The Chief Brief

Why Do They Say This Guy is So Smart, Again?

2012-01-25T21:43:00.000-08:00

This bit from yesterday's State of the Union Address still has me shaking my head.

In the next few weeks, I will sign an executive order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home. (Applause.)

Huh? Even without the expense of the Iraq War, we are still running a deficit somewhere in the vicinity of $1.5 trillion a year. How exactly do we pay down anything based on the fact that we could have been spending more? Sorry, they never covered this accounting trick in B-School.

The Wall Street Journal Imitates Me

2012-01-25T21:37:00.000-08:00

Hmm, sounds familiar.

This is because wealthy tax filers make most of their income from investments. Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%.

This double taxation is one reason the U.S. has long had a differential tax rate for capital gains. Another reason is because while taxpayers must pay taxes on their gains, they aren't allowed to deduct capital losses (beyond $3,000 a year) except against gains in the current year. Capital gains also aren't indexed for inflation, so a lower rate is intended to offset the effect of inflated gains.

A Simple Proposal

2012-01-24T19:50:00.000-08:00

With the all the brouhaha over Mitt Romney's tax return, and the President's State of the Union address, much has been lost about why some rich investors pay such a low rate. The media and politicians always seem to miss that it is the simple fact that capital gains are treated differently than regular income. Should it be, well that depends on your perspective, but there are several legitimate reasons why it is. Such as:

1. They have already been taxed, both when the original capital was taxed as income, and at the corporate level, which on the books at least, is one of the highest in the world.

2. They are not indexed for inflation. If, for example, you have an investment which makes a 30% return over a period of time when the inflation was 40%, you not only lost 10% in real terms, but you get the pleasure of paying a tax to the government for the honor. Not exactly fair.

3. They are not riskless. If you receive a paycheck, the worst thing that can happen is you are laid off, and your pay goes to zero. If you invest $1 million and receive an income stream off of it, you not only lose your income, but you can lose your $1 million. If you make a million you have to pay taxes on that income, but if you lose that same million, the government does not cut you a check for that same amount in taxes.

So while I can understand why some people argue that for fairness, the very rich at least, should have to pay a higher capital gains right, fine, first just address the 3 issues I have raised above. Raise the capital gains rate to the same as income, but first cut the corporate rate to 15-20%, in line with the rest of the developed world. Then allow capital gains to be indexed for inflation, and finally allow capital gains losses to be offset against regular income.

Anyone think the president will actually propose any of these? Nah... didn't think so.

But Lawyers Are?

2012-01-12T20:53:00.000-08:00

I will leave it up to the inimitable Steven Landsburg (just picked up his latest book) to address the bad economics in this Paul Krugman post, but I was most interested in the anti-business bias.

A brief thought on something I’ll try to expand on later. Leaving aside all the questions about what Mitt Romney did or didn’t do at Bain — and about his self-aggrandizing double standard — there’s an even broader question: why does anyone believe that success in business qualified someone to make economic policy?
For the fact is that running a business is nothing at all like making macro policy. The key point about macroeconomics is the pervasiveness of feedback loops due to the fact that workers are also consumers. No business sells a large fraction of its output to its own workers; even very small countries sell around two-thirds of their output to themselves, because that much is non-tradable services.

Well first of all, nobody claims that businessmen are experts on macroeonomics and monetary policy, but in general they at least have an idea in how to lead large organizations and how the economy works. Right now we have a government run by lawyers. Over half of the Senate are lawyers, every Democratic presidential and vice presidential candidate since 1984 has gone to law school (Al Gore, the Nobel Prize winning intellectual of the left and creator of the Internet dropped out, shortly after flunking out of law school).

So having someone with some experience in the real world, outside of government or the court room, is not a bad thing. There aren't really any good jobs to prepare for being president anyway, aside from being a governor, which is why most presidents are former governors. A first term senator getting elected to the presidency is actually quite rare, for a reason. Romney being both a governor and successful businessman certainly demonstrates more experience than our current part-time law professor/community organizer in chief. Now you can definitely make some arguments against voting for him based on policy, but that is another topic.

Democrats Against Democracy

2012-01-11T17:19:00.000-08:00

Aside from this whole thing where Obama simply ignores the constitution by pretending that Congress is in recess, the fact that liberals support the CFPB because it is protected from democracy is disturbing. Can our system be corrupt and self-serving at times? Sure, but it is the best we got. Creating government entities which are immune from control by elected from officials and which rely solely on the virtues and judgement of bureaucrats, is, dare I say, fascist.

The bigger question is why Republicans oppose an agency that would stop financial companies from cheating and taking advantage of ordinary Americans, which happened to millions during the mortgage mania. They complain that the current setup leaves the bureau "unaccountable" to the American people, in part, because its funding comes automatically out of the Federal Reserve's budget rather than through the congressional appropriations process.
Unfortunately, the interests of the American people and individual members of Congress are not always one and the same. The funding mechanism was created precisely to remove the power of the purse from the industry's handmaidens in Congress. During 2007 and 2008, the height of Wall Street excess, conservatives cut the funding for the Securities and Exchange Commission, whose job it was to patrol the markets. They apparently want the ability to deny the Consumer Financial Protection Bureau the means to stand between the unscrupulous financial salesmen and their unsophisticated prey.

I Blame Paul Krugman

2012-01-06T20:00:00.000-08:00

Well since the Nobel Laureate already set a precedent for accusing people you disagree with politically of motivating crimes, then I will start trying to connect his anti-banking rhetoric and support of the Occupy Wall Street crowd to this attempted fire bombing of a bank in Seattle.

Seattle police arson/bomb-squad investigators and the FBI are trying to determine who left an incendiary device at a Southeast Seattle bank early Friday.

The device, which one witness described as two bottles wrapped in tape in a box with wires, failed to ignite. Seattle police are calling the incident an attempted arson.

Police spokesman Mark Jamieson said that someone who apparently saw the device inside the secure ATM area at the Chase Bank, at 7100 Martin Luther King Jr. Way S., flagged down a patrol officer at 6:37 a.m.

Krugman's Army Arms Up

2011-10-29T11:12:00.000-07:00

For today's feature I could post about how the protesters in Madison got in trouble for, ahem, taking things into their own hands, but instead I will focus on the original protest.

Fights are erupting among Occupy Wall Street protesters, so much so that one corner of Zuccotti Park has emerged where protesters say they won't go for fear of their safety, the New York Daily News is reporting.

Police officers also have been warned of "dangerous instruments" being concealed in cardboard tubing, the News says it has been told by unidentified police sources.

Krugman's Army Marches Down the Charles River

2011-10-26T20:22:00.000-07:00

I could make c into a regular feature. But at least none of them are breaking out those tricorner hats!

BOSTON - A man and woman who have been living in a tent with Occupy Boston protesters have been arrested for allegedly selling heroin to an undercover police officer.

Issac Bell, 34, and Charlene Dumont, 31, both pleaded not guilty to drug possession and distribution charges at their arraignments Monday. They were released on their own personal recognizance and ordered to stay away from the Occupy Boston encampment.

Prosecutors say police set up a sting after learning of drug activity in the encampment.

Krugman's Army on the March

2011-10-24T18:42:00.001-07:00

Don't think this will make his next column either.

Dallas Police continue to investigate whether a teenage runaway was sexually assaulted by an adult male at the Occupy Dallas encampment behind City Hall.

A source within the Dallas Police Department who spoke on condition of anonymity because of the ongoing investigation said the girl ran away from home in Garland last month and that she is now refusing to cooperate with investigators. She initially told officers that she had sex with a man in his early twenties and had engaged in sexual activity with several other people.

Some members of the group told CBS 11 the girl identified herself as a 19-year-old and never knew she was 14.

Krugman's Army

2011-10-20T18:03:00.000-07:00

As Paul Krugman said earlier.

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Odd, I don't remember this happening at any Tea Party event.

Cleveland police are investigating an alleged sexual assault incident that occured Saturday at the "Occupy Cleveland" rally involving a 19-year-old female student.
According to police reports, the 19-year-old student was instructed by "Occupy Cleveland" personnel to "share a tent with the suspect due to a shortage of tents."

Or this:

Thanks to some watchful officers and Occupy Seattle protesters, police have arrested a man suspected of exposing himself to children at least five different times throughout Seattle.

Police had been searching for suspect since the incidents, which occurred between September 29 and October 3.

“During the course of their investigation, detectives discovered that the suspect had been at Westlake Park, participating in Occupy Wall Street,” said detective Reneee Witt “Flyers of the suspect was circulated to officers and the public at the event.”

But don't worry, they are taking the problem seriously.

Efforts by the Occupy Baltimore protest group to evolve into a self-contained, self-governing community have erupted into controversy with the distribution of a pamphlet that victim advocates and health workers fear discourages victims of sexual assaults from contacting police.

The pamphlet says that members of the protest group who believe they are victims or who suspect sexual abuse "are encouraged to immediately report the incident to the Security Committee," which will investigate and "supply the abuser with counseling resources."

A Beautiful Mind: Part II

2011-10-10T17:26:00.000-07:00

Paul Krugman shows he is sinking deeper into dementia, with a series of recent editorials. First, from Friday (emphasis added).

Bear in mind, too, that experience has made it painfully clear that men in suits not only don’t have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us that there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring.

Uhh, like Paul Krugman said himself:

So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don't matter. But we're looking at a fiscal crisis that will drive interest rates sky-high.

Now Krugman is chiming in on the Occupy Wall Street protests.

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Uhh... really? Are you serious?

Seattle police arrested 25 people on Wednesday as they clashed with protesters and hauled away tents. The protest continued after arrests were made.

Wednesday's showdown — in one of downtown's most popular gathering spots — began just after lunchtime, as some demonstrators refused a city order to remove the tents.

Several influential New York state lawmakers have received threatening mails saying it is “time to kill the wealthy” if they don’t renew the state’s tax surcharge on millionaires, according to reports.

“It’s time to tax the millionaires!” reads the email, according to WTEN in Albany. “If you don’t, I’m going to pay a visit with my carbine to one of those tech companies you are so proud of and shoot every spoiled Ivy League [expletive] I can find.”

These are the shocking scenes that have led some people to accuse the Occupy Wall Street protesters living rough in New York's financial district of creating unsanitary and filthy conditions.
Exclusive pictures obtained by Mail Online show one demonstrator relieving himself on a police car.
Elsewhere we found piles of stinking refuse clogging Zuccotti Park, despite the best efforts of many of the protesters to keep the area clean.

Thousands of Occupy Wall Street protesters swarmed the Brooklyn Bridge Saturday, shutting down car lanes and setting up yet another tense showdown with the NYPD.

Roughly 700 people were arrested after standing in the roadway, blocking the Brooklyn-bound lanes. Traffic in the opposite direction was slowed -- but still running after the 4 p.m. standoff.

