New forecast...

Fairmodel has been re-estimated and a new US Forecast Memo is out. Here are some of the numbers: Real GDP and % increase===Unemployment Rate 2003/3 9705.0 +4.1% ====6.2 2003/4 9791.2 +3.6% ====6.0 2004/1 9875.4 +3.5% ====5.9 2004/2 9957.7 +3.4% ====5.7 Doesn't 4.1% GDP growth look great? It would be nicer still to be looking at lower unemployment rates, but at least the number is marginally better than the 6.3% we were going along with this morning. It's worth remembering the consensus this morning was +1.5%, not 2.4% GDP growth. But Fairmodel pumped out that silly +2.7% last April 25. Whoops!

Link posted by Steve Antler : 10:00 PM

Welcome to the war economy...

Reportedly huge increases in defense spending are being "blamed" for the unexpected 2.4% second quarter GDP growth Here's one way of looking at the modest rise in defense spending from 4.29% to 4.67% of GDP: =========GDP /DEFENSE/AS %/INCR 2002:1==9,363.20/ 388.5 /4.15% 2002:2==9,392.40/ 395.8 /4.21% /+0.06 2002:2==9,485.60/ 402.5 /4.24% /+0.03 2002:4==9,518.20/ 413.2 /4.34% /+0.10 2003:1==9,552.00/ 409.7 /4.29% /-0.05 2003:2==9,608.10/ 448.9 /4.67% /+0.38

Link posted by Steve Antler : 1:36 PM

Latest from MEMRI

Translation of columnist Khaled Al-Qishtini's editorial on the US Iraq mission: The coalition forces will not withdraw from Iraq until they complete their mission. They are in Iraq at the will of the overwhelming majority of the people, and their mission is a noble and blessed one. They strengthen their presence [in Iraq] every day, with forces from other countries [whose leaders have] grasped the nobility of the mission carried out by the coalition forces. This mission is to sow the seeds of legitimacy of rule and of law, to establish a democratic government, to liberate women from the slavery and backwardness to which they are subject, to spread transparency in [public] administration, and to spread rationality and the spirit of science in education and in defending human rights.

Link posted by Steve Antler : 10:34 AM

As NYT throws on the last few shovels full...

Okay NYT summary of some viewpoints making up the Boskin controversy ("It Looked Good on Paper"): While Professor Auerbach and his co-authors prepared their paper, other commentators took a whack at Professor Boskin's results. Bruce Bartlett...complained that the government would not be able to sell bonds backed by the deferred tax revenue. 'It's not like a corporation that suddenly discovered an asset that it didn't know it had,' he said in a phone interview last week. 'Everybody realized, after they thought about it for a while, that there was less there than met the eye.' Academics, meanwhile, spotted yet another problem. When people take money out of I.R.A.'s and 401(k) plans, securities like stocks and bonds are sold. Because these people are often retired, they may spend most of the withdrawals. The more they spend, the more the nation's stock of private saving falls. When that happens, according to Professor Boskin's own assumptions, businesses would invest less in new projects, and their ability to generate profits would therefore decline. With smaller corporate profits, the government would lose revenue from the corporate income tax - enough to offset a substantial chunk of the revenue gained from the individuals' withdrawals. But Professor Boskin, it seemed, did not take this into account.

Link posted by Steve Antler : 8:39 AM

Business Week hints at a new draft...

No, not military draft...we're talking about a new draft of a paper. This piece in BW Online ("Is This U.S. Tax Windfall for Real?") is being cited as evidence the revised Boskin is out: If Boskin is right (his paper on this will soon be published by the National Bureau of Economic Research), the forecasts of fiscal crisis when baby boomers retire are overstated. The unfunded liabilities of Social Security and Medicare's hospital insurance total $9.4 trillion. Tax revenues on retirement accounts will cover it. Predictions of gargantuan deficits in the years ahead due to the Bush Administration's huge tax cuts appear wrong as well. Tax revenues may well cover that, too.

Link posted by Steve Antler : 8:34 AM

GDP SECOND QUARTER, +2.4%

GDP just came in at +2.4% for the second quarter, just a bit under April's 2.7% Fairmodel prediction and way above the 1.5% current consensus. Initial jobless claims down to 388,000 as well. These are the data to be released tomorrow, along with times and predictions where available. 12:00 AM Auto Sales Jul - 5.5M 5.6M 5.5M - 12:00 AM Truck Sales Jul - 7.5M 7.6M 7.5M - 8:30 AM Average Workweek Jul - 33.7 33.8 33.7 - 8:30 AM Hourly Earnings Jul - 0.3% 0.2% 0.2% - 8:30 AM Nonfarm Payrolls Jul - 0 K 10K -30K - 8:30 AM Personal Income Jun - 0.3% 0.3% 0.3% - 8:30 AM Personal Spending Jun - 0.4% 0.4% 0.1% - 8:30 AM Unemployment Rate Jul - 6.4% 6.3% 6.4% - 9:45 AM Mich Sentiment-Rev. Jul - 90.3 90.5 90.3 - 10:00 AM Construction Spending Jun - 0.5% 0.4% -1.7% - 10:00 AM ISM Index Notice the all-important unemployment rate buried right in the middle. Fairmodel calls for a tenth of a percent decline, so I'll go along with the crowd and predict 6.3%.

Link posted by Steve Antler : 6:28 AM

Wednesday, July 30, 2003

FRB: Beige Book - Full report

FRB: Beige Book - Full report: "Prepared at the Federal Reserve Bank of Richmond and based on information collected before July 21, 2003. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials."

Link posted by Steve Antler : 2:37 PM

Grim reality...

It is becoming slowly and painfully clear this site's permalinks do not work, graphics often disappear for no reason, and loading is haphazard at best. We are going to have to leave blogger.

Link posted by Steve Antler : 12:25 PM

How to blind people with statistics

Mortimer B. Zuckerman says: More than 3.8 million people now draw unemployment benefits, the highest in 20 years. The number looking for jobs has passed 9 million for the first time in 10 years. The unemployment rate has climbed to a nine-year high of 6.4 percent. The economy has lost over 300,000 jobs this year, and unemployment claims are still up around 425,000 a week. Okay, now unglaze your eyes for a second and you'll notice something. First he says bla bla, the highest in 20 years. Then he says bleah, blea, highest in 10 years. Then it's yadda, yadda, climbed to a nine year high. And finally yackda, yacdka this year and this week. Why doesn't he keep the time under consideration constant? The answer is, it might weaken his argument! Here are plots of new and continued claims for unemployment insurance since 1967. I've made no adjustments for the growth in the population and labor force, so you can plainly see what we're going thru is a very mild jobs recession. By standards of the early 1990's (when 6% was about as low as we thought we could go) we are not far from full employment. Jobs data can be really confusing for lots of reasons. Some of our earliest posts had to do with the pain and suffering of explaining to a class how new job searchers increase the size of the labor force and, therefore, the unemployment rate. Another source of confusion is the inexact match between "jobs," "workers," and "work done." Look: many people hold two or more jobs. Say someone like this gets fired and isn't replaced. One job disappeared -- but the person fired isn't counted as unemployed! And consider this: you've got a factory with really low orders, so cut back everyone's hours and put them on a four day week until things pick up. Nobody's fired, but less "work" is being done! To find out what's really going on you've got to look at the hours data as well as the employment/people data. Regards to Bill Hobbs, who sent a reader's queries over to us.

