). Second, we do not have the capability to model a system as complex as the earth.

The most any computer model can be is a useful tool. As it happens, all of the computer models that have been developed over the years by climate change proponents have already been invalidated by events that they did not accurately predict. For example, given the fast rising CO2 concentration in the earth’s atmosphere, global temperatures should have gone up much faster than they have over the past ten years.

The Butterfield effect

It's no secret that the New York Times views those millions of Americans not living in the tonier areas of Manhattan as little short of knuckle-dragging, Bible-thumping yahoos.  Very often, its reporters are so blinded by this prejudice that they end up proving the opposite of what they set out to prove.  Often, this amounts to revealing their complete ignorance of high school or middle school math.  Recently, Catherine Rampell thought she was showing that the only way to close the federal budget deficit was to raise taxes, using data that showed the exact opposite.

This tendency is called the Butterfield effect, which is named after Times reporter Fox Butterfield, who famously discovered the "paradox" of rising rates of incarceration alongside falling crime rates. Here's another recent example.

Today, Michael Luo set out to show how concealed carry laws lead to greater lawlessness because criminals can obtain concealed-carry permits. His evidence was that, of the 230,000 people in North Carolina with concealed-carry permits, a number of them committed crimes. As Robert Verbruggen puts it, Luo's numbers actually show the opposite:

North Carolina has a statewide murder rate of about 5 per 100,000. Even without counting manslaughter, that’s 25 murders committed per 100,000 North Carolinians every five years. There are about 230,000 valid concealed-carry permits in North Carolina, so by pure chance, you’d expect these folks to be responsible for nearly 60 murders over five years. And yet only ten of them committed murder or manslaughter. Instead of “rais[ing] questions,” the Times has demonstrated yet again that permit holders are more peaceful than the general population.

The economy illuminated

There is no need to be confused by the flurry of claims about economic policy, inequality, the national debt, and unemployment. It's really pretty simple to sort through the b.s. if you understand the data. Luckily, James Pethokoukis does understand the data and has provided the seven most illuminating charts. They provide six straightforward lessons:

1. The Administration thought that its recovery plan would have reduced unemployment to 6% by now. It currently stands at 8.6%.
2. The usual unemployment rate understates the true level of unemployment. If you include the millions of workers who have given up looking for work, the unemployment rate would be over 11% with a steady upward trend since the Administration's policies started to kick in.
3. Although the President has claimed that the middle class has gotten nowhere because pro-market policies of the past 30 years, these policies have meant a 50% increase in median income since 1980.
4. Wealth inequality has been fairly constant for nearly 30 years.
5. The President's pro-government recovery is substantially weaker than the pro-private sector ones of recent decades.
6. Our debt problem is worse than portrayed because standard projections ignore the growth effects of tax and spending policies (i.e., they use static rather than dynamic scoring).

Solyndra was political every step of the way

The Washington Post has an exhaustive study of just about every decision made by the Department of Energy over the course of the Solyndra debacle. It is a lesson of what happens every time that partisan political entities are given decisionmaking power and a blank check on tax revenue. Shockingly, they spend taxpayer money to pursue partisan political ends.

The documents reviewed by The Post, which began examining the clean-technology program a year ago, provide a detailed look inside the day-to-day workings of the upper levels of the Obama administration. They also give an unprecedented glimpse into high-level maneuvering by politically connected clean-technology investors.

They show that as Solyndra tottered, officials discussed the political fallout from its troubles, the “optics” in Washington and the impact that the company’s failure could have on the president’s prospects for a second term. Rarely, if ever, was there discussion of the impact that Solyndra’s collapse would have on laid-off workers or on the development of clean-energy technology.

It is foolish and naive to imagine any other outcome, regardless of the party in charge.

Fannie and Freddie in the dock

The exceedingly weak meme that the financial crisis was the fault of weak regulations of rapacious bankers continues to unravel. I've posted about this a couple of times here and here. 

It is becoming clear even to the Securities and Exchange Commission that the central blame for the crisis lies with the various affordable housing mandates handed out to Fannie Mae and Freddie Mac, coupled with fraud by the politically connected heads of those two darlings of Washington:

Shocking subsidies for the Chevy Volt

The Mackinac Center for Public Policy has calculated that, so far, the federal and state governments have committted a total of $3 billion to develop the Chevy Volt.  Depending on how many Volts are sold, the subsidy per car could be as high as $250,000.  For reference, the average Volt owner makes about $170,000 per year.  Perhaps they would prefer a new Ferrari 458 Italia instead of a Volt.  They only cost $225,000 each.

A money-saving tip

In these tough economic times we often find ourselves desperate for new ideas to cut back on expenses.  Here's one way to save on dentistry that I bet you didn't think of.

Policy uncertainty and jobs: A Keynesian consensus

Recent research has estimated that policy uncertainty is a significant factor in holding back employers from hiring. Massive and unknown changes in the regulation of health care, the financial sector, energy, and the environment are expected to increase the costs of doing business and employing workers. In addition, continued wrangling over temporary payroll tax cuts and permanent income tax increases mean that firms don't even know what taxes they will be paying in January.

Corruption at the BLS?

