A New Era of Social Change...? You have not outgrown your imagination. Don't allow anyone who has lost imagination tell you that you don't live in interesting times. You have heard the chimes at midnight, and the times you will soon see are exciting indeed. "Sabine Herold" -- her picture shown above -- is the name of a social revolution now sweeping France. Margaret Thatcher? Joan of Arc? She's both. Her speeches call for fundamental political change first in France, then possibly in all of Europe. This is freely adapted from this google translation of Sabine Herold's Sunday June 15 speech depicted above: My dear friends, My name is Sabine Herold. How many of us are here today! More than I could have hoped a month ago, when strikes were everywhere and the media was predicting a total national shutdown. Our message has moved through France like a jetliner's vapor trail! A Million French Citizens realized in less than two weeks that things had changed, that we will never again be impotent hostages. We are united to recall the values of our Republic to those who ridicule these values: Freedom, Equality, Fraternity. Three words which summarize the Rights of Man against modern tyranny and privilege. What remains of our Republic's grand mission? Who can believe France is now a country of Freedom? How can "freedom" allow your professor to deny you a final grade? Can we call it "freedom" when our trains and airplanes are regularly and endlessly paralysed? Who can believe France is a country of Equality? When the State maintains indecent pension privileges just for public employees and those of large public companies, where is the Equality? Why should the public sector enjoy privileged retirement benefits denied to comparable workers in the private sector? Dear friends, I invite you from now on to enter in active resistance against undeserved privilege, to defend principles we cherish together. For the return of Freedom, for Equality, for Fraternity -- we will continue to fight! More from ChicagoBoyz, negative stuff here, and we will soon be hearing more about this, I assure you.

Link posted by Steve Antler : 1:00 PM

What does it take to define a nation? My inexperience in matters European is criticized by correspondent "Paul." Informed by the history of New Europe, he writes my faith in the falling dollar's restorative powers is completely misplaced: ...I do not believe in the benefit of weak currencies. History shows that weak currencies have been associated with weak countries, and that this combination rarely resulted in anything good. I am for a strong dollar. As an alternative, we could consider adopting the Euro. (If nobody has yet advanced this idea, remember you heard it first from me.) This would eliminate any exchange advantages or disadvantages when trading with the EU, and we could then measure the results in purely competitive terms (price, quality, and service). Frankly, I laughed this off. "Clearly the guy doesn't understand export prices," I thought dismissively. But monetary union is an old idea that just won't die. It may be the next big thing. Consider what Bartley is saying in today's WSJ: ...if the euro can replace the franc, mark and lira, why can't a new world currency merge the dollar, euro and yen? The euro's recent recovery against the dollar almost certainly establishes its credibility as a permanent currency. While major eurozone economies remain troubled, practically no one so far is blaming the European Central Bank. This suggests success for the grandest reform of all, a supra-national central bank. The ECB Executive Board and Governing Council could yet become political targets, of course, especially if much-discussed deflation actually sets in. But even with strikes in Germany and France, few politicians seek a way out in a little more inflation or currency depreciation; few complain about the loss of "monetary sovereignty." World money, with a world central bank, seems a next logical step. How are we to think about this? Try this approach. What is the essence the concept "nation?" If we had to list all the features of "nation," what would be left if we discarded everything that could be taken away? Culture, language, history, all that stuff can get thrown out -- just two and only two features remain on the list. The first is simple border -- an enforcible physical boundary. The second is currency -- an enforcible economic border. So what must be discussed, it seems to me, is whether monetary union is genuinely "rational" or part of the irrational and highly suspect elitist European political movement that's come to be called transnational progressivism. If this makes me sound like the old wacko John Birch Society guys who ranted against the U.N. and the dangers of upcoming world government -- well, I guess I'll just have to live with it.

Link posted by Steve Antler : 10:36 AM

It's getting old... I think the German titles are getting a little used up, but this one should have been named something like "Warum hassen sie uns?" Thanks to our European Correspondent at SadlyNo, we can say the answer (die Antwort) is: UPDATE: Consider these opening words (How many times have you heard them or similar?) from Mort Zuckerman's latest: Did you know that the United States is the only industrialized nation that still doesn't provide its senior citizens with comprehensive insurance coverage for prescription drugs? The above tax-freedom-day chart as well as this (link via BB in context of upcoming post) suggest Europe has to provide its seniors comprehensive insurance coverage because taxes are so high they can't afford to buy it!

Link posted by Steve Antler : 8:27 AM

Energy Lots of great stuff at Capital Spectator, especially the continuing saga of American energy: Readers of the Capital Spectator are familiar with our repeated essays on the prospects of a looming natural gas shortage. Inspired by research from Simmons & Company, an energy-oriented investment bank, we've said for some time now that natural gas supply might be constrained relative to the future path of demand...If natural gas promises to be another thorn in the side of the U.S. economy, at least the process won't be mysterious. A generation of denial and ill-advised energy legislation on the subject of crude oil is the legacy of the last several decades. Will it be the same for natural gas going forward? Or, have we—Congress, in particular—learned anything about the intersection of energy and markets in the last 30 years? I woke up the other night all worried by this -- Nuclear generation for electricity has to be done on a centralized basis. But natural gas can flow right to the home/factory to be used right there for heat/cooling/etc. Why are we using any natural gas to make electricity?

Link posted by Steve Antler : 8:14 AM

Sunday, June 29, 2003

Here it is I finally found a link to the National Do Not Call Registry. Don't you think the point is, if you don't register, you'll get more calls because everyone else did register? But then again maybe all the telemarketers can decipher the handwriting on the wall and will go out of business and you'll get fewer calls anyway, even if you don't register, meaning you get the benefit anyway? I just can't decide... You may want to consult Arnold Kling on the subject.

Link posted by Steve Antler : 3:48 PM

In Memoriam PunditWatch On FOX NEWS SUNDAY, guests are Joe Biden and Jon Kyl. Biden called for 30-60k more troops in Iraq, preferably NATO troops. Exact quote: “– NATO, NATO, NATO…We’ll be in Baghdad for a decade.” Kyle: "Saudi money has facilitated Wahbbi infiltration of US schools, Mosques, prison clergy, even military clergy." Bill Kristol, during panel: “Supreme Court has put us on the path of ceasing to distinguish in our public life, in our public law, between heterosexuality and homosexuality in any way...{I]t is entirely possible that five years from now marriage will be privatized in the sense that it will be a strictly private contractual arrangement – a contract that the state recognizes – and anything deeper will move to the private, religious sphere -- and this may not be such a bad thing.” ABC THIS WEEK: Bill Frist joins the call for more troops in Iraq: "We need to involve the world, the globe, because we’re talking about freedom around the world." George Will predicts: "It took about three month to ratify the 18-yr-old vote amendment. Enshrining heterosexual marriage in the Constitution will go just as fast." George Will on Gray Davis: "California recall law institutionalizes buyer’s remorse…any Republican replacement will wind up taking over a train wreck. MEET THE PRESS: Rudman and Metzl on the upcoming Report of the Independent Task force on Emergency Responders. And, finally, Fun with Carville and Matalin: Carville: This administration has two answers, one domestic, one foreign: tax cuts and belligerence. Our new poll shows 40% of Americans want a “significantly different foreign policy direction than this Admin is taking.” Matalin: Security is more important than popularity around the world. Your poll seems to show 60% of the American public is on our side, by the way. Russert's pop quiz: What will be the defining issue in the next election? Carville :”Opportunity for everyone, not just top 1%." Matalin: "National, economic, homeland, and next-generation security."

Link posted by Steve Antler : 1:09 PM

Can't we do better? Is the entire matter really as petty, personal, self-satisfied, and unimportant as this?

Link posted by Steve Antler : 10:11 AM

Kleinere Besteuerung wohlhabenderer Individuen? Details! We demand more details! UPDATE: Thanks to SadlyNo, here are the details:

Link posted by Steve Antler : 8:51 AM

Sad Story from my Neighborhood

Link posted by Steve Antler : 7:23 AM

Over There We posted these numbers on June 24, in connection with the Boskin "antibonds" story. ====================================================== ------------------------------------------------------------------------------------------ GOVERNMENT DEBT AND PENSION LIABILITIES AS PERCENT OF GDP (1990) ===net conventional debt=======net pension liabilities CANADA===52================121 GERMANY==22================157 ITALY====100================259 UK=======27================156 US=======35=================90 ----------------------------------------------------------------------------------------------- Source: Essays on Pension Reform, Max Alier PhD Thesis, University of California LA, 1997; quoted in R.E.A. Farmer, Macroeconomics, South-Western, 2002, p. 162. ===================================================== And now, the NYT has discovered certain inherent contradictions in the European welfare state: But more important in Germany, as in the rest of Europe, is the rapid growth in the numbers of the elderly. In 1950, 30 percent of the German population was under 20 and only about 2 percent was over 80. By 2050, under-20's are expected to be only 16 percent, while the over-80's are estimated to reach about 12 percent...The solution being recommended by the pension reform commission is to reduce the pension amount from 70 percent of the average national salary to less than 60 percent...That is a large drop in a country where 80 percent of pension income comes from the state, but few experts see any hope that this reduction can be avoided. So the next time John Kerry starts droning "the US is the only major industrial country that bla bla yadda..." and "...in Europe they bla bla bla..." ask him whether he shouldn't maybe reexamine his views on the European welfare state?

Link posted by Steve Antler : 6:45 AM

"If we really sold that many can openers they have to be buying more tuna!" The mysterious Tania sends us this link to Salon -- Cave on Liebowitz, who says the numbers just don't add up properly: The problem is that the number of downloads appears to be larger than the total number of CDs purchased. Worldwide annual downloads, according to estimates from places like Webnoize, would indicate that the number of downloads -- if you assume there are 10 songs on a CD -- is something like five times the total number of CDs sold in the U.S. in a year, and one-and-a-half times the worldwide sales. That's so large that you have to say: Look, if downloads are substitutes [for CDs] in any significant way, we should see really big declines -- unless there's something else going on. The reason I gave in the paper is that maybe people aren't shifting their music [from MP3s to CDs]. But I've also seen some recent numbers on households that have CD writers, and it's something approaching 30 percent. We should see an impact. There's a 5 percent decline in CD sales this year, but that's what you might expect in a recession. So we're still not seeing much. And what I'm beginning to suggest now is that perhaps people aren't going to replace the purchase of CDs with these MP3s

Link posted by Steve Antler : 6:09 AM

Saturday, June 28, 2003

Just in case you missed this... Check out Shelby Steele in today's WSJ: A remarkable feature of this opinion is the way it ignores the vast array of contradictions and unintended consequences that attach to affirmative action--a few of which are its racial divisiveness, its stigmatization of blacks as inferior, its facilitation of identity politics, its encouragement of a victim-focused identity in minorities, its reverse discrimination against whites and Asians, its preference for precisely the least needy minorities, its damage to the principle of excellence, its fostering of a parasitic diversity industry, its cynical refusal to allow the best and brightest minorities to compete openly with their white and Asian counterparts, its flouting of the Constitution's equal protection clause, and of course its utter failure to close the academic gap between whites and blacks. Because the decision should be considered in the broadest possible context, now would be a good time to check out John Fonte's theory of postdemocratic transnational progressivism, especially if you missed it the first time around.

