That was fast

Obama administration scraps child labor restrictions for farms

Pro-Market ≠ Pro-Business

Veronique de Rugy offers a reminder to those who often confuse being pro-market with being pro-business.  Being pro-market means wanting markets to allocate resources.  Often, being pro-business means handing out corporate welfare to favored industries, or carving out tax advantages that favor some activities over others.  But she takes it a step too far when she says that:

The real way to be pro-business and pro-market at the same time is to provide a low tax rate environment for every company, not just a few, a stable and light regulatory regime and put an end to the many subsidies flowing every year to many American companies at the expenses of their competitors and taxpayers.

Being truly pro-market means that you cannot be pro-business because being pro-business means that you favor business over some other concern, such as consumers or workers. The key component of being pro-market is that you are neutral towards all market participants.  As such, being pro-market implies nothing about the level of taxes or the heaviness of regulation. 

Choose your major carefully

College students shouldn't choose their majors solely on crass material considerations such as job prospects and salary, but they should nevertheless keep an eye on those things. Jim Gallagher of the Post-Dispatch has some interesting numbers on the unemployment rates and yearly earnings for recent grads. Here they are ranked by unemployment rate:

It's becoming a psychosis

I can't think of a sane reason for the latest intrusion into people's daily lives: Rural kids, parents angry about Labor Dept. rule banning farm chores.  Are they doing it because they are convinced they need to step in and replace parents as childrens' guardians, or is it that they need to flaunt their power?  Either way, it's coming close to being a mental disorder.

"If I wanted America to fail"

First, I don't think that President Obama wants America to fail economically.  On the other hand, I do think that winning means something different to him than it does to me and many others. That said, I've been arguing for three years now that the economic policies pursued by the President are pretty much the exact opposite of what should be pursued.  Here is a video via Drudge that makes the same point:

Beer prices and winning in MLB

Here is an interesting graphic comparing beer prices for all 32 major league stadiums.  My hometown Cardinals charge the second highest price per ounce, right behind the woeful Red Sox.  If one were to plot teams' current winning percentages against their beer prices, one would see a weak positive relationship.  Further, if the Red Sox are excluded as an outlier on the grounds that their high prices are largely driven up by the in-game beer demand of their multi-millionaire players, the relationship would be statistically significant.  This is apparent from the chart below, which plots the teams' current winning percentages against their beer prices per ounce (the red square is the Red Sox).

They say that correlation is not causation, but how about this: high beer prices lead to sober fans, which leads to better suggestions from fans to the players ("Catch the ball you bum!" instead of "Ctsch da pall yabum!"), which leads to a better team.  According to my results, if the Angels raised their beer prices from 32 cents per ounce to that of the Cardinals (56 cents per ounce), their winning percentage would be 0.585 and they would be in second place in their division. Instead, they spent $255 million on Albert Pujols and his .246 batting average and 4 RBIs and are languishing in last place.

Putting fairness to the test

Many college students are in favor of redistributing income from rich to poor for the sake of fairness. Perhaps such a stance arises among college students because most of them do not yet have much income, so income redistribution would be no skin off their nose.  Also, with relatively little experience in the labor market, maybe they don't understand how people get their income in the first place.

So, what if there a plan to redistribute something they might actually have and also know a lot about?  To find the answer to this question, students at Carthage University were asked to sign a petition calling for a redistribution of GPA points for the sake of fairness:

I like the First Amendment and I bet you do to

"I may not agree with what you say, but I will defend to the death your right to say it." Voltaire

"I don't agee with what you say, so I will defend to the death my right to shut you up." Pelosi

The nature of the beast

Lurita Doan says that "Obama is the World's Worst Investor", a claim that's hard to argue with, given the results:

Consider Obama’s investment in “green jobs”. After three and a half years and almost one hundred billion dollars of “investments”, Obama’s programs have been able to create only a few thousand jobs, certainly not the 5 million “green jobs” originally promised by the president. And, many of those few thousand jobs created are actually existing government jobs that have been re-categorized by Team Obama.

To be fair, I suspect that whoever was President would be a terrible investor.  It's just the nature of the beast: industrial policy will always end up squandering taxpayer money. But the difference is that most Presidents wouldn't actually spend hundreds of billions taxpayer dollars on nutty plans to create a farcical green economy.

Fact checking the fact checkers, part 1

There was a bit of a kerfuffle last week over a statement made by Mitt Romney's campaign suggesting that President Obama's economic policies have not been good for women.  Specifically, the campaign made the completely accurate statement that women make up 98% of the jobs lost since the President took office. As of March 2012, women's employment was 683 thousand lower than when the President took office in January 2009, whereas men's employment was only 57 thousand below its level then.

