I just don't get it. Don't these people believe in evolution? Adaptation? Why won't the species in question just adapt -- you know, kind of like Darwin said they would?
And oh yes, about those scary-sounding "alien predators"...Don't they enjoy species-rights too?
UPDATE: A reader who may or may not agree sends a note dripping with ambiguity:
Darwin didn't say species would adapt. He said if they were to survive in a changing environment they would have to adapt; they don't have to survive. Most of them don't - 99% of all species have already gone extinct.
I presume the note means 99% of all species from the dawn of time, not 99% of all species from the dawn of Man or the dawn of Industrialization. If that's the meaning I guess I agree. (I always suspected the dinosaurs weren't wiped out by industrialization!)
But if the note is complaining Man has caused the elimination of "99% of all species" I'd like to know why this isn't good. I'm old fashioned. If, say, plant biodiversity was reduced so wheat could be planted in nineteenth century America so my grandparents had something to eat so they could reproduce so my parents could be born so I could now be alive to create this post I have to say that is good, not bad.
Too many environmental commentators have a really terrible analogy at the back of their minds, imagining mankind as the Nazis and all those biologically diverse species as little shivering concentration camp victims. This kind of self-loathing rejection of Western Humanism is as strange as snail worship.
No, this isn't some DeLongian nosebleed-pseudo-intellectual-rant designed to make you feel like everyone understands it but you. This is the sort of thing regular working people feel and know on a day-to-day basis in their gut: Getting cheap stuff from China to your corner Costco store is easy. Setting central economic policy that helps the process is easy as well. But the "policies" designed to help you buy the stuff by fiddling with the way you make your living... Face it, everyone knows, they're just as likely to do harm as good.
What do you get when you outlaw drainage of each and every insignificant pond -- every puddle (calling it part of our "wetlands") -- after years of control and/or ban of effective insecticides?
This guy has to be one of the least successful prophets in all of Western history. Remember his early 90's prediction of sustained low-US-productivity? Remember the return of depression economics? The collapse of the US dollar? The fiscal train wreck?
But don't take my word for it. Via Don Luskin, take a look at the detailed account clearly laid out here.
UPDATE: While you're in the neighborhood don't miss this.
On that new first-ever Seattle heat warning, just remember all you have to do is get out of town to find cooler weather. Here (via Jim Miller) is one of George H. Taylor's several graphics illustrating the urban heat island effect:
And here's another really nice one for all you global warming bunnies (you know who you are). Why is the world heating up so much faster than the US? Can it be because of globalization and economic development and URBANIZATION -- you know, all those good things that have already happened in the US but are only just now happening worldwide as well?
And, well, bless my forked tongue! Doesn't Taylor's main point turn out to be you can tailor (no pun intended, really) conclusions to preconceived notions by simply choosing your data's time span -- by, in other words, selectively citing numbers!
The people of France, Germany, Italy and the Netherlands may be angry about globalisation or ultra-liberalism or immigration, but this reflects a deeper malaise. Their living standards are falling, their pensions are in danger, their children are jobless and their national pride is turning into embarrassment and even shame. In sum, they feel that their countries, which numbered among the world's richest and most powerful nations as recently as the middle of the last decade, have gone to the dogs under the leadership of the present generation of politicians. And, at least in the economic sense, they are absolutely right.
The relative economic decline of "old" Europe since the early 1990s -- especially of Germany and Italy, but also of the Netherlands and France -- has been a disaster almost unparalleled in modern history. While Britain and Japan certainly suffered some massive economic dislocations, in the early 1980s and the mid-1990s respectively, they never experienced the same sort of permanent transformation from thriving full-employment economies to stagnant societies where mass unemployment and falling living standards are accepted as permanent facts of life. In Britain, unemployment more than doubled from 1980 to 1984, but conditions then quickly improved. By the late 1980s it was enjoying a boom, the economy was growing by 4 per cent and unemployment had halved. In continental Europe, by contrast, unemployment has been stuck between 8 and 11 per cent since 1991 and growth has reached 3 per cent only once in those 14 years.
