I can't believe Louis Farrakhan would lie to us.
(CNSNews.com) - Statistics released by the Louisiana Department of Health and Hospitals suggest that fewer than half of the victims of Hurricane Katrina were black, and that whites died at the highest rate of all races in New Orleans.
Liberals in the aftermath of the storm were quick to allege that the Bush administration delayed its response to the catastrophe because most of the victims were black.
Damu Smith, founder of the National Black Environmental Justice Network, in September said that the federal government "ignored us, they forgot about us ... because we look like we look."
Nation of Islam leader Louis Farrakhan in October said that the Federal Emergency Management Agency wasn't fit to help the storm's victims because "there are not enough blacks high up in FEMA" and added that, "certainly the Red Cross is the same."
Rapper Kanye West used his time on NBC's telethon for the hurricane victims to charge that, "George Bush doesn't care about black people."
But the state's demographic information suggests that whites in New Orleans died at a higher rate than minorities. According to the 2000 census, whites make up 28 percent of the city's population, but the Louisiana Department of Health and Hospitals indicates that whites constitute 36.6 percent of the storm's fatalities in the city.
Thursday, December 15, 2005
So Much for Inflation
Now maybe the Fed will stop jacking up rates before they cause another recession? From the WP.
WASHINGTON -- A record plunge in the cost of gasoline pushed consumer prices down by the largest amount in 56 years in November while industrial production posted a solid gain.
The new government reports Thursday provided further evidence that the economy is shaking off the blows delivered by a string of devastating hurricanes. But analysts cautioned that the huge drop in consumer prices was overstating the improvement in inflation.
The Labor Department report showed the Consumer Price Index fell by 0.6 percent last month, the biggest decline since a 0.9 percent fall in July 1949. It reflected a record fall in gasoline prices, which have been retreating since they surged to above $3 per gallon right after Katrina hit.
WASHINGTON -- A record plunge in the cost of gasoline pushed consumer prices down by the largest amount in 56 years in November while industrial production posted a solid gain.
The new government reports Thursday provided further evidence that the economy is shaking off the blows delivered by a string of devastating hurricanes. But analysts cautioned that the huge drop in consumer prices was overstating the improvement in inflation.
The Labor Department report showed the Consumer Price Index fell by 0.6 percent last month, the biggest decline since a 0.9 percent fall in July 1949. It reflected a record fall in gasoline prices, which have been retreating since they surged to above $3 per gallon right after Katrina hit.
Wednesday, December 14, 2005
The Economics of Hybrids: Part II
I speculated on this before, but this says it a little more conclusively. If you want to buy a hybrid for social reasons, the environmentalist equivilant of buying a car to pick up chicks, go ahead, but you aren't going to save any money. From the WSJ.
The Prius is a nifty gadget and comes with lots of extras. But Toyota markets the vehicle on its fuel efficiency, and fans tout its fuel efficiency. And our point was to debunk the idea that saving gasoline is a virtue independent of economics, such that it makes sense, say, to spend a buck to reduce gas use by 50 cents.
Edmunds.com, the auto shopper site, guided us to Honda's Civic and Toyota's Corolla as conventional alternatives to the hybrid Prius. This was the source of our claim that the Prius retails for $9,500 more than comparable vehicles. In its own research, Edmunds concluded a Prius owner would have to drive 66,500 miles per year or gasoline would have to jump to $10 for the purchase to pay off.
But don't take our word for it. Kazuo Okamoto, Toyota's research chief, recently told the Financial Times that, in terms of fuel efficiency, "the purchase of a hybrid car is not justified."
Now, as an economic matter, overpaying for the privilege of saving gasoline is simply a subsidy to other gasoline consumers. Also as a regulatory matter: Thanks to the special genius of our corporate fuel economy rules, Prius buyers directly underwrite Toyota's ability to sell more SUVs and pickups in the U.S. market without paying the fines that Mercedes, BMW and Volvo long ago accepted as a cost of doing business in the U.S.
But doesn't saving oil have benefits beyond the dollars saved -- for instance, postponing the doom of civilization?
No: If Prius owners consume less, there's less demand, prices will be lower and somebody else will step up to consume more than they would at the otherwise higher price. That's the price mechanism at work. Oil is a fantastically useful commodity. Humans can be relied upon to consume all the oil they'd be willing to consume at a given price.
