My students were assigned some very, very small mini-cases to present to the class. Students were to read the information, summarize it, identify the pros and cons or causes. They were to ascertain whether or not information was unclear, missing, etc. and provide solutions or clarifications.

One case discussed the fact that the US has 4x the number of software engineers as India, 6x the number of software engineers in China. The question was, why?

The student who had solved this situation was from Africa. His major explanations included these gems:

"America provides more access to education than anywhere else. Americans always look for a way to improve software, they know (have the freedom) to make improvements"

Note: this statement is from a foreign student who recognizes what we have. I only wish more Americans internalized this fact.

Labels: education

Ob: absolutely nothing, I was reading something on a discussion list and wanted to find a quote from the Big Lebowski to respond. The quote page on IMDb seems to me to be the whole damn script, but out of order. And I lost twenty minutes laughing through it. If you ask me for favorite movie ever, that's in the family photo.

OK, the last paper for the book has arrived, and I'm off to finish editing, followed by Littlest's last game of her grade school basketball career. Lileks does this all the time, so why can't I?

The quote, you ask? It was about nihilists. And until this guy changes the spelling of his URL, he's blackballed from the Northern Alliance. I type the wrong one every time.

Labels: big lebowski, blogging

One product of being taught by free market types in graduate school -- my undergraduate education had mostly left-liberal faculty, where in my senior year I was the only econ major wanting to take the Friedman side of a debate on monetary and fiscal policy -- is a certain resignation that, at times, elections bring together enough people in a coalition to create a majority that imposes its will to take the income of the minority. You might wish to complain about it, and surely it's wrong, but the process may require a certain amount of wasteful spending in order to get something done. That's the logrolling I wrote about on Monday, for example.

So where does this coalition come from? Drew Emmer points to a "shrewdly calculated outcome" of a relatively large coalition of firms who stand to benefit from greater government spending on transportation. It's a pretty interesting group, including pavers, engineers, local government, and large associations of firms who want someone else to pay for improvements on roads they ship on. Even a few firms that provide professional services, like the contractors' law and accounting firms are in on the game. If you were teaching state and local public finance or political science and wanted to show how coalitions form, Drew's list would be a good one.

But it extends a little further. My own union's lobbyist makes his reasons plain:

This is good news for higher education because the $416 million the governor had designated for roads and bridges in the bonding bill is now available for other types of projects—like higher education. IFO supported the gas tax increase for this reason.

The public universities are relying on the government to definitely spend their 3% of the budget on bonds, and now that they pushed the governor's road requests aside there's more room at the trough for these porkers to lard up. Understandable, though hardly commendable. But look who else is in? I got a copy of an email sent by ISAIAH to its membership:

Congratulations everyone! ISAIAH marks a huge victory with the successful passage of the Transportation Funding bill into law on Monday February 25, 2008!

Over the last four years, ISAIAH leaders have been champions of a vision for a transportation system that works for everyone, including those unable to drive. Every person has the regular need to travel, whether it is to their home, workplace, school, church or another location. ISAIAH envisioned that Minnesotans should be able to rely on transit as a thriving part of the state's transportation system.

This law was made possible through Minnesotans gathering around a common vision for a transportation system that: gets everyone where they need to go; is a responsible stewardship of our resources for the public good; considers the legacy we leave for the Minnesotans who will live here 30-50 years from now.

...it is critical to note that the content of this law was shaped by the participation of these groups and many others. This includes ISAIAH and the Transit Partners Coalition of which we were founding members.

ISAIAH, of course, is a social justice group that affiliate with churches. I attend church at one of the group's sponsors. I drive about 300 miles per week, and my wife another 100 or so. We probably consume between us about 25 gallons a week. I wonder how the stewardship committee would feel if I withheld $1.25 a week from my offering (rising to $2/wk over the next few years), since the church has now decided I should contribute more to roads? Does the church think the government is a collection agent capable of doing His work?

And these folks aren't through:

While this is a critical infusion into Minnesota's infrastructure, it is also the product of compromise. ISAIAH and transit advocates believe some areas of transportation policy and funding still need additional attention in order to provide adequate and equitable support to our growing transit system. We will bring these to your attention as necessary at ISAIAH gatherings over the next year.