Link posted by Steve Antler : 11:31 AM

It takes one to know one?

This, from the brilliant individual who brought us Saudi Crown Prince Abdullah's peace plan in the desk drawer: The Bush Pentagon has already, idiotically, wasted critical months in Iraq trying to prove it can do nation-building on the cheap and without serious allies.

Link posted by Steve Antler : 9:58 AM

Never had their own Protestant Reformation...

Hobbs sends us to Donald Sensing who tells us (a) the Koran was written down in Aramaic (b) 150 years after the Prophet's death, and (c) in its present form it is possible to read it as an Aramaic rather than an Arabic text. Many links. Go there.

Link posted by Steve Antler : 6:47 AM

A question...

Is anyone who is now calling the Israeli security fence a "new Berlin Wall" on record as having opposed the real Berlin Wall when it was standing? As having celebrated in public when it fell? Anyone know?

Link posted by Steve Antler : 6:15 AM

Tuesday, July 29, 2003

Towards the end...

There's a magic time, that sort of misty twilight just before you move to a new city or take off for summer vacation, or those last three lectures before you leave forever to teach at another university, or that last walkaround the building once you've been fired and you've cleaned out your office and you know you'll never be back again -- you know, that kind of comfy "what-the-hell" feeling when you say what you goddam please because if feels real good even though it's just plain wrong -- well, that's the kind of comfortable magic feeling written just all over Paul Krugman's column today: And when it comes to domestic spin, Mr. Blair isn't remotely in Mr. Bush's league. Whether pretending that the war on terror — not tax cuts, which have cost the Treasury three times as much — is responsible for record deficits, or that those hugely elitist tax cuts are targeted on working families, or that opening up wilderness areas to loggers is a fire-prevention plan, Mr. Bush has taken misrepresentation of his own policies to a level never before seen in America. "Yeah, whatever, who gives a damn anyway..."

Link posted by Steve Antler : 4:25 PM

Dogma, doctrine, and theory...

What's the difference between these three? Frankly I just don't remember but I think it has to do with whether beliefs (a) can or cannot be disproved by fact and (b) are or are not so all-encompassing as to constitute an explanation of the world in its entirety rather than some of its single aspects. Or something like that. Which brings me to Benjamin Friedman's Boston Globe editorial. Frankly, this essay encompasses so many issues, so many aspects of modern life, I suspect it could be the basis of a new religion. I especially like the way bad economic policy gives rise to intellectual inflexibility and white supremacist militias.

Link posted by Steve Antler : 2:07 PM

Tom Joad got out of the old McAlester Pen, it's there he got his parole...

It's the bulldozer scene in John Ford's Grapes of Wrath that makes you feel you're there and wish you weren't. There's the bulldozer under that huge, gray, windy, black and white sky, ready to level the family's shack so the bank can take the farm. There's the dust, and the wind, and you might even cheer if the family really does shoot the bulldozer guy but hey, it's the neighbor's son! They've known him since he was a boy! And he can't help it. He needs this job. And the bank needs the farm to sell. Because they owe money to a bigger bank -- and that bigger bank, well it owes money to an even bigger bank back east. So the shack crashes down under the bulldozer. And the Joads -- along with thousands of others-- are on the road to California. These images -- families owing banks owing bigger banks owing even bigger ones, money flowing East while families flow West -- stay burned in your mind for years. They express the centrality of the Great Depression to America's moral consciousness. The Depression imparted a simple and, basically, a wrong doctrine -- that markets are evil, not to be trusted, and inferior to alternate, more personal forms of economic organization capable of expressing collective conscience. Regular public expression of this belief is now normal activity for the Left, a modern kind of public reaffirmation of faith. But interestingly, at the center of this mistrust of markets was the pernicious 1930's credit pyramid -- so many people and institutions owed more than they owned. This was why banks owed banks who owed banks, half of the disastrous contraction of credit (the other half was supplied by an immature Fed). Which brings us to a number, found in A Rolling Tide, that may surprise you and your friends. Given the skyrocketing public and private debt that's gripped the nation, ask them what percentage of households owe more than they own? You'll get lots of interesting numbers, but here's the real answer: In 2001, 6.9 percent of families had negative net worth—only slightly lower than the 7.3 percent level in 1989...For families with negative net worth in 2001, the median wealth value was $-5,100...Although this group had the lowest levels of wealth, a substantial part of the group had nonnegligible assets—the median value was $7,600. Across the asset distribution, the group with net worth less than $-5,000 had more than twice the assets of the part of the group with new worth closer to zero; however, the poorer group had far more debt as well... Among financial assets, ownership was notable only for transaction accounts (79.7 percent of families with negative wealth) and retirement accounts (23.5 percent); among nonfinancial assets, ownership was notable only for vehicles (64.7 percent) and principal residences (16.4 percent). The proximate cause of negative net worth is that the value of debt exceeds the value of assets; thus, all families with negative net worth have some type of debt... Let's review: in 2001, 6.9 percent of families had negative net worth, lower than the 7.3 percent level in 1989. Is this surprisingly low or disturbingly high? Additional historical data will be interesting indeed.

Link posted by Steve Antler : 1:26 PM

Monday, July 28, 2003

Loading problems continue, counters uninstalled

To address continued loading problems I've uninstalled all counters, hidden or otherwise. (Traffic runs 350-600 visits per day, depending on how you count hits, re-loads, returns, etc. There. Now you know.) UPDATE: Plain vanilla site meter seems to allow loading. We'll leave it alone for a few hours and see what happens.

Link posted by Steve Antler : 12:45 PM

There's no such thing as a future free lunch...

Brookings summarizes William Gale's July 24 Budget Committee testimony: [T]he fiscal problems the country faces are unlike any other the country has faced in their origin and nature. We will likely have to find a new way of dealing with them. The notion that federal spending can be held to its post-WW II norm of about 18 or 19 percent of GDP seems virtually impossible to maintain without severely cutting the major entitlement programs or eliminating the rest of government. In future years, spending on Social Security, Medicare, and Medicaid alone is anticipated to exceed 19 percent of GDP. The unpleasant implication is that a long-term resolution of these issues that does not destroy the role of the federal government in American society will have to include significant increases in tax revenues as a share of the economy. More at DeLong.

