Friday, April 16, 2004
- If you have an economy coming out of a recession and you want to accentuate the negative, it's fairly easy to use lagging indicators -- economic data that turn positive months after the recovery and new expansion begin. And while the number of unemployed is one lagging indicator as everyone knows. So too are bankruptcy rates and median family income*. The upshot of this analysis, as Michael Phillips points out, is that Kerry's misery index could come back to bite him in the arse, as the lagging indicators included in the series turn positive. One more positive employment report, and this thing could be shelved for quite some time.
- The focus on employment in manufacturing, and in particular the outsourcing debate, is quite misguided. The current issue of Foreign Affairs carries Daniel Drezner's excellent rebuttal, noting that the extinction of manfacturing jobs has been going on for some time. Jude Blanchette argues as well that the bevy of goods made available to people at constant or even declining prices is something to be praised not damned. Kerry continues to believe that the middle class earns its money by making stuff, but fewer and fewer people do that, worldwide, and not even John F'n Kerry can stop the engine of progress. Instead we produce services, knowledge, information. And some day even those things will be produced elsewhere as the churn continues, here and abroad.
- One question begged by the Kerry Index is why he focused on only public university tuitions and left out private universities? I'm sure one reason is that private university tuitions have risen slower during the economic downturn, as states balanced their budgets by reducing middle-class subsidization of higher education. So in essence the middle class is more miserable with lower taxes and less subsidization of higher education than it would be with lower tuitions and higher taxes? I must have slept through that class.
- FactCheck notes that when they called Gene Sperling, the ex-Clinton aide that made up the Kerry index, why he had cherry-picked the three prices in the series -- health, gasoline, and college tuition -- he replied that they are "the major things people see and feel." Well in a sense, gasoline is the most visible of the prices we observe, though as I continue to point out to people, the price you'd need in inflation adjusted terms to make this as bad as 1980 is over $2.75 per gallon. This is one reason why Kerry has to focus on changes rather than levels of prices. But it's also misleading, in that gasoline represents less than 3% of the bundle used to evaluate CPI (CPI-U, for urban dwellers, which is the measure most people use). Medical care is under 6%, and college tuition about 1.25%. So he uses a little less than 10% of the CPI to concoct 3/7ths of his index.
Yesterday John Kerry introduced something called the "middle-class misery index." He created a whole new formula to judge how miserable we are, and then he said, "Right now the middle-class misery index is the highest it�s ever been." Well, of course it is � he just invented it yesterday!
UPDATE: Thanks, Elder! It is indeed Michael. James, where ya been?
* -- A footnote: Kerry fudged the 2003 median family income number, which is not available, by having it grow at the rate of "usual weekly earnings". Even that could haunt him, as hourly earnings are turning more positive of late, while the weekly earnings figure naturally takes a pause when firms are rapidly adding employees.