Assorted Links (7/31/2010)

Here’s a list of articles that I have been reading lately:

Obama Declares Auto Bailout a Success – WSJ.com

online.wsj.com

“The president said last year’s $60 billion rescue of GM and Chrysler saved an estimated one million jobs… Alan Blinder of Princeton University and Mark Zandi of Moody’s, estimated that the rescue of GM during by the Bush and Obama administrations ultimately will cost taxpayers about $29 billion. They said the ultimate cost of helping Chrysler will come to $8 billion.”


If the Blinder/Zandi estimates are reasonably accurate, and if we take President Obama at his word (notwithstanding my previous critiques concerning the administration’s “jobs created or saved” metric), this comes out to a cost per job “saved” of $37,000.  It is important and quite necessary here that we distinguish between the concepts of “direct” and “indirect” costs.  The Blinder/Zandi estimates represent direct costs associated with the bailouts; i.e., actual net cash flow provided by taxpayers which can be attributed to the GM and Chrysler bailouts.  Unfortunately, we’ll have to live with the much larger “indirect” costs for many years to come. As the late economist Milton Friedman was fond of pointing out, capitalism is a profit and loss system. Profits encourage risk taking, whereas losses encourage prudence. However, when taxpayers absorb losses instead of investors, this encourages investors to engage in reckless and imprudent risk taking. For more on the corrosive effects of bailouts and crony capitalism, be sure to read Russ Roberts’ succinct (and non-technical) essay entitled “How Little We Know: The Challenges of Financial Reform” (see http://bit.ly/7dvQhT).

Are Bonds Expensive? Stocks Cheap? Or Both? – WSJ.com

online.wsj.com

“After consistently lagging behind bond performance this year, stocks appear historically cheap compared to bonds, offering investors reason to favor stocks, particularly if they are optimistic about the economic outlook. But stocks may be cheap because the outlook is dim, meaning bonds—from Treasurys to corporate debt—could continue to outperform for the foreseeable future.”

Alternative Ways to Gather Census Data – WSJ.com

online.wsj.com

“The Census Bureau combines threats of penalties with painstaking follow-up to track down census evaders and gather a complete survey of the U.S. population. Some data experts say a European-style registration system would be more accurate and cheaper.”

The Democrats Have a Concentration Problem — The American, A Magazine of Ideas

www.american.com

“Will Republicans gain the net 40 seats they need for a majority in the House? Several factors will certainly help.”

Peak Water – WSJ.com

online.wsj.com

“The Wall Street Journal writes that solar power mandates can reduce water supply in Southwestern states.”

Ron Radosh: Oliver Stone’s ‘Empathy’ for Hitler – WSJ.com

online.wsj.com

In The Wall Street Journal, Ron Radosh writes that Oliver Stone’s new documentary on America’s ‘secret history’ will be just another far left narrative.

Afghanistan, July, 2010 – The Big Picture – Boston.com

www.boston.com

Kim Strassel: A GOP Energy Alternative – WSJ.com

online.wsj.com

“In The Wall Street Journal, Potomac Watch columnist Kimberley Strassel says Devin Nunes’s nuclear proposal would do more to reduce carbon emissions than any Democratic plan on the table.”

Peter Ferrara: Beware the Balanced Budget Deal – WSJ.com

online.wsj.com

“In the Wall Street Journal, Peter Ferrara of the Institute for Policy Innovation argues that Washington’s usual approach to balancing the federal budget never works. Instead, tax cuts and major entitlement reform are required.”

Joseph R. Mason: Congress’s Hugo Chavez Bailout Bill – WSJ.com

online.wsj.com

“In the Wall Street Journal, Joseph Mason writes that proposed changes to the tax code would cost U.S. jobs and strengthen foreign competitors like China and Venezuela.”

Peggy Noonan: Try a Little Tenderness – WSJ.com

online.wsj.com

“Peggy Noonan argues in The Wall Street Journal that Chris Christie, not the Tea Party, is the model for the Republicans.”

Newt Gingrich and David Merritt: Who Decides on Health Care Value? – WSJ.com

online.wsj.com

“In the Wall Street Journal, Newt Gingrich and David Merritt report that new rules to micromanage insurance companies could cost patients.”

Charitable Giving in a Recession – Freakonomics Blog – NYTimes.com

nytimes.com

“A new report, based on the Center on Wealth and Philanthropy’s Individual Giving Model (IGM), estimates that individual charitable giving was down 4.9% percent in 2009.”

Faithless Lawmakers – WSJ.com

online.wsj.com

“James Taranto on why the National Popular Vote Interstate Compact should die.”