Link posted by Steve Antler : 10:22 AM

More on "Klassenkampf über alles anderes" Ask yourself which prices have been rising and which have been falling in the past decade? Computers, televisions, autos -- prices here are more or less stable. Insurance, tuition, medical/dental -- prices here are on the move up. Two things account for the contrast. First, computers and autos are easier to trade internationally than insurance or medical/dental. Yes, there is an internationail market for virtually everything now, but some markets are better-organized than others, and the international market for services is always tough compared with hard, shippable/storable goods. More competition (especially international competition) means lower prices. Second, with economic growth there is always an upward price bias for services as compared with all other goods, because productivity gains in the service sector take place very slowly (or possibly not at all). The classic example is the barber: yes, you can make him more efficient in some ways, but you can't create time and there are a limited number of working hours in a day. Per workday hour, today's barber can probably give the same number of haircuts as could his counterpart back in the middle ages. What does this mean? As time goes by and techology moves forward, even though we get "better" at producing everything, we get relatively better at producing hard goods in the non-service sector than services. Services get more expensive compared with everything else, in other words. This is why some prices are rising and others are falling -- why health care is so expensive, but an HDTV can be found for $500, and why, in an earlier era, appliances replaced butlers and maids. It constitutes part of the explanation of why prescription drugs and new diagnosticss are coming to be such an important part of health care. And, one suspects, under everything it constitutes the rationale for 29 CFR Part 41, the Department of Labor's proposed changes in overtime definitions for certain service sector workers. In highly industrialized economies there is a kind of inherent Klassenkampf between hard goods and services including government. The proposed new regulations are, therefore, perfectly consistent with an administration trying to bring the size of government under control. "Bloated government" is only one part of the general problem of a continually "bloating" service sector. UPDATE: Quick-and-dirty verification: Source:Economagic ADDITIONAL UPDATE: The data graphed above may support the argument "too much." I selected the index of employment costs in goods producing industries excluding sales expenses. ("Sales" is a "service," right, so exclude it? No?) I'm not sure how kosher it is to simply exclude sales for the goods producing but not the service sector. (I was, effectively, treating all goods-sector sales as"out-sourced" to the service sector since that part of the activity is service. This may be okay but I want to think about it more.) To keep everything on the up-and-up, here's a plot of goods producing and service sectors with sales included on both sides. Source: Economagic Less dramatic, but the data do in fact verify the "service bloat" thesis. We can see this if we plot the services employment cost index against the goods producing industries employment cost index: Okay, there you have it. Slightly negative intercept, slope slightly greater than one. Service sector employment costs do rise faster than those in the goods producing sector.

Link posted by Steve Antler : 9:02 AM

Remember the market and hemlines? Bill Hobbs has information on new version of the renowned relationship between stock prices and the length of ladies' skirts. More than this I can't say. And by the way, talk about clearing out and leaving more room in the ecological niche! Glenn Reynolds goes on vacation, and all of a sudden Hobbs finds something in his tip jar? Gimme a break!

Link posted by Steve Antler : 7:19 AM

Friday, June 27, 2003

Kindischer Klassenkampf We can only hope the next election addresses the childish left-Democratic politic of class struggle typified by the last post. The notion that changing overtime rules "would create, in effect, a massive subsidy to employers paid for by their employees" operates at something like a sixth grade level of economic sophistication. The world is reduced to workers (good) and employers (bad) who get everything the workers don't (Marx). Real world distribution is complicated and subtle, full of direct, indirect, and even-more-indirect effects. Prices, market shares, costs-of-living, aggregate job opportunities, relative positions of poorer versus more affluent workers, and international trade flows are just a few of the important variables influenced with changes in taxation or regulation. The overtime wages of workers in service industries constitute part of the cost of living of workers in all other industries -- one of the reasons American hourly labor costs are highest in the world. Theoretically, at least, holding the line on labor costs in service industries expands job opportunities for workers in goods-producing industries by making them more internationally competitive. Sure, the impact is small and subtle. But recognizing that which is small and subtle is one aspect of being a grownup. Sooner or later Republicans must address these and similar complexities with more than the counter-slogan "class warfare." I suspect they must start identifying Klassenkampf as what it essentially is: stupid, and childish.

Link posted by Steve Antler : 12:42 PM

Klassenkampf über alles anderes Matt Bivens at The Nation provides us with this daily outrage: Nurses, tech workers, military reservists, cooks, fire fighters and dental hygienists are among millions of people who -- if the White House has its way -- could find themselves working overtime hours minus the overtime pay, as early as this September. That's according to a study, released today by the D.C.-based Economic Policy Institute, of the Bush Administration's plan to rewrite the overtime rules. A co-author of EPI's report -- Eliminating the Right to Overtime Pay -- says the White House plan "would create, in effect, a massive subsidy to employers paid for by their employees." America's largest union, the AFL-CIO, echoes that: "These overtime pay cuts are like a giant new tax on working families by a president who, at the same time, works hard to give tax breaks to millionaires." Go to the original article for links to everything except pertinent information like this: Source: Morimoto, Hirata, Kato: "Global Disinflation", fig. 14 (Thanks to BB -- more on Global Disinflation to come. See post above for small, subtle relationship between wages in manufacturing and service industries.)

Link posted by Steve Antler : 11:52 AM

Tempers flare when temperatures rise? DeLong: "Andrew Sullivan is simply and totally clueless about what America is." Sullivan: "Brad DeLong is sometimes a classic example of the arrogant liberal...Am I being touchy...or is there a soupcon of nativist hostility [as well]? Do we add a touch of homophobia to the nativism?"

Link posted by Steve Antler : 10:33 AM

On the Street We've arrived at a wise, focused, and knowing anger, Says Victor Davis Hanson: The American Street is in a strangely revolutionary — read "fed-up" — mood. It is growing distant from Europe. It is angry with the Arab world especially, and it is tired with South Korea — and most whiny nations that either take billions of dollars in direct American aid or ankle-bite under the aegis of American arms. The result is something new and unexpected. The Street's anger is seeping upwards, right through the heavy, stagnant, and dumb layer of press and media. Now things must change rapidly as leaders from left and right learn what their followers now know: The general public at last understands this post-Cold War teenager syndrome — that perpetual dependency creates envy and jealousy. After all, we would find it strange if our own American teenagers were to wear German T-shirts, play French music, and watch Belgian videos as they painted anti-European graffiti on our walls and their parents in New York sued Chirac or Kohl for European criminal neglect in the Balkans. Our own senators and representatives do not engage in German bashing while the Luftwaffe has 100 jets parked outside of Washington protecting our eastern seaboard. It all reminds me of a Greek hotelier — replete with American Ray-bans and Eminem blaring in his portable CD player — this week who snapped at me that Americans were all over the globe sticking their noses in the business of innocent others like poor Mr. Milosevic — but lamentably not as tourists coming to Greece as in the past. There is common ground between liberals and conservatives to start downsizing from places like Saudi Arabia, Germany, South Korea, Turkey, and as much of Western Europe as possible. The former either fear the label of imperialism or, as in the case of the Gulf, don't like us propping up corrupt governments. The latter are more hard-headed, and see only increasing costs — political, monetary, psychological — with decreasing benefits. History is happening, read the whole thing. UPDATE: Hanson's concern re. systematic immigration is voiced in the last part of the article. You might also wish to look at this commentary, sent in by Dagmar.

Link posted by Steve Antler : 10:05 AM

Kudlow's Got It! The first appearance of the next big thing appears in Kudlow this morning. He's said similar things before: Most supply-siders disagree, but Alan Greenspan & Co. should turn the money spigots wide open that day — more than they have thus far in this reflation cycle. I'm talking about shock-and-awe level accommodation from the Fed. and even more recently: ...in order to wean themselves off funds-rate targeting — which tends to destabilize the economy more often than not — the central bank could announce that henceforth it would conduct open-market operations through the purchase or sale of Treasury notes and bonds. but what I like in the new Kudlow is his move towards the old, rough, post-Keynesian language of the 1980's money critics: ...Arthur Laffer and Robert Mundell...argued for monetary restraint as a cure for inflation and significantly lower tax rates to produce an economic recovery. This supply-side mix is just as important today. The cure for deflation is monetary expansion...This week's action by the Fed seems to suggest that they will not be raising their target interest rate for a long time. This should mean that open market operations will keep the money spigots wide open. If so, this is very good news. and this should help us accept the important new idea -- the "I" word isn't always a profanity. AUTHOR'S MESSAGE: What the goods-producing sector now needs (from the vantage point of small Midwestern manufacturers, at least) is the crazy unpredictability of early-onset mild inflation.

Link posted by Steve Antler : 8:37 AM

Yet Another Logical Final Outcome? One party is businesslike, able to dispassionately weigh opposing interests and alternate viewpoints. The other demonizes “all things business” -- including, most of all, their opponent's businesslike approach. One party reminds you of that stuffy old 1950’s school principal you either knew or first learned about in films like “Back to the Future.” The other reminds you of his most discipline-challenged students – you know, the ones who thought the funniest thing in the world was a fart? One party uncomfortably but steadily houses disparate beliefs, quietly moving its coalition forward as if to prove the impossible -- rule-of-law Democracy can work. The other, constantly challenging and changing rules through litigation or angry manipulation of parliamentary procedure, carries forward a never-ending crusade for what it defines as justice. In short, we have the boring grown-ups and the fun kids. And what, we ask, is the logical-historical outcome? Uh, I don't believe it! The outcome is predicted by -- I NEVER would have guessed! -- the very same Paul Krugman HIMSELF! And what does he say will happen? The result is ONE PARTY RULE!!!!! AAARGH!!!! Noooooooooooo !!!!!!!!!!!!!!! UPDATE: And please, once you regain your composure don't forget to check out Luskin's Krugman Truth Squad report on this!

Link posted by Steve Antler : 7:26 AM

Thursday, June 26, 2003

A Logical, Final Struggle? Earlier this week I attended a lecture by Ronald Coase. The audience was small, the lecture informal, and the topics wide-ranging. His description of early policy justifications for a fully regulated BBC was riveting. It left me feeling I had never really known the true meaning of the word "elitism." If broadcasting is left to the whims of the marketplace, said these pioneers of regulation, the public might get what it wants rather than what it ought to have. One can't help connecting this to current Democratic discomfort with talk radio and Fox News. Also, one can't help thinking that this story shows the logical outcome of the British regulatory model. UPDATE: Kikuchiyo News reports: The BBC is being accused of bias by top folks in the labor government. The fiasco began with reporting on Iraq WMD, but on the World Tonight program today it seems like a general brawl in breaking out. UPDATE II: This report, pointed to by Andrew Sullivan, seems definitive: We consider that this report shows conclusively that the BBC’s claim to provide impartial news coverage is unsustainable. Our two earlier reports... showed that the BBC’s coverage of the Middle East was infected by an apparent widespread antipathy towards Israel. However those reports were based almost exclusively upon a comparison of the media treatment of the Israelis and Palestinians. This current study, which compares treatment of Israelis with that of coalition forces, suggests that the partiality of the BBC’s reporting quite possibly infects its coverage of all politically sensitive issues...The British public continues to pay for this partial and inaccurate news service through the licence fee. We wonder whether it is healthy for Britain’s democracy that such huge public funds should be provided to what is an essentially monopolistic and unaccountable body. The BBC cannot provide impartial news coverage. It has no legitimate call on public funds when they are used simply to promote the BBC’s own prejudices. Same source points us to this as well.

Link posted by Steve Antler : 10:06 PM

The Pros Observe the Dems Bartlett continues in the great neo-Marxist Edsall tradition -- from the McGovern reforms onward, analyzing the Democrats from the ground up, on the gritty foundation of the base's organizations and interests, not its ideology. Bartlett's prediction? It's almost certainly Dean: We will know better in a few days when MoveOn.org announces the winner of its online primary, which started on June 24 and runs for 48 hours. I expect Dean to win handily, which will give his campaign a big boost by anointing him as the official choice of the Democratic party’s left-wing base. Being collectivists by nature, I think this will put a lot of pressure on movement leftists now supporting other candidates to get on board with Dean...Consequently, I believe that Gov. Dean’s chances of getting the Democratic nomination are good and getting better by the day. Professional political handicappers disagree, but I think they are looking at the wrong things. They think that things like fundraising and general-election electability will ultimately determine the nomination. But what Gov. Dean may lack in these areas he more than makes up in the intensity and loyalty of his supporters. As in 1964, I think this may end up being the determining factor. This misses not a beat -- with the exception of an offputting subtlety we saw Sunday morning when Dean angily declared Russert's tax numbers false. On this one, check out Andrew Sullivan : I know from observing [Howard Dean] and debating him once that he's an intemperate, arrogant bully...It's a trait bad doctors have. They are used to being in such controlling positions vis-a-vis their patients that it goes to their heads. Good doctors resist such an obvious temptation. Okay, let's put this all together and think about it. How much does being an intemperate, arrogant bully decrease Dean's chances of winning the Democratic nomination? Gee, I'm not exactly sure. Um, lemme see now...

