Wednesday, August 18, 2004

On vacation, see you soon...

No blogging for a few days. Off we go to a cabin in upstate Wisconsin. UPDATE: And according to Site Meter at some time tomorrow while we're happily driving northward, EconoPundit will greet its 400,000th visitor. Whoever you are: hi, please enjoy looking around for awhile.

Link posted by Steve Antler : 8:22 PM

Who's responsible for what?

Via Instapundit, Daniel Drezner discusses new labor shortages. This chart appears: And I have a question. Roughly 60% of these trades -- those in which current labor shortages are projected for the near future -- are strongly unionized. What do the representative unions have to say about this problem? Do they have any responsibilities at all in the areas of training and recruitment?

Link posted by Steve Antler : 7:42 AM

Tuesday, August 17, 2004

Cuts both ways...

The Washington Post continues to discover deregulation, apparently ignorant of others' previous expression of similar thoughts about the regulatory process itself. For all I know the article may be correct about the one case it examines in detail (Atrazine), but you just can't miss the overriding impression any challenge of absolute environmentalism supremacy is corruption itself.

Link posted by Steve Antler : 7:36 AM

Monday, August 16, 2004

Deregulation and the Aggregate Supply Curve

Given the source the intent is probably one-sided, but still this upcoming material could easily morph into a new and worthwhile election issue: In the past 3 1/2 years, OSHA... has eliminated nearly five times as many pending standards as it has completed. It has not started any major new health or safety rules, setting Bush apart from the previous three presidents, including Ronald Reagan. The changes within OSHA since George W. Bush took office illustrate the way that this administration has used the regulatory process to redirect the course of government. To examine this process, The Washington Post explored the Bush administration's approach to regulation from three perspectives. This article about OSHA traces the impact on one regulatory agency. Tomorrow's story will look at a lobbyist's 32-line, last-minute addition to a bill that created a tool for attacking the science used to support new regulations. Tuesday's article will document a one-word change in a regulation that allowed coal companies to accelerate efforts to strip away the tops of thousands of Appalachian mountains. The Post also analyzed a database from the Office of Management and Budget containing the 38,000 regulatory actions considered by agencies over the past two decades. The analysis, combined with the more detailed look at specific regulatory decisions, shows how an administration can employ this subtle aspect of presidential power to implement far-reaching policy changes. Most of the decisions are made without the public attention that accompanies congressional debate. Under Bush, these decisions have spanned logging in national forests, patients' rights in government health insurance programs, tests for tainted packaged meats, Indian land transactions and grants to religious charities. The economic impact of the policy changes being described in these paragraphs is as hard to measure as any supply-side policy. But if the changes are as sweeping as the Washington Post seemingly wants us to believe, it is possible thus-far fragmentary evidence is actually pointing to an upcoming renewal of the 90's boom -- even in the face of energy price shocks.

Link posted by Steve Antler : 7:23 PM

Must add to blogroll...

Via Milt Rosenberg -- worthwhile commentary on the CBO tax report at Matt Rosenberg's great blog -- packed with news, info, and tasty Left Coast blogbits.

Link posted by Steve Antler : 6:51 PM

Fires of Iraq, Part I?

From DebkaFile: Radical Shiite saboteurs reportedly set fire to southern Iraqi oil well -- the first time Iraqis have attacked such target. Disastrous effect expected on spiraling world oil prices . UPDATE: Hours later and nobody else has said a word. We hope it is one of DebkaFile's celebrated badinfobits.

Link posted by Steve Antler : 2:28 PM

Sunday, August 15, 2004

Predicting elections...

Here's the NYT Ray Fair interview. Interesting how the interviewer wants Ray to try for, you know, somewhat different predictions in the name of a noble cause?

Link posted by Steve Antler : 8:40 AM

Friday, August 13, 2004

I think they'll figure it out somehow...

Social Security mystification like this, once highly effective, seems now to be rapidly reaching the end of its natural life: The one seemingly substantive proposal is a blast from the past: a renewed call for the partial privatization of Social Security, which would divert payroll taxes into personal accounts. Mr. Bush campaigned on that issue in 2000, but he never acted on it. And there was a reason the idea went nowhere: it didn't make sense. Social Security is, basically, a system in which each generation pays for the previous generation's retirement. If the payroll taxes of younger workers are diverted into private accounts, there will be a gaping financial hole: who will pay benefits to older Americans, who have spent their working lives paying into the current system? Unless you have a way to fill that multitrillion-dollar hole, privatization is an empty slogan, not a real proposal. There's a simple matter of widespread personal preference here that is rapidly destroying the effectiveness of Social Security sloganeering ("privatization" -- just listen to the sound of that word!) and mystification (oh! we need this much if you're going to do that!). Workers strongly prefer pension plans that don't take their life savings away from their families after they die. It is as simple as that.