Of course, and if you resist the holy coalition that will not leave you alone until you have paid from your pocket for every additional need that they decide you should pay for, well, that would make you unholy, right?

Labels: Minnesota, taxes, trains

...it appears that we are going to be headed for a showdown between the governor and legislature again, because this deficit is too big to fix with reserve funds and other legeredemain. You either have to cut spending or raise taxes, and the battle will be for probably $500 million or so between the two.

From the summary document, a couple of interesting points relating to the discussion just below on the possibility of recession in the state:

Projected individual income tax receipts fell by $313 million from November’s estimates. The decline in the personal income tax is due to slower growth in wages and declines in non-wage income. The forecast includes a small decrease in capital gains realizations in 2008. Declines in portfolio income, which includes interest and dividends as well as capital gains, explain about 75 percent of the decline in projected individual income tax receipts since the November forecast.

So most of this is because of stock market concerns. The forecasting firm Global Insights not only is calling therefore for a lower stock market, but it is also imputing a larger decline in Minnesota for key driver variables -- the forecasts that are used to generate the revenue figures -- than is expected for the country. They forecast employment to shrink -0.5% in 2008, which is a slump, not a pause. The detailed report has a projection of a 23,400 job loss 2007:III to 2008:III (see p. 23). Wage and salary income rise 2.5% for MN in 2008 versus 3.6% in the nation; any reasonable guess for inflation would lead you to conclude that real wage income in Minnesota is expected to decline. I think the forecast is a driven very much by the housing situation,

Housing is critical to the Minnesota outlook. Construction is expected to lose approximately 13,500 jobs in 2008. This forecast assumes housing permits bottom out in the second and third quarter of 2008. In 2007 it appears that job losses in construction lagged the decline in building permits up to 3 months, thus a “catch up” period is anticipated in the forecast. If the housing slump continues to deepen, however, it is unlikely that Minnesota’s economy will perform as expected. (p. 28)

...and I wonder if this is perhaps a bit too pessimistic. Total MN employment in construction was 112,432 in December 2007, down almost 6,400 from that time in 2006. You are telling me that you expect the rate of decline in the housing sector to more than double?? I sincerely doubt that, as it would drive down the level of employment in construction to 1997 levels. Tom Stinson said last week at the St. Cloud Economic Outlook that he thought prices in housing had to come down another 20% to reach equilibrium. Again, I'm not seeing why this figure is enough to lead to a double digit decline in construction, which has already shrunk.

Regardless of whether this figure is a little too high, it's unlikely we get to mid May without some adjustment of taxes (who knows, maybe they will tax clothes now.) Governor Pawlenty says he will use spending cuts but not in K-12 education. Expect the Legislature to talk more about tax loopholes (that's a technical term for "income the government doesn't currently tax but wants to".)

Labels: economics, legislature, Minnesota, Pawlenty

One of the results of presenting last Thursday night was that it provided a hard deadline for me to forecast what happens to the St. Cloud economy in 2008. (My presentation slides are posted, if you're interested.) As I sit here waiting for the budget forecast from the state (the AP reports a Capitol source providing them with a $935 million number -- I'll post about this separately after Tom Stinson and the Dept. of Finance post their presentation) and as I digest the new MN and St. Cloud employment data, it's worth thinking how I use the words 'recession', 'slump' and what we're talking about.

I found this in the AP report very interesting, because it matches my local expectation:

"But this short, mild recession eliminates about one year of economic growth and one year of state revenue growth," the report reads. "The federal stimulus package helps limit the recession's length, but the rebates come too late to prevent U.S. output from declining in the first half of 2008."

One of the areas that Stinson has cited as experiencing real weakness has been production of building products. Wood product manufacturing has lost about 3000 jobs in Minnesota since 2005, and the construction area (broadly defined, including civil engineering) about 14,000, in an economy with about 2.7 million jobs. So at most those sectors might add 0.1 to 0.2% directly to the unemployment rate, not more. Locally, I see a slightly higher impact from these sectors, but not much more.

