Wednesday, February 26, 2014

Obamacare: They can't stop lying

Obamacare was forced down the country's collective gullet using blatant lies that were repeated by the president himself for several years. Given that, I guess they figure, "Why stop now? It's gotten us this far." The latest whopper is from HHS Secretary Kathleen Sebelius, who has become so used to peddling falsehoods that she appears to have lost track.

Now (after the rollout disaster): "Seven million was not the administration's [enrollment goal."]

Then (before the rollout disaster): "Success looks like at least seven million people signing up by the end of March."

Guy Benson has the videos of these two claims right next to each other, and the shamelessness is a sight to behold.

Saturday, February 22, 2014

Ranking economics research in Missouri

My annual update of economics research rankings in Missouri is appearing earlier than in the past. This is because there have been several changes in affiliations and I wanted the information to be more accurate by doing it in the middle of the academic year.

The good news is that my own department, the Center for Economics and the Environment at Lindenwood University, remains among the top five academic departments in Missouri.  Here is the ranking, which is taken from this page at RePEc and excludes the states' two Federal Reserve banks because of their idiosyncratic methods for counting people.

Friday, February 21, 2014

What planet does President Obama live on?

From the Washington Post today: With 2015 budget request, Obama will call for an end to era of austerity

aus·ter·i·ty   noun \-ˈster-ə-tē, -ˈste-rə- also -ˈstir-ə-\ : a situation in which there is not much money and it is spent only on things that are necessary

Just so you know, every year of the Obama Administration, including 2013, the Federal budget deficit as a percentage of GDP exceeded the previous post-war high. This is the "age of austerity" that the president wants to end:

Monday, February 17, 2014

Development tax credits are a complete waste of money

I have a new paper published in the Missouri Policy Journal (which is brand new itself) that looks at the effectiveness of the Missouri Quality Jobs Program (MQJP) on employment.  The MQJP and has been increasingly popular with economic development folks in Missouri.  The problem is that, as is typical of tax credit programs, it is more likely that it is killing jobs than creating them.  Here's the abstract
According to the Missouri Department of Economic Development (DED), the Missouri Quality Jobs Program (MQJP) will create 118 new jobs by 2020 for each $1 million dollars in tax credits awarded under the program. The claimed sources of these job gains are the direct increase in employment at the firm receiving the credits, and indirect increases at other firms due to spinoff and multiplier effects. Unfortunately, the DED’s estimates for these effects are based more on faith than on evidence. First, the DED rather naively assumes that all of the job gains at the firm receiving tax credits occur only because of the credits. Second, the DED’s projections of spinoff and multiplier effects are generated with a forecasting model that is incapable of an accurate accounting of negative substitution effects, such as the fact that many of the new jobs will be filled by people already employed locally. This paper summarizes new estimates of the employment effects of the MQJP using the actual, rather than the assumed, experience of local economies. What these estimates show is that after an initial net increase in employment following the authorization of tax credits, the net effect on employment becomes negative by the second year after authorization: Job gains in the county receiving the tax credits simply came at the expense of neighboring counties, who tended to have lost more jobs than the recipient county had gained. Finally, by the fourth year after authorization, the only statistically significant effects of the tax credits are job losses in neighboring counties.
 And the concluding line
(I)t is difficult to imagine that the trend reverses itself to result in anything close to the DED’s projection of 118 new jobs per million dollars of tax credits. The more likely best-case scenario is that the employment distortions eventually work themselves out and the net effect of the tax credits approximates zero.