This dreadful economic performance is more than enough to explain the political angst among Europeans.
Thinking the theater couldn't possibly be crowded on a Thursday afternoon with continuous showings of the movie for so long, we went to see the new Star Wars movie yesterday at 5pm -- making sure we got into one of the few Chicago venues showing it with digital projection ("the way it was meant to be seen").
Okay: (1) the place was crowded, (2) the guy next to me weighed 425 pounds, and (3) the screen was so dim you couldn't see much of anything during all those murky scenes involving "dark side" discussions. Finally (4) the bright "EXIT" signs on each side of the screen were distracting, and washed out most picture detail even in bright scenes.
A significant shift in liberal philanthropy took place after McGeorge Bundy, a former dean at Harvard and national security adviser in the Kennedy and Johnson administrations, was appointed president of the Ford Foundation in 1966. Sharply preferring activism to research and expertise, Bundy pioneered a strategy of "advocacy philanthropy." Soon Ford and other liberal donors were investing in a maze of activist groups promoting feminism, affirmative action, environmentalism, disarmament and other cutting-edge causes. The Environmental Defense Fund, the Natural Resources Defense Council, the Women's Law Fund and the Mexican American Legal Defense and Education Fund were among the products of this initiative.
These groups claimed to speak for and to be the legitimate representatives of their respective causes. In that capacity, they promoted ideas that led to legislation, and then sought to influence the regulatory bodies and federal courts that implemented and interpreted the laws. Thus, Ford and Bundy helped develop an institutional structure that, by means of litigation and the leverage it exercised over administrative agencies, could push its favored programs beyond any limits contemplated by the politicians who enacted them.
A strategy designed to bring about large change by circumventing the electoral process was well suited to philanthropic institutions with links to experts and advocates. And it led indisputably to results: employment quotas for women and minority groups, the expansion of welfare, new environmental legislation and the like. It also produced some spectacular blowouts, most notably the effort in 1968 by the Ford Foundation to decentralize the New York City public schools. Over the long run, the Bundy approach was instrumental in inventing what is by now a familiar phenomenon on the American political scene: the well-placed advocacy group nursing a grievance against American society and seeking compensation on behalf of its members.
Reinforcing this trend was the fact that, simultaneously, the Democratic Party was beginning to alter itself along parallel lines. Following the tumult at their 1968 convention in Chicago, the Democrats established a commission, chaired by Sen. George McGovern, whose mandate was to make the nominating process more representative. Quickly captured by liberal activists, the commission pushed through new delegate-selection rules requiring the representation of women, blacks and young people in line with their respective proportions in the population.
The effect was to displace the elected officeholders, party officials and union leaders who had controlled Democratic conventions in the past and to replace them with activists speaking for designated groups. Under this approach, the groups that now found a home in the party began to look very much like the ones Bundy had tried to organize through the Ford Foundation. In many cases, they were the same groups.
Finally, liberalism itself came to be recast along interest-group lines. The welfare state was redefined from a package of programs through which Americans lent assistance to the poor, the sick and the disabled to a system through which certain defined groups could command government support as a matter of right and as compensation for past injustices. Society was cast as the guilty party, the recipients as its aggrieved victims. This sleight-of-hand in turn made it difficult for government to require the beneficiaries of its aid to adapt their behavior to the standards of middle-class life.
As liberalism gradually absorbed the adversarial assumptions of the age, group-based claims became ever more strident and accusations of discrimination and injustice multiplied. In time, the new order would erase those large-hearted features of liberal philosophy that had made it appealing to middle-class Americans from the 1930s through the 1960s.