Link posted by Steve Antler : 6:22 AM

Wednesday, August 11, 2004

Long before there were theme parks...

You could visit the Kellogg plant in Battle Creek Michigan and learn how cornflakes were made. Here are a few references that offer some suggestions.

Link posted by Steve Antler : 6:24 AM

Tuesday, August 10, 2004

$200,000 moving down?

Kerry's campaign documents, according to Bush Cheney '04, show his proposed tax rollback would apply to single filers earning as little as $147,000 and married couples' joint income as low as $179,000.

Link posted by Steve Antler : 8:53 PM

Life imitates EconoPundit...

This is getting scary. On and off since the paper's first draft EconoPundit's been out in the wilderness, all alone, proclaiming the importance of Ray Fair's work on the tech stock bubble. Most important was his conclusion the unemployment rate was artificially pulled down to near 4% by an unusual and temporary situation. The common sense of this is finally coming thru to others beside myself (scroll down to "Monday, August 9"). Interestingly, these new insights are lending intuitive sense to the household/payroll survey discrepancy. And then there's my lighthearted comparison of John Kerry to the central figure of The Manchurian Candidate -- now coming to be echoed by others. My worst worry, however: is the mysterious Kerry trip to Cambodia, Christmas, 1968 -- that trip during which Nixon was or was not President of the United States -- actually the episode during which the implants were, uh, ... you know, implanted? In Kerry?

Link posted by Steve Antler : 1:47 PM

And it's from the payroll survey...

Paul Krugman: Because job growth has finally turned positive, some economists (who probably know better) claim that prosperity has returned -- and some partisans have even claimed that we have the best economy in 20 years. What is he talking about? Whatever does that word "finally" mean? There's been no monthly decline in job growth since April 2003: I think Paul "probably knows better." Maybe he doesn't? Which is worse? UPDATE: This is an incredibly confused column. (I may be misreading it, but at some points it seems to clearly reverse positions Paul has taken in the past.) In short, it is all over the map -- but in all this intellectual wandering Paul ignores two central points: 1. Employment is a lagging indicator. An increasingly lagging indicator. 2. Like it or not, if businesspeople are to add employees they must feel doing so will increase their profits. UPDATE II: My old math professor Alpha C. Chiang was fond of the expression "economic interpretation" whenever economics needed to be applied to equations (rather than the other way around). Let's continue the tradition right here, and provide "economic interpretations" of the Household and Payroll Surveys: Household Survey: measures the degree to which individuals feel it is to their advantage to be gainfully employed by others or themselves. Payroll Survey: measures the degree to which firms feel it is to their advantage to hire, reduce their paid workforce, or maintain the status quo. UPDATE: A reader sends this critique: Seasonally adjusted figures from BLS: Payroll non-farm employment was 129814000 in July 2003 Payroll non-farm employment was 129789000 in August 2003 Job growth was positive after that, but just 8000 in December 2003.Maybe you're using the CPS numbers? I'm sure you know those aren't the rightfigures for job levels. See Alan Greenspan's comments, etc. EconoPundit responds: I just ran to the BLS web site and got a quick table/plot of 1-month percent change from the payroll survey. Maybe I did something wrong? Will check and get back to you.

Link posted by Steve Antler : 7:28 AM

Monday, August 09, 2004

Way ta' go, EconoPundit!

Tom Brown's Between the Lines page in the Seattle Times now records two economics entries in its "Blogs to Watch" listing -- Brad DeLong (a coastal favorite perhaps?) and EconoPundit!

Link posted by Steve Antler : 1:59 PM

Not at all about genocide...

It's all about oil.

Link posted by Steve Antler : 1:53 PM

Heroes and Demons

Legendary hellfighter Red Adair has died. In case you never heard, there was an evil connection between Adair and Halliburton.

Link posted by Steve Antler : 12:45 PM

Problem is, he won...

More support for the Kerry=Nixon thesis.

Link posted by Steve Antler : 12:19 PM

Business may come and go, but government is forever...

If you are upset by this story you should probably know the OSCE is already very much involved in observing US elections. Here's their report on the 2002 general elections, with full approving commentary on all the action leading up to a lawsuit-mandated adoption of the now-discredited touchscreens-without-a-paper-trail. And here, by the way, is how the OSCE's total budget has grown since 1991. Hey guys, looks like we are in the wrong business!