Link posted by Steve Antler : 8:49 PM

NYT helps you keep tabs on the very very rich Everything you wanted to know about the 400 top taxpayers but were afraid to ask? Nearly: The data, in a report that the I.R.S. released last night, shows that the average income of the 400 wealthiest taxpayers was almost $174 million in 2000. That was nearly quadruple the $46.8 million average in 1992. The minimum income to qualify for the list was $86.8 million in 2000, more than triple the minimum income of $24.4 million of the 400 wealthiest taxpayers in 1992. Okay...Well, my own quick dirty calculation says if we expropriate the whole lot it puts the rest of us ahead by about $350 per annum, give or take a few bucks. (Not enough to buy a race horse, but it might help a bit.) Thanks to our correspondent we now have a link to the data and the following somewhat more-sophisticated points: (1) The data end at 2000, so we're seeing the footprints of Clinton-era policies and bubble-generated wealth. Later data will probably show a relative downward movement of this income category. (2) Data sets like this tell us only about income categories, not about people. All income classes are constantly gaining and losing individuals. The category "very rich" is particularly volatile in this regard.

Link posted by Steve Antler : 7:25 PM

In memoriam deludificor Here's Edward Said on the tragic death of the heroic and dignified Rachel Corrie. More info here and here.

Link posted by Steve Antler : 1:15 PM

Sounds like good news to me The unemployment rate is a lagging indicator (see "Existential Horror." --Friday June 13-- below), but new jobless claims, which USA Today reports is falling, is concurrent or maybe even leading. For this reason the USA Today Economic Survey's forecast of a falling unemployment rate is consistent with current data.

Link posted by Steve Antler : 10:33 AM

Lemme see if I got this right... The White House is backing a bill to get cheaper health insurance to small businesses who can't afford it but it's being opposed by AFL-CIO and the National Governors Association in a coalition led by Blue Cross Blue Shield Association which is running a Washington vacation sweepstakes contest giving families a free trip to Washington so they can lobby against the bill. Okay?

Link posted by Steve Antler : 7:31 AM

Wednesday, June 25, 2003

Data alert... Now that I've finally figured out uploads, we'll begin migrating earlier graphics linked to elsewhere. Here's my more-or-less accidental conversion to the supply side doctrine. It seems pretty clear there are, historically, three distinct unemployment trends in the post WW II U.S. economy. The second was initiated by the Kennedy tax cut, the third by Regan. Pretty basic, sure, but also pretty dramatic. This speaks also to the increasingly "jobless" recovery. While we are on an unemployment-rate upswing -- and a pretty bad one at that -- there is absolutely no reason to believe the twenty year trend downward trend has ended. Source: data from Economagic, linear trends from EconoPundit

Link posted by Steve Antler : 8:39 PM

Yeah, yeah -- and by the way I was wrong about Marx too... John Podewils writes: Regarding the percent of GDP the US spends on defense, beware of linking to sources where the answer can be found! According to the CBO (Historical Budget Data - Table 8) we spent 3.4% in 2002 and OMB reports the same for 2002. I am no expert on government statistics, so maybe there is something I am missing or maybe you think that the Iraq and other War on Terror costs will increase this substantially, but it looks like the number is in the mid-3.5% range. Perhaps the constant scare-mongering and lies told by reporters like Ivins and Krugman are seeping into your subconscious :). Great stuff on the deferred taxes issue. I hope it is as positive a development as it looks.

Link posted by Steve Antler : 4:14 PM

Higher fuel prices? Lynne Kiesling explains why natural gas prices are high, why supply is likely to remain tight in the short run, and why our clear air is overpriced : This focus on natural gas as the way to achieve air quality improvements without dramatically increasing power generation costs has had an unfortunate, and likely unforeseen and unintended, consequence of reducing the resiliency of natural gas markets. Regulatory mandates have constrained us away from being able to apply the lessons of portfolio diversification to our energy choices, and our inability to diversify our fuel input portfolios makes for markets that do not adapt to unanticipated and changing conditions. This is a very high price to attach to the environmental amenities of improved air quality, air quality that could conceivably have been achieved through other means had the regulations not so specifically stipulated natural gas as the fuel input. Okay, but I am still waiting for her answer to this question: even if it takes more than a gallon of ethanol to produce one gallon of ethanol, does if really matter so long as we grow the doggone stuff?

Link posted by Steve Antler : 2:38 PM

Architecture of Doom? The most striking analysis of National Socialism to date is Peter Cohen's Undergångens arkitektur (English: Architecture of Doom). Once seen, this documentary comes back to unsettle time and again. Naziism, it shows, was neither a political, economic, philisophical, ethical, nor scientific set of ideas. Rather, it was a simple aesthetic masquerading as one or more of these. Normally, ideological cross-dressing is more interesting than disturbing. We can recognize and even affectionately tolerate Marxism's or modern environmentalism's confounding science with ethics, for example. But an encounter with aesthetics masquerading as ethics has no good side. It leaves you feeling genuinely unclean in the full biblical sense of the word. Those seeing the Cohen film will testify to the experience. And now, a wider audience has access to the same same feeling as they read of Clarence Thomas' dissenting Michigan opinion: Diversity is the religion of academia. It is in diversity that they place their faith and the hopes. But it is an empty faith, largely because most elite academics have no interest in the kinds of diversity that matter most. Justice Clarence Thomas, the courts [sic] lone African American, clearly understood this in his dissent. He argued that the University of Michigan is not really interested in the educational benefits of diversity, but is instead pursuing an "aesthetic" of racial mixing. Read Gabe Neville's guest commentary for more. UPDATE: What is Maureen Dowd talking about? Does she maybe not know what "aesthetics" means?

Link posted by Steve Antler : 1:01 PM

And the significance is?... Those who know tell me the Boskin Report is not as new as I seem to think. To most of us the Report's conclusions are extremely surprising, however, so one can't help but wonder what this particular report says to current policy. First, judging from various blogosphere discussions nobody is going to yield anything on Social Security/Medicare, and rightly so in my opinion. Face it -- discovering an unexpected bonus doesn't tell you what to do with it, nor does it change yours or others' definitions/preferences. Second the Boskin/Bush surplus -- or discovery, or whatever you call it -- cannot help but be a victory for American capitalism's supporters and a defeat for its critics. For half a century boomers' relationship to Social Security has weighed like an incubus on economic policy discussions. Critics debited neither Security's Ponzi structure nor the population bulge for the upcoming "crisis." Rather, they placed direct or indirect blame on American market capitalism itself. The system caused us to spend too much and save too little. Or we were selfish, unwilling to devote sufficent resources to future eldercare. And of course we listened not to the wise advocates of government, of centralized organization and planning, but to the false prophets on the side of irrational markets and greedy corporatism. And there was an even more esoteric plane of criticism, the neo-Marxist critique. This school told us "the system," never able to generate enough economic "surplus" for us to buy back what we have produced, must ultimately fail -- as evidenced for example by the upcoming, obvious, and widely known internal contradiction of the Social Security crunch, which will leave our future elders homeless and starving in the street. And now we learn these critics warned of yet another false quagmire. American capitalism, we now know, has already produced the "economic surplus" needed to solve the Social Security crisis. And so long as things remain more-or-less as they are today, during the next forty years American capitalism will produce enough additional economic surplus to solve the "national debt" and "Medicare" crises as well. Once again: finding the Boskin/Bush surplus doesn't tell us what to do with it. As Business Week sums it up: Until now [this problem] has been portrayed as an intergenerational conflict between young, working taxpayers and old, retired beneficiaries of government transfer payments. Boskin demonstrates that there may also be a conflict among retired boomers with differing levels of savings. Upper-crust boomers will control a large share of the nation's wealth. If that wealth is taxed as it's supposed to be under current law, there may not be a serious problem covering the costs of Social Security and Medicare, whose stability is crucial for middle- and lower-income retirees. Yet wealthy boomers may fight to have tax rates cut in order to keep more of their retirement savings. The political fight over redistribution will continue, in other words, with an outcome presently unclear. What is clear right now, however, is that the system worked. You cannot redistribute something unless you have it. And "it" is precisely what Boskin demonstrates we do -- and will -- "have." Click here for January 2003 Draft of Report.

Link posted by Steve Antler : 8:39 AM

There is no bigger story I can't think of anything more important (or more interesting) than the media's and blogosphere's apparent disinterest in the most important economic story of the year. (Scroll down for info on the Boskin Report and its earthshaking economic implications.) UPDATE: AT LAST!!!! Coming up in the June 30 Business Week: [The current Federal] budget forecast is incomplete and perhaps overly pessimistic because it doesn't take adequate account of the growing wealth -- and future tax payments -- of America's Investor Class. Ordinary Americans and their employers are socking away huge sums in tax-deferred accounts such as Individual Retirement Accounts, 401(k)s, and traditional pensions. The total in such accounts is roughly $11 trillion today, with hundreds of billions in new contributions pouring in every year. Under current law, retirees will pay ordinary income taxes as they withdraw money from these accounts. Surprisingly, official long-term budget estimates ignore most of these projected tax receipts -- and the amounts are simply staggering. (Emphasis added.)

Link posted by Steve Antler : 6:09 AM

Tuesday, June 24, 2003

Exclusive! Bruce Bartlett has sent us the Treasury numbers used by Tim Russert in the Sunday Dean Interview/ambush. (See below, "Treasury Fights Back...") He indicates these are not yet available on the web, so consider this an exclusive. We combined the two Word files sent us and converted them to graphics and text in a single HTML document. (Big file, give it time to load!) Example 2 constitutes the dramatic two-child family numbers Howard Dean insisted must be invalid. To Bruce: THANKS AGAIN!!!

Link posted by Steve Antler : 8:10 AM

Boskin: "As the already accrued deferred taxes are like a negative internal national debt, a modern physicist might call them antibonds" In explaining this table, the Boskin Report says: Simple calculation yields a weighted-average (weighted by balances in each bracket) effective marginal tax rate of 27.7%. This produces total deferred taxes at year-end 2000 of $3.24 trillion, by happenstance almost exactly equal to the publicly held national debt at year-end 2000. Assuming that the slight reduction in taxes was roughly offset by real bracket creep, the total for year-end 2001 would still amount to $3.2 trillion, roughly equal to the debt held by the public, and substantially larger when the holdings of the Federal Reserve are excluded. If the aggregate balance fell to our conservatively estimated $10.3 trillion at year end 2002, consistent with a 20% stock market decline, the total deferred taxes would still amount to about $2.9 trillion, slightly less than the roughly $3.5 trillion debt held by the public, slightly more than the $2.8 trillion national debt held outside the government. "Antibonds?" Yeah, I like the sound of it. (Scroll down for more posts on this important story.) UPDATE: Here's a quiclk-and-dirty comparison I happened to have on my desk -- old, but I doubt the numbers have changed much. Combined with the Boskin antibonds, this may explain why the dollar just won't fall as quickly as predicted by Krugman and other doomsayers. ------------------------------------------------------------------------------------------ GOVERNMENT DEBT AND PENSION LIABILITIES AS PERCENT OF GDP (1990) ===net conventional debt=======net pension liabilities CANADA===52================121 GERMANY==22================157 ITALY====100================259 UK=======27================156 US=======35=================90 ----------------------------------------------------------------------------------------------- Source: Essays on Pension Reform, Max Alier PhD Thesis, University of California LA, 1997; quoted in R.E.A. Farmer, Macroeconomics, South-Western, 2002, p. 162. All this pertains to the pretentions of the Europhiles, especially the Social Democratic left wing of the Democratic Party, who expect a Euro-Japanese flight from the dollar. Fact 1: as a percent of GDP the upcoming US liabilities are comparatively modest. Fact 2: while we await word from anyone with more info or data, I think it is safe to assume nowhere is there anything like the accumulation of U.S. Boskonian antibonds as an asset to possibly offset these future liabilities. The presence of this asset and the comparatively modest extent of U.S. upcoming obligations may explain the dollar's current durability.

