Patterico's Pontifications


Thomas Sowell on the Fed: “When Somebody Removes a Cancer, What Do You Replace It With?”

Filed under: Economics,General — Patterico @ 9:11 pm

I have recently begun a giant post about why we need to get rid of the Fed. But rather me writing a giant post, why not just ask you to watch a very short (under four minutes) video of one of our best thinkers arguing that we should do away with the Fed?

I love the fact that the interviewer is totally flabbergasted by his answer — admitting that he didn’t actually expect Sowell to say that.

I just finished Sowell’s Economic Facts and Fallacies. Just wonderful stuff; you always learn much you didn’t know from Sowell books, and it’s well-written and well-reasoned. He is a national treasure.

Here’s the video:


What Should We Think About on Labor Day?

Filed under: 2012 Election,Economics,General,Obama — Patterico @ 1:38 pm

Michael Hiltzik of the L.A. Times says we should remember the value of unions. Wilma Liebman, writing in the L.A. Times, takes a slightly different perspective, and says we should remember the value of unions.

Actually, I guess that’s the exact same perspective.

Maybe I can offer a truly different perspective: remember the value of labor. Of the opportunity to work. Which many Americans lack under this president.

Ed Morrissey has an amusing interview by Chris Wallace of David Axelrod, in which Axelrod attempts to dance around the following uncomfortable comparisons between when Obama took office (“then”) and now:

  • Unemployment: 7.8% then, 8.3% now
  • Median income: $54,983 then, $50,964 now
  • Gas prices: $1.85 per gallon then, $3.78 now
  • National debt: $10.6 trillion then, $15.9 trillion now

You know the drill by now: it’s Bush’s fault!!!

But it’s worse than that. The real number (which everyone puts in quotes despite the fact that it really is the real number) is more like the number named by that supposed doddering old fool Clint Eastwood:

The “real” number of unemployed Americans is 23.5 million. These are people that are unemployed (12.8 million), want work but have stopped searching for a job (2.5 million), or are working part-time because they can’t find full-time employment (8.2 million).

As the Maryland governor showed, it’s impossible to honestly answer that Americans are better off today than they were four years ago. If you need to work full-time, but are only working part-time, you are not doing well. If you have given up on looking for a job, you are not doing well. 8.3% doesn’t begin to paint the picture.

Every one of those 23.5 million people needs to understand that we are worse off today than we were four years ago. Not better.

That’s what I’m thinking about on this Labor Day.

UPDATE: Elect me and this time it will be different!!!


Breaking: Obama’s Economy Still Sucks

Filed under: 2012 Election,Economics,Obama — Patterico @ 7:31 am

When the L.A. Times can’t spin it for you, man, it’s time to hang it up:

U.S. economic growth slowed further in the second quarter as consumers cut back on spending and businesses curbed their investments, the government reported Friday.

The economy expanded at a sluggish annual rate of 1.5% in the April-June quarter, down from an upwardly revised 2% growth pace in the first quarter and a 4.1% increase in the final quarter of 2011.

The latest reading of the nation’s gross domestic product — the total value of goods and services produced — was slightly better than analysts’ expectations of a 1.3% gain.

Still, the deceleration confirmed that the economy has slipped into another spring stall. The loss of momentum raises the risks of more trouble ahead as Europe’s economic problems hurt American exports and manufacturing, and growing angst about the so-called fiscal cliff — looming tax increases and government spending cuts — threatens to further weaken consumption and hiring by businesses.

An economy growing at a 1.5% pace is consistent with a monthly growth of less than 100,000 new jobs, said Sung Won Sohn, an economist at Cal State Channel Islands. “That’s not enough to take care of new workers coming into the labor force, let alone rescue the unemployed,” he said.

Better than expected; worse than it’s been.

I can’t figure out why massive government spending hasn’t done the trick!


Michael Hiltzik’s Hackery in Making Texas Sound As Bad As California

Filed under: Dog Trainer,Economics,General — Patterico @ 9:18 pm

I don’t want to get off on a rant here, but . . .

