Tuesday, July 31, 2007

Iraq, the Real Story 

Vets for Freedom, a non-partisan organization of Iraq and Afghanistan veterans, will launch its MN chapter on Thursday, August 2. The MN chair, David Thule, a recently returned Iraq veteran from Owatonna, MN will serve as MN's chairman.

Thule had this to say, "Veterans who have served in Iraq and Afghanistan can provide a view point that no pundit, paid MoveOn.org protester or poll company can compete with (honestly). We (vets) know the joy on children's faces when we drive by, the exhilaration of a successful project completed, and the exhaustion of keeping watch in our humvees through early morning."

Vets for Freedom produced a "Thank You" ad with several Iraq veterans. This ad will run in the Mpls-St. Paul, Duluth and Rochester markets.

Vets for Freedom founder, Iraqi vet Pete Hegseth, said, "...we want to set the record straight and ensure that General Petraeus has the resources, time and support he needs to complete the mission." The ad can be viewed at Vets for Freedom at 6:00 PM beginning Wed., August 1.


What recession? 

Larry Kudlow is a pretty smart guy, and he's emphasizing profits as the mother's milk of the economy.
The economy has found its legs with a 3.4 percent GDP growth report for the second quarter, a much-needed surge from only 0.6 percent in Q1. Moreover, core inflation came in at a rock bottom 1.4 percent.

Most importantly, second quarter corporate profits are flowing in two to three times better than expected. Much of this reflects the huge global economic boom that Treasury Secretary Henry Paulson describes as the greatest worldwide surge in his professional lifetime. These rising profits inject new value into the stock market.
I read earlier, but was reminded when I looked at the Bloomberg economy page over my mango smoothie lunch. Top line:
Consumer confidence in the U.S. jumped more than forecast this month to the highest level in almost six years, suggesting the June slowdown in spending may be temporary.
So are all the doom-and-gloomers wrong? I think not entirely.

First of all, slide further down the page: Personal spending came in below expected for June. Yes that number's already cooked in the second quarter numbers, but the expectation should have been moved down already too. Home prices down 2.8% in May, and construction spending down 0.3% in June. Think all those effects are already cooked in? No, me neither. And the NAPM Business Conditions Index is down near where recessions begin, and again it's unexpected.

What does it mean? I think, first, that there may be some reaction to the fact that prices in housing are not falling as fast as some might have feared. Calculated Risk notes that housing slumps tend to be long in terms of price declines, so this may be the beginning of a long decline. The increase in GDP in the second quarter came from sources other than consumption, so if personal spending is really going to rebound in July and August, the evidence so far is just an increase in confidence.

I run for St. Cloud a model much like that James Hamilton uses for the US, or perhaps more like Alan Gin's for San Diego -- I'm still writing up the documentation, it will be available next month -- and like San Diego St. Cloud has had a heavy reliance on construction, and the probability reading I had last time had a point estimate of 28.3%. (I've been surprised by the volatility of the number, so I've been looking to see whether I can get this fixed before I release the measure to the public.) I have received no information in the past thirty days since our last report went public to change my mind on that measure.


Four (year) corner defense 

Excuse me, I'm on pins and needles about KG (I love this, as a Celtic fan living in Minnesota), but meanwhile there's a blog to write.

I found this story quite interesting. In short, a university's lawyer can simply wait for the graduation of a student who is suing for, say, First Amendment violations after being tossed off the university newspaper for criticizing the university's president. Now graduated, the Tenth Circuit Court of Appeals says, the student no longer has his free speech rights limited by the school and therefore the case is moot. So if you really want to pursue that case against the school, you should stay in school and not graduate. That's just weird.

Monday, July 30, 2007

Best paragraph I read today 

Let's say that population really is the biggest problem: we'll agree for the sake of argument. So, what should we do about it? Well, the biggest yet piece of economic modelling of the future says that we should be intensifying globalization. Get everybody rich and population will peak and then fall. We can always add a carbon tax or cap and trade on top if we should so wish.
Tim Worstall. Fertility is as subject to supply and demand as any other human behavior.

Like fixing the robbers tea 

I thought the line went that nobody is safe when the legislature is in session. So why in the world would the Duluth News Tribune think it's a good idea for the legislature to ALWAYS be in session?
�The biggest problem of not having a full-time Legislature is that the Legislature doesn�t end up running as much of the state government as it should. The governor gets more power if the Legislature is not in session,� Massachusetts state Rep. Byron Rushing told the News Tribune editorial page staff Friday of checks and balances provided by his state�s full-time Legislature.
You think car registration is bad now, wait until the Legislature is in session year-round! For Minnesota, particularly for the party that couldn't finish its work, giving them another six months seems like rewarding poor performance.

Now, however, let me put on my economics hat...

Most of the research I've seen on legislature size and expenditures is positive. Time is an input; legislation is an output. (See Crain, 1979.) Is an increase in the amount of legislation produced a good or bad thing for a state or country? That's a very good question -- I know most of the research on rule of law and economic growth, but if we looked at two countries where the "rule of law" was equivalent, would the one with more laws grow faster or slower than the one with less? I tend to think the one with more laws grows slower, because I think each law has to increase the amount of inefficiency in the economic system. What are the counterarguments?

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Singing until they come home 

The local paper has run a Monday insert of local-interest stories, and the lead this morning is of a mother and daughter making a CD of music for the son-in-law and husband that serves in Balad. I've been blessed to have been on stage with Patty McLaird, a woman of great spirit and a delightful voice. I am glad to hear from the story that she is better:

Wagner eventually finished mixing the CD when McLaird was in the hospital, and the pair has sent about 250 copies to military personnel serving overseas. McLaird and Wagner did not name the CD, but they refer to it as �The Servicemen�s Project.�

There are 16 tracks on the CD, including seven with vocals and two poems with music in the background. The rest are instrumentals. McLaird sings, plays guitar and wrote some of the tracks. Wagner plays guitar, violin, mandolin, harmonica, sings and wrote some of the tracks. Her brother, Lucas McLaird, an Army veteran, plays piano on the CD.

Wagner, 24, was married seven months to Ryan, 26, before he was sent to Iraq. Ryan Wagner is a full-time employee of the National Guard and is currently stationed as a helicopter flight engineer in Balad, Iraq.

She had a tough time with his deployment and decided to do something about it.

�Summer said it pretty well when she said, �You�ve got two choices � you can cry and worry all the time or have faith and do something about it,�� said Patty McLaird, who works for the St. Cloud school district as a paraprofessional for the deaf and hard of hearing. �She said we have to try and be positive for the men we come in contact with.�

There's a sample and information on how to get the CD to a serviceman in the article. If you have someone still there, give it a thought, and a prayer for Ryan.


Not quite that bad* 

Doug Giles is trying to "brace you for the liberal Kool-Aid crunch" that faces college incoming freshmen.
In a couple of weeks you�re going to have your liberal campus and its professors shove more crap down your throat than Rosie does her gullet during Chili�s Monday Night Nacho Monster Blowout Special.
What can one do about it?
The options are:
  1. You can drink the campus Kool Aid and do the Dhimmocratic do-si-do.
  2. You can run from the conflict to a likeminded conservative ghetto group and hide on the curb with your little cowering crowd.
  3. You and your concurring buddies can get prepped and be a conservative crew that enters campus life and joyfully, earnestly and courageously challenges the purveyors of the anti-American propaganda.
Hold on there now, cowpoke. Things are not quite that bad.

First off, let's understand that much learning that happens in college occurs within groups that study together. Referring to them as "likeminded conservative ghetto groups" may help gather a few more lonely readers for Giles' radio and book, but if that's what was needed for education why go to college?

And there are departments where at least you have a slightly greater chance finding more conservative thought. As I mentioned on Tony Garcia's show yesterday, while the social sciences run Democrat by about nine to one, the ratio in economics is closer to three to one. (I highly recommend listening to the EconTalk podcast with Bryan Caplan for that particular point.) There are good conservative faculty in the humanities if you look.

You'll need one or two, but you don't need the whole school to be that way. Gary has been fulminating over the attempt of liberal groups to organize boycotts of Fox News advertisers. (I don't necessarily see this as a bad thing -- it might drive the price down enough for me to advertise the Final Word on the local cable during FNC programming. Even better, if they boycott the goods produced by FNC advertisers, there are more of those goods for me. Another argument for another day.) Gary points out something we say here often:

Let�s also recognize that Democrats aren�t willing to venture into the �hostile territory� of conservative talk radio or into debates and forums sponsored by conservative organizations. Here in Minnesota, Patty Wetterling didn�t participate in any debates sponsored by the Minnesota Chamber of Commerce against Michele Bachmann.

State Sen. Tarryl Clark told KNSI talk radio host Andy Barnett that she doesn�t do �entertainment talk radio.�

Compare that with how conservatives don�t think twice about going onto liberal TV shows like Chris Matthews� Hardball, Meet the Press or NPR. Frankly, conservatives are used to doing battle with liberals whenever they�re invited.

Yes, and where better to prepare for that than in a university? So you can't just hide in the "ghetto" and nobody who is a sincere adviser to conservative students would have you do so.

But one of the lessons you will learn is how to pick which battles to fight. Conservative freshmen do not cower, Mr. Giles; they err towards many quixotic adventures that leave them bloodied and chastened. They become like Mark Twain's cat that has stepped on a hot stove, choosing not to get into any further adventures, keeping their heads down and just wanting to get their degree in accounting or biology and get the hell out of college. And they will not engage outside of college either.

You can increase your chances of finding your Hogwarts for the journey through school by finding a school that has a classical liberal education available to you. The ISI College Guide is a fine place to start. A good bit of Thomas Sowell's Choosing a College is outdated now, but the parts on what to look for in a classroom are helpful. And for those entering, his conclusion includes this sage advice:
It may be tempting to go to a college where your friends are going, but the long-run consequences have to be kept in mind. In the short run, it will be good to know someone the first day you step on a college campus, but chances are you are going to make new friends there anyway. Moreover, these are years when people grow personally and intellectually, by great amounts and in very different directions. That is part of why you go to college. It can be more than ironic to realize in your sophomore or junior year that you chose the wrong college because of someone you seldom spend time with any more.
Better that you approach your first year in college that way than deciding to tilt at the liberal windmills. Learn first; the windmills will be there when you're ready.

*If you thought I was going to write about my health, here's all you need to know: It appears there was no problem with the gallbladder. I spent Friday and Saturday alternatively fevered and chilled and mostly in bed. Sunday felt like I had been on a three day bachelor party cruise -- headache, really thirsty, but otherwise normal. Walked last night, talked to Mr. Upmann, and feel a little sheepish about seeing my doctor this morning in an hour. But I will go.


Sunday, July 29, 2007

Iraq Soccer Win 

Today is a HUGE day for Iraq. Those of you who follow soccer know that it is the biggest attended sport outside the USA. Today was the last day of the Asian Games - Iraq was playing Saudi Arabia for the Asian soccer championship.

The Iraqi national team is comprised of Kurds, Sunnis and Shias. This is the first time they have played in the Asian cup in their history. (Iraq was set up as an independent kingdom in 1921 after WWI and the breakup of the Ottoman Empire).

In addition to this being the first time Iraq has played in the Asian Cup, there is another factor: One of Saddam's now deceased sons was so intent on winning that he would physically torture the players if they lost.

Despite history and troubles, the Iraqis persevered. They upset teams all through the playoffs to reach the championship game. They WON!! Iraq the Model a blog established by two men since the downfall of Saddam has the detail. I'm sure the Americans in Iraq as well as those who have come back understand the importance of this victory. Please read the entire post but if not time, Iraq the Model's authors' last line says it all:

The fear is gone, the curfew is ignored, tonight Iraq knows only joy..

Saturday, July 28, 2007

Red Bull (MN Natl Guard) Comes Home to Anoka 

Friday, July 27m a bright, sunny, breezy day, familes and friends welcomed home 99 of Minnesota's finest, members of the Red Bull National Guard Unit in Anoka. These true American heroes had served 22 months in Iraq, one of the longest assignments taken on by an NG unit. The welcoming was large, heartwarming and patriotic. Thanks, guys, thanks a ton for all you did!

Thanks too, to the MN Patriot Riders who make a point of being there for our guys' returns from deployment and provide a respectful final tribute for those who have died for freedom.

More Red Bull Photos 

The welcome to Minnesota's finest was heartwarming, tearful and incredibly happy. These families, kids, spouses, significant others, friends, etc. had an absolutely wonderful day. Please enjoy these photos as well as the others

Heroes' Welcome 

Welcome home, heroes!

One final post - thank you, soldiers! 

Thank you one and all!

Friday, July 27, 2007

Fishing Finale 

The fishing stories are true. Though the river bottom was very rocky and I had trouble keeping balance and I tumbled into the water four days straight, persistence pays.
Our friends, Diana and Mike, caught 28 salmon between the two of them, I caught four. All fish not yet consumed or given to friends are resting comfortably in our freezers. (Yes, I caught the one pictured below but I was not keen on holding it through the gills.)

Harrowing 24 hours 

I apologize for light posting, but I have been to the emergency room twice in the last 24 hours. What they thought might be a gallbladder attack isn't, and it appears we're going to chalk it up to a viral infection for now. So it's water and rest for me this weekend.

Michael drives solo on the Final Word tomorrow, but if you can't get enough of my dulcet tones, you can listen to Taxpayers League Live at about 10:15am CT for discussion of my post on the Wisconsin health care plan. This vacation from FW coincides with Littlest's first day as a teenager. I am trying to store enough energy to do some geocaching with her.

Thursday, July 26, 2007

More American Ingenuity - Soldiers, of course 

In previous posts I've discussed the ability of Americans to look at a problem, define it and find a solution. We take this trait for granted and possibly, unconsciously, assume that all other cultures can do this. This capability is not cross-human. This excerpt from Michael Yon's latest post clarifies a lot. The quotes below come from the last four paragraphs in the long post.

"I have wondered now for two years why is it that American military leaders somehow seem to naturally know what it takes to run a city, while many of the local leaders seem clueless......Our military is, in a sense its own little country, with city-states spread out all around the world. Each base is like a little city-state....

We live far better on base here in Baqubah than many people who are living downtown (though there are some very nice homes), and it�s not all about money. Not at all and not in the least. When Americans move into Iraqi buildings, the buildings start improving from the first day. And then, the buildings near the buildings start to improve. ....

"The Greatest Generation called it �the can-do mentality.� It�s a wealth measured not only in dollars, but also in knowledge. The burning curiosity that launched the Hubble, flows from that mentality, and so does the revenue stream of taxpayer dollars that funded it. Iraq is very rich in resources, but philosophically it is impoverished. The truest separation between cultures is in the collective dreams of their people."

Where's the doomslayer when you need him? 

A writer in Africa declares the world must say goodbye to cheap food.
The price of corn (maize) has doubled in a year, and wheat futures are at their highest in a decade. The food price index in India has risen 11 percent in one year, and in Mexico in January there were riots after the price of corn flour (used in making the staple food of the poor, tortillas) went up fourfold.

Even in the developed countries, food prices are going up, and they are not going to come down again. Cheap food lasted for only 50 years. Before the Second World War most families in the developed countries spent a third or more of their income on food (as the poor majority in developing countries still do). But after the war a series of radical changes, from mechanisation to the Green Revolution, raised agricultural productivity hugely and caused a long, steep fall in the real price of food.

For the global middle class, it was the Good Old Days, with food taking only a tenth of their income. It will probably be back up to a quarter within a decade, and it may go much higher than that, because we are entering a period when three separate factors are converging to drive food prices up.
Those factors are demand from population growth in Asia (and the Middle East, if you believe Mark Steyn), bio-fuels competing for arable land, and global warming. This reminds me of nothing so much as the days in the 1970s when the Club of Rome was declaring our imminent starvation. Luckily then we had Julian Simon:

Rising population did not mean less food, just the opposite: instead of skyrocketing as predicted by the Malthusian theory, food prices, relative to wages, had declined historically. In the United States, for example, between 1800 and 1980, the price of wheat plummeted while the population grew from 5 million to 226 million. Accord-ing to Malthus, all those people should have been long dead, the country reduced to a handful of fur trappers on the brink of starvation. In fact, there was a booming and flourishing populace, one that was better-fed, taller, healthier, more disease-free, with far less infant mortality and longer life expectancy than ever before in human history. Obesity, not starvation, was the major American food problem in 1980. Those were the facts.

The price of corn on the futures market is currently about $3.50/bushel. Now that's well above these historical figures, but when adjusted for the effect of inflation these rates are not that far above the 1995 levels. And that's not even the current price. Just like Simon, you could go look it up, or you can just sit and write and worry.

Your call.


Wednesday, July 25, 2007

Bears and Fishing 

A previous post talked about the fish that almost got away. In this series of photos, you will see the one the bear got.

Background - we usually fished on the side of the river where the black bear appeared. We saw it and crossed the stream. You can see our blue backpacks on the right side of the photos. The distance between us and the bear was 10-12 yards. Click on photo to enlarge.

The bear came over the hill:

The bear spots our fish in the water strung on an 8' log.

