Earlier today, the Department of Labor’s Bureau of Labor Statistics (BLS) released its May 2012 unemployment report (AKA its “Employment Situation Summary”, available at http://www.bls.gov/news.release/empsit.nr0.htm). The news (net job creation of only 69,000 jobs) was very disappointing and came in far below economists’ expectations. According to the BLS, the January-April monthly average rate of net job creation was 188,500 jobs per month, so the May report represents a more than 60 percent drop in the rate of job creation. Putting this into a broader perspective, it takes 130,000 new jobs per month just to keep the unemployment rate at its current (historically high) 8.2% rate, assuming that the labor force participation rate remains constant and that the US population prospectively continues to grow 1% per year (see http://bit.ly/LPEVOM).
All posts by Jim Garven
Assorted Links (5/31/2012)
Here’s a list of articles that I have been reading and videos I have been viewing lately:
The Righteous Mind: Why Good People Are Divided by Politics and Religion
www.amazon.com
“Why can’t our political leaders work together as threats loom and problems mount? Why do people so readily assume the worst about the motives of their fellow citizens?” I am looking forward to reading social psychologist Jonathan Haidt’s new book entitled “The Righteous Mind: Why Good People Are Divided by Politics and Religion”. Here’s Amazon.com’s description of this book: “His (Haidt’s)starting point is moral intuition—the nearly instantaneous perceptions we all have about other people and the things they do. These intuitions feel like self-evident truths, making us righteously certain that those who see things differently are wrong. Haidt shows us how these intuitions differ across cultures, including the cultures of the political left and right. He blends his own research findings with those of anthropologists, historians, and other psychologists to draw a map of the moral domain, and he explains why conservatives can navigate that map more skillfully than can liberals. He then examines the origins of morality, overturning the view that evolution made us fundamentally selfish creatures. But rather than arguing that we are innately altruistic, he makes a more subtle claim—that we are fundamentally groupish. It is our groupishness, he explains, that leads to our greatest joys, our religious divisions, and our political affiliations. In a stunning final chapter on ideology and civility, Haidt shows what each side is right about, and why we need the insights of liberals, conservatives, and libertarians to flourish as a nation.”
Is Free Enterprise Social Darwinism?
arthurbrooks.aei.org
Earlier today, I attended a luncheon at the Texas Public Policy Foundation Texas Public Policy Foundation featuring Dr. Arthur C. Brooks, who is the president of the American Enterprise Institute. I highly recommend watching the video “Is Free Enterprise Social Darwinism?” (the answer is “no”) and also to the audio of today’s luncheon presentation at TPPF here (video is forthcoming (this coming Monday, June 4) at http://www.texaspolicy.com/multimedia.php). Quoting from his inspiring new book “The Road to Freedom” (entitled so in obvious deference to Hayek’s famous tome “The Road to Serfdom”), “If not money, then what do people really crave? The answer is earned success, the ability to create value with your life or in the lives of others. It does not come from a lottery check or an inheritance. It doesn’t even mean earning a lot of money… To earn your success is to define and pursue your happiness as you see fit. It’s the freedom to be an individual and to delineate your life’s “profit” however you want. For some, this profit is measured in money. But for many, profit is measured in making beautiful art, saving people’s souls, or pulling kids out of poverty.”
The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years
www.amazon.com
“The Clash of Economic Ideas interweaves the economic history of the last hundred years with the history of economic doctrines to understand how contrasting economic ideas have originated and developed over time to take their present forms. It traces the connections running from historical events…” This will be my personally assigned reading during my upcoming summer vacation. I am looking forward to becoming better a better informed citizen and scholar; wish me luck!
Hunter Baker on Secularism
www.researchonreligion.org
I’d like to give a “shout out” to the latest Research on Religion podcast on the topic of secularism (defined here as a “…an ideological position wherein religious practice and discourse must be removed from public visibility, either physically in terms of the display of religious symbols… or rhetorically in terms of how religious ideas influence policy”). IMHO, Research on Religion (located at http://researchonreligion.org/) (as well as Econtalk @ http://econtalk.org/) provide some of the best continuing education (particularly for people interested in the social sciences and public policy) that money can’t buy!
Putting the ‘Insurance’ Back in Health Insurance
www.forbes.com
“If we really want to make health insurance affordable and accessible to everyone, we need to go back to basics, and understand all of the government-induced distortions that have made health insurance look nothing like actual insurance.” This Forbes article applies basic economic concepts such as are taught in principles of risk management and insurance courses in colleges and universities to explain how to make health insurance affordable and accessible. It would appear that the author may have read the “famous” August 2009 blog posting entitled “My preferred approach for reforming health insurance…”, which is located at http://blog.garven.com/?p=636 :-).
Living within your means is so inconvenient
cafehayek.com
GMU economist Russ Roberts’ latest on the Eurozone crisis – excellent analysis, with a tip of the hat to Charles Dickens and Adam Smith…
Meet Robert Mugabe, the New Friendly Face of the United Nations
blogs.the-american-interest.com
“Feckless UN bureaucrats have tried to ban Dante and give Mt. Rushmore back to the Native Americans. Now comes news that serial human rights violator and war criminal Robert Mugabe has been appointed as an International Envoy for Tourism.”
The Bain Ads Are About Spending
online.wsj.com
“In The Wall Street Journal, Business World columnist Holman Jenkins writes that the Obama campaign ads against Romney and Bain Capital are an attempt to divert attention from the need for government fiscal restraint.”
Subpar Obama Recovery: 6.5 Million Jobs Below Average
news.investors.com
“President Obama has touted recent job growth as a sign of “extraordinary progress.” But the U.S. economic recovery has been the worst since World War II.”
Mirror, Mirror, on the Wall, Which President Is the Biggest Spender of All?
www.cato-at-liberty.org
A financial columnist named Rex Nutting recently triggered a firestorm of controversy by claiming that Barack Obama is not a big spender. Here’s Cato’s take on this claim…
It’s time to drop the college-for-all crusade
www.washingtonpost.com
“A focus on what is best for each student.”
Do Organic Consumers Shop Exclusively at the Jerk Store?
reason.com
“A new study examines the connection between organic food marketing and anti-social behavior.” While the title of this article seems a bit over the top, the article nevertheless provides some interesting and thought provoking perspectives on food marketing…
Renewable Energy Can’t Run the Cloud
professional.wsj.com
“In The Wall Street Journal, Robert Bryce writes that data centers for companies like Google and Facebook now consume about 1.3% of all global electricity.”
Four More Years?
professional.wsj.com
Quoting from this article by the former Governor of Delaware Pete du Pont, “The president many people felt would unite the country has instead used one wedge issue after another to divide our people along the lines of income, race, sex and class. This setting of one group against another is part of the re-election process and prospects. It may lead to a more difficult, divisive, and nastier election than we have seen in a while. And that may in turn mean an more difficult time for whoever is president in 2013.”
The Law Firm Business Model Is Dying
professional.wsj.com
“In The Wall Street Journal, the Brookings Institution’s Clifford Winston and Robert W. Crandall write that rules adopted to protect the legal profession from outside competition are actually stifling it.” This is a fascinating article which explains how regulatory barriers hamstring not only the legal profession, but also many other sectors of the economy. Quoting from this article, “…deregulation of transportation that began during the late 1970s enabled motor, air and rail carriers to reduce costs and, particularly in the case of railroads and airlines, to regain market share by offering consumers lower prices and better service.”
Number of the Week: Half of U.S. Lives in Household Getting Benefits
blogs.wsj.com
“Cutting government spending is no easy task, and it’s made more complicated by recent data showing that nearly half of the people in the U.S. live in a household that receives at least one government benefit.”
The History Boys
professional.wsj.com
“The Wall Street Journal on Obama’s fiscal blowout that never happened, according to Obama.” The temptation for politicians of all stripes to play fast and loose with statistics for the purpose of bolstering weak arguments can be breathtaking at times; as Mark Twain once famously remarked (with a tip of the hat to British PM Benjamin Disraeli), “”Lies, damned lies, and statistics”… (cf. http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics) .