I don't think I have to go into why it is important to be able to trust government-produced statistics.  Obviously, any data will have its share of errors, mistakes, and shortcomings, but we should be able to trust that the data are provided honestly.  In my years of using such data, I have never believed otherwise.

Two recent stories, however, call into question the honesty and incorruptibility of the Bureau of Labor Statistics (BLS), which provides practically all official data about the labor market, including the unemployment rate and payroll employment, as well as inflation.  First comes the accusation that someone within the BLS has been leaking official data to the governor of North Carolina in advance of its official release. If true, the perpetrator is subject to years in federal prision.  Second, it appears that the Administration plans to politicize the BLS by appointing political operatives to run it rather than promoting career professionals from within.

Selfish economists

Here is an exceedingly stupid discussion in the NY Times by Yoram Bauman about whether economics training makes people selfish and/or whether selfish people tend to become economists.  According to Bauman, the failure to donate to leftwing causes on campus is proof of selfishness rather than different preferences.

This is an interesting development

GOP leaders: Pipeline stays in payroll tax bill

Takers versus creators

Richard Salsman wonders how those who can become wealthy as economic takers (Obama, Gingrich, etc) are in a position to vilify economic creators:

(O)ver the past century of U.S. history Americans have suffered under the corrupt machinations of politicians – the demagogic, hubristic, venal and incompetent – precisely because government’s role has been extended far beyond its proper functions into illegitimate ones; the recent age has been hostile to wealth-makers yet lucrative to wealth-takers and pull-peddlers. Today statists reign with impunity and handcuff wealth-makers. Meantime, lengthy political careers are erected by audacious takings – and few people seem bothered by this

"Harvard prof flunks economics"

The headline suggests a "dog bites man" story, an expectation that is hardened by learning that the Harvard prof in question is Elizabeth Warren, Senate candidate from Massachussetts. Even so, it's worth reading Michael Graham's take on the vapidity of Warren's pronouncements on energy policy. Remember, despite masses of evidence to the contrary, members of the credentialed class think that they are smarter than everybody else.

William F. Buckley Jr.: "I'd rather be governed by the first 2,000 names in the Boston telephone directory than by the faculty of Harvard."

If it was a bear it would have bit her

Economics Reporter from New York Times Has Accidental Encounter with Reality, Learns Nothing

Grading the President

The headline of this story is that "Experts Grade Obama 'C-Minus' on the Economy". Three of the 12 "experts" gave B grades: a Democratic operative and the two economists (one of whom is a Krugman acolyte).

The other economist, Mark Zandi of Moody's,

gave the administration a solid “B” for economic and budget policy in 2011, noting that the payroll tax holiday and emergency unemployment insurance programs that were put in place late last year – and that will expire unless Congress agrees to extend them  --  “were key to keeping the economic recovery together as well as it was kept together during the year.”

What nonsense.

We have a winner!

It's no secret that the annals of federal alternative-energy policies are full of some of the most ludicrously inefficient and ridiculous attempts at repealing the laws of physics, chemistry, biology, and economics.  In the very stiff competition for the most ridiculous, one stands alone: Cellulosic ethanol.  As summarized by the Wall Street Journal:

Congress subsidized a product that didn't exist, mandated its purchase though it still didn't exist, is punishing oil companies for not buying the product that doesn't exist, and is now doubling down on the subsidies in the hope that someday it might exist. We'd call this the march of folly, but that's unfair to fools.

You have to read the whole thing to believe it, but you still might not.

A multitude of one percents

Todd Henderson makes an excellent point about the Occupistas and their opponents, the one percent: There is not a single one percent, but many of them.  Specifically, the problem is the ability of narrow interests to tailor rules and laws in their favor by capturing regulators and legislators.  Wall Street itself is not even a single entity as the interests of bankers are not necessarilly aligned with those of brokerages, for example.

The prescience of George W. Bush

Canada has become the first country to pull out of the Kyoto agreement after fully agreeing to it. The article says that it is the first signatory to do so, which is not true. The United States signed the treaty and President Clintont never sent to the Senate for ratification because it was doomed to fail. President Bush eventually unsigned it.

Take a lesson from George Constanza

I've been saying for close to three years that, in terms of economic policy, the Obama administration's plans and proposals have been the opposite of what should have been done. The state of the Obama recovery certainly lends support to my positions.  The President, however, has taken to blaming everyone but himself, including Bill Clinton.

Perhaps the President should take a lesson from George Costanza, who gave it some thought and figured it out:

Who wants to be a billionaire?

All you need are inside tips from your friend, the Secretary of the Treasury.

Who benefits most from higher ed subsidies?

It all depends on relative elasticities, and it's not students.

The targeted tax break cycle

Dave Nicklaus outlines a significant problem with the use of state and local tax breaks to keep large and politically influential business from moving out. It is particularly ridiculous in Illinois because the state just raised taxes on everyone and is now trying to hand out tax breaks to prevent the fallout. Once everyone is given their tax break, taxes will be raised again to make up for the revenue shortfall.  Then the state will give out tax breaks to...Well, you can figure out the rest.

It's no secret that those governing Illinois are among the most corrupt and inept politicians around, but this situation is not unique.  It's the inevitable result of incompetent governance.