With one motion, the bear pulls the 8' log onto the hill, helps him/herself to one of the salmon and marches back over the hill. These salmon weighed 8-9 pounds. We kept them alive, in the water until ready to clean. During the entire time, the bear had rocks thrown at it and everyone, including Diana (whose fish the bear took), was yelling and screaming at the bear. "Hey, I'm hungry; here's a fish; tough luck!"

A twelve month job on a nine month contract 

Dani Rodrik:

Most people think academics get to take the summer off to vacation as they please. Even some of the better informed think the summer is just for research--with students and teaching as far from the mind as possible. The fiction is also reflected in academic salaries, which are paid for nine months of work. In principle, we do not get paid over the summer since we are not supposed to be doing any work for our institutions.

If it were only so! ... I am busy preparing my course syllabus for the Fall. We have to turn in our course reserve lists in early August, and if you are revising your course in any way--as I am--this means getting busy right about now.

Same here, plus catching up some writing that needs finishing by summer's end. I don't consider myself unemployed in the summers; while many summers I will work overseas on a project, this year I'm working on a book so not traveling. Nevertheless, even when I'm not doing those things, I'm still thinking about classes as Rodrik does in the rest of his interesting post.

So no more today; I need to get some things done. Indeed, I'm hiding at Panera trying to do so. Summer is also not the time for "honey-do" lists. (Mrs. S is so understanding...)

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Newspapers and the market test 

Monday I spent an hour on CQ Radio with my good friend Ed discussing a poll result on media bias. (Ed's discussion.) Yesterday I got the new NBER Reporter, which had as its lead article a summary of the paper by Matthew Gentzkow and Jesse Shapiro titled, "What Drives the Political Slant of Daily Newspapers?" They compared the language used by newspapers and the language used by politicians, arguing that newspapers that favor liberals will use phrases that are used by liberal politicians, and newspapers that favor conservatives will use phrases used more often by conservative politicians.
An illuminating example is the partisan divide over the tax on inherited wealth. In 2005, congressional Republicans, who generally oppose the tax, described it as a "death tax" 365 times, using the term "estate tax" only 46 times. Democrats did the reverse, saying "death tax" 35 times and "estate tax" 195 times. Similarly, the more liberal Washington Post used "estate tax" 10 times more often than it used death tax; the more conservative Washington Times used "estate tax" only twice as often.
Examining over 400 newspapers they find something quite interesting. The ideology of the owner of a newspaper doesn't seem to matter as much as the political views of the community the newspaper serves:
When a single owner owns multiple papers, the authors find that each paper's language is tailored to its own market, rather than toeing a single, corporate line. Their data also show no significant relationship between a newspaper's slant and the political contributions made by its corporate owner. What instead has a big impact on newspaper bias is readers. The study found that the political outlook of a paper's readers explained about 20 percent of the variation in slant that the authors uncovered. No other factor showed such a strong correlation.

The reason for this is that owners find it more profitable to reflect the views of their readers than to impose their own perspective, the authors conclude. And, most of the newspapers studied were close to the ideological "sweet spot" that would maximize their profits, the authors calculate. Even a small deviation from this ideal bias would cut circulation by some 3 percent, so newspapers hew closely to the ideological stance that makes them the most money. "Our work shows that consumers play a fundamental role in determining the ideological positioning of media outlets," the authors write.
I don't find this result too surprising. It is hard for me to imagine that a newspaper can long ignore the median voter in a market (I would call this a Stiglerian or Peltzman-ian view of newspapers -- they are in the end as much subject to pressure groups as are elected officials.) One can always indulge a preference at some cost, but as the competition from other media sources increase these papers have to move towards the market median.

This should not cause any comfort for conservatives in Minnesota. The Twin Cities market is represented by two elected officials -- Betty McCollum and Keith Ellison -- that are to the left even of the median Democratic voter in national elections. The StarTribune, reacting to the market, should keep their paper to that left if the Gentzkow and Shapiro results are correct. Interestingly, when I discussed this paper with some liberal non-economist friends of mine, they argued that the STrib has moved a little to the right since being bought by McClatchy. I don't know that this is wrong -- if what Gentzkow and Shapiro have identified is a market test for newspapers, and if the previous owners were quite liberal themselves, then the paper might have moved a little to the right. What I would disagree with my friends about is that it's the result of corporate purchase. Just because the paper was owned by an ideological family rather than a corporation doesn't make the loss of revenue any less important. They might have moved less, but they still would have moved.

Tuesday, July 24, 2007

Justice delayed 

is still tasty: Ward Churchill has hit the bricks.
The University of Colorado Board of Regents voted to terminate controversial professor Ward Churchill on Tuesday evening.

The Board of Regents passed a motion to accept the recommendation from CU President Hank Brown to fire Churchill from his position in the Ethnic Studies department.

The measure passed with an 8 to 1 vote. The vote was made just after 5:30 p.m. and Cindy Carlisle was the dissenting vote.

Immediately after the decision was announced people in the crowd booed and some swore at the board members.

Churchill and his supporters then participated in a Native American ceremony outside of the building.
There's coverage of the event at Drunkablog and Pirate Ballerina. (Is Jim done blogging now?) Congrats to those two bloggers for providing continuous coverage.

I fully expect some sympathy event on our campus. I'll let you know if and when.


How to keep a statist busy all day 

[C]onservatives should chip in to buy Ms. Clinton and her political allies each a copy of the newest expansion pack of Civilization. It's fabulous. It would keep them busy for months at a time. And they would get what they have always wanted: a chance to run the world. And we would get what we have always wanted: that they would leave our economy alone.

Pareto improving. Win, win. What more can you ask for?

Nothing at all. From Craig Newmark, after reading of Hillary Clinton's desire for a new industrial policy. In comments, David Tufte notes that half of all macroeconomic problems come from the desire to "do something". I'd offer to take the over on that line, but out of respect for David Stern...


How to make Minnesota grow faster 

Let Wisconsin go Sicko and pass this health care plan.
The legislation, part of the budget approved by the Democratic-controlled Senate, would provide health insurance to nearly everyone in the state. That would include the estimated 276,000 people - 38,000 of them children - who have been without coverage for more than a year.

It would be financed by a 9% to 12% tax on employer payrolls and a 4% tax on workers' wages.

In exchange, employers would be freed of the cost and hassle of providing health benefits to their employees. Instead, people would have their choice of health insurance plans overseen by a state authority.
The Wall Street Journal opines that this will cost them more than they realize.
Proponents use the familiar argument for national health care that this will save money (about $1.8 billion a year) through efficiency gains by eliminating the administrative costs of private insurance. And unions and some big businesses with rich union health plans are only too happy to dump these liabilities onto the government.

But those costs won't vanish; they'll merely shift to all taxpayers and businesses. Small employers that can't afford to provide insurance would see their employment costs rise by thousands of dollars per worker, while those that now provide a basic health insurance plan would have to pay $400 to $500 a year more per employee.

The plan is also openly hostile to market incentives that contain costs. Private companies are making modest progress in sweating out health-care inflation by making patients more cost-conscious through increased copayments, health savings accounts, and incentives for wellness. The Wisconsin program moves in the opposite direction: It reduces out-of-pocket copayments, bars money-saving HSA plans, and increases the number of mandated medical services covered under the plan.

So where will savings come from? Where they always do in any government plan: Rationing via price controls and, as costs rise, waiting periods and coverage restrictions. This is Michael Moore's medical dream state.
The plan has both an HMO and a fee-for-service component. The latter is needed for the areas where HMOs do not exist, such as southeastern Wisconsin. But who sets the rate? Even the proponents have no answer to this.

The plan has been rushed forward by the state's senate Democrats, who may not be serious about passing this but rather wanting to get health care on page one in Wisconsin during a slow news cycle. Still, it's not the kind of news they should want. Sean Hackbarth notes the WSJ editorial:
Company executives who read the editorial are putting notes in the backs of their minds to remind themselves not to bother moving to Wisconsin. That�s what happens when politicians threaten to almost double state taxes in an already high tax state. You almost wonder if State Senate Democrats are on the payrolls of Chambers of Commerce for Minnesota, Illinois, Iowa, and Michigan. Passing �Healthy Wisconsin� would be a boon for those states. All at Wisconsin�s expense.
Oh but Sean! Nobody ever moves because of taxes! They love your state. They'll gladly stay and have their wealth confiscated pay taxes.

China is moving towards capitalism, Wisconsin is running away.

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Who pays for specials? 

There's a primary going on today in House District 28B. The DFL-endorsed candidate, Linda Pfeilsticker, is facing off against Wes Moreland. Moreland, it turns out, was studying in Oxford until this past weekend, but appears to be well-known. Michael reports that Pfeilsticker is supported by people close to the Keith Ellison campaign; Drew says she also draws support from Education Minne$ota. Moreland says he's more conservative and a better fit for a district represented by Republican Steve Sviggum for many years.

Local election officials say this primary is costing taxpayers as much as $15,000. Who should pay for this? The Winona Daily News editorial says it's the price of democracy:
What�s great about living in this country is that anyone who meets some very minimal qualifications can run. The ballot can be a great equalizer, just as one vote for every one person also has a positive effect in governing.

We would do well to remember that it�s not necessarily about what kind of family you�re born into, where you�re from or how well connected you are that qualifies you as a candidate. It�s about every person who�s interested having an equal shot, even if sometimes candidates are poorly qualified or seem to show little interest beyond getting their name on the ballot.

Keep in mind much of the criticism on the national political scene comes because of the massive amount of fundraising and cash it takes to be a viable candidate. Now, presidential candidates as well as those running for the House of Representatives, have to raise millions just to compete. The common person has a much harder time getting into the race at the federal level.

But not so on the state or local level (thankfully). Most can throw their names into the political ring with a couple of signatures and a filing fee. Sometimes, it creates lopsided races. Sometimes, it gives voters an odd choice of characters to represent them. Other times � when the system works best � it gives voters at least two great choices to represent their interests.
So while some whine about how limited their choices are for the U.S. Senate (more on that in the next post) in one breath, with the next they may whine about how some people just are wasting our time. Hurrah for the Winona Daily News editorial board. To paraphrase Churchill, the system looks wasteful until you see what the other systems have to offer.

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Cool and blue 

What are the best-paying blue-collar jobs? Forbes reports:

While the U.S. economy remains strong, factory jobs are being outsourced, a slowing housing market has killed construction jobs over the past several months and manufacturing employment has been on a downward trend in recent years.

Yet, there's still good money to be made in the labor and service industries, commonly referred to as "blue-collar" jobs. That is, if you can overcome the long odds of landing a job as an elevator installer and repairer, a gig that could pay more than $63,000 a year.

While some people might not immediately associate blue-collar occupations with higher-level formal education, some of these managers and supervisors must have extensive knowledge of business or sciences to perform the tasks of, for example, power plant operator or agricultural manager.

Power plant operators earn a median annual wage of $55,000, or $26.44 an hour. These workers control, operate or maintain machinery to generate electric power keeping your home or business juiced.

Farm, ranch and other agricultural managers make an annual wage of $52,070, or $25.03 an hour, to supervise the farming activities, get their hands dirty on occasion and handle some of the business and marketing. They perform all these tasks with the owner's consent, of course.

It will come as good news to one economist that two of the top ten happen in railyards. The data on all occupations is here: Economists are listed at $35.61 an hour.


Monday, July 23, 2007

More Colbert converts 

The Tax Foundation has a very funny observation about a very unfunny situation. Remarking on the use of state power to coerce a minority of individuals -- smokers -- to fund health care, Gerald Prante writes,
Why not impose a special excise tax on people who have two vowels in their last name? It's makes about as much sense as arbitrarily choosing smokers to fund various government programs that have nothing to do with smoking.
We'd tax Colbert too, then. I'm just glad Prante doesn't have three vowels in a row in his last name, or else I'd be in big trouble.


Who called for these earmarks? 

That's what The Examiner wants to know.
Here are the earmarks identified for Minnesota, which total $7,155,000. Check out the earmarks for your state and then call your congressman and ask if he or she sponsored any of your state's earmarks. If the answer is yes, ask why the congressman's name isn't on the earmark. If you recognize the institution designated to receive the earmarked tax dollars, call them and ask them what they intend to do with your money.
There's one for the other states, so if you're not in MN there's a list for you. On this list is $400.000 for "St. Cloud State University for the Science Initiative of Central Minnesota for curriculum development." That would be this organization, which has helped our university create a new masters in regulatory affairs; that's right, you can get a masters degree in how to navigate the Federal regulatory system to get your medical device to market. Bureaucracy has created a new field of study.

I am inquiring to see who our benefactor is and have dropped a note to . Who knows? We might throw them a party! I'll let you know if I get any response.

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Media alert: Blog Talk Radio 

I will join Captain Ed Morrissey at 2pm CT on Blog Talk Radio to discuss his post on the Rasmussen poll about media bias. Call 646-652-4889 to join the conversation!


Do you really care about the NBA referee? 

I highly recommend reading David Berri's post on whether the referee scandal in the NBA is going to bring down the league. After reviewing the effects of the Black Sox scandal on league attendance and the fact that the NBA has had very high attendance, he doesn't think the Donaghy Debacle going to matter that much.
That the NBA is setting attendance records should be surprising to the �doomsday� voices in the media. Long before the referee scandal broke academic research had already questioned the integrity of the NBA�s contests. Beck Taylor and Justin Trogdon published research in the Journal of Labor Economics in
detailing how NBA teams were systematically losing to enhance the team�s draft position. The research of Joe Price and Justin Wolfers suggested that the calls NBA referees made were influenced by the race of the player.

The research of Taylor and Trogdon �to the best of my knowledge � has never been addressed by the NBA. The NBA did commission a study to contradict the Price-Wolfers story. Initially it was reported that the NBA�s study refuted the Price-Wolfers research. Later on, though, it was revealed that the NBA�s results could be interpreted as being consistent with the Price-Wolfers study.

What has been the impact of all this research questioning the integrity of the NBA? My sense is nothing has happened. The NBA either ignores it or dismisses its claims.

And why does the NBA take this action? The NBA is not in the �truth� business. The NBA is in the �entertainment� business. Because providing entertainment is the actual game the NBA is playing, these stories � which clearly question the integrity of the game � are swept under the rug.

And these efforts are largely successful. Again, the NBA set an attendance record in 2004-05. This was followed by another record in 2005-06 and 2006-07. Taylor and Trogdon have found evidence that the NBA�s losers were not doing their best to win games since the 1980s. But like the Black Sox scandal, the NBA�s integrity problems have had no apparent impact on consumer demand.
Bill Simmons disagrees.
If you're a diehard NBA fan, you're horrified but strangely hopeful, because we needed a tipping point to change a stagnant league that was headed in the wrong direction ... and maybe this was it.

Look, we already knew the officiating needed to be improved. We knew the NBA needed to solve the problem of nonplayoff teams tanking down the stretch and shelving stars who could have played (and yet continuing to charge fans full price for these games). We knew the NBA needed to solve a lottery system that hasn't quite worked for 20 years. We knew the NBA needed to solve a screwed-up playoff system that only works when the conferences are perfectly balanced, and more importantly, we knew the league needed to start taking some chances. This is a league that hasn't swung for the fences with a major change since 1979, when it brought in the 3-point line from the old ABA. For nearly three decades, it has been making cosmetic changes here and there -- the draft lottery, zone defenses, hand-checks, the charging semicircle, improved rating systems for officials, flagrant fouls, the leaving-the-bench rule, the dress code -- while continually ignoring the bigger picture.

What's the big picture? Well, the regular season is effectively meaningless. Contenders can only improve to a point because of the luxury tax, so everyone searches for that same half-assed "we want to contend for a title, but we don't want to lose $20 million this season" competitive zone that leads to deals like Kurt Thomas and two first-round picks for a second-round pick and a 2006 trade deadline in which the biggest move involved Anthony Johnson. Fan interest peaks at three points -- at the start of the season, at the start of the first round of the playoffs, and right before the draft -- and dips at every other point. For seven of the past 10 seasons, the best two teams in the league played before the Finals -- which seems so incredibly shortsighted, I can't even begin to fathom how it's allowed to continue. And worst of all, when an NBA official was accused of fixing games, the prevailing reaction was "Which one?"

So yeah, they could make a movie about Tim Donaghy's story. And they probably will. Let's just hope we're not watching a documentary about the death of the NBA some day, because we're headed that way. Wake up, fellas. Rome is burning.
He calls this the Zapruder film of the Tim Donaghy Debacle.

Will any of this matter? There's more to learn. A Q&A with gambler Brandon Lang (from Two for the Money fame) suggests how Donaghy could do it, and wonders why it hasn't happened in refereeing before. Worth noting: Yes, a referee could shave the line, but better might be to shave on the total points. Lang suggests getting a team to the penalty (for free throws) would be better if you were trying to shave a game to the over. Steve Levitt suggests that statistical investigation is already happening.

According to latest reports, Donaghy might not make it to tell his tale.

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And all I got was this lousy keychain 

A successful fundraising campaign should be celebrated, and I'm sure the alumni and benefactors of Purdue are a generous bunch. But some celebrations can get a little out of hand.


That's the response from many students and staff when told Purdue spent more than a half-million dollars for a party last month to celebrate the end of its Campaign for Purdue fundraiser.

"That seems like a big waste," said David Hoover, a junior studying actuarial science. "Pay for renovations to some of these buildings. A lot of the buildings need it."