Link posted by Steve Antler : 11:51 AM

Two languages, two stories...

Since it was founded, MEMRI has enabled those who're interested to find out for themselves what's being said in the Middle East in languages other than English. MEMRI has made it more difficult, but apparently not impossible, for groups to say one thing to the West in English and another to their followers: In an interview with the Lebanese daily Al-Safir, Islamic Jihad Secretary-General Ramadhan Abdallah Shalah explained: 'Abu Mazen and his government gave [us] assurances that it would not take the steps that Sharon wanted against the resistance factions, that is, disarmament, arrests, and the like.'...Shalah also said, 'The strategy of the Islamic Jihad is to continue the resistance. Suspension of the operations is merely a tactical step - We are not negotiating with the enemy, and we do not recognize him. But preserving the unity of our people and our national interest demands that we extricate ourselves from the trap that Sharon [set] for our national unity through civil war'... Interesting to wonder whether the old West's supposed-native-persons'-saying "he speaks with forked tongue" referred to bad stuff associated with snakes and reptiles, or saying one thing in one language and another in some other language? (Anyone have more info on this?)

Link posted by Steve Antler : 11:11 AM

I don't wear jeans; I like red meat; please could I bring a camera crew?

More on Sabine Herold, not new but I think we missed it first time around. Dubbed France's Lady Thatcher by the newspapers, Mademoiselle Herold has been leading the rallies against the unions who have been crippling her country. Standing on a telephone box in her pearl earrings and high heels, she addresses crowds of 80,000, urging them to rise up against the striking teachers, Metro workers, rubbish collectors and air traffic controllers who are ruining people's lives. With her student friends, she has set up an organisation: Liberte J'Ecris Ton Nom, which has thousands of members, demanding that France reforms. Now, she wants to come to Britain. Her email is simple: 'I would like to spend my time meeting politicians. I don't wear jeans; I like red meat; please could I bring a camera crew?'"

Link posted by Steve Antler : 10:56 AM

NYT teaches economics (not)...

Bill Hobbs finds some really uninformed economic writing at the NYT.

Link posted by Steve Antler : 7:35 AM

New wealth distribution numbers...

Bruce Bartlett explains a new FRB study on wealth (not income) distribution. Now I know from personal experience just how easy it is to drive a class into absolute shock with US wealth distribution figures. (Heck, you can turn a normally middle of the road bunch of students into a 1960's Les Miserables-raging mob in about ten minutes with those numbers.) Bartlett's piece hints at something really new, the possibility the 90's boom capped a sort of revolution in reverse, a revolution in which, as in the 1960's, the baby boomers are somehow leading the way: In [fact], every wealth class became better off. As the Fed study put it, “Over the period from 1989 to 2001, the SCF data show that the distribution of wealth shifted up broadly in real terms — another way of saying that in absolute terms there were fewer poor families and more families who were wealthier.” The percentage of all families with a net worth greater than $500,000 has risen at an especially rapid pace, increasing from 10.1 percent of all families in 1989 to 14.8 percent in 2001. The Fed attributes much of this growth to the aging of the Baby Boom generation, which moved into its peak earning years over this period. And with retirement facing them in the near future, members of this generation are also saving and investing more heavily, a task made easier by the fact that for many their children are now out of school and on their own. Looking at all families headed by someone aged 44 to 55, only 11.8 percent have less than $5,000 saved, while 20.3 percent have at least $500,000. Almost 70 percent of Baby Boomers have a net worth of at least $50,000. The political implications are important, since the Democrats seem unable to learn where to "correctly" draw the political line separating "rich" from the rest of us. Even when tutored by the likes of Tim Russert and Chris Matthews Dem politicians persist in tagging $100,000 and up -- the married-couple-teacher-fireman-Democrat-voter category -- as "rich." These new numbers sure won't help them.

Link posted by Steve Antler : 7:05 AM

Monday

Because today rhymes with "Sunday" but begins with "M" instead of "S," here's your weekly economic calendar. As always, check the EconoData part of the blogroll for an economic calendar with links and more info.

Link posted by Steve Antler : 6:34 AM

Sunday, July 27, 2003

Movin' East...

Via Prestopundit -- California's progress toward underdevelopment and poverty is explained: The state government under embattled Democratic Governor Gray Davis is turning so stridently antibusiness that it threatens to inflict permanent structural damage. Since 2002 the left-leaning legislature has enacted or expanded half-a-dozen laws dealing with burdensome regulations like family leave and overtime pay. Some corporate leaders think California is becoming Sweden-on-the-Pacific. "I've never seen anything like this is 35 years," says Angelo Mozilo, CEO of Countrywide Financial, the big mortgage company based near Los Angeles. "The state is punishing business, yet it's somehow convinced that business will not leave." Wrong: Companies - and jobs - are departing in droves. The state has lost 289,000 manufacturing jobs since 2001. 'The jobs that have to stay here are ones that involve direct contact with customers,' says Liam McGee, head of Bank of America in California. 'The mobile jobs - in systems development, manufacturing, call centers - are moving to other states.' Fidelity National, the nation's biggest title-insurance company, is shifting its headquarters from Santa Barbara to Jacksonville. Scores of the small businesses that form the backbone of California's economy are moving either jobs or headquarters out of state. Buck Knives is going to Idaho, and Coast Converters, a bagmaking company, to Las Vegas. Taylor-Dunn, a manufacturer of cartlike vehicles for airports, is expanding in Ohio and Missouri. Though Countrywide is growing rapidly, Mozilo is shrinking operations in California and shifting all expansion to low-cost states like Texas. By his estimate, the flood of new legislation will increase Countrywide's cost per worker by $4,000 to $5,000 a year. " I wanted to see how many of those 289,000 lost manufacturing jobs I could confirm, and sure enough, the picture is as grim as the article suggests:

Link posted by Steve Antler : 3:17 PM

Forecast of a jobless recovery...