The Prius is a nifty gadget and comes with lots of extras. But Toyota markets the vehicle on its fuel efficiency, and fans tout its fuel efficiency. And our point was to debunk the idea that saving gasoline is a virtue independent of economics, such that it makes sense, say, to spend a buck to reduce gas use by 50 cents.
Edmunds.com, the auto shopper site, guided us to Honda's Civic and Toyota's Corolla as conventional alternatives to the hybrid Prius. This was the source of our claim that the Prius retails for $9,500 more than comparable vehicles. In its own research, Edmunds concluded a Prius owner would have to drive 66,500 miles per year or gasoline would have to jump to $10 for the purchase to pay off.
But don't take our word for it. Kazuo Okamoto, Toyota's research chief, recently told the Financial Times that, in terms of fuel efficiency, "the purchase of a hybrid car is not justified."
Now, as an economic matter, overpaying for the privilege of saving gasoline is simply a subsidy to other gasoline consumers. Also as a regulatory matter: Thanks to the special genius of our corporate fuel economy rules, Prius buyers directly underwrite Toyota's ability to sell more SUVs and pickups in the U.S. market without paying the fines that Mercedes, BMW and Volvo long ago accepted as a cost of doing business in the U.S.
But doesn't saving oil have benefits beyond the dollars saved -- for instance, postponing the doom of civilization?
No: If Prius owners consume less, there's less demand, prices will be lower and somebody else will step up to consume more than they would at the otherwise higher price. That's the price mechanism at work. Oil is a fantastically useful commodity. Humans can be relied upon to consume all the oil they'd be willing to consume at a given price.
Jay Leno Joke O' the Day
"According to a new ABC Poll, in Iraq 71% of Iraqis think life is going well for them in Iraq. They like living in Iraq. So more Iraqis think things are going well in Iraq then Americans do. So you know what that means? I guess they don't get the New York Times over there."
-Jay Leno-
-Jay Leno-
Monday, December 12, 2005
Outsourcing vs Productivity
I have always thought this talk about outsourcing every job in the country to be a bit ridiculous, while at the same time I have also found corporate America to be a bit short-sighted in its rush for cheaper labor. It is not about outsourcing, it is about productivity. The best companies realize that. From that silly pink newspaper.
Recent research from the consultants McKinsey suggests this may be the case. The research points to a shift away from eliminating jobs, through downsizing or outsourcing, to improving employee productivity.
"For many companies today," says James Manyika, senior partner in McKinsey's technology practice in San Francisco, "and for most companies soon, the biggest pay-off in productivity im-provement will come from making their most talented employees even more talented, and not from automating and outsourcing clerical or production jobs."
Could this be the beginning of the end of outsourcing? Mr Manyika feels businesses definitely should be starting to look at life beyond outsourcing. "Some companies are already at the limits of what they can outsource, given current technology and current costs. Manufacturing has been outsourced. Call centres and other transactional work has been outsourced. Most of the employees that remain are now doing complex work in areas such as sales, research and development and de-sign," he says.
Recent research from the consultants McKinsey suggests this may be the case. The research points to a shift away from eliminating jobs, through downsizing or outsourcing, to improving employee productivity.
"For many companies today," says James Manyika, senior partner in McKinsey's technology practice in San Francisco, "and for most companies soon, the biggest pay-off in productivity im-provement will come from making their most talented employees even more talented, and not from automating and outsourcing clerical or production jobs."
Could this be the beginning of the end of outsourcing? Mr Manyika feels businesses definitely should be starting to look at life beyond outsourcing. "Some companies are already at the limits of what they can outsource, given current technology and current costs. Manufacturing has been outsourced. Call centres and other transactional work has been outsourced. Most of the employees that remain are now doing complex work in areas such as sales, research and development and de-sign," he says.
The Sky is Falling, and it is All Bush's Fault
William H. Gates, the father of the richest man in the world, and not exactly poor himself, is famous for his left wing activism, but it looks like he now has crossed over into paranoia.
He picked Wall Street big shot Pete Peterson, who, Gates said, has warned against "the pending bankruptcy of the U.S."
His response drew shocked laughter from the crowd. But Gates wasn't kidding, and he would return to that theme later in the luncheon.
Gates said he is worried about a lot of things -- the Bush administration's tax-cutting policies at a time of war, the financial problems forecast for Social Security and Medicare and a national debt that appears to be flying off the chart as it is being underwritten by foreign governments.