These developments could not have been foreseen. They were not a consequence of broad social or economic factors or of public pressure. Rather, they were engineered by a narrow circle of activists with access to money and influence within the Democratic Party. They also defied Hayek's assessment that far-reaching changes take a generation or more to be put into place. Here, an established doctrine and a political party with a proud tradition were turned upside down within just a few years.
Wow. Let's be clear, the award is monthly, not daily, which I guess explains why someone with such sentiments might bother to link to (rather than simply ignore and forget) the doggone thing.
An active part of the GOP team, Steve Antler wrote "they avoid the use of a certain word until well into the story" instead of writing "they avoid the use of a certain word until the fourth sentence of a 24-paragraph story." If the word had instead been first used near the end of the story's second sentence, would you still have considered it to be evidence of liberal bias? Where exactly do you believe the cut-off point is?
Perhaps someone someday will make a good case for current GOP federal policies, but don't arguments like the one in your post make your side appear dishonest?
I have a question about Brad's graph, reproduced here: This is how Brad originally explained the graph:
You should cyclically-adjust the series -- after all, we know that the duration of unemployment will be relatively high whenever unemployment itself is relatively high -- and calculate what the duration would be if the unemployment rate were six percent...
One of his commenters sent in this note: Brad: If you have time, could you explain briefly how you computed the cyclically adjusted unemployment duration series? I can take the answer in technical language.
And Brad responded:
Simply regressed unemployment duration on a time trend and on the unemployment rate. Data from the 2005 ERP, annual. 1959-2004. No corrections for autocorrelation or anything--just what I could do in less than 60 seconds. (May 24, 2005 04:56 PM)
What am I missing? If you regress unemployment duration on a time trend and on the unemployment rate you get a linear equation in two independent variables. If you then hypothetically set the unemployment rate equal to 6% you get a linear equation in one independent variable -- time -- and this plots as a straight line.
Brad: so where the heck did those doggone wiggles come from anyway?
UPDATE/ANSWER: Okay, I've got it now. If you get a regression equation of, roughly, AVERAGE WEEKS UNEMPLOYED=3.5+.03*TREND + 113*UNEMPL RATE, build Brad's "cyclically adjusted" series by adding to the regression equation's residual the sum of .03*trend+6.
UPDATE: I haven't kept track of the many times readers have accused Paul Krugman of being an intellectual bully by, for example, leaving out crucial steps and continuing as if everyone (but you) understands just exactly what's being explained.
Brad, I guess we're all just dummies here in the Midwest. We believe explanations should include all the important steps.
UPDATE II: Alex asks this:
Why does DeLong cyclically adjust the data at all? Krugman's point was that unemployment duration has reduced voter's sense of security. To an individual voter, what matters is how long it takes to find a job, not whether that length of time is high or low relative to the unemployment rate. Since we are talking mainly about voter psychology (and not macroeconomics), it seems that the raw BLS data would be at least as good as DeLong's cyclically adjusted data.
UPDATE II: More here. And the comments just keep flying in:
From reader Paul:
truth be told I would bet that the longer unemployment period (if actually true) is the result of greater unemployment benefits, greater job specialization and things like that. The result of a wealthy economy. Krugman's assumption of " lives of working Americans have become ever less secure " is counter intuitive at best and most likely his typical exaggerated scare mongering style. The burden of proof is on "them."
From reader Perry:
Krugman has a bad habit of confusing cause and effect, not just correlation with causation ("President Clinton's 1993 tax increase ushered in an economic boom"). In the case you cited, I think unemployment periods lengthened because social safety nets had already been strengthened, not that social safety nets were expanded because unemployment periods were growing. If people know there's a wider net, they don't have to be as desperate in finding a job, any job...[More-generous] social insurance benefits promote "taking it easy" when unemployed. As more realize they can take it easy, agenda-driven economics like Krugman point to them as evidence of a bad economy, failed government "progressivism," etc. So the benefits are increased, and [on and on it goes]...
