Assorted Links (7/20/2010)

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

Taking apart the federal budget

“(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 –

“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

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

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

“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 –

“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)? –

“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 –

“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 –

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

Assorted Links (7/19/2010)

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

David Cameron: A Staunch and Self-Confident Ally –

“British Prime Minister David Cameron writes in The Wall Street Journal that the U.S. and Britain have a clear common agenda: succeeding in Afghanistan, securing economic growth and fighting protectionism.”

You Don’t Have to Pay for Cable TV

“The average cable subscription costs $900 a year, but you can radically reduce that amount and still watch everything you want.”

Leeds: Chew on this: There is no surplus fairy for Social Security

Here’s the bottom line from Sandy Leeds’ editorial, published in today’s Austin American Statesman:

“The bottom line is that we’re in trouble. Social Security is woefully underfunded and Medicare is an even larger problem. This is going to increase the amount that we’re going to have to borrow from investors – and there’s no certainty that investors will always be willing to lend to us. Most importantly, we’re never going to solve these problems until the electorate understands the issues and starts to pressure our elected officials into making the hard (but right) decisions. We’re not doing anyone any favors by convincing them that we have “built up a big trust fund.””

Economics One: New Data Show the Debt Problem Is Spending (not Taxes) and Obamacare Worsens the Problem

Quoting from Stanford Professor John Taylor’s Blog (Economics One): “Everyone now seems to agree that the exploding federal debt is a serious problem that must be addressed. But how? The following … charts provide some data to help answer that question.”

Review & Outlook: A Climate Absolution? –

“A Wall Street Journal editorial says the global warming alarmists still won’t separate science from politics.”

Firms cancel health coverage

Here’s what we have to look forward to as Obamacare starts to come “on line” (Massachusetts passed so-called Romneycare in 2006, and Obamacare structurally closely resembles Romneycare, only on a national as opposed to individual state level)… “The relentlessly rising cost of health insurance is prompting some small Massachusetts companies to drop coverage for their workers and encourage them to sign up for state-subsidized care instead, a trend that, some analysts say, could eventually weigh heavily on the state’s already-stressed budgets”.

Studying a Suicide Cluster at Foxconn – The Numbers Guy – WSJ

“To analyze whether a recent spate of suicides at a set of Chinese manufacturing facilities represents an unusual outbreak, it helps to make the right comparisons.”

Three Million Imaginary Jobs II

Following up on an earlier posting about the Obama Administration’s “jobs created or saved” metric, I’d like to call attention to Greg Mankiw’s posting from yesterday entitled “The CEA’s Impossible Job”.  I also learned the following Latin phrase from this article: Post hoc ergo propter hoc.

Also, the following two postings about the Obama Administration’s “jobs created or saved” metric which date back to November 2009 are worth a second look:

  • In the Battle for Stimulus Jobs, Shoe Store Owner Tells War Story, by Louise Radnofsky (published November 2, 2009

Here’s a practical, step-by-step guide to “creating or saving” 9 jobs for only $889! 

  • Stimulus and the Jobless Recovery, by Ed Lazear (published November 1, 2009)

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

Assorted Links (7/16/2010)

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

Kimberley A. Strassel: About That Financial Reform ‘Victory’ –

“In The Wall Street Journal, Potomac Watch columnist Kim Strassel writes that Dodd-Frank may backfire on Democrats.”

Andy Kessler: The Yo-Yo Market and You –

“In The Wall Street Journal, Andy Kessler writes that the stock market will suffer dizzy spells until government policies return to some semblance of stability.”

Peggy Noonan: Youth Has Outlived Its Usefulness –

“American politics is desperately in need of adult supervision, argues Peggy Noonan in The Wall Street Journal.”

Charles Krauthammer – Obama’s next act

“I have a warning for Republicans: Don’t underestimate Barack Obama.”

Lasting Inequality – Freakonomics Blog –

“Income inequality throughout the 20th century…The evidence shows that, although there have been large absolute reductions in the level of infant and child mortality rates and also a reduction in the absolute levels of differences across socioeconomic groups, relative inequality has not diminished over the 20th century.”

Hillary Clinton for President –

The secretary of state could mount a formidable challenge to Obama, writes Pete du Pont.”

Evangelicals Try Stand-Up by David Skeel –

“In his Houses of Worship column, David Skeel writes about a new effort called Veritas Riff, which teaches evangelical leaders improvisation techniques to make them into more effective public intellectuals.”

