Perhaps even Paul Krugman will be satisfied with this amount of "stimulus"

Petition to Build Death Star Gaining Steam
To many, including the current administration, the problem with our economy is that no matter how much the government spends, it is always too little. They should, therefore, jump all over the proposal to build a Death Star.  No need to worry about the cost.  We can always rely on the Fed to keep the presses running.

Who says that bipartisanship is dead?

Even Democrats are beginning to see it for the legislative monstrosity that it is: Senate Democrats Urge Undoing of ObamaCare

Hmm, maybe there's a spending problem

Justin Hohn has done some back-of-the-envelope calculations to put government budgets in perspective.  Keep in mind that his calculations are based on there being no behavioral responses to tax rates:

The data indicate that 17,446,537 tax returns showed an income over $100,000.  These returns represented a total income of $3.765 trillion. Estimated 2012 spending comes in at $3.796 trillion. This is still $30 billion more than a 100% confiscation of the annual income of all Americans that reported more than $100K of income for 2009.

The bottom line is that we cannot fund our current levels of spending even if we make unrealistically charitable assumptions about taxpayer response to confiscatory tax rates and confiscate the entire annual income of every American who made more than $100K in 2009.

Rising seas: No biggie

The New York Times has an interesting interactive graphic meant to show the devestation of rising seas as global temperatures rise.  Choose the 5 foot option to see the predicted effects of rising sea levels over the next 100 to 200 years. No doubt the Times intended to raise the alarm so that we drastically cut our carbon emissions, thereby impoverishing ourselves and our ancestors by trillions upon trillions of dollars, just to make a modest dent in the chimera of anthropogenic global warming.  Instead, the relatively minor effects they illustrate help to make the case for adaptation, which would cost much less and which could be done as the effects begin occurring, rather than now, when simplistic and rigged computer models are our only guide.

Insane or delusional?

Gosh, it's difficult to know where to start on Paul Krugman's latest inane screed. One really has to wonder what goes through his head. He's certainly intelligent enough to know that the numbers and "facts" that he throws out are nonsense. So it's either that he is doing it on purpose to fool others who will give deference because he has a Nobel Prize in something completely divorced from what he's talking about, or he has lost his mind.  I suspect that latter, but, not being a psychiatrist, I won't hazard a specific diagnosis.

At any rate, let's start with the sheer stupidity of doing policy analysis by cherry-picking from a single period of history.  Krugman's basic claim is that situation of the 1950s (high taxes on corporations and the very rich, union power) worked just fine, so we can certainly go back to that now.  After all, according to Krugman,

the high-tax, strong-union decades after World War II were in fact marked by spectacular, widely shared economic growth: nothing before or since has matched the doubling of median family income between 1947 and 1973.

Let me think for a second.  Was there anything else that might have has something to do with what happened to the economy starting in 1947?  Well, it's been a while since I was in school, but I do seem to recall something about a massive worldwide depression followed by a war of some sort in which 50-70 million people were killed and all of Europe and much of Asia were flattened.  I also seem to remember talk about economic miracles in Germany and Japan, but perhaps that's just my imagination.

Assuming that my memory is correct, however, maybe we should really go whole hog on this replicating the conditions of the 1950s idea.  Wow, Krugman is way ahead of me on this already.

Update from James Taranto:

Still Crazy After All These Years
The Daily Princetonian profiles Paul Krugman, who in addition to being a former Enron adviser is a professor at Princeton:

Since he won the Nobel Memorial Prize in Economic Sciences in 2008, Krugman has been on more or less "50 percent duty" as a professor, Gene Grossman, chair of the economics department, said. When he won the top award in economics, his public profile increased significantly, meaning he suddenly had fewer free hours to commit to his job as a professor, Krugman said in an interview in his office last spring.

"Since the Nobel, with all of the pressures, I am buying back my falls, which is not going to continue indefinitely," he said, noting that his other commitments are why he only teaches in the spring. "In some ways teaching keeps you sane. I feel disconnected from reality after a semester of not teaching . .  it is good to come back and teach basics," he explained.

In case that's too long to read, here are the main points: 1. Teaching keeps you sane. 2. Krugman has a drastically reduced teaching load.