Coffee, the magic elixir

Here's a short video in which Steven Johnson describes how coffee fueled the Age of Enlightenment (hat tip: Greg Mankiw):

It reminds me of a quote from super-prolific Hungarian mathematician Paul Erdos: "A mathematician is a device for turning coffee into theorems."

Then again, it was beer that created civilization.

Video gaming = war crimes?

The UN is not the only wacky international organization holding a conference these days.  Attendees at the 31st International Conference of the Red Cross Red Crescent have agreed to investigate whether video gamers are "virtually violating humanitarian law".  This is according to what seems like an authentic document (It's very hard to tell the differnce between parody and reality when it comes to international organizations.):

Video games and IHL: how should the Movement take action?
While the Movement works vigorously to promote international humanitarian law (IHL) worldwide, there is also an audience of approximately 600 million gamers who may be virtually violating IHL. Exactly how video games influence individuals is a hotly debated topic, but for the first time, Movement partners discussed our role and responsibility to take action against violations of IHL in video games. In a side event, participants were asked: “what should we do, and what is the most effective method?” While National Societies shared their experiences and opinions, there is clearly no simple answer.

I'm holding out hope that this is a hoax, but I put it at 60-40 in favor of being true.  It's just stupid enough.

Update: It looks as if what they meant was that video games could be used to educate about war crimes.  

International Climate Court of Justice?

Paul Joseph Watson is not impressed with some of the goings on at the UN Climate Summit in Durban, South Africa.  In short, according to Watson

Bureaucrats at the UN Climate Summit in Durban have outlined plans for the most draconian, harebrained and madcap climate change treaty ever produced, under which the west would be mandated to respect “the rights of Mother Earth” by paying a “climate debt” which would act as a slush fund for bankrolling an all-powerful world government.

His article is based on a report by Lord Christopher Monckton, who is reporting from Durban.

Krugman shouldn't argue with sane economists

There was a conference this week at Stanford's Hoover Institution titled "Restoring Robust Growth in America."  As Greg Mankiw puts it

1. John summarizes a recent Hoover conference on restoring robust economic growth.
2. Paul is annoyed at John.
3. John is annoyed at Paul.

Unsurprisingly, Krugman rails on about right-wing economists while, not having attended the conference, claims that Taylor misrepresented it.

Pujols leaving the Cardinals

It looks like Albert Pujols will sign with the Angels for $250 million over ten years, with a full no-trade clause.  You can't blame him for taking the money and running because that's just too much coin to pass up.  The Cardinals were offering roughly $220 million for ten years, although the tenth year wasn't guaranteed.

I'm sad to see Pujols leave, but this is a solid move by the Cardinals.  They can do a lot more with the money than sink it into one 32 year old player for ten years.  I thought that their offer was about the max of Pujols's worth to the team, so I'm glad they stuck to it.  Pujols is still great, but he's going to decline every year.  It's only a question of the rate of decline.  I suspect that the Angels will not be happy with this deal in a few years.

Tilting at windmills II

Over at Investors' Business Daily is a handy summary of the "Five Big Lies in Obama's Economic Fairness Speech."  They are certainly all untruths, but they might not all be lies.  I think he believes the first one, not because he's actually weighed the evidence, but because it is part of his faith.  The other four are clearly bald-faced lies, however.

So can we call him a Socialist now?

President Obama channeled Teddy Roosevelt yesterday when he gave a speech denouncing those crazy theories about free markets.  Back in 1913, the New York Times had this to say about Teddy Roosevelt's version of New Nationalism (hat tip: Jonah Goldberg):

Tilting at windmills

The Washington Post's fact checker gives the President 3 Pinnochios (out of 4) for his claims about taxes in his nutty Osawatomie speech.  The President is well known for simply making up "facts" about taxes, but I suppose it's worth pointing it out every time.

Much more disturbing about the speech is the utter lack of basic economics and history, which seem to be the basis for his actual beliefs.

Free markets have "never worked"?

We've never had a clearer picture of the President's view of free markets in his own words.  He doesn't like them.

Deflecting blame

The President has added a new culprit in his story of weak labor markets.  No, it's not himself, but the internet.  So, that makes it Al Gore's fault.

"Beyond stupid"

So you can't call it Christmas, but you can force children to participate in your eco-religion by torturing them.

Wimpy Occupistas

Watch the Louis C.K. video below before reading this story and watching the video that goes with it.  The poor babies of Occupy LA were simply brutalized:

Most of the roughly 300 Occupy L.A. protesters were released from jail by Friday evening, with some immediately speaking out on the police raid that cleared their camp.

One speaker suggested that some of those arrested might need therapy. Several said they felt traumatized after witnessing police use nonlethal force and being forced to wait for hours in zip-tie handcuffs. Some displayed cuts on their wrists from the handcuffs. Others complained that they were forced to urinate in bags on the bus as they were transported to jails.

One speaker urged others to document any complaints. "Make note of every single violation of human rights," she told those assembled.

Don Surber puts it all in perspective.

Everything's amazing and nobody's happy

A hilarious perspective on our times.

