iCount

On vacation, and I miss all the good stuff. Well, here's some funnies for the AB.

by Divorced one like Bush (noreply@blogger.com) on August 28, 2008 04:05 PM

Wow:

John Goodman, president of the National Center for Policy Analysis, a right-leaning Dallas-based think tank. Mr. Goodman, who helped craft Sen. John McCain’s health care policy, said anyone with access to an emergency room effectively has insurance, albeit the government acts as the payer of last resort. (Hospital emergency rooms by law cannot turn away a patient in need of immediate care.)

“So I have a solution. And it will cost not one thin dime,” Mr. Goodman said. “The next president of the United States should sign an executive order requiring the Census Bureau to cease and desist from describing any American – even illegal aliens – as uninsured. Instead, the bureau should categorize people according to the likely source of payment should they need care.

“So, there you have it. Voila! Problem solved.”

An emergency room does not provide cost effective treatment. You cannot get mammograms at an emergency room. You cannot get chemotherapy in an emergency room. You cannot get regular prescriptions for chronic problems in an emergency room. You cannot get a comprehensive check up that could catch problems before they become emergencies in an emergency room. This is, quite simply, a giant middle finger to every American suffering without health insurance. The McCain camp does not think that there is a real problem and intends to do nothing to help correct it.

by Kevin on August 28, 2008 02:32 PM

Yesterdays release of real income data has received much commentary from blogger. Many ways of looking at the data and many excuses for the data have been proposed. Often I read comments about how the use of household and/or family data biased the data. And there are some validity to the comments that different ways of looking at the data generate certain problems.



Perhaps the simplest way of looking at the data is to use the most basic unit and look at the growth in real per capital income. With this series at least there are no change in the composition of the unit that could bias the data.



As this chart shows growth in real per capita income growth is showing a long run trend of slower growth and in recent years the growth has been especially slow. Out of the past seven years real per capita income fell in five years.



If you do a seven year moving average it shows that since George Bush took office real per capita income growth has been negative. It is the worse economic performance in the modern era.



Way to go Team Bush.

by spencer (noreply@blogger.com) on August 28, 2008 01:59 PM

Jonah Goldberg comments on the Biden speech:

Biden's doing a great job, just as I expected. But come on: To listen to the Democrats you'd think the Great Depression was a day at the beach. There are economic challenges out there, hardships etc, sure. But you'd think we're all living off of puddle water and grub larvae from the way they talk about life in America today. I think at some point the disconnect between the country these people are describing and the country we actually live in is going to undermine the Democrats' credibility.

Gee – I listened to Biden’s speech and he did not say things are worse today than they were in 1932. But then how would Momma’s Boy Goldberg know what transpired way back then – since he loves to argue when someone else is recounting a historical period, Momma’s Boy wasn’t even out of diapers – he had not been born yet. If the folks at the National Review want this campaign to turn on whether folks are really suffering versus whether we are all a bunch of whiners – be my guest. If this is the GOP tone, Barack Obama will win in a landslide.

by PGL (noreply@blogger.com) on August 28, 2008 01:55 PM

The whittlin' demands an immense budget. Perspectives:



Chart 3: FY 2008 outlays:



Defense Discretionary 20.5%: Non Defense Discretionary 20.8% : Social Security Medicare/Medic Aid 20.1%: Other Mandatory 12.8%: Interest 7.9%



Table that defense discretionary has grown faster than non defense discretionary and is a larger part of federal spending than in the former adminstrations.



Table S-3: Defense: FY 2001: $302.5B Fy 2009 Request: $515.4

A cumulative 70.4% increaseover 2001.



The operating costs of the wars are paid off budget with supplementals.



See: Table 6-1 Pg 62 and following:

How could the DoD not be refitting the force structure worn out in Iraq and Afghanistan and then some, a huge sum for procurement? Figure 1 below shows procurement increasing while R&D is declining, see figure 2, I conclude either they are paying a large amount of hedonic inflation or the stuff broke in Iraq and Afghanistan is being refitted and replaced. Most likley they are making the wrong things which don't work.



Figure 1: Total Obligation Authority for for DoD Procurement in constant 2008 dollars from 2001 to 2011 FY 2008 Greenbook, see link





Figure 2: Total Obligation Authority for DoD Research and Development (R&D) in constant 2008 dollars from 2001 to 2011 FY 2008 Greenbook, see link







Figure 3 below concerning Operations and Maintenance (O&M) seems to indicate either the forces are not being trained and maintained (throw away the dusty junker and buy new every so often) or the supplementals are taking on the support for the deployed forces. O&M is also indicative of the army of well paid contractors doing profitable work where they can cut back on Military Personnel (Mil Pers) see Figure 4.



Figure 3: Total Obligation Authority for DoD Operations and Maintenance in constant 2008 dollars from 2001 to 2011 FY 2008 Greenbook, see link









Figure 4: Total Obligation Authority for DoD Mil Pers in constant 2008 dollars from 2001 to 2011 FY 2008 Greenbook, see link





by reader ilsm





From the declines in FY 06 and beyond I think they need a new enemy to turn the growth rate up for whittlin' the warfare machine.



Also from the Greenbook: DoD Total Obligation Authority Constant 2008 dollars over past forty one years:



1967 $504,647M Largest during Vietnam conflict

1985 $52o,241M Largest during Reagan whittling spree

2006 $524,686M A big year for the Global War on Terror. There are more half trillion dollar obligation authorities since 2003 than any other period since the 1950's.



If peace and or sanity ruled the pentagon what would I write about?

-----------------------------

by reader ilsm

by rdan (noreply@blogger.com) on August 28, 2008 09:42 AM

Nieman watch dog carries a summary of some research. The quote here is a summary of conclusions we might use.

Journalists should avoid presenting both sides of a story when one is false - and take into account how readers' brains process the disagreements. The following four rules can guide their efforts.



1. State the facts without reinforcing the falsehood



2. Tell the truth with images



3. Provide a compelling storyline or mental framework for the truth



4. Discredit the source



...



This is one reason that propagandists can be effective simply by creating confusion. Unscrupulous campaign strategists know that if their message is initially memorable, its impression will persist long after it is debunked. (See source amnesia and emotional selection)

by rdan (noreply@blogger.com) on August 28, 2008 05:38 AM

ThinkProgress shows the Wolf interviewing Charles Barkley:

In an interview with former NBA star Charles Barkley today, CNN host Wolf Blitzer discussed the respective tax plans being offered by Sens. Barack Obama and John McCain. This is the on-screen graphic that CNN displayed during the interview, which the network represented as the “average tax bill change”

CNN graphic shows that if you make more than $160,000 a year, the McCain tax proposal gives you a lower tax bill than Obama’s proposal. For the other 95% of the US population, one has to turn to the analysis provided by ThinkProgress. While Charles Barkley was a great basketball player, I have no clue why CNN thought he was some sort of expert on this issue. But even he knew CNN’s graphic was addressing only the impact on the very rich:

Well, I think that if you’re rich — I thank God I’ve been very successful — if you’re rich, you’re always going to be rich. If we pay more in taxes, I got no problem with that. If you’re making that kind of money, a couple hundred thousand dollars here or there are not going to change your life. Let’s be realistic. I’ve been very fortunate and blessed. I did a great job of saving my money. But I got no problem if I’m making that type of money, paying more in taxes to be honest with you.

I think this is where Brad DeLong would plea for a better press corps. Maybe CNN should fire the Wolf and hire Charles Barkley.

by PGL (noreply@blogger.com) on August 28, 2008 05:10 AM

Rachel Weiner does two things. First, she provides a transcript of the latest lie from Team McCain:

ANNCR: Iran. Radical Islamic government. Known sponsors of terrorism. Developing nuclear capabilities to "generate power" but threatening to eliminate Israel. Obama says Iran is a "tiny" country, "doesn't pose a serious threat". Terrorism, destroying Israel, those aren't "serious threats"? Obama -- dangerously unprepared to be president. JOHN MCCAIN: I'm John McCain and I approved this message.

She also shows why this is misleading. But calling Team McCain on their latest lie was not enough for Steve Benen:

I'll give the McCain campaign credit for one thing: these guys are among the most accomplished liars in a generation. Sure, some shameless charlatans have come and gone over the last few decades, but when it comes to genuine, almost pathological, dishonesty, the McCain campaign is setting the bar very high (or low, depending on one's perspective).