Two prominent "fact-checkers" cried foul.  Glenn Kessler of the Washington Post declared the claim to be "True but false" and PolitiFact called it "Mostly false" despite noting that it is, in fact, true.  Both of these fact-checkers made the mistake of mixing fact-checking with analysis and, as a result, have certainly given the impression that they are willing to bending over backwards to protect the President.  In their minds, despite the fact that the claim was absolutely true, it was false because they deemed its implications to be unfair to the president and his policies.  They argue correctly that the drop in employment through 2009 was not due to the policies of the Obama administration, but that has nothing to do with the factual accuracy of the original statement.  What they should have said is that the claim was true but not entirely fair in its implications.  Then they could have gone on to explain why they thought it was unfair.  The degree to which the claim is unfair is debatable, but to them it was not, so it must be labeled as false.

Semantics aside, by focusing on whether or not the job losses during the tail end of the recession can be attributed to President Obama, the fact-checkers completely miss the point.  As the chart above shows, the reason that the gap between men and women is so large is because of what has happened during the recovery, which is entirely President Obama's. It is not normal for women's job growth to lag so far behind during recoveries.  In fact, since 1970, women's job growth during recoveries has tended to be higher than for men.  The charts below show what happened in the two or so years following the previous three recessions.  Each line shows the level of employment relative to the month when payroll employment bottomed out (i.e., since the start of the employment recovery).  The red line is for women and the blue line is for men.  As is obvious, what has been going on for the past two years of the Obama recovery is far from the normal pattern.

 

 

Perhaps one can claim that the reasons that the Obama recovery has been terrible for women relative to men have nothing to to with the president's policies.  But one cannot claim that what has been happening is normal. 

It's a dog eat dog world out there

You might have heard that President Obama's campaign has been trying to make hay out of Mitt Romney's old story about travelling with his dog on the roof of the family car. Well, it looks like that dog won't hunt. Here's a passage from the President's book:

With Lolo [Obama's stepfather], I learned how to eat small green chill peppers raw with dinner (plenty of rice), and, away from the dinner table, I was introduced to dog meat (tough), snake meat (tougher), and roasted grasshopper (crunchy).

From James Taranto: Bam Bites Dog. The political perils of personal attacks.

It reminds us of the conclusion of the sci-fi tale "A Boy and His Dog": "It's a cookbook."

#ObamaDogRecipes: Yorkshire terrier pudding, mutt chop, Pekingese duck, bichon frisee salad, beagle with cream cheese, pure bread.

"So, Mr. President, where shall we go to eat?" "I know a great Spot."

If you want a friend in Washington, don't eat him (credit to Jim Geraghty).

Happiness is a warm puppy, with a side of fries.

Obama's favorite fast-food joint? Checkers (Patrick Daly).

I wouldn't vote for that guy for dogcatcher.

Did you hear about the insomniac polyphagiac president? He lies awake at night wondering if there is a dog. Romney aide Erich Fehrnstrom got into the act last night, retweeting Axelrod's Obama-Bo snapshot from January with the comment: "In retrospect, a chilling photo." 

Rick Ankiel, former Cardinal

Although this is primarily an economics blog, there are times that I just can't keep myself from talking about baseball, and living in St. Louis means that I sometimes have something important to blog about.  Last night, former Cardinal hero and current Washington National centerfielder Rick Ankiel demonstrated one reason he was able to convert from a pitcher to an everday player. Watch this strike that he threw.  The runner on third didn't even risk tagging up.

A good place to start on the Geithner Rule

John Hinderaker suggests that a Geithner rule is a better idea than the lame Buffett rule that the Administration is pushing.  Under the Geithner rule, everyone who owes taxes under the current law has to pay those taxes.  It is named after notorious tax cheat, Timothy "Turbo Tax" Geithner, our current Treasury Secretary.

A good place to start implementing the Geithner Rule is with Federal workers, who are about $1 billion in arrears on their taxes.

Electric-car boondoggle

Robert Bryce visited my institute at Lindenwood University last fall and gave a great talk about the future of fossil fuels. You can view the whole thing here and read it here. He provided one of the most succinct summaries of the electric-car industry.  It was something like "Electric cars are the vehicles of the future...and they always will be." 

Today he has a column about yet another in a long line of government-supported firms that are meant to transform the economy into a green utopia but will probably go bankrupt instead. This one received a government grant of about a quarter of a billion dollars.

The idiotic Buffett rule and the noble Geithner rule

A detail often left out of the discussion of the President's so-called Buffett rule is that it is meant as a replacement for the Alternative Minimum Tax.  As such, the rule would actually reduce Federal tax revenue by $800 billion.