The Occupistas and mainstream economics

A number of students walked out of their introductory economics class (Economics 10) at Harvard because "the biased nature of Economics 10 contributes to and symbolizes the increasing economic inequality in America.”  Their professor, Greg Mankiw has written a response.  It's an interesting read, but one sentence struck me as pretty funny:

A prerequisite for being a good economist is an ample dose of humility.

Mankiw strikes me as having the required dose of humility, which puts him in a distinct minority among economists, particularly macroeconomists.

George McGovern

Former Democratic presidential candidate George McGovern, who lost in a landslide to Richard Nixon in 1972, has suffered a fall and is in stable condition.  I have always been intrigued by McGovern because the 1972 election is the first Presidential election that I remember.  In fact, I campaigned against him in the parallel election held by the 4th graders at Shaker Road Elementary (that election was a landslide also).

McGovern is well known as an exemplar of American liberalism and as a staunch opponent of the Vietnam War.  He is less well known as a war hero and B-24 pilot. After he left politics he opened an inn in Vermont, his first foray into the private sector.  He learned a lot about the negative effects of regulation and lawsuits on small businesses, something that many of his political progeny among today's liberal politicians seem incapable of understanding.  He is also opposed to card-check legislation.

Climatologists Trade Tips

Climatologists Trade Tips on Destroying Evidence, Evangelizing Warming.  If they're not careful, they might ruin their reputations as thoughtful and intelligent scientists who will pursue the truth no matter where it leads.

Today's national unemployment numbers

The big news in today's release from the BLS is that the unemployment rate fell to 8.6 percent from 9.0, the first time it has been below 9% since April 2009.  As I have stressed, changes in the unemployment rate are not always consistent with changes in labor market conditions.  A lower unemployment rate can mean that things have gotten better, or that they have gotten worse.  It is necessary to look into changes in the components of the employable population to see if the news is good or bad.

Well, the good news is that the number of people reporting that they are employed rose by 278 thousand (note that this is not the payroll survey but the household survey).  But, the number of people reporting that they are unemployed fell by much more--594 thousand--meaning that 315 thousand left the labor force altogether (i.e. they were not employed or looking for work).

These numbers don't tell the whole story either because the population of working age is always changing, which, in itself, will affect every other number.  For these reasons, the best variable to look at is the employment-to-population ratio, which rose by one tenth of a percentage point to 58.5.

This was the fourth month in a row that the employment-to-population ratio rose by 0.1, which put it below its post-recession peak of 59 percent.  Still this trend is certainly a sign that the job picture has been improving since mid-summer.  As the chart illustrates, however, this rate of recovery is pathetically slow in that, if this rate continues, the employment-to-population ratio will not reach its pre-recession level until mid 2015, about 3 1/2 years from now (the dotted line).

Long live the suburbs

We are constantly told how much better life would be for everyone if we abandoned our cars, our McMansions, and our good sense and returned to cities where we could build an urban utopia replete with centrally planned communal parks, integrated transit systems, and a shared sense of community (that is, we would live in apartments and share our walls, ceilings, and floors with loud neighbors). 

In fact, we've been told recently by our own housing secretary that this utopia is within our grasp because "(w)e’ve reached the limits of suburban development: People are beginning to vote with their feet and come back to the central cities.”  This turns out to be false, or course.  We are nowhere near the limit of suburban development and we continue to vote with our feet out of urban centers. 

No fuel for you!

(Note, please read the headline of this post as Seinfeld's Soup Nazi said "No soup for you!")  As you might know, there is an energy revolution that has the potential to free us from our reliance on oil from unstable parts of the world, greatly decrease energy prices, and fuel economic growth for decades.  You might also know that the only parts of the country that are growing rapidly are those sitting on fossil fuels that are now accessible because of the greatly improved technology of hydraulic fracturing.  True to form, the EPA has decided to overreach its regulatory remit and seems determined to quash this one bright spot of the Obama recovery. 

The annual gender wage gap data drop

Every year the Bureau of Labor Statistics releases data on the gender wage gap.  This year the data are broken down by state.  As reported by Jim Gallagher in the Post-Dispatch,

(t)he wage gap between men and women yawns wider in Missouri and Illinois than elsewhere, according to new data from the Bureau of Labor Statistics.

The average full-time woman worker in Missouri made just 75 percent of the average man's earnings in 2010. Women in Illinois did a little better at 78 percent. The national average is 81 percent.

Gallagher is too smart to fall into the trap of saying that this gap shows how much discrimination there is against women. I wrote about this a while back when the gap was bigger. The explanations remain the same, although the numbers differ a little.

Sensible energy policy is bipartisan

In terms of science and economics, the argument in favor of fossil fuels over renewable energy is an extremely lopsided contest.  Here is a video of Robert Bryce's talk to my institute about this, and here is the paper associated with the talk.  Still, there are those who insist if we just throw enough taxpayer money at wind, solar, etc., the laws of physics (not to mention supply and demand) will be repealed.

It's heartening to see that there are prominent liberals who agree with Bryce that the argument in favor of fossil fuels is a humanist one in that their use is the best way to raise the well-being of the greatest number of people.  The head of the Brookings Institution's Energy Security Initiative is calling for democrats to "get real about U.S. energy policy."

What media bias?

