Assorted Links (11/27/2009)

Here’s a list of articles that I have been reading today (organized by topic):

Financial Crisis

“If AIG wasn’t too big to fail, why did the government rescue it? And why do we need to turn the financial system upside down?”

Politics

“An icon of a White House that is coming to seem amateurish.”

Public Policy

“The recently disclosed emails and documents from University of East Anglia’s Climate Research Unit compromise the integrity of the United Nations’ global warming reports.”

Assorted Links (11/24/2009)

Here’s a list of articles that I have been reading today (organized by topic):

Economics

  • Obamanomics, by Jeffrey Miron

“Harvard economics guru beaks down Obamas’ income redistribution plan.”

Health Care Reform

“Joe Lieberman is a party apostate on health care.”

“Like all great public issues, the health care debate is fundamentally about values, about whether we have a moral preference for vitality or security.”

Highly Recommended

“How FDR tried, and failed, to change a national holiday.”

“A chronicle (written in 1620) of the Pilgrims’ arrival at Plymouth, as recorded by Nathaniel Morton, keeper of the records of Plymouth Colony, based on the account of William Bradford, sometime governor thereof.”

Public Policy

“Funding a down payment with the credit increases the odds the buyer will default.”

Risk & Uncertainty

“Nurturing a fragile economic recovery into a durable expansion requires policies that restore public confidence and reassure investors, risk-takers and employers. The Democratic agenda is doing precisely the opposite, which is how you get subpar growth and fewer new jobs.”

Assorted Links (11/19/2009)

Here’s a list of articles that I have been reading today (organized by topic):

Economics

Financial Crisis

“When you repeal sound economic policies you repeal their results.” 

Law

“For late-19th-century anarchists, terrorism was the “propaganda of the deed.” And the most successful propaganda-by-deed in history was 9/11 — not just the most destructive, but the most spectacular and telegenic.”

Politics

“The Democratic Party seeks a wildly optimistic individual to oversee a national jobs-creation program.”

“What a surprise — that someone who shouts “Allahu Akbar” (the “God is great” jihadist battle cry) as he is shooting up a room of American soldiers might have Islamist motives. It certainly was a surprise to the mainstream media, which spent the weekend after the Fort Hood massacre playing down Nidal Hasan’s religious beliefs.”

Religion

“Dissident intellectuals have been attracted to Christianity.”

Assorted Links (11/17/2009)

Here’s a list of articles that I have been reading today (organized by topic):

Financial Crisis

“A payroll tax cut would add three to four million jobs at a fraction of the cost of the stimulus bill.”

“Current financial reform proposals would establish ‘too big to fail’ as national policy.”

Health Care Reform

“A University of California chancellor warns that America could soon look like Massachusetts.”

Law and Politics

“The New York newspaperman says our founding document is especially vital today, in an age of expanding state power.”

“A site of mourning became a symbol of defiance and then a metaphor for incompetence.”

Assorted Links (11/9/2009)

Here’s a list of articles that I have been reading today (organized by topic):

Economics

Finance

  • Does Your Optimizer Need a Tune-Up?, by Gene Fama and Ken French

“The realized equity premium for U.S. stocks relative to long-term government bonds has been negative for the 5, 10, 15, 20, and 25-year periods ending in 2008 despite substantially greater standard deviation for stocks. How do I use this information to develop a sensible portfolio based on mean-variance optimization?”

Foreign Policy

“Reagan deliberately confronted criminal regimes with what they fear most: the publicly spoken truth about their moral weakness.”

“From Truman to Reagan, the benefits of moral clarity.”

Health Care Reform

Austin Frakt provides a useful summary of a new National Bureau of Economic Research (NBER) paper entitled “Paying a Premium on Your Premium? Consolidation in the U.S. Health Insurance Industry”.  Dr. Frakt notes that the “…authors’ main results are that due to increases in insurer concentration: (1) Between 1998 and 2006 premiums increased 2.1 percent. (2) Between 1999 and 2002 physician earnings declined by 2 percent. And (3) over the same period health worker employment declined 2.4 percent.”

Assorted Links (11/8/2009)

Here’s a list of articles that I have been reading today (organized by topic):

The Economy

Stimulus-vs-unemployment-october-dots

“Ludwig von Mises explained how government-induced credit expansions led to imbalances in the economy.”

Health Care Reform

“Here are some important passages in the 2,000 page legislation.

“Obamacare could have the unintended consequence of raising health insurance premiums and causing a decline in the number of people with insurance.”

Politics

“The White House has gotten bad at listening, and now it’s paying the price.”

“Sure, Election Day 2009 will scare moderate Democrats and make passage of Obamacare more difficult. Sure, it makes it easier for resurgent Republicans to raise money and recruit candidates for 2010. But the most important effect of Tuesday’s elections is historical. It demolishes the great realignment myth of 2008.”

Assorted Links (11/4/2009)

Here’s a list of articles that I have been reading today, accompanied in some cases with some of my own commentary (organized by topic):

The Economy

Here’s a practical, step-by-step guide to “creating or saving” 9 jobs for only $889! Thanks to Greg Mankiw for the pointer! Professor Mankiw has previously written on “Create or Save“, where he notes, among other things, that while this “statistic” is politically clever, it is based upon counterfactual reasoning and not measurable in any meaningful sense.