Link posted by Steve Antler : 7:33 AM

The Fault of the French Drezner continues to identify the source of every major global economic disruption. Hint: this chart is useful.

Link posted by Steve Antler : 6:42 AM

Tale of Three States, Since we happen to be talking a lot about California and Tennessee, and since I happen to be a Chicago guy, I thought it would be interesting to post this chart comparing unemployment rates in the three states during the past decade. (As you can see from the chart, Tennnessee comes off looking, ahem, uh, pretty good by comparison.) This is really easy to do using Economagic, which has extensive data for all the states and great charting options. Try it.

Link posted by Steve Antler : 3:44 AM

U.S. as one big California Good fact-packed discussion of the national power grid, alternatives to large scale generation, alternate technologies, etc, etc. Like the NYT autta be.

Link posted by Steve Antler : 3:16 AM

Latest from "Dr. K" It's sad to see a talented, competent economist reduced to wetting his pants in hatred. even people who aren't partisan Republicans shy away from confronting the administration's dishonest case for war, because they don't want to face the implications...After all, suppose that a politician -- or a journalist -- admits to himself that Mr. Bush bamboozled the nation into war. Well, launching a war on false pretenses is, to say the least, a breach of trust. So if you admit to yourself that such a thing happened, you have a moral obligation to demand accountability -- and to do so in the face not only of a powerful, ruthless political machine but in the face of a country not yet ready to believe that its leaders have exploited 9/11 for political gain. It's a scary prospect...Yet if we can't find people willing to take the risk -- to face the truth and act on it -- what will happen to our democracy? Will this sad guy ever regain the ability to see opponents are thoughtful people with whom he happens to disagree, rather than evil, superhuman monsters? I don't know. I have only one question: "Bamboozled?" What's with the "bamboozled?"

Link posted by Steve Antler : 2:49 AM

Monday, June 23, 2003

The Boskin/Bush Surplus If you don't know what the newly found Boskin/Bush surplus is, you need to go to Asymmetrical Information for the economic scoop of the decade. From WSJ (not available online, quoted at Asymmetrical): The doom and gloom red-ink budgetary forecasts of recent years have overlooked some astoundingly good news for the government: pensions, IRAs and other tax-deferred accounts should generate some $12 trillion in taxes by 2040. This mind-boggling pot-of-gold is larger, at a minimum, than the sum of the 75-year actuarial deficits in either Social Security or Medicare, according to Stanford economist Michael Boskin , who has written a pioneering paper on the subject for the National Bureau of Economic Research. We could end up with enough to offset both shortfalls, he says. (Emphasis added.) Check out these two "smoking gun" graphics from the Report. Here's the January draft of the Boskin Report.

Link posted by Steve Antler : 4:13 PM

Patrick R. Sullivan and Jim Glass have been talking Says Sullivan: Jim and I have been kicking this around via e-mail. He'd been listening to New York talk radio while taking his kids to summer camp in Connecticutt, and he was hearing nothing but complaints about the taxes people just found out they had to pay on their upcoming 401K withdrawals. I sent him this: > > From Boskin's paper: > > > > "...the deferred taxes add a major new element with a strong interest in > > lower tax rates, at least on their withdrawals, to the future political > > economy of budget policy." To which Jim responded: > They'll say this: Capital gains in tax-deferred account should be taxed on > withdrawal at 15% (or whatever) just like other capital gains. The amount > taxed at ordinary income rates on withdrawal should equal only the pre-tax > contribution amount (the deducted amount for an IRA or pre-tax amount > going into a 401(k), etc.). > > In principle they're right, it makes perfect sense, and it would still give > the gov't a lot of money. The problem is that for the last 20 years since > these accounts first became popular nobody has been keeping any records > for any of this, so it's impossible for all the money in them to date. > > Anyway, if they want to keep the Boskin Boon from being spent decades in > advance, the way the projected Social Security surplus of 1981 was > consumed by the Congress of 1939, they'll have to save the income taxes collected > on tax deferred accounts and invest them in real assets, either through private > accounts or some real national savings fund -- starting right now. > > Accounting-wise there is ready precedent for this, in that the income taxes > collected on Social Secrurity retirement benefits don't go to the Treasury > for general spending but are sent back to the SS Administration -- imposing > the income tax on benefits was really a carefully disguised means-tested > benefit reduction. > > Political argument wise, there's been plenty of rehearsal in recent years of > the argument that funds like these to be used to finance future benefits > should be really saved. > > This could get interesting in time. I agree.

Link posted by Steve Antler : 12:21 PM

Move over to make some more room in the blogosphere... Bill Hobbs has a prediction backed up by lots of articles and facts: Given how blogs affect Google searches, corporate execubloggers may soon be joining the blogosphere in droves, seeking to counteract negative word-of-mouse and enhance positive mentions online. (emphasis added) Corporate execubloggers? Whoa!

Link posted by Steve Antler : 11:14 AM

The fault, dear Brutus... USA Today's analysis: not the economy, nor the tax cut, but rather the states are to blame for their own problems. [O]ne thing has remained constant throughout the crisis: State spending keeps growing...It went up 6.3% for the fiscal year that ended June 30, 2002, and it's on track to rise about 5% in the 12 months that end June 30. The number of people on Medicaid, which pays for health care and nursing homes for the poor, remains at a near-record 40 million. That number is up 30% since 1998, the result of efforts to sign up people who qualify. And despite anecdotal reports of layoffs — Oregon furloughed 130 state troopers, for example — state governments have added 74,000 workers (an increase of 1.5%) in the past two years while the private sector has registered a net loss of 2.6 million jobs (a decline of 2.4%). By almost any measure, state governments have suffered less than businesses and taxpayers during the economic downturn. Even so, nearly every state is struggling to balance its books. It of course should be added they're placing increasingly heavy demands on the same business and taxpayers who've "suffered less." UPDATE: Bill Hobbs identifies the USA Today study as being based on pro-tax publication. He also notes the irony of the illustration -- which can be interpreted in several ways, none of them good.

Link posted by Steve Antler : 10:30 AM

Explosives in Burbank? Is this related to the Burbank Airport Story? The Kuwaiti newspaper Al-Watan published a communiqué today allegedly authored by Al-Qa'ida's chief of training Abu Muhammad Al-Ablaj, which refers to an impending attack by the organization. The communiqué stated that Al-Qa'ida's chief of training Abu Muhammad Al-Ablaj said Osama bin Laden is about to direct a "fatal blow" to the "head of the international media serpent that serves the American whims and interests." He added that the upcoming phases against the U.S. will "cut off the wings of the American eagle, slice its arteries, and finally butcher it the Islamic way." If the two stories are related, it shows why MEMRI belongs in the same column as all the numerical data sources! UPDATE: The Burbank Airport story is a hoax. And the Memri story? Who knows?

Link posted by Steve Antler : 9:01 AM

More from WAPO/Mike Allen Says the article: The Bush administration yesterday released a highly selective analysis of the cost to families of rolling back scheduled tax cuts, an early sign of the White House's plan to brand Democrats as tax raisers...Peter R. Orszag, a senior fellow in economics at the Brookings Institution, said the document "gives a misleading impression of the overall effect of the tax cuts." Just 27 million of the nation's roughly 140 million households consist of married couples with children, he said. Brookings figures show that under the most recent law, 81 percent of households would save $1,000 or less. Isn't it "highly selective" if you don't say this results from the extreme progressivity of the US income tax?

Link posted by Steve Antler : 7:55 AM

Blogger Economic Simulation -- a First? Will any reader(s) familiar with Ray Fair's simulation model please get in touch with me? The Bush/Boskin surplus needs -- no, begs -- to be plugged into a data set and the model needs to be run. This is easy for someone who's done it before. I've fooled around with the model offline using e-views. Online seems lots easier and quicker, but I've never tried. (And, uh, tonight and tomorrow I teach...) Maybe this will be a first for the blogosphere? Blognews plugged into blogmodel creating new Blogsimulations based on fast-breaking blogdata? Come on, let's make history together!!!!

Link posted by Steve Antler : 6:45 AM

A New Source of "Certainty?" I am wondering how financial markets will react to the news of the Bush surplus? What follows is pure speculation but hey, we're talking financial markets, right? Speculation is appropriate behavior! Boskin's numbers are overwhelming. Three trillion is already-accrued, and the rest appears more locked-in than any hypothetical projection generated by this- or that-forecasting model. In short: these numbers are far more certain than any of the projections we're used to. When word gets out, will this be a new source of security and certainty that will enable financial markets to take off? (If, of course, that's what they want but are afraid to do.)

Link posted by Steve Antler : 6:28 AM

Treasury Fights Back... Did it take them this long on purpose, or was it somehow part of the plan? (Clinton would have arranged town meetings and interviews with fifty families long ago.) Anyway, here's where Tim Russert got the numbers to ambush Howard Dean on Meet the Press yesterday: The Bush administration yesterday released a highly selective analysis of the cost to families of rolling back scheduled tax cuts, an early sign of the White House's plan to brand Democrats as tax raisers throughout their race for the presidential nomination...The seven-page analysis, by the Treasury Department's Office of Tax Analysis, asserts that repealing the tax cuts enacted in 2001 and last month would mean a tax hike of $1,933 for a married couple with two children and an income of $40,000. Their taxes would go from $45 to $1,978, for an increase of 4,296 percent, the study said..."If you are advocating repealing the 2001 and 2003 tax cuts, you are advocating a significant tax increase on the American people," said Rob Nichols, the Treasury Department's chief spokesman. "You're talking about raising taxes on roughly 100 million households." Looking for link to the original "seven page analysis."

Link posted by Steve Antler : 5:36 AM

Sometimes real life sounds like the X-Men... Here is D-squared's blog.

Link posted by Steve Antler : 5:25 AM

Back to the 50's WAPO: WASHINGTON (Reuters) - The U.S. Federal Reserve, seeking to rev up a slow recovery while keeping price deflation at bay, is universally expected to cut interest rates to 1958 lows this week. The sole mystery surrounds whether the 13th in a long line of rate reductions, expected to be announced on Wednesday, will be a quarter or bolder half percentage point. Speculation about the size of the cut has intensified as economists look beyond next week's decision to a new era of Fed policymaking with exceptionally low rates.

Link posted by Steve Antler : 5:20 AM

Monday, Monday...can't trust that day.... Here's the economic calendar. I'd put the link on the sidebar, but this is just too much fun.

Link posted by Steve Antler : 5:13 AM

Sunday, June 22, 2003

Further Note In my enthusiasm I referred (metaphorically of course!) to Social Security as being "fully funded" under the new circumstances of the recently discovered Bush/Boskin surplus. (See earlier posts for details.) "Watch your language!" (or words to that effect) says our good friend Patrick R. Sullivan: First, SS is not fully funded even if Boskin is correct that tax revenues will be larger in the future due to withdrawals from 401Ks and IRAs being subject to INCOME AXES. Nor does Boskin's discovery change the "special bonds" in the SS trust fund into real assets. They are still both an asset and a liability of the U.S. government, and by definition net to zero. In order to redeem the special bonds and use the proceeds to pay promised benefits, the government will need more than the historical (roughly since the end of WII) take of 17-19% of GDP. I don't think that will happen. What Boskin seems to be suggesting--I've only skimmed his 131 page paper--is that high income retirees will in effect be paying their own SS benefits to themselves. The government takes away part of their nest egg every year and returns it via a SS check. Seems kinda silly, and inefficient. The two major reasons for changing SS into some kind of investment vehicle still stand; 1) doing so will increase the capital stock available to American labor, and 2)increase the labor force supporting U.S. retirees by investing in foreign countries where there are plenty of people to work. Even Paul Krugman has admitted that it would be better not to have a pay-as-you-go system, but his argument against switching to one relies on a hilariously inept "transition costs", which ignores what he teaches his sophomores about sunk costs. Additionally from Sullivan: in my Sunday Jun 22 08:16:19 AM post I credited David Thompson with a comment actually written by Daniel Davies, who goes by the blog handle "d squared." Okay, ...we'll fix it tomorrow.