Link posted by Steve Antler : 10:28 AM

Economics of obesity...

In Economics 101 we tell students the level of demand depends on the price, prices of substitutes, and prices of complements. Cigarettes and food are substitutes. And cigarette prices have skyrocketed. Via the Corner.

Link posted by Steve Antler : 5:40 AM

Sunday, August 08, 2004

What comes around went around...

VDH: McDonald's is prominent among the stylish cafes of Luxembourg. Dubbed-in "Friends" and "Jerry Springer" blare from hotel televisions. Bare navels, Ray-Bans, pierced everything, and baggy jeans suggest a studied effort to emulate the look of Venice Beach. For a bewildered American, the key in squaring the anti-American rhetoric with the Valley Girl reality is simply to understand Western Europeans as elite Americans. Their upscale leisured culture is not much different from Malibu, Austin and Dupont Circle, that likewise excuse their crass submission to popular American tastes through the de rigueur slurs about the "corporations," "Bush-Cheney," and "Halliburton." Perhaps this notion that Europe itself has become a cultural appendage of the U.S. explains why it views our upcoming election as a referendum on its own future as well. UPDATE: Maybe the VDH argument explains why they are so interested.

Link posted by Steve Antler : 2:10 PM

IN MEMORIAM PUNDITWATCH

This morning's Meet the Press: MR. RUSSERT: In your book, you say that we should abolish the IRS and replace it with a flat tax or a national sales tax. REP. HASTERT: Or a VAT tax. MR. RUSSERT: Or a value-added tax. Critics will say those are the most regressive kind of taxes, that the reason we have an income tax is that people who make more money pay more taxes. And here you are, going after the little guy, taxing every item they possibly want to buy. REP. HASTERT: Well, that's the people you know--it's the devil you know as opposed to the devil you don't know when you start to--taxation. But let's look at it this way: We have an embedded tax in this country. Every time the little guy buys a loaf of bread, a pair of shoes, a pair of pants, an automobile, a refrigerator, he has an embedded tax of 20 to 25 percent, because every corporation in this country pays income taxes, but the cost of those taxes are embedded in the product. The kicker is when we sell our products overseas, those taxes are still in the cost. And so we're impeded in being in good competition overseas. EconoPundit's modest contribution is to reprint these numbers from Chapter 15 of Case & Fair, Principles of Economics: The point is, since we have only a modestly progressive but extremely non-transarent, complicated system right now, why be afraid of moving to a moderately progressive but extremely transparent, simple system? UPDATE: Bruce Bartlett: There is no indication of what tax rate Speaker Hastert thinks would be necessary to replace all federal revenue. A current proposal by Rep. John Linder (R., Ga.) says that a 23 percent rate would be adequate. But such a low rate can only be sustained by making completely absurd assumptions about what would be taxed...An unstated assumption is that the 23 percent rate proposed by Linder is comparable to existing state and local sales taxes, where the tax comes on top of the purchase price. Thus, a 5 percent sales tax on a $1 purchase comes to $1.05. But that's not the way the Linder plan works. He deceptively calculates the rate as if the tax is part of the purchase price. He calls this the tax-inclusive rate. Calculating the rate the normal way people are accustomed to with state and local sales taxes would require a 30 percent tax rate, not 23 percent

Link posted by Steve Antler : 10:43 AM

New environmental issues...

But, strangely, nobody seems upset.

Link posted by Steve Antler : 7:21 AM

...and then, Krugman says O'Reilly is a liar...

Here's Don Luskin's review of the Tim Russert-moderated dialogue between Bill O'Reilly and Paul Krugman. Luskin will post a transcript as soon as one is available. (Heck, I thought I was the only one to notice Paul's hands shaking.) UPDATE: I might as well throw in my two cents. Most diappointing was the way Paul got visibly upset and angry over the very "big" issues an academic like himself should have handled best. Like Robert Reich, Paul Krugman collapses into nervous nastiness when faced with open, principled opposition to bigger government. In the first instance O'Reilly presented the "big government" issue generously, as something over which reasonable people could disagree. Instead of laying out a good case for the other side Krugman acted like he was being slandered, and the whole thing deteriorated rapidly. I think the Krauthammer fundamental thesis (conservatives think liberals are stupid whereas liberals think conservatives are evil) remains the best explanation of principled political debate's impossibility right now.

Link posted by Steve Antler : 6:47 AM

Saturday, August 07, 2004

Why not just give everybody tenure?