This transparent ploy to stir up resentment to get the President reelected began as the key to reducing the deficit and, when it came out that it would raise relatively little revenue, morphed into a simple matter of 'fairness'.  Now it comes out that it's just more proof of economic incompetence.

John Hinderaker proposes the Geithner rule, under which people actually pay the taxes they owe:

Start with the fact that as far as we know, Warren Buffett pays all the personal income taxes he owes, as do Mitt Romney and Barack Obama. Unlike these individuals, there are a great many Americans who don’t pay what they owe. The IRS estimates that year in and year out, around 15% of what Americans owe in taxes isn’t paid. This is mostly due to under-reporting of income. For FY 2011, the IRS collected around $2.3 trillion in tax revenue. Fifteen percent of that amount is $345 billion. Here, unlike the Buffett Rule, we are talking about real money.
Most tax evaders don’t wind up in prison. In fact, some wind up working for the government. Take Tim Geithner. Geithner, Obama’s Secretary of the Treasury, is a tax cheat.

Thumbs on the scales of justice

Via Instapundit:

THE MAJESTY OF THE LAW: Corzine Steals Billions Sans Charges, Errant Whale Watcher Faces Prison. “Which would you imagine might attract more aggressive enforcement from the Justice Department: the theft of $1.2 billion from supposedly segregated customer brokerage funds, or lying about an alleged incident of whistling to attract the attention of a whale so that whale watchers could get a better peep? If you said the latter, then you appreciate the extent to which federal law enforcement priorities have run off the rails.”

Corzine’s a prominent Democrat. The whale-watcher was not.

Cheney vs Geithner

Geithner: Obama's Policies Have Been "Extremely Successful"

Cheney on Obama: “He has been an unmitigated disaster to the country”

Krugman vs Mankiw

Not much of a surprise here, but Mankiw would have won this bet if Krugman had had the guts to accept it.

When will the St. Louis economy recover?

The rosiest scenario is two more years. According to the most recent estimates of payroll employment for the St. Louis metro area, only a quarter of the 84,000 jobs that were lost during the recession have returned. This is according to my institute's estimates, which actually show a stronger recovery than do official data.

If we continue at the rate of the last 12 months, it will take another 8+ years to get back to the pre-recession level of employment. Even if employment growth was at least 30,000 per year, which was last achieved in 1994, it would take two more years to recover to the pre-recession level. Keep in mind, however, that full employment is higher than this because there are more working-age people than in 2007.

The Un-Great Recovery

Yesterday's employment numbers were back to normal (i.e., very grim) after three month of being merely grim. Payroll employment rose by 121 thousand in March after rising by more than 200 thousand in each of the previous three months.

As I pointed out last month, even the three "good" months of job growth were actually pretty grim because, at that rate, it would take another nine years for employment to return to trend. Now we're back to not even keeping up with population growth and the three "good" months might even have been illusory: Mild winter may have artificially inflated jobs data, economists fear.

There are lots of numbers out there, but the most revealing one is the employment-to-population ratio, which doesn't have the pitfalls inherent in the unemployment rate:

The unemployment rate decreased from 8.3 percent in February to 8.2 percent in March because the number of people who were in the labor market fell by 164,000 even as the population grew by 169,000. The number of people who have stepped out of the labor force grew by 333,000.

The employment-to-population ratio, which captures all of this, fell slightly.

 

Bill Clinton: Extreme Social Darwinist

President Obama referred to the Ryan budget plan as Social Darwinism, claiming that

Ryan's "draconian cuts" would "impose a radical vision on our country" and that it was "antithetical to our entire history." It is "so far to the right," he said, "that it makes the Contract with America look like the New Deal."

So what does that make Bill Clinton?

Under Ryan's plan, the federal government would be 46% bigger in real terms than it was in 2000, which was President Clinton's last year in office.

Even if you take out entitlement spending — which has been increasing at a fast pace due largely to rising health costs and the aging of the population — and focus on discretionary outlays, the government would spend 30% more under Ryan's plan than Clinton's last budget.

If you further adjust for inflation and population growth, Ryan's budget still spends more than Clinton's.

Keystone XL vs. Solyndra

Here's the sort of thing that happens when we let the Obama Administration make business decisions:

A speculative “green” energy project that in retrospect, once the rest of us saw the details, was obviously going to be a business disaster, and ended up costing the taxpayers over half a billion dollars, was approved after a “one-day review.” Yet the president demanded that Keystone, a project with certain and vast energy output, be delayed for many more months so that it could be “adequately reviewed,” despite the fact that it had already had years of review. And as a result our energy prices will now rise in the future, with no way of returning to the status quo. Just as the president told us he wanted them to when he ran four years ago.