. . . but Bradley J. Fikes passes along a link to Michael Hiltzik’s latest column titled What California should learn from the Texas budget crisis. The deck headline reads as follows:

The so-called Texas Miracle is in trouble, demonstrating that fashioning fiscal policies strictly along low-tax lines doesn’t protect you from budget deficits or business slumps or make your residents necessarily happy or healthy.

The column is researched with Hiltzik’s characteristically low regard for facts and fairness.

Hiltzik starts out by talking about how bad Texas is supposedly doing, and then quickly moves to weak criticism of the legislature’s response. You can’t help but chuckle at reasoning that could convince only an avowed leftist:

California’s Legislature has won national renown for its dysfunction, but Texas lawmakers know how to squeeze dysfunction until it squeals. The late Molly Ivins reported years ago that when a good-government group ranked the Texas Legislature 38th among the 50 states, the reaction among knowledgeable Texans was, “You mean there are 12 worse than this?”

Maybe things have improved in the Texas statehouse since Ivins’ day. But given that the legislators put off action on the budget this year so they could first debate an anti-abortion measure, a balanced-budget amendment for the U.S. Constitution and a voter-ID law, maybe not.

Well! If Molly Ivins didn’t like the legislature, that’s good enough for me! Never mind that her definition of “knowledgeable Texas” was basically “liberal Texans.”

And I’m with Hiltzik: why should a state fritter away time discussing a balanced budget amendment for the U.S. Constitution? Everyone knows that the federal budget is in tip-top shape under Supreme Regime Leader Barack Obama, and any minor multi-trillion dollar kinks are being quickly and professionally ironed out by our eye-on-the-ball Congress, which is moving to HACK and SLASH spending by MILLIONS of dollars at time — MILLIONS! I say — spending reductions that obviously reveal any discussion of a balanced budget amendment to be a frivolous waste of time.

Add that to wasting valuable legislative debate minutes worrying about abortion, which has snuffed out a mere 50 million or so lives since Roe v. Wade, and voter fraud, which is a non-issue according to such eminent authorities as Bradley Friedman and Senior Fellow of Senior Fellows Eric Boehlert, and the Texas Legislature’s skewed priorities come into even sharper focus, thanks to Hiltzik’s deft wielding of the policy microscope.



Bleak Economic News

Filed under: Economics — DRJ @ 3:54 pm

[Guest post by DRJ]

Bloomberg News posts two reports that together paint a bleak picture of the American economy:

  • U.S. economy grew 2.4% in Second Quarter, Below Forecast
  • U.S. Michigan Consumer Sentiment Index Fell to 67.8
  • A third report seems reassuring but if we look deeper, is also troubling:

  • Most U.S. Stocks Rise as Confidence Overshadows GDP
  • Stocks grew because the Dow corporations have been able to keep earnings high, but revenues continue to fall below expectations. In other words, businesses have been able to maximize productivity from workers but they can’t increase revenues as more and more consumers spend less and less.

    And that is not good news.

    — DRJ


    Senate Clears Hurdle to Extend Jobless Benefits

    Filed under: Economics — DRJ @ 7:44 pm

    [Guest post by DRJ]

    The Senate cleared the way to extend jobless benefits, with a little help from former Senator Robert Byrd’s replacement and the GOP Senators from Maine.

    Meanwhile, Senator Jim Bunning was ahead of the curve on this issue, and all it got him was bad press.

    — DRJ


    Obama Administration Costs American Jobs

    Filed under: Economics,Obama — DRJ @ 3:27 pm

    [Guest post by DRJ]

    The TARP Inspector General reports the Obama Administration’s handling of the GM and Chrysler car dealership terminations needlessly cost American jobs:

    “Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses,” investigators said.

    Those decisions resulted in “potentially adding tens of thousands of workers to the already lengthy unemployment rolls – all based on a theory and without sufficient consideration of the decisions’ broader economic impact,” the report said.

    Why worry about the lives of bitter, clingy Americans when you have a crisis going to waste?

    — DRJ


    Gloom, Doom and Socialism

    Filed under: Economics,Education,Obama — DRJ @ 12:06 pm

    [Guest post by DRJ]

    The financial news is gloomy as the sluggish economic recovery shows signs of faltering. As columnist Irwin Steltzer noted over a year ago, the Obama Administration is making America more like Europe everyday:

    “In the end, Americans will live in smaller houses, drive cars more like those to which Europeans are accustomed, and will rely on European-style healthcare. In short, we will be more like you, which is after all the social democratic model to which Obama wants to convert America.