It is true that the entire Team McCain campaign has degenerated into Rovian smear tactics which in almost every case is based on one lie after another. I don’t trust our press to do their job as they have not so far. Someone needs to say these loud and clear: Team McCain is offering no particular reason for John McCain to be President – unless having a serial liar as the nation’s leader is a high priority for you.

by PGL (noreply@blogger.com) on August 28, 2008 04:59 AM

(rdan here: I will put part of this post under the fold a little later in the day and delete this comment...I thought more would read it intact at first)



by cactus



This is a follow-up to a I wrote the other day, taking into account some very helpful suggestions from many helpful readers in comments. As noted in the earlier post, this material comes from a book I’m writing with a co-author, and which has benefited greatly from comments and suggestions by many people, including (if not especially) the crowd at Angry Bear.



Essentially, the point of this post is to look at tax rates and see how they affected economic growth (which I will measure as the growth in real GDP per capita) and tax receipts (which I will measure as real tax collections per capita).



Before I go on, one more thing… when I mean tax rates, I don’t marginal tax rates. I mean the actual tax rates, the percentage of income we actually pay in taxes. (I.e., income tax collections / total personal income.) I’m going to call that “Actual Personal Tax Rate.”



The Actual Personal Tax Rate is not a figure anyone ever talks about. Instead, people talk about marginal tax rates. There are a many problems with looking at the marginal rates, first among them that nobody pays the marginal rates. There are also many different marginal rates, there are tax avoidance mechanisms and schemes, and there is the little issue that some marginal rates are less likely to be paid than others. (I understand the Warren Buffet Challenge is still out there.)



But the biggest objection is this – why discuss some theoretical tax rate when we can discuss the amount that people actually pay? (Or don’t, for that matter. Remember – tax evaders are people who evade paying taxes, not who evade paying marginal taxes.)



The IRS provides data on total personal income tax paid as a percentage of the total personal income earned by people in the country. In other words, the data tells us the Actual Personal Income Tax Rate we collectively pay, as opposed to whatever it is we think we pay.



(BTW -links to all data, plus a spreadsheet with a copy of the data, will be provided at the bottom of this post. I would encourage readers to look at the data themselves.)





Let’s begin by taking a gander at what the Actual Personal Income Tax Rate looks like. For consistency with the rest of my book, I’ve broken the data up by presidential administrations. (JFK & LBJ are merged into one, as are Nixon & Ford.)



(Graph 1 of 6)

A few takeaways… First, since 1953, the actual personal income tax rate has never, repeat, never been above 11.6%. That’s right, 11.6% - and that rate was reached in the year 2000. Now, perhaps you, like me, know a bunch of people who say they pay half their income in taxes. Even after throwing in state, local, and Social Security taxes, its hard to reach such a figure. I can only imagine that some of those folks have succeeded in hiring the world’s worst tax accountant and aren’t smart enough to realize it, and the rest are simply massively delusional. (No doubt a few of them will provide comments to this post.)



Another takeaway – Democratic administrations tend to raise tax rates. Carter and Clinton produced year after year increases in actual personal income tax rates. The JFK/LBJ years show a big drop – that was 1964, but both before and after the 1964 drop, tax rates went in a single direction. Conversely, Republicans have been (not surprisingly) more the tax cutting types, especially since Nixon took office. (Note one interesting detail: after a few years in office, presidents Nixon, Reagan, and GW all tempered their original enthusiasm for slashing and burning, perhaps after some David Stockman in their midst managed to notice, as we will see later in this post, that tax cuts have very different effects than advertised.)



So how does the pattern we see emerge? For example – consider Bill Clinton. There weren’t any major changes in tax law until he cut the cap gains rate, but even that shows up only as a one time slowdown in the rate of tax increases. Conversely, George Herbert Walker Bush cut taxes, didn’t he? Well, didn’t he? Wasn’t that what the whole “read my lips” criticism was about?



Well, what causes actual tax rates to rise when Democrats are in office is… enforcement. Enforcement means not appointing people to the top tier of the IRS whose most fervent wish is to see tax rates reduced to zero, unlike many of the Grover Norquist and the frighteningly misnamed “Club for Growth” acolytes that show up when a Republican is President.



Now, the rest of this post is simple. I’m going to show four scatterplots:



1. the average actual personal tax rate in each administration versus the annualized growth in real GDP per capita over the length of that administration

2. the average actual personal tax rate in each administration versus the annualized growth (or shrinkage) in real tax collections per capita over the length of that administration

3. the change in the average actual personal tax rate in each administration versus the annualized growth in real GDP per capita over the length of that administration

4. the change in the average actual personal tax rate in each administration versus the annualized change in real tax collections per capita over the length of that administration



A few comments before going on. First, the figures for the change in average actual personal tax rate will be different than in my previous post. That is because in the previous post, I was looking at the annualized change in the actual rate, whereas this time around, I decided that since the tax rate was already in percentage terms, it made more change to simply look at the average yearly change.



That is, last time around, for, say, the Carter administration, I calculated the change in tax rates from the year before he took office (1976: 9.62%) to his last year in office (1980: 10.85%) as [(10.85 / 9.62) ^ (1/4)] -1, or 3.06%. The problem is, a number of people told me they found this to be confusing, so instead, I’m simply taking 10.85, subtracting 9.62, and dividing by 4. However, I am still annualizing the changes in real GDP per capita and real debt per capita, as those figures are in dollars, rather than percentages.



Here’s Scatterplot 1:



(Graph 2 of 6)



What does this graph fail to show? Well, it does not show that administrations with the highest tax rates produce the fastest growth. In fact, offhand it seems to show the exact opposite, even among Republican administrations. For example, the two fastest growing Republican administrations also had the highest actual personal tax rates.



Here’s Scatterplot 2:

(Graph 3 of 6)



If you can look at this and conclude that higher tax rates result in less real tax collections coming in, congratulations – there’s a volunteer job waiting for you in the McCain camp.



Here’s Scatterplot 3:



(Graph 4 of 6)



As we saw in Scatterplot 1, higher average tax rates don’t seem to produce slower growth. Not surprisingly, therefore, raising tax rates doesn’t do it either. Of the four administrations overseeing the fastest growth rates in real GDP per capita, only one (Reagan) cut tax rates. Of the five administrations overseeing the slowest growth rates in real GDP per capita, all five cut tax rates.



Here’s Scatterplot 4:

(Graph 5 of 6)



Here we see the nonexistence, if not the contradiction of the “raising taxes decreases tax receipts” storyline.



Since this post looks at the Republican claims about the effect of taxes on the economy, I should at least take a peak at the most up-to-date state of the art Republican claims, as put forward by the Republican standard bearer, John McCain. McCain tells us he will cut taxes, and that low taxes are the key to growth. He also tells us that Obama is for plenty of new taxes, and that these tax hikes are going to stifle the economy. So below is one more chart – its basically scatterplot 3 repeated, but this time I added in two shaded boxes. The first represents the area that a President Obama will fall into, according to McCain – tax hikes and slow growth. The second represents that a President McCain will fall into, according to McCain – tax cuts and rapid growth. Here’s the graph:

(Graph 6 of 6)



I’m not saying one of those two boxes ain’t gonna happen, but we have yet to see anyone fit into the Obama box, and Reagan is the only President so far in the red quadrant. I can understand McCain believing both boxes make sense – he’s got that rep for being mavericky and all. But what’s up with the Economists for McCain?



A few final points before I wrap this up:

Data for the actual tax rate is here.

Data for real gdp per capita and population is obtained from NIPA Table 7.1

Data for real tax collections comes from OMB Table 1.3.

I've also downloaded all the data and links into this Google Spreadsheet.



Many of the objections usually raised by those who don’t like the results have previously been disposed of, and a collection of the assorted disposals can be found here. I apologize for not having any way to access them selectively, at the moment.



Last thing: I know what a pain in the butt it is to upload these graphs into blogger, so I’m very grateful to Dan for putting up with a guest post with six of them!

---------------

by cactus

by rdan (noreply@blogger.com) on August 28, 2008 04:47 AM

Is the Washington Post trying to rival the National Review?

Mr. Obama's tax increase would not take effect until 2018 -- yes, after both terms of an Obama presidency. One argument for this delay is that raising Social Security taxes now would just allow lawmakers to spend more of the existing surplus on other things; it's not until 2018 that the income from payroll taxes would fall short of paying promised benefits. But surely President Obama could find some way to bring in money sooner without letting Congress fritter it away on other needs.