I've been able to spend a few quality hours at the FAIRMODEL site, and can report the most bleak of jobless recoveries is what's being forecast there. (Hopefully everything changes radically soon when a new quarterly run takes place.) Here's my EVIEWS chart of the predicted unemployment rate thru first quarter 2006, followed by the numbers themselves. 2003/4 ===5.9 2004/1 ===5.8 2004/2 ===5.8 2004/3 ===5.7 2004/4 ===5.7 2005/1 ===5.7 2005/2 ===5.8 2005/3 ===5.8 2005/4 ===5.9 2006/1 ===5.9 2006/2 ===6.0 2006/3 ===6.0 2006/4 ===6.1 To what might we attribute this disturbing prediction? I've been brooding about possible structural change in the economy during the 90's, but my musings are far less interesting than Ray Fair's themselves: [Investigation suggests] there was only one major structural change, namely the huge increase in stock prices relative to earnings. All other large changes can be explained by this change. There is no obvious reason for the large increase in stock prices relative to earnings. Increased productivity growth does not appear to be an answer since the data show that there was only a modest increase in long run productivity growth in the last half of the 1990s. Also, earnings growth and the share of earnings in the economy were not unusually large. Testing for a New Economy in the 1990s, Ray C. Fair, May 2003

Link posted by Steve Antler : 1:15 PM

IN MEMORIAM PUNDITWATCH

On FOX NEWS SUNDAY Krauthammer points out international law undercuts the occupation and supports Iraqi paranoid rumor-mongering. Why? We can't march any of the captured 37 cards around in front of the cameras to prove they've been captured, since prisoners of war can't be put on display. This is why, he says, it was vital we put the two bodies on display. Putting a dead prisoner on display does not violate intl law. MEET THE PRESS Russert ambushes Wolfiwitz with Richard Lugar's Friday Boston Globe proclamation: "The gap between the cash needed to rebuild the country's economy and revenues from oil, estimated at $14 billion in 2004, could be as high as $16 billion a year..." Wolfowitz: Iraq's oil revenue, sooner or later, will pay for rebuilding the country. ABC THIS WEEK: Fareed Zakaria says controversy over display of the two sons' corpses is the "quagmire or the week;" six months from now we'll be consumed with the real story, which will be Iraqi politics and anti-Americanism in that context. And finally, Newt to the people of California: find a way to rewrite the Constitution of California, because the State is ceasing to function.

Link posted by Steve Antler : 10:03 AM

Maybe France is right after all?

Now looking over NBER working paper Peter H. Lindert, WHY THE WELFARE STATE LOOKS LIKE A FREE LUNCH, here's what will be for many readers the smoking gun: (Parenthetical note: take away Portugal, US, Japan, Swedan and - at least for the males - it is not clear you've got a downward sloping relationship here. Need the data to know for sure.) Here's the abstract: The econometric consensus on the effects of social spending confirms a puzzle we confront in the raw data: There is no clear net GDP cost of high tax-based social spending on GDP, despite a tradition of assuming that such costs are large. The paper offers five keys to this free lunch puzzle. First, the costly forms of transfers usually imagined have not been practiced by real-world welfare states. Second, better tests confirm that the usually imagined costs would be felt only if policy had strayed out of sample, away from any actual historical experience. Third, the tax strategies of highbudget welfare states are more pro-growth and less progressive than has been realized. Fourth, the work disincentives of social transfers are so designed as to shield GDP from much reduction if any. Finally, we return to some positive growth and well-being benefits of the high social transfers, and suggest how democratic cost control relates to budget size. Find out what DeLong thinks here. More to come...Stay tuned...

Link posted by Steve Antler : 7:44 AM

Saturday, July 26, 2003

End of the great refinancing boom?

The Capital Spectator is worried about housing: The end of one cycle plants the seeds of another. Surveying the current economic landscape suggests that the U.S. is about to enter a so-called recovery with heavily indebted consumers and a chastened business sector eager to shed workers and delay spending. The issue that hangs over every economic conversation is deciding what impact rising interest rates will have in this less-than-ideal scenario. The answer, most likely, will come in the consumer sector, starting with real estate. To cheer up look at the five year housing numbers and quietly, to yourself, say the magic words "soft landing" three times.

Link posted by Steve Antler : 3:06 PM

More good news (sorry Professor Krugman)

Latest in a string of recovery indicators, rather than declining new home sales hit record levels: The Commerce Department reported Friday that sales of new, single-family homes clocked in at a seasonally adjusted annual rate of 1.16 million units in June, a 4.7% increase over May's level. Economists were predicting a decline. The solid increase comes on top of a 10.9% jump in new-home sales from April to May...'These are huge numbers. Better yet are the implications for consumer spending for the rest of the year,' said Ken Mayland, president of Clearview Economics in Ohio..."These new homes need to be furnished and they need appliances. That's going to lead to a stream of additional consumer spending, just at the time when consumers are getting child tax credits in the mail, and fatter paychecks from reduced withholdings."

Link posted by Steve Antler : 12:12 PM

Find it at Barnes and Noble...

Diligent EconoPunditistas will immediately recognize the name "Wayne Lusvardi" as the individual who accused yours truly of cross dressing as a sociologist. Lusvardi authored a review of Amy Chua's World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability that deserves a wider readership. Here's a slightly condensed version, find the original here: World on Fire asserts that the disproportionate economic success attained by “market dominant minorities” in third-world nations foments ethnic hatred and genocide. Democracy, coupled with capitalism, provides the catalyst that paradoxically sparks the backlash of “indigenous majorities” against wealthy ethnic minorities... Chua’s views come out of the elitist culture of the American university. Chua, herself a member of the “New Class” of lawyers and knowledge elites, casts a blind eye to the fact that the type of egalitarian state she advocates results in a wealthy class of lawyers, instead of an ethnic group, as the new privileged elites of redistribution…[This] new “knowledge class” in Western societies is a major antagonist to capitalism, due in part that this class finds employment and subsidization in the welfare state... [T]he thesis of the book…was [first] addressed by…Karl Marx and Friedrich Engels over 150 years ago when the First World was undergoing a similar wave of industrialization. Substitute such terms as “bourgeoise” for Chua’s “market dominant minority,” “the proletariat” for Chua’s “the poor,” “control over the mode of production” for “market dominance,” “ethnic conflict” for the “Jewish Question,” and “backlash” for “dialectical conflict” and you have a new lexicon of Marxism.. With the impeccable credentials of Chua one can only wonder how she wrote a book paralleling Marxist diagnostics so closely without even once citing Marx in her book? Chua is mostly right to warn about the exportation of American majoritarian democracy into developing nations, but has got it wrong about markets. Chua’s use of the term “market” is a misnomer. [She] uses the term “market dominating minority” to mean the converse of a market: a cartel, a cabal, a monopoly, a ruling class. Despite the constant denials in her book that she is not against democracy, globalization, or markets, World On Fire is less of a book on globalization or social science as it is an incendiary device that throws fuel onto the fire of the global culture wars.

Link posted by Steve Antler : 11:48 AM

Just exactly where is this guy who "distributes" stuff?

Arnold Kling, in a post with lots of good links to Sowell and Bartlett, poses the following question for discussion:: "In a review of a recent book on the history of the income tax, Susannah Camic comments, 'Some Americans firmly embrace the ideal of “justice,” the belief that, in the interest of fairness, resources should be distributed somewhat equally among citizens. In contrast, others hold that wealth comes as a consequence of “virtue”—work, creativity, thrift—and that the wealthy are thus entitled to keep the monetary rewards of their own talent and good behavior." For Discussion. If you support both 'justice' and 'virtue,' which taxes are the best and which are the worst?" With all due respect, isn't there a basic problem (as Sowell points out) with the last word in that tricky, passive voice phrase "should be distributed?"