The Liberal Legal Meltdown Over ObamaCare
professional.wsj.com
“In The Wall Street Journal, Michael W. McConnell writes that if supporters of mandatory insurance were as confident of its merits as they claim to be, they would offer legal arguments, not moral accusations.”
Memorial Day and the American Bible
professional.wsj.com
“In The Wall Street Journal’s Houses of Worship column, Stephen Prothero writes that Americans disagree, but we share a collection of core texts that ‘we the people’ regard as authoritative.”
Vulture Capitalism? Try Obama’s Version
professional.wsj.com
“In The Wall Street Journal, Potomac Watch columnist Kimberley Strassel writes that a profit-driven economy is preferable to one run by political favoritism.” Interesting commentary by Kim Strassel on the important differences between private equity and “public” equity…
The Service Patch
www.nytimes.com
“As college graduates consider their career prospects, they should think about how to be as much as they think about what to be.”
A Mess the 45th President Will Inherit
professional.wsj.com
“The Wall Street Journal reports that taxpayers now stand behind derivatives clearinghouses.” Here is some more important information about the policy train wreck known as Dodd-Frank. Specifically, Dodd-Frank “…authorizes the Federal Reserve to provide “discount and borrowing privileges” to clearinghouses in emergencies. Traditionally the ability to borrow from the Fed’s discount window was reserved for banks…”
Why Oil Prices Will Keep Falling
professional.wsj.com
“In The Wall Street Journal, Nansen Saleri writes that oil will cost less in the future because energy extraction technologies will overcome bad policies and geopolitical risks.” I can’t help but wonder what in the world happened to all the greedy speculators who just one month ago were driving oil prices up (see http://blog.garven.com/2012/04/18/cracking-down-on-oil-market-manipulation)…
Greece’s False Austerity
professional.wsj.com
“In The Wall Street Journal, David Malpass writes that the best outcome would be for Greece to stay in the euro, reduce government spending, and ask Europe for a mix of loans and gifts as it downsizes its government.”
Dodd-Frank’s Too-Big-to-Fail Dystopia
online.wsj.com
“In The Wall Street Journal, Peter J. Wallison writes that the government is expanding crony capitalism to insurers, securities firms and other non-banks.” It’s official: thanks in no small part to Dodd-Frank, the US system of free enterprise is at risk due to Dodd-Frank’s codification of the “SIFI” (“systematically important financial institutions”) designation…
Prostate Testing and the Death Panel
online.wsj.com
“In The Wall Street Journal, venture capitalist Tom Perkins notes that a free economy leads to life-saving innovations, while a highly taxed and overregulated economy leads to government agencies that discourage their use.”
A Tutorial for the President on ‘Profit Maximization’
online.wsj.com
“In The Wall Street Journal, Emory University economist Paul Rubin reminds us that profits provide the incentive for firms to do what consumers want.” Paul Rubin provides a particularly clear explanation of the conceptual linkage which exists between the notions of profit maximization and maximization of social welfare in this short WSJ op-ed…
Free to Choose
One of the first books that I ever read on the topic of economics was “Free to Choose: A Personal Statement“, published in 1980 by Milton and Rose Friedman. As the Free to Choose Wikipedia article notes, “This book maintains that the free market works best for all members of a society, provides examples of how the free market engenders prosperity, and maintains that it can solve problems where other approaches have failed.” Anyway, Free to Choose deeply influenced me when I read it as a beginning graduate student, and I am delighted to see that a Values & Capitalism blogger named Kurt Jaros is “walking” his readers through the entire book. Here’s a list of blog postings that he has contributed so far, along with brief summaries provided by Mr. Jaros (source: http://valuesandcapitalism.com/authors/t-kurt-jaros):
“Free to Choose
This Christmas I asked for and received Free to Choose by Milton and Rose Friedman. I’ve been a big fan of Milton for a while now, be it reading some articles online or watching YouTube videos of him.
The Power of the Market: Part 1
A couple weeks ago I wrote about the introduction to Free to Choose by Milton and Rose Friedman. In this post, I will explore some of the points from the first chapter, “The Power of the Market.” Friedman begins the chapter by explaining the difference between a command and a voluntary economy.
The Power of the Market: Part 2
Some people think the free market is full of greedy men who respond to monetary stimuli. But this isn’t the essence of a market (despite some types of those men acting within the free market).
The Tyranny of Controls
In the second chapter, Friedman writes on the role of government as it relates to trade. He makes a strong case for free trade, and specifically focuses on international trade. However, the same principles ought to be applied to domestic trade.
The Tyranny of Controls: Part 2
In my previous post I explained why the government should not regulate tariffs due to their harmful consequences toward consumers and innovation. This is part five of a book series on Free to Choose by Milton Friedman.
The Anatomy of Crisis
In my previous post, I shared Milton Friedman’s thoughts on why international trade is bad for an economy. This is part six of the series on “Free to Choose” by Milton Friedman. Often times in our political discussions with friends and colleagues we want to play the role of doctor and figure out what the source of pain is. We can both agree on what the symptoms are, but we may have different answers for the cause.
Cradle to Grave
In my previous post, I summarized Friedman’s beliefs about the Federal Reserve, its proper role, and how its failure is what leads us to economic problems (not capitalism). In his following chapter, “Cradle to Grave,” Friedman explains how the welfare state began to take off during the FDR administration.
Cradle to Grave: Part 2
In my previous post I began to discuss the shift of public perception about the role of government in America from one that merely protects the individuals to one that also provides for the individuals. Although he does not use the term, Friedman considers Social Security to be a Ponzi scheme.”
Assorted Links (5/23/2012)
Here’s a list of articles that I have been reading lately:
www.freakonomics.com
“Is there a role for hope in poverty alleviation programs? According to a recent speech by economist Esther Duflo, there is. Duflo looked at a BRAC program in West Bengal; program participants were given a “small productive asset” (a cow, a goat, or some chickens) and a small stipend to encourage participants not to immediately eat the animal. The results were significant…”
Toxic Charity: Lessons from Bob Lupton
www.valuesandcapitalism.com
“Repeatedly offering charity to the poor can create dependency, rather than breaking the cycle of spiritual and physical poverty, writes Peter Greer, president and CEO of HOPE International.”
Risk intelligence: how gamblers and weather forecasters assess probabilities.
www.slate.com
“Humans are useless at assessing probabilities. But against the odds, Dylan Evans has tracked down the handful of people who rate as geniuses on the intelligence scale he calls risk quotient.”
The New Holy Wars
www.independent.org
“’Economics and environmentalism are types of modern religions.’ So says author Robert H. Nelson in this analysis of the roots of economics and environmentalism and their mutually antagonistic relations in the twentieth and twenty-first centuries.” I am looking forward to reading this book. I found out about it from listening to a compelling and thought-provoking Research on Religion podcast (see http://bit.ly/JxRvaK) in which host Tony Gill interviews the book’s author, Prof. Robert Nelson, who is a professor of public policy at the University of Maryland and a Senior Fellow at The Independent Institute.
Taxation: The People’s Business
www.futureofcapitalism.com
“Thomas Sowell has a column about Andrew Mellon’s book Taxation: The People’s Business, recently reprinted by the University of Minnesota. The Mellon tax cuts inspired the Kennedy tax cuts, which inspired the Reagan tax cuts.”
How the Recovery Went Wrong
online.wsj.com
“In The Wall Street Journal, Harvey Golub writes that of the 11 recoveries in the last 60 years, this one is at or near the bottom in job growth and every other economic indicator.”
mises.org
“In a few recent blog posts at the New York Times, Paul Krugman used bar graphs and tables in an attempt to establish the superiority of his views over those of the Austrian School of economics. Yet, as I’ll show in this article, I can use Krugman’s own data to demonstrate the exact opposite…”
Church of the Holy Contraception
www.humanevents.com
“The institution most successful in imposing its worldview on others is called the Democratic Party.”