Now personally I would like to see the deficit cut even more, but I think it is a bit of an exaggeration to claim, The national debt is "flying off the charts" and we are on the verge on bankruptcy.
Source: OMB
Besides, how can there be any problem with social security? When the president tried to reform it last year Paul Krugman and all the "experts" said there was nothing wrong with it.
He picked Wall Street big shot Pete Peterson, who, Gates said, has warned against "the pending bankruptcy of the U.S."
His response drew shocked laughter from the crowd. But Gates wasn't kidding, and he would return to that theme later in the luncheon.
Gates said he is worried about a lot of things -- the Bush administration's tax-cutting policies at a time of war, the financial problems forecast for Social Security and Medicare and a national debt that appears to be flying off the chart as it is being underwritten by foreign governments.
Now personally I would like to see the deficit cut even more, but I think it is a bit of an exaggeration to claim, The national debt is "flying off the charts" and we are on the verge on bankruptcy.
Source: OMB
Besides, how can there be any problem with social security? When the president tried to reform it last year Paul Krugman and all the "experts" said there was nothing wrong with it.
Friday, December 09, 2005
And to Think I am Wasting All My Time Studying Business
The Seattle PI reports on some of my fellow grad students at the University of Washington studying, I kid you not, graffiti. They are even cataloging it on-line. Now I am all for furthering your education, but if I saw something like this on Scrappleface, I wouldn't find it believable. I am glad to know our tax dollars are are being spent wisely. H/T Soundpolitics.
Thursday, December 08, 2005
Babs v. Jonah
Intellectual giant Barbra Streisand was so upset over Jonah Goldberg nominally replacing Robert Scheer at the LA Times that she cancelled her subscription. Mr. Goldberg takes the chance to respond to her outrage. It is not a fair fight.
As Streisand surely surmises, we in the warmonger and puppy-kicker community take it as a great badge of honor to be singled out for obloquy by the likes of her. Short of convincing Alec Baldwin to actually make good on his promise to flee the country, vexing the Dashboard Saint of Hollywood Liberalism is about as good as it gets. That my name is such wolf's bane (or Yentl's bane) to her that she must cancel her subscription to the Los Angeles Times is just gravy. Feel free to post pictures of me around your homes if you fear she may be coming through your town.
Streisand's real complaint is that the Times will no longer carry Robert Scheer's column. She's simply wrong on the facts that my column replaced his. I'm part of a bundle which results, I believe, in a net gain of liberal voices. But that Scheer is out and I'm in is a great injustice in her eyes.
Now, Streisand is notorious for her desire, indeed her yearning, to be taken seriously. During the early days of the Clinton administration, when she was basking in the glow of Bubba's gaze, she ostentatiously drenched herself in substance, watching C-SPAN and reading up on the Declaration of Independence and the Constitution, no doubt finding The Federalist Papers — A.K.A. the Founding's liner notes — particularly helpful. But there were still some things she didn't get. When Bill Clinton invited Sharon Stone to the White House for a consultation, instead of her, Streisand reportedly declared, "Why Sharon Stone? She doesn't know anything about policy."
But we shouldn't mock her interest in substance. That's a healthy sign of citizenship. So let us try to take Streisand seriously.
As Streisand surely surmises, we in the warmonger and puppy-kicker community take it as a great badge of honor to be singled out for obloquy by the likes of her. Short of convincing Alec Baldwin to actually make good on his promise to flee the country, vexing the Dashboard Saint of Hollywood Liberalism is about as good as it gets. That my name is such wolf's bane (or Yentl's bane) to her that she must cancel her subscription to the Los Angeles Times is just gravy. Feel free to post pictures of me around your homes if you fear she may be coming through your town.
Streisand's real complaint is that the Times will no longer carry Robert Scheer's column. She's simply wrong on the facts that my column replaced his. I'm part of a bundle which results, I believe, in a net gain of liberal voices. But that Scheer is out and I'm in is a great injustice in her eyes.
Now, Streisand is notorious for her desire, indeed her yearning, to be taken seriously. During the early days of the Clinton administration, when she was basking in the glow of Bubba's gaze, she ostentatiously drenched herself in substance, watching C-SPAN and reading up on the Declaration of Independence and the Constitution, no doubt finding The Federalist Papers — A.K.A. the Founding's liner notes — particularly helpful. But there were still some things she didn't get. When Bill Clinton invited Sharon Stone to the White House for a consultation, instead of her, Streisand reportedly declared, "Why Sharon Stone? She doesn't know anything about policy."