UPDATE III: And James Bennett sends this comment he posted over at DeLong's site (read the whole thing there):
Krugman was not merely making a scientific observation of the relation of unemployment rates and unemployment duration, he was [showing] how this [affects] people. Adjusting [the series by] some arbitrary 6% [unemployment rate]...obscures [and] distorts [Krugman's point]...
UPDATE IV: More here. And for those of you who missed our discussion of BLS "alternative measures of labor underutilization" go here to get yourself up to speed.
There's a very good reason voters, when given a chance to make a clear choice, increasingly support a stronger, not a weaker, social safety net: they need that net more than ever. Over the past 25 years the lives of working Americans have become ever less secure. Jobs come without health insurance; 401(k)'s vanish; corporations default on their pension obligations; workers lose their jobs more often, and unemployment lasts much longer than it used to. (Emphasis added)
...columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults.
A plot of the BLS statistic "average weeks unemployed" from its 1948 start to the present illustrates Okrent's point:
The first gray arrow shows upward trending from 1948 to 1983. During those years Krugman was correct. The second gray arrow shows a slight downward trend since the mid 1980's. During these years, Krugman is wrong.
So which is it? Relative to 1948, unemployment now lasts longer than it used to. Relative to 1983 recession-peak-unemployment lasts about two weeks less than it used to.
I guess the question is one of interpretation. It just has to be left to the voters. Do they share Krugman's pessimism, or do they feel optimistic about the future?
UPDATE: Using a truly complex mixed metaphor (someone has to "lay down a marker that Steve Antler writes with forked tongue") Brad DeLong proves I'm doing something other than economics by demanding my numbers be adjusted to produce this figure (which starts, suspiciously, in 1960 rather than 1948, and which he apparently saved using the imaginative filename "antler_dork.gif"):
Okay Brad, listen up. I'm just a working class guy teaching at a working class university. EconoPundit is blue collar, and he keeps things simple. He tries to stay away from charts his readers don't know how to duplicate and/or use in their own work.
I know you Berkeley guys have all this economic sophistication we Midwest rubes lack, but Brad, try to get this: the chart I plotted was raw BLS data. All I did was add a few arrows showing how my eye reads the various trends.
But if you want to play games with numbers you don't have to be so oh-so-very-Leftcoast esoteric in all this. Just plot the linear trend like this, and add those gray recession bars so readers can get the point:
What does this say? We've moved out of a world with more-frequent recessions but shorter job search times, into a world with fewer recessions and longer job search times.
But is the working class (to which I belong, remember) ready to join Krugman's Committee for the Return to Depression Economics?
Don't just look at average duration of unemployment, but also look at price-corrected quarterly unemployment insurance benefits per unemployed person:
Well, just bless my forked-keyboard (or whatever one uses to "write" with a "forked tongue")! Doesn't it look like real quarterly unemployment benefits per unemployed person have trended upward over the past half century?
So we live in a world of fewer recessions, longer job-search-time, and higher benefits per person. Maybe that's why everyone is so optimistic.
UPDATE II: There are lots of great comments coming in here and over at Brad Delong's blog. BUT -- if you find yourself confused by some of the back-and-forth over there, the reason may have to do with Brad's editing of the comments. Before it disappears, here's the last comment I found this morning: What is with the deal with deleting and altering my posts when I am engaged in a completely polite and civil conversation on the subject at hand. Is this how free speech works now at Berkeley? It is only allowed if you agree with the teacher.
Most academic disciplines know their appropriate boundaries. Neither anthropologists nor political scientists worry about material science aspects of bridge construction, for example. They know the engineers are responsible for that aspect of life. Similarly, engineers don't spend much time on drug research or ethnography.
But there are exceptions to this rule. In some academic disciplines, it is typical for wise professors to gravely complain how limited is their discipline because it fails to explain, well, everything...