The NY Times sums up its ideology with one headline: "Barney Frank, Moderate"

St. Louis finally leads the nation

New data show massive job growth in St. Louis.

I nominate FOIA for a Nobel Peace Prize

The scientific argument that global warming is caused by human activity makes me queasy. As I explained earlier, much of this is due to the similarities between the much-ballyhooed computer models of the world's climate and computer models of the U.S. economy. But I don't claim to know much about the underlying science. 

The more worrying part of the debate is the tendency for warmists to obfuscate, shrilly denounce opposing views, and outright misrepresent and distort evidence. The latest trove of leaked emails reinforces these worries. The emails show some of the leading climate scientists scheming revenge against critics and deliberately hiding data from public view.  James Delingpole has been on top of things and sums it up:

If the case for man-made global warming is really as strong as the so-called consensus claims it is, why do the climategate emails show scientists attempting to stamp out dissenting points of view? Why must they manipulate data, such as Mr. Jones's infamous effort (revealed in the first batch of climategate emails) to "hide the decline," deliberately concealing an inconvenient divergence, post-1960, between real-world, observed temperature data and scientists' preferred proxies derived from analyzing tree rings?

This is the real significance of the climategate emails. They show that major scientists who inform the IPCC can't be trusted to stick to the science and avoid political activism. This, in turn, has very worrying implications for the major international policy decisions adopted on the basis of their research.

Higher education vs. something useful

There's an interesting discussion over at Instapundit about the relative values of higher education and learning a trade such as plumbing.  It's a rambling discussion that starts with the decision of the Chinese government to reduce subsidies to students studying for degrees in fields not particularly valued by the private sector, and ends with practical advice on why, how, and where to become trained in a skilled trade.

Looking a gift horse in the mouth

Instead of thanking our lucky stars that our peaceful friends to the north sit on billions upon billions of barrels of oil, we shun them. Other countries have wiser leaders when it comes to energy, so Canadian oil will go elsewhere. Walter Russell Mead sums up this travesty rather neatly

This is what bad energy policy looks like: as the US dithers over Canadian tar sands oil, China is ready to buy.  Access to reliable oil from a friendly neighboring country like Canada is one of America’s greatest geopolitical blessings.  Throwing this away would be the height of folly; those seem to be heights we are eager to scale.

Perhaps America’s profoundly dysfunctional and confused green movement will come to its senses as the reality that the US cannot stop Canadian tar sands development sinks in.  The question is not whether this oil will be produced; the question is whether the US will get direct benefits from it like geopolitical security and refining jobs.  It is not only in America’s interest to have this oil ourselves; it is in our interest for China to have to scramble for oil in sketchy, unstable places while US crude comes from safe and convenient ones.

Debunking the Supercommittee spin

Charles Krauthammer debunks the nutty claim that the not-so-Supercommittee failed because of GOP intransigence over taxes.  The claim is just factually incorrect in that Sen. Toomey proposed a large tax increase that would have fallen on those with high incomes.

Krauthammer thinks that Democrats are just thick: "Let me offer a more benign explanation: thickheadedness. Democrats simply can't tell the difference between tax revenues and tax rates."

I'm sure that this explains some of the post-failure spinning, but I think there is a lot of willfull ignorance.  Many on the left just don't care about the difference between marginal and average rates because their objective is punishment, not revenue.  Quite frankly, they are happy to crush economic growth because they want the rich to have less even if it means that the rest of us have less also.

Private investors beat government investors again

Thanks to private investment in oil and gas production, some parts of the U.S. economy are booming.  Areas that have recieved government green-energy investment, not so much.

The ironies here are richer than the shale deposits in North Dakota's Bakken formation. While Washington has tried to force-feed renewable energy with tens of billions in special subsidies, oil and gas production has boomed thanks to private investment. And while renewable technology breakthroughs never seem to arrive, horizontal drilling and hydraulic fracturing have revolutionized oil and gas extraction—with no Energy Department loan guarantees needed.

Some good news for a change

Perhaps there's reason for hope for our culture and society, after all: Charlie Brown beats Lady Gaga in Thanksgiving ratings

Milton Friedman on inequality

Mark Perry at Carpe Diem has posted three great clips of Milton Friedman addressing questions of inequality. The first economics class I ever took featured episodes of Friedman's PBS series "Free to Choose" and John Kenneth Galbraith's series "Age of Uncertainty".  Friedman's clarity and logical consistency was a breath of fresh air next to Galbraith's self-satisfied bloviating.

Gibson Guitar ganged up on by an unlikely alliance

According to Kim Strassel, Gibson Guitar has been caught in a web of protectionism wrapped inside a wrapper of misguided and aggressive environmentalism.

Union thugs at the NLRB

The National Labor Relations Board has become an arm of unions instead of the neutral arbiter of labor issues it is meant to be.  The two Democratic appointees have a short amount of time until their recess appointment expire, so they're cramming as much through as possible, without telling the Republican member until after actions are approved.