The White House uses this created or saved “metric” regularly; e.g., last Friday, the White House claimed that the $787 billion economic stimulus plan approved early this year “…has generated or saved more than 1 million jobs” and that “…it is on track to create or save 3.5 million jobs by the end of next year.” (Source: “White House: 1 million jobs created or saved”).

Finance and the Financial Crisis

  • Is Market Efficiency the Culprit?, by Eugene Fama

“Justin Fox (“The Myth of the Rational Market“) and many other financial writers claim that much of the blame for the financial meltdown is attributable to a misguided faith in market efficiency that encouraged market participants to accept security prices as the best estimate of value rather than conduct their own investigation. Is this a fair assessment? If so, how should policymakers respond?”

Health Care Reform

Professor Mankiw points out an important unintended consequence associated with the House of Representatives’ version of health reform unveiled last Thursday by Speaker Nancy Pelosi.  Specifically, the House bill imposes very high implicit marginal tax rates on labor income.  For example, a family of four earning $54,000 would pay only about 1/3 of the actual cost for health insurance. However, if that same family earns additional income of $12,000, then the health insurance subsidy falls by $3,800, which translates into an implicit marginal tax rate of 3,800/12,000 = 32 percent.  This is an implicit tax that must be “paid” on top off of all the other explicit (income and payroll) taxes which normally apply to $66,000 of personal income.

Politics

  • Obama and the Liberal Paradigm, by John Stele Gordon

“The sheep are quite capable of looking out for themselves. Someone tell the Democrats.”

Assorted Links (11/2/2009)

Here’s a list of articles that I have been reading today (organized by topic):

The Economy

Responses to this question are provided by a quartet of academic economists spanning the ideological spectrum, including Simon Johnson (MIT), Mark Thoma (University of Oregon), Russell Roberts (George Mason University, and Jeffrey Miron (Harvard).

“Jobs ‘created or saved’ is meaningless. What matters is net job gain or loss, and that means the unemployment rate.”

Health Care Reform

“Barack Obama is, in many ways, the left’s answer to Ronald Reagan.”  Also see Professor Mankiw’s “Disincentives from Health Reform”, which follows up this New York Times article with a few additional observations!

The author notes that the health-care bill unveiled last Thursday by House Speaker Nancy Pelosi is being advertised as having an $894 billion price tag over the course of a decade. A more accurate accounting suggests that a more realistic price tag of $1.5 billion.  Similar points are made today in a Wall Street Journal editorial entitled “The Worst Bill Ever”.

Public Policy

Professor Landsburg provides some interesting perspectives related to the controversy that is currently brewing in reaponse to the chapter on global warming which appears in (the recently published) book called SuperFreakonomics.

“The net neutrality battle pits broadband builders against content providers.”

More on the economics of the Car Allowance Rebate System (CARS); AKA “Cash for Clunkers”

Yesterday, I blogged concerning The economics of the Car Allowance Rebate System (CARS) and the First-Time-Home-Buyer Tax Credit (FTHBTC).  I brought up the topic of economic stimulus but didn’t follow through on it.  In what follows, I will try to make some assessment of stimulus possibilities based upon data reported in the article entitled “Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com”.

If you read the Edmunds.com article referenced above a bit more closely, you’ll notice the following table which compares (annualized) Actual/Forecast sales with and without Cash for Clunkers:

Month Actual (or Forecast) If no Cash for Clunkers Difference
Jan ’09 9.59 9.59 0.00
Feb ’09 9.14 9.14 0.00
Mar ’09 9.69 9.69 0.00
April ’09 9.20 9.20 0.00
May ’09 9.85 9.85 0.00
Jun ’09 9.67 9.80 -0.13
Jul ’09 11.22 10.11 1.11
Aug ’09 14.06 10.45 3.61
Sep ’09 9.19 10.63 -1.44
Oct ’09 10.40 10.89 -0.49
Nov ’09 10.40 10.82 -0.42
Dec ’09 10.61 10.85 -0.24

The numbers in this table indicate annualized auto sales rates (actual or forecast) on a monthly basis during 2009 (the monthly unit sales is calculated by dividing the annualized data by 12, so this implies that in May 2009, 9.85 million/12 = 820,833 new cars were sold in the United States). 

This table clearly indicates that the primary effect of CARS was to change the timing of vehicle sales, and that it had a very limited effect on total volume; specifically, during the months in which CARS was in full swing (i.e., July and August, 2009), more sales were generated than would have been the case had the program not been implemented. The program stimulated temporarily higher sales rates last summer primarily by motivating people who would have bought cars anyway to simply act sooner.  The overall effect of CARS during 2009 is to increase new car sales in the United States by a total of 1.65%, which translates into an additional 170,000 unit sales (obviously, it will be interesting to see how long it takes for new car sales to revert back to the seasonally adjusted trend line).  After the program expired, the auto industry had marginally worse sales than they normally would have expected simply because some of the sales that “should” have occurred in September through December occurred instead during July-August.  Based upon this analysis, I stand by my earlier assertion; i.e., that as far as stimulus measures go, CARS most certainly had a very low (probably close to 0) multiplier effect upon the overall economy.