Ask and Ye Shall Receive

2011-09-08T20:12:00.000-07:00

Jimmy Hoffa, introducing President Obama on Monday:

video platform video management video solutions video player

And now today:

At least 500 Longshoremen stormed the Port of Longview and broke out windows in the guard shack, according to Longview Police Chief Jim Duscha. As men wielding baseball bats and crowbars held six guards captive, others cut brake lines on boxcars and dumped grain, according to Duscha.

None Dare Call it Economics

2011-09-05T10:51:00.001-07:00

Krugman has gone over the edge, now proclaiming that virtually any kind of spending, no matter how productive is beneficial.

This puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.
And now you can see why tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point! And with corporations sitting on lots of idle cash, the money spent would not, to any significant extent, come at the expense of other investment.

So why not force corporations to build ice sculptures in their cafeterias or something? At least that would look nice.

Practicing Journalism Without a License

2011-08-22T17:08:00.000-07:00

I always thought that the AP was an actual news organization, not an arm of the Democratic Party. I have been shaking my head all day at this AP story, run here in the Seattle Times, with the headline:

GOP aims for end to payroll tax break

But if you actually read the article, however, it doesn't list a single Republican "aiming" to end this, much less any indication that it is part of GOP policy, and in fact concludes with:

Neither House Speaker John Boehner, R-Ohio, nor Senate Minority Leader Mitch McConnell, R-Ky., has taken a firm stand on whether to extend the one-year tax cut.

Journalistic Standards

2011-07-05T18:56:00.000-07:00

After my previous post on Greg Valentini, the war-story telling vet who is suing the VA, I e-mailed it to Steve Lopez, the journalist for the LA Times who written 3 stories on the guy with lurid but vague tales of bloody combat. I never received a response.

I just noticed though that Mr. Lopez has now written a fourth article on the guy, with no mention of the previous issues with his stories.

Valentini enlisted in the Army in 2000 primarily for the G.I. Bill and ended up in heavy combat a year later, even though he's generally antiwar. He hung a "Veterans for Peace" sign on his dorm room door at the vet center, and when Zenner objected, Valentini hung it on Zenner's door.

So I e-mailed Mr. Lopez again, and this time I got a pretty swift response. Mr. Lopez insisted that I didn't know what I was talking about and the Rakkasans had fought in Operation Anaconda. Nevermind that I had already stated that fact in the first story that I did, less than a week in a support roll for the Army Rangers, does not count as "9 months of bloody combat", in addition to the issues of claiming to have assaulted Tora Bora or the Kandahar Airport.

Anyway, after several exchanges as I tried to explain to Mr. Lopez that either both him and Laurence Tribe (he claimed not to be familiar with Tribe's claims) had made up stories, or Valentini had lied to him, I finally got a response stating, "Ok, well I appreciate your service there, and I admit to not knowing everything greg went through because I wasn’t there with him".

Well that isn't the point! I don't know absolutely everything that he did either, but at least I can check the big things, such as the fact that the 101st didn't suffer a single fatality despite their "9 months of heavy combat", hell, I did a search for news articles on Purple Heart recipients for that tour and came up with a grand total of 1. And that was for a pilot, not an infantryman. Aren't journalists supposed to do at least the most basic fact checks, or do they just write down whatever people tell them?

Worst Wall Street Journal Editorial Ever

2011-06-20T20:38:00.001-07:00

This editorial is so stupid it defies description. I am starting to think they put it in there just to make unions look bad. Maybe it was published on a dare?

Yet the Boeing case has a scarier aspect missed by conservatives: Why is Boeing, one of our few real global champions in beefing up exports, moving work on the Dreamliner from a high-skill work force ($28 an hour on average) to a much lower-wage work force ($14 an hour starting wage)? Nothing could be a bigger threat to the economic security of this country.

We should be aghast that Boeing is sending a big fat market signal that it wants a less-skilled, lower-quality work force. This country is in a debt crisis because we buy abroad much more than we sell. Alas, because of this trade deficit, foreign creditors have the country in their clutches. That's not because of our labor costs—in that respect, we can undersell most of our high-wage, unionized rivals like Germany. It's because we have too many poorly educated and low-skilled workers that are simply unable to compete.

Why Indeed Do Veterans Sleep in Dumpsters?

2011-06-09T17:51:00.000-07:00

Laurence Tribe and Bobby Shriver have an editorial in today's Wall Street Journal about a lawsuit against the Veterans Administration to force them to provide more funding for caring for homeless veterans. Now I don't know the details about the lawsuit or benefits in this particular area, although as a veteran I am of course sympathetic to this. I was a bit concerned, however, with one of the veterans they are taking up the cause of.

Among the plaintiffs in this lawsuit is Greg Valentini. A private in the 101st Airborne, he took part in the initial invasion of Afghanistan. There, he participated in the assault on Tora Bora that sought Osama bin Laden. He was redeployed to Iraq, where he again experienced heavy combat. He received six decorations for his service.

Having served in the original OEF myself though, this claim is not true. The 101st Airborne was not part of the initial invasion of Afghanistan. They did not arrive until mid-January of 2002, two months after Kabul fell. Furthermore, they did not participate in the assault on Tora Bora, which took place in mid-December 2001. The authors of this piece should have known that, since only a handful of special operations troops took part in the operation, working with local Afghan forces, a decision which has been widely criticized over the years as allowing Osama bin Laden to escape to Pakistan. To the best of my knowledge the only significant combat operations they took part in was supporting the Army Rangers during Operation Anaconda, and they spent the rest of the time manning guard posts in Kandahar. At the time the tours were only 6 months. In fact a list of casualties from Afghanistan does not show a single fatality from the 101st for all of 2002, for any reason.

So how exactly did this private end up homeless? Well a previous article in the LA Times tells us:

Back home, it was meth that took the edge off, and nearly destroyed him.

"It wasn't pretty," says Mr. Valentini.

His son was scatterbrained, dishonest and jumpy. Mr. Valentini was torn. He knew Greg was strung out, but he also knew he'd been through something horrible.

"I was probably too lenient, but I was trying to understand his side of it."

"But I got worse and worse," admits Greg, who stole cash, credit cards and jewelry from his father. "I did a lot of humiliating things."

"Yeah, it was a blow," says Mr. Valentini.

Greg, who was arrested several times, often limped back home when he was set free. Once, his father told him he could sleep on the back porch, that was it. Another time, he kicked him out altogether.

In that same article, Valentini tells even farther fetched stories:

As the father grills burgers on a sunny and pleasant Southern California day, the son takes us into a war zone on the other side of the world. In Afghanistan, Greg says, his whole unit smoked opium "to take the edge off." Surviving firefights seemed to be a matter of luck. Once, in a convoy, he was switched out of one vehicle and into another. Minutes later, the first vehicle hit an IED, and there were no survivors.

Once again, the 101st did not suffer a single fatality during that tour in Afghanistan. Not a one.

Update: More overwrought stories here:

Six years later, Valentini can still hear the fury and chaos, see himself freezing in his first firefight in Kandahar, feel the butt of the rifle that a buddy used to bust him in the chops and snap him out of paralysis.

He began shooting, and shooting, and shooting, and during nine bloody months of heavy combat in Afghanistan, Valentini came to understand fear, absorb it, get comfortable with it. What was fear of death but a reverence for life?

Update 2: More problems in the complaint, although who knows what of this Valentini said, or his lawyer embellished. From page 38.

Mr. Valentini received his basic training in Fort Benning, Georgia, and was selected for further training at Fort Bragg, North Carolina. He was assigned to the 82nd Airborne Division and then to the 101st Airborne Division. In October 2001, he was deployed to Afghanistan as part of the initial assault on the Taliban and al-Qaeda after September 11.

Mr. Valentini's first mission was to take control of the Taliban-held airport at Kandahar, which involved heavy combat. Many of his fellow soldiers were killed. He also witnessed a number of civilian deaths and was tasked with transporting the dead bodies of civilians.

The first major problem with this being, the Army didn't take the Kandahar Airport, the Marines did in December 2001.

Marines took control of the airport Thursday night without resistance. Afghans on the ground appeared stunned and curious, then waved and fired weapons in the air in a show of support. Still, Brig. Gen. James N. Mattis has ordered that "force protection" remain a major concern as Taliban and Al Qaeda forces continue their retreat.

"These guys might try to make one big hit before they get out of town," said Maj. Tom Impellitteri. "The Marines have to remember: vigilance, vigilance, vigilance."

On Sunday, only one Afghan approached the perimeter of the airport. Given some clothes and food by Marines, he left quickly.

The complaint continues:

In February and March of 2002, Mr. Valentini's unit was part of Operation Anaconda in the Tora Bora Mountains, searching for Osama bin Laden and other elements of the al-Qaeda and Taliban leadership. He took part in significant ground fighting, under nearly constant sniper fire and mortar bombardment. Again, he witnessed the gruesome deaths of numerous civilians, including children.

OK, this might at least explain the previous Tora Bora claim. Operation Anaconda did not take place at Tora Bora, but rather the Shah-i-Kot Mountains. I have no idea what role he played in this, but based on the rest, I am not willing to give him the benefit of the doubt.

Too Big To Fail

2011-05-23T19:39:00.001-07:00

OK, haven't posted for a while, been busy, but I was just watching HBO's Too Big to Fail, and reflecting on the whole financial crisis thing. The movie ends with a caption stating how the top 10 banks control 77% of the deposits, and they have been designated "Too Big to Fail". The presumption being that despite all of the chaos we still haven't learned anything and are continuing with the same policies.

This is to a certain extent correct, except now we have the financial system under a ridiculously complicated regulation scheme in which moral hazard is merely explicit rather than implicit, and companies are more formally protected against their business risks by the government. So basically the conflict is between letting the banks take all the risks themselves, the morally correct free market thing, and having the government regulate and guarantee them to some extent, a more practical but morally objectionable stance.

So the question really comes down to, not whether the government should do anything, since all but the most die hard Hayek devotee (of whom I am a non-diehard fan) would agree that government should do something to prevent a reoccurence. So the question is, how can we handle this systemic risk, without government control, and without the moral hazard endemic is classifying businesses "Too Big to Fail".

Unfortunately governments never take the simple solution, they would give up too much control and subtract from their whole raison d'etre. It doesn't have to be that complicated though. The simple solution is, quite simply (to be redundant) to instigate a sliding scale of capital requirements for financial institution. Banks can be as big as they want to, but their costs will simply increase the larger they get, reflecting their systematic risks. Banks already have to maintain a certain reserve ration, for example $1 of assets for every $10 they loan out. So allow this for smaller institutions, but say, for every $100 billion of liabilities that they have (in accounting terms a bank loaning out money is a liability) then this ratio increases by 10%. This will increase the costs of capital for larger insitutions, and bring banks down to a level of equilibrium which is both profitable and manageable, with no more government regulations than were required previously. In fact you could fit this entire program on a single sheet of paper.

Just an idea. Probably never get any politician to adopt it though.