Link posted by Steve Antler : 9:34 AM

Deflation: corrosive vs. benign

St Louis Fed has a new handout on deflation. (Thanks BB for link.) Widely misunderstood is the difference between normal upward or downwnward GDP deflator moves and what Greenspan calls "corrosive" deflation. In Greenspan's words, the corrosive variety “essentially feeds on itself, creates falling asset prices, which in turn brings down levels of economic activity…” Let's review: ====SELF CORRECTING?=======INFLUENCES ASSET PRICES? BENIGN======YES ===========NO CORROSIVE====NO===========YES Says the handout, based on accompanying table: U.S. experience with sustained deflation has been limited since the founding of the Federal Reserve in 1914. The results from 1930-1933 are uniformly bad, but deflation may simply have been a by-product of the economic collapse at that time. Japan’s experience is perhaps more relevant for today’s circumstances. Although sustained deflation is not everywhere and always “corrosive,” on balance the evidence suggests that deflationary episodes are marked by subpar growth.

Link posted by Steve Antler : 7:16 AM

(...oh God -- they know !...)

Regarding Klassenkampf, here's the most colorful critique to date (by email from Wayne Lusvardi) -- Good article posted on TCS. However, it seems your'e an economist trying to cross dress as a sociologist, if you'll excuse the metaphor. Reading Ricardo and Marx on class would help, but you missed sociologist Alvin Gouldner (The Rise of the Intellectuals and the New Class) written from the Left, and sociologist Peter Berger on "The New Class" written from a more conservative position. These sociologists wrote about two middle classes (a business class and a knowledge class) since about the 1970's. Many sociologists have recently written that the old class structure of the U.S. has melded into one big class where, except for the underclass, everyone at least appears middle class... More from Lusvardi soon on the California crisis...

Link posted by Steve Antler : 6:53 AM

Friday, July 25, 2003

From the upcoming edition...

From the Weekly Standard, by email, Stanley Kurtz on polyamory: AFTER GAY MARRIAGE, what will become of marriage itself? Will same-sex matrimony extend marriage's stabilizing effects to homosexuals? Will gay marriage undermine family life? A lot is riding on the answers to these questions. But the media's reflexive labeling of doubts about gay marriage as homophobia has made it almost impossible to debate the social effects of this reform. Now with the Supreme Court's ringing affirmation of sexual liberty in Lawrence v. Texas, that debate is unavoidable. Among the likeliest effects of gay marriage is to take us down a slippery slope to legalized polygamy and "polyamory" (group marriage). Marriage will be transformed into a variety of relationship contracts, linking two, three, or more individuals (however weakly and temporarily) in every conceivable combination of male and female. A scare scenario? Hardly. The bottom of this slope is visible from where we stand. Advocacy of legalized polygamy is growing. A network of grass-roots organizations seeking legal recognition for group marriage already exists. The cause of legalized group marriage is championed by a powerful faction of family law specialists. Influential legal bodies in both the United States and Canada have presented radical programs of marital reform. Some of these quasi-governmental proposals go so far as to suggest the abolition of marriage. The ideas behind this movement have already achieved surprising influence with a prominent American politician. I am neither a legal scholar nor anything like a theologian, but I can’t see how groups with seemingly valid historical/cultural/religious claims to polygamy (try Mormons and Muslims for just for starters?) could be denied their own rights to state-sanctioned polygamous marriage once sanctioned homosexual marriage came into being.

Link posted by Steve Antler : 3:38 PM

McDonald's Part II

Our mini-study on obesity and McDonald's, we're relieved to learn, is slightly less likely to support litigation if the US legal profession pays heed to public opinion as measured by new polling numbers: Echoing the legal arguments made by smokers against the tobacco industry, some obese Americans are now trying to blame fast-food chains and other food suppliers for their health problems. The Senate's No. 2 Republican, Mitch McConnell of Kentucky, filed a bill last Thursday -- backed by the restaurant industry, but opposed by the Association of Trial Lawyers of America -- that would shield the food industry from such lawsuits. A new Gallup Poll, conducted July 7-9, indicates that Americans are solidly aligned with McConnell on this issue. Only a third of Americans believe the fast-food industry bears much responsibility for the health problems faced by obese Americans. Just 6% say the industry is very responsible and 27% say it is somewhat responsible. The remainder believes the industry is generally not responsible, including 25% saying "not too responsible" and 41% saying "not responsible at all." ...Even more to the point, nearly 9 in 10 Americans (89%) oppose holding the fast-food industry legally responsible for the diet-related health problems of people who eat that kind of food on a regular basis. Just 9% are in favor. Those who describe themselves as overweight are no more likely than others to blame the fast-food industry for obesity-related health problems, or to favor lawsuits against the industry. We thank Bruce Bartlett for this link and for the data used in the original Mcdonald's/obesity study. (We have not yet given up on the proposition the obesity/McDonald's relationship is more complicated than suggested in our simple regression study.)

Link posted by Steve Antler : 3:28 PM

Krugman writes a column that has something to do with economics...

Paul Krugman's column today seems to be about economics. Well, sort of: [Greenspan's] testimony last week was surprising on several counts. There is very little evidence in the data for a strong recovery ready to break out. As far as I can make out, Mr. Greenspan's optimism is entirely based on models predicting that tax cuts and low interest rates will get the economy moving. But that's what the models said last year, too: the report that accompanied his July 2002 testimony predicted an unemployment rate of 5.25 to 5.5 percent by late 2003 (the rate is now 6.4 percent). Maybe tax cuts mainly for the affluent aren't as effective as the models say...

Link posted by Steve Antler : 11:19 AM

Kling not impressed...

Arnold Kling correctly points out my "iron law" is Baumol's "cost disease." Both derive from Ricardo. (See the just-posted technical addendum to Klassenkampf 2003.) On the over-all political economy of the piece, Kling is, uh, shall we say, not impressed: Beyond the tendency for government workers to prefer political parties that favor big government, I am not convinced that economic interests will determine voting behavior in the way that Antler describes. However, if the Republicans are to become the party of goods industries, then they will be the minority party. Just as agriculture has declined to a small share of employment and GDP, the same thing is happening with the goods industries.

Link posted by Steve Antler : 10:52 AM

Goes back to Ricardo...

For anyone who's interested here's a little technical addendum which goes along with and helps explain my article Klassenkampf 2003.

Link posted by Steve Antler : 10:39 AM

Not bad news...