Jacob S. Hacker, Ph.D., has done some research and has discovered the average American faces intolerable economic insecurity. So he proposes: ..."universal insurance"--a kind of umbrella insurance policy protecting families against catastrophic drops in income or budget-wrecking expenses. Premiums would be a small share of total income and payouts would be based on the decline of disposable income from its previous base, with the share of income replaced higher for lower-income families. Universal insurance could, in turn, be coupled with...tax-free accounts [that] would help families manage unavoidable household expenses before they reached catastrophic levels. Each year--and upon the birth of children--the government would contribute small amounts to each account. These public contributions would vary inversely with income, offsetting the regressive distribution of the tax breaks. Universal insurance would protect Americans before they fell into poverty, lessening the burden on programs for the poor and protecting the dignity of beneficiaries. From the standpoint of income protection, what matters is not whether some are rich and others are poor, but whether all Americans are protected against precipitous drops in their standards of living. Universal insurance would depart from existing social insurance programs in providing general risk protection. Its premise would be that Americans need access to more than existing, highly segmented programs--programs that not only leave glaring gaps, but also lack the ability to respond to a rapidly changing world of risk. So what to make of this? Having spent decades in the happy, comfortable world of tenured academia I can say absolutely nothing beats it when it comes to security. You quietly sit in your office, read books, sound smart in front of students, and occasionally publish one thing or another. In return you get two to three months of Summer vacations at full pay, full health and retirement benefits, and -- best of all -- the absolute security of knowing you can never be fired. And yes, I've spent a few years outside the academy as well. I've seen friends lose their jobs. I've seen businesses boom, then falter, then simply stop -- money made, lost, then turned into unpayable debt. And friends who can't afford health insurance. All the costs of unsubsidized real life, where one's only real source of support is one's own self. Most academics think their vision of the perfect America is based on the European welfare state, but a better source may be the secure (and highly artifical, and highly subsidized) world of academia itself.

Link posted by Steve Antler : 1:42 PM

Hey -- sorta like Cheney and Halliburton, no?

In fact, Baron said, Kranish had no connection to the Kerry campaign book and did not write its introduction. Baron noted that earlier this summer Kranish worked with PublicAffairs -- the publisher of the Boston Globe biography of Kerry, "John F. Kerry: The Complete Biography by the Boston Globe Reporters Who Know Him Best" -- to write a short introduction to a second project: an independent, unauthorized review of publicly available documents dealing with the platform and policy statements of Kerry and Edwards. That project was in no way connected with the Kerry-Edwards campaign, Baron said. "When PublicAffairs subsequently struck an agreement with the Kerry campaign to do an official campaign book, Kranish's relationship with the project immediately ended," Baron said. UPDATE: And what started as a joke analogy now appears to be a real news story. UPDATE II: We stand corrected. Don Luskin sends us this: Uh, sorry, but that's no "real news story." Cheney's immunized deferred comp and options he's pledged to give to charity are way old news. I mean years old.

Link posted by Steve Antler : 11:50 AM

Says it all...

From Command Post: Whether Captain Elliot was or was not misquoted is no doubt a matter for debate by reasonable people. The fact that the Boston Globe didn't reveal the status of their "reporter" is not.

Link posted by Steve Antler : 9:58 AM

EconoPundit Scoops Drudge

I suppose there's some small amount of dirty pride (is there a German word for that? Schmutzigstolz?) in posting a link to this sick story before Matt Drudge gets to it.

Link posted by Steve Antler : 9:47 AM

Friday, August 06, 2004

Without the tech stock bubble things would have been otherwise...

Strong evidence published last year suggests a full-employment unemployment rate (the so-called "natural rate") is roughly the same as the figure announced today.

Link posted by Steve Antler : 9:05 AM

"Go know..."

Here, via Milt Rosenberg, are the latest logical arguments why --> Bush will win or Bush will lose. And here's The Corner's new sponsor with its rather detailed, well-supported quantitative presentation.

Link posted by Steve Antler : 6:07 AM

Thursday, August 05, 2004

No transparency please, we're newspaper guys!

As the scandal continues to spread.

Link posted by Steve Antler : 7:58 PM

Details...

While checking out his free sample chapter of Unfit for Command Don Luskin caught John Kerry in either a major lie or a serious lapse of memory.

Link posted by Steve Antler : 7:47 PM

A Tale of Two Markets

Okay, without Corel and all the other cool graphics tools at my disposal back at the office I can't get these charts to match up very well; the time scales are different because the markets are located in different parts of the world. (How does Luskin do it, anyway?) Still, crude though it may be, this is worth considering for a moment. On the top are movements in today's DOW, and on bottom are the ups and downs in trade of the BRC: I'd bet the rather dramatic late-day downward spike in the BRC matches that late-afternoon DOW plunge. Anyway, look at how the BRC recovers. On the street these guys are called "bargain hunters," right? (Don't worry, the DOW will behave the same way in a little while.)