I know that the Federal government has seen its total Federal debt rise relative to GDP and has a rather large general fund deficit but how on earth does this place the Social Security Trust Fund on the edge of bankruptcy. Let’s turn the microphone over to Dean Baker:

The Post is complaining yet again that politicians are unwilling to deal with a Social Security shortfall that is first projected to hit in 2049, when John McCain will be 113 years old. To try to makes it case sound more compelling it refers to the date 2018 when the Social Security trustees project that tax revenues will first be inadequate to meet benefit payments. Of course 2018 is completely irrelevant to the finances of the program. At that point the program is projected to have accumulated more than $5 trillion in government bonds. But the Post wants to scare readers to advance their Social Security agenda so they trot out 2018 as though it is a date that anyone needs to worry about.

Gee – the Trust Fund will have $5 trillion in bonds earning interest. If the interest rate is 5 percent – then the fund will have $250 billion in interest income so the fund will likely continue to accumulate assets even in 2018 or 2019 as the difference between payouts and payroll contributions will be less than its interest income. That the Trust Fund is in crisis is almost as stupid as this:

Are the Denver Dems downing the stock market today? The Dow is off 230 points, starting right from the get-go.

Stock market prices fell during the day while those speeches were at night. Not only is Larry preaching Pre Hoc Ergo Propter Hoc nonsense, there was no real news in any of those speeches last night. Steve Benen has more on Kudlow the Klown.

by PGL (noreply@blogger.com) on August 28, 2008 01:34 AM

My father grew up in a country where African Americans were, by law, forced into separate and unequal lives. They were lynched, cheated, driven from homes, kept from jobs, denied their rights, and abused by te justice system. They lived as refugees in their own nation. Today, an African American was nominated for the Presidency of the United States by one of the two major political parties. Today we are reminded that the world as it is does not need to be accepted, that the good guys do not always lose and that we can make things better.

This is not the end of the fight for equality. This is not the promised land. But it is a step, a large step, closer. On most days I settle for the Democratic party because of the way our political institutions force that choice upon me. But tonight, tonight I am deeply proud to be a Democrat.

by Kevin on August 28, 2008 01:30 AM

Hey, remember back in February, when Serr8d used disingenuous graphs to try to argue that melting polar ice wasn’t a problem? And remember how I subsequently pointed out the flaws in his arguments, and noted that the late summer ice levels are what’s important? Well, lookie here:

The National Snow and Ice Data Center in Boulder, Colo., reported that the extent of sea ice in the Arctic is down to 2.03 million square miles. The lowest point since 1979 is 1.65 million square miles set last September.

With about three weeks left in the Arctic summer, this year could wind up breaking the previous record, scientists said.

Arctic ice always melts in summer and refreezes in winter. But over the years, more of the ice is lost to the sea and with less of it recovered in winter. While ice reflects the sun’s heat, the open ocean absorbs more heat and the melting accelerates warming in other parts of the world.

…snip…

“We could very well be in that quick slide downward in terms of passing a tipping point,” said center senior scientist Mark Serreze. “It’s tipping now. We’re seeing it happen now.”

Within a few years — “five to less than 10 years” — the Arctic could be free of sea ice in the summer, said NASA ice scientist Jay Zwally.

“It also means that climate warming is also coming larger and faster than the models are predicting and nobody’s really taken into account that change yet,” he said.

Other scientists, including James Hansen, director of NASA’s Goddard Institute of Space Studies in New York, agreed. Hansen in a Wednesday e-mail said the sea ice “is the best current example of a tipping point.”

Last year was an unusual year when wind currents and other weather conditions coincided with global warming to worsen sea ice melt, Serreze said. Scientists wondered if last year’s melt was an unusual event or the start of a new and disturbing trend.

This year’s results suggest the latter because the ice had recovered a bit more than usual thanks to a somewhat cooler winter, Serreze said. Then this month, when the melting rate usually slows, it sped up, he said.

Of course, these are people who study this sort of thing for a living, so what the hell do they know? Obviously, they’re just politically-motivated alarmist hacks…

Cross-posted at Tennesseefree.

by tgirsch on August 27, 2008 08:05 PM

In honor of Economy Day at the DNC, the Tax Foundation sent me an e-mail trying to convince me that the corporate income tax is terribly unfair to average Americans. The pitch is based on a tax incidence study that claims that in the lower quintile of cash incomes, personal income taxes averaged $171 in 2004, whereas the effective bite of corporate income taxes was $271. Including payroll and excise taxes, they figure that the bottom 20 percent paid on average $1,684. All other figures in the post are from the Tax Foundation.



As an aside, at least the estate tax burden for the bottom quintile was estimated to be $0. For the second quintile, the estate tax burden was $0. At the median, the burden was $0. In the fourth quintile (i.e. up to the 80th income percentile), the average estate tax burden, according to the Tax Foundation, was $0. By advanced mathematics, the maximum estate tax burden for the bottom 80% of the U.S. income distribution was — you guessed it — $0. That goes to show the power of marketing.



Before you start wringing your hands about the corporate income tax shafting the poor, a working paper [PDF] that serves as the source of the statistics is honest enough to note that the net fiscal incidence is the difference between government spending and tax payments. The news item only gives the payment side, but the paper actually provides the benefits and allows calculation of the net incidence.



It turns out that by the Tax Foundation economists' calculations, that diabolical tax system took that $1,684 only to return $24,860 in spending to bottom-quintile earners, including expenditures on what the authors tally as public goods. Average net benefits don't turn negative until the fourth income quintile, and the top quintile, with the largest net "burden," faced an effective total (average) tax rate of 34.55 percent (24.25% federal). That includes income, payroll, excise, property, and estate taxes at all levels, again in the account the Tax Foundation is peddling.



Some of you may think that's unconscionable confiscation, but I prefer to think of the working well-to-do and the rich as having a glass that's right around 2/3 full. And even without being anywhere close to the nosebleed sections of the distribution, I can tell you that if you take the pessimistic view of the tax incidence on the well-to-do and aren't in the top fifth, I'm not trading places to free myself of that "burden." Just saying.

by Tom Bozzo (noreply@blogger.com) on August 27, 2008 02:59 PM

Here is an interesting water problem for coastal folk. Almost as interesting as who owns the land at low tide or high tide for beach properties.

by rdan (noreply@blogger.com) on August 27, 2008 12:24 PM

by ilsm





If the war machine were not for the jobs and the PAC's it may be more useful than whittled beaks.



New England politicians saved jobs, diverted funds from better uses, many outside the military industrial complex. The Navy will build a third Zumwalt class destroyer. The Navy does not need a destroyer which is too small for the radars needed for fleet air and missile defense and which cannot fulfill the anti submarine roles either. The Navy, to their credit, had wanted to use the money to build a larger more versatile existing class of ship which could do the missions.



Boston Globe, August 20, 2008: Lawmakers' Influence Felt In Destroyer Decision Critics call reversal a make-work program.

By Bryan Bender, Globe Staff

"We saw it with the B-1 bomber, we saw that with the Seawolf submarine," said Winslow Wheeler, a former Republican congressional aide who has become a vocal critic of the defense budget process. "This shows the depths to which Congress has sunk. It has become bipartisan to see the defense budget as a jobs programs. They see it as key to their own political survival. So the nation is to pay for overpriced, ineffective weapons because it helps a politician stay in office."

"According to Loren Thompson, a defense analyst at the Lexington Institute, an Arlington, Va., think tank, the project would be headed toward extinction if not for powerful New England politicians."

So many beaks are whittled for the congress?

by rdan (noreply@blogger.com) on August 27, 2008 12:02 PM

by: Divorced one like Bush

at the beach on vacation Ha!



Gee the economics profession is ignoring labor. I wonder why. Could it be who we follow? It's not like we don't quote old Adam often. Free market and ghost hand ideas are mentioned all the time as we follow Milton:

According to The Economist, Friedman "was the most influential economist of the second half of the 20th century…possibly of all of it".[2] Former Federal Reserve Board chairman Alan Greenspan stated, "There are very few people over the generations who have ideas that are sufficiently original to materially alter the direction of civilization. Milton is one of those very few people."[3]

I would add, a mind who focused on....wait for it.... MONEY.

“Monetarism is a school of economic thought concerning the determination of national income and monetary economics. It focuses on the supply of money in an economy as the primary means by which the rate of inflation is determined.”