Doctors fleeing faster | medicare, doctors, patients – Opinion – The Orange County Register

www.ocregister.com

Quoting from this article’s conclusion: “The solution? Putting doctors and patients, not government bureaucrats, in charge of medical decisions. Congress must restructure Medicare to allow seniors more choice and control over their health spending, including allowing them to continue to join private plans with incentives for doctors to provide more efficient care, and to get paid enough to continue seeing patients.” The approach to reform outlined in this article is logically consistent with the approach that I outlined on my blog in August 2009 (see “My preferred approach for reforming health care…“).

Assorted Links (7/29/2010)

Here’s a list of articles that I have been reading lately:

Dipping and Deflating — The American, A Magazine of Ideas

www.american.com

“A double-dip recession now appears all too probable, likely tipping the U.S. economy into deflation.”

SEC Says New FinReg Law Exempts It From Public Disclosure

www.foxbusiness.com

“Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.”

Court: University Can Expel Student Who Opposes Homosexuality

www.foxnews.com

“A federal judge ruled in favor of a public university who removed a Christian student over her belief that homosexuality is morally wrong. The decision, according to Julea Ward’s attorneys, could result in Christian students across the country being expelled from public university for similar views.”

The United Mistakes of America – Freakonomics Blog – NYTimes.com

nytimes.com

“Kathryn Schulz, the author of Being Wrong, has been guest-blogging for us about being wrong – and admitting our mistakes. Her latest post examines the historical culture of error in the United States.”

Q&A: Are Treasury Bonds Risk-Free? – Fama/French Forum

www.dimensional.com

“EFF/KRF: TIPS aside, U.S. Treasury bonds and the government bonds of other countries are not now and never have been risk-free since they are subject to inflation risk. Given the current borrowing binges of governments, the temptation down the road to use inflation to kill the value of these nominal promises.”

Economic Scene – Study Rethinks Importance of Kindergarten Teachers – NYTimes.com

nytimes.com

“A new study found students with better teachers learned more in kindergarten — and earned more as young adults.”

Religion: Countercyclical church attendance | The Economist

www.economist.com

“Every day, the economist Daniel Hungerman looks at the graph that hangs above his desk at the University of Notre Dame. One jagged line goes down and up. This is America’s gross domestic product since 1972. Another jagged line goes up and down. This is the religiosity of Americans over the same period.”

How the Great Recession Was Brought to an End?

A new working paper entitled “How the Great Recession Was Brought to an End“, by Princeton’s Alan Blinder and Mark Zandi of Moody’s Analytics, was released two days ago. In his blog posting entitled “The Impact of Another Kind of Stimulus“, New York Times reporter David Leonhardt characterizes it as “…the first serious attempt at analyzing the effect both of the stimulus programs passed by Congress and of the various financial-market policies put in place by the Fed, the Treasury and Congress” and summarizes some highlights of their analysis.  Yesterday, the New York Times published an article about the Blinder-Zandi paper entitled “In Study, 2 Economists Say Intervention Helped Avert a 2nd Depression” and also quotes Stanford professor John B. Taylor as saying that Blinder and Zandi’s empirical results were quite different from his own empirical work on the policy responses to the crisis.  Today, Professor Taylor provides a detailed critique of the Blinder-Zandi paper on his blog (see “More on the Blinder-Zandi Working Paper on the Crisis”).  Anyway, an interesting and very public academic debate is unfolding here which obviously has critically important policy implications; there’s a lot here to “chew” on!

Assorted Links (7/27/2010)

Here’s a list of articles that I have been reading lately:

Debate Heats Up Over Stimulus Spending – WSJ.com

online.wsj.com

“Eighteen months after Obama administered a massive dose of spending increases and tax cuts, a fight has broken out about whether fiscal-stimulus medicine is curing the illness or making it worse.”  For a page 1 story of a major newspaper, I was pleasantly surprised by how well the reporter (Jon Hilsenrath) was able to summarize the empirical academic literature which assesses the relative efficacy of fiscal policy instruments such as deficit spending and tax cuts…

Robert M. Kimmitt and Matthew J. Slaughter: The Foreign Investment Solution for American Jobs – WSJ.

online.wsj.com

“In The Wall Street Journal, Robert M. Kimmitt and Matthew J. Slaughter write that the Obama administration can spur job growth for Americans by making it easier for foreign companies to do business in the United States.”