Link posted by Steve Antler : 7:30 PM

This is good news, not bad...

Don't let the oil futures news and all associated stories get you upset. Yes, we're moving into $45/bbl territory, but what this means is the "Lucas Supply" principle can come into effect. In a nutshell, Lucas Supply has to do with how companies respond to price movements. Under conditions like those prevailing currently, any sharp rise in a basic component of everyone's cost (energy! pay attention!) will cause everyone who can raise prices to do so within the next few months. Further, widespread knowledge of the crude oil price spike will allow companies who have so far been timid about price increases to forge ahead, raise prices, and thereby more-than restore any damage done to their balance sheets by the upcoming energy price spike. Inflation? Not really, just a one-time sharp bump upward that won't affect consumer prices more than a cent or two. Slower growth? Not at all, and that's the important point. When firms can sharply and suddenly raise their profitability, they also expand employment rapidly. Thus the price spike (tech note: because it was unanticipated and also because its impact ripples thru the economy rather slowly and irregularly: end tech note) leads to not simply a rise in prices, but an expansion of real output as well. We are looking for realization of the rapid growth predicted by the ISM PMI. All past PMI/GDP numbers say 4-10% growth nine months from now is virtually inevitable. UPDATE: Reader John Landshof asks: Wouldn't a spike downwards in the price also have the same effect? And if so, does this mean all price spikes - up and down - result in favorable economic outcomes? That seems fishy to me . . EconoPundit answers: In principle it can work backwards as well. The crucial point is whether firms feel they can raise their profitability not only by passing costs along to consumers (if they're able to) but also by expanding output (and, to say the same thing, employment). You have to understand this whole argument relates back to a kind of logical puzzle: if you're told your salary will go up if you work harder, you may decide to work harder; if you're told your salary will go up but all prices will go up exactly enough to cancel the salary increase, you definitely won't decide to work harder; if you (and everyone else) confuse the second situation with the first, you (and everyone else) will work harder even though price increases may cancel your higher salary -- and the outcome will be everyone's income (as well as total price-corrected output) will go up. I realize there are many steps between this simple story and a real economy, but the economic numbers seem to say things actually work this way from time to time.

Link posted by Steve Antler : 8:16 AM

Tuesday, August 03, 2004

What happened?

A short time ago there occured a really sharp uptick in the BRC: What is going on? After stabilizing at a reasonable 54.5, the price is now rapidly climbing to 56, maybe higher. What happened? UPDATE: I suppose this news at Drudge explains it. The timing of the Drudge post seems to match the chart. UPDATE II: And back we go down to 54.3 or thereabouts. Support for those who argue the new book will not help -- and may possibly hurt -- the Bush candidacy.

Link posted by Steve Antler : 8:27 PM

Something of a first I think...

There is now a link to John Kerry's Democratic Convention acceptance speech posted on the main page of the Bush-Cheney '04 reelection website.

Link posted by Steve Antler : 6:38 PM

So who are you going to believe?

Consumer spending has plummeted -- the biggest drop since 9/11, they say. But other indicators -- the Instute of Supply Managers' Purchasing Managers' Index (the so-called "ISM PMI"), for example -- are substantially up. Here's what they're talking about when they say the PMI is setting records: PMI numbers like these haven't been recorded since 1981. So what's the significance? Maybe nothing, but history suggests the opposite. Consider this graph, showing paired values of the PMI (horizontal axis) and real aggregate growth (vertical axis) three quarters later: You can find a few data points below the 4% growth rate when the PMI lies at or near its current value, but PMI's around 61 typically generate real growth in the astonishing 4-15% range three quarters down the road. So as you look at the graph I guess it boils down to this: who are you going to believe, Paul Krugman or your own lying eyes? UPDATE: For extra credit, can you see how I showed a bit of bias in the above argument? Right, you guessed it! If you're going to draw a dotted line cutting off the two below-4% outliers, you should probably cut off those two pesky 16% outliers at the top as well. Redraw the figure accordingly and change the text to "in the astonishing 4-10% range" and everything's much more Kosher -- and best of all the conclusion doesn't change!