Link posted by Steve Antler : 8:55 PM

Patrick R. Sullivan writes: Regarding the Boskin paper, if he is correct then the so called "transition cost" of reforming [Social Security] to an investment (or privatized) system evaporates. We could easily finance Milton Friedman's plan... I can hardly for Paul Krugman to jump on the bandwagon.

Link posted by Steve Antler : 8:35 PM

In Memoriam PunditWatch ABC’s This Week Nothing new from Lugar, Hegel, and Biden except for this tidbit: according to Lugar, one of the most serious intelligence problems was that most of our agents were killed. Even though Joe Klein tried to get himself worked up using the words: “arrogant,” “unilateral,” and “infidel,” among the round table participants WMD fatigue has started to set in. George Will floated two interesting new ideas: (1) Blix and the UN must share much of the intelligence-failure blame if WMD are never found; (2) the Bush Preemption Doctrine presupposes reliable intelligence, which means if WMD aren’t found, the doctrine itself fails for the foreseeable future. George Will on why Kerry supported Clinton admin but not Bush Iraq policy: "What did John Kerry not know and when did he stop not knowing it?" Meet the Press Russert opens with a great ambush. Howard Dean agrees he’s for repeal of the entire Bush tax cut. Russert puts Treasury Dept. numbers on the screen: repeal the tax cut and a married couple (two kids, $40,000 income) go from $45 to $1,933 federal income tax. This actually works out to over 4,000% increase. Dean doesn’t believe the numbers. Bush admin “not been candid about impacts of this tax cut.” Second ambush: Dean: “I don’t like the balanced budget amendment but I’m tempted.” Russert puts up graphic of 1995 Dean statement calling for cutting Social Security, moving retirement to age to 70, cutting defense, Medicare, and veteran’s pensions. Dean: doesn’t remember saying any of that. Finally: some of his democratic opponents need a “backbone transplant,” but he’s afraid to say who. ("Backbone transplant" -- kinda ironic language given the way he avoided service in Vietnam. And by the way, as someone who in terms of Army pre-induction physicals has been there and done that, I have two questions for Mr. Dean: (1) was it really your induction physical, or just your wimpy pre-induction physical, and (2) did you or did you not bring a note from your home physician?) Face the Nation Can’t help it, don’t watch the show, half hour is only long enough for rapid gut-based judgments anyway. Just look at George Allen and compare him with Terry McAuliffe. If you don’t know better, Allen’s maybe a lawyer, a businessman, maybe even a school principal. McAuliffe? He’s a polician or a politician’s advisor. The Republicans are the ones with a life. They believe in the economic system so their alternatives are, say, to be in business, or to be lawyers, accountants, shoe salesmen, or whatever. To many Republicans, a life in "public service" is very much a second-best alternative, which is why they seem duller than the Dems. The Dems are the guys who believe in Government. Like Sowell points out, they’re the intellectual heirs of the French Democratic philosophers, the French Revolution, the Utopian Socialists, Tom Paine and Jefferson, the guys who believe man can be perfected if institutions are perfected. They’re sharper and more focused than the Republicans because they are exactly where they want to be. Like Bill and Hillary and unlike any Republican leader, they can’t imagine being anywhere else. Fox News Sunday Says Charles Krauthammer: Democrats are now living in the year 1972 -- and Howard Dean is their new George McGovern.

Link posted by Steve Antler : 10:24 AM

It starts to make more sense Great discussion on scoop of the decade (see below) at EconLog. Example from David Thompson: Revenues of this sort are typically not projected because of the fundamental "principle of annuality" which lies at the heart of government accounting. A private company which had future expected revenues of this sort would capitalise them, because a private company takes the current state of laws as given. But the government has to recognise that when these people retire, they will do so under the 2038 tax code, not the present one. Therefore, it is not regarded as prudent to capitalise them today for the purpose of government accounts. I'm not saying that they should be ignored or that Boskin's work isn't valuable (it is), just explaining how they came to be ignored... The point about "the transition problem" has always been that it's actually the *entire* problem. Any revenue-raising measure which "solves the transition problem" to privatised accounts can also be used to make Social Security solvent, since the two problems are the same...My position has always been that Social Security isn't insolvent and doesn't need fixing, hence my [praise] for Boskin demonstrating this fact. If you have an ideological reason why you want to move to a privatised system, then go ahead and make that case; I promise not to bring up the transition problem so long as you don't base your argument on Social Security "being bust" or "providing a negative rate of return". Once again: if you haven't seen it, do NOT miss the Social Security/Medicare/Public Debt scoop-of-the-decade below! Considering the current political mood of the country, maybe we should we start calling this the Bush Surplus?

Link posted by Steve Antler : 8:16 AM

Reading the Housing Tarot Cards All former-Marxist quantitative economists (and those little guys who hang around them because they're so popular) keep looking for the "upcoming crash." This is why I keep eyse open for evidence of a housing bubble, even maybe a small slump. There's this from Reuters, and (even more dramatic) there's this from the American Bankruptcy Institute. (Great name, no?) No harm in checking these out, but draw no final conclusions until you see the Social Security/Medicare/Public Debt scoop-of-the-decade below -- posted Friday but still not widely known!

Link posted by Steve Antler : 6:36 AM

In Memoriam PunditWatch... I'll be doing a rundown of all the Sunday morning talk shows, courtesy of DirecTV and Microsoft UTV PVR (whose two satellite tuners and massive hard drive watch TV for you while you toast bread!). Be patient, this takes time. And if you haven't seen it, do NOT miss the Social Security/Medicare/Public Debt scoop-of-the-decade below!

Link posted by Steve Antler : 5:21 AM

Saturday, June 21, 2003

Scoop of the Decade -- More A few questions re the all-important Social Security story immediately below. (1) Why didn't the CBO know about this? Isn't this precisely the sort of matter they're paid to keep on top of in an "out-of-the-box-thinking" sort of way? (2) Didn't Greenspan ever talk about this, even in broad terms? (3) Is this a great example of a VERY important item just falling thru the cracks because nobody in government ever moves beyond their narrow job description? (4) If the answer to (3) is "yes," what other surprises might be in store for us? (5) How do the US numbers compare with Europe? Over there the upcoming baby boomer social insurance/medical bill is substantially higher than what we face here. Do they have anything like our accumulation of tax-deferred accounts to help offset these? If the answer is "no," will those who rant about Europe's superior safety net finally shut up? I don't want to start with Krugman-type predictions about how this is a turning point in American history, but still, think of it. Voters have been harangued for decades by opportunists exploiting the Social Security time bomb. The case for deregulation and minimal government was explicitly weakened by Social Security time bomb anxieties. The implicit case for European welfare-bureaucratic-socio-capitalism was similarly strengthened by the vision of a boomer America unable to finance its own retirement plan. And now it turns out they forgot to count $13 trillion in accumulating revenue? Ooops! Am I missing something, or has everything (and I mean EVERYTHING) really changed? UPDATE: To get an idea of the magnitudes involved check out these two "smoking gun" graphics from the Report. (Scroll down for second if necessary.)

Link posted by Steve Antler : 6:53 AM

Friday, June 20, 2003

EXTRA!! Social Security 'time bomb' a DUD !!!!! Despite the Onion-type headline, this is serious and important. Linking to an upcoming Boskin study and quoting WSJ, Asymmetrical Information has the economic policy scoop of the decade. The doom and gloom red-ink budgetary forecasts of recent years have overlooked some astoundingly good news for the government: pensions, IRAs and other tax-deferred accounts should generate some $12 trillion in taxes by 2040. This mind-boggling pot-of-gold is larger, at a minimum, than the sum of the 75-year actuarial deficits in either Social Security or Medicare, according to Stanford economist Michael Boskin , who has written a pioneering paper on the subject for the National Bureau of Economic Research. We could end up with enough to offset both shortfalls, he says. (Emphasis added.) Call everyone you know this weekend. The sooner word gets out, the faster will the current recovery take off. UPDATE: Here's the Boskin paper. Here are two "smoking gun" graphics from the Report. (Scroll down for second graphic.) UPDATE II: Here's an excerpt from the study's conclusions: We have presented estimates of the historical flows and projected future flows of taxes and interest, debt and capital formation effects of deferred tax vehicles. From understanding the present and likely future state of the public finances to the direct interest in the size and breadth of the programs themselves; from a more thorough and accurate context for understanding the macroeconomic implications of the national debt and the unfunded liabilities in Social Security and Medicare to more accurate measures of private wealth for analyzing consumption; these estimates are fundamental. The already-accrued taxes in tax-deferred accounts amount to about $3 trillion, slightly more than the national debt held outside the government and slightly less than the publicly held national debt. Even conservative estimates of the likely real present value of future budgetary effects amount to roughly an additional $5-$10 trillion. The total size may well rival the 75-year actuarial deficits in Social Security and Medicare, plus the national debt. (Emphasis added.) This is very, very big.

Link posted by Steve Antler : 8:31 PM

Law of unintended consequences strikes again? California gasoline prices may start rising soon. Lynne Kiesling asks whether costs might start to outweigh benefits when it comes to local air quality standards and the required boutique blends of gasoline: [Fuel] regulations balkanize markets, [so] fuel in one place is no longer substitutable for fuel in another. That balkanization re-introduces price disparities that competition naturally diminishes through opportunistic arbitrage, and because it is the consequence of the application of blunt, inflexible regulatory instruments, the natural diminution of price disparities is cut off at the knees. Thus wholesale fuel markets become less resilient and less able to absorb unanticipated shocks such as pipeline mishaps, fires, etc. And before you go don't forget to check the supply/demand situation along the California energy grid.

Link posted by Steve Antler : 12:27 PM

Here's Krugman's latest... Let's do a line-by-line -- you know, what Krugman says and then what he really means: KRUGMAN: A few months ago, some analysts began to argue that because interest rates were so low, even today's very expensive stocks were a good buy. I don't agree, but that's a long discussion. TRANSLATION: I'd explain but you wouldn't understand me. KRUGMAN: What's clear, however, is that investors' big move back into the market has been driven not by careful comparison of returns, but by the fact that stocks are rising -- and the fear that if you don't buy stocks, you'll miss out on a good thing. TRANSLATION: Those investors are irrational and dumb, not like you and me. KRUGMAN: The new bull market isn't forecasting anything; it's just feeding on itself. TRANSLATION: You are smart if you agree with this sentence because it repeats what I said before. KRUGMAN: Could the story I'm telling be wrong? Of course. TRANSLATION: As Luskin shows quite clearly, I made a few predictions that weren't so accurate earlier this year. KRUGMAN: Maybe a vigorous, though still invisible, economic recovery will deliver the sustained, double-digit earnings growth that analysts -- apparently not chastened at all by recent history -- are once again predicting. TRANSLATION: I never look at housing starts and other construction statistics, so I don't know anything about the new activity that's going on there. Anyway, that's a long discussion. KRUGMAN: But even if that happy scenario comes to pass, it's hard to justify current stock prices -- because if the economy booms, the low interest rates that might conceivably make stocks worth buying at 30 times earnings will soon go away. TRANSLATION: I worry only about interest rates, never prices. That's why I don't think when interest rates rise, prices also start rising, restoring profitability. That's also a long discussion. KRUGMAN: If and when businesses start borrowing again, they'll have to compete for funds with the federal government, which will be running $400-billion-plus deficits as far as the eye can see. TRANSLATION: Yeah, and this time around maybe we'll actually be able to measure the crowding out effect! KRUGMAN: Meanwhile, foreigners won't keep lending us $500 billion each year; in fact, private investment inflows into the United States have already dried up. TRANSLATION: I only worry about interest rates, never exchange rates. That's why I don't think when exchange rates adjust, export/import prices adjust, restoring economic growth. (Yup -- long discussion!) KRUGMAN: In short, the current surge in stocks looks like another bubble, one that will eventually burst. TRANSLATION: I had to get a column out and didn't have much time, so I basically re-wrote Greider's piece in The Nation. You're too dumb to understand anything serious I might write, and if I'm wrong about anything, you're not smart enough to notice or even remember!