My New Favorite Democrat

2011-01-15T09:52:00.000-08:00

Pawlenty on the Public Unions

2010-12-13T18:03:00.000-08:00

Is it too early to join the Pawlenty for President bandwagon?

When Americans think of organized labor, they might think of images like I saw growing up in a blue-collar meatpacking town: hard hats, work boots, tough conditions and gritty jobs. While I didn't work in the slaughterhouses, I did become a union member when I worked at a grocery store to help put myself through school. I was grateful for the paycheck and proud of the work I did.

The rise of the labor movement in the early 20th century was a triumph for America's working class. In an era of deep economic anxiety, unions stood up for hard-working but vulnerable families, protecting them from physical and economic exploitation.

Much has changed. The majority of union members today no longer work in construction, manufacturing or "strong back" jobs. They work for government, which, thanks to President Obama, has become the only booming "industry" left in our economy. Since January 2008 the private sector has lost nearly eight million jobs while local, state and federal governments added 590,000.

So Much for Hopenchange

2010-10-25T18:47:00.000-07:00

Barack Obama in 2004:

"Well, I say to them tonight, there's not a liberal America and a conservative America; there's the United States of America.

There's not a black America and white America and Latino America and Asian America; there's the United States of America."

Barack Obama this morning:

“If Latinos sit out the election instead of saying, ‘We’re gonna punish our enemies and we’re gonna reward our friends who stand with us on issues that are important to us,’ if they don’t see that kind of upsurge in voting in this election, then I think it’s gonna be harder and that’s why I think it’s so important that people focus on voting on November 2.”

Quote of the Day

2010-10-12T07:04:00.001-07:00

Via Rich Lowry:

It should be taken as an axiom of political life that if your argument is about the other side’s advertisements, you’re losing. If your argument is about who’s funding the other side’s advertisements, you’re losing badly. And if your argument is about how foreigners might — lack of evidencenotwithstanding — be secretly funneling cash into the other side’s advertisements, you’re losing in a historic landslide.

Keith Olbermann Warns of the Great Terrorist Threat Against US Muslims

2010-08-17T19:04:00.000-07:00

I have never considered Keith Olberman some sort of intellectual giant, but this is stupid even by his standards. From 3:45 in:

Maybe those exploiting 45 Park Place would still shake their fists and decry terrorists by extremists, who happen to be Muslim, and never face the shameful truth about our country, as the Jacksonville Mosque bombing shows, since 9/11 Muslims have been at far greater risk of being victims of terrorism in the United States than have non-Muslims.

Visit msnbc.com for breaking news, world news, and news about the economy

If That Doesn't Work He Will Put a Boot to Their Throat

2010-06-22T06:55:00.000-07:00

First he usurps the bankruptcy process with GM and threatens the creditors to get them to accept it, then he extorts $20 billion out of BP, now he is threatening the insurance companies. RIP capitalism.

President Obama, whose vilification of insurers helped push a landmark health-care overhaul through Congress, plans to sternly warn industry executives at a White House meeting Tuesday against imposing hefty rate increases in anticipation of tightening regulation under the new law, administration officials said Monday.
The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than covering claims.

Uhh, you are responsible. The new law changes the way the insurance market works, they will have to respond to it. You have nobody to blame but your own misguided policies. Go back to school and take economics 101.

A Tale of Two Counties

2010-06-01T17:28:00.000-07:00

As I have touched on before, end public employee unions now, before they turn us into another Greece.

Virginia law denies public employees collective bargaining rights; that's helped Fairfax resist budget-busting wage and benefit demands. As revenue dipped two years ago, Fairfax officials froze all salaries for county government and school employees with little ado. By contrast, Montgomery leaders were badly equipped to cope with recession. County Executive Isiah Leggett took office proposing fat budgets and negotiating openhanded union deals after he succeeded Mr. Duncan. Then, as economic storm clouds gathered, he shifted gears and cut spending -- while still trying to appease the unions.

Did the Stimulus Work? Don't Ask the Government.

2010-05-27T07:21:00.001-07:00

I have touched on this before. The supporters of the $800 billion stimulus package claim all these jobs have been created and credit Keynesian theory, but the way that the jobs are being calculated is by using that very same Keynesian theory, in a perfect bit of circular logic.

In response to a new CBO update on the effects of the stimulus, DemWarRoom, the twitter feed for Senate Democrats, has posted a triumphant note about the program's success: "Critics of the stimulus listen up: CBO estimates that it put 2.8 million ppl to work in 1st 3 months of 2010." But it's stimulus boosters who ought to be paying more attention: Douglas Elmendorf, the head of the Congressional Budget Office, has stated plainly that his team's estimates do not measure real-world outputs (just inputs), that they do not serve as an independent check on its success or failure, and that if the stimulus had not created jobs, the CBO's figures would not reflect that fact. So no, sorry, try again: The CBO's updates do not actually confirm whether or not the stimulus is creating jobs.

Is Keynesian Theory Dead Yet?

2010-04-26T19:49:00.000-07:00

It didn't work in the 30's, it didn't work during the lost decade in Japan, it didn't work now. I know economics is a soft science, but still...

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years -- but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House's Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

Another Racist Calls Obama a Socialist

2010-03-22T22:22:00.000-07:00

Where are the denuciations?

"I think that the president and Nancy Pelosi get credit," Sharpton said. "I think this began the transforming of the country the way the president had promised. This is what he ran on."

And if that transformation is socialism, then so be it, he explained. That is what the American public "overwhelmingly" voted for.

Inane at Any Speed

2010-02-12T07:37:00.001-08:00

Ralph Nader, one of the biggest frauds of the last half century, weighs in, poorly, on the recent Supreme Court election free speech decision.

The disparities between individual contributions and available corporate dollars mock any pretense of equal justice under the law. A total of $5.2 billion from all sources was spent in the 2008 federal election cycle (which includes 2007
and 2008), according to the Center for Responsive Politics. For the same two-year period, ExxonMobil's profits were $85 billion. The top-selling drug, Pfizer's Lipitor, grossed $27 billion in sales during that time.

Of course business is the ultimate boogie man for Nader, unless he is busy shaking them down. Nevermind that the McCain-Feingold act which the court truck down was only created in 2002, and there were plenty of rich companies before that, none of which were spending billions of dollars on campaign related commercials. The idea that they would is just silly.

Nader proposes a solution:

In the absence of a future court overturning Citizens United, the fundamental response should be a constitutional amendment. We must exclude all commercial corporations and other artificial commercial entities from participating in political activities. Such constitutional rights should be reserved for real people, including, of course, company employees, to enhance a government of, by and for the people.

Nevermind that the case he is talking about is not about a commercial corporation, but Citizens United, a non-profit one. This also effects unions and other such non-commercial entities. I would love to see Nader supporting an ammendment banning unions from political speech.

The Public Unions

2010-02-04T22:24:00.000-08:00

Personally, even though it will probably never happen, I think it should be illegal for public employees to be unionized. For starters, the whole point of unions was to protect workers from "capitalist exploitation", so why do they need protection from the enlightened government that they helped elect. Secondly, in a private corporation there are checks and balances, a company cannot survive without paying enough to recruit qualified workers for their industry, nor can they survive if they pay their workers too much to be competitive. GM stands as an example of this, although they have managed to survive solely through government intervention. In government though, they have an endless supply of money they can simply confiscate from taxpayers to pay their workers, in a weird sort of monopoly power. Anyway, the WSJ, as usual covers this topic well.

In private industries, union workers are subject to the vagaries of the marketplace and economic growth. Thus in 2009 10.1% of private union jobs were eliminated, which was more than twice the 4.4% rate of overall private job losses. On the other hand, government unions offer what is close to lifetime job security and benefits, subject only to gross dereliction of duty. Once a city or state's workers are organized by a union, the jobs almost never go away.

This means government is the main playing field of modern unionism, which explains why the AFL-CIO and SEIU have become advocates for higher taxes and government expansion in cities, states and Washington. Unions once saw their main task as negotiating a bigger share of an individual firm's profits. Now the movement's main goal is securing a larger share of the overall private economy's wealth, which means pitting government employees against middle-class taxpayers.

Fox News and Media Bias

2010-01-26T19:18:00.001-08:00

I found this study on the media and the president interesting. Most of the focus was on the fawningly ridiculous coverage of Obama, but this factoid stood out.

Previous CMPA studies found that Mr. Bush received only 23 percent positive
evaluations in 2001; Mr. Clinton had 28 percent positive evaluations in 1993 and Mr. Reagan had 26 percent positive evaluations in 1981…
Fox News was never in the Obama fan club, however. Only 22 percent of their stories on Mr. Obama were positive during the year, some of it quite pointed.

So otherwise Fox News treated Obama just like the media treated every other president up to Obama. Hey, they really are fair and balanced!

Cheap Economists

2010-01-04T21:16:00.000-08:00

I found this rather amusing, and it explained several of my professors in b-school. They know who they are.

Academic economists gather in Atlanta this weekend for their annual meetings, always held the first weekend after New Year's Day. That's not only because it coincides with holidays at most universities. A post-holiday lull in business travel also puts hotel rates near the lowest point of the year.
Economists are often cheapskates.
The economists make cities bid against each other to hold their convention, and don't care so much about beaches, golf courses or other frills. It's like buying a car, explains the American Economic Association's secretary-treasurer, John Siegfried, an economist at Vanderbilt University.
"When my wife buys a car, she seems to care what color it is," he says. "I always tell her, don't care about the color." He initially wanted a gray 2007 Mercury Grand Marquis, but a black one cost about $100 less. He got black.

Why the Health-Care Bills Are Unconstitutional

2010-01-02T09:13:00.000-08:00

I am not a huge Orrin Hatch fan, but he is absolutely right here. If Congress can force you to purchase a private product, then their powers are unlimited, and the constitution is meaningless.

President Obama's health-care bill is now moving toward final passage. The policy issues may be coming to an end, but the legal issues are certain to continue because key provisions of this dangerous legislation are unconstitutional. Legally speaking, this legislation creates a target-rich environment. We will focus on three of its more glaring constitutional defects.
First, the Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate. Congress's powers to tax and spend do not apply because the mandate neither taxes nor spends. The only other option is Congress's power to regulate interstate commerce.

I Guess He Wanted a More Challenging Job

2009-12-21T18:28:00.000-08:00

I was a bit amused to see this in the news. Why exactly would you want to go from holding a job where your biggest concern is "where do I stash this ginormous pile of money?" to a company which is doing so poorly it is majority owned by the US government?

DETROIT — General Motors has hired an outsider to run its troubled finance operations, bringing in the chief financial officer of Microsoft.Chris Liddell will join GM next year, GM Chief Executive Ed Whitacre Jr. said in a statement today.
Liddell, 51, brings depth and experience to the job leading GM's global financial and accounting operations, the statement said.

I Think They Are Being a Bit Too Ambitious

2009-12-15T19:02:00.000-08:00

I was amused by this Reuter's headline pointed out by Best of the Web.