Corporate welfare for dairy farmers

Beware industries seeking to have their prices regulated to ensure "stability". The dairy industry is currently asking for government help to prevent swings in their profits.  Of course, they only want to smooth out down swings (having taxpayers and consumers pick up the tab) while keeping all profits from upswings for themselves.  The story is in today's WSJ

More Climategate 2.0

The distinct odor of scam continues to emanate from the climate science community.  David Appell does a good job of sorting through the latest emails from the University of East Anglia. He's absolutely correct that even the most innocuous email can be taken out of context. As he puts it, "(e)ven trying to guess at the context and keeping it in mind, some of these excerpts are inexplicable. Some seem innocuous. Others seem just scientists being people, gabbing and gossiping and blowing off steam the way we all do."  That said, here are three that seem especially damning about the honesty and integrity of some of the leading climate scientists:

Climategate 2.0

I've always been very suspicious of the claim that there is scientific consensus about global warming being caused by human activity.  Those making the claim have become increasingly shrill in declaring it, which made me even more suspicious.  In addition, there was far too much blatant lying and misrepresentation over the years.  Underlying all of that, however, there are serious scientists working earnestly on the topic, which is good.  But the fact of the matter is that there is not a scientific consensus.  There might be a significant majority of scientists (however that group is defined) who believe it, but that's far from the same thing.

It's the government and we're here to help!

William McGurn has an interesting and maddening story in today's Wall Street Journal about the decision by New Jersey to classify soup kitchens as a retail restaurants. (Yes, when I say "soup kitchen" I mean a place that gives out free food and is supported by volunteers and private donations.)  As a result of this new classification, the soup kitchen in Morristown, NJ, must comply with the same regulations as restaurants, increasing its costs by $150,000 per year (how many meals would that money have provided?).  It also means a ban on donations of home-cooked food (no home-made apple pie for you!). The McGurn article is available only to subscribers, so here's a column about the Morristown soup kitchen and its travails.

Pathetic spinning of pathetic GDP numbers

New estimates of annualized real GDP show third quarter real growth of 2%.  This is a downward revision of the advance estimate, which pegged real growth for the third quarter at 2.5%.  For reference, here are records of the Obama Recovery of 2009-11 and the Reagan Recovery of 1982-84 for the first 9 months of positive real growth.

Advice for economics graduate students

In the many years since I finished my graduate studies, I have dispensed a lot of advice to my students and others about pursuing a PhD in economics. My reflexive answer has almost always been "Don't!", usually followed with "Why on earth would you want to do that?"  This is my little way to help them to think really hard about it and to find out what it actually entails.  For example, back in 1984 I was extremely surprised to discover that an undergraduate degree in economics was practically useless for pursuing a PhD in economics.  If anything, this situation is even worse than it was then.

Congressional insider trading

Professor Bainbridge has taken a look at the STOCK Act, which is meant to ban members of Congress and their staff from profiting from inside information they obtain as part of their jobs.  Laws such as this are always tricky, but he finds this one to be unsatisfactory.  Warning: This one gets pretty lawyery.

Do economists agree on anything?

It is often said that economists have a hard time agreeing on anything.  In my experience, this is true to some extent when you get into the details of economic policy, but that there still tends to be broad agreement on a lot of issues.  The most commonly cited examples of this are the benefits of free trade and that the minimum wage harms the employment prospects of the less-skilled.  

When these agreements do occur, it is usually difficult to find out about them through the media.  This is partly because of the liberal bias of the media, partly because journalists never got past introductory economics in college, and partly because journalist are trained to write about both sides of an argument. The result is a muddle of information without a clear idea about what economists tend to think about important economic policy issues. 

There is a new web site hosted by the University of Chicago that has the potential to sort through this muddle.  An "economics experts panel" has been assembled as representative of the range of views among prominent economists.  A different question is posed to the panel each week and their responses are compiled into a nice histogram to show the distribution of views.  Panelists can also give comments for their responses, as well as express how confident they are in their view.  

Several of the questions were very poorly constructed (especially this one), which can make it difficult to agree or disagree with a statement in its entirety.  Even so, the site has the potential to become a very useful resource.

For example, on a topic of the day, tax reform, only 5% of the experts disagreed with the claim that "Eliminating tax deductions for non-investment personal interest expenses (e.g., on mortgages), with reductions in personal tax rates that are both budget neutral and keep the burden of taxes by income group the same, would lead to more efficient financing decisions by individuals."

Also, none of them thought that the Fed's Operation Twist would be very effective  Specifically, none agreed with the statement that "All else equal, the Fed's new plan to increase the maturity of its Treasury holdings will boost expected real GDP growth for calendar year 2012 by at least one percentage point."  However, the wording of this statement is such that someone who thought that the effect will be zero would provide the same answer as someone who thought the effect will be an increase of 90 basis points in growth.

Is there an echo in here?

John Steele Gordon has a piece making the same point I made in my previous post: Get rid of deductions and lower the marginal tax rates.  Decisions are made at the margin and if the next dollar earned is taxed at a higher rate, there is less incentive to earn it.  He makes the additional point that high marginal rates lead to rent-seeking and that this ends up greatly reducing the progressiveness of the tax code:

In other words, the higher the marginal rate, the more lobbying for new loopholes goes on to prevent those high rates from actually being collected. And the more tax accountants and lawyers scour the endless depths of the tax code to figure out how to structure tax avoidance schemes that will be at least arguably legal.