Glass-Steagall Wouldn’t Have Prevented the JPMorgan Loss or the Financial Crisis
reason.com
“Andrew Ross Sorkin pokes a liberal sacred cow: A meme around Glass-Steagall has been created, repeated so often that it has almost become conventional wisdom: the repeal of Glass-Steagall led to the financial crisis of 2008. And, the thinking goes, has become almost religious for some people, that if the law were reinstated, we would avoid the next crisis.”
Milton Friedman Sound Recordings Digitized
www.hoover.org
“More than two hundred fifty audiotapes in the Milton Friedman papers are available for listening after having been digitized by Hoover’s audio lab.” I can’t wait to listen in… 🙂
Market Logic vs. Moral Value?
bleedingheartlibertarians.com
“The May issue of Boston Review has a special forum on “How Markets Crowd Out Morals,” with a lead essay by Michael Sandel. Sandel’s essay is, like his recent Atlantic essay, based on his new book. In it, he argues that market logic crowds out moral value in a variety of ways.”
Dim Views of Big Business, Government
blogs.wsj.com
Voters have little confidence in Wall Street, large corporations or the news media, according to a new Wall Street Journal/NBC News poll.
www.libertarianism.org
“We value liberty at the expense of caring. That’s the takeaway about libertarians from Jonathan Haidt’s compelling new book, The Righteous Mind: Why Good People are Divided by Politics and Religion.” Here’s the Cato Institute’s response to Haidt’s thesis: “Do libertarians value liberty at the expense of caring and fairness? At Libertarianism.org Aaron Powell argues the answer is no. Rather than limiting other concerns, he says, “liberty is the best way to maximize all other concerns…so we can better go about making the world a happier, healthier, richer, and more caring place.”
www.boston.com
“A rare annular eclipse – a ring of sunlight as the new moon, passing between Earth and sun, blocks most, but not all, of the sun’s disc. It is striking to see. Differing from a total solar eclipse, the moon in an insular eclipse appears too small to cover the sun completely, leaving a ring of fire…” This is a wonderful photoessay from our friends at the “Big Picture” (which is a Boston Globe online photography offering)…
Why the Bishops Are Suing the U.S. Government
professional.wsj.com
“In The Wall Street Journal, Harvard Law Professor Mary Ann Glendon says that the main goal of the contraception mandate is not to protect women’s health—it’s to conscript religious organizations into a political agenda.”
As an insurance economist, I am dumbounded by the notion (advanced by the Obama administration) that by mandating that insurers pay for a scheduled benefit (in this case, “free” contraception), that this somehow relieves consumers of the financial responsibility associated with said benefit (Professor Glendon does an excellent job in this article explaining why the HHS sterilization, abortifacient and birth-control insurance mandate directed toward insurers does not relieve consumers of moral responsibility). It’s axiomatic that insurance prices reflect the expected value of future claims costs; thus, the costs of any and all mandated benefits are reflected (other things equal) in the form of higher insurance prices, which implies that consumers bear the full financial responsibility of the mandate. While it is true that insurers write the checks, they do so as intermediaries in the entire process.
The Dumbing Down of Joe Biden
professional.wsj.com
“In The Wall Street Journal, Main Street columnist William McGurn writes that as the punch line for late-night television jokes, the vice president relieves comics from having to tell any jokes at Mr. Obama’s expense.”
professional.wsj.com
“If the (Obama) campaign is going to successfully demonize Mitt Romney as a marauding capitalist, it can’t have fellow Democrats defending capitalism.”
The Age of Innocence
www.nytimes.com
“It’s no wonder Europe and the United States are facing debt crises and political dysfunction at the same time.” This is a somewhat depressing article that rings true. Quoting from it, “The American decentralized system of checks and balances has transmogrified into a fragmented system that scatters responsibility. Congress is capable of passing laws that give people benefits with borrowed money, but it gridlocks when it tries to impose self-restraint.”
www.nytimes.com
“Private equity is not where we need to be focusing our critical lenses. Is this what the presidential race is going to be about?” Quoting from David Brooks’ latest column about private equity, “Forty years ago, corporate America was bloated, sluggish and losing ground to competitors in Japan and beyond. But then something astonishing happened. Financiers, private equity firms and bare-knuckled corporate executives initiated a series of reforms and transformations.”
Let Us Now Praise Private Equity
www.nationalreview.com
Quoting from this NRO article, “Every presidential candidate has to defend himself against accusations of wrongdoing — an affair, abuse of office, campaign-finance impropriety, and so forth… But the allegation against Mitt Romney is extraordinary: He stands accused of doing his job too well.”
Douthat On Orthodox Christianity’s Implications for Markets
www.valuesandcapitalism.com
“This conversation between Ross Douthat and William Saletan on Slate is required reading for any thoughtful Christian. It reviews themes in Ross’s new book, “Bad Religion,” which I’m now about to buy.”
Competition Is Killing Higher Education (Part 1)
www.bloomberg.com
“Competition, we are constantly told, encourages individuals, institutions and companies to take the risks necessary for innovation and efficiency. But in higher education, competition often discourages risk taking, leads to overly cautious short-term decisions, produces a mediocre product for the price, and promotes excessive spending on physical plants and bureaucracies.” This is an excellent real world example of a “winner take all” game…
Three Views of the ‘Fiscal Cliff’
professional.wsj.com
“In The Wall Street Journal, Edward Lazear writes that it’s the tax increases we have to fear—spending cuts won’t hurt the economy.” Quoting from this article, “Christina Romer, President Obama’s first chairwoman of the President’s Council of Economic Advisers, and David Romer document the strong unfavorable effect of increasing tax rates on economic growth (American Economic Review, 2010). They report that an increase in taxes of 1% of gross domestic product lowers GDP by almost 3%. The evidence on government spending also suggests that high spending means lower growth… Swedish economists Andreas Bergh and Magnus Henrekson (Journal of Economic Surveys 2011) survey a large literature and conclude that an increase in government size by 10 percentage points of GDP is associated with a half to one percentage point lower annual growth rate.”
Finally, I close in noting that the empirical results referenced above are consistent with UCSD economist Valerie Ramey’s empirical finding (see http://papers.nber.org/papers/w17787) that “… government spending does not appear to stimulate private activity”.
professional.wsj.com
“The Wall Street Journal asks in an editorial how a rapacious company could manage to get repeat business for 29 years?”
Game Theory and Business Economics
www.tutor2u.net
“Game theory is mainly concerned with predicting the outcome of games of strategy in which the participants have incomplete information about the others’ intentions.” This blog posting from the UK provides a number of recent examples of game theory in action; e.g., currency interventions by central banks, over-fishing of the oceans, doping in professional sports, solar panel trade wars, the ongoing Eurozone sovereign debt crisis, etc… Good stuff!
Market Failure: The Case of Organic Food
econlog.econlib.org
Quoting from this article, “Maybe the health benefits of organic food really do justify a 30-50% price premium. But nothing high on Google Scholar (see http://bit.ly/JiEd0b) inspires confidence in this position. Major literature reviews in 2009 (see http://www.ajcn.org/content/90/3/680.short), 2003 (see http://informahealthcare.com/doi/abs/10.1080/09637480120092071), and 2002 (see http://journals.cambridge.org/production/action/cjoGetFulltext?fulltextid=803836) report that (a) there’s little solid evidence about the health benefits of organics, and (b) existing evidence reveals little health benefit of organics.”
College Presidents vs. College Football Coaches
mjperry.blogspot.com
Quoting from the blog posting referenced above: “1. A new list of the highest-paid public university presidents in 2011, from today’s Chronicle of Higher Education (see http://chronicle.com/article/What-Public-College-Presidents/131912/table.html); E. Gordon Gee at Ohio State University is No. 1 at almost $2 million. 2. USA Today’s list of the highest-paid college football coaches in 2011, mostly at public universities (see http://www.usatoday.com/sports/college/football/story/2011-11-17/cover-college-football-coaches-salaries-rise/51242232/1). Mack Brown at Texas is No. 1 at more than $6 million (with maximum bonus).”