In an interview at Right Wing News by John Hawkins (sorry no date)of The Man who is introduced thusly:

But I think the fact that Mr. Friedman finished in a tie for the 15 slot when RWN had conservative bloggers select, "The Greatest Figures Of The 20th Century" gives you some idea of Mr. Friedman's stature.

we get responses to the questions by Mr Influence of the 20th century of:

From my point of view, we in the United States have gone overboard in respect to the extent of regulation and detailed control of labor standards, industry, and the like. It's bad for us, but fortunately we had two hundred years of relatively free development to provide a strong basis to sustain the cost.



Well, they only consider half of the problem. If you move jobs overseas, it creates incomes and dollars overseas. What do they do with that dollar income? Sooner or later it will be used to purchase US goods and that produces jobs in the United States.



If the White House were under Bush, and House and Senate were under the Democrats, I do not believe there would be much spending.



How do you get them together by forming industrial cartels and keeping prices and wages up? That's what Roosevelt's policies in the New Deal amounted to. Essentially, increasing the role of government, enhancing the monopolistic position of labor, and creating as I said before the equivalent of price fixing cartels made things worse.



Well, who would provide the funds, the capital, and the entrepreneurship for the new industries? In a world in which there were no rich people, how would you have ever gotten the capital to produce steel mills or automobile plants? You can do it through the state, but the world tried that with the Soviet Union.



Well, Social Security is having a bad effect now through the tax system.

So we have a profession which followed a man whose focus was minimally on labor and by the above quotes maybe even condescending to labor as a factor in economics and wonder why the profession of this man has de-emphasized the subject? HELLO!!!!!!!!!!!!!!!!!!!



Maybe the profession really only needs to follow one piece of advice from Mr. Milton:

John Hawkins: Are there any political websites you'd like to recommend to our readers?



Milton Friedman: No, I don't really follow any political websites. I think they'll do better reading theWealth of Nations (laughs)...

Ok, lets read the words of the originator of the ghost hand theory:

"Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniencies, and amusements of human life. But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities. The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."[3]

If you will allow me, let's put a picture to Mr Smith's concept as it relates to why the economics profession needs to follow this one piece of Mr Influence's advice.



Then there is this. And this as to why the economic profession needs to study this. Of course if the profession would just think about how the majority (like super duper majority) acquire their money, then maybe they would have not passed on this currently wide open, you can own it, make a name for your self aspect of money making.

by Divorced one like Bush (noreply@blogger.com) on August 27, 2008 03:13 AM

Stephen Karlson, who must have eaten some bad clams or something, points to a bit of infrastructure frothing-at-the-mouth from greater Wingnuttia. Dan Riehl found Obama saying this at a campaign appearance:

"Their ports, their train systems, their airports are vastly superior to us now, which means if you are a corporation deciding where to do business you’re starting to think, “Beijing looks like a pretty good option. Why aren't we doing the same thing?”

Riehl asks:

Did Obama Just Lose The Election?

No.



He writes:

Obama is either incredibly naive, terribly misinformed, a communist, just flat out dumb or all of the above to be caught on tape making a statement like that.

Contrast George W. Bush, caught on a government website saying:

My view of China is, is that it's a great nation that's growing like mad.

So IOKIYAR. Bonus from the same (April 2005) appearance:

I will tell you with $55 oil we don't need incentives to oil and gas companies to explore. There are plenty of incentives. What we need is to put a strategy in place that will help this country over time become less dependent.

At that point, Bush had only about 18 months of single-party rule to put a strategy in place. "Drill here and drill now" Republicans are clearly just covering up for their own lack of action when it was obvious more than three years ago that action was needed!



Meanwhile, Possession of "listening comprehension" makes it obvious that the antecedent of Obama's "same thing" is "investing massively in infrastructure." Now, lots of China's infrastructure actually is not so advanced, as Karlson tells the rail-minded and some of Riehl's commenters state more plainly. However, China is still developing, is poor on average, and dirt poor where it's poor. The U.S. is advanced, rich on average (by global standards), and extremely rich where it's rich. So if we're going to use China as a yardstick for our accomplishments, it should be China at its most advanced, not its least. There, but for our own fecklessness and lack of thrift, we should be able to go.

by Tom Bozzo (noreply@blogger.com) on August 27, 2008 01:44 AM

Billy asked me as a point of interest to alert people to the show for Millenium age voters. He is pro McCain, but his partner on air Stephen is pro-Obama. It is intended to be educational but not neutral as in a classroom. I shall be watching sometimes to see how they do. (Bios on the site)

by rdan (noreply@blogger.com) on August 27, 2008 01:24 AM

Via C&L, via Tennesseefree:

Ha! I wonder if they have a similar one in Denver…

by tgirsch on August 26, 2008 03:45 PM

You decide. More on the Clinton supporter in the McCain ad. As far as I can tell, this is sour grapes, and she’s doing it out of pure spite. If she could name just two substantive issues where McCain’s position is closer to Clinton’s than Obama’s is, I might understand. Of course, it would be foolish to expect anyone in the media to actually ask that question.

Quoth the woman:

every time I tried to learn about [Obama] he seems to change his mind on a lot of the issues

Err, have you ever “tried to learn” about McCain? He’s “changed his mind” on everything from tax cuts to torture to social security privatization. And it’s no coincidence, I think, that he’s changed his mind in the less-mavericky direction. A partial list of McCain flip-flops.

Cross-posted at Tennesseefree.

UPDATE: Did anyone see The Daily Show’s bit on the Clinton Supporters for McCain? They actually talked to a child behavior expert about how to deal with kids who refuse to play nice, then tried the tactics on the Clinton supporters. Hilarious!

by tgirsch on August 26, 2008 03:31 PM

Warning: Racist Humor Inside.

by tgirsch on August 26, 2008 02:01 PM

That was a very, very good speech. Despite the campaign ads and the talking heads nonsense, the Obama’s are an incredible, uniquely American story. They came form less than privileged backgrounds — no Admiral in the family to smooth the way for Barack, no rich daddy to make things easier for Michelle — and they worked very hard to be where they are. It is a remarkable, deeply American story that resonates, I think, with people who have had to work for a living, have had to struggle to get where they are in the world. Barack Obama, despite the opinion of the millionaire wignut welfare brigade, is as American as apple pie. Michelle Obama did a fantastic job reminding people of that last night.

But her speech was more than just that. When she talked about building the country that should be, she was getting to the heart of the campaign. John McCain really is just more of the same. he basically wants to continue the foreign policy and economic policies that the Bush Administration has followed for the last eight years. he thinks things are fine, with maybe a little tweaking. The country as it is, according to McCain, is basically as it should be. I don’t think that, obviously. hard work doe snot pay as it should. Our foreign policy is stupid and counter-productive. Discrimination of various forms are still a large problem. The rich are getting richer and everyone else is getting poorer. It is getting harder to send your kids to a doctor or to a college. The world should not be this way.

And it doesn’t have to. No matter how entrenched the interests seem to be, no matter how much money and political power the status quo has, not matter how long this predator state has been in existence, it does not have to be this way. It can be made to change. Bowing to a crown, keeping another man as a slave, holding a women in a house as a virtual child: at one time, men could say “that is the way the world is”. And now they represent the way the world was. It does not have to be this way. It is, I think, one of the most powerful notions in human events and the Obamas seem to understand that at a fundamental level. That, more than the stories of their lives, more than the genuine emotion with which Michelle talked about their past and their dreamed for future, more than even their adorable kids (okay, maybe not more than that), is what struck me about Michelle’s speech. Their lives have taught them that the worlkd is not as it should be and that we can do something about that.

by Kevin on August 26, 2008 01:17 PM

Michael Perelman at Econospeak and here has thoughts on the role of the worker in economic theory I found interesting.

An August 8, 2008 search of 73 economics journals collected electronically in the JSTOR database revealed how marginal work, workers, and working conditions has become in economic literature. Of the articles published since January 2004, the term "working conditions" appeared in only 12, not counting four more substantial articles in the Review of African Political Economy, a journal rarely cited by mainstream economists. Of the remaining articles, three concerned the problem of retention of teachers. Another had a footnote that observed that people can learn about working conditions from websites. One article noted that faculty members in colleges and universities join unions to improve working conditions. A book review considered whether globalization could improve working conditions. Two articles mentioned legislation that took working conditions into account. One article disputed that child labor abroad experienced hideous working conditions. Another cited a mid-nineteenth century British economist who said that factory working conditions were good.

....

At the same time as questions of labor were disappearing, economics began to elevate the status of investors' financial claims, insisting that owners of this form of property had rights equal to those of owners of real goods, such as land or factories. Even something as ephemeral as "good will" became recognized as property.

Peter Dorman at Econospeak added his thoughts on child labor, and has published Markets and Mortality.