And the rich have much more political influence than the not-so-rich. Do you think you could get your congressman or senator on the phone in ten minutes flat? I doubt I could. Do you think Warren Buffett could? See what I mean?

It's not about the revenue, it's about the punishment

Michael Barone has an interesting outline of how to raise tax revenue from the rich (and raising their average tax rate) without destroying the economy with high marginal tax rates: limit their deductions.  Although proposals like these were made by Republicans on the Supercommittee, they were rejected because the Democrats want high marginal tax rates rather than revenue.

Recall this telling exchange between then-Presidential candidate Obama and Charlie Gibson on ABC News: 

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.

Alternative energy vs. Keystone XL

The President has chosen wind and solar power to fuel the U.S. economy, and has worked hard to rid us of fossil fuels.  He has used uneconomic cronyism (Solyndra, etc.), regulatory subterfuge (Gulf moratorium, etc.), and cowardly electioneering (Keystone XL).

Robert Bryce has a thorough smackdown of the President's energy choices.

One pipeline — one pipeline! — would have delivered 46 percent more energy than all the solar panels and wind turbines did last year.

"But what about the future?" you might ask. "The future is wind and solar and we're about to turn the corner and become a green-energy utopia."  Not by a long shot. 

Whenever you hear that claim, recall the numbers above: In 2009, production from all geothermal, wind, and solar sources amounted to 1.25 percent of American energy while oil provided 37 percent — the exact same percentage as it did way back in 1949.

As it turns out, we can wait

Charles Krauthammer is not impressed with the Obama Administration's economic record:

His near-$1 trillion stimulus begat a stagnant economy with 9 percent unemployment. His attempt at Wall Street reform left in place a still-too-big-to-fail financial system, as vulnerable today as when he came into office. His green-energy fantasies yielded Solyndra cronyism and a cap-and-trade regime not even a Democratic Congress would pass.

Krauthammer finds the delay of the Keystone XL pipeline as just another example of the President putting the election calendar trumping the national interest.  Despite the President's cries of "We can't wait", we are told that we must wait until after the election for him to decide on a policy that would be an economic bonanza with only ginned up environmental problems.

Tax obsession and the Supercommittee

It looks less and less likely that the Congressional Supercommittee will agree on a deficit-cutting plan.  James Pethokoukis places the blame on "tax-obsessed" Democrats:

Yet Democrats used the SuperCommittee to push a trillion-dollar tax hike and block fundamental entitlement reform. As one GOP aide told Politico, “If they were willing to go a little further on entitlements, we’d see what we can do on revenues. That was the way it would have to work. What we found was, they needed a trillion-plus in revenues, and weren’t willing to do anywhere near that on entitlements.”

As I have been saying for months, Pethokoukis concludes that

(i)f Uncle Sam does need more revenue, pro-growth tax reform is the best way to get it. A host of studies from both liberal and conservative economists have found that eliminating the tax code’s bias against investment would boost long-term GDP growth by as much as 10 percent and add perhaps a full percentage point to annual GDP growth for a number of years.

Balanced budget amendment

The country will suffer mightily if the federal  government continues to be unable (or is it unwilling?) to operate with even a modicum of fiscal sanity.  But a balanced budget amendment is not the way to go because fiscal sanity is not the same as a balanced budget.  Dave Nicklaus has an interesting take on the analogy of the family budget.

Personally, I don't believe the doomsday scenario depicted by Nicklaus because it seems based on an immediate implementation of such a budget rather than it being phased in.  But I think he's right that "(a) vote against this amendment is not a vote for profligacy, it's a vote for common sense."  I certainly agree that Congress and the President need to be reigned in, but this is too blunt and ham-fisted.

Next time use your own money

Energy Secretary Steven Chu testified before Congress and said he doesn't see anything fishy with the Solyndra loan. He also doesn't see incompetence.

Unstimulating

The Congressional Budget Office is the official scorekeeper for fiscal policy at the Federal level.  During testimony this week, CBO Director Douglas Elmendorf said that the President's much-vaunted (by himself, at least) stimulus from 2009 will be a drag on the economy in the long run.  As Peter Suderman puts it,

even the mildly Keynesian congressional scorekeeper agrees that borrowing $800 billion dollars ultimately creates a drag on the economy and a net loss in economic performance relative to what otherwise might have been. And yet the administration went ahead with the legislation anyway, arguing that it would be more or less a free lunch in the long run. 

Who are you calling lazy?

The President, who seems to find us unworthy of his governance, recently told Asian leaders that the United States has been lazy when it comes to attracting foreign investment.  The statement is factually incorrect in that the country has been very successful in attracting foreign capital.  How else could we finance our twin deficits?  More to the point, it is the Obama administration that has been openly hostile to foreign investment, as well as practically any private-sector investment.  The IBD calls the President on this one.

Public policymaking and personal profiteering

I suspect that this will fail, as have previous attempts, but "Sens. Scott Brown, R-Mass., and Kirsten Gillibrand, D-N.Y., today are introducing the Stop Trading on Congressional Knowledge (STOCK) Act of 2011, which would prohibit members or employees of Congress, as well as executive branch employees, from using nonpublic information obtained through their public service for investing or any attempt at personal financial gain."