The bill for the June 30 event, in which donors were thanked for $1.7 billion in contributions over the past seven years, totaled $576,778, according to documents gathered by the Journal & Courier. About half was paid for by the Purdue Research Foundation; the rest came from money raised through the campaign.

Joe Bennett, vice president for university relations, said the event had to be upscale to properly thanks donors, many of whom donated more than $1 million.

"It's part of what you do to raise money at that kind of level," Bennett said. "That's what the people who made contributions to us deserved."

The article goes on to other justifications. But you simply have to wonder whether the alumni who gave, say, $500 or $1000 -- for whom this is a significant donation -- would like to know that even a small fraction went to a bash so large that an event management firm was paid almost a half-million to run it. They act like it just got a little bigger than planned, but that fact should demonstrate it was planned all along. The article suggests these opportunity costs:

What [$576,778] could have paid for:
  • Salary for almost seven full-time faculty members at average salary for a year.
  • Rooms for 82 students for a year in a university dorm.
  • Tuition for 81 students for a year at Purdue.
  • Salaries for 41 graduate teaching assistants for 10 months.
  • The debt of 30 graduating undergraduate students.
  • Former Purdue President Martin Jischke's yearly base salary of $406,950.
Yes, former. There's a new president, who has no comment on this bash because it was planned by President Jischke.


Might be two standard deviations there, hon 

There could be some studying needed by Patty Wetterling, who has taken a new job as coordinator of the state's sexual violence prevention unit (h/t: Andy Barnett).
The 57-year-old Democrat said she was exploring new opportunities after her narrow election loss to U.S. Rep. Michele Bachmann in November and that she applied when the job was posted in March.
I guess it depends on the definition of narrow. The results say Wetterling lost by eight points, just as she did in 2004. May I suggest, Mrs. Wetterling, that you study a little statistics? These fine students would be willing to help you.

(Video from reader sf, posted on the campus discuss list.) While we're at this, I also want to use this humorous look at Mankiw's Ten Principles (which Greg himself seemed to enjoy):

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Saturday, July 21, 2007

Fishing Stories - the one that got away, sort of. 

It's been awhile and I'd hoped to post more on our Alaska (AK) trip. Cropping photos is a learning experience and let's say, it's taken some time. One story has no photos. Here goes.

We fished on the Russian River on the Kenai Peninsula in AK. It is a snow melt river that runs fast and clear; the bottom is comprised of rocks, rocks, rocks; water and air temps were about 40 degrees. (The referenced photo is about 1/2 mile downstream from our location - we were in mid-thigh depth water.)

The salmon were running erratically. This was my fist time fishing. All those films of fish pulling out lines, flopping all over after landed, tugging against you when pulling them in are true. Couple the hooked fish activity with walking backwards over rocks you cannot see to get to dry land, well, let's say it gets real iffy at times. Despite good clothing, I had a hard time backing up to land my fish so when I got one on the line, I'd yell for my friend Mike to steady me.

I'd hooked a good 9-pounder. Mike and I were backing up to the sandbar when I lost my footing and plummeted into the river, taking Mike with me. He's yelling at me, "Hold the rod, hold the rod!" Sad to say, the fish jerked rod, reel and itself out of my hands. I was soaked from top to bottom and the pole was gone. Mike went downstream asking fishermen if they'd seen it but to no avail.

I'm on land, admittedly feeling sorry for myself, moping, etc. I'd caught one fish earlier and was debating to leave. About 20 minutes later, I hear this guy yell, "Anyone lose a rod?" He was fishing about 25' from where I'd been dunked, now holding two fishing rods.

"Hey, that's my rod! Can I have it back?"

"No problem," he says and hands me the rod. I go to pull in the line and the fish is STILL ON THE HOOK! I landed it - it's now in our freezer!

Friday, July 20, 2007

Unfair sales 

There is a relic of the Depression era in Wisconsin, called the Wisconsin Unfair Sales Act. Passed in 1930 it put a minimum on prices for goods and services in the state; you can't sell below cost. There are specific provisions for gasoline, however, which says you have to sell your gas at a markup over wholesale cost that can be 9.18%. In 2003 the Federal Trade Commission offered an opinion that this law is harming consumers by keeping prices high.
Unlike federal antitrust law, the Act protects individual competitors, not competition, and discourages pro-competitive price cutting. In particular, the Act subjects vendors to civil liability - including treble damages and a substantial fine per violation - for cutting prices even if there is no likelihood of harm to competition, and even if the vendors have no intent to engage in anticompetitive conduct.
If you need much more proof that it's protecting competitors, look at a position paper of the Wisconsin Grocers Association. they argue that minimum prices are good for consumers, without any explanation for why.

The Institute for Justice is now seeking to help Raj Bhandari, who is being fined $2,500 per gallon of gas he sells below cost. IJ is arguing that retailers like Bhandari are being denied their due process rights in two ways, first by singling out a good for disparate treatment (namely, gas) and second by blocking people engaging in a common commercial practice.

Our friend David Strom from the Taxpayers League will have Lee McGrath and Bob McNamara on their show, Taxpayers League Live, at 10am tomorrow to discuss the case. I suggest you tune in. If you are in Wisconsin, write to your legislators and get them to repeal this law. It would be a good example for us in Minnesota to follow, where there is also a minimum gas price law.

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But see? They didn't flinch 

Thanks for the interest in today's discussion of the civic center proposal. I read the report last night and one thing that I came away with was the neverending argument "we have to have this tax money to keep up." I called it "mutually assured taxation" on the air. (Check out the argument on this brochure for the new arena in Duluth -- it'll only add six cents to your $8 lunch.)

These things are a little tricky here in Minnesota. The money for the expansion would come from the food and beverage tax in St. Cloud. The tax was originally passed to pay for local civic buildings; at one time it paid for the civic center we now have. The money has more recently been used to pay for renovations in our arts district and at the local sports facility. Those bonds will soon be paid off. Rather than retire that tax, the move is now to find something else for it to pay for; thus comes the group supporting the new civic center expansion. The civic center proposal needs a state bond to make it happen, and so it needs state permission.

I will say, I don't really find the idea of an expansion egregious; the downtown area is about to lose its library and with restaurants closing all around the place, downtown is looking pretty shabby. We've spent money on worse. But that's the problem, isn't it? Rather than give us a tax break by letting us eat out for a half-buck less (on a $50 tab), it's easier to keep the tax in place and find some use, any use, for the bucks.

A similar attitude keeps showing up in this argument that we can tax the well-to-do more. Today's example from mnpACT! about a meeting in Red Wing where the local Chamber of Commerce gave its legislators some grief for supporting tax increases.
It would be a little difficult to satisfy this group on tax policy. After all, if wealthier citizens are looking for greener pastures, there are plenty of them. New Hampshire, Florida, Nevada, and Wyoming have no income tax at all... Alaska gives its citizens rebates on oil revenues. Oregon, Montana, and Delaware have no sales tax. But, with the exception of Stanley Hubbard who left for warmer climes in Florida, most of Minnesota's "elite" have stayed.

Why? Because the overall business climate is good here. Although Minnesota ranks high in tax revenue raised, Forbes magazine (not exactly a liberal source) decided to study all aspects of business climate...setting up a ranking of The Best States for Business (September, 2006). The result? Minnesota ranks 14th in the nation overall. That's ahead of Iowa (25th), Wisconsin (39th), South Dakota (17th) and just behind North Dakota (13th). Minnesota was ranked 14th for our labor force, 20th for regulatory environment, and most importantly, Forbes ranked Minnesota #3 for quality of life.

Before the chamber starts counting the number of wealthy Minnesotans who would bail out on Minnesota because of taxes, they might want to look at the Forbes picture....life is not measured by taxes alone.
The old Colbert quote of public finance being how to pluck the goose the most with the least amount of hissing has become how to pluck the goose the most without having the goose fly away. The OECD notes that at the time, Jean-Baptiste Colbert was interested in getting feathers for the wars and friends of Louis XIV. How different from now, if we replace the Sun King with Pogemiller, Clark and Bakk? Not much.

No doubt Minnesota is a great place to live. (Played golf today -- which is why I'm only posting now -- and 80 degrees and enough sun to keep the bugs off made this by far the nicest day of the year so far.) And those who are here are those who have voted with the feet; they adjust to Minnesota's higher taxes by receiving compensating differentials in other areas, including the weather (!), good roads, good schools, etc. The beauty of the St. Cloud civic center proposal is its hidden nature: You won't notice the money you forgo because you never held it. Thus there will be little objection to the bonding request St. Cloud will make. But small changes in what you keep can have some substantial effects. It's an elasticity question; seems like most of the good questions are.

One of the people I golfed with today is a local lawyer who handles estates. What keeps him busy these days? Writing opinions for clients on the benefits and costs of moving. Be careful you don't keep ignoring the hissing; those geese have maps as well as wings.

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Thursday, July 19, 2007

Radio tomorrow 

I will be appearing (perhaps as a weekly gig now) on Hot Talk with Andy Barnett on 1450 KNSI around 8:10am. The topic is the proposal to expand the Civic Center in St. Cloud into the space currently occupied by the library (we passed a referendum to drop about $30 million into the library and sundry other public works awhile ago.) Since the proponents intend to have the state bond for us, I would hope those living outside St. Cloud will take notice of this proposal for another $15 million.

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Yes, dammit, change my towels! 

I admit to liking fresh sheets and towels daily when I travel. When I travel with Mrs. S this is a problem, for she does not like the invasion of Housekeeping. (Part of this is because I usually am gone by the time they arrive; she has turned Getting Ready to Go Out into a three-act production with hors d'oeurves served between acts.) But I love the feel of a fresh towel.

I have always found the signs of "save the earth, reuse your towels" absolutely annoying, yet have also wondered if they work. Apparently not.

Nearly 70 percent of respondents said they open a new mini-bottle of shampoo each time they shower at a hotel, and 63 percent said they were more likely to leave the lights on at a hotel than at home.

Three out of four hotel guests believe it is important to have their sheets and towels changed each day � an environmentally unfriendly habit few practice at home.

I do re-use the shampoo at least. But I also take home the fresh one they leave the second day.

Frank Stephenson figures that when we don't pay for the water or the washing, we conserve.

(Which causes me to pause on a story my pastor friend told me the other day. He has a six-year-old son who likes to wear different pajamas to bed each night. This is nice except that at the end of the week the hamper has seven pairs of pajamas, causing extra washing. So he tries to talk his son into using fewer pajamas. Having spent much time with an economist -- right, I get to take credit for this, because it's my story -- he tells his son he will charge a quarter for washing. Come week-end, and the son brings his dad his hamper with the seven pairs. "I told you I would only do that if you gave me a quarter." His son carries the hamper out and back to his room, only to return a minute later with the hamper. "You still have all the pajamas there." The son smiles, places a quarter on top of the hamper and leaves.

When he told me this he wondered if he should raise the price. He feared his son would raid his piggy bank, which is one of those in which you teach kids to tithe, save, and invest. We agreed that increasing the amount of money he got for allowance would only cause inflation and not change behavior. What to do? I replied, "Well, you could simply destroy six pairs of pajamas. You'd solve your problem and your son would keep his money." A long silence followed. I'm not sure if he was awestruck for my brilliance or praying for God to forgive my depravity in suggesting the ruin of his son's pajamas.)

Anyway, back to towels. Some guy did a study suggesting that if you tell people what is expected of them in re-using towels, you'll get almost fifty percent of them to re-use a towel at least once. But a commenter on Freakonomics post on the same thing suggests that paying people to re-use sheets and towels (at about $5/day) was a much better mechanism.
In every other hotel I�ve stayed in that has encouraged me to forego linen changes, the hotel has done nothing to compensate me for the savings they get from my decision. Having experienced this in Tokyo done right, I almost never opt for this service. I do feel guilty, but it bothers me that the hotel is disingenuous in their appeals to my environmentalism (they�re doing this to save money/make profits, not to save the planet). If they cared about saving the planet, they would pass the cost savings from those choices back to the guests who made those choices.
Excuse me, I need to call my pastor friend...


Radio Saturday: Whaddya think of Giuliani? 

Michael and I are starting a series this week on the Final Word in which we will focus on one presidential candidate per week and ask callers to tell us specifically what they like or don't like about that candidate. This week we kick off with Rudy Giuliani as the focus. Do you like him or don't you and why? Do you think he'll win or not? I'll focus mostly on domestic policy -- since Steve Forbes has signed on with Rudy as an advisor, should I be treating Rudy as a Forbes/Kemp tax warrior? -- as that's what I know. Michael will offer some thoughts as well. But what will make this feature work or not are opinions on the candidates from you, the listener. Be sure to listen and call us Saturday at 651-289-4488 with your view.

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Smart growth for thee 

Via Craig Newmark, a great story by Peter Gordon about the cost of the Subway to the Sea.
The Mayor wants to extend LA's Red Line subway another 12.5 miles so it goes all the way to the beach. (Why stop there?)

Planners are still $5 billion short but, the story reports, they do have $5 million for a study of the project.

The sharing part of me prompts me to do the study for free. So here goes.

The present 16 miles of the Red Line accounts for an annual loss of $286 million (even after considering all manner of external benefits from some riders not driving). So we are looking at augmenting this problem by about $223 million per year. The $5 billion to be spent has an annual value (using the governments favored 7.5% annual interest rate) of $375 million. So the bottom line is: forget about it.

In fact, as a bonus, I suggest the MTA shuts down the 16 miles of Red Line they now operate. In fact, if each of the 115,000 current daily boardings are parts of a round-trip, there are approximately 57,500 of them. We could ask them if a lifetime pension of $5,000 per year would make them whole. It's mostly a low-income ridership that now uses the Red Line and many might think that this is pretty cool.
Craig points out that Mayor Villaraigosa is not taking his own advice, being driven instead in his own Yukon. Ironman doesn't want to outfit the poor with Yukons, but rather a nice little ride for each person currently using LA's mass transit. I'd say either cash or the pension, which could finance a used car and some other bills those riders might have.


Wednesday, July 18, 2007

Maybe he's just warming up 

As most observers now, Rep. Barney Frank is now chair of the House Financial Services Committee, which hears testimony from the Federal Reserve. RTE notes that he got a little excited today talking about income inequality and forgot to let Fed Chairman Ben Bernanke give his opening remarks in his legally mandated testimony to Congress.
Barney Frank spoke at length on growing income inequality, then, half an hour into the hearing, asked Federal Reserve Chairman Ben Bernanke for his thoughts. Mr. Bernanke began to reply when Mr. Frank sheepishly interrupted, �I apologize, you haven�t given your opening statement yet. If this had been my first hearing, I could explain that mistake a little bit easier. No good explanation comes to mind.�

Mr. Frank also praised Mr. Bernanke for devoting several pages of his testimony to consumer protection issues. His predecessor, Alan Greenspan, had little interest in consumer protection issues, much less mentioning them in his Humphrey-Hawkins testimony. �To me it is very clear this is not Uncle Alan�s semi-annual report,� Mr. Frank said.

It's not a mild-mannered Congress working with the Fed these days. How bad is this? Let me tick off two past Congressmen who probably were harder on the Fed than Rep. Frank has been so far.

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How sorry is he? 

In my continuing quest to figure out what Keith Ellison meant, I have now drawn two stories from which I have two statements:

In a written statement released Tuesday afternoon, Ellison, the first Muslim elected to Congress, said his remarks had been misconstrued.

"In response to a question, I stated that the Bush Administration exploited post-9/11 fears to advance a policy agenda that has undermined our civil liberties. I stand by this statement. ...

"I want to be clear that the murderous Nazi regime is historically distinct and the horror of the Holocaust must be acknowledged as a unique event in human history. I did not intend any direct comparison between the totalitarian state of Nazi Germany and the current administration.

"I have taken consistent and strong stands against Holocaust denial throughout my life in public service," Ellison said. (Minneapolis Star-Tribune, July 17, 10:21pm)
OK, he stands by the statement and he did not intend any direct comparison by the statement he made. So we probably need to watch this again:
Now you don't get to see the part where he is reported to have said he can't really say that Bush staged the 9-11 debacle because doing that put you in "the nut-ball box." (It's not clear whether Hitler ordered the burning of the Reichstag either, but that's for the historians to debate.)

Now the second report, almost at the same time as this one:
The nation's first Muslim congressman said Tuesday that he erred in comparing the Bush administration's response to Sept. 11 to an event that led to Adolf Hitler's consolidation of power in Nazi Germany.

..."In hindsight, I wouldn't have used that [Reichstag] reference point," Ellison told The Associated Press in a telephone interview Tuesday. "It was probably inappropriate to use that example, because it's a unique historical event, without really any clear parallels."

Ellison said he remains harshly critical of the Bush administration.

"I believe that they have exploited the fears that grew from 9/11, in order to pass legislation and even start wars they could have never gotten away with but for that tragedy," he said.

Ellison said he had gotten a call Tuesday afternoon from the Anti-Defamation League, an international group that opposes anti-Semitism, regarding the Hitler comparison.