You'll find the following at Memri.org. Reproducing it here constitutes no "proof," but rather intuitive (shall we say anecdotal?) evidence of the following proposition: US-hatred is nothing more than politically-correct Jew hatred:
"Allah has tormented us with 'the people most hostile to the believers' -- the Jews. 'Thou shalt find that the people most hostile to the believers to be the Jews and the polytheists.' Allah warned His beloved Prophet Muhammad about the Jews, who had killed their prophets, forged their Torah, and sowed corruption throughout their history.
"With the establishment of the state of Israel, the entire Islamic nation was lost, because Israel is a cancer spreading through the body of the Islamic nation, and because the Jews are a virus resembling AIDS, from which the entire world suffers.
"You will find that the Jews were behind all the civil strife in this world. The Jews are behind the suffering of the nations.
"Ask Britain what it did to the Jews in the early sixth century. What did they do to the Jews? They expelled them, tortured them, and prevented them from entering Britain for more than 300 years. All this was because of what the Jews did in Britain. Ask France what it did to the Jews. They tortured them, expelled them, and burned their Talmud, because of the civil strife the Jews wanted to spark in France, in the days of Louis XIX. Ask Portugal what it did to the Jews. Ask Czarist Russia, which welcomed the Jews, who plotted to kill the Czar - so he massacred them. But don't ask Germany what it did to the Jews. It was the Jews who provoked Nazism to wage war against the entire world, when the Jews, using the Zionist movement, got other countries to wage an economic war on Germany and to boycott German merchandise. They provoked Russia, Britain, France, and Italy. This enraged the Germans toward the Jews, leading to the events of those days, which the Jews commemorat today.
"But they are committing worse deeds than those done to them in the Nazi war. Yes, perhaps some of them were killed and some burned, but they are inflating this in order to win over the of the media and gain the world's sympathy. The worst crimes in history were committed against the Jews, yet these crimes are no worse than what the Jews are doing in Palestine. What was done to the Jews was a crime, but isn't what the Jews are doing today in the land of Palestine not a crime?!
"Look at modern history. Where has Great Britain gone? Where has Czarist Russia gone? Where has France gone - France, which almost ruled the entire world? Where is Nazi Germany, which massacred millions and ruled the world? Where did all these superpowers go? He who made them disappear will make America disappear too, God willing. He who made Russia disappear overnight is capable of making America disappear and fall, Allah willing.
"We have ruled the world before, and by Allah, the day will come when we will rule the entire world again. The day will come when we will rule America. The day will come when we will rule Britain and the entire world - except for the Jews. The Jews will not enjoy a life of tranquility under our rule, because they are treacherous by nature, as they have been throughout history. The day will come when everything will be relived of the Jews -- even the stones and trees which were harmed by them. Listen to the Prophet Muhammad, who tells you about the evil end that awaits Jews. The stones and trees will want the Muslims to finish off every Jew."
While many studies have relied on measures of terrorism-related casualties or terrorist incidences as a proxy for the risk of terrorism, Abadie uses country-level ratings on terrorist risk from the Global Terrorism Index of the World Market Research Center, an international risk-rating agency. The index assesses terrorism risk in 186 countries and territories. In order to measure poverty, Abadie uses World Bank data on per capita gross domestic product as well as the United Nations Human Development Index and or the Gini coefficient (a measure of country-level income inequality). He also uses Freedom House's political rights index as a measure of country-level political freedom and employs measures of linguistic, ethnic, and religious fractionalization. Finally, he includes data on climate and geography, since it is well known that certain geographic characteristics -- such as being land-locked or in an area that is difficult to access -- may offer safe haven to terrorist groups and facilitate training.
(And for those who don't want to pay the NBER's modest download fee, someone has posted a PDF of what I presume is an earlier draft here.)
UPDATE: Don't you just love it when political conclusions generate easy-to-understands graphs like this one? From Abadie's paper, this shows terrorism increases as measurable political freedom decreases, but only up to a point: Thus does economic methodology provide quantitative support for realpolitik and the Bush doctrine, depending on where you're standing:
I'm not trying either to romanticize the General Motors of yore or to portray Wal-Mart as the root of all evil. GM was , and Wal-Mart is, a product of its time. And there's no easy way to reverse the changes.
has to be graded as "showing some progress."