Family Ties, Inheritance Rights, and Successful Poverty Alleviation: Evidence from Ghana
papers.nber.org
Here’s an interesting NBER paper on the implications of law and culture for the alleviation of poverty…
Assorted Links (5/20/2012)
Here’s a list of articles that I have been reading and videos that I have been viewing lately:
Number of Those Working Past 65 Is at a Record High
www.nytimes.com
“While the number of workers over the traditional retirement age has risen, those 55 and under are doing worse.” Signs of the times – people who have jobs are not retiring, and people who don’t have jobs (the so-called “chronically unemployed”) are claiming Social Security Disability Insurance at a historically unprecedented rate (see http://bloom.bg/Iwbi7A)…
www.nytimes.com
“Why Elizabeth Warren’s embarrassment is a scandal for academia.”
Banks Need More Capital, Not More Rules
professional.wsj.com
“In The Wall Street Journal, Allan Meltzer writes that the U.S. economy can’t grow unless investors are free to finance risky assets.” Also see Mark Steckbeck’s posting entitled “The Solution to Too-Big-To-Fail is Not Bailing Out Big Banks” (@ http://bit.ly/KDC3HI) which follows up Professor Meltzer’s WSJ essay with a simple thought experiment illustrating the self-regulating incentive effects associated with increasing bank capital requirements.
Notable & Quotable
professional.wsj.com
“Historian Lord Acton on power and moral judgment, 1887—including the coinage that absolute power corrupts absolutely.”
What’s at Stake in the Wisconsin Recall Election
professional.wsj.com
“In The Wall Street Journal’s Cross Country column, Christopher M. Toner writes that what unions really want is legal standing to sue employers and prevent any changes—in wages, hours or other conditions of employment—unwanted by their members.” Intrade currently puts the odds of Governor Scott Walker winning the upcoming recall election at nearly 90% – see http://www.intrade.com/v4/markets/contract/?contractId=759686.
The Weekend Interview with Abigail Thernstrom: The Good News About Race in America
professional.wsj.com
“In The Wall Street Journal, Jason Riley interviews Civil Rights Commission co-chairwoman Abigail Thernstrom, who says the 1965 Voting Rights Act has been a huge success. So why are black activists keen to press the discrimination button on issues like voter ID?”
The Saverin Savonarolas
online.wsj.com
“In The Wall Street Journal, Business World columnist Holman Jenkins writes about the Facebook founder who encountered America’s ‘content-free outrage’ machine when he renounced his citizenship.”
Is Austerity to Blame for Europe’s Economic Woes?
www.youtube.com
“From Nobel laureate Paul Krugman to the free-market-friendly Economist magazine to former Treasury Secretary Lawrence Summers, all sorts of experts are charging that financial austerity measures are killing the great economies of Europe.” These “experts” “…criticize cutting government spending in a weak economy ignore academic research showing that significant spending cuts, structural reforms to entitlements, and loosening labor regulations are proven ways to reduce debt loads and get countries moving again.”
Destroying Latin America: Journalist Mary O’Grady on Populism, Protectionism, and Prohibition
www.youtube.com
“The inequality produced by liberty: This, for the socialist, is the soft underbelly of pro-market rationale and the best place to attack,” says Mary O’Grady, who covers Latin America for the Wall Street Journal. She goes on to say (and I agree), that the socialist argument against inequality “… is the intellectual stream that prevails in Latin America, and it’s the reason the region can not hope to reach its potential any time soon.” Hat tip to my friend Spencer Case for pointing this video out to me.
6 cups a day? Coffee lovers less likely to die, study finds
vitals.msnbc.msn.com
“Coffee drinkers who worry about the jolt of java it takes to get them going in the morning might just as well relax and pour another cup. That’s according to the largest-ever analysis of the link between coffee consumption and mortality, which suggests that latte lovers had a lower risk of death during the study period.”
professional.wsj.com
“Actor Will Smith on French TV discussing new President Francois Hollande’s proposal to tax high-earners at 75%.” Hat tip to my Baylor colleague Dave VanHoose for pointing this article out to me…
Tom Frost: The Big Danger With Big Banks
professional.wsj.com
“In The Wall Street Journal, Tom C. Frost writes that taxpayer safety nets such as the FDIC should be available only to banks that are in the loan business, not those in the investment business.” Mr. Frost basically calls for an end to TBTF (too big to fail); quoting from the article, “…by protecting people from the consequences of their errors, the bailouts raised the risk that the same errors will be made in the future.” QED!
Obama walks fine line in bashing Romney, courting Wall Street
www.reuters.com
“For President Barack Obama’sre-election team, it’s sort of like threading a needle.”
www.ted.com
“What can mathematics say about history? According to TED Fellow Jean-Baptiste Michel, quite a lot. From changes to language to the deadliness of wars, he shows how digitized history is just starting to reveal deep underlying patterns.”
C.S. Lewis’s Lesson on Enterprise
www.valuesandcapitalism.com
“In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honour and are shocked to find traitors in our midst.”—C.S. Lewis, “The Abolition of Man”
Highest and Cheapest Gas Prices by Country; Relative to Income, U.S. Has Very Affordable
mjperry.blogspot.com
According to this “affordability” list of 55 countries, the US comes in at #50! :-)…
Assorted Links (5/15/2012)
Here’s a list of articles that I have been reading and videos that I have been viewing lately:
Jonathan Haidt Answers Your Questions About Morality, Politics, and Religion
www.freakonomics.com
Quoting from this Freakonomics interview with University of Virginia psychology professor Jon Haidt, “Once I lost my feelings of repulsion and anger toward conservatism I discovered a whole world of ideas I had never encountered.”
Is Free Enterprise Really Based on Greed?
www.youtube.com
“In his book “The Road to Freedom”, Arthur Brooks demonstrates how earned success, true fairness and helping those in need are the foundation of the moral case for free enterprise.” I am looking forward to the upcoming luncheon in Austin (scheduled for May 31) featuring Dr. Art Brooks, who is president of the American Enterprise Institute. If y’all are interested in attending, the registration for this event is located at http://bit.ly/JUOBtR…
Jerry Brown vs. Chris Christie
professional.wsj.com
“In The Wall Street Journal, Main Street columnist William McGurn writes that more states are realizing that the road to fiscal hell is paved with progressive intentions.” It’s important to say no because saying yes will very quickly take us down the same fiscal and economic road that the EU is currently traveling!…
Saying No to State Bailouts
professional.wsj.com
“In The Wall Street Journal, Congressman Kevin Brady and Senator Jim DeMint write that Congress must make plain that American taxpayers will not protect states from the consequences of their economic policies.”
professional.wsj.com
“In The Wall Street Journal, Global View columnist Bret Stepehns writes that nobody should be surprised if voters also give Angela Merkel and David Cameron the boot at the next ballot.”
Losing Money Isn’t a Crime
professional.wsj.com
“In The Wall Street Journal, Yale Law Professor Jonathan Macey writes that J.P. Morgan lost $2 billion and will learn from the experience—which regulators rarely do.”
professional.wsj.com
“The Wall Street Journal says write the President a check and escape eternal damnation.”
Lifetime airline passes: Fly anywhere, any time, for life
www.economist.com
“IN THE early 1980s, American Airlines, strapped for cash, decided to start selling passes for unlimited first-class travel for life. At the time, the passes cost $250,000 (around $600,000 in today’s dollars), with a companion ticket available for an extra $150,000 and discounts for older people. The Los Angeles Times explains what happened next…”
The Leverage Cycle: Cause and Cure for the Current Crisis
www.youtube.com
Yale economist John Geanakoplos discusses his “leverage cycle theory” in the context of the global financial crisis of 2008-????; hat tip to Greg Mankiw (http://bit.ly/Kxn01J)…
www.nationalreview.com
“In “Politics and the English Language,” George Orwell says that a writer can avoid the heavy lifting of making an original or insightful argument by simply turning his pen on autopilot and fueling it with “ready made” clichés.” Interesting essay from NRO’s Jonah Goldberg on the “meaning” of “social justice”…
Read to your kids (and teach them about money)
cafehayek.com
“The latest EconTalk episode is David Owen talking about how to teach your kids about money. It’s based on his book, The First National Bank of Dad.”
