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280 Down

June 2nd, 2011 Erik No comments

Larry Kudlow brings some sanity to the 280 point drop and the economy.  Snip:

What’s lacking here is confidence.

No, we’re not going into a double-dip recession. The most important indicator is the Treasury yield curve, which is still very steeply sloped. And businesses are profitable. Those profits have been the backbone of what little growth we’ve had in the last two years. And they’re the mother’s milk of the stock market.

But the point is, without real growth policies, there’s not much to cheer about in the market or the economy. We’re muddling along. It could even be called a growth recession.

Wednesday’s 280-point Dow drop is cry for help. Is anybody listening?

 

Categories: Economics Tags: ,

Nothing Made in America?

May 29th, 2011 Erik No comments

Bottom Line: The declining share of manufacturing’s contribution to GDP reflects a global trend as the entire world moves increasingly towards a more services-intensive global economy. When people complain that “nothing is made here anymore,” it’s not really true that somebody else is manufacturing the goods that we used to make in America. The reality is that because of ongoing gains in productivity and lower prices, we (and others around the world) just don’t need to spend as much on manufactured goods any more in relation to the overall size of the economy. And we’re all better off because of that global “decline in manufacturing.”

Categories: Economics Tags: ,

Keynes v. Hayek 2

April 29th, 2011 Erik No comments



Categories: Economics Tags: ,

Welfare State Handouts Account for 1/3 of Wages

March 12th, 2011 Erik No comments

Pretty astonishing when you think about it.  It is economically unsustainable.

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.

Even as the economy has recovered, social welfare benefits make up 35 percent of wages and salaries this year, up from 21 percent in 2000 and 10 percent in 1960, according to TrimTabs Investment Research using Bureau of Economic Analysis data.

“The U.S. economy has become alarmingly dependent on government stimulus,” said Madeline Schnapp, director of Macroeconomic Research at TrimTabs, in a note to clients. “Consumption supported by wages and salaries is a much stronger foundation for economic growth than consumption based on social welfare benefits.”

Posner Talks Economic, Stimulus, and Budgets

February 16th, 2011 Erik No comments

Catching up on my Uncommon Knowledge shows on my trip, I watched this interview (below). Posner calls the stimulus worthless and ineffective. Posner also speaks about the Fed. His view of the Fed is mixed. Watch it in its entirety:

Categories: Business, Economics Tags:

Ryan v. Maloney

February 9th, 2011 Erik No comments

Categories: Congress, Economics Tags:

Kudlow Interviews Rand Paul

January 28th, 2011 Erik No comments

Unsustainable

January 14th, 2011 Erik No comments

In Love with Hayek

December 31st, 2010 Erik No comments

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Milton Friedman Interviewed

December 23rd, 2010 Erik No comments

Uncommon Knowledge takes us into the past to talk libertarianism with Milton Friedman from 1999. This interview is a classic:

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PG&E Reprieve?

December 14th, 2010 Erik No comments

Erin Brockovich made Hinkley and PG&E famous (as noted in the movie that bears her name) by helping to uncover the carcinogenic chromium 6 in the ground water in, or near, said town.  Now comes this story from a study that concludes the instance of cancer in Hinkley is below “expectations.”

A state survey has not found a disproportionately high number of cancers in Hinkley, a high-desert community that has become the symbol of public fears about exposure to groundwater tainted with carcinogenic chromium 6.

From 1996 to 2008, 196 cancers were identified among residents of the census tract that includes Hinkley — a slightly lower number than the 224 cancers that would have been expected given its demographic characteristics, said epidemiologist John Morgan, who conducted the California Cancer Registry survey.


The survey did not attempt to explain why any individual in Hinkley contracted cancer, nor did it diminish the importance of Pacific Gas & Electric Co. cleaning up a plume of groundwater with elevated levels of chromium 6, Morgan said.