New Poverty can never be eliminated

The Census Bureau released a new supplemental poverty measure the other day.  As Mickey Kaus points out, it is a complete scam that does not actual measure poverty as people normally think of it.  The old measure tries to capture absolute poverty, but the new one measures relative poverty.  It would be possible for poverty to be eliminated under the old definition, but, by definition, it it can never be eliminated under the new one.  No wonder those who benefit from the existence of poverty (i.e., the poverty industrial complex and most of the media) like this one so much better.

How could this unexpected?

The rate of poverty in the United States spiked up between 2010 and 2011 and this is supposed to be some sort of surprise.  What do people expect happens when the Federal government enacts scores of laws and regulations to discourage economic growth, favors pet industries over efficient ones, and promises to do more of the same for the next four years? 

Apt commentary on the election

Be careful what you vote for

I am not a Libertarian, but I do like this ad.

When was shame replaced by entitlement?

I recently turned 50 and have decided that I am now old enough for two life-altering changes.  In decreasing order of importance: I can now wear a fishing vest and hat wherever and whenever I darn well please; and I can now begin arguments and debates with variations on the phrase "Back when I was your age, things were different."  To the chagrin of my children, I have already embarked on the former change.  To the chagrin of anyone who is reading this blog, I will now embark on the latter.

From a proud Missourian

I have not blogged since mid-September because I was getting tired of coming up with new ways to say how I thought that nearly every economic and regulatory policy put in place since the end of 2008 was pretty much the opposite of what should have been done.  Also, how many times can you say that the new employment/GDP/budget numbers show the long-term economic stagnation wrought by those misguided policies?

The utter stupidity of our ethanol policies

Who says that economists can't agree on anything?  The IGM Economics Experts Panel is unanimous on ethanol policy.

Shocking!! Politics defeats business in state-owned corporations

Here's a shocker.  The Obama Administration refuses to sell its GM shares because it would reveal to the public the many billions of dollars that the taxpayers poured in to bail out the UAW.  Bad political optics will always triumph over good business sense.

Why statists hate corporations

In a nutshell, from David Burge:

'Government' is just a word for things we do together. 'Corporations' is just a word for things we do together voluntarily.

If a central entity isn't forcing you to do things under threat of jail or worse, you're just not doing it for the "right" reasons.

Firefighter tourism

There's a certain genius to this idea. 

Giving the bird in 2012

The prime minister of Hungary, Viktor Orban, has unfriended the IMF on his Facebook page.

Obamanomics explained

For quite some time, I have been trying to figure out the economic model that President Obama has in his head when he devises his ruinous economic policies.  I've been saying for years that his policies tend to be the opposite of what should be put in place, but that's because they were the opposite of the optimal policies that derive from my understanding of how the economy works.  I've had a tough time, however, trying understand how the President thinks his policies are meant to work.

Andrew Klavan has done a pretty good job of this, although I think he's incorrect in equating Obamanomics with Keynesian economics.  Certainly the two have in common the belief that economic stimulus can get an economy out of recession, but I suspect Keynes would be horrified to see how his name is being sullied to justify a government takeover of the private sector, not to mention the infinitely expanding budget deficit.

The broken record of Obamanomics

For those of you who are too young to know what a broken record is, let me explain. Before there were mp3 files, and even before there were compact discs, cassette tapes, and 8-track tapes, there were vinyl records.  These plastic discs had grooves cut into them that served as memory.  Actually, a record had one long spiral groove running from its outer edge to its center.  By rotating a record under a diamond needle, this memory would be transmitted through the record player and out of speakers.  Sometimes, the grooves in the record would become damaged so that the needle would stop following the groove in toward the center of the record and, instead, simply go around and around over the same part of the groove, repeating the same snippet of music until you gave the record player a light smack.

With that in mind, Byron York has a collection of the Obama administrations responses to the dismal job numbers (96,000 net jobs and 368,000 more discouraged workers), each of which reminds us that we should not "read too much into any one monthly report."  The administration is silent, however, on whether it is okay to read something into years of these alarmingly similar reports.

When is a recovery worse than the recession?

When every policy that you enact is the opposite of what you should have done: U.S. Incomes Fell More in Recovery Than Recession

American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC.

Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.