‘Taxmaggedon’ Is a Real Threat
professional.wsj.com
“In The Wall Street Journal, former Treasury Secretary John Snow writes that next year’s scheduled increases on dividends and capital gains will retard investment and derail the recovery.” Look’s like we may be “toast”…
professional.wsj.com
Quoting from this WSJ article, “It’s worth noting that once upon a time a $2 billion banking loss was a problem for the bank, not politicians. But in the Dodd-Frank world, the biggest banks have become more or less regulated utilities. One tragedy of J.P. Morgan’s trading loss is that it will become an excuse to give regulators even more power, when what taxpayers really want is a system that ends too-big-to-fail banks, not a plan to revive them.”
Winning the News Cycle, Losing the Race
www.nytimes.com
“The Obama White House has worked to change the subject to social issues. But in a pocketbook election, it helps to focus on pocketbook anxieties.”
College Graduates Face a Long Job Hunt
professional.wsj.com
“Most graduating college students will leave school this spring without a job offer despite an uptick in hiring by on-campus recruiters.”
Disabled Americans Shrink Size of U.S. Labor Force
www.bloomberg.com
Apparently Americans are claiming Social Security Disability Insurance, or SSDI, in record numbers. This helps to explain (at least in part) the shrinking labor force participation rate. See the Washington Post article “Jobs report shows effects of the incredible shrinking U.S. labor force” at http://wapo.st/KwK1yd; this article notes, among other things, that “If the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1 percent (rather than the current 8.2% rate, according to the US Bureau of Labor Statistics).”
Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO
www.bloomberg.com
Interesting Bloomberg article about how the co-founder of Facebook, Eduardo Saverin, has renounced his American citizenship, a decision apparently motivated (at least in part) by US income tax considerations. The article notes that “Besides helping cut tax bills stemming from the Facebook, the move may also help him avoid capital gains taxes on future investments since Singapore doesn’t have a capital gains tax.”…
The FDR Lesson Obama Should Follow
online.wsj.com
“In The Wall Street Journal, Arthur Herman writes that Roosevelt reluctantly unleashed industry to win World War II, thereby laying the groundwork for America’s economic recovery.”
Stimulus Spending Keeps Failing
online.wsj.com
“In The Wall Street Journal, Harvard economist Robert J. Barro asks: If austerity is so terrible, how come Germany and Sweden have done so well?”
The Great Human-Rights Reversal
online.wsj.com
“In The Wall Street Journal, Wonder Land columnist Daniel Henninger writes that the Democratic left has conceded human rights to the conservatives.”
Big &#%!ing Joker
www.nationalreview.com
Interesting article by NRO’s Jonah Goldberg about Vice President Joe Biden; particularly concerning the VP’s tiresome “…literally, not figuratively” rhetoric…
What the Greek Left Wants
online.wsj.com
“In The Wall Street Journal, Takis Michas writes that Greece’s left wing wants no reform, but they do want to tax the rich and blackmail Germany.”
America and the Value of ‘Earned Success’
online.wsj.com
“In The Wall Street Journal, Arthur Brooks writes that societies that enable individuals to earn rewards based on their effort and merit are happier than those that don’t.” Quoting from this article, “All surveys show that most Americans still embrace our free enterprise system—today. The crucial test is whether the country is willing to support the hard work and policy reforms that will sustain it. The cost of failing this test will be more human than financial. In our hands is the earned success—and thus the happiness—of our children and grandchildren. The stakes in the current policy battles today are not just economic. They are moral.”
Who Shoulders the Burden?
blogs.worthpublishers.com
Here’s a short video with economist Steve Horwitz that reminds us who sends the check to the government isn’t the same as who’s actually burdened by the tax; while it is true that taxed corporations write the check, the actual incidence of corporate taxation occurs in the form of lower wages for workers and higher prices for goods and services for consumers…
Chronicle of Higher Education Fires Blogger For Challenging Seriousness of Black Studies Depts.
reason.com
Quoting from this article, “Over at the Chronicle of Higher Education… contributor Naomi Schaefer Riley has been fired for a post questioning the intellectual seriousness and validity of black studies departments.” The title of her post is “The Most Persuasive Case for Eliminating Black Studies? Just Read the Dissertations” (see http://bit.ly/KGpCf9).
Assorted Links (5/8/2012)
Here’s a list of articles that I have been reading and videos that I have been viewing lately:
‘Fair Trade? Its Prospects as a Poverty Solution’
www.amazon.com
“Fair Trade is an enormously popular idea in Christian and secular circles alike. Who, after all, could be against fairness? Victor V. Claar, however, raises significant economic and moral questions about both the logic and economic reasoning underlying the fair trade movement. In this monograph, Claar suggests that, for all its good intentions, fair trade may not be of particular service to the poor, especially in the developing world.”
xkcd.com
Humor alert: xkcd provides us with a clever cartoon essay concerning how “Every (college) major is terrible”; he suggests that his essay be sung to the tune of Gilbert & Sullivan’s “Modern Major-General’s Song” from their 1879 comic opera The Pirates of Penzance (go to http://bit.ly/JZTXBM for a listen…); apparently someone has already taken xkcd up on his suggestion (see http://www.youtube.com/watch?v=Gu1VhsNOwPU)…
Supermoon: the perigee moon of 2012
www.boston.com
Here’s the Big Picture’s photoessay about Supermoon – photos from all over the world!
Why Colleges Don’t Teach the Federalist Papers
professional.wsj.com
“In The Wall Street Journal, Peter Berkowitz writes that at America’s top schools, graduates leave without reading our most basic writings on the purpose of constitutional self-government.” The extent to which public education as well as “higher” education has been dumbed down during the course of a generation is remarkable. I attended a rather “average” public high school back in the 70’s and recall reading the Federalist Papers as part of a required course in “Civics”…
‘Paycheck Fairness’ Will Mean a Pay Cut for Men
professional.wsj.com
“In The Wall Street Journal, Carrie Lukas writes that wage discrimination is already illegal—but so what? Get ready for another phony debate about the ‘war on women.’”
Don’t Worry (About GDP), Be Happy
professional.wsj.com
“In The Wall Street Journal, James Bovard writes that with the economy slow and joblessness high, the feds want a new way to measure well-being.” This is sort of the academic equivalent of “Economists Gone Wild”…
Hollande’s European Reality Check
professional.wsj.com
“In The Wall Street Journal, Matthew Kaminski writes that despite its election of a Socialist president, expect France to keep its commitment to Germanic discipline when the chips are down.”
Of Course 70% Tax Rates Are Counterproductive
professional.wsj.com
In today’s WSJ article entitled “Of Course 70% Tax Rates are Counterproductive”, Cato’s Alan Reynolds is quite critical of the Fall 2011 Diamond and Saez Journal of Economic Perspectives article entitled “The Case for a Progressive Tax: From Basic Research to Policy Recommendations” (available from http://www.aeaweb.org/articles.php?doi=10.1257%2Fjep.25.4.165). It all comes down to a rather technical discussion concerning the reliability of econometric estimates of the elasticity of taxable income (ETI), which refers to the sensitivity or responsiveness of taxable income to changes in marginal tax rates. As Reynolds points out in his article, you can pretty much drive a Mack truck through the range of empirical estimates of ETI as they vary widely. If taxable income is indeed not all that sensitive to increases in marginal tax rates (Diamond and Saez claim an estimate for ETI = 0.25 in their paper), then you can obtain (as Diamond and Saez do) so-called “socially optimal” tax rates of 73%-83% on the top 1% which would raise tax revenues while having a neutral effect on overall economic growth. On the other hand, if ETI is higher than .25, then the Diamond-Saez marginal tax rate recommendations could have the exact opposite effect – i.e., they could potentially cause substantial losses in tax revenue while reducing economic growth. Reynolds notes that compared with other public finance academic studies, the Diamond-Saez ETI of 0.25 represents a “lowball” estimate. In fact, other studies indicate ETI estimates ranging from 0.62 (from a 2004 paper by Saez) to 1.99 (from a 2000 public finance book edited by Michigan economist Joel Slemrod). Selecting the midpoint of this range (1.3), the application of the Diamond-Saez methodology would then imply a substantially different policy recommendation – in that case, the so-called “socially optimal” tax rates would be more like be 33.9% for all taxes, and below 27% for the federal income tax.