Obama administration aims for high school financial literacy

Who knows, maybe they can find someone who can teach Tim Geithner how to use TurboTax?

Greatest Music Video Ever

2009-11-24T21:54:00.000-08:00

Scary Economics Stat of the Day

2009-11-24T19:24:00.000-08:00

While Paul Krugman may have suddenly developed a desire for gigantic deficits, they are terrifying me. George Melloan points out the true size of the money we are borrowing in the WSJ.

A number more relevant to what the government is actually demanding from the capital markets is the Treasury's financing requirement. At a recent Chartered Financial Analyst Institute conference, Treasury official Karthik Ramanathan proudly described the prodigious fund-raising task he and his colleagues pulled off in the fiscal year, what one might call a borrowing feat unparalleled in human history: "In the course of 291 auctions in 251 business days, Treasury issued nearly $7 trillion in gross Treasury marketable securities to raise approximately $1.7 trillion to finance the government."

Idiotic Democrat Quote of the Day

2009-11-23T19:28:00.001-08:00

If I knew this new healthcare bill would guarantee immortality, I would have supported it months ago. From Harry Reid:

Today we vote whether to even discuss one of the greatest issues of our generation - indeed, one of the greatest issues this body has ever face: whether this nation will finally guarantee its people the right to live free from the fear of illness and death, which can be prevented by decent health care for all.

Sarah Palin Comment of the Day

2009-11-17T19:11:00.000-08:00

I am hardly the world's biggest Sarah Palin fan, but I am constantly amused by how rabid she makes the left, the very same people who insist she is unimportant while discussing her nonstop. For example the AP dedicated 11 fact-checkers to her new book.

AP writers Matt Apuzzo, Sharon Theimer, Tom Raum, Rita Beamish, Beth Fouhy, H. Josef Hebert, Justin D. Pritchard, Garance Burke, Dan Joling and Lewis Shaine contributed to this report.

So I was wondering, did the AP dedicated 11 people to fact-check, for example, Joe Biden's book? Well, no, the answer occured to me. It is actually rather unlikely that 11 people have ever actually read Joe Biden's book.

First Must See Movie of 2010

2009-11-14T19:43:00.001-08:00

Hey, how can you not like a movie whose trailer has the hero introducing himself, "I am a Chief Warrant Officer with the US Army ."? Now that I think of it, Matt Damon does look a lot like me...

UW Medal of Honor Memorial

2009-11-11T07:57:00.001-08:00

I donated money to help this get built. I wish I could be there today, but have to work.

Earning a medal, of any sort, was the furthest thing from Bruce Crandall's mind on the morning of Nov. 14, 1965, as he repeatedly flew his Huey helicopter through a hail of enemy fire in Vietnam. Only this mattered: His comrades needed him.

Likewise, John "Bud" Hawk wasn't looking for glory on Aug. 20, 1944, when he stayed exposed in a French orchard, taking a shot in the thigh as he directed fire against German tanks. Fact is, Hawk didn't know if he'd live to see sunset.

On Wednesday, Veterans Day, the University of Washington will dedicate a new memorial to eight UW alumni who have received the Medal of Honor, the nation's highest honor for valor in battle.

Tear Down this Wall

2009-11-09T17:27:00.000-08:00

In honor of the 20th anniversary of it happening.

Quote of the Day

2009-10-23T07:24:00.001-07:00

I am still amazed by this idiotic Obama campaign against Fox. He won't take on the Taliban or Iran, but Rupert Murdoch is his number one target. Charles Krauthammer weighs in with his usual wisdom.

Defend Fox from whom? Fox’s flagship 6 o’clock evening news out of
Washington (hosted by Bret Baier, formerly by Brit Hume) is, to my mind, the best hour of news on television. (Definitive evidence: My mother watches it even on the odd night when I’m not on.) Defend Fox from the likes of Anita Dunn? She’s been attacked for extolling Mao’s political philosophy in a speech at a high-school graduation. But the critics miss the surpassing stupidity of her larger point: She was invoking Mao as support and authority for her impassioned plea for individuality and trusting one’s own choices. Mao as champion of
individuality? Mao, the greatest imposer of mass uniformity in modern history, creator of a slave society of a near-billion worker bees wearing Mao suits and waving the Little Red Book?
The White House communications director cannot be trusted to address high schoolers without uttering inanities. She and her cohorts are now to instruct the country on truth and objectivity?

Obamaegomaniac

2009-09-23T22:50:00.000-07:00

Could this guy be more full of himself?

President Obama said during his speech today: ‘For those who question the character and cause of my nation, I ask you to look at the concrete actions we have taken in just nine months.’

Remember When Dissent Was Patriotic?

2009-09-17T20:48:00.000-07:00

I was listening to Nancy Pelosi get hysterical today. How that women ever got into a position of authority in this country is beyond me. Anyway, before we get on to that, a look back at the first (and hopefully last) inaugural address by President Obama:

As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience's sake.

Now, apparently Nancy Pelosi disagrees:

"We are a free country, and this balance between freedom and safety is one that we have to carefully balance," Pelosi began. She then became emotional as she recalled the events, startling the reporters gathered for the weekly news conference.

Well apparently while dealing with foreign terrorists who like to fly planes into buildings, balancing security and rights is not a dilemma, but when dealing with those evil Republicans on the other hand, then you really have to be careful...

Hoover and the Depression

2009-08-31T21:01:00.000-07:00

It has become part of modern Democratic dogma that Hoover just fiddled while the economy collapsed, necessitating a rescue by FDR. Not at all true.

Pro-labor policies pushed by President Herbert Hoover after the stock market crash of 1929 accounted for close to two-thirds of the drop in the nation's gross domestic product over the two years that followed, causing what might otherwise have been a bad recession to slip into the Great Depression, a UCLA economist concludes in a new study.
"These findings suggest that the recession was three times worse — at a minimum — than it would otherwise have been, because of Hoover," said Lee E. Ohanian, a UCLA professor of economics.
The policies, which included both propping up wages and encouraging job-sharing, also accounted for more than two-thirds of the precipitous decline in hours worked in the manufacturing sector, which was much harder hit initially than the agricultural sector, according to Ohanian.
"By keeping industrial wages too high, Hoover sharply depressed employment beyond where it otherwise would have been, and that act drove down the overall gross national product," Ohanian said. "His policy was the single most important event in precipitating the Great Depression."
The findings are slated to appear in the December issue of the peer-reviewed Journal of Economic Theory and were posted today on the website of the National Bureau of Economic Reasearch (www.nber.org) as a working paper.

The Opinion Journal Imitates Me

2009-08-31T20:57:00.000-07:00

This sounds familiar:

Two Columnists in One!
"Basically we have a world-class budget deficit not just as in absolute terms of course--it's the biggest budget deficit in the history of the world--but it's a budget deficit that as a share of GDP is right up there....

Krugman on Deficits

2009-08-26T19:22:00.000-07:00

Paul Krugman on his blog yesterday shows once again how he has stopped becoming a serious economics. First Kruggie from 2004, when the budget deficit was a mere $413 billion:

PROFESSOR PAUL KRUGMAN, PRINCETON ECONOMIST: Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there.It's comparable to the worst we've ever seen in this country.

It's biggest than Argentina in 2001.

Which is not cyclical, there's only a little bit that's because the economy is depressed.

Mostly it's because, fundamentally, the Government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it.
So, if you take a look, the only thing that sustains the US right now is the fact that people say, "Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order," but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future.

Now from his blog, when it was announced that the deficit will total over $9 trillion, over the next decade, more than double the worst deficit under Bush, for 10 straight years!

It turns out that I was a little over-pessimistic in my assessment, mainly because the $9 trillion includes this year’s deficit, so we start from debt at 40% of GDP, not 50%. Overall, the OMB puts debt in 2019 at 76.5% of GDP; that figure is slightly exaggerated, however, because various financial rescues get counted as additions to the deficit even though taxpayers end up with additional assets. Net of these assets, the debt in 2019 is 68.9% of GDP.
As I’ve pointed out, that’s bad, but it’s not horrific either by historical or international standards. On a comparable basis, federal debt hit
109 percent of GDP at the end of World War II, and hit a second peak of 49 percent at the end of the Reagan-Bush years. And a number of European countries have hit substantially higher debt levels without crisis.

The Postalization of Health Care

2009-08-19T19:16:00.000-07:00

I went to the post office this morning, there is a major one only a couple of blocks from work. I simply needed to pick up some stamps. I searched around for a vending machine, as I destest having to deal with postal employees, but alas, there were none. Finally I asked a couple of employees standing behind a counter chatting with each other accomplishing nothing, if I could buy some stamps.

They informed me that I could not, because it was only 8:25, and the people who sold the stamps do not come on duty until 8:30. With a scowl I replied, "Thanks for the great service." and one of them replied sarcastically, and with no apparent sense of shame "you are welcome".

Now continuing what is possibly the world's most clueless argument for getting government involved in our healthcare, is Jesse Jackson Jr. I swear this guy is setting new records for bad economics.

Stimulus Success?

2009-06-09T07:30:00.000-07:00

Several months ago I argued that Keynesian stimulus was not a proven concept. It might be a bit early to say definitively, but the early evidence showed that I was unfortunately right.

White House economic adviser Austan Goolsbee promised on "Fox News Sunday": "It's going to take more than a few months to turn it around." That contradicts White House economic adviser Lawrence H. Summers' promise in January that the economy would start improving "within weeks" so long as the president's $787 billion stimulus was passed.
The stimulus actually has dampened economic projections. In January, before the stimulus was passed, 53 business economists and forecasters surveyed by the Wall Street Journal expected gross domestic product (GDP) for the third quarter (July through September) to rise by 1.2 percent at an annual rate. Predictions became gloomier after the stimulus passed in March. In May, these experts forecast only a 0.6 growth rate for the third quarter.

Great Moments in UW Class of 93 History

2009-05-24T10:49:00.000-07:00

I was interested to find out the woman who broke the expense account scandal in the UK was a classmate of mine. Unfortunately, I didn't know her. Big school and all.

If the British tabloids knew about the sex-advice column Heather Brooke wrote for the University of Washington Daily nearly two decades ago they might run with it as a salacious news item.

Something like "sex writer rocks Parliament."
But that information hasn't reached them, it seems, and Brooke has proven to an entire nation she is a journalist of another ilk. In doing so, the former Seattleite has shaken up the British parliamentary leadership and perhaps changed forever the relationship between the British press and the House of Commons.

No Kidding

2009-05-14T19:33:00.000-07:00

In the bizarre beyond belief category, President Obama proposes the largest deficits, by far, in US history through massive spending increases, and then notes that they are a bad idea.

May 14 (Bloomberg) -- President Barack Obama, calling current deficit spending
“unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
“We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

You Are Joking, Right?

2009-04-20T18:28:00.001-07:00

Jake Tapper is about the only serious journalist left. Robert Gibbs continues to be the clown of the White House.