The innumeracy of Team Obama

One might get the impression that they have no choice but to pull numbers out of their collectes a**es.  According to Stephanie Cutter, Obama's deputy campaign manager:

(Y)ou know, 27 months we’ve created 4.5 million private sector jobs. That’s more jobs than in the Bush recovery, in the Reagan recovery...

The problem with this claim is that it's, how we say, the opposite of the truth. The Reagan and Bush recoveries were both stronger.  As James Pethokoukis points out,

From the end of the recession in June 2009 through July 2012 — the first 37 months of the Obama recovery — the U.S. economy has generated 2.7 million net new jobs. From the jobs low point in February 2010, the U.S. economy has generated 4 million net new jobs.

From the end of the 1981-82 recession through the end of of 1985 —  the first 37 months of the Reagan recovery — the U.S.created 9.8 million net new jobs. And if you adjust for the larger U.S. population today, the comparable figure is more than 12 million jobs....

If you look at job growth during the George W. Bush Recovery the way Cutter examines Obama’s job growth — from the low point forward, then the first three years of the Bush recovery created 6.5 million jobs — also better than Obama.

The budget debate we should be having

Everyone knows that the federal budget is out of control and that, unless something is done soon to reform how we collect taxes and structure entitlement spending, our fiscal future is bleak.  Given that, it seems obvious that responsible governing requires lining up the various fiscally sustainable plans and choosing one.  That is, the debates over the proper size of government, etc. should be within the context of federal budgets that are somewhere in the neighborhood of being balanced.  At the very least, they should not have explosive deficits as part of their design.  It is not a simple matter to project the federal budget for years into the future, and there is a great deal of disagreement over the economics behind the various tax and spending schemes.  But, at the very least, we should only be debating budget plans that make a good-faith effort at sustainability.

Consider five representative budget plans that are out there: President Obama's, Paul Ryan's, the Bowles-Simpson Commission's, Ron Paul's, and that of the Congressional Progressive Caucus (CPC).  Four of these plans are designed to achieve fiscal sustainability, although the means by which they do it span the spectrum.  The Paul and CPC plans represent the two extremes: The Paul plan includes huge cuts to taxes and spending, whereas the CPC plan does the opposite.  In the middle are the Ryan and Bowles-Simpson plans, which differ mostly on how to manage health care, Medicare, and Social Security.  Roughly speaking, the former uses market mechanisms and competition to control costs, while the latter uses government bodies to take over these markets.  What these plans have in common is a complete overhaul of our ridiculously inefficient and complicated tax structure: Both include significant cuts to tax rates along with greatly reduced deductions and tax expenditures.

If we exclude the Paul and CPC plans as having no chance of being adopted, then the debate we should be having is between variants of the Ryan and Bowles-Simpson plans.  Instead, we are debating the Obama and Ryan plans, the former of which is destined to achieve fiscal ruin.  In fact, according to Tim "Turbo Tax" Geithner, it's a stretch to say that the administration has a plan at all.  As he told Paul Ryan, "We're not coming before you to say we have a definitive solution to our long-term problem. What we do know is we don't like yours."

Keith Hennessey has a handy comparison of the Ryan, Bowles-Simpson, and Obama plans.  In short, we should be arguing over the purple and red lines, but, instead we're arguing over the blue and red lines.

Like rats on a sinking ship

According to America's finest news source: Nation's Economists Quietly Evacuating Their Families.

"We've noticed a trend among the leading economic thinkers, be they Keynesians, supply-siders, or students of the Austrian school—they're putting their families on one-way flights out of the country, often leaving half-finished survival bunkers behind them," Paul Klement, an analyst with the Brookings Institute

It's not just TIFs

The Post-Dispatch has an outstanding editorial today about the folly of tax increment finance (TIFs):

In 2010, according to information compiled by the East-West Gateway Council of Governments, $67.7 million in property taxes was diverted from various government entities in the city of St. Louis and St. Louis County for the benefit of TIFs. More than half of that money, $38.7 million, should have gone to school districts. Another $36.3 million in sales tax revenue was diverted.

That's fine if the diverted money fed an economic beast, but it didn't. Various East-West Gateway reports have determined that at best, TIFs move some retail money around between competing municipalities. There has been next to no economic benefit for the St. Louis region in terms of net new jobs since the use of this development tool exploded over the last two decades.