But we shouldn't mock her interest in substance. That's a healthy sign of citizenship. So let us try to take Streisand seriously.
Is the Current Account Deficit as Bad as They Say?
The Financial Times has a rather interesting article on how the current accounts deficit (more commonly and inaccurately referred to as the trade deficit) is not as bad as portrayed. It is a bit complicated but basically they argue that the important thing is that the income earned from investments bought by US citizens from foreign countries is much higher than the income earned by foreign citizens on investments bought from the US. So overall not nearly as much wealth is leaving the country as portrayed. Unfortunately I only have a subscription to the pink paper version of FT, not the on-line version, so I can't post much of the article, but if you get a chance read it.
‘Dark matter’ makes the US deficit disappear
By Ricardo Hausmann and Federico Sturzenegger Published: December 7 2005 20:40 Last updated: December 7 2005 20:40
In 2005 the US current account deficit is expected to top $700bn. It comes after 27 years of unbroken deficits that have totalled more than $5,000bn, leading to concerns of an impending global crisis. Once the massive financing required to keep on paying for such a widening gap dries up, there will be an ugly adjustment in the world economy. The dollar will collapse, triggering a stampede away from US debt, interest rates will shoot up and a sharp global recession will ensue.
But wait a minute. If this is such an open and shut case, why have markets not precipitated the crisis already?
‘Dark matter’ makes the US deficit disappear
By Ricardo Hausmann and Federico Sturzenegger Published: December 7 2005 20:40 Last updated: December 7 2005 20:40
In 2005 the US current account deficit is expected to top $700bn. It comes after 27 years of unbroken deficits that have totalled more than $5,000bn, leading to concerns of an impending global crisis. Once the massive financing required to keep on paying for such a widening gap dries up, there will be an ugly adjustment in the world economy. The dollar will collapse, triggering a stampede away from US debt, interest rates will shoot up and a sharp global recession will ensue.
But wait a minute. If this is such an open and shut case, why have markets not precipitated the crisis already?
I Guess Our Local Schools Have Too Much Money
They have to waste their extra money on this idiocy.
FEDERAL WAY, Wash., Dec. 7 (UPI) -- The Federal Way, Wash., school district destroyed lunch menus for 23 elementary schools after an employee added the greeting "Merry Christmas," a report said.
The 11,500 copies of the one-page lunch menu were recycled before they reached students, since the greeting "has a religious connotation for some people," a school spokeswoman told the Tacoma (Wash.) News Tribune.
The December lunch menus -- reprinted last month at a cost of $494 -- now carry a "Happy Holidays" greeting that the spokeswoman said conforms to practices of the school district between Seattle and Tacoma, Wash.
Nobody knows what incalculable damage these brave public employees saved our children from in having to see those offensive words "Merry Christmas". Who knows, they may have been inspired to give gifts to each other and sit on the laps of fat men.
The next time, rather than waste taxpayers dollars on such stupid things, why don't they just invite the local head of the ACLU in, give them a magic marker, and tell them to go to town?
FEDERAL WAY, Wash., Dec. 7 (UPI) -- The Federal Way, Wash., school district destroyed lunch menus for 23 elementary schools after an employee added the greeting "Merry Christmas," a report said.
The 11,500 copies of the one-page lunch menu were recycled before they reached students, since the greeting "has a religious connotation for some people," a school spokeswoman told the Tacoma (Wash.) News Tribune.
The December lunch menus -- reprinted last month at a cost of $494 -- now carry a "Happy Holidays" greeting that the spokeswoman said conforms to practices of the school district between Seattle and Tacoma, Wash.
Nobody knows what incalculable damage these brave public employees saved our children from in having to see those offensive words "Merry Christmas". Who knows, they may have been inspired to give gifts to each other and sit on the laps of fat men.
The next time, rather than waste taxpayers dollars on such stupid things, why don't they just invite the local head of the ACLU in, give them a magic marker, and tell them to go to town?