"They told me they understood the point I was trying to make, but they didn't think it was the right way to use that historical example, because they thought any sort of comparison to the modern world we live in in some way diminishes the horror of the Nazi era," Ellison said. "I told them I feel they're right."
Gary calls this an apology (that doesn't wash with him) but I don't see any regret or remorse expressed towards the person to whom the slur was made -- the president. Indeed, he goes further than the statement quoted by the StarTribune, not only accusing the Bush administration of undermining civil liberties but of starting wars. (Which ones? Does Ellison oppose the Afghan war against the Taliban?) Instead he just admits it was an error.

For a man that is supposed to say he's sorry, he doesn't seem to show much contrition.

Michael has been running a series of posts today of reactions to the now-better-publicized remarks.

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Tampa under the gun 

Do you remember the yacht tax? Passed as part of a luxury excise tax on the rich in George H.W. Bush's tax increase in 1990, it produced much less revenue than expected and killed off 7,600 jobs in the boat building industry, according to a column by George Will. It was such a bad idea that by 1992, both Republicans and Democrats wanted it gone. It took a few years before the industry bounced back. Even principles of economics textbooks refer to it now as a disaster.

If only Congress would read those textbooks. For in their desperate search for money to pay for a new federal child health insurance program, the muttonheads in the Democratic Party are at it again. This time it's cigars.
The Democrat controlled Congress has sought an extra $35-billion to $50-billion for the state children's health insurance program. The program distributes payments to the states to help buy coverage for kids not poor enough for Medicaid.

(Note: Part of that money would go to expand SCHIP, the insurance program, to families at four times the official poverty guideline which, according to Kim Priestap, would by over $82,000 for a family of four.)

Cigarettes, which accounted for more than 95 percent of tobacco tax collections last year, are the main focus of the bill. Federal taxes on a pack would jump from 39 cents to $1.

But the legislation has dragged cigars along for the ride. The industry operates under a 4.8 cents-per-cigar tax cap.

Under the proposed bill, taxes on "large cigars," a category that includes all but the tiny cigars sold in 20 packs like cigarettes, would rise to 53 percent.

A U.S. Senate version of the bill under consideration today in the Finance Committee sets the maximum tax per cigar at $10.

"We are a very small industry. We're the fly. The cigarette industry is the elephant as far as tax collections are concerned," Newman said. "We've been roped in with conglomerates that own cigarette companies."

The city of Tampa has 1000 employees in cigarmaking, including 900 at the Hav-A-Tampa plant owned by Altadis. As the article points out, it's very hard to argue against a sin tax when the revenue is earmarked for reducing the costs of the sin (sort of.) But it is nonetheless a very damaging story to that industry, and you would have thought the yacht tax debacle would have taught us something.

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Tuesday, July 17, 2007

Let me be sure I have this right 

Money in freezer: seat in Congress.

Money in bathroom: resignation.

I think we need a little more Argentina in our lives. Either that, or a map to where to stash the cash.


I work for myself, and nobody works for me 

A new issue of the Federal Reserve Bank of Minneapolis' FedGazette features small firms. Minnesotans on average are now working in smaller firms than they did before. Most interesting: Minnesota has had 18% growth in its population, but a 36% growth in the number of firms who hire at least one worker. (The graph on the left shows the share of firms who hire no workers; nationwide, it's almost four out of five.)

It's worth thinking about that graph -- those four of five firms are what we think about when we say entrepreneur. I'm waiting to see the rest of this video that studies three such men and what they are able to achieve. I'd say, the reduction in the size of the firms we have in Minnesota is part of our transition away from manufacturing and towards other types of value-adding employment.

Interesting to me is this short note on limited liability corporations or LLCs.

One might think that the rise in LLCs, as well as business registrations in general, could be an indicator of business and economic activity; indeed, the very act of creating a legal business entity would seem to be at least a weak signal of owner motivation and attitude. But that does not appear to be the case, at least from what we know, which isn�t much.

Brian Winrow, an assistant professor at the School of Business at Emporia University in Emporia, Kan., recently looked at LLC trends in South Dakota. He said one of the reasons for the rise in LLCs is a very practical one. Entrepreneurs are more educated today and, as such, more likely to understand the comparative utility of an LLC. It�s a much easier process, as well as less expensive, to form an LLC than a corporation, yet an LLC offers much of the same liability protection for an owner.

But aside from the hard numbers, there is virtually no research on whether a rising pool of LLCs has any discernible economic effects�on firm survival, employment, sector concentration and other matters�or whether LLC growth is simply a legal phenomenon, as more of the self-employed seek liability protection.
I have been debating whether to track the local economy's LLC creation for awhile. It would appear I should think about it some more.

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Starvation comes next 

It is probably only because people understand so little economics that Robert Mugabe will not be thought of as the perpetrator of democide. Just as surely as a bullet or machete, purposefully emptying your country's stores will kill your people.
Zimbabweans are shopping like there's no tomorrow. With police patrolling the aisles of Harare's electrical shops to enforce massive government-ordered price cuts, the widescreen TVs were the first things to go, for as little as �20. Across the country, shoes, clothes, toiletries and different kinds of food were all swept from the shelves as a nation with the world's fastest shrinking economy gorged itself on one last spending spree.

Car dealers said officials were trying to force them to sell vehicles at the official exchange rate, effectively meaning that a car costing �15,000 could be had for �30 by changing money on the blackmarket. The owners of several dealerships have been arrested.

President Robert Mugabe's order that all shop prices be cut by at least half, and sometimes several times more, has forced stores to open to hordes of customers waving thick blocks of near worthless money given new value by the price cuts. The police and groups of ruling party supporters could be seen leading the charge for a bargain.

Mr Mugabe has accused business interests of fuelling inflation, running at about 20,000%, to bring down his government. A hotline is in place to report "overcharging", and retailers who flinch at slashing prices are being dragged before the courts. Several thousand have been arrested for "profiteering" over the past week, including the chief executives of the biggest retailers in the country, some of them foreign-owned.

Economists say the price cuts will only deepen the national crisis, leaving many shops bare because they will not be able to afford to restock while official retail prices remain lower than the cost of buying wholesale or importing. Mr Mugabe has dismissed such warnings as "bookish economics".

Some businesses fear that Operation Reduce Prices is intended to pin the blame on the private sector for Zimbabwe's economic problems as a step towards seizing control of many companies in the way that white-owned farms were expropriated at the beginning of the decade, sparking the crisis.

Operation Reduce Prices comes after some classic hyperinflationary experiences, like this one by Moses Moyo.

I popped out for a Z$25,000 loaf of bread last Friday. It had gone up to Z$30,000 dollars. I ran home for the extra, ran back to the shop - and the price of my loaf had risen to Z$44,000.

That's life in Zimbabwe today - or at least it was, until this week [when ORP began] ...

An order went out to all manufacturers, wholesalers and retailers to slash their prices by half. Any who showed the slightest reluctance to do so were visited by the Green Bombers - young graduates from the Zanu-PF terror camps whose economic arguments are enforced with a smack on the head with a stout stick. ...

And the end result? Where it worked best, where prices were cut by a genuine 50 per cent, the government succeeded in reducing the cost of living to almost exactly what it was 10 days ago.

Craig Newmark, who provides the first link above, wonders how much longer this can go on. It won't be too long. As in Yugoslavia, the bakers will stop making bread, and the farmers will stop bringing produce to market. Of course it could be that Mugabe is creating a pretext to nationalize industry like he has the farm system. I doubt that will go well for him either. The only question that remains is how many will die, and when will Mugabe leave. I'm disappointed Intrade doesn't have a contract...


You mean there's a budget constaint? 

From a new report issued by Moody's, entitled "Intercollegiate Athletics Programs: A Winning or Losing Game?" According to a Chronicle of Higher Ed report (subscriber's link),

The report ... says the biggest and most successful athletics programs can have a positive effect on the creditworthiness of their institutions. But a majority of intercollegiate athletics programs require substantial institutional subsidies to balance their operational budgets, and do not have significant revenue from ticket sales and donations. Those programs could hurt their institutions' credit rating, the report says.

"A well-run athletics program or a particular team's sustained success might contribute to long-lasting, stronger student demand, national name recognition, and philanthropic support, thereby creating positive credit momentum," the report says.

But success in athletics requires heavy spending on facilities and coaches' salaries, costs that can create negative publicity, the report says. And such big spending typically does not lead to other benefits, such as attracting faculty members or research grants.

Isn't that shocking? Of course not. There are more losers than winners in college sports; Big 12 commissioner Kevin Weiberg points out that the winners cannot compensate the losers (h/t: Phil Miller.)
It is also important to understand that even with equal revenue sharing in television, the increase for the teams receiving the least amount under the present structure would likely be less than $1 million. While not insubstantial, that amount of money is only about two percent of a $40 million budget. A case can also be made that a team appearing in a televised game should receive some financial upside since many times television requires changing start times and other inconveniences for the participating teams. There are also a number of areas in the Big 12 where money is shared equally, like revenues from the football championship game. So the current package of revenue sharing represents a negotiated balance. It is an area that the conference needs to continue to focus on and to discuss.
"Continue to focus on and to discuss" is the commissioner's nice way of saying "no way, pal." And I wouldn't expect this to improve with the possibility of the "plus one" playoff in college football.

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Monday, July 16, 2007

The substitution effect dominates the income effect 

Ezra Klein gets all Veblenesque in his critique of Americans working too much. It's all about positional competition, he says.
He argues that the U.S. economy has set its incentives up so as to systematically underemphasize leisure and overemphasize consumption. Much of what we purchase are called "positional goods" � goods whose value is measured in relation to the purchases of others. Take housing. Would you rather live in a land where you had a 4,000-square-foot house and everyone else had a 6,000-square-foot house, or one in which you had a 3,000-square-foot house and everyone else had a 2,000-square-foot house? Given this choice, studies show that most respondents pick the latter.
And on. The problem with working so much is that we do it for the wrong reasons; it's wasteful to try to get ahead of the Joneses.

Let me return you to a post Russ Roberts had last year regarding another article on declining real wages. Which, of course, is a lot of hooey, at least if you can read BLS data. What do we find? Real wages are rising.

My professor Craig Stubblebine read a story like this many years ago and remarked to me how stupid he thought the argument was. "So real wages go up and people are supposed to work less? Whatever happened to the substitution effect?" (That's a paraphrase; he said this to me at least twenty years ago.)

Now in the aggregate we think in the long run that labor supply is relatively unresponsive to changes in the real wage (though I still remember the Mincer effect of rising real wages on increased female labor force participation -- did this effect not survive years of econometric testing?) But that doesn't mean that you can't buy more in the short run, or that the short run is all that short. Increases in productivity have increased the demand for labor, and also have changed the nature of work and the tradeoff with leisure. But the income effect could certainly be something that takes hold more slowly and can easily explain that which Klein abhors.

Roberts concluded:
What keeps my wages high (and yours) is our alternatives. Is there any evidence that workers have fewer alternatives than they once had? If anything, workers are more mobile today than ever. What sets workers wages are the wages of those alternatives. That depends, generally, on our skills, our knowledge and our drive and discipline�human capital and how well we are able to apply it. Workers are better educated than ever. That is why I believe that compensation, properly measured, is higher than it was five or ten or twenty or thirty years ago.
We are able to do more with our leisure than ever before, so the value of income in supplementing that leisure is also higher. What motivates us to do that is, frankly, irrelevant to whether it creates the prosperity engine we now enjoy.

UPDATE: The Onion gets it.


Snapshots vs movies and corporate taxes 

I confess to being confused over all the fuss about the WSJ editorial regarding corporate tax rates and tax revenues. I agree that what the Journal calls a Laffer curve isn't one (take for instance Mark Thoma's redrawing or Max Sawicky's estimate, or the other links provided by Kieran Healy) -- but not for the reasons they express.

Laffer's argument is a dynamic one. Not in the sense that Laffer drew it -- the Laffer curve itself is a comparative static story: two tax rates in equilibrium should produce tax/gdp ratio of what? -- but underlying the story is a lifetime optimization problem. If presented with these (expected) tax rates over the rest of my life, when would be the smartest times for me to work and save and invest, and when would it be wisest for me to consume leisure?

The graph in the editorial is a snapshot of what an industrialized economy's corporate tax rate is right now and what its tax share is right now. It tells you nothing about when the tax rate was imposed and the stage at which the economy's adjustment to the new rate is right now. It doesn't tell you about administrative deadweight losses of tax collection systems between countries. It doesn't tell you the interplay of tax rates and R&D, which can be different in different countries. As one of my friends would say, "there's a whole lot of ceteris that just ain't paribus."

If you were going to make this analysis, time must be an explicit dimension. The effect of tax rates on tax takes is a long-run analysis. You need to see the movement of work effort and savings over time. You need a movie, not a snapshot. Unfortunately, newspapers are not good vehicles for dynamic analysis.

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You could say this about Ellison too 

In commenting on Betty Williams' statement that she "would love to be able to kill" George Bush, but non-violently (this makes it so much better), Eric Falkenstein observes that while Williams means well, her view is nonetheless evil:
Evil isn't Snidely Whiplash or the Legion of Doom who explicitly state an intention to hurt people (and are comic characters). It's people with really good intentions operating under extreme confidence against other people's will, creating a greater good such as the no-Bush world, or rule 'by the people'.

It's good to know what evil really is: good intentions, enthusiastically applied, on a bad theory. These people are creating utopias or protecting some principle, and the mere sadists are just opportunists. The idea that killing a politician who won two democratic elections, because one disagrees (strongly!) with them is based on the premise that Bush actually stole the election, or that he is in fact cynically trying to favor big business knowing this merely sucks the life out of average people, or some other caricature. ... As Nietzsche said, no one lies like the indignant, and they lie to promote a greater good. It is facts that matter, because facts constrain theories, and if you assume the wrong facts, your theory that explains those facts is wrong, and an extreme application of that theory is evil.
And nobody does indignant like the StarTribune's editorial board, still shilling for Ellison.


Saturday, July 14, 2007

Vets for Freedom - July 17 

Pete Hegseth, Executive Director of Vets for Freedom has designed a 10-week program for vets to convince Congress, in particular the US Senate, to give General Petraeus and his surge crew the time they need for victory in Iraq. My contacts are saying the surge is working. It's more than interesting that the US Senate, who overwhelmingly confirmed General Petraeus, now are deciding to play coward. Personally, I would not want to be labeled a "cut an run" Senate candidate next year after our soldiers win this!

If you are an Iraq or Afghan vet, please go to the Vets for Freedom website. Contacts and directions are there for you to participate this Tuesday, July 17. If not you, then who? Also, there are funds available to help offset transportation costs. Those who are not vets can always donate funds. Thank you in advance to all who participate.

Those who support this war need to call the US Senate, main #: 202.224.3121 and ask for your Senator or Harry Reid and tell him you support the surge. House main # is: 202.225.3121 - same message to your Congressman. Be polite but flood the Congress!

One fine day 

If you are a blogger, or read blogs, just wonder what that word means, you need to be at Keegans tonight at 6pm for the Minnesota Organization of Blogs gathering. Usual ringleader Chad the Elder has decided he prefers Manila, enjoying his satellite TV connection, but the rest of us should be there. Cigars preferred.

You can start your fine day right now, listening to the second hour of Taxpayers League Live and then six hours of the Northern Alliance Radio Network beginning at 11am, on AM 1280 the Patriot (stream, later podcasts). Michael and I will have the Final Word starting at 3pm, with a focus on state and local politics. Exactly what? We're still working on guests while I hop in the car now and drive to the station; moonroof open because it's another gorgeous day in Minnesota.

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Friday, July 13, 2007

What part of fairness don't they understand? 

Apparently, all of it.

I am signing the petition today to tell the Democrats hands off talk radio. Obviously that's a bit self-interested in my case. But we continue to applaud Senator Norm Coleman for leading the fight to keep talkers talking. Captain Ed has the dialog between he and Sen. Dick Durbin. Coleman later offered a press release, in which he said,
Since the repeal of the Fairness Doctrine talk radio has flourished, thanks to free speech and free market ideals. Americans have not only been witness to, but have directly benefited from, the information revolution that has changed our daily lives. Cable television, radio and the Internet are all in their own ways bringing forward a multiplicity of information and view points. Despite today�s efforts by my opponents, I will continue working to ensure our free speech and free market principles are protected by fighting against reinstitution of the Fairness Doctrine.
Look for more news at Fairness Doctrine Watch.

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The kinds of stories I love 

I am by training a monetary economist, and I love good stories about money. Via Marginal Revolution, I read that India has a problem with its coins being driven out of circulation because they are worth more as razor blades in Bangladesh.

Police in Calcutta say that the recent arrest of a grocer highlights the extent of the problem. They seized what they said was a huge coin-melting unit which he was operating in a run-down shack.

The grocer confessed to melting down tens of thousands of Indian coins into razor blades which were then smuggled into Bangladesh, police said.

"Our one rupee coin is in fact worth 35 rupees, because we make five to seven blades out of them," the grocer allegedly told the police. "Bangladeshi smugglers take delivery of the blades at regular intervals."

Two-rupee coins are made of copper, whose price shot up enough to cause lots of coins to be melted down last year, as well as nickel. (I recommend this article by Daniel Gross on the longer-run reasons for copper's price rise.) Now it is a bit of a bother to melt down coins to get pure copper (though if you have pre-1982 pennies, which are 95% copper, you're probably going to get more than a penny back). Given that the coin is quite substantial in size, I could see that.