This is absolutely right, and I'm glad that P-D editors find themselves on the right side of an economic issue for a change.  They fail, however, to see the big picture: The corruption and ineffectiveness they point out are not a product of TIFs, but are the very nature of government intervention into the free market.  I might be wrong, but I don't expect that this excellent editorial is a sign that the editors will come to their senses any time soon over the many offenses against economic freedom committed by all levels of government.

Remember, it's all about the children

Teachers' Unions in Action

In Louisiana, where 44 percent of public schools are given D or F grades by the public schools themselves, the main teacher's union is threatening to use "Any means necessary" to prevent private schools from using the state's new voucher system:

Its lawyers faxed threatening notices to 100 of the 119 schools in the voucher program, warning them that their clients (the union thugs) intend to use "whatever means necessary" to make the schools bar voucher students.
"By any means necessary" -- BAMN, as it is known to devotees of radical causes -- is code language for confrontational action, including violence if necessary.
The LEA will start by suing all 100 schools, many of them small private schools catering to poor children. The LEA, flush with fat union dues, is well-positioned to legally harass these schools, whose resources are limited.
You can see why the LEA is panicked: its members support failure in school so long as it lines their pockets, and they know that the public is beginning to realize that school choice is a necessary precondition to K-12 school reform.

Meanwhile, in New York City schools, sexual predators are aided and abetted by their union:

Specifically, nearly a hundred tenured teachers or other public school employees have been charged by the Department of Education with various sex crimes, including one teacher who had sex with a 13-year-old girl and an assistant principal who asked a young girl if she would give him oral sex.
But while in private industry, perps would be summarily fired and face the justice system (or else the business would be on the firing line), in New York they just appear before a school investigation panel, an independent law firm, or a local school superintendent. After that, the perp goes before an arbitrator selected -- get this! -- by the teachers' union and the school district jointly. The arbitrators, by the way, get paid $1,400 a day. You don't have to be a public choice economist to realize that, to please the unions, these arbitrators will likely be inclined to fine or suspend the teachers rather than fire them.
For example, one perp who repeatedly hugged girls, including fondling one poor girl's breasts, was suspended for six months. Another fine fellow was only reprimanded for "inappropriate touching" of a number of young boys. A third randy shaper of young minds, who repeatedly texted sex messages to girls -- including asking one to perform a striptease for him -- was merely suspended.

It's Tenure Man!

Note that my own institution, Lindenwood University, did away with tenure about 20 years ago and, not coincidently, is a financial and academic success story. As for me, while I would really like to have tenure myself, I am glad that no one in the rest of the university has it.

 

Thieves, leeches, and liars

Take me down to the parasite city

Emails: Geithner, Treasury drove cutoff of non-union Delphi workers’ pensions

Hmmm. So, political takeovers of private companies will punish those who do not bankroll the correct political party?  And the fight for a spot at the trough is a booming sector?  Who'da thunk it?

A sound, but incomplete, warning

For the Thirty-First Time, Obama White House Says ‘Don’t Read Too Much’ Into a Bad Jobs Report

So true.  But do feel free to read a lot into the past 42 jobs reports as a whole.

It should exceed 450 thousand per month by now

Today's job numbers are a mixed bag.  Payroll employment rose by 163 thousand, which is somewhat higher than the number of working-age adults that were added last month.  As a rule of thumb, job growth of about 125 thousand is needed just to keep pace with population growth.  We should be adding 450 thousand or more jobs every month by now.  And don't believe the hokum that the weak recovery is due to the deepness of the recession.  The opposite is true. 

Here's a good characterization of the payroll numbers:

"I'd call this a soft 163," said Steve Blitz, chief economist at investment research firm ITG in New York. "If you want to take from this the notion that the economy is not heading to a recession or something more ominous, that's fine. But if you want to take from this the idea that the economy is about to accelerate, I think that would be a big mistake."

