St. Cloud State economist King Banaian has won his race for Mn. state house district 15B. The differential between King and his competitor, Carol Lewis, amounted to only 10 votes, but after the recount began it became apparent that the outcome would not be changed and Lewis conceded.
King is a good man, but more importantly he is a damn good economist. He understands the workings of economies and markets as well as anyone and he understands that public policy often has unintended consequences. The people of district 15B have elected themselves a fine representative. Congrats, King!
Thought of the day: It looks like the Obama Administration and the core Democratic leadership is going to ram rod through the unpopular Obamacare health reforms. The Republican party has often been referred to as the Party of No for its opposition to the health reforms. But given that the Democrats most likely will pass it by deeming it passed, despite fierce citizen opposition and a lack of congressional votes, I guess that makes the them the Party of "So?"
As longtime readers know, this blog is primarily an economics blog (except when I feel the need to write about my beloved Mizzou). There may be an odd post here or there which is more political than others. But even the political ones - posts advocating or criticizing some program or law or commenting on something said by a politician - are usually written from my point of view as a professional economist.
Harvard has one of the most reputable Economics departments in the nation and the world, so Dick Armey's comment about Harvard (and Larry Summers) is just plain ludicrous. Greg Mankiw:
Okay, this has got to be one of the goofiest comments from a major political figure in recent weeks:
don’t consider Larry Summers a serious economist," [Dick] Armey said.
“You can get a Ph.D. from Harvard without ever having seriously
considered the subject.” (Source).
Dick Armey wants to criticize Larry Summers or the economic policy of
the Obama administration, there is no shortage of ammunition and easy
targets. But saying that Larry is not a serious economist, or that a
PhD from one of world's preeminent economics departments doesn't mean
much, makes Mr Armey look more than a tad ridiculous.
Stanford economist Edward Lazear describes the jobless recovery this time around. He makes two skeptical points that I will highlight (but read the whole thing).
After reporting GDP, the government released new numbers claiming
that the stimulus programs have "created or saved" over a million jobs.
These data were collected from responses by government agencies that
received federal funds under the American Recovery and Reinvestment Act
of 2009. Agencies were required to report "an estimate of the number of
jobs created and the number of jobs retained by the project or
activity." This report is required of all recipients (generally private
contractors) of agency funds.
Unfortunately, these data are not
reliable indicators of job creation nor of the even vaguer notion of
job retention. There are two major problems. The first and most obvious
is reporting bias. Recipients have strong incentives to inflate their
reported numbers. In a race for federal dollars, contractors may assume
that the programs that show the most job creation may be favored by the
government when it allocates additional stimulus funds.
Point number 2 invokes the broken windows fallacy.
Another subtle but important point: During the cash-for-clunkers
program, sales of small cars like Honda Civics went up while sales of
large SUVs like the Ford Expedition went down. To discern the net
effect of the program on auto sales, it is necessary to take into
account not only the addition to sales of subsidized models but also
the reduction in sales of discouraged models. Reporting the positives
without the negatives would be misleading and would complicate attempts
to objectively evaluate the success of the program.
Yet this type of gains-only reporting is precisely what the
government is doing with respect to the figures on stimulus-induced new
hires. When the government reports this figure, it wants us to believe
that the new hires came from the pool of the unemployed and that they
are net additions to the stock of employed workers. But the data do not
speak to the number of workers who left their current jobs to fill
Taking a longer-term view and using some of Professor Lazear's wording, the data do not speak to the number of workers who would have eventually gotten a job in the future had they not gotten government-sponsored jobs. I realize that part of the logic of the stimulus is to put people in jobs now. But economies have business cycles, they grow and retract . It's important to at least acknowledge that a person with a government-sponsored stimulus job would likely have had a different job sometime in the future.
In any case, the real answer to "how many jobs were created or saved" is the difference between employment that an economy would have with and without the stimulus. In a perfect research world, we'd be able to observe the economy without the stimulus and with the stimulus while holding everything else the same. This would allow us to count the difference in employment.
But the world is less than perfect and the data we have is less than perfect. For instance, how do we entangle the effects of the stimulus with the myriad other effects that also affect employment? At this point, there hasn't been enough time to collect and analyze the data that is available to put even rough, believable estimates on job creation. The administration is tooting its own horn as we'd expect any adminstration to do, and it is collecting and reporting data to this end.