Link posted by Steve Antler : 10:52 AM

It's a small world after all? Good background on on Bush admin and the Alien Tort Claims Act of 1789.

Link posted by Steve Antler : 10:01 AM

Marx was an opponent of the first ones... Corn Laws II?

Link posted by Steve Antler : 9:37 AM

Bourgeoisie versus the Thinking Class Brought to mind by Krugman's latest: Why do so many intellectuals instinctively hate and mistrust the workings of markets? How can they possibly see markets as the embodiment of stupid behavior rather than a public and honest expression of, simply, what people "want to do?" Maybe this can help explain the mystery?

Link posted by Steve Antler : 7:33 AM

Innumeracy growing in NY Got this from Instapundit. All I do is put the first four digits on the blackboard and add zeros till I've got it right. Students love it.

Link posted by Steve Antler : 7:22 AM

We are setting a good example, Molly! John Podewils says: there is another glaring problem with her analysis that you didn't point out. In the US, federal spending represents approximately 20% of GDP and with your numbers on the military's share of the federal budget, we get the fact that in the US, military expenditures represent between 3 and 4% of GDP. SInce in North Korea the government basically is the economy (I couldn't find a percentage), military spending is a full 31% of GDP (according to the CIA). So in fact, I would say we are setting a very good example to North Korea about our economic priorities. Once again, we see the (intentional or unintentional - which is worse?) misuse of economic statistics to (attempt to) make a political point. Actually I think it's a little higher than 3-4%, but the point is absolutely correct.

Link posted by Steve Antler : 7:06 AM

Antitrust as Slavery? Yep, Volokh Conspiracy asks the question. Find a good answer at Kikuchiyo News.

Link posted by Steve Antler : 6:51 AM

Thursday, June 19, 2003

More Supply Side Controversy Sebastien Messier (of Sadly, No!) thinks Hobbs' supply-side enthusiasm is misplaced: Is the claim that government revenue "soared" under Reagan valid? Sadly, no. From 1981 to 1989, income tax revenue increased by 55.9%. Is that impressive? It sure does seem like a big increase. Under Bush I income tax revenue went up by only 26%. Sadly for the "proof" under Clinton it went up by 95%. And Clinton increased taxes! (Paging Laffer to the courtesy curve on a cocktail napkin phone.) And it only gets better: under Carter, income tax revenue (ITR) went up by 81%. Under Nixon/Ford? 80.7%. Kennedy/Johnson? 78.7%. So Reagan did better than Bush I (and unless he's re-elected better than Bush II.) But everyone else managed to increase ITR by a larger share than Reagan's "supply-side" tax cuts. Hmmmm. PS: If you look at total tax revenue, rather than simply ITR, Reagan edges out Kennedy/Johnson, 65% to 60%. (The lead over Bush I remains as well.) The CBO figures I used are here. Here's my two cents: The Laffer curve is a parable, just like the paradox of thrift or the balanced budget mutiplier. Like these other parables, it's great for teaching but not much good for anything else. You can't just "apply it" by cutting taxes and then counting your revenue increases. Look: if you lower personal taxes, someone, somewhere, has extra money to either spend or save. We know what happens on the demand side because its transmission mechanism is simple. The supply side gets difficult because everything has to go thru factor markets to production functions to cost curves. There's no simple transmission mechanism. This doesn't mean supply-side is invalid, just that it's really hard to model. But I think everyone's a "supply sider" in the sense we agree taxes levied on businesses affect business behavior in one way or another. I was more agnostic on the subject until I fooled around with these long term unemployment trends. I can imagine a lot of reasonable people seeing the "red" and "purple line" trends as being initiated by the two major pre-Bush tax cuts.

Link posted by Steve Antler : 8:13 PM

Utilitarian Redistribution? Dated June 17 2003, a Center on Budget and Policy Priorities report with the sorta unimaginative title "PERMANENT REPEAL OF THE ESTATE TAX WOULD BE COSTLY, YET WOULD BENEFIT ONLY A FEW, VERY LARGE ESTATES" (summary here) seems to be the documentary source of lots of Capitol Hill posturing right now. At points the Report gets a little, well, strange: In 2010, there will be an estimated 53 million Social Security beneficiaries. This figure contrasts with the 10,000 or so estates that year that would remain subject to the estate tax if the tax is retained with a $3.5 million exemption rather than eliminated altogether. Cutting but not eliminating the estate tax on the 10,000 wealthiest estates each year would leave resources available that could be used to narrow Social Security’s long-term financing deficit, which ultimately will affect millions of elderly people, many of whom have low or moderate incomes. Compared to permanent repeal, the amount saved by keeping the estate tax at the higher exemption level and lower top rate in effect in 2009 is equivalent to nearly one-quarter of the entire shortfall in the Social Security Trust Fund over the next 75 years, the period used by the Social Security actuaries to gauge the long-term financial health of Social Security. Thus, one option would be to reform rather than repeal the estate tax and to dedicate the estate tax revenues that remain to the Social Security Trust Fund. Sure but hey, why stop there? If we confiscate the entire mess we can retire the debt and maybe find a cure for all diseases! (What the heck, -- we're only talking 10,000 wealthiest households here.) It is humbling to realize just how ineffective this stuff appears to anyone outside the inner circle of true believers.

Link posted by Steve Antler : 12:29 PM

RE: Maximize the Whales Reader Scott McArthur writes: 1. Seal meat tastes terrible. If it was a yummy treat it would be part of the North American restaurant menu, No? 2. So are you saying that the price mechanism works well in commercial fishing? Really. So its all a question of over-regulation rather than non-regulation of a free good? Hummmmm. Ok then, see you in 2020, we'll dine on soy-tuna and soy-sordfish. Hey maybe by then we'll be less squimish and LOVE seal meat. Regarding (1): We'll never know because Greenpeace caused the regulated seal hunt to be banned. Regarding (2): The price mechanism can't regulate a common property resource, which is why international agreements like the IWC are vital. The question is: will the IWC regulate to maximize whalers' or whales' welfare? UPDATE: Check this out.

Link posted by Steve Antler : 10:25 AM

Okay, exactly what are we doing here? It is time to start work on a mission statement. Exactly how will the world be different because of EconoPundit? These two points come to mind immediately. Upcoming posts will add more. (1) Economists tend to bully people, especially non-academics. This blog puts out lots of tools -- charts, data, argument -- to push the bullies back where they belong. (2) U.S. politics conflates (love that word!) issues to make them insoluble (yeah, also a good word). For example, it tends to fuse ethical disputes (hard to resolve!) with economic ones (usually resolved with data and models). This blog will do to these issues whatever the opposite of conflate is.

Link posted by Steve Antler : 8:35 AM

Data alert... Reader Jon Henke sends us valuable links relating to the tax debate. First he draws our attention to the Tax Policy Center's Tax Facts, which has been added to the EconoData section of the blogroll. Also he links to this table showing effective Federal tax rates for all households by income quintiles, and this one showing distribution of major federal taxes as a percent of household income. Let's take a few hours to absorb these. Soon we can relate them to posts below. (For example, there's Molly Ivin's assertion we don't have a progressive income tax and that's why people hate to pay their taxes.)

Link posted by Steve Antler : 6:54 AM

Closing the barn door a little too late? As the House passes a permanently end to estate taxes, the Senate prepares to debate. Republicans said the tax must be fully repealed to protect families who own small businesses and farms and prevent their heirs from liquidating their enterprises to pay their tax bills. They also pointed to the time and money spent on estate planning..."The country was built on family businesses," said House Majority Leader Tom DeLay, R-Texas. "Unless we permanently repeal the death tax, we can kiss our small businesses goodbye." Wow, are these people out of touch. Earth to Tom DeLay: "Hello: ...uh, Tom, those small businesses you mentioned? They're already gone !"

Link posted by Steve Antler : 5:28 AM

From Bill Hobbs: A Laffing Matter NashvillePost.com, a business news website that regularly blows away the business section of the city's big daily newspaper, has another scoop today: the firm founded by the author of the famous "Laffer Curve" of supply-side economics fame, is moving from San Diego to Nashville. Reason: Tennessee doesn't have an income tax. Laffer Associates provides international investment advisory services to institutions and management of institutional accounts. It was founded by Arthur B. Laffer, an economist, and is now run by his son, Arthur B. Laffer Jr...[There's] one thing the Left never quite understood about supply-side economics: It was a tool for increasing government revenue by lowering tax rates to the optimal point for maximum economic growth. The Reagan years proved it worked - taxes were cut yet total government tax revenue soared as the economy boomed. Welcome to Nashville, Laffer Associates.

Link posted by Steve Antler : 5:14 AM

Wednesday, June 18, 2003

Pete Seeger, Susan Sarandon, Harry Belafonte Anyone old enough to remember the Rosenberg trial and execution must also remember those days' sick, depressing, fearful mood. What happened must be taken seriously -- meaning current journalists should treat the upcoming anniversary responsibly rather than as a simple excuse for warm, fuzzy, irresponsible political correctness. (How ironic to use that term in this context!) Don't hold your breath. Of the many names in reports on the upcoming Rosenberg anniversary, the name of an important American scholar and witness to those days is found nowhere. This is a scandal.

Link posted by Steve Antler : 11:10 AM

Even for Molly Ivins, this is just plain silly Ari Fleischer is too pious about those trivial differences between the US and North Korea. 50.1% of our discretionary spending goes to the military (Got that? Not 50, but 50.1%). "These priorities" she says with special wry irony "are not exactly setting a great example for North Korea." Roads, schools, prisons, courthouses, bridges, dams and sewage systems are all necessary, as are health and education. That's why we pay taxes. We pay for after-school programs and sports leagues because kids need them and get into trouble without them...The reason that people hate paying taxes is because they know the system isn't fair. We don't have a progressive tax system in this country anymore [sic], and we certainly don't have one in Texas. Okay, well, the numbers tell us whether or not we have a progressive tax system, so we won't even talk about it. (See below, a couple of posts on the subject.) But if, as she says, people hate paying taxes, maybe it's because they don't think they're getting their money's worth? UPDATE and by the way, here are the real numbers: YEAR-----------------------------------2001-------2003(est) National defense---------------16.6%-----17.8% Human resources----------------64.2%-----65.7% Physical resources-----------------5.3%---- 5.2% Net interest------------------------11.1%----8.5% Other functions---------------------5.8%----6.3% Undistrd offttng receipts-------(-3.0%)--(-3.5%) Total, Federal outlays-----------100.0%----100.0% Source: find the data right here... There is actually something to be learned here. First, the current American system of federal/state/local taxation constitutes a powerful tool for income redistribution. Second, reasonable people can disagree about what constitutes an ethically correct distribution. Finally: we will never reach a reasonable compromise if one side's desideratum is simply a perpetual redistribution from top and middle to the bottom.

Link posted by Steve Antler : 9:05 AM

HDTV altert... For all fellow HDTV freaks (I know there must be one or two of you out there). We've arrived at the point where ABC announces which movies won't be broadcast in high definition! ABC is proud to air almost all of its movie broadcasts in HDTV. When a movie doesn't air in HDTV, it is now a rather rare exception. To alleviate confusion, we regretfully announce that the following movies will, unfortunately, not air in HDTV in their upcoming broadcasts: ONE FINE DAY - Thursday, June 26 STAR TREK FIRST CONTACT - Saturday, July 5 PICTURE PERFECT - Thursday, July 10 HDTV transfers of these movies will not be ready in time for their air dates. Assistant Director, Technology and Strategic Planning ABC Television Network (It's a shame about Star Trek. Oh well...)

Link posted by Steve Antler : 8:47 AM

Need Econ 101? Brownstein say Congress could use a refresher course. Bush used to talk about promoting "the responsibility era." But this series of decisions may be the most blatant example of generational irresponsibility in U.S. history. It amounts to baby boomers and their parents voting themselves a big tax cut, then voting themselves an even bigger prescription drug subsidy, then passing on the bill for both to their children in the form of an exploding national debt. Interesting language here. Econ 101 discarded this "passing on the bill...to their children" language in the 80's, thanks to Robert Eisner and others. More about this later.