JENNIFER LOVEN, AP: The $100 million target figure that the president talked about today with the Cabinet, can you explain why so small? I know he talked about -- you know, you add up 100 million and 100 million, and eventually, you get somewhere, but it would take an awfully long time to add up hundred million (inaudible) in the deficit. Why not target a bigger number?
GIBBS: (Smiling) Well, I think only in Washington, D.C. is a hundred million dollars...
LOVEN: The deficit's very large. It's not a joke.
GIBBS: No, I'm...
LOVEN: The deficit's giant. $100 million really is only a step.
GIBBS: But no joke.
LOVEN: You sound like you're joking about it, but it's not funny
.GIBBS: I'm not making jokes about it. I'm being completely sincere that only in Washington, D.C. is $100 million not a lot of money. It is where I'm from. It is where I grew up. And I think it is for hundreds of millions of Americans.
LOVEN: The point is it's not a very big portion of the deficit.
TAPPER: You were talking about an appropriations bill a few weeks ago about $8 billion being minuscule -- $8 billion in earmarks. We were talking about that and you said that that...
GIBBS: Well, in terms of -- in...(CROSSTALK)
TAPPER: ...$100 million is a lot but $8 billion is small?

Obama's Economic Mirage

2009-04-19T19:22:00.000-07:00

I am a bit behind on this, but this deserves posting, as it makes a point that I have tried to make several times. I don't know what this is, but it sure as hell isn't economics. From columnist Robert Samuelson.

What defines the "post-material economy" is a growing willingness to sacrifice money income for psychic income -- "feeling good." Some people may gladly pay higher energy prices if they think they're "saving the planet" from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor. Unfortunately, these psychic benefits may be based on fantasies. What if U.S. cuts in greenhouse gases are offset by Chinese increases? What if more health insurance produces only modest gains in people's health?
Obama and his allies have glossed over these questions. They've left the impression that somehow magical technological breakthroughs will produce clean energy that is also cheap. Perhaps that will happen; it hasn't yet. They've talked so often about the need to control wasteful health spending that they've implied they've actually found a way of doing so. Perhaps they will, but they haven't yet.
We cannot build a productive economy on the foundations of health care and "green" energy. These programs would create burdens for many, benefits for some. Indeed, their weaknesses may feed on each other, as higher health spending requires more taxes that are satisfied by stiffer terms for "cap-and-trade." We clearly need changes in these areas: ways to check wasteful health spending and promote efficient energy use. I have long advocated a gasoline tax on national security grounds. But Obama's vision for economic renewal is mostly a self-serving mirage.

Jury Strikes Blow for Incompetent Professors Everywhere

2009-04-03T07:31:00.000-07:00

Give me a break. I know Harvard PhDs at the University of Washington who haven't been able to get tenured positions yet, and they give this idiot, with a MS in Communications from some unknown experimental university a department chair at CU. He should have never been hired in the first place. Firing was the correct action.

DENVER — A jury ruled Thursday that the University of Colorado wrongly fired the professor who compared some Sept. 11 victims to a Nazi, a verdict that gives the professor $1 and a chance to get his job back.
"What was asked for and what was delivered was justice," Ward Churchill said outside the courtroom.
Then-Gov. Bill Owens was among the officials who had called on the university to fire Churchill after his essay touched off a national firestorm, but the tenured professor of ethnic studies was ultimately terminated on charges of research misconduct.

Great News: Obama Budget Even Worse than Thought

2009-03-22T11:11:00.000-07:00

Remember, this is the budget that Nobel Prize Winner Paul Krugman just called "Very, very good". He might want to think about taking that back.

President Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House previously estimated, congressional budget analysts said yesterday.

In the first independent analysis of Obama's budget proposal, the nonpartisan Congressional Budget Office concluded that Obama's policies would cause government spending to swell above historic levels even after costly programs to ease the recession and stabilize the nation's financial system have ended.

The Robert Gibbs Comedy Hour

2009-03-17T18:16:00.000-07:00

I hope Obama doesn't get rid of this guy, he is a laugh a minute. The guy is like a one man Abbot and Costello.

A Return to Depression Economics

2009-03-16T22:06:00.000-07:00

Nevermind that it was been tried before with disasterous results, populist economics can be, well, popular with some politicians:

"The housing affordability crisis trumps any theoretical recommendations of economists," New York State Assemblyman Jonathan L. Bing, a sponsor of many of the rent-control provisions pending in New York, told FOXNews.com.
Bing supports bills that would further limit the amount landlords can increase rent after tenants move out, and that would increase to $240,000 the maximum income of people who qualify for rent control.
San Francisco Tenant Union Director Ted Gullicksen supports legislation that would llow tenants to avoid rent increases that would make them pay more than 30 percent of their income in rent.
The city's proposed law would also force landlords to let tenants take in roommates, who, Gullicksen said, could help with the rent.
But should landlords be compensated for the new restrictions on their property? "I don't think so," Gullicksen said. "Rents are so extraordinarily high. Landlords in San Francisco are just making huge amounts of money."

Economic Knowledge

2009-03-12T21:47:00.000-07:00

I came across a survey which showed how poorly high school students understand economics. I wonder if you gave it to Congress if they would do any better. Or president Obama for that matter...

In 1999, researchers at the Securities and Exchange Commission concluded that 66 percent of high school seniors could not pass a basic economic literacy test. Things have not changed for the better since.
In 2008, the Jump$tart Coalition for Personal Financial Literacy administered its financial literacy test to 6,856 high school seniors in 40 states. The overall score was 48 percent. Only 17 percent knew investing in stocks would probably generate the most return over an 18-year period.

Hey Tim...

2009-03-11T19:32:00.000-07:00

While we undergo the biggest financial crisis in 70 years, the Obama administration has enough time to plan attacks against Rush Limbaugh and revamp our social systems for the next 2 decades, but they can't seem to appoint anyone to the Department of the Treasury to actually do anything. Here is a list of the appointed positions there:

Secretary
Deputy Secretary
Under Secretary — Domestic Finance
Under Secretary — International Affairs
Under Secretary — Terrorism and Financial Intelligence
Assistant Secretary — Economic Policy
Assistant Secretary — Financial Markets
Assistant Secretary (Deputy Under Secretary) — International Affairs
Assistant Secretary (Deputy Under Secretary) — Legislative Affairs
Assistant Secretary — Management and Chief Financial Officer
Assistant Secretary — Public Affairs/Director — Policy Planning
Assistant Secretary — Tax Policy
Chief Counsel — Internal Revenue Service/Assistant General Counsel for Tax
Commissioner — Internal Revenue (five-year terms of office)
General Counsel
Inspector General
Inspector General — Tax Administration
Treasurer — United States

Of all those positions, only Secretary Geithner, the guy who can't figure out Turbo Tax, has actually been appointed. Come on, it is not like there aren't any unemployed finance people out there. Hell, I would consider a couple of those positions, if you made the right offer...

Hey Tom...

2009-03-11T19:20:00.001-07:00

Now I am not a typical conservative in that I have read far more Thomas Friedman than I have listened to Rush Limbaugh, but I have to take Tom to task for this part of his editorial today.

Meanwhile, the Republican Party behaves as if it would rather see the country fail than Barack Obama succeed. Rush Limbaugh, the de facto G.O.P. boss, said so explicitly, prompting John McCain to declare about President Obama to Politico: “I don’t want him to fail in his mission of restoring our economy.”

OK, that sounds nice, Rush has become the Democrats designated whipping boy, an intentional plan as it turns out, but that is not what he said. Here is the original quote which started this whole thing off.

If I wanted Obama to succeed, I'd be happy the Republicans have laid down. And I would be encouraging Republicans to lay down and support him. Look, what he's talking about is the absorption of as much of the private sector by the US government as possible, from the banking business, to the mortgage industry, the automobile business, to health care. I do not want the government in charge of all of these things. I don't want this to work. So I'm thinking of replying to the guy, "Okay, I'll send you a response, but I don't need 400 words, I need four: I hope he fails."

He never says that he wants the country to fail, just Obama. And he is even more specific than that, he is talking about specific economic policies that Rush opposes, not the presidency in general. Whether you agree with him or not, that is well within the normal political discourse and Thomas Friedman owes him an apology.

Alan Greenspan: We Didn't Do It

2009-03-11T18:24:00.000-07:00

In today's Wall Street Journal Alan Greenspan makes an argument that I have been making for a while. Obviously he knows a little more about the subject than I do, although he is a bit biased.

There are at least two broad and competing explanations of the origins of this crisis. The first is that the "easy money" policies of the Federal Reserve produced the U.S. housing bubble that is at the core of today's financial mess.
The second, and far more credible, explanation agrees that it was indeed lower interest rates that spawned the speculative euphoria. However, the interest rate that mattered was not the federal-funds rate, but the rate on long-term, fixed-rate mortgages. Between 2002 and 2005, home mortgage rates led U.S. home price change by 11 months. This correlation between home prices and mortgage rates was highly significant, and a far better indicator of rising home prices than the fed-funds rate.

The Smartest Woman in the World

2009-03-06T20:30:00.000-08:00

OK, I had better stop now, this could go on forever.

Tiredness appeared to show Friday when she answered questions in front of 500 young Europeans at the European Parliament, where she was the highest-ranking U.S. visitor since the late U.S. President Ronald Reagan in 1985.
A veteran politician, Clinton compared the complex European political environment to that of the two-party U.S. system, before adding:"I have never understood
multiparty democracy.
"It is hard enough with two parties to come to any resolution, and I say this very respectfully, because I feel the same way about our own democracy, which has been around a lot longer than European democracy."
The remark provoked much headshaking in the parliament of a bloc that likes to trace back its democratic tradition thousands of years to the days of classical Greece.
One working lunch later with EU leaders, Clinton raised more eyebrows when she referred to EU foreign policy chief Javier Solana, who stood beside her, as "High Representative Solano."
She also dubbed European Commission External Relations Commissioner Benita Ferrero-Waldner as "Benito."

Condoleeza Rice Would Have Got it Right

2009-03-06T20:21:00.000-08:00

Apparently the State Department doesn't own a Russian-English dictionary. I suppose I could loan them one of mine if they are that hard up.

Clinton presented Lavrov with a gift-wrapped red button, which said "Reset" in English and "Peregruzka" in Russian. The problem was, "peregruzka" doesn't mean reset. It means overcharged, or overloaded.
And Lavrov called her out on it.
"We worked hard to get the right Russian word. Do you think we got it?" Clinton asked Lavrov.
"You got it wrong," Lavrov said. "This says 'peregruzka,' which means overcharged."

They must not have worked that hard. The least they could have done was write it in Cyrlic. And just how smart was it to give the Russians a big red button? We have been trying to keep the Russians from pressing the red button for the last 6 years now.

Diplomatic Blunder #2

2009-03-06T20:16:00.000-08:00

The other day I posted about how the Brits felt slighted regarding Obama's treatment of their PM. Now it appears I could start an entire series on the new administration's diplomatic idiocies.

