Patterico's Pontifications

6/11/2014

Is Obama Deliberately Flooding Texas With Illegal Children?

Filed under: General — Patterico @ 10:47 pm

This morning I described the influx of illegal kids at the border as an “unintended consequence” of Obama’s announced refusal to enforce immigration law with respect to children.

But what if it isn’t unintended at all? What if it’s deliberate?

I wouldn’t put much past this guy, at this point.

Hillary: Obama Is Like That Other Senator from Illinois: Abraham Lincoln

Filed under: General — Patterico @ 9:06 pm

“It was in the very first chapter, the chapter I rightly call ‘Team of Rivals’ because that’s what it was in the beginning. A senator from Illinois ran against a senator from New York just as had happened way back with a senator from Illinois named Lincoln and a senator from New York named Seward. And it turned out the same way.”

Except that Lincoln wasn’t a Senator, but otherwise, great analogy, sister!

Cantor’s Loss and the Flood of Illegal Children at the Border

Filed under: General — Patterico @ 7:35 am

Lovers of liberty often point out that government action can have unintended consequences — even when the goal sounds good. To many, the idea of not deporting children who are here through no fault of their own sounds good. So Obama decides he can do it on his own, by simply declaring he won’t deport kids. The unintended consequence? A flood of illegal children at the border:

Megyn Kelly says in this clip that 6500 such children came across the border last year — and estimates are that there will be 90,000 to 150,000 children coming across the border this year. This issue is coming to the forefront because pictures of the children are being leaked — and the administration’s response is to fix the problem ban cell phones so that no more pictures are taken.

Obama blames this on violence caused by drug cartels. But drug cartel violence is just what the children are told to blame so that they will get asylum. Most of these children are coming from Central America. They’re coming a long way simply to escape cartel violence — and the magnet drawing them is obvious: Obama’s announcement that he will not be deporting kids any more (together with the fact that many of the kids have relatives here, and are hoping to leverage that immigration law loophole into permission to stay).

This kind of unintended consequence is not the type of thing politicians care about. They blame clearly unrelated factors and refuse to draw the obvious conclusions.

You know what provides politicians with clarity? Losing elections.

With Eric Cantor’s shocking defeat — the first primary defeat of a House Majority Leader in history — politicians will, all of a sudden, start connecting dots that they were unable to connect before. You know those politicians who can’t seem to process a connection between a policy of not deporting kids and a flood of illegal kids? They’ll be able to process the connection between the flood of illegal kids and Cantor’s loss.

And those politicians who don’t care about the unintended consequences of kids dropped on street corners in Phoenix, or waves of undocumented kids in Arizona school? There’s one unintended consequence they do care about: the unintended consequence of losing an election that everyone knew — knew! — could not be lost.

If there’s one thing that gets a politician’s attention, it’s the possibility of losing office. That’s the importance of kicking out Cantor. A complacent politician suddenly becomes less complacent when he sees a colleague get his ass unexpectedly handed to him by the voting populace.

Economics Is About Improving People’s Lives, Not Creating Busywork — Why Paul Krugman’s Love of GDP Is Wrong, Part Three

Filed under: GDP,General — Patterico @ 6:00 am

As regular readers are aware, I am spending time this week attacking GDP as the ultimate benchmark for measuring the strength of the economy. On Monday, in Part One of the series, I noted that GDP includes government spending even though government spending does not necessarily benefit consumers. Yesterday, in Part Two of the series, I addressed another problem with GDP: it overemphasizes consumer spending to the detriment of capital investment.

Today, I want to show how an overemphasis on the GDP measure can encourage less efficient ways of satisfying consumers’ preferences — and indeed, can encourage destruction of resources. In this way, GDP favors busywork over an actual improvement in consumers’ standard of living. As we will see, this nonsense leads the Krugmans and Keyneses of the world to say it would be a great idea to dig pointless holes — or to prepare for a Martian invasion that will never happen — as long as people are busy!!!

In this post I am borrowing heavily from this excellent blog post by Alex Zorach, which makes the points I want to make quite effectively. I recommend clicking through and reading it, since my post is little more than an attempt to summarize the points made by Zorach.

Zorach’s first point is that a less efficient way of doing something can lead to a higher GDP:

It is also worth noting how GDP counts goods or services when they are sold and resold. Shipping and storage of goods are almost always counted in GDP, as these are considered services that are produced. So a product that is sold directly to the end user, at the point of production, will result in less of a contribution to GDP than a product which is produced, shipped, stored in a warehouse, and shipped again to the same end user for the same price plus shipping costs.

In other words: let’s say that a car manufacturer comes up with a way to sell cars direct to consumers for $20,000, as opposed to selling it through a dealer for $25,000.

It could be that the dealer adds sufficient value to justify that extra $5000. After all, the dealer handles shipping and storage costs that make it more convenient for the average consumer to purchase the car. He provides customers with a way to service their cars and enforce their warranties. In an unhampered market economy (which we don’t have in the case of auto sales; we have discussed here before how government puts its thumb on the scale), consumers can determine whether the value produced by the dealer is worth the extra cost. Some manufacturers would utilize dealers and others would sell direct, and the best sales model would win out.

But assume that a car manufacturer finds a way to cut out the middleman in a way that most consumers prefer. In such a scenario, in an unhampered market economy, dealers will go out of business — and they should. The land used by the dealership will be sold to a company that can put it to better use. The people working for the dealership will have to go find new jobs that are more productive for the economy. But consumers will be far better off. They can get the car for less money, and if the manufacturer finds a more efficient way of delivering and servicing the car, consumers are ultimately in a better position.