After reading these articles, I am reminded of the famous quote “It is better to be vaguely right than exactly wrong.”
To the Class of 2012
online.wsj.com
“In The Wall Street Journal, Global View columnist Bret Stephens advises graduates: Tone down your egos, shape up your minds.”
It’s All Your Money: Taxpayers may be on hook for US Postal Service losses
www.foxnews.com
Quoting from this article, “The USPS is losing up to $25 million dollars a day. Until now, taxpayers have not been on the hook for its mounting losses, but that could be about to change. A bailout recently approved by the Senate would appropriate $34 billion in federal money.” On an annual basis, this is equivalent to a lost of more than 9 billion per year ($25,000,000 x 365 = $9,125,000,000)…
Paul Krugman and the European Austerity Myth
danieljmitchell.wordpress.com
From Cato Institute, “Notwithstanding claims by Paul Krugman and other fans of big government, government spending hasn’t been “slashed” in Europe. Which is unfortunate since that’s exactly what’s needed.”
EU Voters Nix Austerity, Though It’s Not Been Tried
news.investors.com
“Elections in France, Greece and Italy brought new political parties to power that reject budget austerity. Unfortunately, data show there’s been little austerity at all in the EU.”
www.washingtonpost.com
“Having lost his ability to inspire, what is Obama’s appeal?”
Paul Ryan’s Cross to Bear
online.wsj.com
Hat tip to my friend Kevin Stuart for pointing this article out… I particularly like and appreciate the following quote from this article, “…a “serious but respectful discussion” would have to concede… that conservative Republicans advancing market-oriented answers are as serious about their moral case as liberal Democrats are about theirs.”
The 2012 Pelosi GTxi SS/RT Sport Edition
www.youtube.com
Here’s an advance look at GM’s car of the future – The 2012 Pelosi GTxi SS/RT Sport Edition…
www.washingtonpost.com
“Obama stirs fear and resentment to win votes.”
The War Against The Young
blogs.the-american-interest.com
“An analysis of recent jobs figures at Investor.com reveals a disturbing development: the biggest beneficiaries from the economic recovery are Boomers, while everyone else is getting the shaft.”
iowahawk.typepad.com
Here’s Iowahawk’s parody (source: http://iowahawk.typepad.com/iowahawk/2012/05/julias-circle-of-life.html) of the Obama-Biden campaign’s narrative entitled “The Life of Julia” (source: http://www.barackobama.com/life-of-julia)…
Rory Sutherland: Perspective is everything
www.ted.com
Rory’s TED Talks are highly entertaining, and they also provide important insights into behavioral economics (for more information about behavioral economics, see http://en.wikipedia.org/wiki/Behavioral_economics)…
The Case Against the Paycheck Fairness Act
www.usnews.com
Quoting from this article, “An analysis of more than 50 peer-reviewed papers, commissioned by the (U.S.) Labor Department, found that the so-called wage gap is mostly, and perhaps entirely, an artifact of the different choices men and women make—different fields of study, different professions, different balances between home and work.”
professional.wsj.com
“In The Wall Street Journal’s Wonder Land column, Daniel Henninger asks: Unless they plan to be union lifers, what’s in an Obama vote for young Americans?”
professional.wsj.com
Quoting from this article, “For the better part of 100 years, and especially in the past five, we have socialized the risks of high finance. All too often, the bankers who take risks don’t themselves bear them. By all means, let the capitalists keep the upside. But let them bear their full share of the downside.By all means, let the capitalists keep the upside. But let them bear their full share of the downside.”
‘Press 9 for More Options’
professional.wsj.com
Quoting from this article, “Putting people on hold for five or 10 or 30 minutes is the antithesis of the philosophy that the customer is king. It’s the height of rudeness. It is telling your customers: Our time is more valuable than yours, so we are going to make you wait and wait and converse with a computer. And by the way, stop rubbing salt in the wounds with the intermittent “your call is important to us,” or “you’re a valued customer,” and “we apologize for the inconvenience.” All lies.”
Pastors Call a Truce on ‘Sheep-Stealing’
professional.wsj.com
“In The Wall Street Journal’s Houses of Worship column, Naomi Schaefer Riley writes in Charlotte, churches are cooperating in an experiment to attract twenty-somethings.”
Who the hell is Julia and why am I paying for her whole life?
www.humanevents.com
In the article referenced below, columnist David Harsanyi writes: “What we are left with is a celebration of . . . how a woman can live her entire life by leaning on government intervention, dependency and other people’s money rather than her own initiative or hard work. It is, I’d say, implicitly un-American, in the sense that it celebrates a mindset we have–outwardly, at least–shunned.”
professional.wsj.com
“In The Wall Street Journal, Potomac Watch columnist Kimberley Strassel writes that Al Armendariz, the EPA official who resigned in disgrace this week, was no outlier among the Obama administration’s regulators.”
College Grads Need Jobs, Not a Lower Loan Rate
professional.wsj.com
“In The Wall Street Journal, Andrew Biggs writes that young workers who enter the labor force in a recession suffer years of lower wages.”
How to Muddy Your Tracks on the Internet
www.nytimes.com
Good advice from the Personal Tech section of the New York Times… “It’s probably impossible to cloak your online activities fully, but there are steps you can take to make them harder to follow.”
Romney’s Former Bain Partner Makes a Case for Inequality
www.nytimes.com
“A former partner of Mitt Romney’s at Bain Capital argues that more income inequality is good for the economy.”
The Campus Tsunami
www.nytimes.com
“What happened to the newspaper and magazine business is about to happen to higher education: a rescrambling around the Web and online learning.”
How to define a manufacturer: Corporate tax cuts spark controversy
www.youtube.com
“President Barack Obama wants to drop the corporate tax rate from 35% to 28% and move manufacturing to a special category, with a 25% rate. Reuters columnist David Cay Johnston warns this could cause a rush of “manufacturers” looking to take advantage of the lower rate.” (Hat tip to Greg Mankiw (http://bit.ly/IYg0rC))…
The Scream’ Fetches $119.9 Million
online.wsj.com
“One of the art world’s most recognizable images, Edvard Munch’s The Scream, sold for a record $119,922,500 at auction in New York City.”
Assorted Links (5/2/2012)
Here’s a list of articles that I have been reading and videos that I have been viewing lately:
Obama losing rock star status with young
campaign2012.washingtonexaminer.com
“Michael Barone on polls showing the Obama enthusiasm deficit among young voters.”
Can Obama Run on His Foreign-Policy Record?
professional.wsj.com
“In The Wall Street Journal, Fouad Ajami writes that the American people may demand more than the killing of bin Laden and the hunting down of Somali pirates.”
Smackdown: Ron Paul vs. Paul Krugman on the role and scope of government in the economy
www.youtube.com
“Ron Paul – “Governments aren’t suppose to run the economy, people are suppose to run the economy.” Paul Krugman – “I’m a believer in capitalism.””
A New Age for the Catholic Church in Cuba? From Survival to Planting Seeds
www.patheos.com
This posting by UNC-Chapel Hill sociologist Margarita Mooney provides a fascinating history of the Catholic Church in Cuba since the Cuban Revolution of 1959. I also highly recommend listening to the related “Research on Religion” podcast located at http://bit.ly/JCHiHd…
xkcd.com
“It’s weird how proud people are of not learning math when the same arguments apply to learning to play music, cook, or speak a foreign language”.