Link posted by Steve Antler : 6:19 AM

About time... Daniel Altman says commercial lending is starting to ease up. Check out the accompanying graphic. Commercial loans are turning into more of a lagging indicator than unemployment.

Link posted by Steve Antler : 5:50 AM

Data alert... This shows the basic (and I do mean basic) case for the Bush tax cut. The long term shows private sector steadily crowded out by increased federal, state, and local spending. The short term (roughly 91-01) shows an abrupt 5 percent increase accounting for current state/local fiscal problems. Since data cover all federal, state, and local spending, they roughly measure all state, federal, and local taxes. Where these are not paid directly by individuals, they get embedded in enterprise costs (part of the "cost curve" of any business). They are ultimately shifted to other businesses, to consumers, to workers or other providers of factor services. Business may pay them directly, but in the indirect sense everyone pays. This can be a roll-your-own quick and dirty supply-side argument if you're willing to assume private sector activity is always more productive than public sector activity. There's a dollar-for-dollar productivity gain under these circumstances, as activity shifts from public to private sector. Not only do you "know better" what to do with the money, but you'll also get more income, employment, and output if you (not the government) spend it. Hold onto your hats! Once the tax cut kicks in, we'll see if the theory works!

Link posted by Steve Antler : 5:11 AM

Tuesday, June 17, 2003

As the lines get closer... Good background briefing on California. By the way, I think Tony said this, not this.

Link posted by Steve Antler : 8:36 PM

Answer to a question that hasn't been asked? Critics of the Senate Finance Committee's prescription drug benefit plan are increasingly and confusingly questioning its wisdom. The NCPA, for example says: Only people with more than about $1,100 in drug costs in a year would be better off, in retrospect, for having enrolled in the plan. According to data compiled by Frank R. Lichtenberg, a Columbia University health economist, from the government's Medical Expenditure Panel Survey: ---About two-thirds of the elderly used less than $1,100 worth of drugs in 1999. ---The 10 percent of the elderly who used the most drugs averaged $3,720 in total costs; at that level, the out-of-pocket cost under the Senate plan would be $2,418. Moreover, because the plan would offer no direct benefit to most seniors in a given year, healthy people might not enroll, increasing the average cost per enrollee. Premiums would rise, and as they did so, still fewer healthy people would join. Let me see if I understand this. (1) People who don't immediately advance their economic position by getting more dollars out of the plan than they put in won't join. (I'd appreciate it if you kept real quiet about this point. If word gets out, the whole insurance industry is doomed!) (2) Two thirds of the elderly have drug costs lower than $92 per month. (Uh, maybe this isn't quite the crisis we thought it was?) (3) Those who most need the plan would have their drug costs lowered by a mere 35%, which is far from perfect. (Reminds you maybe of Saturday Night Live? "If it's not Scottish, it's CRAP!") UPDATE: Robt. Kuttner thinks the Dem equivalent of the Sat Night Live line above will be a winner.

Link posted by Steve Antler : 2:42 PM

I think we can do it! Andrew Sullivan suggests we make history together: Here's my proposal. On July 9, as many blogs as possible focus on the struggle for freedom in Iran. It's the anniversary of the pro-democracy protests that have been going on for years. I'll devote the week after July 4 to this issue, culminating in July 9. Please send me links, ideas, articles pertaining to the Iranian struggle in the next few weeks. If you're an Iranian dissident and may perhaps read this somewhere somehow, get in touch, email your thoughts. If you're an Iranian ex-patriate, let me know what you think we need to link to or include. If you're a blogger, make your own plans, and let me know so I can link. Many people have theorized about the power of the web to bring about change and the young generation in Iran must know this as well as any group of people. So let's try and use it - if only to send a symbol of solidarity with those resisting the theo-fascists who have wrecked Iran for three generations.

Link posted by Steve Antler : 2:13 PM

Data alert... Courtesy of EconoMagic, here is one picture of our dependence on Middle East oil. This can be measured in lots of ways -- for example, "Persian Gulf oil" may not exactly equal "Arab Opec oil."

Link posted by Steve Antler : 1:32 PM

Like the NYT is right now... The light weight of Krugman's latest is shocking. Three introductory paragraphs rewriting Yahoo News, one from Washington Post, the next from Slate, then there's this little-girl whiny stuff: With the budget deficit projected at more than $400 billion this year, a few billion more for homeland security wouldn't make much difference to the tax-cutting agenda. Moreover, Congress isn't pinching pennies across the board: last week the Senate voted to provide $15 billion in loan guarantees for the construction of nuclear power plants. Yeah, that proves it! The nuclear power stuff, right? That'll tell them! Doesn't this look kind of silly in the same paper as Romero's piece? UPDATE: Oh yes, and can you find nuclear power in this graphic depiction of total US energy sources?

Link posted by Steve Antler : 12:47 PM

Like the NYT used to be Simon Romero gets everything right. Facts are abundant, neither the business nor the environmental types are presented as bad guys. Just the facts, disturbing though they may be. One especially appreciates the way businessmen seem so, well, businesslike. An important subtext is how most folks in the energy business make money no matter which way the political wind blows. It's part of their job description -- what they're supposed to do.

Link posted by Steve Antler : 12:26 PM

No time Check this and this out while I'm in class. You might also notice the upcoming major boom in US tourism to Iraq (It's coming. You heard it here first!) seems to have been initiated by none other than Nicholas D. Kristof himself!

Link posted by Steve Antler : 7:18 AM

Kerry bit by ANWR bug? Opponents of ANWR (Arctic National Wildlife Refuge) drilling like to quote two figures. First, the size of ANWR (approx. 20 million acres?) and second how long the deposits could power the US economy (three months to two years?). The second number always looks puny compared with the first. ("Twenty million acres? Just three month's worth of oil? Forget about it!") The cute thing is, if you take any one source of US petroleum imports and trot out its numbers in isolation you make it look puny by comparison. We'll get the exact numbers showing our "dependence on Middle East imports" this afternoon (gotta teach this morning). For now, let's take as a working hypothesis that Kerry was bit by the ANWR bug -- he just doesn't realize how much oil we use from how many sources and how small each individual source is compared with all the others. UPDATE: Bill Hobbs sends this picture of ANWR in the summer. I think it looks somewhat the same in the winter, only the color is different.

Link posted by Steve Antler : 7:10 AM

Monday, June 16, 2003

Kerry's energy plan At NRO, Gregg Easterbrook summarizes the Kerry energy plan. With total unrealism, Kerry pledges "ending our reliance on Middle East oil within this next decade." That would require a reduction of 4 million barrels per day in U.S. oil consumption, or a 21 percent drop in national oil use--assuming no increase in demand through the next ten years. Toss in a rising population and ever-more SUVs on the road during the next decade, and eliminating Middle East imports would require something on the order of a 30 percent national drop in oil use. Reduction of that magnitude could happen only if there were a second Depression or via gasoline rationing...Thus Kerry's promise to eliminate Middle East oil imports in a decade is quite ridiculous. The one-third mpg improvement Kerry advocates would not translate into a one-third reduction in oil usage because it would apply only to new vehicles, not existing ones, and the transportation sector is only part of the petroleum picture. Let's hope someone on Kerry's staff did not base his pledge on this rudimentary math error. Then of course there are these little details. (1) Petroleum is fungible, i.e. "less purchased here" means "more available for sale somewhere nearby." (2) According to last February's API fact sheet, only 11.5 percent of U.S. oil consumption originates in the Persian Gulf. (More coming soon on this last point!) Are we really going to cut our imports of Mexican and Canadian petroleum by 21%? Update via Bill Hobbs: How much stuff do Canadians buy from us? How much would that decrease if we slashed our purchases of their oil and their economy suffered? How many more impoverished Mexicans would head north if we vastly reduced our purchases of Mexico's oil? How much time did John Kerry spend thinking about the ramifications of his sound-bite plan? Answer to the last one: None.

Link posted by Steve Antler : 2:41 PM

This proves that there really is too much money in politics.

Link posted by Steve Antler : 1:58 PM

Every day they get a little closer... The long blue line represents forecast or estimated demand. The shorter red line represents actual demand, accurate to the current one-sixth of an hour. As the day creeps on, the red line gets longer and longer, snaking under and sometimes over the red line. At the top, like a flat ever-sheltering roof, the long green line shows available resources. Today the long flat green line seems somewhat closer to the red and blue lines than it did yesterday. And so it goes as California creeps closer and closer and even closer to... ARMAGEDDON!!!!!! AARRRGHHHH!!!!!!!

Link posted by Steve Antler : 1:28 PM

I was watching Fox... Via Luskin: Wesley Clark on Meet the Press: ...I thought this country was founded on a principle of progressive taxation... Luskin reports: Our friend Bret Swanson says, "Whooooaaaa, General! Founded on the idea of progressive taxation? Thanks to Madison and Hamilton and their crew, the Constitution explicitly forbade progressive taxation. It took the 16th amendment to enshrine the socialist concept." Read the rest of the Clark interview for yourself. The modern U.S. military has rightfully moved well beyond its old 1960's less-than-genius reputation. Clark may have moved things backward a bit.

Link posted by Steve Antler : 11:00 AM

Data available right here... Here's a summary of the somewhat confusing table linked to in "guaranteed loser" below. -------------------------------------------------- TAXABLE INCOME---PERCENT OF TOTAL INCOME TAX BURDEN Top 7% ------------55% Next 23%-----------26% Next 24%---------- 12% Bottom 46%---------7% -------------------------------------------------- Please don't get me wrong -- I know this isn't the whole picture. My point is merely that these data are more politically powerful than many seem to believe.

Link posted by Steve Antler : 9:28 AM

You can always find someone who says it better... Last night I agonized (see "guaranteed loser" below) over distribution, taxation, and progressivity. Here's Wm. Buckley: By neglect [critics mean] the refusal of the American people to make the [public] investment required for the United States in 2003...But the term greed is, of course, invidious, and we are driven yet again to look at the charts. In the year 2000, U.S. earners in the top 1 percent contributed (rounding the figures) 37 percent of federal income taxes, up from 30 percent in l995. Earners in the top 10 percent paid 67 percent, up from 61 percent in l995. And the top 50 percent practically didn't move, but then there wasn't much room to move. In 2000, they paid 96.1 percent of the tax, up from 95.39 percent in 1995. My point is: this argument will prove extremely effective -- far more politically effective than my Democratic friends seem able to realize.

Link posted by Steve Antler : 7:43 AM

From LA Times via StraitsTimes Robert Solow says fears of deflation are inflated.

Link posted by Steve Antler : 7:15 AM

Monday, monday... Okay, find a cup of coffee and click here for your economic calendar -- "everything you need to know about the key economic reports due out in the next five days."

Link posted by Steve Antler : 7:03 AM

Sunday, June 15, 2003

A guaranteed loser of an issue... Two years ago, my Democratic activist buddy just couldn’t understand why his latest focus group was so cool to the Party’s position on inheritance taxes. Nobody had a family rich enough to be touched by the “death tax” -- but they were all opposed anyway. Nobody owned a small business, but still they argued passionately for small businessmen and family farmers unable to pass businesses along to their kids. My buddy just didn’t get it. “Do you know any farmers?” he asked. “Are any of your parents millionaires?” How could they have been so dense, he wondered to me afterwards. “They just thought this kind of tax is unfair,” he complained in disbelief. Any economics professor knows how easily students are shocked by U.S. income distribution. It all just looks so unfair , the top 20% earning over 40% of all income and so on. Their reaction is a proper expression of democratic traditions, even of Western civilization itself. An egalitarian prejudice is basic to our culture. When combined with historical details like Utilitarian philosophy and the Great Depression, this prejudice gave rise to the progressive income tax. But an obscure and extremely interesting feature of progressive taxation is the following. When imposed on an unequal distribution of income, a progressive distribution of taxes must by simple arithmetic appear less fair than the distribution of income itself. If richer people constitute a top 20% earning 40% of all income, in other words, a progressive income tax means they must also constitute a top 20% paying, say, 60% of all the taxes. Those shocked by income inequities, in other words, will most certainly be even more scandalized by the even-more-unequal distribution of taxes generated by progressivity. This is a kind of automatic stabilizer moving redistributive taxation in a less-redistributive direction. It is a real dilemma for the Dems. It explains why the tax cut is for them a guaranteed losing issue.