Monday, December 05, 2005
School Vouchers
I was rather pleased to see an editorial on school vouchers in New Orleans by Nobel Laureate (and Alex P. Keaton's favorite economist) Milton Friedman in today's WSJ. Unfortunately due to the power of the teacher's unions, especially in liberal strongholds, this will probably never happen, but we can always hope.
Whatever the promise of vouchers for the education of New Orleans children, the reform will be opposed by the teachers unions and the educational administrators. They now control a monopoly school system. They are determined to preserve that control, and will go to almost any lengths to do so.
Unions to the contrary, the reform would achieve the purposes of Louisiana far better than the present system. The state's objective is the education of its children, not the construction of buildings or the running of schools. Those are means not ends. The state's objective would be better served by a competitive educational market than by a government monopoly. Producers of educational services would compete to attract students. Parents, empowered by the voucher, would have a wide range to choose from. As in other industries, such a competitive free market would lead to improvements in quality and reductions in cost.
If, by a political miracle, Louisiana could overcome the opposition of the unions and enact universal vouchers, it would not only serve itself, it would also render a service to the rest of the country by providing a large scale example of what the market can do for education when permitted to operate.
Whatever the promise of vouchers for the education of New Orleans children, the reform will be opposed by the teachers unions and the educational administrators. They now control a monopoly school system. They are determined to preserve that control, and will go to almost any lengths to do so.
Unions to the contrary, the reform would achieve the purposes of Louisiana far better than the present system. The state's objective is the education of its children, not the construction of buildings or the running of schools. Those are means not ends. The state's objective would be better served by a competitive educational market than by a government monopoly. Producers of educational services would compete to attract students. Parents, empowered by the voucher, would have a wide range to choose from. As in other industries, such a competitive free market would lead to improvements in quality and reductions in cost.
If, by a political miracle, Louisiana could overcome the opposition of the unions and enact universal vouchers, it would not only serve itself, it would also render a service to the rest of the country by providing a large scale example of what the market can do for education when permitted to operate.
Friday, December 02, 2005
France: The New Enron
Don't tell Paul Krugman about this.
Just two days ago France discovered that its national debt was €2,000bn - almost twice the figure normally found on the state balance sheet.
The difference derives from some €900bn ($1,080bn, £630bn) of off-balance sheet public sector pension liabilities that Thierry Breton, finance minister, now points to when warning citizens about the scale of the country's debt problems.
"What is shocking is the bill we are leaving for the next generation," he said this week. The minister is a former chief of France Telecom who was brought in nine months ago to correct France's accounts.
Mr Breton is seeking to challenge not only opponents of economic reform but the 25 per cent of the French workforce in the public sector who benefit from numerous special privileges, notably more favourable pensions than their private sector counterparts.
Just two days ago France discovered that its national debt was €2,000bn - almost twice the figure normally found on the state balance sheet.
The difference derives from some €900bn ($1,080bn, £630bn) of off-balance sheet public sector pension liabilities that Thierry Breton, finance minister, now points to when warning citizens about the scale of the country's debt problems.
"What is shocking is the bill we are leaving for the next generation," he said this week. The minister is a former chief of France Telecom who was brought in nine months ago to correct France's accounts.
Mr Breton is seeking to challenge not only opponents of economic reform but the 25 per cent of the French workforce in the public sector who benefit from numerous special privileges, notably more favourable pensions than their private sector counterparts.
Well at least they aren't running into each other
You really got to hand it to the people who run our local transit systems.
Expensive new hybrid diesel-electric buses that were portrayed by King County Metro as "green" heroes that would use up to 40 percent less fuel than existing buses have fallen far short of that promise.
In fact, at times, the New Flyer hybrid articulated buses have gotten worse mileage than the often-maligned 1989 dual-mode Breda buses they are replacing. Yet the hybrid buses cost $200,000 more each than a conventional articulated diesel bus.
The disappointing results are a far cry from the rosy predictions made by officials.
In May of this year, when Metro held a public event to herald the arrival of the first of the new hybrid buses, County Executive Ron Sims said they would save 750,000 gallons of fuel a year over the Bredas.
Metro was the first agency in the country to buy a 60-foot articulated bus with a hybrid diesel-electric technology. It ordered 235 of them, 213 for itself for $152 million and 22 for Sound Transit. Metro now has the largest fleet of hybrid buses in the world.
Expensive new hybrid diesel-electric buses that were portrayed by King County Metro as "green" heroes that would use up to 40 percent less fuel than existing buses have fallen far short of that promise.