“In this preliminary assessment we only looked at cancer outcomes, not specific types of cancer,” Morgan said. “However, we did look at a dozen cancer types in earlier surveys of the same census tract for the years between 1988 and 1998. Overall, the results of those surveys were almost identical to the new findings, and none of the cancers represented a statistical excess.”

Categories: Business, Environment Tags:

Whole Foods Redeux

December 13th, 2010 Erik No comments

The CEO of Whole Foods featured last January here.

Categories: Business Tags: ,

Americans Don’t Hate the Rich

December 13th, 2010 Erik No comments

Bill Voegeli of CMC writes in the latest Commentary that class warfare rhetoric does not necessarily provide the benefits we might think it would.  In other words, Americans do not loathe the rich.

Would Friedman Have Supported an Inflationary Fed?

December 13th, 2010 Erik No comments

No:

Friedman made an exception to his rule about steady-state monetary policy in case of deflation. When prices fell, as they had during the Great Depression or in Japan in the 1990s, he urged the central bank to increase money growth. I served as one of two honorary advisers to the Bank of Japan in the 1990s. With short-term rates close to zero, I gave the same advice, urging the bank several times to buy long-term bonds or foreign exchange to increase money growth until deflation ended.

All this is not relevant now, since there is no sign of deflation in the United States. The Fed’s claim that there is a risk of deflation should embarrass it.

Categories: American Government, Economics Tags:

Manchin Votes with the Republicans on Holding Current Tax Rates

December 5th, 2010 Erik No comments

So reports Politico here.

Categories: Economics Tags:

Quantitative Easing (The Printing of the Money)

December 2nd, 2010 Erik No comments

Somewhat of a language warning here:

Categories: Economics Tags:

Blunt Words from Richard Epstein

November 24th, 2010 Erik No comments

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Hayek v. Keynes: Rematch!

November 7th, 2010 Erik No comments

And the original:

Categories: Economics Tags: ,

Obamacare Encourages Business to Drop Insurance

October 23rd, 2010 Erik No comments

So says Democrat Governor Philip Bredesen.

In 2014, when these exchanges come into operation, a typical family of four with an annual income of $90,000 and a 45-year-old policy holder qualifies for a federal subsidy of 40% of their health-insurance cost. For that same family with an income of $50,000 (close to the median family income in America), the subsidy is 76% of the cost.

One implication of the magnitude of these subsidies seems clear: For a person starting a business in 2014, it will be logical and responsible simply to plan from the outset never to offer health benefits. Employees, thanks to the exchanges, can easily purchase excellent, fairly priced insurance, without pre-existing condition limitations, through the exchanges. As it grows, the business can avoid a great deal of cost because the federal government will now pay much of what the business would have incurred for its share of health insurance. The small business tax credits included in health reform are limited and short-term, and the eventual penalty for not providing coverage, of $2,000 per employee, is still far less than the cost of insurance it replaces.

The Die is Cast

October 8th, 2010 Erik No comments

The latest jobs numbers do not bode well for the Democrats as we head to November:

Categories: Economics Tags:

Explaining the Most Influential Election Issue in One Graph

September 26th, 2010 Erik No comments

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The Founders, Property, and Federalist #10

September 8th, 2010 Erik No comments

One of my former students writes an excellent piece at Heritage, noting this piece by Thomas G. West, on the Founders and their favorable opinion of free markets.  This issue came up for a brief moment yesterday in my American Government class while going over Federalist #10.

Drawing on the West study, Shaw points out that the Founders were remarkably similar in their protection of property individuals  earned.  Government was there, to protect property and to enforce that protection through and by the rule of law.  If I could add, this was a moral issue to the Founders:  to allow someone to violate the property rights of another was a violation of the rights inalienable endowed into each every human being.

Cut to the class discussion today in Federalist #10:

The second expedient is as impracticable as the first would be unwise. As long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed. As long as the connection subsists between his reason and his self-love, his opinions and his passions will have a reciprocal influence on each other; and the former will be objects to which the latter will attach themselves. The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.