Today's Durable Goods Orders report for June is in at +2.1%. Apparently this is lower than forecasts but higher than market expected. Newsday interprets: Later in the morning, the department reported that sales of new, single-family homes rose at a seasonally adjusted annual rate of 1.16 million units in June, a 4.7 percent increase over May's level. Economists were predicting a decline.

Link posted by Steve Antler : 8:09 AM

Hobbs: CNN=Complicity News Network

Bill Hobbs links to a report CNN is continuing to suppress news.

Link posted by Steve Antler : 7:16 AM

The worse, the better...

Brad DeLong has posted a great essay on Weimar Germany, based on what he calls "the second saddest book" on his bookshelf, 1928's Quigley and Clark: Republican Germany: An Economic and Political Survey. Writes DeLong: Why did the Communists hate the Social Democrats so? One reason was that the Social Democratic government had assassinated the Communists’ two best-loved leaders--Karl Leibknecht and Rosa Luxemburg--when they were under arrest in 1919 after the unsuccessful Spartakist uprising. But a second reason was that Stalin and his henchmen in Moscow were more interested in making the Moscow-run Communist International the only political force on the European left than in pushing for liberal and leftist parliamentary victories. Since Communism was to be established by a revolution that would sweep away the old order, why bother to try to make the old order better? The only purpose of parliamentary struggles, to Lenin and Stalin, was to solidify the working class and teach them that compromise with the capitalists was a mistake. A more brutal and right-wing government did more to advance the cause: "the worse, the better," in a formulation ascribed to Lenin. So why help the Social Democrats make the Weimar Republic a success? Moreover, Karl Marx’s theory of history guaranteed the victory of socialism. It did not guarantee the victory of Lenin’s Bolshevik brand of Marxist socialism rather than, say, German Social Democrat Friedrich Ebert’s revisionist brand. So from Stalin’s perspective to made sense to spend all your institutional resources trying to discredit the Social Democrats, and to leave the broader task of destroying capitalism and fascism to the Angel of History.

Link posted by Steve Antler : 7:11 AM

Taxation always feels like tyranny?

Truck and Barter is looking for tax information on Iraq: ...Does anybody out there know where I can find information on the former and planned tax structures in Iraq? All I could find was SANCTIONS AGAINST IRAQ: COSTS OF FAILURE by researchers at the Center for Economic and Social Rights, who stated: "One reason for such openness with income data in Iraq compared to many other developing (and indeed developed) countries is that direct taxation is practically unheard of. In many other countries people are worried about disclosing their earnings lest the information gets passed on to tax authorities... There are few taxes in Iraq, so the main part of revenues apparently came from oil and profit transfers from non-oil state enterprises..." [Emphasis added] ...Apparently, there was an implicit tax on farmers some time ago, who were forced to sell their product to the government at below market prices, resulting an implicit tax rate of 25%-35%...It will be interesting to see how Iraqis respond to an entrenched bureaucracy that will tax them directly...UPDATE: I forgot to mention Saddam's loving use of 'the cruelest tax'--inflation... If you have info please respond not to me but rather directly to Truck and Barter (Well, CC. to me wouldn't hurt.). I include the story because its thematic relationship to the following headline in today's Chicago Sun Times just jumped out at me -- IRS is scaring poor from claiming tax credit: Daley: To combat fraud by taxpayers who may claim more children as dependents than they have, the IRS plans to send notices to 45,000 randomly selected recipients of the credits next month to demand verification documents...The papers range from medical and child-care records, marriage and birth certificates to third-party affidavits from landlords, doctors and social service agencies. Daley's concern is that taxpayers will either be too intimidated to subject themselves to the IRS microscope or unable to take the estimated five days off work needed to complete the paperwork... ''What if your landlord refuses to sign an affidavit saying your child lives with you? What if the neighbor who cares for your children refuses to sign? What do you do then--hire a lawyer? They charge as much per hour as some EITC recipients make in a week,'' Daley said...''What happens if they just send it back and say, 'I'm not going to do it. I'm not going to go through all of this.' There are better ways to stop fraud than through intimidation and confusion.

Link posted by Steve Antler : 6:56 AM

Thursday, July 24, 2003

Output gap and deflation

This, one of many comments below a recent DeLong post, is the first persuasive deflation prediction I've seen anywhere. Here's the comment: They never teach 'Output Gaps' in US universities...Aggregate Hours Worked is currently 4.5-5.0% below its trend level, which has always been an excellent predictor of changes in the core inflation rate one year later. On this basis US core inflation will be 0.5-0.8% by end-2004, 0% by end-2005, and even lower in 2006, because the output [gap] won't have closed [yet]. To close a 5% gap by end-2006, payrolls growth has to average 360,000 per month until then.... extremely unlikely.

Link posted by Steve Antler : 11:50 AM

Knowing when is always tricky

The Capital Spectator provides us with this nifty link which we will be adding to the blogroll, as well as the following informed judgment -- "with the 10-year Treasury yield above 4%, the market is considering the possibility that interest rates are no longer in perpetual free fall...": Knowing when the old regime ends, and the new one begins, is always tricky, in politics as well as finance. Lenders, i.e., buyers of bonds, must decide whether a bit more than 4% is sufficient compensation for turning over greenbacks for a 10-year stretch in Treasuries. Alternatively, is locking up the money for three times as long warranted for a current 5%-plus yield? No one knows the answer, of course, at least not today. The truth will out, courtesy of parsing anything and everything of macroeconomic consequence. Trade deficits, GDP forecasts, consumer price index trends and the like hold the key to the future. If only someone knew how to break the code. The Fed, for its part, keeps telling us the price of money. The real question is whether the price is fair for what lies ahead.

Link posted by Steve Antler : 10:08 AM

Correction

We have to retract, or so far at least partially retract, our latest critique of Paul Krugman. (Scroll down or search -- can't get link to work!) It turns out Wilson's wife was at least something like a covert operative. Luskin has the story: Based on my conversations in the last 36 hours with Washington contacts, here's how I'm very sure it's going to turn out -- and it will hinge on two key questions. Was Plame really a covert operative? Yes, but this will be difficult to officially confirm and there will be debates as to just how covert she really was, and what real harm was done by outing her. Who outed her, the White House or the CIA? Both. Both are understandably furious with Wilson -- the White House for the embarrassment he has caused and for what they see as his disingenuous and partisan statements in the media. But outing Ms. Plame was not to punish Wilson, but to refute him: Ms. Plame's involvement in Wilson's selection for the Niger assignment trivializes him, makes him seem less an expert and more of a hack on a nepotistic boondoggle. The administration officials who spoke to the press probably weren't even thinking about outing Ms. Plame, as such -- after all, Wilson had effectively already done that when he outed himself by going public with his CIA-sponsored work. And therein lies the reason why the CIA is furious at Wilson -- what he has done is an enormous breach or protocol and security.