A minimum wage proposal to boost the economy

A $4 minimum wage can get people back to work

Saturday, February 15, 2014

Hayek destroys E.J. Dionne from the grave

I realize that it is folly to take E.J. Dionne as a serious thinker, but his recent column blaming Austrian economics and, more specifically, F.A. Hayek for the nation's ills needs to be corrected.  Unfortunately, Dionne's silliness is what passes for seriousness among progressives these days.  Blogging at the Volokh Conspiracy, which is now part of the Washington Post's family of blogs, Todd Zywicki does an efficient take-down of Dionne, while also providing a very nice summary of Hayek's contributions to economics.
Start with Hayek. Dionne’s attack on Hayek is summarized in this paragraph:
Hayek and Mises perceived little difference between democratic governments that used their power to plan against recessions and dictatorships that did the same thing. In this view, the policies of Franklin Roosevelt led down what Hayek called the “Road to Serfdom” and were thus objectively comparable to those of Hitler or Stalin.
Later on, Dionne conflates this statement with what he represents to be the takeaway from Hayek’s critique of the New Deal and related policies:
Hayek believed, Judt said, that “if you begin with welfare policies of any sort — directing individuals, taxing for social ends, engineering the outcomes of market relationships — you will end up with Hitler.”
This is not an accurate summary of Hayek’s thesis in the book (I observe in passing, it isn’t evident from the column that Dionne has actually read The Road to Serfdom itself, as opposed to just reading commentators on the book who have also fundamentally misunderstood the book). Hayek did not believe that “if you begin with welfare policies of any sort” that you were necessarily on the road to serfdom. In fact, the entire last part of his famed The Constitution of Liberty is dedicated to explaining how many modern welfare-state policies could be implemented in a manner that would not unduly threaten liberty and the rule of law.
Hayek never said that the basics of the welfare state were incompatible with individual liberty. Hayek’s concern was that comprehensive economic planning of the economy by the state was incompatible with individual liberty and the rule of law over the long run. His attack on the New Deal was not about Social Security, but rather the National Recovery Act and other interventions designed to cartelize industries, erect barriers to entry, raise prices for producers at the expense of consumers, fix wages, and divide markets among incumbent producers. Central planning, not the welfare state, is what was incompatible with individual liberty.
Perhaps Dionne didn't realize that there was a cartoon version of the Road to Serfdom. It might be more his speed.

Much more than a smidgen of scandal

The IRS, the Democrats' Cat Paw:
Encouraged by the lack of a public backlash, an uninquisitive press, cover from the White House and an eager-to-please bureaucracy, the Democrats are boldly counting on the IRS to be their political and policy enforcer.This statement isn’t an overreach by the “vast right-wing conspiracy” or a phony crisis created by hecklers (like me) on the right — it goes back to the early stages of President Obama’s reelection campaign. Remember the case of Romney supporter Frank Vandersloot? Before the 2012 campaign, he was publicly accused of having a “less-than-reputable record” by Team Obama and then found himself the target of IRS and Department of Labor audits. This was just one example of an individual who was persecuted because of his donation to a pro-Romney super PAC, but it served as a sufficient warning and no doubt had a chilling effect on others who were inclined to support the Republican nominee for president in 2012. And we now know that while this was going on, the IRS was actively suppressing conservative organizations seeking tax-exempt status because they opposed the president and the Democrats’ policy positions.
Lois Lerner, the government official at the center of the IRS scandal, took the fifth amendment in a high-profile congressional hearing, then quietly retired from the agency with a taxpayer-funded pension. She hasn’t been heard from since. The Obama administration has gone into overdrive since the scandal broke to avoid any accountability, with the president famously telling Bill O’Reilly of Fox News only a few weeks ago that there was “not even a smidgen of corruption” in the IRS targeting of conservative groups. Comically, this is still an active and ongoing investigation by the Obama Department of Justice, so you would think the president wouldn’t be able to come to that conclusion quite yet. Of course, no one in the administration can comment on an active and ongoing investigation, so it is the perfect cover for self-preservation and is reassuring to those doing the Democrats’ bidding in the IRS and elsewhere.  Let’s also remember that the Justice Department’s farce of an investigation into the IRS targeting scandal is now being led by trial lawyer and Obama donor Barbara Bosserman. It’s so brazen, I almost admire their audaciousness. In politics, gall pays off.
And don’t forget, it is the IRS that is now tasked with enforcing the Democrats’ penalties against businesses who do not conform to the latest Obamacare changes, in addition to their pursuit of individuals who are not in compliance with their law. Last week, we learned President Obama unilaterally gave the IRS the mandate to monitor the thinking and attitude of any business that might be trying to circumvent the negative impacts of Obamacare, and punish them accordingly. And presumably the punishment isn’t limited to civil fines, but includes criminal perjury charges as well.