Link posted by Steve Antler : 12:52 PM

"The clay feet of the U.S. colossus"

Niall Ferguson in Foreign Policy: Powerful though it may seem -- in terms of economic output, military might, and "soft" cultural power -- the United States suffers from at least three structural deficits that will limit the effectiveness and duration of its quasi-imperial role in the world. The first factor is the nation's growing dependence on foreign capital to finance excessive private and public consumption. It is difficult to recall any past empire that long endured after becoming so dependent on lending from abroad. The second deficit relates to troop levels: The United States is a net importer of people and cannot, therefore, underpin its hegemonic aspirations with true colonization. At the same time, its relatively small volunteer army is already spread very thin as a result of major and ongoing military interventions in Afghanistan and Iraq. Finally, and most critically, the United States suffers from what is best called an attention deficit. Its republican institutions and political traditions make it difficult to establish a consensus for long-term nation-building projects. With a few exceptions, most U.S. interventions in the past century have been relatively short lived. U.S. troops have stayed in West Germany, Japan, and South Korea for more than 50 years; they did not linger so long in the Philippines, the Dominican Republic, Haiti, or Vietnam, to say nothing of Lebanon and Somalia. Recent trends in public opinion suggest that the U.S. electorate is even less ready to sacrifice blood and treasure in foreign fields than it was during the Vietnam War. What distinguishes those who put the words "free market" in quotes and those who don't is the answer to a simple question: Are monopolies largely permanent fixtures, or, rather, aren't even the most ironclad monopolies vulnerable to competition and rent-seeking behavior in the long run? What distinguishes those who put "hegemony" in quotes and those who don't is their answer to this simple question: Are those with more power always ethically inferior to the underdogs? UPDATE: And of course savor the delicious irony: from the lofty heights of The Nation William Greider calls for a global version of Stalinism as some sort of corrective to the US current account deficit. Meanwhile Ferguson, from a somewhat more-distinguished platform, says the trade deficit will inevitably bring about an automatic ("market-determined"?) collapse of US hegemony. UPDATE II: And while you're still thinking about that "ironclad-monopolies-subject-to-competition-in-the-long-run"stuff, read this. UPDATE III: And this too.

Link posted by Steve Antler : 9:35 AM

Look -- this doesn't really matter, but...

CrushKerry.com says Kerry's acceptance-speech catchphrase "help is on the way" was cribbed from Dubya, while David Broder says it was lifted from Dick Cheney.

Link posted by Steve Antler : 8:12 AM

It applies to blogs as well...

I missed Milt's show Monday night. Hopefully it will appear in the archives and I'll be able to listen to it in a month or two. Aside from authoring a new book, Germond is noted for this quote: "Writing a good editorial is like wetting your pants in a dark suit. It makes you feel warm and comfortable, and nobody notices."

Link posted by Steve Antler : 7:28 AM

Tantalus...

Robert Samuelson: Generally, the periods when Americans seem most satisfied occur when the economy exceeds expectations. After World War II, people feared another Great Depression. The postwar boom was just the opposite. In the 1990s the long expansion confounded wisdom that America was in decline. But these euphoric periods set up unrealistic expectations of even greater growth that are inevitably disappointed. One way or another, the squeeze is forever.

Link posted by Steve Antler : 7:14 AM

U think what WE think...

One of EconoPundit's recurring themes is how US leftist thinking acts as international opinion leader. However -- this little article suggests the entirety of US thought actually serves as world opinion leader for a wide spectrum of beliefs.

Link posted by Steve Antler : 6:54 AM

Monday, August 02, 2004

Issue finally settled?

Michael Kinsley has been crunching historical numbers from February's Economic Report of the President, and he has discovered the following: It turns out that Democratic presidents have a much better record than Republicans. They win a head-to-head comparison in almost every category. Real growth averaged 4.09 percent in Democratic years, 2.75 percent in Republican years. Unemployment was 6.44 percent on average under Republican presidents and 5.33 percent under Democrats. The federal government spent more under Republicans than Democrats (20.87 percent of gross domestic product, compared with 19.58 percent), and that remains true even if you exclude defense (13.76 for the Democrats; 14.97 for the Republicans). What else? Inflation was lower under Democratic presidents (3.81 percent on average, compared with 4.85 percent). And annual deficits took more than twice as much of GDP under Republicans as under Democrats (2.74 percent versus 1.21 percent). Republicans won by a nose on government revenue (i.e., taxes), taking 18.12 percent of GDP compared with 18.39 percent. That, of course, is why they lost on the size of the deficit. Personal income per capita was also a bit higher in Republican years ($16,061) than in Democratic ones ($15,565). But that is because more of the Republican years came later, when the country was more prosperous already. (Emphasis added) On this last point, we can only add that since none of the Democratic years came later than the Republican ones, we can never say, for example, wise growth-oriented policies during Republican administrations led to the higher growth rates of the Democratic years. Of course not. UPDATE: And in a similar vein the good folks at Media Matters discuss matters like under which administration the recession really began. (Actually, it now seems pretty clear we never had a real recession.)