Link posted by Steve Antler : 4:29 PM

Hope it pans out... MORE INFORMATION+FASTER COMMUNICATION=MORE EFFICIENT MARKET Now if we could just get a little action on tort reform and tax simplification...

Link posted by Steve Antler : 2:22 PM

Let's start sorting this out In recent public discussion two legitimate but separate issues, income distribution and taxation, have become entangled with each other. This enganglement will only worsen in coming months as state and local governments address their growing deficits. Simple credible data can help. Maybe such data can start undoing the extensive damage done so far by tons of angry partisan studies, each with its own acres of detailed and confusing percentage tables. Here’s a simple, basic compilation by Karl Case and Ray Fair showing percent of total income going to summed local, state, and federal taxes for five income classes. This handy little table is the most useful summary of the tax/income issue I’ve been able to find to date. -------------------------------------------------- INCOME CLASS---TAXES/INCOME Top 20%------------33.9% Fourth 20%--------32.6% Third 20%----------32.3% Second 20%-------31.2% Bottom 20%-------34.0% -------------------------------------------------- (Source: Case and Fair, Principles of Economics, Prentice Hall, 2002, p. 364.) Lots more on this and related material very soon, but let's draw one quick conclusion right now. When they start yelling the tax cut is a fraud because the states are taking all the money Washington gave to the poor, you should just point out there's nothing new here! Like it or not, that's the way the system's worked for years -- with willing participation of all parties, it might be added.

Link posted by Steve Antler : 1:01 PM

I'll get back to you when I've worked it out... John Cook's Hot Air in the Blogosphere (registration required) has a few ideas on the blogosphere's eco-political significance. Okay, here's the data: there are 700,000 ham radio operators in the US compared with a mere 74,000 or so daily visits to Instapundit: I bring up ham radio because it's essentially a low-tech version of blogging--it's a far-flung network of isolated, lonely and bored people, probably in their basements, probably in their underwear, who share obscure interests and communicate with one another via a technology they are obsessed with...And you tend to read remarkably little about the influence of all those ham radio freaks these days. (In the spirit of full disclosure I should point out that I am a bored, lonely and isolated person who, often in my underwear, obsessively reads the blogs referenced here, and others. I'm just under no illusions as to their opinion-shifting power.) Now here's a story problem for you. If there are 700,000 ham operators in the U.S. and the average blogger stays at Instapundit for 13 seconds per visit, how many minutes per day would the average ham radio operator have to spend broadcasting to match the communication power of the blogosphere? Update: I seem to remember ham radio operators were among the groups most actively courted by politicians before the days of modern special interest groups.

Link posted by Steve Antler : 10:27 AM

Did you know...? We are running out of petroleum and the world is coming to an end.

Link posted by Steve Antler : 7:21 AM

Find a cup of coffee and tune to ABC... Alan Greenspan is on "This Week" ... UPDATE: False alarm. Preempted by Brinkley coverage? (Oh, yes, and don't Kerry and Stephanopoulos just look great together?)

Link posted by Steve Antler : 6:51 AM

Scroll down for "Existential horror" Now there's an even scarier-sounding 20-yr employment related datum. This measure (new jobless claims) is less of a lagging indicator than the data talked about in the "horror" post below. Here we're talking about people leaving jobs and entering unemployment, not leaving unemployment and entering the labor force (and then looking for jobs). Got that?

Link posted by Steve Antler : 6:37 AM

Saturday, June 14, 2003

Metering Power and Politics in California Current California discontent as noted by John Fund: Fueling...discontent is massive fiscal incompetence...Carl DeMaio of the San Diego-based Performance Institute notes that California's general budget grew by an average of 9.4% a year from fiscal 1997 through 2002. Revenues grew dramatically too--by 27% during Mr. Davis's first term. But spending went up 36% during the same period. If the state had only held spending growth to the increase in population and inflation, it would be enjoying a $5.5 billion surplus now. You can meter potential changes in this discontent right now and in coming months here. Keep checking the green, red, and blue lines showing each new day's 24-hr California energy situation. This is a 24/7 changing picture, updated every ten minutes (use your screen refresh). When the lines get close, as they may in coming weeks, plan on exponential increases in discontent.

Link posted by Steve Antler : 9:46 PM

Why, there'd be no business cycles at all if only... Lots to admire in William Greider's new piece Deflation. Also many places where you feel like sticking three fingers right down your throat. On the plus side: nice overview of the issues. On the minus side: lots of sanctimonious twaddle: what's under way is a brutal unwinding of the delusional optimism that reigned during the 1990s--excesses like the hyperinflation in financial assets and the swollen ambitions that led investors and companies to wildly overvalue their prospects for future returns. The stock-market bubble was the most obvious expression of excess, but not the most serious dimension. In an era of Internet fantasies and collective self-delusion, business sectors (and their financiers) overinvested on a grand scale and generally used borrowed money to do so. That is, they built too many factories, shopping centers and office buildings--creating more productive capacity than the marketplace could possibly absorb. Consumers indulged in their own version of wishful thinking, borrowing heavily to keep on buying, hoping the "good times" would last long enough to bail them out. Yeah, if only all of us were just as modest, unselfish, and immune to collective self-delusion as the folks over at The Nation!

Link posted by Steve Antler : 12:15 PM

Life imitates Art? Sorry, last time.

Link posted by Steve Antler : 11:32 AM

Maximize the Whales! Environmental culture wars continue as countries opposed to whaling table an International Whaling Commission resolution to maximize the size of the international whale stock rather than size of harvest. "It's potentially the most important move by the IWC since it created the Southern Ocean Sanctuary for whales in 1994," says Vassili Papastavrou, a whale scientist at the International Fund for Animal Welfare, which backs whale conservation...But whaling nations led by Japan and Norway are openly suspicious. "Hidden beneath the mask of conservation is a devious strategy to end all sustainable use of whale resources for food," says Minoru Morimoto, Japan's commissioner to the IWC. Doesn't he realize liberal postmodernism has taken us beyond old-fashioned, absolutist barbarities like arguing over what's improper to eat? Full Disclosure: I witnessed firsthand the 1970's battle between Greenpeace and the Newfoundland seal industry. I myself have eaten seal meat. It is delicious.

Link posted by Steve Antler : 11:12 AM

Fiscal Crisis of the States Wm. Buckley calls Federal aid to deficit-ridden states voodo socialism: A diminished economy has to mean diminished services at the state level, because states are not permitted to borrow money. What is required is leaner practices, and it is a democratic exercise what exactly that will entail. When Newt Gingrich closed down the government in l995, Mr. Clinton outwitted him by closing down elevator service in the Washington Monument. Targeting such services arouses the yelps the president sought, and Gingrich retreated. But straitened budgets should bring on thought directed at getting along with what we have got. Public-sector spending is over 40 percent of GDP, and it is reasonable for the taxpayer to ask for husbandry in place of higher taxes. And of course, Mr. Krugman et al. fail to acknowledge, let alone emphasize, that aid by Washington to the states has got to originate in aid from the states to Washington. If Californians want more public money, they can raise it directly, by increasing the taxes on Californians, or indirectly, by getting it from Washington, which will get it from Californians. Okay, how about getting it from Tennessee? P.S. It is Bill Hobbs we have to thank for this web site; until more formal thanks are organized, we'll make do with informal ones like the present note!

Link posted by Steve Antler : 9:08 AM

The Thrill is Gone? I think Samuelson is getting kind of tired. He needs a vacation. Consider his latest: Both parties are guilty. Go back to 1993. President Clinton proposed raising the top income-tax rate. Congress agreed. No Republicans supported the increase. They said that higher taxes would destroy the economic recovery. This conformed to Republican dogma: Lower taxes are glorious; higher taxes are sinister. A decade later, the predictions seem absurd. The recovery, aided by low inflation and rising employment, was already underway. Clinton's tax increase didn't have much effect one way or another. Democrats may now be falling into a similar trap. Their dogma is income distribution. The loathing of Bush's tax cuts is so widespread that it's presumed they must fail. The tax cuts go to the "wrong" people (mainly the well-off and rich), who will not spend them. Moreover, the tax cuts are so deep that long-run budget deficits must cripple the economy. Up to a point, the description fits. In 2003, 58 percent of the benefits go to taxpayers with incomes exceeding $100,000, says the Tax Policy Center of the Brookings Institution and Urban Institute. As for budget surpluses, they're nowhere in sight. Yeah, right, there's some truth on both sides, bla, yadda yadda and so on, but can't he find even the smallest glimmer of those exciting big ideas we used to think the two sides more-or-less represented?

Link posted by Steve Antler : 8:07 AM

Quick Briefing on Freddie Mae and Fannie Mac; or is it Fanny Mac and Freddy May; or ...? The Baltimore Sun has a nice, self-controlled summary of the Freddie Mac/Fannie Mae story.

Link posted by Steve Antler : 5:56 AM

Friday, June 13, 2003

Why Not Worry? Here's one reasonable reading of unemployment trends since the late 1940's. (There are others of course.) It looks like three distinct trendlines are generated -- one for the period prior to 1962, one for 1962-1983, and one final downward-sloping trend for all years since 1983. I am not what they call a "supply-side economist." ("Where's the transmission mechanism? It can't be a real model without a specified transmission mechanism!!") Still and all, these three employment trends look an awful lot like major tax cuts had something do with all this.

Link posted by Steve Antler : 5:38 PM

Existential horror There you stand in front of the class explaining something you know is true and a few ugly common-sense neurons start firing uncontrollably, sparking a frightening feeling this is wrong, wrong! It makes no sense whatsoever! Dry mouth. Queasy stomach. Every word echoes as hollow, unnatural. (What moron designed the acoustics in this armpit of a classroom?) A simple numerical example! Yes! That's just what I need! A simple numerical example! Okay here it is. Now look. When we come out of a recession unemployed people who were previously not looking for work start looking and, until they find a job, remain unemployed, right? The unemployment rate is the ratio of those actively seeking work to the sum of those employed plus those actively seeking work. (This sum is otherwise known as the labor force). This works completely counter to intuition -- take any ratio of two positive numbers that has a numerical value less than one. Increase the numerator (top) and the denominator (bottom) by the same number. Your intuition, those nasty common-sense neurons, says "no change," but the value actually increases, as you can easily verify with a calculator and the following simple numerical example. Start with an unemployment rate of 25/100 or 25%. Now let ten more people start looking for work, increasing the labor force to 110 and the number actively seeking work to 35. The result is an unemployment rate of (25+10)/(100+10)=(35/110)=?. (You have to get out your calculator to verify the exact result. Send me news if it doesn't come out to a number greater than 25%!) The point of the exercise is this: when we recover from a recession, there's a natural tendency for the unemployment rate to temporarily rise as labor markets recover. Or: this could actually be good news. Update on existential horror: check out this plot of the unemployment rate since 1950. Try this. Look at the chart. Starting at 1950 and ending in or around 1983, try to discern the long-term unemployment trend for those years. Does the pattern make you comfortable or uncomfortable? Now start at 1983 and end at the present-day "nine-year high." What is the long term trend for these years? How does this pattern make you feel?

Link posted by Steve Antler : 4:14 PM

Last one, I promise -- finally, once more, life imitates art?

Link posted by Steve Antler : 1:19 PM

Krugman's latest may be appropriately named, but it amounts to nothing. Why isn't he writing about important stuff like this?

Link posted by Steve Antler : 1:09 PM

More life imitates art?

Link posted by Steve Antler : 10:09 AM

Here's a hint: some of this involves less than $20/bbl crude Memri's Dr. Nimrod Raphaeli notes Saudi writers are discussing the many economic implications of Free Iraq. You can find additional earlier posts at the Suggested Supplementary Reading blog.

Link posted by Steve Antler : 9:45 AM

Tuesday, June 10, 2003

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