It is inherent in our trade agreements (WTO, bi-lateral and regional, and internal) so much so that few people in general think it is missing. The best retort in comments at Econospeak had to invoke contract law as the contradiction to the thesis.

by rdan (noreply@blogger.com) on August 26, 2008 12:40 PM

I was anxious to hear Michelle speak tonight.  I was concerned that not being a professional, she might not be too effective in communicating her message.  Needless to say, those concerns have been soundly put to rest.  She certainly put Nancy Pelosi to shame.

I wonder if we could have a debate between Cindy McCain and Michelle.  That would be a very interesting experience.

by Ted on August 26, 2008 03:15 AM

Sebastian of Pro-Gun Progressive gets his panties all in a twist because Lewis Black — a vocal critic of gun rights — had some fun at the expense of gun rights on a comedy show. (Sample line: “I don’t have the energy to google up the location of a gym, let alone come to your house and wrestle your guns away.”) And it’s not like they went soft on PeTA while daring to go after the Sacred Church of the NRA. In any case, the “expert witness testimony” at 0:43 of the video below is funny, I don’t care who you are.

I mean, I knew that the real serious gun rights activists had a rifle stick up their collective ass, but when you can’t take being the brunt of a few jokes on a show that treats everything that way (and I do mean everything — they’ve lampooned everything from Tila Tequila to the Catholic Church), then I humbly (or, maybe not-so-humbly), that may suggest that it’s time for a nice warm glass of Get The Hell Over Yourself.

H/T: Say Uncle

(Full disclosure: I thought PeTA should have been declared the root of all evil, but that’s because I thought Tompkins was funnier.)

by tgirsch on August 26, 2008 02:38 AM

Since I'm cash-strapped for the next few years, I'm looking for ways (legally, semi-legal, other) to make money.



Thank the L-rd for WaMu.



Let's see: HELOC is at Prime - 0.76%, currently 4.24%. So I can:

1. Take $25,000 from HELOC.
   
   
2. Invest in FDIC-insured WaMu CD for 12 months at 5.00%.
   
   
3. Profit until the fourth 0.25% rate hike, which should be at least a year.

Make $190, give or take, risk free if nothing changes.



Hmmm, maybe I should make that $50K. In the form of my new motto: WWTD? (What Would Tyler Do?)

by Ken Houghton (noreply@blogger.com) on August 26, 2008 02:00 AM

Josh Marshall reminds us of a pledge John McCain before Chris Matthews. Greg Sargent notes that Team McCain endorsed the “Swift-Boating Ayers spot”. But why are we surprised? McCain has been lying about just about everything during the campaign.

by PGL (noreply@blogger.com) on August 26, 2008 01:29 AM

Poblan Unico jamás será vencido



Extremely regular readers of AngryBear will have noticed that I became a guest contributor a while ago. Then I vanished. The reason is that I have become obsessed with Presidential Polling and don't have much original to say about it. A dialog from last night between me and my 11 year old daughter



11) dad what are you thinking about

rjw) mmm

11) Obama right ?

rjw) yeah

11) why don't you ever think about anything else

rjw) mmmm.



Now about polling. My favorite site (by far) if www.fivethirtyeight.com. Very very impressive. I call it the silver standard, because, Nate Silver (aka Poblano) being a Democrat, would never support crucifying mankind on a cross of gold.



fivethirtyeight simulates elections and calculates a probability distribution for electoral votes won. He (they?) consider(s) both state level and nation wide disturbances. They note that polls tend to narrow over time. They estimate pollster reliability with data from actual voting (mostly primaries I think).



As of recently he also estimates pollster fixed effects or house effects "the tendency of certain polling firms' numbers to tend to lean in the direction of one or another candidate". This happens to be very important largely because the most prolific pollster -- Rasmussen -- has, relative to other pollsters a tendency to lean pro-McCain. They also had excellent performance in the primaries and count extra.



My one concern about fivethirtyeight.com is that the calculations are very complicated and not at all transparent. I would like to see some reporting on a larger set of simulations done with different assumptions. For example, the house effects correction seems to me to be conservative and I would like to see simulations with a more aggressive correction.

3) The house effect adjustment is enacted only in cases where we are at least 90% certain that there is a house effect. Even in these cases, we hedge our bets a little bit, by subtracting 166% of the standard error from the house effect coefficient.

I would rather see with/without house effects and the with house effects estimates with just the point estimates no setting to zero if not significant and no subtracting 166% of a standard error.



Silver links to and praises an article on house effects in national polls written by

Charles Franklin at pollster.com (my second favorite site) . This is completely separate evidence of house effects, since fivethirtyeight's raw data are state level polls. Rasmussen polls are significantly better for McCain than average polls.



much more after the jump.







OK here I just let go.



1. My problem with pollster.com is that their trend calculations are waaaay too complicated. They use a Loess trend estimate (trend value at t estimated with weights depending on how long before/after t the poll was taken then report the fitted value for time = t). This means that new data shifts past values of the trend line which freaks me out. It also means that they say Obama is ahead in Ohio because it is about tied now and he used to be behind so they are convinced there is a significant trend. Also the initial estimates downweight outliers (not explained exactly how). I do not agree with doing this (see below). The calculations might be optimal but they are much too complicated to understand. I'd rather a point estimate based on averaging (weighted regression on a constant and no trend) and an estimate of the recent slope with a standard error reported as a number). Still, since I can get the recent simple average from realclearpolitics.com I have no serious complaint (just one more url www.realclearpolitics.com to type I do *not* hotlist pollsters)



2. What happened to the Gallup anomaly ? For years I have been reporting on the Gallup likely voter anomaly -- Gallup polls are better for Republicans than other polls. In the Pollster analysis, Gallup is much less pro-McCain than is Rasmussen and is 4th best for McCain. The reason is simple. The Gallup anomaly is an aspect of the Gallup likely voter filter and the vast majority of Gallup polls reported so far are from the Gallup tracking poll of registered voters.



As Gallup explains every 4 years, their likely voter filter is not reliable long before the election. Gallup has been forced by the competition to report likely voter results earlier than they used to (I remember way back when). There was a very large huge Gallup likely voter anomaly in the poll conducted July 25-27 (click and search for USA Today in which Obama lead among registered voters and McCain lead 49 to 45 among likely voters. The likely voter pool was strongly biased against the young compared to actual votes in past presidential elections.



Gallup has an excellent record predicting elections. What this means is that the last Gallup polls before the vote are very accurate. That is, the likely voter filter works in late October. This does not mean that it works in August.



What is going on ? It is simple. Admirably, Gallup has stuck with the same method they used long long ago. This is transparent and honest (they aren't using their success in the past with one method to justify their claims based on a new method). It is almost comprehensible how they decide who is a likely voter. The filter is based on answers to simple questions. from the Gallup FAQ

"These questions include asking whether or not the individual knows the location of his or her voting place, whether or not the individual voted in the past election, how closely the person is following the election, and so forth."

Now obviously knowledge of the location of the voting place in August and in October will differ -- some people learn where it is between August and October. It is not surprising that someone who claims he or she will certainly vote but doesn't know where to go to vote in late October is not likely to vote. In August, the answer has, I would suspect, much more to do with how long the voter has been registered to vote at his or her current address than the probability that he or she will vote. The use of that question creates a selection against younger voters (and people who moved recently) stronger than the correlation of age and not moving and voting.



Even the assumption that eligible adults who are not currently registered will definitely not vote is dubious in August. There is still plenty of time to register.



In any case the evidence that the Gallup filter works in October tells us little about whether it works in August (as Gallup insists whenever asked and often when not asked).



There will be Gallup likely voter polls. There will be complaints about the Gallup anomaly. Democrats will be alarmed at Gallups excellent record (based on late October polls). It is all very simple and right there on the FAQ.



So what's with Rasmussen ? Here a key feature is that they assume that partisan inclination (Dem Rep Independent) changes slowly so that differences from poll to poll in partisan inclination are mostly noise. They reweight so that the partisan inclination matches the average over the past 3 months.

Like all polling firms, Rasmussen Reports weights its data to reflect the population at large. Among other targets, Rasmussen Reports weights data by political party affiliation using a dynamic weighting process. Our baseline targets are established based upon survey interviews with a sample of adults nationwide completed during the preceding three months (a total of 45,000 interviews). For the month of August, the targets are 40.6% Democrat, 31.6% Republican, and 27.8% unaffiliated. For July, the targets were 41.4% Democrat, 31.5% Republican, and 27.1% unaffiliated (see party trends and analysis).