And then there's this "smart diplomacy" from the Administration: Canada: After Keystone, We'd Rather Sell Oil to China

Solyndra is no longer the administration's biggest energy blunder. Canadian Prime Minister Stephen Harper appeared a think tank event held in Washington yesterday. During an interview Harper explained that President Obama's rejection of the Keystone pipeline had forced Canada to change course in ways that will permanently affect Canada's approach to its own energy market. 

Obama could have approved the pipeline, added 30,000 jobs to the economy, and insured the most secure oil source for our future. Instead, he chose to kill the pipeline and the jobs and, in the process, insured that America will pay more for the oil it does buy. It's hard to imagine a worse decision, especially since it was all so Obama could deny Republicans a win in the run-up to the next election.

Krugman bites Ryan

I realize that this is one of those dog bites man stories, but (just in case there are still people who think that Paul Krugman provides useful contributions to the nation's debates) here is a Krugman column about Paul Ryan's budget proposal.  Yuval Levin points out that just about everything that Krugman says in the column is fraudulent.

Richard Thaler losing his brain cells over gas prices

Richard Thaler opened his recent NY Times article with the following:

EVERYONE knows it’s dangerous to ingest gasoline or to inhale its fumes. But I am starting to believe that merely thinking about the price of gasoline can damage cognitive processing. Thus I may be risking some of my precious few remaining brain cells by writing about that topic.

He should have heeded his own warning because nearly everything he says below that paragraph is incorrect and/or blatantly misrepresents the views of other economists.  He might also have ruined his chances of continuing as an informal advisor to President Obama: NYT’s Richard Thaler savagely attacks Barack Obama.

Thaler suggests a "test to see whether you are guilty of cloudy thinking about gas prices: Do you believe that they are something a president can control? Many Americans believe that the answer is yes, but any respectable economist will tell you that the answer is no."  In fact, no respectable economist would think that that was even the relevant question.  Substitute the word "control" with "affect substantially" and you should find that any respectable economist will tell you that the answer is yes.

Here's my question to test whether one has any idea about how U.S. gas markets work:  Would gas prices be lower ten years from now if President Obama did the following:  open up Federal lands to oil exploration, fast-track permits for exploration and drilling in the Gulf of Mexico, approve the Keystone XL pipeline, and allow exploration on the parts of the U.S. coastline that are currently off limits?  Jay Leno and any respectable economist will tell you that the answer is yes.

I take that back.  A respectable but ignorant economist might fall for the Administration's incorrect claim that we sit on only 2 percent of the world's oil supply and, therefore, cannot affect the price by increasing output.  Thaler appears to fall into this category.

Thaler also asks readers to "(c)onsider a recent poll of a panel of economists conducted by the University of Chicago Booth School of Business... The 41 panel members were asked whether they agreed with the following statement: 'Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies.'"  

Well, I saw that poll when it came out and my first thought was "What a stupid way to pose the question.  I bet some goofball will take the results of this poll to argue that U.S. presidents can't affect gas prices."  I'm happy to report that Thaler came through to prove me right by claiming that the results show that all respectable economists think that oil prices are unaffected by U.S. oil output.  Thaler, who seems to be a native English speaker, overlooks the fact that one can believe that gas prices have been predominantly due to market forces rather than U.S. federal economic or energy policies while also believing that these policies have a substantial effect. 

I can go on, but I think I'll take the advice that Thaler did not take and stop before I lose precious brain cells and write a bunch of nonsense about how there is nothing that the Federal government can do on the supply side to affect gas prices.

Remember, he taught constitutional law

For someone who taught constitutional law and who has sworn to uphold the U.S. Constitution, you'd think that President Obama would have a passing familiarity with the subject. Here's the president talking about the Supreme Court and the possibility that Obamacare will be overturned:

For starters the president expressed confidence that the Court would “not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress.”

I'm not a Harvard-trained lawyer who lectured at the University of Chicago, but I did go to high school and learned all about Marbury v. Madison, which established the role of judicial review in limiting Congress and the President from passing laws that were unconstitutional, regardless of how strongly the Congress felt about the law.

Putting aside the absurd claim that Obamacare was passed by a strong majority (219 to 212 in the House and only by circumventing the usual procedures in the Senate), is the President really claiming that it is unprecedented for the Court to overturn a law passed by a democratically elected Congress?  Again, I never went to law school, but I have paid a bit of attention to the news over the past few years and have watched hundreds of episodes of Law and Order.  Also, I have one of those Google machines on my desk that allows me to type in phrases such as "federal laws overturned by supreme court".  When I did this I was provided with the number of laws passed by Congress that were later overturned by the Court: 158 between 1789 and 2002.  (Mr. President, if you're reading this, here's the link so you can update your lecture notes).