In fact, at times, the New Flyer hybrid articulated buses have gotten worse mileage than the often-maligned 1989 dual-mode Breda buses they are replacing. Yet the hybrid buses cost $200,000 more each than a conventional articulated diesel bus.
The disappointing results are a far cry from the rosy predictions made by officials.
In May of this year, when Metro held a public event to herald the arrival of the first of the new hybrid buses, County Executive Ron Sims said they would save 750,000 gallons of fuel a year over the Bredas.
Metro was the first agency in the country to buy a 60-foot articulated bus with a hybrid diesel-electric technology. It ordered 235 of them, 213 for itself for $152 million and 22 for Sound Transit. Metro now has the largest fleet of hybrid buses in the world.
Whatever the news is, it's bad
A bit of wisdom from the WSJ editorial page.
During a quarter century of analyzing and forecasting the economy, I have never seen anything like this. No matter what happens, no matter what data are released, no matter which way markets move, a pall of pessimism hangs over the economy.
It is amazing. Everything is negative. When bond yields rise, it is considered bad for the housing market and the consumer. But if bond yields fall and the yield curve narrows toward inversion, that is bad too, because an inverted yield curve could signal a recession.
If housing data weaken, as they did on Monday when existing home sales fell, well that is a sign of a bursting housing bubble. If housing data strengthen, as they did on Tuesday when new home sales rose, that is negative because the Fed may raise rates further. If foreigners buy our bonds, we are not saving for ourselves. If foreigners do not buy our bonds, interest rates could rise. If wages go up, inflation is coming. If wages go down, the economy is in trouble.
This onslaught of negative thinking is clearly having an impact. During the 2004 presidential campaign, when attacks on the economy were in full force, 36% of Americans thought we were in recession. One year later, even though unemployment has fallen from 5.5% to 5%, and real GDP has expanded by 3.7%, the number who think a recession is underway has climbed to 43%.
During a quarter century of analyzing and forecasting the economy, I have never seen anything like this. No matter what happens, no matter what data are released, no matter which way markets move, a pall of pessimism hangs over the economy.
It is amazing. Everything is negative. When bond yields rise, it is considered bad for the housing market and the consumer. But if bond yields fall and the yield curve narrows toward inversion, that is bad too, because an inverted yield curve could signal a recession.
If housing data weaken, as they did on Monday when existing home sales fell, well that is a sign of a bursting housing bubble. If housing data strengthen, as they did on Tuesday when new home sales rose, that is negative because the Fed may raise rates further. If foreigners buy our bonds, we are not saving for ourselves. If foreigners do not buy our bonds, interest rates could rise. If wages go up, inflation is coming. If wages go down, the economy is in trouble.
This onslaught of negative thinking is clearly having an impact. During the 2004 presidential campaign, when attacks on the economy were in full force, 36% of Americans thought we were in recession. One year later, even though unemployment has fallen from 5.5% to 5%, and real GDP has expanded by 3.7%, the number who think a recession is underway has climbed to 43%.
Thursday, December 01, 2005
The Benefits of Incompetence
I was walking to class this morning and I noticed a flier promoting an appearance by former Seattle Police Chief Norm "They won't riot at the WTO" Stamper at an event against the Patriot Act. This flier also promoted his book Breaking Rank. I just continue to find it amazing the number of people who get fired for being incompetent and/or blatantly dishonest, and then manage to get major book deals out of it, Mary Mapes, Jayson Blair, BG Karpinski (of Abu Ghraib fame), the list goes on... People have always screwed up, but at least in the past they had the dignity to be ashamed and hide, now they brag about it! It almost makes you think the easiest way to succeed nowadays is to be an idiot.
Wednesday, November 30, 2005
Stupid Senate Tricks
I have posted on this subject several times, but this is even dumber than I expected.
The last time Congress imposed a form of the windfall tax was the final gloomy days of Jimmy Carter, and the result was: a substantial reduction in domestic oil production (about 5%), thus raising the price of gas at the pump; and a 10% increase in U.S. reliance on foreign oil. A windfall profits tax is the ultimate act of economic masochism because it taxes only domestic production, while imports and foreign oil subsidiaries bear almost none of the cost.