Op-Ed Columnist – The Gospel of Mel Gibson –

“The taped tirade of the former Braveheart is evidence of our modern infatuation with ourselves.”

Three Million Imaginary Jobs –

“The Wall Street Journal writes that the White House and Christina Romer are still claiming that the stimulus worked despite the high unemployment.”

The White House’s claim that the $862 billion economic stimulus of February 2009 “created or saved” between 2.5 million and 3.6 million jobs can’t be taken seriously. While the “jobs created or saved” statistic is politically clever, it is based upon a “what would have happened” counterfactual scenario that, by definition, is neither measurable nor refutable.

Senate VIP Loans Mount –

“U.S. senators or Senate staff members received 30 loans—far more than had previously been known—under a controversial lending program at Countrywide Financial that provided cut-rate terms to favored borrowers.” / Companies / Banks – Failures of the Dodd-Frank Act

“Anachronistic in parts right from the day of its legislation …when read in its full glory, the 2,000 plus page script falls flat on at least three important counts, even ignoring its somewhat misplaced – likely populist – diversion into consumer protection issues. First, the Act does not sufficiently discourage individual firms from putting the system at risk…Second, the falls into the familiar trap of regulating by form rather than function…Third, implicit government guarantees for large parts of the shadow banking sector remain unaddressed.”

The Estate Tax’s Perverse Incentives – Freakonomics Blog –

“Will the estate tax return next year?”

Do High Incomes Make CEO’s Mean?

Possibly they do…

When Debt Flies Off the Charts

“Under one realistic future scenario, the nation’s debt becomes so large that Congressional Budget Office models break down.”

Gregg Sherrill: Speaking Up for American Capitalism –

“In The Wall Street Journal, Tenneco CEO Gregg Sherrill writes that business has taken a pounding on Capitol Hill and at the White House and has for the most part remained silent.”

Assorted Links (7/14/2010)

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

For a New Generation, an Elusive American Dream –

“In the Nicholson family, America is not delivering for a grandson as it did for his father and grandfather.”

NHTSA: No, Toyotas do not Suddenly Accelerate Unless You Press the Accelerator

“At the apex of PJ O’Rourke’s description of the 1980s Sudden Acceleration Incident craze…”

‘Artificial Intelligence’ Gains Fans Among Investors –

“A new wave of investment firms are turning to artificial-intelligence programs to make trading decisions. The programs are designed to crunch numbers, learn from decisions, and adapt. Some are having success.”

Shadow Banking

Here’s some “light” reading for folks who are interested in having a better understanding of how financial intermediation works in the real world: “The rapid growth of the market-based financial system since the mid-1980s changed the nature of financial intermediation in the United States profoundly. Within the market-based financial system, shadow banks are particularly important institutions.”

James Woolsey and Rebeccah Heinrichs: Iran and the Missile Defense Imperative –

“R. James Woolsey and Rebeccah Heinrichs write in The Wall Street Journal that U.S. intelligence now sees Tehran developing intercontinental missiles by 2015. If we continue our current strategy, we will not be able to counter the threat.”

Jenkins: Bank CEOs and the Bewitching Carrot –

“Holman Jenkins writes in The Wall Street Journal that shareholders of large, publicly traded banks have a higher appetite for risk than is compatible with our regulatory system.”

The Uncertainty Principle –

“The Wall Street Journal writes that Dodd-Frank will require at least 243 new federal rule-makings and lots of economic uncertainty for struggling businesses.”

Nation Demands Tax Dollars Only Be Wasted On Stuff That’s Awesome

Satire concerning “stimulus spending” from The Onion… “Nine of 10 respondents said they favor the continued public financing of new sports stadiums, but only if the old ones are imploded in an elaborate pyrotechnic display that everyone can watch from reclining chairs as AC/DC’s “Highway To Hell” blasts in the background.”

Q&A: The Limits of Arbitrage – Fama/French Forum

“The people in behavioral finance treat the Shleifer and Vishny (1997) paper as if it is empirical evidence. In fact, it is theory built on a set of assumptions – in the end, a clever set of claims. It can’t discredit market efficiency until it is supported by rigorous empirical work.”

The electoral consequences of large fiscal adjustments

“The market turmoil in recent weeks pose a key question: can European governments credibly commit to cutting their deficits? This column presents evidence that fiscal adjustments do not increase the likelihood of electoral defeat for incumbent governments.”

Eating to Live or Living to Eat?  

Mission Group Reels After Losses in Uganda