Link posted by Steve Antler : 7:02 PM

To some, good news is bad news...

Much to the consternation of Greenpeace, Oxfam, and Friends of the Earth, global trade talks have apparently ended successfully. UPDATE: Interesting how much relevance this William Greider essay retains, even in the face of many facts that seem to refute it. I've brooded long and hard about the essay, and I think the most reliable criticsm is simply that Greider's economics is based on intuition and feelings alone. The essay's confidence is perpetually (and artificially) supported by well developed writer/reader solidarity innuendo codes -- Greider simply can't say free market without sneerlingly putting it in quotes and preceeding it with words like "faith in," for example. Considering the strength of these feelings I have trouble understanding how Greider shows no reaction whatsoever to his final page of policy recommendations. In all but name he calls for a new Stalinist Globalism, and I would have thought anyone with as strong an aesthetic sense would have experienced some slight reaction to what he wrote on that final page. UPDATE: A reader takes me to task for the term "Stalist Globalism": If I'm not mistaken, Stalin believed (or should I say insisted)...Communism would work in a single country, even if the rest of the world was not Communist, but Trotsky believed Communism would not work unless the entire world agreed to it. This is why the two men did not get along..., and [this] may also be why many western liberals (e.g., Christopher Hitchens) are (still) Trotskyites. EconoPundit responds: Maybe I meant Global Stalinism? Yes, I think that is what I meant.

Link posted by Steve Antler : 2:29 PM

Looks impressive but says nothing?

Via Kerry Spot (scroll down to "Overlooked Economic News") we have this handy study -- not new, but with lots of interesting charts, all leading to this conclusion: [The Consumer Confidence Indicator]...is largely dominated by the current situation. It possesses virtually no predictive properties, and short-term fluctuations in [consumer] sentiment in fact often prove subsequently to have been misleading. Since private consumption data are also published on a monthly basis, albeit a month later, the additional information contained in the consumer confidence figures appears negligible.

Link posted by Steve Antler : 2:10 PM

Bouncebouncebounce...

The postconvention "bounce" is now showing up as visible to the naked eye: The problem is, it's a pro-Bush bounce. So far. UPDATE: After a day everyone else catches on. Meanwhile, the contract appears to be stabilizing at around 54.5 -- for the time being.

Link posted by Steve Antler : 11:15 AM

You decide...

DebkaFile says (1) US and Baathists are in secret negotiations (who said Bush ignores diplomacy?) and (2) the next church bombing can easily be the Vatican itself.

Link posted by Steve Antler : 7:58 AM

Quarterly re-estimation and run of Fairmodel...

From the new Forecast Memo: Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 3.5, 3.6, 3.3, and 3.2 percent, respectively. These growth rates are high enough to drive the unemployment rate to 5.2 percent by the middle of 2005. The jobs variable, JF, is predicted to increase in the four quarters by 2.5, 2.3, 2.1, and 1.9 percent, respectively. Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted to be around 3.0 percent for the entire forecast period. Monetary Policy: The estimated interest rate rule (equation 30) is predicting that the three month bill rate (RS) will rise to 2.4 percent by the middle of 2005. It then rises to over 3 percent by 2006. Other Variables: The federal government budget deficit is predicted to be a little over $400 billion in the next four quarters (on a NIPA basis). (See the predicted values for SGP.) This is smaller than many others expect. This is where experimenting may be useful. In particular, it may be that the above assumptions have underestimated future federal government spending. It could also mean, however, that people are too pessimistic about the deficit. The U.S. current account deficit (variable -SR in the model) is forecast to be extremely large throughout the period. It is predicted to rise to over $600 billion in 2005.

Link posted by Steve Antler : 7:43 AM

Great minds travel in the same rut...

Thinkers at The Corner agree with my mom's Nixon analogy.

Link posted by Steve Antler : 7:35 AM

The bargains are gone...

For this morning at least, the Bush Re-Election Contract can't be purchased for less than 54 cents a share. The price flirted with 49 a few moments during the Democratic Convention, but it now seems likely to stablilize (just a guess!) at 52 until the Republican Convention.

Link posted by Steve Antler : 7:20 AM

Sunday, August 01, 2004

Latest tax rumor...