Jakaya Mrisho Kikwete and Yoweri Museveni: Free Trade and the Fight Against Malaria – WSJ.com

online.wsj.com

“Tanzanian President Jakaya Mrisho Kikwete and Ugandan President Yoweri Museveni write in the Wall Street Journal that removing tariffs would be good for African health and for African entrepreneurs.”

Stephens: From WikiLeaks to the Killing Fields – WSJ.com

online.wsj.com

“In The Wall Street Journal, Global View columnist Bret Stephens says that liberals contemplate withdrawal from Afghanistan with no thought of the consequences.”

The Patriarch’s Will – a game theory puzzle – Mind Your Decisions

mindyourdecisions.com

“Here is a scenario which occurred many millennia ago: The patriarch of a wealthy family was on his deathbed and wanted to divide his gold among his eight sons who were all very, very greedy. Wishing to favor the oldest son (as tradition would have it) but also to reward the more cunning of his progeny, he made the following decree…”

The Costs of War – Freakonomics Blog – NYTimes.com

nytimes.com

“A new paper reviews war costs in Iraq and Afghanistan.”

McGurn: Giving Lousy Teachers the Boot – WSJ.com

online.wsj.com

“In The Wall Street Journal, Main Street columnist William McGurn on bad teachers in D.C. who were booted by school chancellor Michelle Rhee.”

Science Turns Authoritarian — The American, A Magazine of Ideas

american.com

“Science is losing its credibility because it has adopted an authoritarian tone, and has let itself be co-opted by politics.”

The American Spectator : America’s Ruling Class — And the Perils of Revolution

online.wsj.com

My friend Kevin Stuart (Ph.D. student in UT-Austin’s Department of Government) brought this very compelling essay to my attention the other day…

2010 Tour de France – part II – The Big Picture – Boston.com

boston.com

The Cop on the Banks of the Nile – WSJ.com

online.wsj.com

Fouad Ajami writes in The Wall Street Journal that no great upheaval has taken place in the Egypt of Hosni Mubarak. But the country has stagnated, and some of its children have blamed the U.S. and embraced terror.”

Fan and Fred and the Problem of Narrative – WSJ.com

online.wsj.com

“In The Wall Street Journal, Brian Carney notes that Fannie Mae and Freddie Mac’s blunders don’t fit the left’s story about how greedy bankers caused the financial crisis. That’s why they haven’t been reformed.”

ATMs in Antarctica: An Interview With Wells Fargo’s David Parker

needcoffee.com

“I was fascinated when I learned that there was an ATM on Antarctica, specifically at McMurdo Station. Just because, you know, it’s not like your local ATM that they can zip a service tech out to. So to sate my curiosity, I gave a ping to Wells Fargo, who manages that ATM–and got a chance to chat with David Parker. All shall be explained.”

Assorted Links (7/24/2010)

Here’s a list of articles that I have been reading lately:

Mike Huckabee on politics, Christianity, Israel : The New Yorker

www.newyorker.com

Interesting New Yorker article about former Arkansas governor and presidential candidate Mike Huckabee…

Will the U.S. Hand Chavez a License to Kill?

www.american.com

“Venezuelan dictator Hugo Chavez’s record of providing money, arms, political support, and, yes, safe haven to groups waging a murderous war against a sovereign state openly violates international law.”

The Government’s Role in the Housing Bubble – National – The Atlantic

www.theatlantic.com

“I never would have guessed that years in, we’d still be debating the role of the government in the housing bubble.”

New Blood for Social Security

www.american.com

“Should public-sector pensions shift their workers to Social Security?”

Are We Naturally Lazy?

freakonomics.blogs.nytimes.com

“We’re happier when busy, but inclined to laziness.”

Crisis Economics

nationalaffairs.com

This is the clearest “plain English” explanation that I have seen anywhere which explains the conditions under which fiscal policy instruments such as government spending and tax cuts may or may not have particularly “stimulative” effects on the economy. The author (Harvard Professor N. Gregory Mankiw) also provides some interesting anecdotes concerning the absurdity of the Obama Administration’s famous “jobs created or saved” metric (also see Three Million Imaginary Jobs II); e.g., how some employers have counted federal government stimulus money which was used to provide pay raises to existing employees as “creating” jobs, and the story about a shoe-store owner in Kentucky who sold boots to the U.S. Army Corps of Engineers (for work on a project made possible by stimulus funds) who claimed to have created nine jobs with $889 (“…after all, a soldier could not go to work… without a pair of boots”).

Stormy skies – The Big Picture – Boston.com

www.boston.com

Robert McDowell: The U.N. Threat to Internet Freedom – WSJ.com

online.wsj.com

“In the Wall Street Journal, Robert McDowell writes that the FCC’s move to treat broadband providers like phone company monopolies could spur international efforts to regulate the Web.”