Time to make a moral case for free enterprise
washingtonexaminer.com
This article is excerpted and adapted from AEI president Arthur Brooks’ book “The Road to Freedom: How to Win the Fight for Free Enterprise”.
Taylor on monetary and fiscal policy history
cafehayek.com
“The latest EconTalk is John Taylor giving his take on the last four decades of fiscal and monetary policy in the United States.” This non-technical, 1 hour-long presentation of the economics of fiscal and monetary policy by Stanford economist John Taylor also provides a very interesting historical narrative of the last 50 years of American economic and political history!
Sitting Out Obama
www.nationalreview.com
Quoting from this article NRO’s Victor David Hanson, “The president has investors scared stiff… the more the government seems to take over private enterprise — the car bailouts, the mortgage industry, student loans, wind and solar partnerships — the more private enterprise is frightened of being the next small guitar company or the next Chrysler creditor.”
Virginia Could Be an Energy Power—If Only Washington Would Let It
professional.wsj.com
“In The Wall Street Journal, Gov. Bob McDonnell writes that in 2010, Virginia was poised to become the first on the East Coast permitted to produce oil and natural gas offshore—then politics intervened.”
Obama and the bin Laden Bragging Rights
professional.wsj.com
“In The Wall Street Journal, former U.S. Attorney General Michael Mukasey writes that it is hard to imagine Lincoln or Eisenhower claiming such credit for the heroic actions of others.”
Education Is the Key to a Healthy Economy
professional.wsj.com
“In The Wall Street Journal, George P. Shultz and Eric A. Hanushek write that if we fail to reform K-12 schools, we’ll have slow growth and more income inequality.”
Government doesn’t give tax cuts, it takes more or less taxes
keithhennessey.com
“To make a balanced decision you need to incorporate the harm done by taking money from someone.” Interesting and informative points on the economics of tax cuts from Stanford University’s Keith Hennessey.
www.washingtonpost.com
“Obama stands idly by and embarasses the nation.” The latest missive from the Washington Post’s Charles Krauthammer…
Chile’s Cautionary Lesson for Americans
online.wsj.com
“In The Wall Street Journal, Americas columnist Mary Anastasia O’Grady writes that a free economy is at risk when a demand for equality is not answered by a defense of liberty.”
Stop Telling Students to Study for Exams
chronicle.com
According to this Chronicle of Higher Education article, I should refrain from telling my students to study for their upcoming final exam, since by so doing I apparently “… communicate to students that the process of intellectual inquiry, academic exploration, and acquiring knowledge is a purely instrumental activity—designed to ensure success on the next assessment.” My bad!
online.wsj.com
“In The Wall Street Journal, Potomac Watch columnist Kimberley Strassel notes Barack Obama’s attempts to intimidate contributors to Mitt Romney’s presidential campaign.”
Does Government Have a Revenue or Spending Problem?
www.youtube.com
“People say the government has a debt problem. Debt is caused by deficits, which is the difference between what the government collects in tax revenue and the amount of government spending. Every time the government runs a deficit, the government debt increases. So what’s to blame: too much spending, or too little tax revenue? Economics professor Antony Davies examines the data and concludes that the root cause of the debt is too much government spending.”
The President’s Incoherent Economic ‘Philosophy’
www.nationalreview.com
“Whatever he’s for, apparently it’s not a free-market economy.” Quoting further from this article, “The key (to long-term economic growth) is to embrace a strong free-market economy with stable monetary policy, free trade, low marginal tax rates, a tight rein on government entitlement promises and regulations, and narrow deficits. The president’s plan touches on none of this. He has proposed no serious tax reform or deficit-reduction package. He is, at best, reluctant to promote free trade, for fear of offending his union base. And, on entitlements, he has taken the largest expansion in a generation and piled that on top of the unaffordable programs already on the books.”
How the Fed Favors The 1%
professional.wsj.com
“In The Wall Street Journal, Mark Spitznagel writes that the Fed doesn’t expand the money supply by dropping cash from helicopters—it does so through capital transfers to the largest banks.”
God and Man in Tennessee
www.nytimes.com
“By politicizing our faith, lawmakers are ignoring Tennessee’s true religious roots and threatening the liberties they claim to protect.”
Assorted Links (4/28/2012)
Here’s a list of articles that I have been reading lately:
Freshman Class President
online.wsj.com
“The Wall Street Journal argues that President Obama rocks the youth vote by socking taxpayers.” This is an important part of the news that President Obama didn’t slowjam the other night on the Jimmy Fallon show (see http://bit.ly/Jy1VWe for the YouTube slowjam video for context)…
Congress Finally Takes on the Fed
professional.wsj.com
“In The Wall Street Journal, George Melloan writes that the Federal Reserve’s near-zero interest rate policy has punished savers without producing a strong recovery. Two bills in Congress would rein in the central bank.”
How the Swiss ‘Debt Brake’ Tamed Government
professional.wsj.com
“In The Wall Street Journal, Daniel J. Mitchell notes government spending in Switzerland can’t increase by more than trendline tax revenue, and as a result government debt levels have fallen in the last half decade.”
The Age of Indiscretion
professional.wsj.com
“Daniel Henninger on GSA partiers in Vegas and Secret Service revelers in Cartagena make it clear that discretion is dead.”
Why Women Make Less Than Men
online.wsj.com
“In The Wall Street Journal Kay Hymowitz writes that in studies from the U.S. to Sweden In studies from the U.S. to Sweden, pay discrimination can’t explain the earnings gap between women and men. Women earn less because they work fewer hours.”
Gasoline-Futures Prices Tumble 16 Cents in Last Week, Due to Market Forces
mjperry.blogspot.com
“The price of gasoline is actually being determined by market forces, specifically an increase in the supply of oil, and not by speculators.”
A Black Box in Your Car?
blogs.wsj.com
Quoting from this article, “The Senate passed a bill in March that calls for “mandatory event data recorders” (or black boxes) to be installed in all new passenger motor vehicles, starting with the 2015 models… The bill… has a privacy provision but gives the government the authority to access the black box in a number of circumstances, including court order, consent of the owner, an investigation or inspection, or to determine the need for emergency responses.”
Coursera
www.coursera.org
“We offer courses from the top universities, for free. Learn from world-class professors, watch high quality lectures, achieve mastery via interactive exercises, and collaborate with a global community of students.” Coursera has a pretty impressive array of university courses available from places like Princeton, Stanford, University of California (Berkeley), University of Michigan, and University of Pennsylvania, on topics such as computer science, economics, finance, history, humanities, life sciences, statistics, and so forth. They’re all available for free – the only “cost” is the time required to actually sit through a course! :-)…
Obama’s Budget Means a Tax Increase on Everyone
professional.wsj.com
“In The Wall Street Journal, Glenn Hubbard writes that maintaining the president’s higher spending levels will require raising taxes for all Americans, including an 11% increase on those earning less than $200,000.”
professional.wsj.com
“In The Wall Street Journal, Fouad Ajami writes that a no-fly, no-drive zone on the border with Turkey would critically alter the terms of engagement. Everyone is waiting on Washington’s leadership.”
Wal-Mart Innocents Abroad
professional.wsj.com
“In The Wall Street Journal, Business World columnist Holman Jenkins writes about the allegations that Wal-Mart paid bribes to local bureaucrats to get permission to expand rapidly in Mexico, noting that multinationals in an unfamiliar market face a choice: Play by the local rules or change the rules…” Coincidentally, a couple weeks ago Texas A&M finance professor Scott Lee presented a very interesting empirical paper at Baylor entitled “The Impact of Anti-Bribery Enforcement Actions on Targeted Firms” (see http://bit.ly/JAafFI); Professor Lee and his coauthors find that firms prosecuted for foreign bribery under the U.S. Foreign Corrupt Practices Act (which is the law that is in play in the case of Walmart) experience significant costs in terms of declines in share values.