Mothers Against Drunk Driving is anything but an uncontroversial organization, as the Washington Times, Radley Balko, and our own archives
make clear. Among the bad, sometimes awful ideas with which it has been
identified are a reduction of the blood alcohol limit to .04 (meaning
that for some adults a single drink could result in arrest), blanket
police roadblocks and pullovers, the 55 mph speed limit, traffic-cams,
and the imprisonment of parents who knowingly permit teen party
drinking, to name but a few. Of particular interest when it comes to
the policies of the National Highway Traffic Safety Administration
(NHTSA), it has backed proposed legislation demanding that costly
breathalyzer-ignition interlock systems be foisted on all new
cars, whether or not their drivers have ever committed a DUI offense;
it’s also lined up with the plaintiff’s bar on various dubious efforts
to expand liability.
Now President Obama has named MADD CEO Chuck Hurley to head NHTSA.
Drivers, car buyers, and the American public had better brace
themselves for a season of neo-Prohibitionist rhetoric, nannyist
initiatives, and efforts to criminalize now-lawful conduct. It won’t be
Hurley's pending appointment is bad news for social drinkers,
motorists, and anyone interested in freedom of movement and less hassle
on the roadways. Hurley is an anti-alcohol zealot, and a longtime
proponent of just about any highway regulation that's sold under the
guise of public safety. He's a supporter of primary seat belt laws,
which allow police to pull motorists over solely for seat belt
infractions. In addition to being a questionable use of law enforcement
resources (people who don’t wear seat belts aren’t a threat to anyone
other than themselves), primary seat belt laws have been criticized for
giving police officers the pretext to engage in racial profiling, or to commit asset forfeiture abuse. Hurley has also supported the proliferation of red light cameras, despite studies showing
that they're little more than revenue generators for local government,
and may actually cause more accidents than they prevent.
Kudos to the Mankato Free Press for giving the Mankato Tea Party prominent front page coverage in this morning's print edition. Here's a pdf of today's front page. I fully expected some sort of coverage (the gathering took place right outside the Free Press's building), but I thought the coverage would be, at best, front page news in one of the paper's inner sections or, more likely, buried somewhere in the newspaper. But I was wrong.
Here is one of the front page articles entitled "Tea Party Attracts Hundreds" (Mankato/North Mankato only has a population of around 45,000 or so). I couldn't find an online version of the second article on the front page.
What intrigues me about the Tea Party movement is that (and I don't prefer to use the following term because it's cliche') it is really a true grass-roots movement. Many of the organizers and the protestors are folks who go about their normal course of business*, who have probably never been part of an organized protest before, and are almost embarrassed to take part:
“I’m a reluctant protester,” Steve Moller said. “But I feel obligated to our children.”
He said he is opposed to the growth of government, deficit spending and government bailouts.
Even though the Tea Party movement appeals to many Reagan conservatives, it is much more than a conservative movement and it certainly is not something that comes from the Republican political machine (as Glenn Reynolds describes in this op-ed in yesterday's WSJ). People are concerned about the impacts of the recently-passed
"stimulus." People are concerned about the push of government into the
everyday business of the auto companies and the financial system. People are concerned about the massive deficits that are forecasted to result from profligate government spending. So instead of being a conservative movement, it's much more of a limited government and libertarian movement.
*I did not participate in the Tea Party because I went about my normal course of business (trucking the kids around to their activities after work).
I can recall only a few outbreaks of such
collective insanity as these tea parties in recent years. There was
that time in the mid-1990s when a $19.95 video proving Bill Clinton was
some sort of serial killer went viral. And then, a few years back,
there was that chilling, televised midnight seance from the floor of
the U.S. Congress aimed at reviving the long-brain-dead Terri Schiavo.
And now this. Whip out your Lipton and don your tinfoil hat and join the protest against ... against ... against what exactly?
I've got a couple of things to be upset about.
Number 1. The bailouts of auto companies and financial companies, rather than letting them go through bankruptcy or, especially for the auto makers, fail. But instead of letting this happen, the current administration has nationalized some of the banks and has gotten into micro managing the automakers to push their green agenda.
Number 2. The stimulus bill which will likely lead to higher taxes and/or higher levels of inflation, both of which lower standards of living.
Both of these items are plenty for the average American to be upset about, and the tea parties are an excellent way to get the message across.