I noted last Thursday that there's a difference between 'recession' and 'slump', and that most of what people want to call the former (like a two-quarter decline in real GDP) is a better description of the latter. The quote above says nothing about a decline in GDP over a whole year. You might forecast three possible outcomes:

1. A slump in January through about June, followed by slightly accelerated growth in the second half and a return to normal growth in early 2009. If you were to put that on a graph, you would get a pattern like a 'V' for 2008. Global Insights, the forecasting firm that the Minnesota government uses, has a -0.3% GDP forecast for 2008:I and -0.1% for 2008:II before bouncing back to 2.8% in Q3 and 2.7% in Q4. Those latter two are in the neighborhood of trend growth. Now unless you're going to argue that Minnesota gets hit worse than the nation as a whole -- and that might be Stinson's story, and if so I'm unpersuaded by what I heard last week -- I don't see that as a V. You might get instead...
2. A pause in the first half and stimulus in the second half giving you something closer to normal growth in the year as a whole. There are some forecasters packing in some pretty high numbers for Q3, more like 4-5%. That would be good for local area retail, though it seems to me that this money is going more to the discount chains than to local, specialized retailers. I tend to watch (I call this FBWA -- Forecasting By Walking Around) some of our local stores to see who's buying, who's busy. I'd watch the bookstores, the sporting goods stores, and the electronics stores. If they look busy this summer, this story might be right. But I don't expect that. What I expect is...
3. A pause in the first half and sluggish growth in the second half, to look like a U rather than a V. I still see elements of the credit crunch creating problems for retail in the second half -- notice that this will be to me the key area locally and nationally -- so that the share of the stimulus package that gets saved or used to reduce debt will be at least as large as in 2001. I will be looking at the budget forecast for what they are projecting for sales tax revenues for 2008-09. I think local area employment avoids being down for the year -- we have a fairly large education and health sector, which is immune to recession -- but unless retail grows more than I expect, those gains in the credit-insensitive areas will be largely offset by declines in manufacturing and construction. I don't necessarily call this a recession -- you'll note I've used 'pause' here several times -- but I don't object to the word any more.
   

It might come to pass that I'm more pessimistic than the state economist ... which would be a first! But I need to read the forecast first. Back after lunch with that.

UPDATE: Forgot to mention Ben Bernanke's projection:

Mr. Bernanke said “both fiscal and monetary policy face some additional constraints” relative to the start of this decade, he told the Senate Banking Committee.

In 2001, the federal government had a sizable projected surplus; it now has a deficit. In early 2001, inflation was 3.7%. Now, it’s 4.3%.

In addition, he pointed out that the negative effects of the stock market decline of 2000-2002 fell mostly on firms who pulled back on investment as a result. “In this case the consumer is taking the brunt of the effect,” because the asset in question is houses which are more important than stocks to the typical household.

Still, Mr. Bernanke has said he doesn’t project a recession this year.

Gosh, that makes me feel better...

Labels: economics, Minnesota, St. Cloud

• Poland
• Iceland
• Taiwan
• Ireland
• Hungary
• Kuwait
• Russia

All but one has adopted flat taxes or lower taxes recent. Summary here for all except for Russia, here.

Minnesota will be like one of those. Hint: Not the good one.

Labels: Minnesota, taxes

Do you remember this game? If you're under 35, probably not, as it's been banned by the government since 1988. But for many people it was a good alternative to horseshoes, as it didn't gouge up your lawn. Bob Lawson notes that the game was great fun (for me too!):

I've used this example in class to highlight the trade-off between safety and other values (i.e., fun!). Somewhat shockingly I ask my students, "Ok, we have a game that provides millions of hours of fun and enjoyment for hundreds of thousands of people. Unfortunately, a few kids get maimed and maybe even killed. That's a price I'm willing to pay!" If they recoil in horror at my inhumanity, as they often do, I remind them that this isn't that different from saying, "Ok, we have this device that provides us with the incredible ability to get from place to place quickly. Unfortunately, tens of thousands of us will get killed and many more injured each year using it. I'm talking about cars. How many of you want to ban cars?" The issue is that we have to make trade-offs.

I also had a BB gun as a kid, and luckily my name is not Ralphie. In his case, his parents got to make the trade-off. We also had a dart board. But not for the lawn dart any more do we trust parents to make that decision.

My friends play bocce, which has some similarities to both jarts and horseshoes, but for some reason I find it unsatisfying. Ever been hit with one of those balls? Ouch! Call the CPSC!

(I'm sure John will now bring up curling.)