You might be surprised to find out that Congress has conveniently exempted its members from insider-trading rules that would prevent them from profiting financially from the information they obtain as part of their jobs.  Recent studies coauthored by my Lindenwood colleague Jim Boyd (here and here) have shown that Senators and members of the House of Representatives are surpisingly adept at personal financial matters.  Hmmm.  Might there be a connection?

Good enough for government work

Firing Incompetent Employees 'Would Harm The Agency’s Work,’ SEC Chief Says

Chicago Teachers Union President Mocks Arne Duncan, Jokes About Smoking Pot -- With Kids in the Audience.  She also made fun of his lisp.

If politicians run a business,

it will be run for political purposes. According to emails, the Dept. of Energy interfered with the timing of layoff announcements at Solyndra. According to one email:

They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3rd – oddly they didn’t give a reason for that date.

By complete coincidence, November 2, 2010 was the date of the mid-term elections.

Government as entrepreneur

Solyndra is only the most recent in a long line of white elephants and failed energy ventures that the private sector would not have touched with a ten foot pole, but which the Federal government was willing to jump in feet first.  President Obama and Energy Secretary Steven Chu should be forced to put some of their own money into any venture that they think is deserving of taxpayer money.

"My dog ate the recovery"

As the Obama recovery continues along its pathetic way, you will continue to hear various excuses.  Tom Blumer has a handy reference for three of them.

More supercommittee supershenanigans

The Democrats on the supercommittee just can't keep their hands out of our pockets.

Robert Bryce to the rescue

I had the misfortune to read Paul Krugman's recent column about solar energy and hydraulic fracturing.  I had been hoping that this would be one of those times that Krugman the sane economist would reappear, but my hopes were dashed.  Yes, this is two posts in a row about my naive and stupid hopes being dashed.  At any rate, as I was reading Krugman's column, I thought of Robert Bryce, who visited my institute last month and gave a great talk about the future of energy.  I was hoping that he would give Krugman a well-deserved intellectual thrashing.  This time, my hopes were realized:  Bryce wrote yesterday that Krugman "displays an astounding disinterest in numbers and woeful ignorance of the facts."  Needless to say, Bryce, who spends a lot of time thinking deeply about these things, can actually speak intelligently about solar energy and hydraulic fracturing. Read the whole thing.

Hopenchange

Initially, I had relatively high hopes that the Congressional supercommittee would be able to overcome political hurdles and come up with a worthwhile tax-reform plan.  (I was hoping for it because I don't see any other way to escape from the Obama recovery.)  Such a plan would lower marginal rates while eliminating deductions and has significant bipartisan support (intellectually if not politically).  Yesterday, such a plan was put on the table by Republican members of the supercommittee and was rejected out of hand by Democrats because it didn't raise marginal tax rates on the rich.  This is despite the fact that the plan would have added billions in coveted tax revenue (mostly from the rich), even under static scoring, which doesn't account for the higher growth that would result from such a plan.  Apparently, success in the supercommittee would mean the death of the President's contrived meme about Republican obstructionism, on which he is basing his entire campaign.

I think it's become pretty clear that everything that happens in the Administration and in Congress is about the 2012 election, regardless of the effect that it has on the country as a whole.  How's that Hope and Change going now?

On the subject of Lindenwood....

Here's a video tour of campus that I put together from pictures my kids and I took. It's pretty slick.

Lindenwood to receive an award

I often have taken the opportunity to brag about my employer, Lindenwood University, as being a great place to work and for its forward-looking business school.  Although such bragging looks a lot like blatant sucking up, anyone I have worked for can confirm that sucking up is not exactly my style.  So, I will again take the opportunity to brag about Lindenwood and an award it's receiving for its "meaningful business contributions and positive impact the community."  The criteria for the award fit the university to a tee:

Criteria for the award included organizational stability and progress, fiscal solvency, community investment, leadership in industry, and sustainable efforts. Other areas included commitment to corporate citizenship and economic impact.

Advice from Lord Keynes to the President

I have often complained that, regardless of the merits of health-care reform, environmental regulations, and the myriad of "reforms" put in place by the Obama administration, doing so while the economy is recovering from a massive recession is simply a bad idea.  It turns out that I'm more of a Keynesian than I thought and that the President isn't enough of one.  Greg Mankiw has a post describing a letter by John Maynard Keynes to FDR in 1933.  Here is the key quote:

(E)ven wise and necessary Reform may, in some respects, impede and complicate Recovery. For it will upset the confidence of the business world and weaken their existing motives to action, before you have had time to put other motives in their place.

"We screwed up the U.S. economy"

Well, he's not the only one, but this NLRB lawyer seems pretty proud of it. 

"Now is the time to put country before party"

On many occasions, the President has urged Republicans to put their country before their party, and he did so once again yesterday.  On an entirely unrelated topic, the President has delayed the decision on the Keystone XL pipeline until after the election so as to avoid alienating organized labor or environmentalists, who are on opposite sides of the issue.  Because of the delay, the Chinese might step in and build a pipeline to the west coast of Canada so that oil can be exported across the Pacific instead of to the United States.