But one-rupee coins are stainless steel, 4.85 grams; using them for creating razor blades seems pretty novel (this blog says it's not likely to have a great edge for shaving, but who knows what quality is available in Bangladesh?) As the blades would go for the equivalent of four rupees each in Bangladesh, I assume good ones must be very scarce. It's almost a weird version of Gresham's Law: bad Bangladeshi razor blades drive good Indian coin out of existence.

The original story says that the Indian government has been minting new coins to make up for the shortfall. As in many countries, small candies or other trinket goods are used as substitutes for small currency (rupees are divisible into 100 paise, and a rupee is worth less than $.03.) even resorting to a fiat private money with small bits of hand-printed cardboard.

Question: If the Reserve Bank of India wanted to maximize the value of its issue, why wouldn't it just sell steel directly to the razor makers?


Here's what I don't understand about Keith Ellison 

When we talked last week on the Final Word about his cosponsorship of the Kucinich bill calling for investigation of the president for the war, I noted that his press secretary said that the bill had no chance and that they were only making a statement.

The next day he makes a big statement, which he now says we are misconstruing. It doesn't take belief that Bush has created a Reichstag fire to find enough things about the war that could be impeachable. But rather than list those, Ellison only lists foreign policy disagreements.
...[I]n the aftermath of 9/11, instead of invading Iraq, President Bush should have responded militarily where necessary, but even more so, diplomatically, and with all of our intelligence resources.

If the president had embraced the good will of the post 9/11 world to marshal an international effort to eliminate the terrorist cells responsible for this heinous act, we wouldn't be mired in a five-year war. We could have effectively eliminated Al-Qaida instead of creating a virtual recruiting station for them in Iraq. As it is, we may need years to shake off the taint of Iraq, Abu Ghraib, Guantanamo, FISA violations, Patriot Act encroachments and other Bush administration failures.

If Ellison believes these are policy disagreements, he should not have signed onto the Kucinich bill. If he believes they are more, why his climbdown from the rhetoric of his remarks?

Which is it, Representative?

Little gas fact for today 

I have done a couple of presentations on gas prices the last couple of days, and here's the fact that sticks out for me. In 1981 the average American production worker needed to work 11.4 minutes to earn enough to buy one gallon of gas. Seeing the sign for $3.299 gas yesterday morning I thought, well, it's got to be higher now right? Nope, almost exactly the same number. And cars use almost 20% less gas to travel 1000 miles as they did then. Even though there are now SUVs as opposed to then.

Phil Miller observes on the declining cost of entertainment as well.

Immigrant Societies 

This post by King reminds us that far too many universities fight against "creating commonality on a unique American culture." As he states, the third point of Robert Putnam's research is key. King has triggered a very fond memory and an unsettling observation.

Fond Memory:
At one point in my life I was selected to take four 11-year-olds to an international camp in Leeds, England, through an organization called Children's International Summer Villages or CISV. "My" two boys and girls were chosen after a number of screening sessions. We spent a month living with children from 11 nations and junior counselors (teenagers) from two more.

The purpose was to focus on our similarities as humans, not our differences. Children from Scandinavian countries (similar not identical languages), English-speaking and Spanish speaking nations were not bunked together. The objective was to make us communicate and work with each other. Activities were designed to mix the kids, not segregate them by any manner. It worked - a great four weeks and contacts made that were maintained for decades.

Unsettling Observation:
Today instead of providing opportunities for American students to mix, too many college campuses encourage various subsets to maintain their respective exclusivity - in dorms, ethnic organizations, etc. The idea of mixing across cultures has become taboo.

The goals of the 1960's and CISV were to foster awareness, appreciation and acceptance across the board. Today, the same people who voiced they wanted this cross-culture community are the same people who now demand that separate facilities for ____________ subset be supplied at universities and funded at public expense. And this same mindset claims it wants everyone to be a member of the "global community" while using its authority to segregate student populations by mostly outward characteristics.

This does nothing to foster an American identity, an ideal which is truly unique on the planet. No other nation (or global community concept) provides the opportunity to succeed with hard work, regardless of race, creed, ethnicity, national background, etc. A key reason this belief grew was because our universities used to encourage an environment to mix; today they foster division by differences and discourage finding common ground.

Thursday, July 12, 2007

Media alert 

I'll be having a little gas (talk) with Andy Barnett on 1450 KNSI tomorrow morning beginning after 8am. We'll talk both about the short- and long-run, and how we can put things in perspective.

We can update this article by Mark Perry from a couple years ago. We'll also look at these numbers.

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Why you have to keep cutting taxes 

While discussing what might happen to pay for the fiscal deficit implied by the Federal government's health care obligations, Greg Mankiw lets a really big cat out of the bag:
Depending on the path of health spending, the automatic tax increases built into current law may be enough to close much of the long-run fiscal gap. These numbers include, I believe, the automatic expiration of the 2001 and 2003 tax cuts, as well as the bracket creep that occurs as economic growth pushes people into higher tax brackets.

Of course, one should not underestimate the size of the implied tax hikes. For the median married taxpayer with two kids, the average effective tax rate (including both income and payroll taxes) rises from 20.0 to 37.6 percent. The marginal tax rate for this taxpayer rises from 30.3 to 50.3 percent.
What happens to the incentive to save and invest and work if the next dollar of what the median married worker earns is taxed over 50%?

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Stranger in a strange town 

I think Dan Drezner is correct: Journalists seem to run articles like this every summer. "Those free market boys in economics are getting taken to the woodshed by their own kind, and they try to marginalize them in return." Alex Tabarrok points out correctly that the average economist is no Milton Friedman. Greg Mankiw points out that many such "heretics" end up with Nobels. Though I'd argue the taste of the Nobel committee deviates from a free-market view. Better to look at the Clark Medal winners ... where we find Krugman and Card. No matter what, you tend to end up with a bunch of moderate Democrats, as Bryan Caplan points out.

OK, so the world misperceives us. I don't really care too much, but I am bothered by the question Drezner asks:

What's of interest to me is that this kind of scattershot critique of standard economic theory -- in which a whole bunch of disparate, even contradictory critiques are lumped together -- seems to be a common trope among journalists. My question is, why?

There's a Freakonomics-style question to be asked here -- are journalists who wash out of Ph.D. programs more or less likely to do this? What about journalists with overt ideological biases? And why the hell hasn't The New Republic written its standard, contrarian, "the neoclassical model does better than you think" kind of piece?

If you think I have an answer for this, guess again. Though for part of it the answer has to be how one writes articles. 'Balance' -- the bitch-goddess of journalism -- requires you to find two economists on, say, foreign trade sanctions who disagree on whether sanctions are good or bad, and report them. Now there's a whole lot of economists who are moderate Democrats who are against sanctions. But to get that person against the economist who might favor sanctions doesn't give you enough balance or contrast. So you pose them against a conservative economist.

Over time, as you learn that most economists are against sanctions on foreign trade, you associate that with the Republican stand and conclude that "all economists who oppose sanctions on foreign trade are Republicans." This is simply not true, but you can see how one gets that perception as the journalist tries to gain labels to demonstrate balance.

Get enough of these lumps, and it's not too hard to find enough economists with one issue that don't agree with the orthodoxy, and you get articles like this.

UPDATE: I really like the point Don Boudreaux makes,
I would say that I have no "faith" in free trade; rather, the evidence and the theory of free trade are powerful enough to convince me that it is practically superior to any form of protectionism if the goal is widespread prosperity. Faith is required when neither evidence nor theory support whatever proposition you choose to (or happen to) believe.
I think, for instance, the data on trade openness and its connection to real GDP is fairly clear-cut, but what makes trade open is still a matter of some debate.

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Just one question 

If you put your caucus in the middle of a whole mess of other primaries, what does it gain you?

My short answer: Mention on the ticker when everyone else is watching. It's the reason smaller schools join Division I athletics; I call it ticker envy.

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Wednesday, July 11, 2007

"Challenge faculty to focus on academics 

After talking with a colleague, I've decided the only thing wrong with Dick Andzenge's editorial today is that it didn't kick enough ass. Speaking of outgoing president Roy Saigo,
Because it does not have its own board, the university cannot articulate its vision and define its mission independent of other institutions in the system. This makes it hard for a president to develop a clear vision and move toward it.

Rather than attempt a forward-looking vision, Saigo chose to confront the perceived bigotry and perceived conflicts at the university. Unfortunately, focusing only on problems creates an image and a perception that the institution cannot appreciate its positive qualities.
Dick has identified a key problem: When things become disorganized (may I use the word 'malorganized' to describe deliberate disruptions of the university's organization), there is no board of outsiders you can speak to. Perhaps one reason Saigo faced so many lawsuits on this campus is the lack of this release valve, of having an independent group of leaders solely focused on the health of this university, rather than the promotion of the personal goals of someone in St. Paul.

Dick cites one example:
Many administrative tasks have gradually fallen under the purview of faculty who routinely frustrate the efforts of nonfaculty people assigned to work in those areas. Many administrative and even faculty positions have become very difficult to fill because of wrangling over the power of search committees and benefits extended to administrative ranks.

The Faculty Association does not quibble over the ranks and tenure conditions of faculty hires, which are made by deans, but vehemently opposes the granting of tenure to administrative hires, even when those people being considered had already earned tenure at similar or better ranked universities.

This happens, although the association knows that extending tenure to incoming senior administrators improves the quality candidates.
I.e., people who want to be deans here routinely are denied the ability to obtain tenure. Administrators don't want to have deans with loyalties to anyone but the president; the union does not know how to deal with supervisors as union members who supervise other union members, and it can't see how anyone who is faculty would not be a member of the union. The union has been caught in thinking of itself in industrial terms rather than professional terms for years, and it cannot escape it. Indeed, by having a president that has focused only on problems, the union has been strengthened and emboldened. It has had something to agitate against. Dick correctly identifies that as a problem.
After many of years of focusing on all that is wrong and bad at the university, I hope the new president will help us to see the university as place with hope and possibilities and lead us in discovering and identifying with those.

To move forward, the president must be able to challenge faculty to focus on academics and leave administration to those hired to do it.

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Who are we fooling? 

According to a new Zogby poll, not many.
As legislation is introduced in more than a dozen states across the country to counter political pressure and proselytizing on students in college classrooms, a majority of Americans believe the political bias of college professors is a serious problem, a new Zogby Interactive poll shows.

Nearly six in 10 - 58% - said they see it as a serious problem, with 39% saying it was a "very serious" problem.
Men saw it as a serious problem more than women; whites were twice as likely as African Americans to cite it as a serious problem.

Here's the part not being reported as much:
The survey also showed that an overwhelming majority also believe that job security for college professors leaves them less motivated to do a good job than those professors who do not enjoy a tenured status - 65% said they believe non-tenured professors are more motivated to do a good job in the classroom.

Asked whether they think the quality of a college education today is better or worse than it was 25 years ago, 46% said they think it is worse, while 29% said it is better. Another 16% said the quality now is about the same as it was a generation ago.
Younger people think it's better. Perhaps we're responding to the market then? Or are we just not holding up standards?


Tuesday, July 10, 2007

Short and long run effects of diversity 

A summary of reactions to Robert Putnam's research appears in this week's Chronicle of Higher Education (temp link, thanks to loyal reader jw).

Putnam�s study underscores three crucial points:

  1. Ethnic diversity is increasing and inevitable and in the long-run is a valuable asset for advanced countries. The study highlights the economic, cultural, and developmental benefits from immigration and diversity for both sending and receiving countries. Immigrants comprise a disproportionate share of America�s Nobel Laureates and distinguished scholars and artists. Economic productivity is often higher (and crime rates often lower) in places with greater numbers of immigrants.
  2. Putnam�s research indicates that at least initially our fear of what is new and different means that increased immigration and diversity reduce trust, social solidarity, and social capital. (Previous research suggests that where levels of social capital are higher, children grow up healthier, safer and better educated; people live longer, happier lives; and democracy and the economy work better.) Extensive analysis of a large national sample of Americans finds that controlling for many other factors at the individual and community level, people of all ethnic backgrounds tend to �hunker down� in more diverse neighborhoods. Trust (even of one�s own race) is lower, friends fewer, altruism and community cooperation rarer, confidence in local institutions weaker, and TV-watching more frequent.
  3. In the long run, successful immigrant societies like the U.S. overcome such fragmentation by creating new, cross-cutting forms of social solidarity, and more encompassing identities. The study notes that the U.S. has done this through popular culture, education, national symbols, and common experiences. In addition to the successful history of American immigrant assimilation a century ago, Putnam lauds the US Army, many evangelical megachurches, and (as with European immigrants a century ago) the Catholic Church, as contemporary success stories for encouraging shared identities and inter-ethnic ties.
Rod Dreher writes,
I predict this research will have absolutely zero impact on the immigration debate. Why? Because Diversity is a dogmatic secular religion. To dissent from its dogmas is to declare oneself to be a heathen. Seriously, to question its premises is to be thought of as a closet hater by the Establishment. You would get about as far questioning Creationism at a backwoods Bible college as you would questioning Diversity at a US university, corporation or whatnot. In fact, that's a good comparison, because it's the secular left that's always cracking on religious people for ignoring science when it doesn't suit their ends.
I think the reaction to Putnam is overblown. I don't think you'd find many new immigrants throughout history that did not set off the kind of short-run reactions that Putnam describes. Doesn't matter if it's Irish need not apply, or reaction to French-speaking Quebecois in northern New England, or the Italians, or modern-day equivalent.

It's the third point Putnam makes that's key: The cross-cutting cultural experiences of the U.S. Army (where my German-American father-in-law met Jewish and black soldiers for the first time in the Pacific theater, and ended up lifelong friends with some) and large churches (I witness with wonder the Sudanese congregants at a local Lutheran church, getting some early worshiping done before their own native-language service immediately after.) It is the desire to keep those groups distinct these days that is hindering our ability to benefit from diverse immigration, and it is the accidental blending that is giving these groups common ties.

But Dreher makes a good point regarding the American university, and its desire to fight against creating commonality on a uniquely American culture.

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If you haven't paid attention, you're counting something 

...that ain't necessarily so.

Mike Shedlock has been banging the phantom construction employment drum for some time, and yesterday's post asks a really good, hard question.
...the household survey has taken a big hit in payroll growth over the past 6 months, averaging a mere 45,000 jobs while the establishment survey is averaging 145,000 jobs a month.

Given that the unemployment rate is based off the household survey, and that the unemployment rates has not risen, we have yet another discrepancy in the BLS data. The game (lie) here is to lower the participation rate. If fewer people are looking for jobs then the unemployment rate does not rise.

But I don't believe we can account for all of these discrepancies because of illegal aliens. If Stone is correct that a relatively small number of construction companies are surveyed, then one might expect those companies to be the larger ones (major home builders like Lennar, Meritage, KB Homes, etc). Now I do not doubt for a second that those companies hired illegal aliens, but what I do doubt is that they were undocumented. The difference being someone receiving pay under the table with no taxes withheld vs. someone receiving a payroll check using a bogus Social Security number (and therefore showing up on the establishment survey).

More to the point, shouldn't the slowdown in temporary workers in conjunction with the slowdown in starts and permits have affected the model at the BLS?

That last question is key to understanding where the problem with the numbers is. Somehow, for some unexplained reasons, the model at the BLS is assuming a creation of construction businesses even as temporary workers are being let go, even as homebuilding starts and permits have plunged, and even as the GDP fell to a crawl at .6%.
The birth/death model is just causing a lot of problems right now, and until they start benchmarking more frequently off the Quarterly Census, I don't see it stopping.

Freddie Mac says the problem isn't getting any better.
While a steady job market and growing national economy may help limit the downside risks to housing prices, several risks � the elevated levels of homes for sale, recent increases in mortgage rates, and rising foreclosures of subprime borrowers � point to continued weakness in the months ahead.
(h/t: Real Time Economics) And at least at D.R. Horton, it's getting worse...


Monday, July 09, 2007

For those unclear on the concept... 

...Learned Foot has provided the ultimate guide to MOB Night at Keegans. Coming this Saturday, 6pm here. I will be outside, by order of the fire marshal, christening a newcomer if he shows up.

(Private channel to Drew: Every other letter's an 'a'.)


That's entertainment 

Waking up at 6 a.m. on a cool warm morning -
Opening the windows and breathing in petrol -
An amateur band rehearsing in a nearby yard -
Watching the tele and thinking about your holidays -

Andy Barnett, morning talk show host at KNSI in St. Cloud, reports on a conversation he had last week with state senator Tarryl Clark.
Senator Clark made it clear to me that she does not do certain types of radio shows, like Hot Talk. She said she is not comfortable doing opinion based entertainment talk shows. She went on to say that she didn't like the questions I asked her because they were too opinionated. She said I asked the kind of questions her critics from the right ask.

...At the end of our conversation there was some talk about a possible re-appearance on Hot Talk, but she said it would have to be with certain ground rules in place.
So the voice of the Senate DFL wants ground rules. Don't take it personally, Andy. We have offered repeatedly to have Sen. Clark on our show as well, but because it is on a Saturday her office reported that she would be spending time in the district with her constituents. I guess she decided we're entertainment, too.

Now it turns out her constituents can not hear her on the only talk radio program in her district.