But the ideology remains. The policy model seems grounded in these words:
The average full-time Wal-Mart employee is paid only about $17,000 a year. The company's health care plan covers fewer than half of its workers.
True, not everyone is badly paid. In 1968, the head of General Motors received about $4 million in today's dollars - and that was considered extravagant. But last year Scott Lee Jr., Wal-Mart's chief executive, was paid $17.5 million. That is, every two weeks Mr. Lee was paid about as much as his average employee will earn in a lifetime.
Over and over the message of excessive CEO salaries is repeated, as if this proves redistribution is a viable (dare we say it -- sustainable?) means of reestablishing a deteriorated safety net. As if this proves ideologues won't wind up taxing all the better-off workers in order to support their less-well-off counterparts.
For those who know even a little recent history, a simple cinematic comparison can show how lame this can be.
Consider Michael Moore's angry 1989 documentary "Roger and Me." Compare it with the ever-popular English film "The Full Monty." Once you ignore differences in national setting, you easily see the background socioeconomics are absolutely identical with one exception -- in the latter, the safety net has been maintained through redistributive taxation of, basically, everyone.
So just ask yourself: despite the anger of the Moore movie and the humor of the English one, where would you rather live?
UPDATE: And here's one more problem with this ideology of anecdotally-based class envy: it works like eating nachos. You start with just one, then you eat another, then one more...
In 1965, government spending as a percentage of GDP averaged 28% in Western Europe, just slightly above the U.S. level of 25%. In 2002, U.S. taxes ate 26% of the economy, but in Europe spending had climbed to 42%, a 50% increase. Over the same period, unemployment in Western Europe has risen from less than 3% to 8% today, and to nearly 9% for the 12 countries in the euro zone. These two phenomena are related; in a country with generous welfare benefits, rising unemployment increases government spending rapidly.
But here a third element enters the picture, creating a feedback loop that explains why the Continent will never regain the halcyon days of postwar growth. As spending goes up, higher taxes must follow to pay for those benefits. But those taxes, usually payroll taxes, must be collected from a shrinking number of workers as jobs are cut. This in turn increases the cost of labor and decreases the benefit of working rather than collecting unemployment or welfare checks. As Martin Baily, a former head of Bill Clinton's Council of Economic Advisers, has described, this can lead to a spiral of rising taxes and falling employment, especially when welfare payments are high, as they are in most of Western Europe.
The result is predictable--more jobs are lost, the tax base shrinks, and taxes must go up further to pay for yet more welfare benefits, making work less attractive and not working more attractive.
Shouldn't someone who has apparently never held a private sector job be careful when he claims to know who'd get fired and who wouldn't? I can imagine many private sector types arguing from personal experience major top decision makers are paid very high salaries to act exactly like John Bolton.
It feels like the entire world is either grading exams, taking them, or proctoring. (Now there's a word fallen into serious disuse, no? "Proctoring" -- to the uninitiated it must sound vaguely like a rectal exam.)
Anyhow...here's David Malpass on recent media economic stupidity. (My expression, not his.)
What is going on here? There seems to be absolutely nothing new in any of the material I can access. Since I can get to neither page #2 nor the printer-friendly version, I can't see whether there's important material buried towards the end.
However: knowing Lowell Bergman, his personality, and his career, I'd say there's some upcoming political reason this material is being revisited by this particular newspaper at this particular time.
UPDATE: Tom Anger sends this thought:
Bergman likes to trash the credit-card industry. The credit-card industry is vulnerable to identity theft. Bergman's latest piece may be a "hook" on which to build a case for tighter government control of private databases, such as those maintained by credit-card companies. There could even be a tie-in to Eliot Spitzer, who seems to be into internet issues.