I'm all for it in principle -- but as these things usually work out in the real world, the central government adds the VAT but somehow forgets to drop the income tax. So you're left with a more-complicated system and higher taxes as a result. Almost anything would be better than the current quagmire. The combined federal/state system of income/sales/property/excise taxes/gift/inheritance taxes taken as a whole is actually no more progressive than Milton Friedman's old flat tax "returns-sent-in-on-a-postcard" proposal. We have all the non-progressivity of a flat tax, in other words, combined with all the disadvantages of a progressive system. UPDATE: Reader Fred has this all figured out: The VAT sounds like a Boomer trap to me. The government's tax receipts from Boomers' income will decline with their mass retirement. That loss in revenue is to be replaced by taxing Boomers' retirement savings as they spend that (already taxed) money. Neat trick, I wish I was evil enough to think of it. EconoPundit comments: with all due respect, Fred, you were evil enough to think of it.

Link posted by Steve Antler : 9:28 PM

Thinking outside the spirtual box...

Where the word "model" is used in its strictly scientific sense, No Blog Here has a great discussion on religion as a "model" of spirituality.

Link posted by Steve Antler : 12:36 PM

IN MEMORIAM PUNDITWATCH

Ambush of the week -- Tim Russert (check here later for transcript) confronts Joe Biden with this: Bush has lately claimed the Iraq war to be a Kosovo-like "humanitarian intervention," but that notion has never had more than a minuscule following among Democrats; and although Dean's candidacy imploded in Iowa, and voters united around Kerry as the best bet to beat Bush, a deep vein of disapproval for this Iraq votes still runs through the Democratic base. That unease is compounded by the obvious political calculation of Kerry's vote last fall to withhold eighty-seven billion dollars of auxiliary support for the military in Afghanistan and Iraq. As one of his advisers put it to me, "Off the record, he did it because of Howard Dean. On the record, he has an elaborate explanation." Kerry originally supported an amendment sponsored by Senator Joseph Biden that would have funded the war by temporarily reducing Bush"s tax cuts to the wealthiest one per cent of Americans. But Biden's bill had no chance of passing in a Republican-dominated Senate, and Kerry's absurdly abbreviated account of the matter -- "I did vote for the eighty-seven billion before I voted against it" -- has left him open to relentless Republican ridicule. Biden himself ultimately voted for the money, and he confirmed that Kerry's decision not to was "tactical," an attempt "to prove to Dean's guys I'm not a warmonger."

Link posted by Steve Antler : 10:35 AM

They just never add up all the costs, do they?

Ninety percent of nine out of ten largest New York firms that say they intend to outsource jobs to save money -- but while these firms think their cost savings will be 44% per job, the true number is actually just 20%! The explanation is that additional costs must be added to the offshore wages themselves to get the complete picture on costs. Companies have to spend money for planning, offshore transition, vendor selection, technology, communications, offshore management, travel and security. Many employers do not take every one of these costs into consideration. Add up all the costs and suddenly a call-center worker with a raw wage of $5 an hour offshore has a true cost of $17. Of course, I knew it. Those silly big companies never bother to plan for all those extra costs, do they? It is this absent-mindedness of the private sector that just points toward the need for new government "initiatives," right? [W]hat helps us most against offshoring is our leadership in innovation. To maintain our advantage, we need a national agenda that promotes research through tax credits and further direct investments in science. We should provide new tax incentives for jobs, and eliminate perverse ones which actually reward businesses for sending jobs offshore. That's why I have co-sponsored legislation to create a 10% tax cut for manufacturers, and to close loopholes for companies that move headquarters abroad solely to avoid taxes. And John Kerry has proposed an overhaul of the corporate tax system to eliminate the so-called deferral advantage which rewards foreign profits at the expense of domestic profits. Okay, so who did the economic research, and who is proposing the new government initiatives? Check here to find out. And about those major New York corporations that may be guilty of considering outsourcing and other cost-reducing, profit-enhancing measures, an alternate intitative (suggesting a somewhat different policy direction) seems currently in the process of formulation elsewhere. UPDATE I: The alternate initiative just mentioned is now reported as including the IMB and World Bank Buildings. Interesting choices, no? UPDATE II: Reader Phenes adds: After factoring in costs that havebeen largely missed by these companies who out-source, the actual savings, per Robert Rubin is 20%. Only 20%? That's nothing I suppose. Except how many businesses would pass up a chance at decreasing costs by 20%? My guessis very few if they seek profits. And aren't these businessmen stupid for not recognizing the actual costs? Thanks, Hillary. He also suggests that, so long as we're looking at costs that were somehow missed in one way or another, we also include costs of excessive government regulation?

Link posted by Steve Antler : 8:41 AM

 
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