Now there is no need to smooth that much given the sample size (especially because Rasmussen could use data from other pollsters on party affiliation). This also shows the difference between a report which is optimal for the pollster and one which is optimal raw material for meta-analysis (here just fancy talk for averaging across pollsters). Weighting to make party affiliation fit a target reduces noise (increases precision) at the cost of introducing possible bias (if true support for the parties has shifted over time). For one poll the optimum balance may be to weight. However if one averages many polls (many Rasmussen polls or many polls across pollsters who do the same thing) the noise averages out and the bias doesn't.



Now Rasmussen polls could be corrected by taking a more recent average (also across pollsters) of party affiliation and then using the internals (really simple like 90% of Dems for Obama and 90% of Republicans for McCain and easily available) to calculated a desmoothed Rasmussen based number.



The fact that they are making a very strong, very dubious assumption and have results which are strongly significantly different from the average pollster should give Rasmussen pause.



Finally note how quiet times are good for McCain. In quiet times the averages across pollsters are dominated by the Rasmussen and Gallup tracking polls. They both are more favorable to McCain than the average poll. Some of the alarm (among Democrats hope among Republicans) about Obama's vacation, McCain's celebrity campaign etc is based on this (I don't know how much).

by Robert (noreply@blogger.com) on August 25, 2008 11:00 PM

Ladies and gentlemen, Tyler ("So Right It Hurts") Cowen presents the following, er, argument:

Excessive bank regulation is another danger. To be sure, the regulatory structure for financial institutions failed in the current crisis, and change is in order. But we shouldn’t reform in a way that will discourage bank lending and weaken the tie between savings and investment. Banks are already allergic to very risky mortgages — probably excessively so — and we shouldn’t overreact by punishing them for past mistakes. [emphasis mine]

Somewhere, an Economic Angel had its wings rent asunder.

by Ken Houghton (noreply@blogger.com) on August 25, 2008 09:37 PM

I spend a good deal of time talking about 'Nothing' as a plan for Social Security. You can make an excellent numeric case for 'Nothing' in the short run VIII: Calculating the Cost of Inactivity and you can make a reasonable economic case for 'Nothing' in the long run II: The Shape of Low Cost. For that matter you can make a pretty good case that even if the Trust Fund does run out at some time in the future that it may not be that big a deal. For example the CBO just released their most recent projection last week in Updated Long-Term Projections for Social Security and tell us (bolding mine)

CBO’s projections indicate that future Social Security beneficiaries will receive larger benefits in retirement— and will have paid higher payroll taxes—than current beneficiaries do, even after adjustments have been made for inflation and even if the scheduled payments are reduced because the trust funds are exhausted.

This is because the schedule of benefits is set up so that initial benefits track the overall growth of real wages over your work life, in this case the rising tide DOES lift all boats.



But I have to admit that 'Nothing' is not a particularly satisfying plan. It is all well and good to say 'So what 78% (Trustees) or 84% (CBO) of the scheduled benefit is better in real terms than what my Mom gets today' but somehow that leaves something lacking. So I want to propose an action plan based on real numbers and set a time when we might want to move on Social Security in an effort to either eliminate the projected benefit cut or smooth and extend it out. Details and numbers under the fold.



I attempted to make the case in XXXVIII: Financing Shortfall that the doom and gloomers who insist that paying back the Trust Fund will require massive tax increases or huge program cuts or unsustainable borrowing are simply ignoring the numbers, in inflation adjusted terms they never approach typical Bush II level unified deficits:

all these numbers represent transfers from the General Fund. Numbers are in billions.



Year:::::Current:::::Constant 2008 dollars

2017:::$24:::::::::::$19

2020:::$107:::::::::$77

2025:::$275:::::::::$172

2030:::$471:::::::::$257

2035:::$656:::::::::$313

2040:::$808:::::::::$335

2045:::$0::::::::::::$0

Now there is no doubt that given reasonable control on the General Fund side that we could afford to finance these numbers. On the other hand we have other societal needs. So I suggest we pick a target figure of $200 billion in 2008 dollars as the limit for what we will willingly want to transfer from the General Fund (or roughly the one year cost of the current wars). Which suggests a target date for implementation right around 2026-2027. Which suggests firing up the policy shops around 2023 (my scheduled date for retirement, maybe I can land a consultant gig).



Now lets turn around and see what current law requires. The Trustees use two different official measures to track the health of Social Security. One is Long Term Actuarial Balance which is the gap between future income and future cost reported as the amount of payroll tax needed to deliver 100% of the scheduled benefit, or that amount expressed as a percentage of GDP, or as a Trust Fund ratio all over a 75 year window. The official target is a TF ratio of 100 which is to say a TF balance equal to one year of projected cost in each of the next 75 years. The second measure is Short Term Actuarial Balance which is always reported in terms of TF ratio over a ten-year window. If the Trust Fund is projected to have a TF ratio of 100 or more in each of the next ten years then the overall system is deemed in Short Term Actuarial Balance. If the TF fund is projected to fail that test the Trustees are mandated to urge Congress to act to bring it back in. Which is to say that Short Term Actuarial Balance is the canary in the coal mine.



Currently the Trust Funds individually and combined are in Short Term Balance so under the law we can (and in my view should) wait and see what eventuates. But under current projections when would the system fail the actuarial test?

Table IV.B3.—Estimated Trust Fund Ratios, Calendar Years 2008-85[In percent]

Well a little interpolation shows us going below a TF ratio of 100 in 2036 meaning that if outcomes do in fact come in in line with Intermediate Cost that the Trust Funds will fall out of Short Term Actuarial Balance in 2027, year ten being the trigger.



So both from the financial-economic side and the legal-technical side we end up with an action date under IC projections of 2027.



Now this date is obviously fluid and has been moving out in time. (And if we examine Low Cost we see that the system never fails the test and in fact may need to have its taxes cut back a little to keep the TF ratio at least under 400 and ideally back towards a sustainable 100 over the long term.) But at least it is something to hang our hat on. When anybody asks 'What is YOUR plan for Social Security' the answer is 'We are targetting the official measure of Short Term Actuarial Balance. If it looks to be failing that test four years out we will start planning with an implementation date of the year the system falls out of actuarial balance. Meanwhile we will simply monitor the numbers as they come out.'



Sure a little wonkish but it would show that supporters of Social Security are not just working on a hope and a prayer but instead imposing realistic tests on the system. My personal belief is that the date the system is projected to fall out of actuarial balance will continue to recede, but belief doesn't buy you much. On the other the numbers are speaking to us and they are telling us we need to do nothing about Social Security before 2027 and plan nothing before about 2023. Meanwhile we have plenty of serious problems in other areas to worry about.

by Bruce Webb (noreply@blogger.com) on August 25, 2008 05:53 PM

So its Biden. better pick than most. He is wrong about a lot of stuff, staring with the bankruptcy bill, but he is correct about a lot too, starting with things like FISA. I think I like this pick. Biden is too old to run for the office himself, so he doesn’t prevent a progressive voice from winning the nomination in 2012 that a younger centrist might have. He is better on most issues and is more competent than most of the other names floated, especially Bayh and Kaine. The press, bless their myopic little hearts, seem to love him so that might offset some of the media McCain worship that is already intolerable. And, most importantly, he is a funny, sarcastic guy perfectly willing, even eager, to play the bull dog role. Obama could have done better, but he certainly could have done worse.

by Kevin on August 25, 2008 04:14 PM

It has officially jumped the shark. See if you can spot why!

by tgirsch on August 25, 2008 03:40 PM

Nothing is lamer than when one of the “reasonable” conservatives tries to make a fact-based argument about politics. George Will tried it today and is now still wandering around the Science and Nature section of Barnes & Noble, gibbering like a loon.

Obama recently said that he would “require that 10 percent of our energy comes from renewable sources by the end of my first term — more than double what we have now.” Note the verb “require” and the adjective “renewable.”

By 2012 he would “require” the economy’s huge energy sector to — here things become comic — supply half as much energy from renewable sources as already is being supplied by just one potentially renewable source. About 20 percent of America’s energy comes from nuclear energy produced using fuel rods, which, when spent, can be reprocessed into fresh fuel.

Uh, no, George. You know jack shit about nuclear energy, and your claim doesn’t even make sense on its face. “Renewable” energy doesn’t mean re-using unspent fuel - that’s just recycling. And you can’t reprocess “spent” fuel - it’s . . . “spent”.