As he headed back home from Washington, Gordon Brown must have rummaged through his party bag with disappointment.
Because all he got was a set of DVDs. Barack Obama, the leader of the world's richest country, gave the Prime Minister a box set of 25 classic American films - a gift about as exciting as a pair of socks.
Mr Brown is not thought to be a film buff, and his reaction to the box set is unknown. But it didn't really compare to the thoughtful presents he had brought along with him. The Prime Minister gave Mr Obama an ornamental pen holder made from the timbers of the Victorian anti-slave ship HMS Gannet.

What, was there a sale at Best Buy?

Obama Insults the Brits

2009-03-04T23:18:00.000-08:00

Who would have thought we would be looking back at the comparative competence of the Bush administration.

Obama to World: Drop Dead!
The White House could easily have granted the press conference Gordon Brown so clearly craved. Though there was something a little craven, a touch humiliating about much of the build-up to this week's Prime Ministerial visit to Washington, it's reasonable to suppose that, in this instance at least, Brown may have been treated a little shabbily. The kindest way to view this is that the White House is so focused on economic fire-fighting that it has little time for diplomatic niceties;
alternatively it sends a tough reminder as to who wears the trousers in this relationship partnership. There'll be none of this Athens to Rome nonsense, Mister Brown. (Was it just a coincidence that the BBC went big on Macmillan visiting JFK in their footage last night?)

Well, maybe next time we will elect someone who has actually managed to hold down a full-time job for more than a couple of years?

Paul Krugman Then and Now

2009-03-03T20:13:00.000-08:00

If there were still any question that Paul Krugman, large cash awards from Swedish bankers aside, should no longer be taken seriouslyas an economist, check out this editorial from last week. But first, let's set the stage by looking at his previous statements.

From 2003, when the budget deficit was a "mere" $378 billion:

As a drunk is to alcohol, the Bush administration is to budget deficits.....

It's O.K. to run a deficit during a recession, as long as the deficit is clearly temporary. But both the numbers and the administration's search for excuses tell us that there's nothing temporary about the red ink. On the contrary, we'll probably be on a deficit bender until the baby boomers retire -- and then it will get much worse.

Paul Krugman in 2004, when the deficit was $413 billion:

Well, basically we have a world-class budget deficit not just as in absolute terms of course - it's the biggest budget deficit in the history of the world - but it's a budget deficit that as a share of GDP is right up there.
It's comparable to the worst we've ever seen in this country.
It's biggest than Argentina in 2001.Which is not cyclical, there's only a little bit that's because the economy is depressed.
Mostly it's because, fundamentally, the Government isn't taking in enough money to pay for the programs and we have no strategy of dealing with it.
So, if you take a look, the only thing that sustains the US right now is the fact that people say, "Well America's a mature, advanced country and mature, advanced countries always, you know, get their financial house in order," but there's not a hint that that's on the political horizon, so I think we're looking for a collapse of confidence some time in the not-too-distant future.

Now, Paul Krugman on a Obama budget that starts out at $1.7 trillion and even in its best year never dips below $500 billion, more than any Bush deficit:

But I don't blame Obama for leaving some big questions unanswered in this budget. There's only so much long-run thinking the political system can handle in the midst of a severe crisis; he has probably taken on all he can, for now. And this budget looks very, very good.

In fact that is even the title of the editorial, in big bold letters:

Krugman: This budget looks very, very good

Amazingly he even spins things to make it look like Bush had it easy as a result of the real estate bubble:

Bear in mind that from 2005 to 2007, that is, in the three years before the crisis, the federal deficit averaged only $243 billion a year. Now, during those years, revenues were inflated, to some degree, by the housing bubble.

By contrast I am not aware of him ever pointing out that the surplus of the late 90s was mainly due to capital gains resulting from the stock market bubble, even thoough most serious economists admit it was, to Krugman it was purely the genius of Bill Clinton and Robert Rubin.

And finally he manages to spin this once more:

But won't the deficit be swollen by interest on the debt run-up over the next few years? Not as much as you might think. Interest rates on long-term government debt are less than 4 percent, so even a trillion dollars of additional debt adds less than $40 billion a year to future deficits.

Oh, great. You ruin the economy to the point that the Fed drops interest rates to effectively zero, and scare everone from investing in anything other than treasuries, then take pride in the fact that the national debt is cheap to finance.

And they gave a Nobel Prize to this guy?

It's the Spending Stupid

2009-02-26T07:26:00.000-08:00

In only a month Barack Obama's fiscal policy has gone from merely stupid to scary. From today's Journal:

Note that federal income taxes are already "progressive" with a 35% top marginal rate, and that Mr. Obama is (so far) proposing to raise it only to 39.6%, plus another two percentage points in hidden deduction phase-outs. He'd also raise capital gains and dividend rates, but those both yield far less revenue than the income tax. These combined increases won't come close to raising the hundreds of billions of dollars in revenue that Mr. Obama is going to need.

But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006.

Maybe They Should Outsource Chris Matthews

2009-02-25T17:44:00.000-08:00

MSNBC host Chris Matthews is now not only trying to spin his bizarre "Oh God!" outburst when Governor Bobby Jindal spoke last night, but he added to this by claiming that the Republicans "outsourced" the speech to him. Now I will give the benefit of the doubt that Matthews was not making some cheap crack about Jindal's Indian heritage, even though Democrats can somehow find racial offense in a political cartoon about a chimpanzee, but I will point out what a stupid comment it is.

The fact is, and being a longtime political pundit Matthews should know this, having a governor give the rebutal is not only not unusual, but the norm. Let's look at who the Democrats had give the rebutals under Bush.

2008 Kathleen Sebelius governor of Kansas
2007 Senator Jim Webb
2006 Tim Kaine governor of Virginia
2005 Senator Harry Reid and Representative Nancy Pelosi
2004 Representative Nancy Pelosi and Senator Tom Daschle
2003 Governor Gary Locke of Washington State
2002 Representative Richard Gephardt

So 3 out of the last 7 (the first, like yesterday's was technically not a State of the Union), and 2 out of the last 3.

The Reality of Manufacturing

2009-02-17T19:20:00.000-08:00

I criticize the AP a lot, but this time they get it right.

Manufacturing in the United States isn't dead or dying. It's moving upscale, following the biggest profits and becoming more efficient, just as Henry Ford did when he created the assembly line to make the Model T.
The U.S. by far remains the world's leading manufacturer by value of goods produced. It hit a record $1.6 trillion in 2007, nearly double the $811 billion in 1987. For every $1 of value produced in China's factories, America generates $2.50.

As I have said before, there is no future in the US for manufacturing cheap goods, it is in high-tech, higher margin items. Sorry, if you want to spend the rest of your life making cheap sneakers, you will have to move to China.

Guess I Won't Be Drinking Much Beer Down in Oregon

2009-02-16T09:24:00.000-08:00

This threatens to ruin my occasional pilgrimage to Powells. Books and beer are about all the state has to offer.

PORTLAND, Ore. -- Five Oregon state lawmakers want to impose a hefty tax on beer and have introduced a bill that brewers say would cripple them.
Four Portland legislators joined a Springfield senator to introduce Oregon House Bill
2461, which would impose a $49.61 tax on each barrel of beer produced by Oregon brewers.

The Presidential Fearmonger

2009-02-16T09:22:00.001-08:00

As I have discussed before, this rhetoric by President Obama is both irresponsible and unpresidential. Let's hope it stops.

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics. It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

I Feel So Much Better With Our National Security In These People's Hands

2009-02-13T07:47:00.000-08:00

OK lady, shut up.

WASHINGTON, D.C. - A senior U.S. lawmaker said Thursday that unmanned CIA Predator aircraft operating in Pakistan are flown from an airbase inside that country, a revelation likely to embarrass the Pakistani government and complicate its counterterrorism collaboration with the United States.
The disclosure by Sen. Dianne Feinstein (D-Calif.), the chairwoman of the Senate Intelligence Committee, marked the first time a U.S. official had publicly commented on where the Predator aircraft patrolling Pakistan take off and land.

Oddly Enough, Not a Single Woman Reported Dreaming About Joe Biden

2009-02-10T20:13:00.000-08:00

Sorry, but this is kinda creepy.

The other night I dreamt of Barack Obama. He was taking a shower right when I needed to get into the bathroom to shave my legs, and then he was being yelled at by my husband, Max, for smoking in the house. It was not clear whether Max was feeling protective of the president’s health or jealous because of the cigarette.

The other day a friend of mine confided that in the weeks leading up to the election, the Obamas’ apparent joy as a couple had made her just miserable. Their marriage looked so much happier than hers. Their life seemed so perfect. “I was at a place where I was tempted daily to throttle my husband,” she said. “This coincided with Michelle saying the most beautiful things about Barack. Each time I heard her speak about him I got tears in my eyes — because I felt so far away from that kind of bliss in my own life and perhaps even more, because I was so moved by her expressions of devotion to him. And unlike previous presidential couples, they are our age, have children the same age and (just imagine the stress of daily life on the campaign) by all accounts should have been fighting even more than we were.”

Jonah Goldberg on the New Deal

2009-02-10T20:08:00.000-08:00

I have covered this a couple of times already, but I don't know if there is a modern political pundit who lays it out any better than Jonah Goldberg. I wish I could write this well.

In fairness to Sirota, DeLong, and Gross, their argument is more empirical. They rebut the charge that the New Deal “prolonged” the Great Depression by pointing to FDR’s efforts to stabilize the banking system. And they’re right to make that argument. Many of those efforts did help end the Depression, as even Milton Friedman and Federal Reserve chairman Ben Bernanke have argued. But some of those efforts didn’t help. For example, it’s doubtful Gross et al. would defend FDR’s embarrassingly erratic and ultimately destructive behavior during the ill-fated London Economic Conference in 1933. Few would dispute that his decision to blow up the conference as a sop to protectionist Democrats helped prolong the Great Depression, at home and abroad. More generally, the apologists protest too much. Plenty of “normal” and sane people believe the New Deal prolonged the Great Depression. In 1995 a survey by Robert Whaples, published in the Journal of Economic History, showed that half of economists and one-third of historians agreed somewhat or entirely with the proposition that the New Deal prolonged the Great Depression.

Pork Central

2009-02-10T20:06:00.000-08:00

The new Porkulus bill has billions of dollars to fight "global warming" and then also has this (emphasis added):

For example, the latest version contains $2 billion for a clean-coal power plant with specifications matching one in Mattoon, Ill., $10 million for urban canals, $2 billion for manufacturing advanced batteries for hybrid cars, and $255 million for a polar icebreaker and other "priority procurements" by the Coast Guard.

Am I the only one who sees the obvious solution here?

The Wisdom of Joe Biden

2009-02-10T20:01:00.000-08:00

If I had the time I would create a blog dedicated to all of the stupid things that Joe Biden says, but that would suck up my time even more than talking about conspiracy theorists.