Labels: economics, sports

Anyone remember when Krispy Kreme was all the rage? Well the last one in Minnesota closed, and the reason is quite simple:

"Just not making the dough. Just not enough retail, not enough wholesale. We're a retail, wholesale operation and the retail just has not even met our expectations ... It's just disappointing," said Molly Spoor, the Director of Operations for the Maple Grove location.

Mild wailing from James, but Kathy's lamentation bears notice.

I'm so ashamed. This is my fault. I'll admit it. I'm to blame. Since the various Krispy Kremes about town were nowhere near the Cake Eater pad, I visited only occasionally when we had a car, and then not at all when we didn't. Maple Grove is quite the hike from the Cake Eater Pad. It takes about a half-hour to get there---and that's without traffic. I just couldn't be bothered to get in the car and drive all the way up there to get some donuts. I lamented their lack of inner city locations, but, woe is me, did nothing to support their glazed ambitions because it was too far to go for donuts. I should have made the effort. Really, I should have.

To be fair, however, they did deliver to all the local Holiday stations, and there are a few of those nearby. I patronized their glazed deliciousness via the local gas station, but alas, they lost that contract to a local grocery store chain a few months ago. And while I like the local grocery chain's custard filled chocolate bismarcks, I still adored the glazed goodness of a Krispy Kreme. Unfortunately, I didn't adore them often enough.

Well, it's unfair of you, Kathy! You should know that your decision to not drive has impoverished Molly and many other KKD workers! I'm asking you to believe, "We are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other's success because the more Americans prosper, the more America prospers.”

Oh, wait. That was politics, this was supposed to be about donuts. But Don Boudreaux points out that, well, shift happens:

Trade is just one manifestation of consumer sovereignty. Just as there are ... winners and losers from consumers shifting their expenditures from goods made in America to goods made abroad, there are winners and losers from consumers shifting their expenditures from goods made in Illinois to goods made in Arizona - and from consumers shifting their expenditures from donuts, beef, cigarettes, whiskey, and train travel to bagels, fish, yoga lessons, wine, and air travel. Trade plays no unique, or uniquely important, role as an avenue of economic change spurred in part by consumer sovereignty. The only practical way to rid the economy of such "loses" is to try to freeze it, a futile step that will in the long-run only make losers of everyone.

The decision of Americans to avoid carbohydrates in an effort to trim their waistlines is a choice that a free society should embrace, but KKD was a loser in that. Maybe they made mistakes in overly aggressive expansion, but I don't see any Dunkin Donuts here from the east nor an invasion of Tim Horton's from the north. As an east coaster, I'm very, very fond of the Double D, but because there are not enough of me my preferences are not fulfilled in the market either. By what right would I be able to claim my two honey dips and a coffee regulah no sugah? By what right would the worker at KKD have a claim on my purchasing pattern?

But isn't that what we do when make claims for "free trade as long as it's fair"? Or use tax expenditures to favor firms who invest with our friends rather than someone else's?

Labels: donuts, economics

My own representative, Larry Haws, is quoted in the local paper (not online, and my copy is at home so I'll do this from memory) saying he voted for the transit tax bill and its override based on thinking the gas tax was a better way of getting that money than getting it from grandma through property or income taxes. Again, not exactly those words, but that was the gist of what he was saying. And that's an argument worth having, a basis for voting that I can respect because that's the real choice that was made yesterday. I disagree with it vigorously, though.

I received a prepared email assailing yesterday's vote sent to a group of individuals mostly living in the Twin Cities directed against DFL Sen. Linda Berglin. I'm not sure how I ended up on this list, but it contains a number of prominent private citizens who I know to be conservative. One such individual sent back a message.

I agree that our overall tax structure is too high, but we need the roads and we need money to fund them.

I never thought that I'd support anything that Linda Berglin supported, but here it is. Thank you Linda.

I believe the description of my reaction would be 'gobsmacked', if you were British. I am admittedly one to respond to people who write things to me that leave me in such a state, and this was no exception.

I notice your address is in Minneapolis. I live in St. Cloud. Approximately 13,000 St. Cloud residents (out of the 105,000 workers in our area) drive outside our metro area to work each day, and most of those drive to some place in the seven-county metro. It’s about a 75-mile one-way trip. Assuming they get the average fuel efficiency of American cars, your “need” just cost my friends an extra $172 just to commute to work and back. They’d buy a more fuel-efficient car, but your “need” just hit them with an extra $200 for their tabs.