For weeks I have been telling anyone willing to listen (a) that I really want to get in to see the new Ridley Scott movie ASAP and (b) I predict (on the basis of trailers, previews, and innate wisdom) reviewers will peevishly dismiss the film because it doesn't recount the standard postmodern narrative of bad Crusaders versus noble Saracens.
So here is the first review I have come across. I link to it first. And now I go to follow the link so I can read it to see if my prediction was correct.
Smog reduction, which ought to help control global warming, has led to global brightening, which is increasing the rate of global warming. The NYT warns us not to take these results too literally:
But the findings also highlight a major gap in understanding of climate. Scientists do not know what caused the dimming and subsequent brightening or how those changes affect the rest of the climate system.
------------------- * I'm really sorry about this, I just can't leave behind that stupid grade-school habit of instinctively forming puns on peoples' names. (It's what happens when you grow up with a last name like "Antler.")
In this case, what pops into my head is a line of Mexican peasants -- you know, like in a Zorro movie -- all lined up respectfully at roadside holding sombreros saying "Buenas dias, Don Luskin!"
There looks to be a 50% chance of a change in the yuan policy within the next few days. Initially, this would be likely to involve a relatively small widening of the trading band, potentially to around 5%, and a possible move to a trade-weighted basket. Markets would unlikely to be satisfied with a small move and there would be pressure for a further band widening over the next few months.
Either they know something, or they're dividing a 100% probability by two.
"...immoral, illegal, and dreadfully dangerous..."
In the 1960's and 70's, when I was a card-carrying member of the New Left, I despised Robert S. McNamara. Guess what -- even now I still despise him for composing the same talking points we'll soon be hearing from the France, Iran, North Korea, Venezuela and Cuba, and (just wait -- it's coming soon!) even from Hamas.
Based on the false assumption that small employers would have to bear all the burdens of administering a 401(k) plan in order to deal with Social Security personal accounts, Cavanaugh goes on to cite the inevitable "studies" leading to the conclusion that small businesses will be taxed billions of dollars in order to comply. But there's really nothing more for employers to do than they already do to deal with Social Security. So where's the extra cost?
The Treasury Department this week reported there would be a $54 billion swing from projected deficit to surplus in the April-to-June quarter, after an unanticipated gush of tax payments poured into the Treasury before the April 15 deadline. That prompted private forecasters to lower their deficit projections for the fiscal year that ends in September. (Emphasis added)
Other Variables: The federal government budget deficit is predicted to be around $420 billion in the next four quarters (on a NIPA basis). (See the predicted values for SGP.) This is smaller than many others expect. (Emphasis added)
The primary issue is whether the assets in the federal trust funds will help future generations of workers finance the retirements of the baby boom generation. Has the governmental policy of building up these trust funds succeeded in transferring resources to the next generation of workers? [T]he evidence...suggests...the answer is "no." [F]ocus on the unified federal budget has undermined the wealth accumulation aspect of the trust funds. The surplus revenues that the trust funds have turned over to the rest of the government have been spent and not saved. As a result, no extra wealth has been accumulated.
So here's a quiz. What would be the impact of raising the cap in accordance, say, with Richard Cohen's approach?
Undocumented immigrants depress wages of other undocumented immigrants?
What follows is kind or ironic, but also important and therefore an inappropriate subject for the usual depressive-bad-taste EconoPundit jokes.
Without seeming to attach much importance to the result, Pew Hispanic Center has documented the possible beginnings of labor market saturation in areas largely served by undocumented immigrants:
The rapid growth in Hispanic employment appears to have come at the price of lower wages. Contributing to this trend is their concentration in specific segments of the labor market, in particular, the lower-skill occupations. Consequently, real wages for Hispanic workers declined for the second consecutive year in 2004. The cumulative decline over the past two years amounts to 5 percent, and, as a result, the earnings of Hispanic workers have fallen even further behind the earnings of non-Hispanic workers. The decrease in the earnings of Latino workers has been led by new immigrants who have accounted for the vast majority of new jobs for Hispanics but at relatively low wages. Those immigrants also suffered among the largest losses in earnings in 2004. The fact that employers were able to fill their payrolls without having to bid up wages is evidence that some slack remains in the labor market.