But wait, this time it's worse. The current Senate proposal would actually require oil companies with daily production of 500,000 barrels or more to disregard generally accepted accounting principles, by revaluing their oil inventories. GAAP accounting (and current tax law) allows oil firms to value barrels of oil sold at what it costs to replace that barrel.
The Senate bill would require the companies to revalue their inventories by $18.75 a barrel -- an arbitrary number if there ever was one. In effect, this means that Congress is creating the illusion of higher oil profits, and thus raising the tax liability of oil companies by an estimated $5 billion next year. This would be on top of the 35% tax rate they already pay on their actual profits.
When Andy Fastow tried to create phony profits at Enron, he got 10 years in the slammer. Now Senators want to create phony corporate profits, so they can grab them to spend. Where's Eliot Spitzer when you really need him? What's even more reprehensible about this revenue grab is its retroactive nature. In a sense this is less a tax than it is an ex post facto confiscation of private property.
The last time Congress imposed a form of the windfall tax was the final gloomy days of Jimmy Carter, and the result was: a substantial reduction in domestic oil production (about 5%), thus raising the price of gas at the pump; and a 10% increase in U.S. reliance on foreign oil. A windfall profits tax is the ultimate act of economic masochism because it taxes only domestic production, while imports and foreign oil subsidiaries bear almost none of the cost.
But wait, this time it's worse. The current Senate proposal would actually require oil companies with daily production of 500,000 barrels or more to disregard generally accepted accounting principles, by revaluing their oil inventories. GAAP accounting (and current tax law) allows oil firms to value barrels of oil sold at what it costs to replace that barrel.
The Senate bill would require the companies to revalue their inventories by $18.75 a barrel -- an arbitrary number if there ever was one. In effect, this means that Congress is creating the illusion of higher oil profits, and thus raising the tax liability of oil companies by an estimated $5 billion next year. This would be on top of the 35% tax rate they already pay on their actual profits.
When Andy Fastow tried to create phony profits at Enron, he got 10 years in the slammer. Now Senators want to create phony corporate profits, so they can grab them to spend. Where's Eliot Spitzer when you really need him? What's even more reprehensible about this revenue grab is its retroactive nature. In a sense this is less a tax than it is an ex post facto confiscation of private property.
Economists Correctly Predict 7 of the last 3 Recessions
Despite the best wishes of some the US economy keeps on plugging along quite nicely.
The economy grew at a lively 4.3 percent pace in the third quarter, the best showing in more than a year. The performance offered fresh testimony that the country's overall economic health managed to improve despite the destructive force of Gulf Coast hurricanes.
The new snapshot of economic activity, released by the Commerce Department on Wednesday, showed the growth at an even faster pace than the 3.8 percent annual rate first reported for the July-to-September quarter a month ago.
Of course the NY Times keeps hoping.
Gasoline is cheaper than it was before Hurricane Katrina slammed into New Orleans. Consumer confidence jumped last month and new home sales hit a record. The stock market has been rising. Even the nation's beleaguered factories appear to be headed for a happy holiday season.
By most measures, the economy appears to be doing just fine. No, scratch that, it appears to be booming.
But as always with the United States economy, it is not quite that simple.
Cue ominous music...
The economy grew at a lively 4.3 percent pace in the third quarter, the best showing in more than a year. The performance offered fresh testimony that the country's overall economic health managed to improve despite the destructive force of Gulf Coast hurricanes.
The new snapshot of economic activity, released by the Commerce Department on Wednesday, showed the growth at an even faster pace than the 3.8 percent annual rate first reported for the July-to-September quarter a month ago.
Of course the NY Times keeps hoping.
Gasoline is cheaper than it was before Hurricane Katrina slammed into New Orleans. Consumer confidence jumped last month and new home sales hit a record. The stock market has been rising. Even the nation's beleaguered factories appear to be headed for a happy holiday season.
By most measures, the economy appears to be doing just fine. No, scratch that, it appears to be booming.
But as always with the United States economy, it is not quite that simple.
Cue ominous music...
Tuesday, November 29, 2005
The High Benefit of Low Prices
As I have commented before, WalMart has become the limousine left's favorite whipping boy, responsible for all of society's ills (well except for those caused by Halliburton). Cafe Hayek addresses this, commenting on a Washington Post article. One thing the left doesn't quite seem to understand is it isn't the cocktail circuit crowd that benefits from WalMarts low prices, it is the poor people that they claim to want to help. If the government gives poor people 10% more money, that is good in their eyes, but if WalMart allows them to buy goods at 15% lower prices, they are indifferent to the benefits. This isn't about economics, it is about control.
