Wednesday, July 24, 2013

Detroit: Krugman being Krugman

Unsurprisingly, Paul Krugman has said the single dumbest thing about Detroit's bankruptcy:
So was Detroit just uniquely irresponsible? Again, no. Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.
Actually, Melissa Harris Perry's claim that it was small government that did it is the winner for absolute dumbness, but she doesn't have a Nobel prize in economics to sully, so Krugman's comment wins for relative dumbness. 

If it was simply market forces that did in Detroit, then we should be seeing bankruptcies and general decline throughout the entire Detroit metro area, and not just in the city of Detroit.  Detroit is a political unit within the larger metro area, and the metro area is the relevant economic unit.  Here is what has happened to the populations of the city of Detroit and the rest of the Detroit metro area since 1950:

As you can see, the non-Detroit part of the Detroit metro area has grown continuously since 1950, although, like the rest of the Rust Belt, its growth has slowed over time. But when you take into account that the metro area was saddled with such a horrifically governed urban core, it doesn't look so bad.

In short, similar market forces buffetted the entire Rust Belt and the rest of the Detroit metro-area.  But Detroit is the only political unit among them that has filed for bankruptcy:  Pittsburgh hasn't, Cleveland hasn't, St. Louis hasn't, Buffalo hasn't, Wayne county hasn't, Dearborn hasn't, Pontiac hasn't, Livonia hasn't,...

I assume that, like me, very few of you have Nobel prizes in economics, but it looks to me as if the city of Detroit might have had some city-specific problems that led it to where it is today.

For anyone who is interested, Veronique de Rugy and Walter Russell Mead have some solid reality-based commentary on Detroit.

A speech that worth the teleprompter it's written on

The Economic Speech the President Ought to Give
(I)nstead of sparking growth, the rich got richer and the poor got poorer, and my policies produced the worst recovery since the Great Depression. Yes, the economy is finally growing, but at an agonizingly slow pace.
Had my policies managed to produce a merely average recovery, the economy would be $1.2 trillion — that's trillion with a "t" — bigger today. And 7.6 million more people would have jobs.
Instead of bottom-up prosperity, my policies produced the exact opposite — with gains at the top, but ongoing misery everywhere else.
The stock market has climbed and corporate profits are up. But median family income fell more during my recovery than it did during the recession itself. There are 2.7 million more people in poverty and 14 million more on food stamps.
On top of all this, over the past four years I've repeatedly witnessed the dead end of my vision for activist government — from the economic collapse of Greece to the bankruptcy of Detroit.
I now realize that had I put more faith in the free market, in the genius of the American people to solve problems on their own, rather than in Washington politicians and bureaucrats, we'd be in a far, far better place today.
So I'm no longer clinging blindly to the ideology I espoused on this spot eight years ago in hopes that someday, somehow, it will work as I'd hoped.

Friday, July 19, 2013

Obamacare and the weaselly use of "may" when you mean "might"

One of my pet peeves is that the word "may" is used at different times to convey two entirely different meanings, thereby creating great uncertainty about the true meaning of a sentence.  If I say that "I may go to the store", do I mean that I am allowed to go to the store, or that there is a chance that I will go to the store?  If, instead, I say "I might go to the store", then it is clear that I mean the latter.  If we reserve "may" for use only when you mean the former, then there can be no ambiguity.  For some reason, however, it has become common to use "may" to convey each meaning, although it actually ends up conveying both meanings at the same time.

As is their wont, politicians will take any opportunity they can to be ambiguous and weaselly, and the blurriness between "may" and "might" gives them one more safe harbor.  I was reminded of this when I read a blog post by Jeryl Bier at the Weekly Standard about the Obama Administration's backpedaling on its guarantee that, under Obamacare, you will be able to keep your current doctor.  You might recall this statement from the President:
Here is a guarantee that I've made. If you have insurance that you like, then you will be able to keep that insurance. If you've got a doctor that you like, you will be able to keep your doctor.
 Now we have this from Health and Human Services:
Depending on the plan you choose in the Marketplace, you may be able to keep your current doctor.
The problem is that, because of the many onerous regulations and restrictions under Obamacare, plans available in the Marketplace in your state (the health exchanges that each state is required to have) will not necessarily include all of the insurance plans that had been available. And, even if your plan is available, it might not include your doctor any longer. 

So, the President's iron-clad guarantee that you can keep the same doctor, which only a fool would have believed, has become the weaselly "you may keep the same doctor", thereby creating the illusion that you will be allowed to keep the same doctor.  The fact is that you might be able keep the same doctor, but that Obamacare might be responsible for eliminating your plan and your doctor as options. 

Tuesday, July 16, 2013

Maybe we should be more like Europe

From Via Meadia:
Spain is the latest European country to regret its foray into green energy production. On Friday the Spanish government announced some contentious reforms to its regime of green energy subsidies, which were among the most generous in Europe....
While environmentalists will no doubt be upset, Spain made the clear choice. High electricity rates are an unnecessary and regressive tax on citizens and a serious drag on industry, and green energy has yet to prove itself competitive without substantial subsidies. Spain is right to cut its losses on its costly green energy boondoggle and to refocus its limited resources on the country’s more pressing problems.
The Spanish government is smart enough to do this, and, unlike the United States, they aren't even sitting on top of decades worth of clean natural gas.

It's almost as if Jay Carney is paid to just make stuff up

74% of small businesses will fire workers, cut hours under Obamacare

Carney: Suggestion ObamaCare reduces full-time hiring 'belied by the facts'

I know first hand that ObamaCare is directly responsible for turning full-time employees into part-time ones.  It is only because of ObamaCare that my university, among many others, is restricting the number of courses that an adjunct instructor can teach.  These are people who are perfectly happy to be paid to teach, but not receive health benefits, and the university is perfectly happy to hire them to teach as much as they want.  But, because of ObamaCare, and for no other reason, these voluntary transactions that would benefit all parties will not take place.

Wednesday, July 3, 2013

Well, it did help him get elected

ObamaCare's success depends on the young being stupid:
ObamaCare's efforts to expand insurance coverage and bring down costs depend entirely on convincing young people to buy coverage, while the law gives these people every reason not to.

Monday, July 1, 2013

Yes, it's that simple

'Basically you have the government regulating and making business more difficult, and you have the Fed trying to compensate for it'

The most idiotic policy yet?

Given that nearly every decision and initiative undertaken by the Obama administration has or will impoverish the country, it's getting harder and harder to argue against those who claim that the president is intentionally ruining the economy. Off the top of my head I am unable to think of a single one of his policies that will have a positive economic impact. There must be at least one that does this, even if inadvertently.

At any rate, although most of the president's policies have severely negative effects that have prolonged and worsened the recession, some are even worse than that because they would drive our economy into the ground for years to come.  The most recent of these is the president's idea to centrally plan every aspect of energy use.