The unemployment rate, on the other hand, rose from 8.2 to 8.3 percent.  As I've said many times, the unemployment rate is very close to worthless as a measure of labor market conditions. Higher unemployment can indicate improving or worsening conditions. The employment to population ratio is much more useful, and it fell from 58.6 to 58.4:

 

Lower unemployment in St. Louis is bad news

The unemployment rate for the St. Louis MSA fell last month, to 7.7 percent on a seasonally adjusted basis.  As has become well known during this recession and "recovery", the unemployment rate can be a very misleading indicator of economic conditions.  Steve Giegerich did a good job wrestling with this difficulty in the Post-Dispatch today.

My take on the St. Lous economy:

• Although the BLS is underestimating it, St. Louis payroll employment is growing too slowly to recover the jobs lost during the recession anytime soon. In fact, as with national employment, it might not even be keeping up with population growth. 
• The St. Louis unemployment rate has fallen by about 1.6 percentage points since June 2011.  Almost 24 thousand fewer people are unemployed, but most of this did not result in more employment.  The labor force shrank by 17.1 thousand while employment rose by only 6.6 thousand.  That is bad news.
• Since January of this year, the seasonally adjusted unemployment rate fell by 0.4 percentage points.  Although the number of unemployed fell by 6.2 thousand, the labor force shrank by even more (9.2 thousand).  Thus, the number of employed people fell.  That is bad news.

That's only half the story

President Obama was campaigning in Ohio today and made a very clear statement of how he believes the economy works:

President Obama explained to a group of supporters in Ohio this afternoon that more government investments in infrastructure would help the economy grow again. Pointing out that if government continued to invest in roads and bridges, it would put more money in people’s pockets to spend.

“That’s how we grow our economy.” Obama said, “If we’re investing in roads and bridges, putting some hard hats back to work, getting our steel workers back to work, they got some more money to spend, maybe they buy a new computer, maybe they decide to take a little vacation.”

“And all that money circulates in the economy and it makes us all grow,” Obama added.

That's not a bad description of the mechanics of how government spending is alleged to lead to growth.  However, it misses the other half of the story.  To pay for that government spending, people have to be taxed now, or the government has to borrow now and raise taxes in the future.  If taxes are collected now, then people will have less money to spend, maybe they put off buying a new computer, maybe the decide that they can't afford a little vacation.  If the government borrows money, it sucks funds out of financial markets that would have gone to the private sector.  Plus, because this money has to be paid back, people know that their taxes will be raised in the future, so they reduce their spending now.

Is that really how we grow our economy, by taking money from consumers and private businesses to build roads and bridges?  If that's so, then let's take all of the wealth in the economy and pay people to dig holes in the ground and then fill them in.  What fantastic growth that would cause!

Just because it's a failure

doesn't mean it's not his biggest economic success:  Obama Touts GM as Success While Market Share, Stock Price Decline

Happy Birthday, Milton Friedman

I am an economist because of Milton Friedman. More specifically, I am a free-market economist because my first economics professor had us read Friedman's Free to Choose and Galbraith's The New Industrial State. We also watched several episodes each of Friedman's TV series of the same name, and Galbraith's The Age of Uncertainty. After experiencing the turgidity of Galbraith alongside the clarity of Friedman, there was no turning back.

Today would have been Friedman's 100th birthday. Over at Cafe Hayek they have a collection of links to articles about Friedman's legacy.

Our best hope: A Damascene conversion

The Federal budget is probably in much worse shape than is indicated by Administration projections. As Greg Mankiw points out, the Administration's latest growth projections are well above those of private forecasters. Given the economic incompetence of the Administration, I'm fairly confident which set of projections is more likely.

Then again, maybe the President knows something we don't and the projections are embedded with the assumption that we won't have to suffer from his opposite-of-what-should-be-done policies for much longer. Maybe he's predicting his own electoral defeat, or that he will have a Saul-to-Paul conversion that will make him stop persecuting businesses and their employees. Other than wishful thinking, I can't think of any other explanations for the optimistic growth projections.

Who do you think you are!?

Mark Steyn sums up nicely the bizarre notion of stifling free speech in the name of tolerance: "If you’re only in favor of freedom of expression for people you agree with, you’re not doing it right."

It’s bad enough that in a supposedly free society you can’t sell a chicken sandwich to your fellow citizen without buying a bazillion permits from the state. If they can prevent you from selling a chicken sandwich because they don’t like your opinions, then what can’t they do to you?