This is important for several reasons. First, it may signal upcoming slowdowns in undocumented border crossings, as economic incentives start to diminish. Second, it may herald a magic point at which certain of the undocumented immigrants start moving up the food chain toward higher-paying slots -- putting downward pressure on currently higher-paying and more desirable labor slots in the US economy.
Fairmodel has been re-estimated and re-run. Here are the basic numbers from the forecast memo:
Real Growth and the Unemployment Rate: The predicted growth rates for the next four quarters are 1.9, 2.3, 2.6, and 2.4 percent, respectively. These growth rates are enough to keep the unemployment rate unchanged at 5.3 percent. The jobs variable, JF, is predicted to increase in the four quarters by 1.6, 1.8, 1.9, and 1.8 percent, respectively.
Inflation: Inflation as measured by the growth of the GDP deflator (GDPD) is predicted to be between 3.5 and 3.7 percent in 2005 and 2006. These values are higher than those in the past few years, and so inflation is predicted to increase.
Monetary Policy: The estimated interest rate rule (equation 30) is predicting that the three month bill rate (RS) will rise to 2.9 percent by the end of 2005. It then rises to 3.4 percent by the end of 2006.
Other Variables: The federal government budget deficit is predicted to be around $440 billion in the next four quarters (on a NIPA basis). (See the predicted values for SGP.) By the end of 2008 it is predicted to be $592 billion.
The U.S. current account deficit (variable -SR in the model) is forecast to be around $780 billion in the next four quarters (on a NIPA basis). By the end of 2008 it is predicted to be down to about $700 billion.
Hmmmm... The current account deficit starts to decline, eh?
At first glance, this seems to say we can conserve all that precious petroleum by returning to those good old days of slow speed limits everywhere:
But when we look at the whole picture, it appears a better strategy would be to induce a recession!
As the diagram shows, reduced household demand for gasoline is an excellent concurrent indicator of economic slowdown. The 55 MPH speed limit may have had some effect, but the all-dampening effects of economic recession had more of an impact.
And I'm puzzled. Why did gasoline consumption grow so rapidly during the early years of the 55 MPH speed limit -- and why did it plunge when speed limits returned to local control?
UPDATE -- With EconoEgg on my EconoFace: Rod Phares gets the prize for noticing what I knew about but didn't have time to correct yestereday. In Rod's own words:
Your second graph on the 55 MPH posting is showing oil consumption in dollars, not gallons. The price of oil/gasoline is far more variable than consumption and your chart is mostly showing the big price moves (both up and down).
UPDATE II: Okay, here is the corrected graphic. I won't bore you with all the false starts (Gasoline, motor oil, plus Fuel oil? Chained dollar series that only go back to 1990?) but here is constant-price purchase of gasoline and motor oil products since 1970, recessions shown in pink bands, era of 55 MPH speed limit shown by dark arrow: As I said yesterday after posting one of the (withdrawn) graphics, constant-price purchase of gasoline seems an excellent leading indicator. It may carry not only timing information but also severity information. The severity of the two recessions during the era of 55 MPH, in other words, may have more to do with the more-dramatic declines in constant-price gasoline consumption than did the 55 MPH speed limit itself.
UPDATE III: I ran a quick-and-dirty statistical check on the annual data. Percent changes in gas purchase and GDP are modestly but significantly related. Adding a dummy to denote the years of the 55 MPH speed limit reduces the explanatory power of the whole thing and generates a statistically insignificant coefficient on the dummy. In short: statistically speaking, the 55 MPH speed limit did nothing to change the rate at which Americans purchase gasoline.