The dealerships’ employees will temporarily be worse off — but that is the tradeoff we make in an unhampered market economy. The “creative destruction” of businesses that are not satisfying consumers’ preferences ensures that scarce resources are allocated in the manner that best satisfies those preferences. In other words, the dealerships’ employees will need to find something to do that delivers value — that consumers want. Once they do, they will once again be successful.

But whether a car dealership adds value or not, GDP will be larger if the dealer is involved. That’s because $25,000 is a higher number than $20,000. So if your only desire is to maximize GDP, you’ll pass laws to keep dealers in business — even if market forces dictate that direct sales are preferable, and that the resources spent on dealerships are best reallocated to different parts of the economy.

Ah, but it gets worse. As Zorach points out, GDP also increases when things are destroyed. Imagine a car accident. In its aftermath, GDP increases.

Between health insurance, car insurance, out of pocket expenses, a lot of money changes hands. . . . [T]he medical care, any car repair work, and new cars purchased, and any legal fees, is all included in GDP. Furthermore, the incremental rate by which everyone’s insurance premiums go up to pay for this accident results in more payments to insurance companies, which is also included in GDP. The net effect of the accident is to produce a substantial increase in GDP. Most alarmingly, the more destructive the accident, the greater the increase in GDP.

While it is necessary to have a section of the economy that deals with car accidents, we can all agree that it’s better for citizens when there are fewer car accidents. Yet more accidents equal a bigger economy.

Why is this a problem? Because when we analyze the economy, we’re doing so in order to create a better standard of living for consumers. But when your only incentive is to increase GDP, you don’t care whether eliminating the middleman benefits consumers (as in the first point above) or even your actions are destroying wealth (as in the second point above). All you care about is making people do busywork, even if it does not contribute to a net increase in people’s living conditions.

Do Keynesian economists recognize this fallacy? Nope, not even the Nobel prize winners. Paul Krugman believes that even pointless activity is a good thing, as long as it’s activity. For example, Krugman favorably cited this passage from Keynes in a 2008 blog post:

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.

Absurd. In a similar analogy, Krugman said that preparing for an invasion of space aliens would make the economy better off, even if the invasion turned out to be imagined:

If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better [off].

Ridiculous. As David McIlroy explains:

These people honestly believe that money spent — no matter why it’s spent or the effects of the spending — is the same as creating growth. They don’t understand that if the spending produces nothing of value, the amount of overall value in the economy is lowered and that the average standard of living must go down.

Krugman might tell you that having useless car dealers around would be good — if they would increase GDP. He might even tell you that car accidents are good — if they would increase GDP. He and the rest of the Keynesians think that any economic activity is good. They don’t care whether it makes your life better . . . or doesn’t.

And this has important real-life consequences, because Our Betters in Government listen to guys like this, and implement policies to further Krugman’s wrong-headed goals.

Now that you understand what is driving their warped thinking, you will be better prepared to spot the fallacies in these arguments.

Reject GDP as the be-all and end-all of economic analysis.

A Small Tale Of Two Cities And The Homeless

Filed under: General — Dana @ 5:59 am

[guest post by Dana]

Outside of apartment buildings in London and in downtown Los Angeles, two unique decisions have been made to protect the owners of high-end residences. And both decisions have caused quite a stir.

Metal spikes have been installed outside a block of luxury flats in London to deter homeless people from sleeping there.

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People living in the flats, which sell for upwards of £800,000, said the metal studs were installed two weeks ago after a number of homeless people were seen sleeping there.

One woman resident, who asked not to be named, said: “There was a homeless man asleep there about six weeks ago.

Then about two weeks ago all of a sudden studs were put up outside.

I presume it is to deter homeless people from sleeping there.”

A couple, who also asked to remain anonymous, added: “It’s because of the homeless.”

Protesters against the installation claim the homeless deserve better treatment:

“These Anti homeless studs are like the spikes they use to keep pigeons off buildings. The destitute now considered vermin [sic].”

Local charities are shocked by the practice:

Katharine Sacks-Jones, head of policy and campaigns at homelessness charity Crisis, said: “It is a scandal that anyone should sleep on the streets in 21st century Britain. Yet over the last three years rough sleeping has risen steeply across the country and by a massive 75 per cent in London.

Behind these numbers are real people struggling with a lack of housing, cuts to benefits and cuts to homelessness services to help them rebuild their lives.

They might have suffered a relationship breakdown, a bereavement or domestic abuse. They deserve better than to be moved on to the next doorway along the street. We will never tackle rough sleeping with studs in the pavement. Instead we must deal with the causes.”

Similarly, last month in Los Angeles, the City Council approved plans for a luxury high-rise developer to install a pedestrian bridge over the street below in order to protect tenants from a homeless population that frequent the area. The bridge will essentially join together two separate sections of the apartment. The developer was blunt about what he perceived as the necessity for a bridge:

Palmer’s company, G.H. Palmer Associates, said in paperwork filed with the city that it requested the bridge “specifically because it is concerned about the safety of project residents and potential incidents that could occur during the evening hours when the homeless population is more active in the surrounding area.”

As expected, and as in London, this drew the ire of Angeleno activists who believe the developer is vilifying the homeless. On the other hand, his supporters in the downtown business groups commend him for constructing apartments at a location where others have been fearful of developing projects.

–Dana


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