Link posted by Steve Antler : 9:35 AM

Volatile series, third week of decline

I think what Dept of Labor records as "initial claims" and the released item "new jobless claims" are the same: New claims were far below Wall Street expectations for 413,000 applications, and the lowest since the week of Feb. 8. It was also the first time since then that initial claims were below the critical 400,000 mark, a level viewed by economists as the sign of a soft jobs market. Claims had been above 400,000 for 22 straight weeks. Here's a picture of the context: I've crudely drawn in this morning's data release (approx. 385,000) by hand. We're now in the third week of decline of this very volatile statistic. UPDATE: Caught by The Capital Spectator, missed by me: But wait--there's more. Continuing jobless claims also lend aid and comfort to the notion that a proverbial light is approaching in the economic tunnel. For the second week running, through July 12, this number has dropped, giving additional support to the view that more of the unemployed workers are finding work.

Link posted by Steve Antler : 8:54 AM

Discounted present value of the Limits to Growth?

Richard A. Heddleson writes: I've been following the generational thing since the Boskin paper. I looked at the conclusion of the Gokhale & Smetters paper. I don't know about you, but my eyebrows arch when I see statements like" the Federal government's long-term Fiscal Imbalance is $44.2 trillion as of FY 2002. This is the amount of resouces in present value that the government must produce, either by cutting spending or increasing revenues, in order to put the nation's fiscal policies on a sustainable path...To fully eliminate the existing FI, wage taxes, for example, would have to be increased by 16.6 percentage points for ever. Eliminating all discretionary spending immediately and forever would fall short by $1.8 trillion." I don't know about you but I don't think those things will happen and I don't think this paper will do much to prevent it. One's first instinct is to disregard the entire lot. First Boskin (in a draft that I guess shouldn't have gone out) predicted enough thus-far non-noticed deferred saving tax revenue to pay off the whole of national debt, medicare, and social security. Now Gokhale and Smetters tell us, in effect, fully funding these programs requires tax increases so profound we'll discover what things looks like from the top of the Laffer curve. As I read their paper I have flashbacks to the 1970's and the old "Limits to Growth" arguments, with their wild exponential extrapolations that proved so wrong. But disregard any and all such talk. It's all cheap shots. Each of these papers addresses different aspects of the same issue in differing ways. One hopes what's being generated is an agreed-upon policy vocabulary and database, and that policy discussion (once all these are assimilated) will be that much more intelligent for the experience.

Link posted by Steve Antler : 7:00 AM

The core of the matter...

Just one of many insightful comments on my Klassenkampf 2003 essay in Tech Central Station: Message: The author is a socialist agent trying to send the Republican party down the class warfare rhetoric drain of no return.

Link posted by Steve Antler : 6:30 AM

Wednesday, July 23, 2003

Less than great

I added FRED II to the EconoData part of the blogroll, and in poking around I noticed this: Not exactly what an optimist like me likes to see. We (or at least I) sometimes forget there's an "hours" as well as a "number of persons employed" dimension to employment. If you keep the same staff but give them fewer hours, in a sense (literally number of hours worked) employment has declined even though number of persons employed has stayed the same. The average nonagricultural establishment is giving its staff about an hour less a week since the start of the recession. To complete the picture you need to also look at multiple jobholders, their hours, and so on, but I thought I'd throw this in anyway just to keep you on your toes.

Link posted by Steve Antler : 8:26 PM

Bad timing

From MEMRI'S latest batch of translated Iraqi editorials: An Iraqi lawyer initiated the first lawsuit against Uday Saddam Hussein [dealing with] a house that Uday appropriated without paying any compensations. It is known that several of Saddam's relatives, especially his two sons Uday and Qusay, had taken advantage of their powerful status and their proximity to the former President to usurp properties belonging to the citizens. If you're not among those charmed by lawsuits against dead rapist thugs you might want to look at this new set of editorials anyway. Far more diverse, somewhat more anti-American than the first batch.

Link posted by Steve Antler : 3:58 PM

Notice

With humility we mention Tech Central Station is currently featuring our Klassenkampf 2003 essay.

Link posted by Steve Antler : 1:29 PM

Bartlett: prescription drug benefit leads to price controls

Bruce Bartlett warns: Two economists at the American Enterprise Institute have estimated that the present value of this proposal will be $12 trillion. This is a calculation in today's dollars of all future drug benefits discounted by the rate of interest. In effect, it is the burden on future generations for giving today's seniors - who will have paid nothing for it during their working lives - an extra medical benefit on top of those they already receive. But even this calculation is too low, in my opinion. When the government begins to subsidize something, demand for it rises, pushing up the price. If the Medicare plan ends up subsidizing, say, one-fourth of drug costs, as the Senate bill does, eventually the price of drugs will probably rise by about 25 percent above what otherwise would have been the case. In the end, drugs will be no more affordable than they are today. This will put inexorable pressure on the federal budget. Outlays will rise and rise and rise - even without the program expansions envisioned by Kennedy, which are probably inevitable. If history is any guide, the federal government will respond with price controls in order to save money. Canada already has de facto price controls on drugs, which is why they are cheaper there -- if you can get them. That nation now limits the availability of many new drugs in order to control costs. While an optimist might try to squeeze some sort of upcoming Thurow-style subsidization of an important leading sector out of all of this, I have to admit the Bartlett prediction is far more realistic and supportable by fact. How can legislation on this scale not lead to (almost certainly industry-killing) regulation in the form of price controls? Addendum: Thanks to BB we learn numbers are from Joseph Antos and Jagadeesh Gokhale, "A Benefit That Is Bad for America's Health," Financial Times (June 20), slightly revised version in AEI Publications: The political debate focuses on the $400 billion cost to taxpayers. But that is only for the next ten years. This is particularly misleading because it does not account for the increased cost associated with the baby-boomers retiring. Using the same long-term spending assumptions applied to Social Security, the present value of all future Medicare expenditures associated with the administration's original proposal for extending prescription drug coverage could generate an unfunded federal obligation of $6 trillion. That sounds pretty bleak. And it gets worse. The original White House proposal included strong incentives for competition that would have yielded future cost savings. The proposal making its way through the Senate has dropped those incentives. Take the lack of competition into account and the result is striking. Depending on the future growth of demand for prescription drugs under Medicare, the Senate plan would increase the government's unfunded obligation of between $6 trillion and $7 trillion to $12 trillion. Yet Medicare is already in deep trouble. Under conservative assumptions of future healthcare spending growth, its long-term shortfall amounts to more than $30 trillion. And this is without a new prescription drug benefit.