It sounds to me like he’s confusing reprocessing partially spent fuel rods from ordinary reactors, and transmuting non-fissionables in “breeder” reactors. Breeder reactors are often described as “making more fuel than they use”, which is true in the sense that they output more fissionable material than is input to them. But doing that requires a steady input of non-fissionable material, usually low-enrichment uranium (but there are other designs). So you’ve still got to keep digging radioactive crap out of the ground and shoveling it in there to get any energy out. It would be more accurate to say they are non-renewable generators capable of using a wide range of fuels (by transmuting non-fissionable ones into fissionable ones). And they’re going to play exactly no role in energy production in the next four years: there are very few breeder reactors in the world today, and most of those are shut down or obsolete; breeders were banned in the US because they generate huge amounts of nuclear material requiring reprocessing, raising the danger of the diversion of plutonium from the output stream. There are ways to make it almost impossible to use that plutonium for nuclear weapons, but all of the fissionables are potential contamination sources for “dirty bombs”, which are much more likely to be a terrorist weapon that an actual fission bomb anyway.

Will might also want to take a look at the Department of Energy’s own Web site, which explicitly lists nuclear (and other non-renewable) energy sources in completely separate categories from “Renewables”, and does not list nuclear energy among its examples of renewable sources on the page for that category.

The rest of the column is equally dumb. He just wanders around yawping at whatever shiny bit of energy policy catches his attention. Spent fuel containment? George knows the way. Electric car industry growth by way of market incentives? That can’t work, because liberals believe in it. (Yes, he thinks that way.) And see here: Obama’s projected 1 million electric cars won’t have enough power because his proposed 80% carbon-emissions reduction would require a cap set at the level of “colonial days” due to the projected 11% population increase over the next 40+ years. (Wow. Science. It’s got numbers in it and everything. Never mind that he bounces from electric cars to population growth to carbon caps to colonial wood-burning stoves like a Labrador chasing a butterfly. It’s all so . . . real-seeming.) Is any of this true? It comes from the American Enterprise Institute by way of George Will, so the answer is almost undoubtedly “no”, but who cares? The whole point to carbon reduction is that we need to shift to other energy sources, not live like colonials. Is Will suggesting that, if we could find large amounts of renewable energy, we should still keep emitting greenhouse gasses anyway?

It doesn’t matter what he’s saying, because, in the very next paragraph, he’s off on (wait for it . . .) marginal tax rates for upper income levels. (Huh. What a shock.) He notes that Obama has remarked in passing that he didn’t want a 60% marginal tax rate, and then states that “Obama’s policies would bring it to the mid-50s for many Americans, close to the 60 percent Obama considers excessive.” And this means - what? That Obama has set his own tax policy to conform to his own beliefs about appropriate maximum levels? What else did Will expect? (Never mind. The paragraph did give him a chance to mention Ronald Reagan twice, which presumably was reward enough.)

Remember, this is the smart conservative.

by KTK on August 25, 2008 03:34 PM

Lessons from Italy and Australia



by One Salient Oversight



Statements:

-----------------------

1. Together, the amount of money the Italian government spends on debt

servicing (interest plus paying back principal) is €263,663 million.



Now let's put that number in perspective.



€263,663 million represents a whopping 41.2% of the Italian government's

spending in 2007. According to the same document, Italy's GDP in 2007

was estimated to be €1.475 trillion, which means that debt servicing

also represents 17.9% GDP.

-----------------------

2. Australia's fiscal example should stand as an example to other nations.

In 1996 when the conservative Howard government came to power, net

public debt was around 20% of GDP. While this was quite small in

comparison to other nations - both now and at the time - steps were

taken very early to cut spending. So although net debt was comparatively

small, it was never allowed to increase. Importantly, cuts to spending

were made when unemployment was moderately high - at around 8%. This

meant that, when the economy recovered from the effects of the spending

cuts, economic growth in the years that followed produced large and

growing budget surpluses and steady improvements in unemployment.

Moreover, the government could then afford to make incremental tax cuts

on an annual basis - a process that was quite politically rewarding.

Since 2005, unemployment has dropped below 5%, big budget surpluses are

run regularly, income tax rates are lower than ever and net public debt

is now negative.

-----------------------



It is likely that the effects of Peak Oil and the subprime meltdown will

be far reaching. Countries that are fiscally weak like Italy will either

be forced into making painful fiscal readjustments or else run their

nations into bankruptcy-in-all-but-name by increasing their deficits. On

the other hand, countries like Australia will be in a more flexible

position and will have room to cut taxes or increase public spending.



What will become of America, though? While I would like to think that

America could avoid Italy's fate I am not at all certain that bipartisan

steps can be made to rectify the situation before net public debt hits

record levels - say between 75-85% of GDP.



One thing is certain, however, and that is that America's fiscal

position will determine its influence in the world over the next 20

years. If America should go down Italy's route, you can almost guarantee

that America, as a society and as an economy, will be a pathetic

reflection of what it was for most of the 20th century.



In the face of a semi-permanent energy crisis along with the spectre of

global warming, what the world of the 21st century needs is a strong,

free America. Being fiscally responsible is an important step in that

direction.

by rdan (noreply@blogger.com) on August 25, 2008 10:12 AM

Rdan-This post is from last year 2007.



by cactus



This post updates an earlier one I wrote on healthcare costs last year, with a few added details. This update shows Federal spending on healthcare as a percentage of the GDP over time and Federal spending on healthcare as a percentage of the federal budget over time. Additionally, it shows how the total (private plus plublic) healthcare spending as a percentage of GDP has evolved over time.



Before we begin, let’s get some data issues out the door. Data on healthcare comes from the Department of Health and Human Services (note… zipfile… pulled off this page). Data runs from 1960 to 2005. The table also includes data on GDP. Additionally, data on the Federal Budget is obtained from White House OMB Table 3.1.



OK. Enough with the yadda yadda. Here are the graphs…















And summaries…















So what do we get from this?

1. Clinton did the best of job keeping federal health expenditures in check, followed by Carter and Reagan. Coming in at the bottom (no surprise after this many series have been looked at) were the Bush boys.

2. The ability to keep federal health expenditures in check doesn’t seem related to the share of the budget going to healthcare.

3. In terms of keeping total healthcare costs in check (public and private), presumably the most important of the series, Clinton, JFK/LBJ, and Carter lead the pack. Once again, the Bush boys did the worst among the various administrations.



How did Dems exert this influence on healthcare? Different ways… JFK/LBJ got the government into the healthcare business in a big way (I didn’t graph it because this post is getting long, but in 1960, the Federal government accounted for 11% of all healthcare spending, but by 1968 it accounted for 24%. The annualized increase was more than triple that of any other President.) Clinton, on the other hand, scared the beejeezus out of the health insurance providers… Hillarycare could always be resurrected. I don’t know enough about the Carter admin to say what happened there.



Or it was all a big coinkidink that good things tended to happen when the Dems were in office. As with a lot of the series we've gone through so far.

by cactus (noreply@blogger.com) on August 25, 2008 10:00 AM

I’ve seen some criticism of Obama’s decision to choose Joe Biden as his running mate that goes something like this – Obama should have picked a real Democrat. Well - Fred Barnes wants to assure you that Biden is a real Democrat in the following sense:

But what Mr. Obama has done is create an all-liberal ticket -- a very, very liberal one, at that -- in a nation whose electorate is still center-right ... and liberal Democratic presidential tickets usually lose, as John Kerry did with John Edwards as his running mate in 2004 ... Once regarded as a centrist, Mr. Biden was rated by the National Journal in 2007 as the third most liberal member of the Senate. Mr. Obama was rated the most liberal. Neither has a record of bucking the wishes of liberal interest groups or promoting bipartisanship.

No mention of the bankruptcy bill – huh? Oh well. Now you might just be saying – “c’mon PGL, don’t you spot the agenda that Barnes has here. He is a rightwing hack who loves to tarnish folks with the L-word. Don’t you get that the National Journal ratings are quite simplistic.” Well, it would seem Brendan Nyhan agrees with you. OK, you’re correct – Fred Barnes is a rightwing hack.

by PGL (noreply@blogger.com) on August 25, 2008 09:21 AM

The powers that be at Lean Left have been kind enough to grant me blogging privileges - at least until i start focusing on Britney Spears and/or American Idol. I would like to thank them for this privilege, and excepting my pathological inability to spell, I will try not and embarrass anyone.