Well-reasoned arguments are not enough to counter this lunacy, however. As Rush Limbaugh puts it, what is needed is to stand up and ask: "Who the hell do you think you are, Rahm Emanuel? Who the hell do you think you are? What country do you think you’re in?” Steyn is right: "Until more citizens of free nations are willing to say to statist hacks 'Who the hell do you think you are?', liberty will continue to bleed."

Real environmentalists should be happy

Walter Russell Mead has a great piece on the effect of the energy revolution on the environmental debate:

High praise indeed

A global warming skeptic who's a lot smarter than Al Gore

It's impossible to delve into Dyson's career without concluding he is several orders of magnitude smarter than the Al Gores of the world.

One of his themes is the complexity of the universe.

He thus gets a good laugh at all of the simplifiers of science, such as Gore and the rest of the what I like to call the climate scientology cult.

Anyone who knows anything about science realizes that something as complex as the Earth's atmosphere offers too many variables to be understood in a matter of mere years.

Research is just beginning into the role of carbon dioxide in the atmosphere, yet the climate scientologists claim to know exactly what effect each tiny increment of CO-2 will have on the environment.

Hmm, are other TARP recipients doing this?

GM Ramps Up Risky Subprime Auto Loans To Drive Sales

Potential borrowers of car loans are rated on FICO scores that range from 300 to 850. Anything under 660 is generally deemed subprime.

Subprime Key Driver
GM Financial auto loans to customers with FICO scores below 660 rose from 87% of total loans in Q4 2010 to 93% in Q1 2012.

The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012, GM Financial loans to customers with the worst FICO scores — below 540 — shot up 79% to more than $2.3 billion. The second worst category, 540-599, rose 28% from about $3.4 billion to $4.3 billion.

Let me think...What is it about GM that makes it different from other companies? It couldn't be that it is largely owned by the federal government and the United Auto Workers, could it?  No, the government would never allow such a thing to happen after the mess we had in 2008.  And I'm pretty sure that a government-owned company would never use subprime lending to juice sales prior to an election in which two key auto-producing states, Michigan and Ohio, are up for grabs.

Besides, the government can surely be trusted to make sure that TARP recipients (GMAC, $12.5 billion; GM, $40 billion; and GM suppliers, $3.5 billion) don't ever put the economy at risk again.

I guess it will remain a mystery.

Was TARP worse than you think?

TARP Was Even Worse Than You Think: “An Abysmal Failure,” Barofsky Says:

Most Americans have a sense TARP was a badly managed program that bailed out "fat cat" bankers at the expense of U.S. taxpayers. Well, it's even worse than you think, according to Neil Barofsky, former special inspector general for TARP (SIGTARP).

 

I'm not sure that I agree with a lot that Barofsky has to say here about TARP.  I was a Fed economist at the time, and TARP and other programs were sold as necessary evils to prevent the collapse of the financial sector.  They were not to save the financial sector for its own sake, but to save the rest of the economy, which relied on the existence of a functioning financial sector.  Saving Wall Street was the same as saving Main Street.  Plus, as repugnant as it was to bail out bankers who were in trouble because of their own decisions, many bankers and others in the financial sector were innocent victims.

More on goons and thugs running Chicago

From Eugene Volokh: Chicago Alderman: I Will Deny Business Permit Because “There Are Consequences for [Its Owner's] Statements and Beliefs,” and They Should Include Denial

This is just appalling. A government official thinks that the proper “consequence” for a business owner’s “statements and beliefs” is the denial of the ability to do business. Because he’s “sure the majority of” his constituents find the owner’s “comments and attitudes repugnant,” it’s just fine for him to use the coercive power of the government to block the business from opening up a store. His “belief in equality is resolute,” and that apparently justifies him discriminating against businesspeople for exercising their First Amendment rights to speak out. They “should really reconsider [their] platform on gay issues,” or else the government of Chicago will exclude them from the alderman’s ward.

As I noted before, such a viewpoint-based denial of a business permit is a blatant violation of the First Amendment. But that doesn’t seem to bother Alderman Moreno, because his “principles” seem to demand this sort of unconstitutional behavior. As I said, just appalling.

What else is there to say?