Kim Strassel: Obama’s Other Chicago Problem – WSJ.com

online.wsj.com

“Kim Strassel writes in The Wall Street Journal that the president’s support for Illinois senatorial hopeful Alexi Giannoulias is an unwanted reminder of the Windy City’s unsavory politics.”

Review & Outlook: Liberal Tax Revolt – WSJ.com

online.wsj.com

“The Wall Street Journal writes that even many Democrats don’t want the Bush cuts to expire.”

Charles Krauthammer – Beware the lame duck

www.washingtonpost.com

“To pass major legislation in a lame-duck session would be a violation of democratic norms.”

“What Wall Street Reform Means for You”

Hat tip to my former MBA student, Jason Gould, for pointing out a 3 minute video which was recently posted at http://www.whitehouse.gov/wallstreetreform entitled “What Wall Street Reform Means for You”.  Jason characterizes it as “Wall St. Reform for 1st Graders”, noting that “It is simply amazing that this is how they choose to speak to the American public. A 2300 page law explained in a 3 minute video by the White House. Obama and his staffers must be joking…it is embarrassing.” 

I completely agree with Jason; this video is simultaneously embarrassing, condescending, and grossly misleading. That’s because this is a political narrative designed to attribute blame to the private sector; as if the public sector was an “innocent” bystander, powerless to do anything other than bail out TBTF institutions. Thank God that we now have a 2,300 page reform bill that will empower the federal government to protect us from ourselves!

Anyway, here’s the video:

Assorted Links (7/20/2010)

Here’s a list of articles that I have been reading lately: 

Taking apart the federal budget

www.washingtonpost.com

“(Graphically) Explore the various facets of the government’s budget and see how revenues and spending have changed over time.” Basically, this is a lesson in real world public finance in only 5 slides!

Michael Boskin: Obama’s Economic Fish Stories – WSJ.com

online.wsj.com

“Michael Boskin writes in The Wall Street Journal that when it comes to unemployment, the president claims that the stimulus bill was several times more potent than his chief economic adviser estimates. Such statements hurt his credibility.”

Beware Greedy Relatives If You Hope to See 2011

www.businessweek.com

Thanks to a quirk in the federal tax law, the estate tax this year is zero, but starting on Jan. 1 all taxable estates exceeding $1 million will be taxed at the rate of 55 percent. The author of this article notes that the perverse incentives may mean that “Plugs get unplugged, do-not-resuscitate orders are placed. Maybe worse.” Furthermore, there is an empirical literature which shows that monetary incentives influence death rates; specifically, “…a 2003 paper in the Review of Statistics and Economics by Joel Slemrod of the University of Michigan and Wojciech Kopczuk of the University of British Columbia…examined the number of estate-tax returns immediately following changes in the law since 1916 and found that death rates change with the estate tax.”

Economics One: Government Policy and the Slowdown

johnbtaylorsblog.blogspot.com

Professor Taylor on the causes of (and the cure for) the slowing economy: “Like many economists, I am concerned about the slowdown in the economy which prolongs the high unemployment rate. I think uncertainty about the growing federal debt and the increased government interventions-from health care to financial markets…-is the cause of the slowdown. In my view the best stimulus right now would be a clear and credible plan to reduce the deficit and bring down the growing debt.”

Labor Pains — The American, A Magazine of Ideas

www.american.com

“Europe’s taxes punish working outside the home, so Europeans don’t work as much as they would otherwise.”

Martin Feldstein: The ‘Tax Expenditure’ Solution for Our National Debt – WSJ.com

online.wsj.com

“In The Wall Street Journal, Harvard economist Martin Feldstein says that the credits and subsidies that make the tax code so complicated cost big bucks. Reduce them by third and the debt will be 72% of GDP in 2020 instead of 90%.”

Bret Stephens: Why Hasn’t Israel Bombed Iran (Yet)? – WSJ.com

online.wsj.com

“In The Wall Street Journal, Global View columnist Bret Stephens says the military risks of a raid on Iran are large, but the political risks could be even bigger.”

Notable & Quotable – WSJ.com

online.wsj.com

“Reuel Marc Gerecht discusses how conversations about Islam in the U.S. have become boring, lightweight, and sometimes inane under the Obama administration.”

Michio Kaku: What We’ve Learned from the Gulf Spill – WSJ.com

online.wsj.com

“In the Wall Street Journal, Michio Kaku writes that in the future, relief wells should be drilled simultaneously with the main well.”