Wal-Mart's critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is "a progressive success story." Furman advised John "Benedict Arnold" Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart's products.
These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's "every day low prices" make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart's $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.
Wal-Mart's critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is "a progressive success story." Furman advised John "Benedict Arnold" Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart's products.
These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's "every day low prices" make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart's $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.
Monday, November 28, 2005
Does Paul Krugman Still Claim to be an Economist?
From his latest bit of dribble.
We like to think of ourselves as rugged individualists, not like those coddled Europeans with their oversized welfare states. But as Jacob Hacker of Yale points out in his book "The Divided Welfare State," if you add in corporate spending on health care and pensions ... we actually have a welfare state that's about as large relative to our economy as those of other advanced countries. ...
[T]hose who don't work for companies with good benefits are, in effect, second-class citizens. Still, the system more or less worked for several decades after World War II. Now, however, deals are being broken ... What went wrong? An important part of the answer is that America's semi-privatized welfare state worked in the first place only because we had a stable corporate order. And that stability - along with any semblance of economic security for many workers - is now gone.
Regular readers ... know what I think we should do: instead of trying to provide economic security through the back door, via tax breaks designed to encourage corporations to provide health care and pensions, we should provide it through the front door, starting with national health insurance. You may disagree. But one thing is clear: Mr. Drucker's age of discontinuity is also an age of anxiety, in which workers can no longer count on loyalty from their employers.
Surely an economist can distinguish between "welfare" provided by productive corporations which are paying benefits to attract employees, and government which forcibly confiscates wealth in order to distribute to others as it see fit? Can't he? I am taking micro right now, and I am pretty sure the professor mentioned it. I am sure they teach this at MIT too...
We like to think of ourselves as rugged individualists, not like those coddled Europeans with their oversized welfare states. But as Jacob Hacker of Yale points out in his book "The Divided Welfare State," if you add in corporate spending on health care and pensions ... we actually have a welfare state that's about as large relative to our economy as those of other advanced countries. ...
[T]hose who don't work for companies with good benefits are, in effect, second-class citizens. Still, the system more or less worked for several decades after World War II. Now, however, deals are being broken ... What went wrong? An important part of the answer is that America's semi-privatized welfare state worked in the first place only because we had a stable corporate order. And that stability - along with any semblance of economic security for many workers - is now gone.
Regular readers ... know what I think we should do: instead of trying to provide economic security through the back door, via tax breaks designed to encourage corporations to provide health care and pensions, we should provide it through the front door, starting with national health insurance. You may disagree. But one thing is clear: Mr. Drucker's age of discontinuity is also an age of anxiety, in which workers can no longer count on loyalty from their employers.
Surely an economist can distinguish between "welfare" provided by productive corporations which are paying benefits to attract employees, and government which forcibly confiscates wealth in order to distribute to others as it see fit? Can't he? I am taking micro right now, and I am pretty sure the professor mentioned it. I am sure they teach this at MIT too...
Another Sign We Are Too Damn Fat
I feel guilty for not going to the gym this morning.
CHICAGO (Reuters) - Fatter rear ends are causing many drug injections to miss their mark, requiring longer needles to reach buttock muscle, researchers said on Monday.
Standard-sized needles failed to reach the buttock muscle in 23 out of 25 women whose rears were examined after what was supposed to be an intramuscular injection of a drug.
Two-thirds of the 50 patients in the study did not receive the full dosage of the drug, which instead lodged in the fat tissue of their buttocks, researchers from The Adelaide and Meath Hospital in Dublin said in a presentation to the annual meeting of the Radiological Society of North America.
CHICAGO (Reuters) - Fatter rear ends are causing many drug injections to miss their mark, requiring longer needles to reach buttock muscle, researchers said on Monday.
Standard-sized needles failed to reach the buttock muscle in 23 out of 25 women whose rears were examined after what was supposed to be an intramuscular injection of a drug.
Two-thirds of the 50 patients in the study did not receive the full dosage of the drug, which instead lodged in the fat tissue of their buttocks, researchers from The Adelaide and Meath Hospital in Dublin said in a presentation to the annual meeting of the Radiological Society of North America.
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