Saturday, December 31, 2011

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?

Friday, December 30, 2011

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.

Thursday, December 29, 2011

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.

Wednesday, December 28, 2011

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.

Monday, December 26, 2011

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.

Thursday, December 22, 2011

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:

Wednesday, December 21, 2011

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.

Tuesday, December 20, 2011

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.

Saturday, December 17, 2011

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.

Friday, December 16, 2011

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."

Thursday, December 15, 2011

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.

Tuesday, December 13, 2011

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:

Sunday, December 11, 2011

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.

Saturday, December 10, 2011

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.

Thursday, December 8, 2011

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.

Wednesday, December 7, 2011

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.

Sunday, December 4, 2011

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.

Saturday, December 3, 2011

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.

Friday, December 2, 2011

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).

Thursday, December 1, 2011

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.