Obama’s College Tour
reason.com
“The students and professors may be cheering on campus, but there are plenty of people in the private sector who are getting tired of paying for them.”
America’s entitlement spending problem (part 1)
keithhennessey.com
Interesting and informative exegesis of the Reports of the Social Security and Medicare Trustees (see http://1.usa.gov/hgI6Fr), from Stanford University’s Keith Hennessey…
Solyndra, Inc. and the United States Department of Energy
iowahawk.typepad.com
“Congratulations to this erstwhile “public-private partnership” for showing the rest of us how to isolate energy waste… then supersize it!”
xkcd.com
Nerd alert: A table of “slightly wrong” equations and identities useful for approximations from the good folks at xkcd.com; I particularly like the algorithm for estimating the world population…
The amazing stock-picking robot
newswires-americas.com
“It’s amazing the Securities and Exchange Commission would have to waste its time shutting down such an obviously fraudulent pitch like this.”
Rural kids, parents angry about Labor Dept. rule banning farm chores
dailycaller.com
According to this article, the US Department of Labor apparently wants to ban farm kids from doing farm chores. I am glad that these “rules” weren’t in place when my father grew up on a family farm, since the experience was very formative for him and helped instill a remarkably strong work ethic which subsequently set the stage for a wonderful set of educational and work opportunities that my entire family has since enjoyed.
online.wsj.com
“In The Wall Street Journal, Business World columnist Holman Jenkins asks: Why is it in America’s interest to persuade the rich to report less income?”
www.theeuropean-magazine.com
“A country’s decline begins only when initiative and excellence are no longer valued by society. The US middle class is not exploited by the free market but by the rhetoric of redistribution and fairness that has taken hold in America.” Cato’s Roger Pilon opines on the nature and consequences of “natural” and “forced” (or coerced) inequalities…
A 50-State Tax Lesson for the President
online.wsj.com
“In The Wall Street Journal’s Cross Country column, Arthur Laffer and Stephen Moore write that over the past decade, states without an income levy have seen much higher growth than the national average. Which state will be next to abolish theirs?”
The Great California Exodus
online.wsj.com
Quoting from this article, “Nearly four million more people have left the Golden State in the last two decades than have come from other states… most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families… the state is run for the very rich, the very poor, and the public employees.”
The Tragedy of Argentina
professional.wsj.com
“In The Wall Street Journal, Pierpaolo Barbieri writes that commentators on Greece are drawing all the wrong lessons from his homeland’s tragic default.”
City of Austin studying whether to end outsourcing, despite higher costs
www.statesman.com
“Austin is taking a hard look at whether the city should curtail outsourcing of municipal jobs and appears poised to go the opposite way of communities elsewhere that have turned jobs over to contractors to cut costs.” For a cautionary tale concerning unintended consequences of public policy (in this case, the possible implementation of a “living wage” policy by the Austin City Council) be sure to watch http://www.youtube.com/watch?v=8ioHIlPgOS4&feature=player_embedded for a compelling story concerning how a similar initiative in our nation’s capital worked out (in this case, “insourcing” the job of escalator repair). Tip of the hat to my good friend Spencer Case for pointing this remarkable video out to me.
Gas Futures Point to Pump Relief
professional.wsj.com
“After a sizzling start to the year, gasoline futures prices are sliding, easing pressures on drivers and the U.S. economy and raising the prospect that prices at the pump could be headed lower still.” Horrors, the “speculators” who were called out recently by various and sundry politicians for driving gas prices higher apparently have changed their minds and now want gas prices to be lower! All cynicism aside, this article notes that the reason WHY gasoline futures prices have fallen 6.3% from their high for the year (reached on March 26) has everything to do with “fundamentals” in the “spot” market for oil and gas. Specifically, “… the price of crude oil that gets refined into gasoline has dropped a similar amount amid easing tension over Iran, the world’s fourth-largest oil producer.”
professional.wsj.com
“In The Wall Street Journal, Jim Sollisch writes most of us are walking around with a spare part that 90,000 people need.” This is an inspiring story; perhaps stories like this may raise greater public awareness and interest in alleviating critical organ shortages and improving patient welfare within the constraints of the current social and legal environment; e.g., see Roth et al., “Kidney Exchange” 2004 Quarterly Journal of Economics (available from http://kuznets.fas.harvard.edu/~aroth/papers/kidney.qje.pdf)…
Obama’s Seinfeld Strategy
professional.wsj.com
“The Wall Street Journal on the President’s call to hang the evil oil speculators, if anyone can find them.”
It’s 1936 All Over Again
professional.wsj.com
“In The Wall Street Journal, Wonder Land columnist Daniel Henninger writes that the Obama 2012 campaign is channeling the ghost of Franklin D. Roosevelt in the Depression.”
Cracking Down on Oil Market Manipulation
www.whitehouse.gov
“President Obama announces a new series of steps to strengthen oversight over the energy markets.”
Last Saturday marked the one year anniversary of the creation by the Obama administration of the “Financial Fraud Enforcement Working Group” (see the MSNBC article from 4/21/2011 entitled “Obama says new task force will examine gas prices”, available on the web at http://on.msnbc.com/JdlbDx). The article referenced above (entitled “Cracking Down on Oil Market Manipulation”) is from the White House blog and is dated 4/17/2012.
While the notion that “high” gas prices result from “price gouging” by a cadre of unsavory and greedy oil companies, energy traders, and speculators makes for a provocative political narrative, it’s really bad economics. As canards go, this one is particularly favored by politicians; indeed (as you can see from the time-date stamps of the April 2011 MSNBC and April 2012 White House blog articles), you can almost set your watch on these kinds of things.
I wrote a blog posting about the economics of “high” gas prices on April 23, 2011 (source: http://blog.garven.com/2011/04/23/is-gas-price-gouging-to-blame-for-high-gas-prices), and many, if not most of the points I raised in that article are as applicable today as they were then (now the geopolitical risk du jour is Iran; back then it was Libya)…
Is Our Adults Learning?
Yesterday, David Brooks published an interesting essay in the New York Times entitled “Is Our Adults Learning?” The basic premise behind his essay can be summarized in the following quote, “Government doesn’t profit from experience because of the way it goes about testing its policy problems. It should try learning the way businesses do.”
My purpose in posting this commentary on Brooks’ article is to challenge his presumption that it’s even remotely possible for the government to conduct itself like a business. Avinash Dixit’s 1997 American Economic Review article entitled “Power of Incentives in Private versus Public Organizations” provides the framework for my critique. In this (admittedly somewhat dated) academic journal article, professor Dixit takes on an earlier version of Brooks’ ideas as exemplified in Al Gore’s 1995 tome entitled “Common sense government”. In this book, Gore argues for “reinventing” government by measuring and rewarding “results, not red tape.” However, Dixit shows that the problem with Gore’s and Brooks’ platitudes about getting the government to act more like a business is that these “theories” fundamentally ignore the nature of government bureaucracy. Dixit argues that “a distinct feature of government bureaucracies is that they must answer to multiple principals”, and he goes on to “… develop a model of a common agency to show how the interaction among many principals results in a loss of the power of incentives.” To illustrate this, Dixit notes that in the real world, a government agency may be formally answerable only to the executive, but in practice Congress, courts, media, and organized lobbies all have a say. He notes that one way to resolve this “weak incentive” problem at the federal level is to devolve political power to states or localities, where “…agencies can be so designed that each performs fewer tasks, thus reducing the externalities among the principals affected by its actions.” So basically Dixit rigorously proves with the game theory the wisdom behind federalism!
In closing, it would seem that the least likely place for “decentralizing policy experimentation as much as possible to encourage maximum variation” to be successful would be at the level of the federal government. The weak incentive problem identified by Dixit explains why government agencies are typically focused on red tape, and not results; it’s all about process and procedure, and rarely ever about results.