But let me move for a second to what I was supposed to talk about. I was asked to talk about foreign policy. You know that old joke, you know, an expert is anyone from out of town with a briefcase? I'm out of town, but I don't have a briefcase, and I know a lot of you know as much and more about foreign policy as I do, but it's like that old joke, I hope you Texans aren't offended, but in Delaware that old joke about the Texan who said ‘I don't now much about art but I know what I like?’ Well, I may not know much about it, but I know what I think, and I know what I think we have to do.

It has got so bad that even the One is starting to give him the smackdown. He should lock him in a closet, but then again He picked him to be VP.

When You Have Lost the New York Times...

2009-02-06T17:51:00.001-08:00

Even the New York Times is discussing the failure of mega-government spending to stimulate the economy.

Most Japanese economists have tended to take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.
Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

CBO Projects that Stimulus Package a Net Loss

2009-02-05T20:12:00.000-08:00

Allah Pundit on Hot Air brings up a Washington Times article discussing a Congressional Budget Office report on the stimulus plan. The Times reports:

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.

Allah then asks if this is correct:

The confusion lies in the term “on net.” Does that refer to the entire period from 2009 to 2019 or the period not including 2009 and 2010, since specific growth numbers for those two years are provided? If the former, then the Times is right and CBO is claiming that the loss in GDP from 2011 to 2019 will wipe out any growth over the next two years for a net loss. If the latter, then the Times is way off.

The letter is available on the CBO website though, so we can take a look, and it seems to back up the negative viewpoint.

From the intro:

At your request, the Congressional Budget Office (CBO) has conducted an analysis of the macroeconomic impact of the Inouye-Baucus amendment in the nature of a substitute to H.R. 1. CBO estimates that this Senate legislation would raise output and lower unemployment for several years, with effects broadly similar to those of H.R. 1 as introduced. In the longer run, the legislation would result in a slight decrease in gross domestic product (GDP) compared with CBO’s baseline economic forecast.

Later in the letter:

Including the effects of both crowding out of private investment (which would reduce output in the long run) and possibly productive government investment (which could increase output), CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. H.R. 1, as passed by the House, would have similar long-run effects. CBO has not estimated the macroeconomic effects of the stimulus proposals year by year beyond 2011.

It indicates several times in the paper that its methodology is calculating a not a year by year change, but a cumulative change from the baseline. Here it is in the endnotes. From table 1:

Estimated Macroeconomic Impacts of the Inouye-Baucus Amendment in the Nature of a Substitute to H.R. 1, Fourth Quarters of 2009, 2010, and 2011
2009 2010 2011
GDP (Percentage from baseline)
Low estimate of effect of plan 1.4 1.2 0.4
High estimate of effect of plan 4.1 3.6 1.2

And from table 2:

Note: For each option, the figures shown are a range of "multipliers," that is, the cumulative change in gross domestic product over several quarters, measured in dollars, per dollar of additional spending or reduction in taxes.

So the Washington Times, and Allah Pundit are more or less correct, the CBO predicts that by 2019 the cumulative effect on GDP will be .1% less than it would be otherwise. Of course this is not a huge difference, I suppose it matters whether you want your cake now or later, but it does lend credence to Michelle Malkin referring to it as the Generational Theft Act of 2009.

A Trade War?

2009-02-05T19:43:00.000-08:00

Earlier I brought up the question of a possible trade war. Burton Malkiel, the author of the excellent A Random Walk Down Wall Street, addresses the issue further in today's Journal:

As the world-wide recession deepens, protectionist sentiments are rising. The House of Representatives' version of the economic stimulus bill contains a provision that only American-made steel and other products be used for the infrastructure projects. Wrapped in the cloak of "Buy American" patriotism, the Senate version of the bill contains even stronger anti-free-trade provisions.

This Buy American momentum is bad economics, and by threatening to destabilize trade and capital flows, it risks turning a global recession into a 1930s-style depression. Asked about Buy American on Tuesday, President Barack Obama told Fox News that "we can't send a protectionist message." He said on ABC News that he doesn't want anything in the stimulus bill that is "going to trigger a trade war." He's right.

Yes, I would agree that he doesn't want a trade war, but that doesn't necessarily mean he won't start one. In reality it is really up to Congress, and they do not seem settled on the matter.

US senators voted overwhelmingly, late on Wednesday, to require the "Buy American" provisions "be applied in a manner consistent with US obligations under international agreements".
However, an amendment put forward by Republican Senator John McCain which would have removed the clause altogether was defeated.
Speaking before a vote on that amendment, Mr McCain warned that if the provisions were passed it would "only be a matter of time before we face an array of similar protectionism from other countries - from 'Buy European' to 'Buy Japanese' and more".

The problem with this of course is that "in a manner consistent with US obligations" is a matter of interpretation, and any law which promotes favoritism towards US companies can still provoke a backlash, as other countries will just do the same thing.

President Obama could of course veto the bill if he feels the language is too strong, but he is not very likely to do that after arguing that not passing the bill will bring on a catastrophe.

This is Transparency?

2009-02-05T19:24:00.000-08:00

Geez, this guy makes Bush seem eloquent.

New Deal Policies and the Persistence of the Great Depression

2009-02-05T07:27:00.000-08:00

Earlier I posted an excellent editorial by professors Harold Cole and Lee Ohanian in which they argue that the New Deal made the Great Depression worse, or at least last longer. In it they discuss their academic research, which I fortunately was able to find. I haven't managed to read the whole thing, and it is quite technical at times, but rather interesting. From the conclusion:

The recovery from the Great Depression was weak despite rapid productivity growth, and was accompanied by significant increases in real wages and prices in several sectors of the economy. A successful theory of the recovery from the Depression should account for persistent low levels of consumption, investment, and employment, the high real wage, and the apparent lack of competition in the labor market. We developed a model with New Deal labor and industrial policies that can account for sectoral high wages, a distorted labor market, and depressed employment, consumption, and investment despite normal productivity.

Our results suggest that New Deal policies are an important contributing factor to the persistence of the Great Depression. The key depressing element behind these policies was not monopoly per se, but rather linking the ability of firms to collude with paying high wages. Our model indicates that these policies reduced consumption, and investment about 14 percent relative to their competitive balanced growth path levels. Thus, the model accounts for about half of the continuation of the Great Depression between 1934 and 1939.

New Deal labor and industrial policies did not lift the economy out of the Depression 51 as President Roosevelt and his economic planners had hoped. Instead, the joint policies of increasing labor’s bargaining power, and linking collusion with paying high wages, impeded the recovery by creating an inefficient insider-outsider friction that raised wages significantly and restricted employment. The recovery would have been stronger if wages in key sectors had been lower. 52

None Dare Call It Science

2009-02-04T18:21:00.000-08:00

The anti-war fringe has been pushing the Lancet medical study claiming that 600,000+ Iraqis have died as a result of the war (and that was several years ago). I have argued against it on a couple of occasions, and Slate did a particularly good column on it. Now there is even more reason to doubt their conclusions.

Gilbert Burnham said in the Lancet medical journal in 2006 that 650,000 civilians had died since 2003 - a figure far higher than other estimates.
A polling association in the US said Dr Burnham had refused to supply "basic facts" for its inquiry into his work.
It did not comment on the accuracy of his conclusion.
The American Association for Public Opinion Research (AAPOR)began investigating Dr Burnham's work .

Reproducibility is of course one of the key parts of the scientific method. They should be begging for people to review their work, not blocking them.

The Lost Library Book

2009-02-04T18:08:00.001-08:00

With all that is going on right now, sometimes it is nice to just read a story like this. From a Southern California radio station, via the Best of the Web.

Chesley Sullenberger has a problem. He borrowed a book from the Danville Library – and it’s overdue. To complicate matters, the book was an interlibrary loan from Fresno State.
Sullenberger contacted librarians and asked for an extension on the loan and a waiver on the overdue fine. The reason? The book is in the cargo hold of the US Airways plane that made an emergency landing last month in New York’s Hudson River. Sullenberger is the pilot who made that landing. No one was seriously injured.
Fresno State library officials were impressed with Sullenberger’s sense of responsibility… and waived all fines and fees, even the one for losing the book. The library’s going one step further: when the replacement book goes up on the shelf, it will have a special template in front, dedicating it to Chesley “Sully” Sullenberger.
Oh, by the way. The topic of that book? Professional ethics.

The One Politician Dumber than Joe Biden

2009-02-04T07:42:00.000-08:00

That is 6 billion this year alone! Although Barack Obama promises to save 3 million of those....

More On the Great Depression

2009-02-03T19:46:00.000-08:00

I discussed recently how I thought the government helped make the Great Depression even greater. Helpfully an editorial in the Wall Street Journal today by economists Harold Cole and Lee Ohanian assists me in making my case.

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.
Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office.

Unfortunately not everyone reads history. And one of those people we just elected president.

The European Union warned the US yesterday against plunging the world into depression by adopting a planned “Buy American” policy, intensifying fears of a trade war.
The EU threatened to retaliate if the US Congress went ahead with sweeping measures in its $800 billion (£554 billion) stimulus plan to restrict spending to American goods and services.
Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that “history has shown us” where the closing of markets leads — a clear reference to the Depression of the 1930s, triggered by US protectionist laws.

Can We Question Their Patriotism Yet?

2009-02-02T17:54:00.000-08:00

Vice President Joe Biden, back during the campaign:

Noting that wealthier Americans would indeed pay more, Biden said: "It's time to be patriotic ... time to jump in, time to be part of the deal, time to help get America out of the rut."

Which makes all their appointments interesting:

The failure by the former Senate majority leader to pay taxes on the free use of a car and driver for several years, first reported Friday by ABC News, complicates Daschle's nomination and erodes the chances that it will sail through the Senate.
Daschle said tonight he did not realize his car service was income and not a gift from a good friend.
After the closed-door session, the Democratic senators on the Finance Committee expressed support en masse for their former colleague.
"There is a completely understandable, rational, reasonable and acceptable explanation" for his mistakes," Sen. John Kerry, D-Mass., said.

As I said earlier, how scary is it for a $700 billion bailout being run by a guy who can't figure out how to use TurboTax.

So Much for Bipartisanship

2009-01-28T18:24:00.000-08:00

Well the stimulus bill passed today, without a single Republican voting for it. I am not sure what is scarier, a $350 billion TARP package in the hands of a man who can't figure out how to use Turbotax properly, or $900 billion in the hands of Democrats eager to buy off votes.

Well for a refreshing breath of reality, the National Review has an excellent article on the failed history of Keynesian stimulus. I actually have a copy of the awkwardly named The General Theory of Employment, Interest and Money, sitting on my shelf, that I have been meaning to read. I will have to move it up in priority, so I know what woes are in store.