Perhaps she feels burned by MPR; after all, they quote her as saying the Senate's budget would not have any additional taxes in it. And it didn't ... for about three weeks. Instead, she held out for $314 per student extra in special ed money from the state to St. Cloud. Maybe she didn't want to be asked why the school district still "needs" an extra $6.5 million in a new tax levy. Indeed, what kind of 'spokespersoning' does she do up here?

But no need for that, Mrs. Clark, just keep feeding the ducks and wishing you were far away...
UPDATE (7:30pm): I just recalled reading something earlier, notes on a presentation Senator
Clark made to the Civic Caucus in Bloomington on June 21.
Legislators are finding it increasingly difficult to get their message out as the mainstream media reduce their public affairs coverage, Clark said. The Governor can command a good deal of attention, but legislators don't get that kind of attention, she said. Acknowledging the growing role of internet outlets, Clark said she's unsure the extent that legislators themselves utilize the internet for news. Certainly, blogs get legislators' attention, but she doesn't know how much legislators turn to the internet for hard news. Clark said she relies heavily on radio and newspapers.
Emphasis mine. Why does she do that but reject KNSI? Because she knows that, with the exception of talk radio, she can rely on the mass media for compliant, softball coverage. One that will refer to talk radio in St. Cloud as KGOP.

Here is a lesson for budding politicians (listening, Josh?) Get your message in as many channels as possible, and stand for what you believe in. I still admire the work Jay Esmay did with his blog and consider it a model. Ingredients were time, a message, and a passion. People are impressed by Fred Thompson's new media effort, but you need nothing nearly so elaborate. This woman will not blog, for fear of criticism. Those that will, can gain an audience.

Michael has no problem going on Air America
, and neither would I. The Final Word continues to offer its microphone to any Democrat, at any time. We will make time for you. Come, persuade, if you can. Be a spokesperson for your beliefs.

Does the Senator from St. Cloud have what it takes?


Learning from History 

King, you now say that "[tradeoffs in the moral realm] were the subject of my first post. There are ways to do things that 'get the job done,' like handing everyone an ID card or putting a "status check" marker on a drivers license. And the culture does seem to accept this now. My problem is that this trades off the culture we used to hold, the culture we had not too long ago."

But your first post didn't say that -- it said that �laws are only enforced when they have some basis in the structure of our country�s culture.� I responded with many examples in which the structure of our country's culture does support enforcement of our ID laws. How is it not a shift that your current position is that the cultural change is regrettable?

As for Reagan's endorsement of the positive aspects of immigration, this is what I wrote:

"legal immigration to the US has been and continues to be an enormous benefit to us. People choose to come here, to a greater extent than anywhere else on earth, because we are a beacon of liberty and opportunity. Those who choose to become legal citizens are generally courageous, ambitious, industrious and hard-working. I have been making significant new and ongoing connections with immigrants for more 30 years, including many in my most recent classes. The vast majority are grateful to be here, and play by the rules of our system. I know we are extremely lucky to have their contributions. My knowledge of various nations and cultures has expanded because of them - they share why they came, their hopes, their dreams, and for most of them, the desire to become Americans. We need to expand the opportunities for legal immigration, and to provide funding and personnel to remove the idiotic bureaucratic obstacles and processing delays in our current system."

I think I can fairly claim to agree with Reagan on the positive aspects of immigration.

However, I doubt that Reagan would have said "let's give illegal immigrants a pass on the enforcement of our ID laws," especially after 20+ years of ignoring the requirements in the law he supported. I submit that the persistent refusal of our political and bureaucratic elites to enforce the cultural and legal norms applied to the the vast majority of our populace -- starting after the 1965 immigration reforms, continuing after the 1986 Reagan-Era comprehensive reform, and down through today -- is one of the principal causes of the cultural shift you deplore. As Robert Heinlein said, "A generation which ignores history has no past and no future."

We have consistently supported a legalization program which is both generous to the alien and fair to the countless thousands of people throughout the world who seek legally to come to America. -- Ronald Reagan, 1986
The quality of that generosity is exactly what I am questioning. It's not a positive question.


The clue bat strikes Mr. Krebs 

"Clue bat" is a phrase an old friend, now living up on the Superior shore, uses to refer to what he thought it would take to get someone to wake up to reality. Apparently, travel soccer did this for St. Cloud Times editorialist Randy Krebs.
But what's really got me mumbling to myself � and now you � is the differences I see in recreational/sports facilities between St. Cloud and the suburban Twin Cities. Not to sound bitter, but holy cow! How did communities seemingly close in size to ours come up with the ca-ching for these digs? At this point, veteran soccer parents � and, I suspect, parents of kids in other sports � are probably saying "No duh!" But honestly, as a first-time family in statewide competitive sports leagues for kids, I had no idea.

...Indeed, in crossing my personal and professional paths for a moment, this summer of "travel soccer" reminds me weekly about one my first visits from a legislative lobbyist when I took this job seven years ago.

The lobbyist, whose name I don't recall, essentially said: "Randy, as you watch the Legislature unfold, you're going to realize legislators aren't in a pitched battle of Republican vs. Democrat or liberal vs. conservative. Rather, it's a battle of the haves vs. the have-nots. And in Minnesota, the suburban Twin Cities is the 'haves' and everyone else is the 'have-nots.'"

Mr. Krebs, meet local government aid, though this time, they got tougher. School district aid also helps (wish I had a better table to show of that as well.)

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But we'll trust you on the grammar 

I read that the St. Cloud school district will have Spanish and Chinese immersion programs.

The curriculum will be the same as for students in traditional kindergarten classes, but classes will be taught in another language.

The district expects to add a grade each year so students can continue to move forward in school taking immersion classes. English would not appear in the classroom until second grade. Parents would be expected to work at home with their children on English through reading and other activities that parents normally do to help their children develop, Espe said.

The district also wants to ensure that the percentage of minority students in the immersion classrooms matches the district�s percentage of minority enrollment. Espe said she hopes to have about 30 percent minority students. In a class of 20 students, that would mean about six.

The district plans to invite minority students to enroll in two language immersion classes next year to attempt to ensure minority students are enrolled. Students who are from other countries and learning English for the first time would not be eligible.

Now I wonder -- we can trust parents in these programs to teach English to their children, but not financial literacy? We can't trust them to teach their children about respect for other cultures? (I don't doubt for a second that some of that will happen in these immersion classes.)

It just seems a little too convenient.

If we can provide Spanish and Chinese immersion for those who choose (Spanish has been offered in Mpls. Public Schools for years), why not English immersion for students who do not speak English? In other words, eliminate the part time English as a Second Language (ESL) classes, immerse the children in English everything. Based on my experience with foreign students, it takes about six months of concentrated effort to become functionally bilingual in the classroom.


Cui erudiat ludimagistri* 

I was reading another article (this in the WSJ, subcribers link) on states requiring high school students to be instructed in personal finance.

Legislators and school boards are slowly getting on the bandwagon by requiring schools to provide classes in economics and personal finance, and to work economics into math and history courses. But change takes time because of the need for teacher training and the difficulty of fitting new courses into existing graduation requirements.

Currently, 17 states require high-school students to take an economics course in order to graduate, up from 14 in 2004 and 13 in 1998, according to the National Council on Economic Education. Seven states require a personal-finance course for high-school graduation, up from six in 2004 and one in 1998.

Mississippi will require students who begin high school in 2008 to take an economics class before graduation. But first the teachers have had to brush up on the subject. Since training began, scores on the course material among prospective economics teachers, many of whom have a social-studies background, have risen to 84% from 62%.

Janet and I have also reported on this movement at the college level. I do not think, though, that economics professors are the right place to learn about checkbook balancing or credit card responsibility. As I read this article this AM, I thought, "who exactly is going to teach these classes?" People who can't balance a budget for the school district and keep asking for more tax money?

I don't think it's wise either to use economists. Before there was TurboTax and Quicken, I could not balance a checkbook myself. I don't see where we have any particular comparative advantage in teaching personal finance skills.

So I ask, where are the parents? Why are we using the state to replace the family in teaching personal financial responsibility?

* -- My friend Tim will certainly correct my 30-year-rusty Latin. Just checking if he's still reading.

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To step into the sunlight and become Americans 

I want to summarize briefly my reactions to the lively exchange on immigration between Janet, commenter J. Ewing, and me. In attempting to respond to two different critiques, I think Janet is wrong to accuse me of shifting ground. When one fights a two-front war, one is allowed to move material between the fronts. So let me separate them.

I did not like the immigration bill the Senate sent forward. I said so on a show I did with Captain Ed's program a few weeks ago. That does not mean I support the status quo, nor does it mean I prefer a border-enforcement only bill. I support none of those. What I have argued is that the way to a winning coalition in Congress and the White House that strengthens border defense, provides for stronger employer sanctions and provides some means of dealing with those here is most likely through a grand bargain. I do not think you can move two or three pieces of legislation at the national level to get that done.

The state of Arizona, or any other state, can only move on one of the three items in my list, employer sanctions. It cannot effectively act as a border enforcement device as it has no standing army; one cannot become a citizen of Arizona without first becoming a citizen of the United States. This has good and bad consequences. The good consequence is that the states can pass employer sanctions without waiting for the federal government to act (although I have to think there are implications for the interstate commerce clause; I'll let the constitutional scholars figure that one out for me.) The bad consequence is that it removes a chip to be used in the grand bargain at the federal level. You might still have a winning coalition without that chip, but it is evident to me that fewer chips make bargaining harder.

The rest of my argument with JE is that there are costs involved with any solution, not all of which are explicit. Enforcement is expensive; finding ways to elicit cooperation from those you wish to ID would reduce those costs and might be more efficient. My concern in this argument is that there is no concern over efficiency with the enforcement-first types. As an economist I can never stray far from the concept of tradeoffs. There are instead emotional appeals to patriotism or moral appeals to lawfulness and citizenship. We tend to wave those problems away.

But there are even in the moral realm tradeoffs, and these were the subject of my first post. There are ways to do things that "get the job done", like handing everyone an ID card or putting a "status check" marker on a drivers license. And the culture does seem to accept this now. My problem is that this trades off the culture we used to hold, the culture we had not too long ago. Could Lee Iacocca have raised the money he did raise for the Ellis Island project in 2006 like he did in 1986? Would George W. Bush have given the speech at the dedication that Ronald Reagan gave?

If you answer no, what are you saying about the United States as a land of immigrants? To what extent has the edge we've had for the last 75 years come from the economic engine they have provided?

At base, the Reagan argument for immigration still appeals; I thought Janet's response to me was at first very defensive precisely because she understands that appeal. But if others hold that appeal too, then policies that deal only with enforcement will be seen as contrary to that cultural affinity for our immigrant heritage, and will be rejected. Thus again, even though right now many people want sticks, they will be prone to suspicion of motives if a few carrots are not offered. And if that sounds too much like amnesty for your taste, go back and read Reagan again.
We have consistently supported a legalization program which is both generous to the alien and fair to the countless thousands of people throughout the world who seek legally to come to America. The legalization provisions in this act will go far to improve the lives of a class of individuals who now must hide in the shadows, without access to many of the benefits of a free and open society. Very soon many of these men and women will be able to step into the sunlight and, ultimately, if they choose, they may become Americans.

...Distance has not discouraged illegal immigration to the United States from all around the globe. The problem of illegal immigration should not, therefore, be seen as a problem between the United States and its neighbors. Our objective is only to establish a reasonable, fair, orderly, and secure system of immigration into this country and not to discriminate in any way against particular nations or people.
If you want to have an argument where I get Reagan on my side and you get ... well, whomever you get, I like my odds.


Saturday, July 07, 2007

On the Final Word today 

Remember first that the Final Word comes after four hours of excellent local talk radio on AM 1280 the Patriot's Northern Alliance Radio Network. Be sure to catch some combination of Brian and Chad and John from 11am to 1pm, and Mitch and Ed from 1-3pm.

Seeing that blogs at two newspapers are fretting over the loss of a congressional district, Michael and I will visit with the guy who started this thing. Tom Gillaspy is the state demographer, has done so for quite some time, and I'm happy to have been on a couple of panels with him at Winter Institutes here in the past. Half an hour with a demographer is a lot more fun than you'd think, and you should try it during the first hour.

Back by popular demand in the second hour is our good friend Drew Emmer, whose unique view from Wright County is not to be missed. I'll try to keep my giggling to a minimum.

So at least one of us is having fun tomorrow on the Final Word. Maybe you will too.

Did you take the weekend off and miss the frivolity? Podcasts available.

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Friday, July 06, 2007

Immigration: Back to You, King 

UPDATED by Janet in light of comments, as of the morning of 7/9/2007:

King has taken issue with one of my immigration posts, saying that �laws are only enforced when they have some basis in the structure of our country�s culture.� I think that he and I agree far more than we disagree, so let me try some clarification.

First, like King, both my husband and I had immigrant grandparents who came to this country through Ellis Island. We admire and respect the courage and hard work it took for them to uproot themselves from their native lands, to learn a new language, and to make their way in this strange and wonderful new place. We are proud that they followed their dreams and ultimately became legal citizens of the United States. They, too, said, �I am an American.�

Second, legal immigration to the US has been and continues to be an enormous benefit to us. People choose to come here, to a greater extent than anywhere else on earth, because we are a beacon of liberty and opportunity. Those who choose to become legal citizens are generally courageous, ambitious, industrious and hard-working. I have been making significant new and ongoing connections with immigrants for more 30 years, including many in my most recent classes. The vast majority are grateful to be here, and play by the rules of our system. I know we are extremely lucky to have their contributions. My knowledge of various nations and cultures has expanded because of them - they share why they came, their hopes, their dreams, and for most of them, the desire to become Americans. We need to expand the opportunities for legal immigration, and to provide funding and personnel to remove the idiotic bureaucratic obstacles and processing delays in our current system.

Third, there are valid reasons, such as national security and preserving our cultural identity, for placing limits on the rate of immigration. Totally open borders are an unrealistically utopian ideal, which means that some entry into this country has been, and will continue to be, contrary to our laws.

This background provides needed context for the point I was trying to make.
US culture today routinely expects virtually every person to provide personal identification in a myriad of settings. We are all required to have identification for becoming a student in a school system, starting employment, renting an apartment, buying or renting a car, opening a bank account, cashing a check or money order, buying a cell phone, arranging for utility service, paying our taxes, getting a passport or driver�s license, buying alcohol or a gun, obtaining and using a credit card, a mortgage or other loan, and many other activities in our daily lives. In today�s world, being able to slide through the cracks without identification is almost impossible. Citizens and legal immigrants alike must routinely respond to �May I see some ID, please?�

This de facto cultural ID system is supported and reinforced by a de jure system for issuing IDs, laws requiring such IDs for many common transactions, and laws designed to protect individuals against identity theft. King cannot claim a conflict between �the structure of our country�s culture� and the expectation that we will enforce our laws regarding the integrity and use of our identification systems.

Should we exempt illegal immigrants from these ID requirements? Of course not. One of our core values as Americans is equality before the law.

Thus, one of my base points is: How can we allow continuation of a system in which the same Social Security Number can be used illegally by 42 different people? How can we allow continuation of a system in which the inspector general of the Social Security Administration reports that a single employer encountered 131,191 SSNs which the SSA could not attribute to any known legal worker in the United States? This is just crazy.

For comparison, let's look at VISA and MasterCard, which do a far better job of tracking the use of their credit cards. When they detect an unusual pattern of charges on our card, further use of the card number is suspended while they contact us to verify legitimate use. In the event of a lost, stolen or misused card, further use of that card number is canceled completely, and a replacement card is issued with a new number. Banks have put in place the same procedures with debit and ATM cards. Does it work 100% of the time? No, but it works a significant portion of the time. It is certain that no credit card number would continue to be honored after use under 5 different names, much less 42. And any merchant accepting transactions involving 131,191 invalid credit card numbers would be in serious trouble.

The issue is not the number of people involved, or the number of transactions to be processed. Our society tracks hundreds of millions of legal citizens and legal immigrants through billions of transactions every year, without �tagging them like a side of beef.� I have reread every one of my posts on immigration without seeing the word "tag," which has a far more sinister meaning than "track," the word I did use. We have the technology to track most anything. Should illegal immigrants be tracked differently than citizens and legal immigrants? No. But should illegals get a pass when they abuse the ID systems that have become an ingrained and accepted part of our culture? I don't think so. We can and should do better. That is why Arizona has just enacted a bi-partisan law requiring verification of legal immigration status for employment.

KING ADDS: I would like to know how one gets illegal aliens to accept an ID card, and with what they would be ID'd. If one holds such a card, how is this not a tag? I understand the desire not to use the word "tag", since it recalls what we did to Japanese-Americans in internment in WWII. But I don't see a real difference between a plastic card in the pocket marked "alien" to be required of someone at all times, and those tags. (I'm also quite familiar with markers like those in the Turkish population card. Had Nana not left her childhood home, she'd've carried one of those.)

Moreover, why would the government get these cards right when they can't get the Social Security numbers right? It's not "society" that would track them; MasterCard and Visa can stop me from charging dinner on my credit card, but they cannot deprive me of life and liberty. The ID system needs to have an incentive to get illegal aliens to step up and allow themselves to be counted. Either that or, as Hernando de Soto pointed out once, you have to freeze everyone in place and swarm the country with bureaucrats to ask questions and count noses and hand out cards. Beef doesn't move (after you separate it from the steer.) People do. Just another complexity?