US economic growth slowed to 1.5 pct. rate in Q2 

Since early 2009 I have been saying that the policies pushed and implemented by the Obama Administration have been pretty much the opposite of what is needed to get the economy back on track.  Three years after the recession ended we're still seeing pathetic growth, and it has nothing at all to do with the hand that the President was dealt.  Deep recessions are typically followed by strong recoveries (here and here), and the reason this has not happened is due entirely due to the wrongheaded economic policies that the administration has hampered the economy with.

When thugs and goons are in charge

Chicago plans to punish private citizens who express political views contrary to the Mayor's, and the Mayor is proud of it. That certainly does sound a lot like the Chicago values the Mayor is trying to protect: Emanuel goes after Chick-fil-A for boss’ anti-gay views 

Note that Chick-fil-A's owner did not discriminate against anyone, or break any laws or rules. Its owner simply had the nerve to express his personal opinions. How dare he!

In related news: Rahm welcomes help from Farrakahn, ignores anti-Semitic remarks 

So, in Chicago it's okay to be an anti-semite and racialist, but don't you dare cross one of the Mayor's key voting blocs.

From March,Venezuelan strong man Hugo Chavez threatens companies that support the opposition:

“I have a list of private banks that are financing the opposition’s destabilizing plans,” Chavez, 57, said. “It wouldn’t be bad at all to issue a decree and bring those firms under state control. Large national and some international companies that earn more than enough money here.”

Argentina takes control of newsprint business:

Economic liberty intertwined with civil liberty, part 7,914,886: “The paper used to produce newspapers came under government control in Argentina on Thursday, in a long-sought victory for President Cristina Fernandez in her dispute with the country’s opposition media”...

Dictator Juan Peron used similar methods to muzzle the press, while in Mexico for decades governments of the ruling PRI closely controlled newsprint allocation, a power they were not hesitant to use to bring excessively independent publishers to heel.

Good enough for gummint work

Jobs Program Spent $76,000 Per Person To Help Youth Find Minimum Wage Jobs: 

• Wasteful administrative costs are eating up job training dollars.  In one program, just 14 cents of every dollar went to actual job training.
  
• Questionable spending abounds.  For example, the Job Corps program spent $36,000 on flowers and billboards.  Other expenditures included bowling trips and recreational activities that had little to do with job training.
  
• Some job training programs appear to segregate participants by race, gender, and background.  For example, Oklahoma's 40 job training programs have eight that target Native Americans and seven for veterans--"some of which require veterans to pursue training for 'green skills,' not because of labor market analysis but because politicians in Washington are imposing ideological agendas on states." 

Somewhat more than Al Gore

How much did the government contribute to developing the internet?  Urban legend has it that the internet was a government project that ended up spurring an economic bonanza.  This legend was recently and famously repeated by President Obama when he made his case that everyone owes everything to the government.  The reality is quite different from this legend, however, and it is more accurate to say that the internet exists only because the government got out of the way and private businesses took advantage of the technology that the government had been sitting on.  Here's Gordon Crovitz in the Wall Street Journal:

As for the government's role, the Internet was fully privatized in 1995, when a remaining piece of the network run by the National Science Foundation was closed—just as the commercial Web began to boom. Blogger Brian Carnell wrote in 1999: "The Internet, in fact, reaffirms the basic free market critique of large government. Here for 30 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished. . . . In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the millennia."

I think he has it backwards

The Washington Post has an analysis by Chris Cizzilla of the economies of presidential-election swing states. According to Cizzilla, the improving economies of those states, at least relative to the awful national economy, will make them more likely to end up in President Obama's column:

In seven of those 12 states — Iowa, New Hampshire, New Mexico, Ohio, Pennsylvania, Virginia and Wisconsin — the unemployment rate is below the June national average of 8.2 percent. In some, it is considerably less than the national average; the June rates in New Hampshire, Iowa and Virginia were below 6 percent. Even in Ohio, a state hit hard by the collapse of the manufacturing sector, the unemployment rate is a full percentage point below the U.S. average. Republicans note that the unemployment rate rose between May and June in Colorado, Iowa, New Hampshire and Virginia, among other swing states.