So to Hamilton and Jefferson, we can add Madison:  the object of government is to protect private property–an extension of securing our natural rights.  This protection necessary is because each and every human being is equal in those rights.  Different human beings have different talents.  It follows, that some will be more productive and more talented than others in acquiring property, and in putting their gifts/talents to use.  We can see how this might apply to a person who invents something the consumer might want and becomes rich as a result of a calculated risk.  This inventor (let’s say it is Henry Ford), will likely get rich.

The same right that protects an Henry Ford, though, protects anyone who accumulates property.  It protects rich and poor alike.  The problem, as Madison notes, is that the people become inflamed, jealous,  and motivated by greed or some other passion, and that leads to factions.  The implication is that rich, and the poor, may violate the rights of others derived from their passions.  The rich might have a desire for more gain at the expense of others, and the poor possess the desire of greed/envy and may try to lay their hands on the property of the wealthy.

The necessity to remedy this problem of faction in a political community is the first object for Publius in crafting a defense of the then proposed U.S. Constitution.  Without the protection of the faculties of others–the rights of others–and the property that results from their talents and risks, there would not be a strong commercial republic–or rather the republic would not be strong without a strong commercial and market sector.  Taking into account the Declaration, a government that redistributes property (without consent) abandons its primary object it was instituted. The Founding remedies the problem of faction, which would violate the rights of others who have property no matter the source.

The Limitless Welfare State

August 26th, 2010 Erik No comments

William Voegeli from the Claremont Salvatori Center speaks about his new book, Never Enough: America’s Limitless Welfare State.

Categories: Economics Tags: ,

Obama and 2012

August 23rd, 2010 Erik No comments

More and more are speculating what I speculated many months ago–that Hillary! will challenge Obama for the nomination. BUT, there are no Republicans really catching fire.


Government too Big

August 3rd, 2010 Erik No comments

In yesterday’s post on the Tea Party, I suggested that the government is seen by a majority of the voters (and the Tea Party) as being too overreaching.  There is a lot of ample evidence to support such a conclusion.

Michael Barone writes at Real Clear Politics that, after looking at a Rassmussen poll, the divide in America is between the people, and those who are in the government:

Evidence comes from pollster Scott Rasmussen. He asked likely voters — his usual sample, which tilts more Republican than all adults — whether increased government spending is good or bad for the economy:

The results were unambiguous. Good for the country? Twenty-eight percent. Bad for the country? Fifty-two percent.

He got similar results when he asked whether increasing the federal debt is good or bad for the economy. Likely voters believe it’s bad for the economy by a 56 percent to 17 percent margin.

There is some dissent, from the voters Rasmussen labels the Political Class. These are voters who trust the judgment of America’s political leaders over that of the American people, who do not believe the federal government has become a special interest group and who don’t believe government and big business work together in ways that hurt consumers and investors.

Here is what Rassmussen concludes:

In official Washington, there appears to be a belief that policy makers must choose between helping the economy or reducing spending and deficits. A number of polling companies have even asked questions on the trade-off.

However, a new Rasmussen Reports national telephone survey finds that just 28% of voters believe increased government spending is good for the economy. Fifty-two percent (52%) believe increased government spending is bad for the economy, while 12% say it has no impact. Eight percent (8%) are not sure.

This suggests that for 72% of voters, asking about a trade-off between cutting spending and helping the economy doesn’t make sense. A look at the demographics shows that the trade-off makes sense for only one group– the Political Class. Among that group, 67% believe increased government spending would be good for the economy.

Couple this with the traditionally Democrat states like NY, that want to repeal Obamacare, and you have an election cycle shaping up with angry voters who believe their money is going to government officials, who seem not to want to listen to them in the first place.  The only alternative for folks like that is to vote another party.  The NY poll does not necessarily guarantee that kind of movement, but it suggests the problems facing the Democrats and Obama as we go forward.