I think you misread the Hernando de Soto interview (He is an author I admire). He says that you need an army of bureaucrats handing out ID cards if you don't have a system of individual property rights. With our current system of property rights and transactions, the incentives to produce ID are already in place.

Saying �make them carry identification cards� in my original post may have been over the top, in that anyone can leave home without ID. But as I pointed out above, we already have in place strong cultural and legal incentives for everyone, legals and illegals, to produce ID on a regular basis. I just got home from returning a small (under $10) purchase; the store required both my receipt and my driver�s license before they would issue a refund. Illegal immigrants have to produce ID, too; they just fake them.

As for stamping �alien,� do you object to the existing requirement here in our own state of Minnesota that

"A status check date that coincides with the federal lawful admission period indicated on the federal primary document presented or on the additional documentation that indicates the duration of the applicant's lawful short-term admission status shall be indicated on the driver's license, permit, or identification card issued. "

(To confirm that requirement, you can use the steps listed below this Minnesota DMV web address: 1 � click on DVS Rules; 2 � click on 7410; 3 � click on 7410-0410, Proof of Residency; 4 � Subp. 8 defines the �status check� portion of the ID)

There are many places where fake IDs can be noted and stopped by the government today. A good first step would be getting the Social Security numbers right. That�s already a matter of law. It can be done (the VISA and MasterCard systems have larger volume). The problem is lack of will and failure to appropriate the resources (money and people) to get the job done.

JANET ADDS (7/9/2007):

It seems to me that King's arguments have shifted. (A thank-you to my "recovered lawyer" husband for pointing this out.)

My post responded to his claim that "laws are only enforced when they have some basis in the culture." I cited many examples to show that there is broad cultural and legal support for enforcing our laws about the integrity and use of our ID systems.

When he asked about labeling people as "aliens," I noted that Minnesota already does the equivalent by putting on driver's licenses and other State-issued IDs the words "Status Check" and the date of expiration of the federal short-term "lawful admission period."

To the claim that we would need an army of bureaucrats to issue IDs, I said that the de Soto interview makes this claim only in a system lacking individual property rights. I said that our system of property rights and transactions already has in place large incentives to produce identification, illustrated by the many examples I have gven.

In the comments below, he offers additional arguments. I'll respond to them here:

"The poor often transact in cash, which makes their transactions difficult to track." Sure, in many (most?) transactions we are not asked for IDs. But there are MANY situations where IDs are required. That's why so many illegal immigrants have fake IDs! Going after the gross abuses of SSNs won't solve all of our problems, but I don't see any valid policy argument that we should ignore such abuses.

What about "matricula consular (for illegal Mexican aliens)?" Exempting illegal immigrants from compliance with our ID system at the whim of any foreign government is a bad idea.

The rest of King's dialog with J. Ewing deals with transition costs (abrupt implementation leads to recession) and whether the level of incentives is right. King acknowledges that "the Z-visa is too much incentive" for him.

We seem to have reached a logical place to end this discussion, for now. Although King argued against the bill that failed, he still believes that a comprehensive immigration reform package is the only way to solve the ID problem. But comprehensive reform is politically dead for the forseeable future. J. Ewing and I say that we can and should require illegal immigrants to comply with our cultural and legal requirement for vaild IDs, which are expected of all other citizens and legal immigrants. Fixing the abuses of Social Security numbers is a workable first step we can take now, even without comprehensive immigration reform.


Back to the beginning 

Jeff Kouba writes that Peace Like a River is back in business with a new address.
I wanted to get back to a focus on international and security matters. So as before, it's a place to jot down what interests me in the world, and if others find it interesting as well, then great!
I think you will. Update your blogroll and check it out.


Want fries with that McMansion? 

If Boulder County, Colorado gets its way, you'll need to purchase land offsets for your large home.
Under the plan, people would only be able to build bigger homes if they agreed to buy development rights that would preserve agricultural or rural land elsewhere in the county � something that could cost a homeowner hundreds of thousands of dollars.
Home sizes in unincorporated Boulder County have grown nearly 20% since 2004.

From whom would they buy the agricultural land? Those people get a huge benefit. And putting that other land aside protects the value of houses already built. It hurts those who would like to move to Boulder County but now face artificial scarcity. Thomas Sowell observes from another context:
One of the rationales for such land use restrictions is the "preservation" of agricultural land. But nothing is easier than to dream up a rationale to put a fig leaf on naked self-interest. Far from being in danger of losing our food supply, we have had chronic agricultural surpluses for more than half a century.

Another rationale for laws restricting land use is that "open space" is a good thing, that it prevents "overcrowding" for example. But preventing people from building homes in one place only makes the crowding greater in other places. This is just another fig leaf for the self-interest of those who want other people to be forced to live somewhere else.

h/t: Freakonomics blog


Working on it 

The new payroll figures show a fairly sharp revision in April and May employment along with a healthy increase in June. I always keep an eye out for revisions, as they tell us something we didn't expect. I'm inclined to think this would move up some GDP estimates for the second quarter by as much as 0.2%, if you believe those gains are for real.

The hard part to figure is how residential construction employment can do so well when all we ever hear is how housing is being hit hard (I've said it myself.) The WSJ blog reports this quote from Stephen Stanley of RBS Greenwich Capital,
The persistent weakness in nonresidential construction payrolls has been every bit as puzzling as the absence of large cuts in the residential sector, though it has not gotten much (any?) fanfare. We continue to believe that the reporting is imperfect and that some housing job losses are showing up in nonresidential while some nonresidential hiring is showing up in residential.
James Hamilton reported on some of these difficulties last month. Calculated Risk argued in May that the residential data was too strong. But CR reports today that residential construction right now is flat (as we are also observing here in St. Cloud.)

I won't say "there's less here than meets the eye", but I do say that we need another report or two to confirm a pickup from a lackluster Q1 number on GDP.

UPDATE: Hamilton posts this PM and adds to the puzzle:

Another possibility raised by Calculated Risk is that the BLS establishment survey is underestimating the number of construction firms that have permanently gone out of business. Stone & McCarthy further argue that BLS is also missing the behavior of small firms in this sector. I had been leaning toward such hypotheses as long as the BLS household survey, which is not subject to these same problems, was signaling slower employment growth than the nonfarm payrolls. I still believe that we will eventually (perhaps next fall) see these current construction employment numbers revised down. But the strength we're seeing in the separate household survey numbers the last two months suggests to me that these biases may not be as severe as I was earlier assuming.

This increases my uncertainty over my public statements on the local economy over the weekend. See also David Altig for more links and head-scratching.


When you grade intentions rather than results... 

The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world's most famous celebrity activist � Bono � was attempting to shout him down. Mwenda was suffering from too much reality for Bono's taste: "What man or nation has ever become rich by holding out a begging bowl?" asked Mwenda.

Perhaps Bono was grouchy because his celebrity-laden "Red" campaign to promote Western brands to finance begging bowls for Africa has spent $100 million on marketing and generated sales of only $18 million, according to a recent report. But the fact remains that the West shows a lot more interest in begging bowls than in, say, letting African cotton growers compete fairly in Western markets (see the recent collapse of world trade talks).
From Bill Easterly today. Do I recall a fake ad on the 1/2 Hour News Hour (private to Fox: kill this, now. Just keep the Dennis Miller bits and play them as 2 minute spots scattered around your other shows) where you could rent celebrities to be part of your cause? Not like you can't rent them.

Gifts are often dependent on the utility of the giver rather than the receiver. Bono is great for consciousness raising, but not so good on policy.


Does he really support merit pay? 

Some are reading into this article that Sen. Barack Obama wants merit pay for teachers and would make it a priority of his administration were he elected president.

Obama said teachers' salaries should be increased across the board, but he also said there should be fair ways of measuring teacher performance and compensating teachers accordingly.

"If you're willing to teach in a high-need subject like math or science or special education, we'll pay you even more. If you're willing to take on more responsibilities like mentoring, we'll pay you more," Obama said.

The Illinois senator said it's possible to "find new ways to increase pay that are developed with teachers, not imposed on them and not based on some arbitrary test score."
So what is proposed as a measurement, if not "some arbitrary test score"? Do you think I can assess student learning if I develop the test with them and not impose grades based on "some arbitrary test score"?
Obama said he would only support a merit-pay approach after consulting with teachers.
...who will tell him anything that gets them more money without any real accountability. But Obama might show some interest in bringing to the table the one group that can hold teachers accountable and has an incentive to do so: parents.

Only one candidate, Barack Obama, suggested that maybe money was not all that was lacking when it comes to educating America's poor and minority children. Parents had a role to play, too. "It is absolutely critical for us to recognize that there are going to be responsibilities on the part of African American and other groups to take personal responsibility to rise up out of the problems we face," he said. What? It's not just a question of funding?

Obama has said this sort of thing before. Back in March, in one of his first major speeches as a presidential candidate, he struck just the right balance -- not only more money but more personal responsibility, too: "Even as I fight on behalf of more education funding . . . I have to also say that if parents don't turn off the television set when the child comes home from school and make sure they sit down and do their homework and go talk to the teachers and find out how they're doing . . . I don't know who taught them that reading and writing and conjugating your verbs was something white."

If Obama is really going to go Cosby on the education establishment, I'd have at least one thing to look forward to, should he win.


Mrs. Scholar's latest 

The fairer half writes again about smoking bans. Predictably it draws some fire from commenters.


Thursday, July 05, 2007

Where would the lines be? 

If trends don't turn around, Minnesota could lose congressional seat after 2010 census, says the Associated Press.
If current trends hold, that would mean southern states would gain congressional seats after the 2010 census while states in the Upper Midwest and the Northeast would probably lose out.

Larry Jacobs, director of the Center for Politics and Governance at the University of Minnesota's Humphrey Institute, said Minnesota's political influence would lessen if it lost a seat. The state would also lose an electoral vote in presidential elections and receive less money from the federal government, which considers population in determining how much to spend on such programs as Medicare and Medicaid.

The state plans to spend $300,000 over the next two years to ensure every Minnesotan is counted during the 2010 census.
As will the other states.

I suggest viewing this slide show (in .pdf) from the Demographic Office from May. What population growth might happen will be in older age groups. And what growth occurs happens in the ring counties around the Twin Cities. Sherburne County is expected to add more residents to it than will Hennepin -- Ramsey may decline. Anoka and Washington will grow faster than the state average. (Full data here.) It will be interesting to have that suburban shift and a loss of a Congressional seat happen at the same time, if we in fact do lose one.


From what do we expect our dinner? 

Suppose you believe that human beings seek status; it is desirable to them to win competitions for prestige versus their fellow humans. Suppose then you you make after-tax income equal through highly progressive taxation.

What would they do?

Tim Worstall's comment to Tyler Cowen's post is spot on:
If we close off or limit one form of status seeking, another will simply take its place. At various times and places status has been determined by how much you give away or destroy ("potlatch" societies), order of birth (aristocracies), religious fervour (theocracies), skill at decapitating peasants with a broadsword (feudalism) and no doubt many other forms I've left out.

If competition for social status there is going to be then that over the size of your yacht seems the least bad option: after all, in working to earn that your production has provided consumption goods for others, something that none of the other alternatives provide.
Adam Smith had already figured this out.

I often wonder whether figuring out the "black box" that is the utility function is really getting economics anywhere.


Banaian's 25% short principle 

After reading another story about how our desperate school district must ask voters for a levy, I turned to my wife and said, "do you ever recall them saying 'hey, thanks, we have all the money we need this year'?"

She hadn't. If you have, please deposit evidence in the comment box.

An annoyance in this article:
The fall levy campaigns are part of a larger discussion school leaders are having statewide about a need to change the way the Legislature pays for public schools.
Personal to Dave Aeikens: The Legislature doesn't pay for anything. Taxpayers do. The only question is who will be blamed for raising taxes and how effectively the taxes can be hidden from public view. (My old public finance prof called this the Colbert principle.) It should come as no surprise that school district officials want to shift the blame to someone else. Using "the Legislature pays for public schools" is to swallow the bilge the school districts are serving you.

Worth asking: Why should not those who benefit from the school district's services be the ones who pay for it? If you say "those outside the district also benefit", ask whether or not the benefits would have been derived in the absence of any state subsidy. And also ask, does the benefit differ between the larger districts that receive more state school dollars per student than others?

In raising my kids, I've always taught the 25% short principle: The money in your pocket at any time is 25% short of what you think you need. Part of growing up is learning that there are no needs; there are only wants and preferences available at alternative prices. School boards could use some of that maturity.

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Tuesday, July 03, 2007

Independence Day, July 4 

Today, many people will attend parades others will spend the day with family and friends. However you choose to spend today, please remember that we are the land of the free and the home of the brave.

Because of the ideals and beliefs of the Founders, America became and still is a beacon to the world for freedom loving people everywhere. We need to remember that what we have is still unique - the opportunity to succeed is there for those who work at it. As stated in other posts, we have our warts but we examine our warts and make changes over time. In too many places on the planet, religion, tribe, language, etc. prohibit people from achieving their dreams, change is very difficult, if not impossible.

In the USA, individuals can have dreams and with effort achieve most of them. Today is our Independence Day, the commemoration of our Founders deciding that people could rule themselves. Let's keep it going.

Immigration (responses to Janet) 

I thought these would be better as a separate post.

As Janet and Michael have both noted, we had on Senator Coleman last Saturday on FW. (Audio here -- he's the first segment.) Whether you characterize the actions on immigration as a coming to reality, capitulation or cravenness, the result was that a combination of forces kept the Senate from passing a bill brought together in a back room and forwarded by people who thought they knew better. Since the bill is dead (seemingly, it's already been resurrected once,) it makes no sense to me to try to dissect it.

But something has to happen, because even if the sentiment on this bill was 20-80 against, the status quo is also a 20-80 proposition.
Regardless of what happened at the Senate today, there are still 12 million illegal immigrants living in the country, and that number is increasing at the rate of about half-a-million a year. And there's no longer any need for the Bush administration to keep playing the charade of "more enforcement" that received wide media attention in the past few months. The economic and social dislocations caused by illegal immigration are not going to disappear simply because the issue is no longer in the political headlights.

Combine this with a legal immigration system that admits about 1 million immigrants a year--most of which tend to be low-skill workers. The economic pressures that both legal and illegal immigrants put on the low-skill labor market are severe, and have been ignored for years. I suspect that the immigration "problem" would have been long resolved had the labor markets for high-skill workers--say, for example, journalists and attorneys--faced the same pressures as those faced by low-educated workers.

Now that the debate is over, perhaps we can return some sanity and honesty into the intellectual discussion of what immigration does to the United States.
I can quibble with Borjas about the elasticities of low-skill wages, but cannot find fault with the premise. Those areas that are most severely affected are going to pass laws without waiting for that debate, like Arizona. There, a Democratic governor considered friendly to Mexico nevertheless signed a bill with strict employer sanctions, bucking powerful members of her own party.

The pressure is undoubtedly there to do something. But laws are only enforced when they have some basis in the structure of our country's culture. Perhaps, as Janet says, "every other country" can tag and issue ID cards to their immigrant population. But we're not those other countries. We are a country that at one time was formed on the principle that all men are created equal and that all men have inalienable rights. The preamble of the Declaration didn't make any distinctions in attributes of humans -- that regrettably came later in the compromise over slavery that led to the signing of our Constitution. Mises.org is running an old essay by Frank Chodorov, a paleo-conservative before anyone knew any other kind of conservatism, in which he discusses how men come to these rights:

In that respect, they maintained, all men must be considered on a par. This was a brand-new base for government. In all political science hitherto known it had been an axiom that rights were privileges handed down to subjects by the sovereign power; hence there was nothing positive about them. A new king or a new parliament could abrogate existing rights or extend them to other groups or establish new favorites.

The Americans, however, insisted that in the nature of things all rights inhere in the individual, by virtue of his existence, and that he instituted government for the sole purpose of preventing one citizen from violating the rights of another.

It is worth remembering that, 21 years ago tonight, Ronald Reagan stood at a ceremony for the opening of the Statue of Liberty Centennial. There he said,

Call it mysticism if you will, I have always believed there was some divine providence that placed this great land here between the two great oceans, to be found by a special kind of people from every corner of the world, who had a special love for freedom and a special courage that enabled them to leave their own land, leave their friends and their countrymen, and come to this new and strange land to build a New World of peace and freedom and hope. Lincoln spoke about hope as he left the hometown he would never see again to take up the duties of the Presidency and bring America through a terrible Civil War. At each stop on his long train ride to Washington, the news grew worse: The Nation was dividing; his own life was in peril. On he pushed, undaunted. In Philadelphia he spoke in Independence Hall, where 85 years earlier the Declaration of Independence had been signed. He noted that much more had been achieved there than just independence from Great Britain. It was, he said, ``hope to the world, future for all time.''

Well, that is the common thread that binds us to those Quakers [Puritans] on the tiny deck of the Arabella, to the beleaguered farmers and landowners signing the Declaration in Philadelphia in that hot Philadelphia hall, to Lincoln on a train ready to guide his people through the conflagration, to all the millions crowded in the steerage who passed this lady and wept at the sight of her, and those who've worked here in the scaffolding with their hands and with their love...