Using quaint Keynesian arguments to rationalize heavy spending is nothing new. But its resurgent popularity is somewhat surprising. Democrats and their favorite economists spent the past 25 years bemoaning the “twin deficits” of the 1980s and then claimed that the strong economy of the late 1990s was the result of President Clinton’s fiscal restraint — the precise opposite of “fiscal stimulus.” Also working in the anti-Keynesian mode, former treasury secretary Robert Rubin co-authored a 2004 paper with forecaster Allen Sinai and Peter Orzsag of the Brookings Institution, who now has been tapped by Obama to lead the Office of Management and Budget. They argued that “budget deficits decrease national saving, which reduces domestic investment and increases borrowing abroad.” Big budget deficits, warned Rubin, Orzsag, and Sinai, would “reduce future national income” and risk a “decline in confidence [which] can reduce stock prices.”

Joe the Dumber Speaks, Again

2009-01-26T20:40:00.000-08:00

I had thought, well, I had hoped that Obama still had him locked in a closet somewhere, but apparently they still let him speak occasionally. Economist Gregory Mankiw, or as I call him, the anti-Krugman, takes him to task for his recent statement on the stimulus bill:

In a TV interview last month, Vice President Joe Biden said the following:
Every economist, as I've said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs.
That statement is clearly false. As I have documented on this blog in recent weeks, skeptics about a spending stimulus include quite a few well-known economists, such as (in alphabetical order) Alberto Alesina, Robert Barro, Gary Becker, John Cochrane, Eugene Fama, Robert Lucas, Greg Mankiw, Kevin Murphy, Thomas Sargent, Harald Uhlig, and Luigi Zingales--and I am sure there many others as well. Regardless of whether one agrees with them on the merits of the case, it is hard to dispute that this list is pretty impressive, as judged by the standard objective criteria by which economists evaluate one another. If any university managed to hire all of them, it would immediately have a top ranked economics department.

Ouch. It well worth reading the rest. I didn't realize that Mankiw had a blog. It is not on my to read list.

Kristof Copies Krugman

2009-01-24T17:00:00.001-08:00

A couple of years ago I posted a link to Paul Krugman's excellent essay on sweatshops in the third world (this was back when Krugman was an actual economist).

For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men, women, and children lived on that dump--enduring the stench, the flies, and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily, because the $10 or so a squatter family could clear in a day was better than the alternatives.

So I was a bit surprised to read this editorial recently by Nicolas Kristof in the New York Times:

Before Barack Obama and his team act on their talk about “labor standards,” I’d like to offer them a tour of the vast garbage dump here in Phnom Penh. This is a Dante-like vision of hell. It’s a mountain of festering refuse, a half-hour hike across, emitting clouds of smoke from subterranean fires.
The miasma of toxic stink leaves you gasping, breezes batter you with filth, and even the rats look forlorn. Then the smoke parts and you come across a child ambling barefoot, searching for old plastic cups that recyclers will buy for five cents a pound. Many families actually live in shacks on this smoking garbage.

Now I think both editorials are good mind you, and the wording is different enough that it is not plagiarism, but Kristof is hardly being original.

CSPAN Porn

2009-01-24T16:40:00.000-08:00

I was amused by this passage:

WASHINGTON - Barack Obama’s $825 billion plan to boost the recession-bound U.S. economy has some elements that, well, aren’t the sort of stimulus that House Minority Leader John Boehner says he can believe in.
“I’m concerned about the size of the package, and I’m concerned about some of the spending that’s in there,” Boehner complained Friday after a meeting at White House.
“How can you spend hundreds of millions of dollars on contraceptives? How does that stimulate the economy?”

OK, maybe I have a dirty mind, but when talking about contraceptives you should be careful discussing "stimulate" and the "size of packages".

Obama Does Have Superpowers!

2009-01-21T20:41:00.001-08:00

Faster than a speeding bullet, stronger than a locomotive... able to time travel. From the new White House website.

President Obama swiftly responded to Hurricane Katrina.

Yeah, OK, buddy.

Michael Shermer on the Bailouts

2009-01-12T19:41:00.000-08:00

Ever since I have taken up following conspiracy theorists I have been reading a lot of Michael Shermer, he is founder of the the Skeptic Society after all. He recently wrote a pretty decent book on economics, which I got an autographed copy of (and actually made a YouTube video of when the troofers interrupted it). He continues this theme with a editorial in the City Journal.

Though the financial crisis is complex and has many explanations, one of its primary causes involves Fannie Mae and Freddie Mac, the nation’s largest guarantors of home mortgages. Recall that Fannie and Freddie are government-run organizations that do not make loans directly to customers; rather, they buy loans from the banks that make those loans directly. In spring 1999, Fannie and Freddie—under pressure from the Clinton administration—increased their portfolio of loans to lower- and moderate-income borrowers from 44 percent to 50 percent by 2001. That meant granting loans to higher-risk customers.
Now, there’s nothing wrong with corporations’ and institutions’ taking higher risks, so long as they adjust for it by charging more. The higher price acts as a risk signal to both buyers and sellers, thereby dialing up their emotion of risk aversion. That’s what Fannie Mae was already doing, in fact: when it purchased loans that banks made to high-risk customers, it bought only those that charged 3 to 4 percentage points higher than conventional loans. But under the new program, Fannie would buy high-risk mortgages that were only 1 point above a conventional 30-year fixed-rate mortgage (and that added point would be dropped after two years of steady payments). In other words, the normal risk signal sent to high-risk customers—you can have the loan, but it’s going to cost you a lot more—was removed.

Atlas Still Shrugs

2009-01-12T19:27:00.000-08:00

One of the greatest books ever, but one I hoped wouldn't come true.

Many of us who know Rand's work have noticed that with each passing week, and with each successive bailout plan and economic-stimulus scheme out of Washington, our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957, when this 1,000-page novel was first published and became an instant hit.
Rand, who had come to America from Soviet Russia with striking insights into totalitarianism and the destructiveness of socialism, was already a celebrity. The left, naturally, hated her. But as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most
influential book in their lives, behind only the Bible.

Only in Seattle: Part II

2009-01-12T19:19:00.001-08:00

Well they at least figured out that it isn't really that big of a deal to put salt in the ocean, but geez, they have to hire a consultant. Doesn't anyone on the city council have a cousin in Spokane or something?

The Seattle City Council will consider hiring an outside consultant to look at the city's response to December's historic snowstorms.

City departments will give the mayor a report Jan. 30, but Councilmember Tom Rasmussen said this morning that an outside party could help city officials figure out what went wrong.

The storms stranded bus riders and left ice and compact snow on many streets for nearly two weeks.

The Wall Street Journal Imitates Me

2008-12-29T11:28:00.000-08:00

Igor Panarin, the Russian academic who predicted the collapse of the United States, is back. This time on the front page of the Wall Street Journal. They left out much of the nutty stuff:

He based the forecast on classified data supplied to him by FAPSI analysts, he says. He predicts that economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.
California will form the nucleus of what he calls "The Californian Republic," and will be part of China or under Chinese influence. Texas will be the heart of "The Texas Republic," a cluster of states that will go to Mexico or fall under Mexican influence. Washington, D.C., and New York will be part of an "Atlantic America" that may join the European Union. Canada will grab a group of Northern states Prof. Panarin calls "The Central North American Republic." Hawaii, he suggests, will be a protectorate of Japan or China, and Alaska will be subsumed into Russia.
"It would be reasonable for Russia to lay claim to Alaska; it was part of the Russian Empire for a long time." A framed satellite image of the Bering Strait that separates Alaska from Russia like a thread hangs from his office wall. "It's not there for no reason," he says with a sly grin.

Only In Seattle

2008-12-23T12:45:00.001-08:00

Now correct me if I am wrong, but isn't the Puget Sound pretty salty already?

The icy streets are the result of Seattle's refusal to use salt, an effective ice-buster used by the state Department of Transportation and cities accustomed to dealing with heavy winter snows.
"If we were using salt, you'd see patches of bare road because salt is very effective," Wiggins said. "We decided not to utilize salt because it's not a healthy addition to Puget Sound."

Russia Gets Scarier

2008-12-20T11:02:00.001-08:00

As I have mentioned before, as a long time student of Russia, the Putin regime scares me. Things are getting worse as the prepare to essentially ban dissent:

Putin did not specify who might pose a threat to Russia's stability. But in the past, he has often blamed Western security services of trying to destabilize the country using opposition groups and non-governmental organizations as their instruments.
"Any attempts to weaken or destabilize Russia, harm the interests of the country will be toughly suppressed," they quoted ex-KGB spy Putin as telling an annual meeting of top spies and security officers ahead of their professional holiday.

But what do you expect from a country which has a national holiday for the secret police?

The Day of Security Officers is marked annually on December 20, a day when in 1917 Bolshevik rulers created the CheKa secret police to suppress their foes. After a string of transformations, the Cheka became the KGB.
As president, Putin always personally attended the holiday meetings of security officials. Medvedev, a former corporate lawyer with no security background, stayed away and sent his chief of staff Sergei Naryshkin to deliver his greetings.

Al Gore and the Broken Window Fallacy

2008-12-09T22:12:00.000-08:00

One of the things that drives me nuts (admittedly, there are a lot right now) is the constant insistance among environmentalists and politicians that "alternative energy" will "create jobs", somehow justifying large government expenditures to pay companies to do things which they would not normally waste money on. As Obama said when he met Al Gore today:

"We all believe what the scientists have been telling us for years now, that this is a matter of urgency and national security, and it has to be dealt with in a serious way," Obama said. "We have the opportunity now to make jobs all across this country, in all 50 states, to repower America. ... We are not going to miss this opportunity," he said.

OK, now if you want to argue that "green energy" has some sort of positive externalities in regards to the environment or national defense, you might have an argument, I am not saying it would be a good one, but you could at least make it, but to argue that it is an economic benefit in that it provides jobs, is a fallacy. Under no circumstances is it an economic benefit to subsidize people to do things in a manner which are a less efficient application of resources than they would otherwise. If solar power costs $20 per megawatt, and coal costs $10 a megawatt, it is never an economic benefit to pay someone $20 extra per megawatt in order to get them to put up solar cells. You might as well just use coal and pay them $10 to surf the Internet for Carrie Underwood videos.

This tactic, commonly used by politicians is a variation of the Broken Window Fallacy, by which you argue an economic benefit to smashing windows in order to employ window repairman, but at a loss to society as a whole.

The AP On Military Education

2008-12-09T20:00:00.000-08:00

The AP, which has pretty much given up reporting the news and become an editorial service, has written an article on why soldiers are reenlisting in the military because... well apparently they can't get a job anywhere else. While obviously a bad economy probably has an effect, they take the John Kerry education approach.

Roughly 208,000 men and women left the military in 2007. Some were rank-and-file warriors, while others worked in specialized fields such as satellite communications or computer networking. Only about 30 percent of enlisted soldiers hold a bachelor's degree.

Only about 30 percent of enlisted soldiers hold a bachelor's degree? Well, how does that compare to the population at large? Well, according to the US Census, 27.1%, or less than the military, and this is not even counting officers, who almost all have degrees. So why exactly did they add the "only"?