    The president also intends to change the way our children are educated. He says he wants teachers to be compensated on a merit basis, and parents free to select schools they deem best for their children. But his allies in the teachers’ union won’t go along with this, and in the one test of his rhetoric so far he has allowed Democrats in Congress to kill a programme that provided funds to allow a few thousand poor, mostly black children to escape the horrors of the Washington DC school system and instead attend swanky private schools of the sort in which he has enrolled his daughters.

    There is no doubt about one thing: the president intends to increase the number of students financially able to attend college. America will, in the end, have more degree-wielding students and fewer horny-handed sons of toil. That will produce another result the president has in mind as he rebuilds the American house on his rock: the earnings premium paid to highly educated workers will decline as the number of men and women competing for those jobs increases, and the relative wages of the fewer blue-collar – by then, green-collar – workers will increase.

    This greater equality of income distribution is, for Obama, the summum bonum. He is redesigning the tax system to narrow the after-tax gap between “the rich” – family incomes above $250,000 (£170,000) a year – and lower earners, even if the economic cost of such a move (reduced risk-taking) is quite high. Equality, not economic efficiency, is his goal. Which is why he favours raising the rate at which capital gains are taxed even if the result is a fall, rather than an increase, in the Treasury’s net receipts.”

    For someone who isn’t a socialist, he sure acts like one.

    — DRJ


    Fudging Unemployment

    Filed under: Economics,Obama — DRJ @ 6:44 pm

    [Guest post by DRJ]

    Tyler Durden explains how the BLS is fudging the unemployment rate:

    “The only reason for the decline in the unemployment rate to 9.5% was yet another decline in the labor force participation rate, which according to the BLS dropped another 652k people in the month of June. This resulted in a labor force to the civilian non-institutional population ratio of 64.7%: the second lowest number in decades of data, and only better than December 2009, when this number was 64.6%.
    if there was a mean reversion to the last 10 year labor force participation average rate of 66.2%, there should be another 3.5 million jobless added to the 14.6 million tally. And as this differential is the easiest thing in the world for the BLS to fudge, adding the two and dividing by the labor force of 153,74, we get an unemployment rate of 11.8% …”

    Americans need jobs but we can’t afford Obama’s choices for jobs: Not the $160K per job explained in Ed Morrissey’s Hot Air post on broadband technology, nor the $266K per job for Colorado solar projects.

    — DRJ

    Apocalypse Now

    Filed under: Economics,Obama — DRJ @ 3:32 pm

    [Guest post by DRJ]

    Recently, even President Obama acknowledged the potential fiscal apocalypse caused by record deficits and called on Republicans to put up or shut up:

    “Next year when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits step up. Because I’m calling their bluff.”

    For now, most Republicans have focused on deficits but the Wall Street Journal calls this Obama’s Tax Trap:

    “Mr. Obama’s plan has been to increase spending to new, and what he hopes will be permanent, heights. Then as the public and financial markets begin to fret about deficits and debt, he’ll claim that the debt is “unsustainable” and that the only “responsible” policy is to raise taxes.”

    Instead, the WSJ argues the GOP’s focus should be on growth and spending, not deficits, or they will fall into Obama’s tax trap:

    “Republicans need to break out of their rhetorical preoccupation with debt and deficits, focusing their political aim instead on spending and above all on reviving economic growth. They should hold the line against all tax increases and begin to consider a menu of tax cuts to make the U.S. more competitive, especially if the economy continues to underperform.

    Mr. Obama’s strategy of spending our way to prosperity clearly hasn’t worked, as the voters are coming to understand. But if the GOP policy response is merely to bemoan deficits, they will soon find themselves back at their historic stand as tax collectors for the welfare state. To avoid Mr. Obama’s tax trap, Republicans also need a growth agenda.”

    Too bad Congress doesn’t have someone like Rick Santelli and his Stop Spending message. I think that argument resonates with most Americans.

    — DRJ

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