We're bound together because, like them, we too dare to hope -- hope that our children will always find here the land of liberty in a land that is free. We dare to hope too that we'll understand our work can never be truly done until every man, woman, and child shares in our gift, in our hope, and stands with us in the light of liberty -- the light that, tonight, will shortly cast its glow upon her, as it has upon us for two centuries, keeping faith with a dream of long ago and guiding millions still to a future of peace and freedom.

When they put the names of the immigrants on that island, they included the name Gulenia Hovsepian. Left by her family to an orphanage in Beirut, she had managed to get enough education to work as a nurse there and later in Cairo. When a man came in 1922 that wanted to marry her cousin and the cousin got cold feet, Gulenia said she would marry the man instead, if he was going to America. No Z-visa, no H1B. It was a new life, she thought, streets full of goods and paved with gold. She went on to have six children before her husband -- himself an uneducated man -- died of pneumonia after trying to make money roofing one winter. She took in wash, worked at a textile plant, scrubbed floors and did the best she could. And right after her husband died, she applied to be a citizen and stopped talking in her native tongue.

As you might guess, that's my grandmother. And the picture to the right is my father standing at the Ellis Island Memorial pointing to his mother's name.

She was an inspiration to us that hard work was rewarded here in America. And a reminder that people who get a chance to "keep faith with a dream" "guided ... to a future of peace and freedom" can build prosperous, productive families. And most of all, when you asked her nationality, she said "American."

I wonder how she'd've answered if she had been tagged like a piece of beef.

After Reagan gave his speech and the other dignitaries had given theirs, the torch of the Statue was lit and Reagan spoke a little more. At the end he turned to a choir that sang the last few lines of Emma Lazarus' "The New Colossus" from which the famous line about poor tired huddled masses. And then Reagan closed,
We are the keepers of the flame of liberty. We hold it high tonight for the world to see, a beacon of hope, a light unto the nations. And so with joy and celebration and with a prayer that this lamp shall never be extinguished, I ask that you all join me in this symbolic act of faith, this lighting of Miss Liberty's torch.
As you enjoy your Fourth of July, perhaps while you light your fireworks or watch those in the sky, try to remember why we make light explode in a night sky every year at this time. Is it to remember Fort McHenry and defending our shores? Or is it a beacon?

Rather than ask, what does immigration do to the United States, the question is, what does immigration do to for the world?

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Even if it hurts 

And sometimes you have a hard time explaining things people say. Tim Worstall points out the results of Zimbabwean price controls: emptying markets. In turn, the Mugabe government is arresting shopkeepers and blaming them for price increases. Even the central bank blames speculators:
Three quarters of our problems today are of our own making as Zimbabweans because of:
  • Our insatiable appetite for everything external, from economic and technical advice to wine, food, cigarettes, milk and bottled imported water, among many other trinkets, which can not go on unchecked through progressive introspection.
  • Indeed, quite strangely, some would rather listen to external economic advisors than our very own sons and daughters with exposure and personal distinctions in these areas.
  • Some Zimbabweans have also elected to sell their souls in pursuit of foreign exchange, to the extent that damaging or weakening their own currency at home does not matter to them at all.
It does not seem to matter to them at all that the government runs a deficit of 25% of GDP or that monetary base growth has exceeded 1200%.

Zimbabwe's social contract -- in essence, the first step of a macro stabilization, which has a half-hearted look to it -- is not likely to last even through the summer if it includes arresting and beating shopkeepers.

Supply and demand in action 

I think this, for example, was predictable.
The price of machetes has halved in parts of Nigeria since the end of general elections in April because demand from thugs sponsored by politicians has subsided, the state-owned News Agency of Nigeria reported.

..."A price survey on machetes, which served as a popular weapon among political thugs in the state, indicated ... a drop in the price of the implement," NAN reported over the weekend....

"Before the conduct of the general elections, I was selling a minimum of seven machetes daily but can hardly sell one a day now," said Usman Masi, a trader quoted by NAN.

The price has fallen 50%.

For extra credit, what's the elasticity of supply of machetes in Nigeria?

HT: A departmental colleague, also mentioned by The Economist this AM.


Economic predictions 

William Polley points out something in a discussion of whether economists are any good at prediction.
[T]he textbook model is not perfect but still useful. In my discussion of the Schwartz op-ed, I conclude that monetary incentives can have nonstandard effects in certain circumstances. We don't completely understand those circumstances and therefore more work is needed. I'm not ashamed to admit that perhaps a little more humility is also needed when considering the possibility of these non-standard effects. But it still remains that the incentive story that drives most economic models is mostly right.
Let me add a couple points. All textbook examples, save those doing general equilibrium (which almost never show up in an op-ed in some newspaper) involve invocation of ceteris paribus, an assumption that all other things that might influence the relationship under study are held constant. This includes time, usually. Indeed, a supply and demand graph is best understood as instantaneous: If you could theoretically draw it exactly right, when you turn your head and look back, it will be wrong because something, somewhere, will have changed.

As Polley states, though, that doesn't make supply and demand useless. The question is whether or not the supply and demand apparatus gets you better predictions of human behavior than some alternative model that explains the allocation of goods and services. If you engage economics as a predictive science, the validity of any model is relative to other models in terms of predictive accuracy. Does the supply and demand model get more answers right than wrong, relative to other models? I think the evidence on that is clear, even if we don't bat 1.000.

Put another way, if you are in a forecasting business you will always make errors. Ifyou don't have a logically consistent model, you will not be able to explain your errors. That's likely to influence your job tenure as a forecaster.


Monday, July 02, 2007

The One that Got Away - Fishing #1 

We fished on the Russian River in the Kenai Peninsula in AK, "our spot" (really our friends' (Mike and Diana) spot). They've been coming here for years). Water temperature is about 34 degrees and those of you who fish know you go early. In this river, you either walk to midstream or fish from the bank on the far side. Usually the sockeye salmon are plentiful this time of year.

I'd heard stories about "the one that got away" but never really understood. This fishing deal is a new experience - my first attempt at fishing is salmon fishing in Alaska - how lucky can one get?! June 16th was Day 1 for me. My friend Mike taught me how to cast. The river wasn't too crowded and it took about two hours to catch my first salmon. All three of us legally hooked salmon but many got away - either lost when pulling them to the bank or they were smart enough to wiggle free while in the river.

Mike and his wife Diana caught their allotted three fish per person in less than two hours. It took me longer - maybe three hours to catch two fish. I gave up on number three after bruising my right hand trying to stop an improperly caught fish that ran out the reel. Back to back hassles with a scared fish pulling your line is no fun. I'll try the 17th.

We used the cleaning tables located at strategic points in the river to fillet the fish (Mike) and pull the pin bones. We returned to our bed and breakfast to complete the job. All in all we cleaned, deboned, filleted, cut, freezer wrapped, and froze eight salmon. A good day's work, fun and learning experience.

Immigration Thoughs, #3 

This video capturing Newt Gingrich at his best is a reminder of what we can do when we decide to do it. Frankly, it's pathetic that one SSN can be used illegally 42 times and no government agency catches it. Take a look.

As stated in this post, we can track a pound of hamburger from X cow, at Y time. We can do the same with chickens, pigs, etc. We know we have a problem with illegals. Every other nation on the planet tracks illegals. So???

Watching one's voice, or, a writer is not a reporter 

It takes almost no time to find a faculty member here who has had an experience with Internet plagiarism. A study from Rutgers University four years ago (that I find cited frequently) found that 38% of students survey said they had cut-and-pasted from the internet into their research papers. 44% of students thought this was trivial and not cheating. By comparison, only five percent of the students surveyed had turned in papers out of paper mill or otherwise downloaded from an online source.

One of the reasons I find students having this issue is the misunderstanding of the academic voice in writing. When one writes as a student or faculty member of such-and-such university, one conveys a seriousness to the exercise. It says, I am a person who thought about a subject in a sincere intellectual pursuit of truth, and here is what I found in that pursuit. Students tend to write like the examples they read -- alas, these are most often email and instant messages (thus the papers that refer to "ur" rather than "your" or only use the middle letter of "are".) Some more serious students nevertheless try to imitate styles of journalists or, more often, columnists. The imitations are often wincingly bad, but I simply tell them instead "your voice should be that of a serious student, not Dave Barry." Let Mr. Barry write his own academic tomes.

We have software we use to get at this, which can be otherwise a daunting, time-consuming task. The stuff is expensive, as you'd expect for something that can replace that much labor. And reading this article on newspaper plagiarism indicates that the best way to combat it -- not defeat, that's too lofty a goal -- is to make sure students know what it is and how severe it is. I read the first item of "Prohibited Conduct" from the student handbook:
Academic dishonesty, including but not limited to, cheating, plagiarism, misrepresentation of student status, and resume falsification. Plagiarism includes, but is not limited to, the use by paraphrase or direct quotation, the published or unpublished work of another person without full and clear acknowledgment; unacknowledged use of materials prepared by another person or agency engaged in selling or otherwise providing term papers or other academic materials; and commercialization sale or distribution of class notes without the instructors' permission. (Emphasis added.)
While Mitch and Michael were discussing the issue of plagiarism at Minnesota Monitor, Michael called to ask whether the use of a quote from a published source met my definition of plagiarism. Pointing to the above definition, what I could say was that if a student here did what Mr. Fecke at MinMon did on a paper turned in to me, I would call it plagiarism. Use of the adverb "reportedly" would not suffice -- I would have written in red in the margin, "reported where? Give source."

Now certainly a newspaper article is not an academic work. And certainly as well, a newspaper gets press releases that can be used as quotes without attribution (it's considered something in lieu of an interview.) But by its own standards, MinMon says its 'new journalist fellows' should "[i]dentify sources when possible." I think it is fair to hold a website that puts such statements on its pages up to those standards.

The Society of Professional Journalists, in 1984, added this sentence to its code of ethics: "Plagiarism is dishonest and unacceptable." (Source.) Indeed, as Fred Fedler points out in that piece,
Typically, SPJ's code does not define plagiarism. The Associated Press Stylebook does not include an entry on "Plagiarism" but devotes slightly more than a page to "Copyright Guidelines."13 Similarly, Roy Peter Clark of the Poynter Institute found that most newspapers had no clear rules about plagiarism and that editors seemed loath to define it. Clark found no guidelines, no warnings, not even the word "plagiarism" in the indices of newspaper stylebooks and journalism textbooks on his shelves.14

Journalism's trade and professional publications devote more attention to the topic, and Editor & Publisher has blamed journalism schools "for sending out interns and graduates who pilfer other people's work."15
(Click the source article to follow the footnotes.)

This is what strikes me as the takeaway from this story: In Mr. Fecke we have a young man, reared on the blogosphere, who has been encouraged by an agenda-driven news site to wear the mantle of "journalist". He identifies himself as a freelance writer, and he writes like, well, a freelance writer. In trying to effect the voice of a journalist he has failed to grasp the seriousness of the enterprise. This does not make him a journalist, and to do so would require more care over his articles than the editors of MinMon have provided, at least in this case. Perhaps new fellow Eric Black can provide the seasoned wisdom that the current leadership has failed to provide to its new journalist fellows.

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Are you ready? 

Our new forecast for the local is out.

It ain't pretty.

Through a student's senior thesis I began working on a new model for the local economy's chances of recession. I'm in the process of expanding the research, but the model my student ran estimated a probability based on a simple logistical model of the possibility of a local recession. (I had set the dates on local recessions in advance, based on previous research I had done of local employment.) His model shows a local probability of recession right now of about 28%, which is quite high. Are local businesses prepared for a better-than-one-in-four chance of local recession?

Also, a new article today on the role of the health sector in the local economy contains some quotes by yours truly. The last quote at the bottom of the story sounds like I think too many people are employed in health care. That's not my point really. My point is that we have weird ways of measuring productivity in this field. That we hire more and more people into health care doesn't mean we are becoming less productive -- it can well mean that the demand for health services has risen. Or it could mean the price of health care has fallen (how much do you spend for one more day of life, or one more "quality day", if you can measure such things) and so people demand a higher quantity.

For those who would say third-party payer systems make the marginal price of health care zero t0 the patient I'd ask, what has changed about that in the last thirty years?

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The door swings closed 

Our president retired Saturday (sort of, he will still work for MnSCU helping other schools set up international programs.) You wouldn't have to search much here to find my criticisms of his seven years on the campus. His exit has been somewhat more gracious than most of time, though, and there's a quote in the story that struck me as dead on.
"He had a more casual attitude and was more comfortable as the average guy than as president," Prout [Sue, Saigo's executive assistant] said. "He feels more comfortable being one of the guys than being the suited president standing up addressing a crowd in a formal address."
I recall him in academic regalia and thinking "he doesn't seem to like wearing that stuff," yet he seemed to want the display of pomp (for example, he was formally installed as president via a ceremony.) I found him at his most comfortable wandering into lunch alone and sitting with whomever he thought might want to chat. Formal speaking, I'd argue, was not his long suit.

I'm glad the article focused on his work on international programs; it really has been the one good thing he's done here that I hope lasts past his term.

Get to meet the new guy this morning. Let's see what his first impression is like...

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Sunday, July 01, 2007

Al-Qaeda, Murderous Thugs 

Normally, I don't post on the Iraq situation unless I have something related to our soldiers. However, the latest report by Michael Yon, an independent journalist documenting the incredible work of our guys and atrocities of our enemy must get as wide a distribution as possible.

It is unfortunate that our mainstream media (MSM) and too many politicians choose to ignore the barbaric, inhuman behavior of our enemy. Al-Qaeda's cruelty is not limited to Iraq. It is carried out in Afghanistan, The Philippines, Indonesia, Thailand, etc. They do not want to negotiate, they want the entire planet to submit to their view of the world. They will stop at nothing to attain this goal, nothing.

For us to continue to play ostrich with an enemy this fiercely barbaric is at our own peril. Please read Michael's report but be warned - graphic photos.


Thoughts on the Immigration Bill, #2 

Once it became clear that the American people had spoken and that the immigration bill would be defeated, there was some rejoicing but we need to realize we created this mess by ignoring our laws. We have an illegal immigration problem.

One key reason western civilizations have thrived (albeit in spurts) for millennia is that they developed the rule of law, a concept whereby the people choose their leaders and the law applies equally to everyone, regardless of tribe, faith, race, culture, language, etc. This concept began with the Greeks, then the Romans then various western European cultures. No other civilization developed and implemented this way of thinking, none.

Our Founding Fathers took this rule of law concept to a new level. Their ideal, based on the belief that people could rule themselves, reverberated around the world. As Thomas Jefferson wrote....,"that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." (Note, not equality but created equal; not happiness but the PURSUIT of happiness). It took time, revisions, struggles and war to get where we are today, but we're here, the most racially, religiously, ethnically tolerant and freest country on the planet. We have problems but try living anywhere else. America is any immigrants first choice.

Does our system work 100% of the time? No. Is it always fair? No. However, the alternatives are worse. Recall the words of Winston Churchill: "Indeed, it has been said democracy is the worst form of government except all those others that have been tried from time to time."

Our history, warts and all, is the history of a nation's people applying laws across the board and making necessary changes to promote freedom, here (Civil War) and overseas.

If we apply the law to some groups but not others, the system will fail. We want an immigration bill that addresses labor issues but also one that says if you are here, you need to come legally, obey our laws and carry your weight - pay your fair share and not take advantage of our generosity (and guilt).

Congress needs to understand we don't trust them - they are stalling on the fence, not tracking illegals, and ignoring the application of current immigration law. We know there's a problem but we want a clean, basic fix: build the fence, track illegals, require proof of citizenship to vote.

Congress needs to remember, Americans are smart enough. Given the facts, we will do the right thing. Now, we need Congress to act accordingly.


American Loss of Jobs 

You could lose your job to a foreign worker�not because he�s cheaper but because he has better workplace skills and discipline. That�s the message Labor Secretary Elaine Chao hears from U.S. executives who are worried about America�s competitive future. Source, Sunday Parade Magazine.

U.S. employers say that many workers abroad simply have a better attitude toward work. �American employees must be punctual, dress appropriately and have good personal hygiene,� says Chao. �They need anger-management and conflict-resolution skills, and they have to be able to accept direction. Too many young people bristle when a supervisor asks them to do something.�

This attitude can be attributed to 40 years of grade inflation, dumbing down of curriculum and the belief that every kid has the "right" to do whatever, whenever, however. When students are given grades (versus earning them), when parents insist that their Johnny or Susie is the greatest student since Einstein, when students can do no wrong and are not held accountable for aberrant behavior, they do not learn the habits that are necessary for success in the workplace or life in general.

All the hoopla about working at home at one's own pace, with no accountability is just that - hoopla. One must learn to arrive on time, meet deadlines, find solutions to problems, and stop offering excuses because one has been coddled all his/her life.

It is time that parents start demanding challenges and stiffer curriculum for all students.

An anecdote - I give my college students a 50-fact multiplication timed test to drive home how fast computers compute (billions of actions per second). As a general rule, the foreign students: Africans, Asians, Eastern Europeans, Latin Americans significantly out perform American educated students. Bottom line - you need to know that 7 x 6 is 42, period.