In the four swing states where the rate is above the national average — Florida, Michigan, Nevada and North Carolina — the trend line is headed downward. Nevada’s June unemployment rate was an eye-popping 11.6 percent, but that was down from 13.8 percent in June 2011. Ditto Florida (10.7 percent in June 2011, 8.6 percent now), Michigan (10.6 percent in 2011, 8.6 percent now) and North Carolina (10.6 percent in 2011, 9.4 percent now).

The problem with this analysis is that almost all of these states either began succeeding economically only after they swung Republican in their statehouses in 2011 (Florida, Michigan, Wisconsin, Virginia, New Mexico, Ohio, Iowa, Pennsylvania) or is poised to elect a Republican governor to replace its current, wildly unpopular Democratic governor (North Carolina).  Even if the Republican governors are not responsible for their states' good fortunes, I bet they'll be able to take credit, especially since their electorates just replaced Democrats.

I'm no expert when it comes to politics, but that looks like good news for Romney rather than Obama.

Dodd-Frank and Obamacare: Birds of a feather

A hastily designed and poorly conceived legislative monstrosity that will fail to do what its framers claim it would do and is riddled with carve-outs based on political connections.  Years after it was signed into law, the regulations underlying it are still not close to being written, making it impossible for businesses to calculate future costs, or to even know what will be legal and illegal next year.

How to lose an election: Sound economics

Good Economics but Bad Politics?  As I've noted before, there is actually broad agreement among economists about many policy areas.  Veronique De Rugy points to a segment on NPR highlighting this point, along with the political perils of acting on this agreement.

On Wednesday, NPR’s Planet Money had a very good segment that listed six policies that economists from all sides of the political spectrum could agree on but no politicians would ever dare to run with.

Here are the policies:

• Eliminate the mortgage interest tax deduction.
• End the tax deduction companies get for providing health-care to employees.
• Eliminate the corporate income tax.
• Eliminate all income and payroll taxes. All of them.
• Tax carbon emissions.
• Legalize marijuana.

According to the story, no politicians who plan on winning would run with these policies.

Corporate cronyism under the guise of helping family farms

Crop cronyism: Trillion-dollar farm bill is the latest example of what’s wrong with our economy:

Combine a Midwestern drought with pointless ethanol mandates, and the supplies of corn inevitably dwindle, driving prices sky high. Politicians like Sen. Claire McCaskill, Missouri Democrat, are citing the crop crisis as an excuse to ram through a near-$1 trillion farm bill. While a bit of that cash might find its way to a small farmer, the bulk of the loot will be transferred to individuals who are anything but poor. Like the bank bailouts and TARP, the farm bill illustrates the capture of the legislative process by special interests. ...

The greatest scourge to the honest Midwest farmer is not unfavorable weather, pestilence or disease. Far worse for them is the plague of politicians who create an artificial market in which only those with influence can truly compete. Defeating the budget-busting 2012 farm bill is the best chance at a good harvest.

St. Louis employment

According to new data released by the ISEE at Lindenwood University, and your's truly, the BLS is again way off on its estimates of St. Louis payroll employment. Here are the ISEE and BLS series:



For details, look at this and go here. The long and short of it is that we've done a lot better (net gain of 12,400 jobs) than the BLS says (net loss of 2,100 jobs) over the past year, but it has still been pretty dismal. I've been making the case for a while that St. Louis goes as the U.S. goes, and this graph illustrates that:

A peek inside the FOMC

For the past three years or so the Fed has been secretly videotaping the meetings of the Federal Open Market Committee.  A leaker inside the Fed has given me this snippet.  See great minds at work:

The French are so much more sophisticated

After banning the burqa, French lawmakers target floral dresses:

An embarassing spectacle took hold of the French parliament on Tuesday when a Socialist minister turned up to work in a floral dress. Rightwing lawmakers raised their eyebrows and hooted as minister of territories and housing, Cécile Duflot, took to the podium to speak about an architecture project.

Not surprisingly, the “sexist imbeciles” in question denied any wrongdoing. “We were just admiring her,” conservative MP Patrick Balkany told French daily Le Figaro. “If she didn’t want us to take an interest in her, then she shouldn’t have changed her look.” Adding insult to injury, he suggested that she had only worn the dress “to get us to listen to what she had to say.” MP Jaqcues Myard went one sorry step further, telling Le Point magazine that the catcalls were a way of “paying homage to the beauty of this woman”.