Link posted by Steve Antler : 6:36 AM

New Poll Shows Correlation is Causation

Just stumbled on this, disregard if you've already seen it: WASHINGTON (AP) The results of a new survey conducted by pollsters suggest that, contrary to common scientific wisdom, correlation does in fact imply causation. The highly reputable source, Gallup Polls, Inc., surveyed 1009 Americans during the month of October and asked them, 'Do you believe correlation implies causation?' An overwhelming 64% of American's answered 'YES', while only 38% replied 'NO'. Another 8% were undecided. This result threatens to shake the foundations of both the scientific and mainstream community. UPDATE: A correspondent writes: This is another case where imprecise wording has spawned confusion. If I were asked whether correlation IMPLIES causation, I was also say yes. If asked whether correlation PROVES causation, I would certainly say no. Consequently, I think you are overstating your point. My two cents is as follows: the "basic linear model" in econometrics 101 is absolutely clear -- we're investigating and testing an "underlying relationship" between two (or more) variables that may or may not be causal. Even the basic models avoid causality. Does a higher price "cause" households to buy less? Does a lower personal disposable income "cause" a lower level of personal consumption? We usually teach "no," saying, instead, changes in the independent variable are associated with changes in the dependent variable. Only when we reach the heights of Keynesian policy economics do we have the temerity to start using the term "causation." A change in an exogenous variable (like govt spending) will cause a change in the equilibrium levels of income, output, and employment, we say. I think the survey (if in fact it's not a big joke) proves how confusing statistics is to the general public, and I guess my feeble attempt at a humorous ironic headline failed miserably. (Note to myself: in the future avoid all ironic humor.)

Link posted by Steve Antler : 6:11 AM

Tuesday, July 22, 2003

New growth industry

There is a major story here on recent academic papers addressing medium and long-term fiscal imbalance, fiscal gap, and the upcoming social security/medicare crisis. First we had Boskin's dramatic announcement of "antibonds" followed by the withdrawal of that paper (another draft is in the works). Next in line was Auerbach, Gale, and Orszag, "Reassessing the Fiscal Gap" which undercut Boskin even before the paper's withdrawal. Now via Asymmetrical Information and and EconLog we have Gokhale and Smetters, "Fiscal and Generational Imbalances", about which we'll get back to you as soon as we've had time to read it.

Link posted by Steve Antler : 5:59 PM

UPS Says Overseas Results Lifted Profits

Globalization and the modestly declining dollar strike again: UPS, whose businesses include logistics and financial services, said its international operations shone in the quarter. International revenue rose 19.8 percent to $1.37 billion and operating profit more than doubled to $158 million from $62 million a year earlier...The company said its strong international showing resulted from increased volume and favorable currency trends. Worldwide export volume increased 6.3 percent, led by a 15 percent gain in Asia...

Link posted by Steve Antler : 2:20 PM

Two coasts, two income/skill levels -- one story

New York Times: I.B.M. Explores Shift of White-Collar Jobs Overseas: Mr. Mehlman, the Commerce Department official, said companies were moving more service jobs overseas because trade barriers were falling, because India, Russia and many other countries have technology expertise, and because high-speed digital connections and other new technologies made it far easier to communicate from afar...Another important reason for moving jobs abroad is lower wages...'You can get crackerjack Java programmers in India right out of college for $5,000 a year versus $60,000 here,' said Stephanie Moore, vice president for outsourcing at Forrester Research. 'The technology is such, why be in New York City when you can be 9,000 miles away with far less expense?' Los Angeles Times: Record numbers of illegal immigrants are pulling wages down: In April, I shopped for a contractor to paint my house trim. I got three bids. One was for $1,600, about $400 less than the others. The only condition was that payment be in cash. [T]his bargain [came] from an established businessman...I asked why the ethical gyrations. He vented: "If I'm going to stay in business, I have to do what the illegals do. They never pay taxes, on profits or on their employees' pay. Right there, I'm at a 20% disadvantage. They'll come in here with about six guys with paintbrushes who work for peanuts, do a fair job, and then they're gone." These competitors have driven every American out of gardening, he added, and are doing it to house-painting, roofing and car repair. He concluded in frustration, "What am I supposed to do?"... After the "please pay cash" painting contractor left my house, I put pencil to paper on the bids. Considering that his line of work is labor-intensive, if I accepted the above-board bid of $2,000, probably about $1,500 would go toward wages, and maybe 10% of that would go to the government. If I went for the underground bid, I would get off cheaper—and the government would lose $200. Multiply that by the countless such transactions in California daily, and a lot of hospitals are going to run short, and a lot of potholes are going to grow. (Even though the math and tax rates are wrong, the conclusion is approximately correct.)

Link posted by Steve Antler : 12:34 PM

What the NYT knew but didn't report...

It becomes increasingly easy to see the paintbrush, the paint, and right there in the corner, the Democratic Party. Here's news gathered but not published by the NYT: A recent New York Times poll of Gotham residents...contained striking information that didn't make it into the paper. New York's minorities, the poll numbers show, don't support the mayor's recent tax increases - in fact, blacks and Hispanics oppose them at higher rates than do the city's whites. The results belie the perception that minorities are friendlier than other voters to tax increases and tend to oppose government cost-cutting - a perception that rests on the tax-friendly, free-spending voting patterns of the city's minority pols rather than on the actual views of minority voters. (Emphasis added.) What's going on? I suspect we're seeing the kind of elitist blindness that demands attention to income inequality while denying the reality of income mobility. As people move up the ladder -- hey, even people like blacks and Hispanics! -- they grow resentful of the increasing share the govt takes out of their paycheck. Full disclosure: the article also reveals an approximately 60% majority in favor of increased taxes on incomes in excess of $100,000.

Link posted by Steve Antler : 10:38 AM

Colgate Profit Up; Weak Dollar Helps

Yes! Let's keep that dollar moving in a smooth, modest downward direction: Sales rose 7 percent to $2.46 billion. Most of Colgate's sales come from outside North America, and the weak dollar boosted sales in Asia and Europe as sales in local currencies were worth more when translated to dollars.

Link posted by Steve Antler : 10:12 AM

Are you experiencing loading problems?

We find it increasingly impossible for the entire blog to come up without pushing the "refresh" button at least a few times. After fiddling with the template, it starts to look like this is some kind of blogger server problem and not our doing. Investigations continue, sorry for any inconvenience. If fonts and colors change temporarily at EconoPundit please bear with us, it's strictly temporary, not your eyes, only our tinkering with the template to get loading problems under control. Thanks for your patience.

Link posted by Steve Antler : 10:01 AM

Hah! Gotcha!!!!

Paul Krugman has finally proved the Bush administration is criminal and unpatriotic. This is because two people say somebody told them that they believed somebody got a job because of his wife's CIA job, which Paul Krugman declares must have been a secret: And while we're on the subject of patriotism, let's talk about the affair of Joseph Wilson's wife. Mr. Wilson is the former a