My first topic is the Kabuki theatre that is the DNCC this year. I would have just loved to be a fly on the wall as the deals went down concerning Bill and Hillary. When they would speak, what they would speak about. And of course the whole nomination of Hillary (which I am glad is going to happen) and then her (reported) plan to release he delegates before the vote. Magnanimous gesture of unity? Concern that a reduced vote count would blunt her perceived position of power? We will never know. I am disappointed Wes Clark did not get a chance to speak. I hope he plays a strong role in the campaign and beyond. He is excellent neocon antidote.

I hope Bill and Hillary and Joe all rock the house, and that Obama nails his speech as well. I usually find conventions boring to the point of being almost unwatchable, but I’m thinking at least good-sized blocks of this one will be pretty entertaining. I certainly have had my fill of 13 yo Chinese gymnasts at this point.

by Ted on August 25, 2008 02:15 AM

Jack Kemp & Peter Ferrara would have you believe that John McCain would pay for his proposed tax cuts by big spending cuts, while Barack Obama would increase everyone’s taxes so as to pay for a much larger government. Never mind the fact that their characterization is quite at odds with reality, what offends me is the pretense that Robert Mundell has somehow endorsed the latest nonsense from Jack Kemp:

Nobel Prize-winning economist Robert Mundell has written that if such tax increases are adopted, the U.S. economy will suffer “a deep recession, a nosedive,” and the dollar will decline further.

Really – when and where did Dr. Mundell actually write this? After several pages of babbling, Kemp and Ferrara write:

Frankly, we are going to need a new theory of economics to argue that Obama’s much higher taxes, much higher spending, protectionism, and much higher energy costs are going to revive the economy and promote economic growth.

No – all we need to do is to turn to Mundell’s open economy IS-LM model but first we have to decide whether the two Presidential candidates are proposing fiscal stimulus or fiscal restraint. For the sake of argument, let’s suppose Obama is proposing fiscal restraint which will tend to reduce private aggregate demand. In the Mundell model, this would indeed lead to dollar devaluation as interest rates fell. But then a weaker dollar would increase net exports, which would at least partially offset the decline in aggregate demand.



I can’t decide which is the case – is Jack Kemp just too stupid to know that this is the implication of Mundell’s contribution or is Jack Kemp up to his old tricks of lying to the readers of the National Review assuming they are too stupid to know otherwise.



Update: Kyle Wingfield did interview Mundell a couple of months ago:

"It's a lethal thing to suddenly raise taxes," he explains. "This would be devastating to the world economy, to the United States, and it would be, I think, political suicide" in a general election.

OK, a quick dose of fiscal restraint is not a good idea when aggregate demand is weak. But phased-in fiscal restraint, which we tried during the Clinton years, could restore national savings without triggering a Keynesian style recession. Much of the rest of this interview written by a Wall Street Journal’s editorial page writer reads like the usual supply-side gold-bug silliness the National Review is known for.

by PGL (noreply@blogger.com) on August 24, 2008 10:56 PM

Bears or Bulls? Winners or Losers? What is going on out there? The Time Online today has a nice overview of various takes on the global economy. Below are some choice quotations, the first being my favorite:

“Yachts,” he [Terry Smith of the broker Tullett Prebon] said. In previous summers the ruling families of the Gulf came to Monte Carlo to tie up next to western bankers. This summer, Smith said, western financiers are taking their yachts to the Gulf to curry favour with the families overseeing Middle Eastern sovereign wealth funds.

“I ring my contacts and they’re all in Abu Dhabi,” said Smith. These are not bankers but men who own and run large private companies. “These are the guys the sovereign wealth funds want to work with – guys so far off the radar they make the hedge funds look transparent.”

Here are some others, certain to raise debate:

Smith breaks a City taboo and mixes his economic analysis with politics. He traces the cheap money to Alan Greenspan, the former Federal Reserve chairman, and his refusal to raise interest rates to bring surging asset prices under control. “Greenspan was part of a new political culture that started in the 1990s and violated the integrity of his predecessor, Paul Volcker,” said Smith.

“Feel-good politicians like Bill Clinton and Tony Blair started telling people only what they wanted to hear.”

Robson [Steve Robson, a former Treasury official]wonders how America and China will stabilise their unhealthily symbiotic economic relationship. America relies on Chinese savings to fund its deficits, he said, and the Chinese rely on the American export market to sustain their high growth rate. “The yuan is too low against the dollar,” said Robson. “If the Chinese won’t revalue it, the US needs to talk about import tariffs.” In hock to the Chinese, however, America is in a weak position to get tough.

“Regulatory reform, proper incentives for bankers . . . these are valid issues,” said Robson. “Ultimately, though, they are displacement activity.”

Wonder what he meant by "displacement activity"?



The rest of the article is a Bulls-Bears point counterpoint. For the Bears:

Bears say global finance remains out of control and is likely to produce further bank failures as a new round of defaults on debts — ranging from credit cards to loans for leveraged buyouts — overwhelms the system. “We don’t have a sub-prime mortgage crisis,” said New York University economist Nouriel Roubini in a recent interview. “We have a sub-prime financial system.”

For the Bulls:

Bulls say the unravelling is over. Passing through London en route from Beijing to Italy for a short break, Citigroup chairman Sir Win Bischoff last week made the case that banks were now healing themselves. Banks still face billions in mortgage-linked writedowns. But Bischoff said “the final tally will depend in large measure on US house prices and the broader stabilisation of the credit markets”.

And then there is this choice remark from a former Middle Eastern sovereign wealth fund manager:

Laughing off questions about the pattern of yachts moving through the Suez canal, he said western leaders should redirect public attention to the issue of how industrial economies relate to the emerging economies. “How you deal with the coming changes — say half the General Motors assembly line moving to China — will determine where the downturn comes out,” he said.

Is that where G.M. is going? Will anyone be surprised?

by Stormy (noreply@blogger.com) on August 24, 2008 06:31 PM

China continues to use its financial clout with People's Bank of China buying approximately one percent of Prudential Assurance and Loan, making China one the top 25 investors in Britain.

China's central bank has acquired a secret stake in Prudential, Britain's second-­largest insurer, as part of Beijing's increasingly active plans to deploy its vast pool of foreign currency reserves in overseas markets....

It is not just the insurance sector. The Chinese have been buying stakes in a significant number of companies," said one person close to the situation. Banks, resources companies and pharmaceutical groups are among the other industries where falling share prices are likely to have proved attractive in recent months, according to the person.

The investment from the People's Bank of China is the latest in a string of moves by Chinese government entities to pour money into large western companies.

An unidentified fund acquired a stake worth about £1bn in BP, the energy company, earlier this year...

Last year, officials in Beijing established the China Investment Corporation (CIC), a $200bn sovereign fund set up to diversify the country's vast holdings of foreign exchange reserves.

Since then, its investments have included a $3bn stake in Blackstone, the US private equity firm, and a minority stake in Morgan Stanley, the Wall Street investment bank.

In Britain, Barclays has turned to Chinese sources of capital as part of its fundraising rounds last year and earlier this summer. The institution that invested in Barclays was China Development Bank, which has traditionally lent money to finance infrastructur related projects.

On another front, Aluminum Corp (Chinalco), a state owned Chinese entreprise

got Australian approval to raise to 11 percent its stake in Rio Tinto Group, the target of a hostile $143 billion takeover by rival miner BHP Billiton Ltd.

People's Bank of China is a state owned bank.



On yet another front, both China and Saudi Arabia may be involved in a $10 billion dollar bailout of Pakistan.

Negotiations with the IMF which commenced last week for a US$10 billion bailout package for Islamabad are expected to remain inconclusive as Pakistan is set to seek direct help from Saudi Arabia and China.

by Stormy (noreply@blogger.com) on August 24, 2008 06:03 PM

by rdan



Lifted from comments cactus style, by k harris.

A public infrastructure spending binge is likely to require lots of petroleum products. This is not a deadly criticism, but is is an issue that could produce a lot of "leakage". We could offset that, either concurrently or subsequently. Spending a ton of money modernizing the interstate system while leaving commuter rail on the fringes is a good way to consume oil now, and consume oil later.



If we are admitting that we jigger the economy to produce the results we want, then we can stop putting up with the argument we have to accommodate cars because people like cars. We can stop pretending that the choice to live in a massive home that sucks up lots of heating and cooling and requires lots of (publicly protected) credit is a purely personal decision. Let's stop putting up with claims that "private" economic outcomes are the result of personal virtue so shouldn't be "burdened" with taxes. If we are in the business of jiggering outcomes, then let's stop listening to arguments predicated on the badness of public intervention or the goodness of persona