So as you enjoy the new roads and bridges you “need” – which will be not many, since a big chunk of this money will go for the half-empty trains you’ll watch while waiting at a crossing (but you’ll be waiting on new roads! O joy!) – thank a St. Cloud resident.

Using our benefit principle discussion from yesterday, I assume you to say that the commuters are paying for roads they benefit from so are properly charged. But the point is that all taxation and expenditure involves a reallocation, and the extra $172 is not going to improve I-94 or US 10. It's not going to be used to build a connector in Clearwater between those two highways. Rep. Haws chose to have his own residents who work outside of St. Cloud, who are likely to be wage earners with families, bear a larger burden instead of grandmothers. Even if we accept the premise of our interlocutor, that we "need" roads and bridges and even if we assume that we actually will get roads and bridges and not just more transit projects, what makes Grandma more deserving of protection from government taxation than the family trying to better themselves, provide for their children, and producing goods and services people want to buy?

As the old saying goes, those who rob Peter to pay Paul can always count on Paul’s support. If you're Grandma, Rep. Haws is your hero. If you're a worker commuting from St. Cloud to Hennepin County, or from Randall to Waite Park to work in our manufacturing plants, Rep. Haws decided you are Peter.

Here's Peter's friend. I don't know if he would tax Grandma more; he might just decide to make some real budget choices.

Labels: gas, Minneapolis, Minnesota, St. Cloud, taxes, trains

In some places, people look at the budget they have and make choices of what they can and cannot provide. Take for example the Bureau of Labor Statistics. I got a postcard this morning from BLS indicating that they were not able to mail any more paper reports due to unexpected budget issues. No big deal, I thought, since I get The WSJ economics blog writes that a rather valuable survey may have to go away because money is needed for updating other surveys. I think it's a hard choice to have to make, but notice that the Bush Administration is at least making choices. That's what they do in the big leagues.

Meanwhile, our minor league Legislature has decided to have you pay rather than choose.

Taxpayers are going to see a significant bump in their tax burdens now that the Governor’s veto of the Transportation Bill has been overridden.

That’s good news if you think that the bonding bill should devote significant resources to Polar Bear exhibits, hiking and biking trails, convention centers, and other local projects instead of high-priority roads and bridges.

“Legislators had an opportunity to demonstrate their commitment to prioritizing State spending by making local projects compete with roads and bridges. Instead, they chose to raise taxes and place the burden of making hard choices on citizens instead of on State Legislators,” said David Strom, President of the Minnesota Free Market Institute.

“Governor Pawlenty was absolutely right when he proposed using General Obligation Bonds to fund roads and bridges. In fact, we believe that he should have gone farther and proposed to use State bonds for State roads, and requiring that all bonding projects have cost-benefit analyses to demonstrate their worth,” Strom said.

“Now that Legislators have decided to raise taxes the bonding bill will have plenty of room for pork-barrel spending, as it always has,” Strom concluded.

Victory for universities, too. Met your match? Sure you will -- every time you fill up. And don't drive less! You'll just cut down their revenues, and they'll raise your taxes again.

It's not the size of taxes that describes government extortion. It's the size of government spending.

Labels: legislature, Minnesota, taxes

President and Mrs. Bush went on a tour of Africa from February 17-21 - by the few accounts I heard of, it was incredibly successful. Where's our mainstream media coverage? Not too many places.

And you think there is no bias? If Bush were a Democrat on a goodwill tour of Africa being received well, do you think our mainstream media would ignore it? No.

What is the basic problem here? Americans are not being informed of the really good things our president is doing. Whether we like it or not, we are the world leader and when our president makes a point of carrying representative democracy to nations craving for something besides a tribal mentality and our media ignores it, that is plain wrong.

President Bush has done more to alleviate the scourge of AIDs in the African continent than any one else, including all the do-gooders in Europe. A total of $15,000,000,000 has been allocated to help Africans with this disease. Coverage? None.

The U.S. is the largest donor to the Office of the United Nations High Commissioner for Refugees (UNHCR), with more than 40 percent of that funding going to Africa in 2007. Coverage, none. (from White House memo)

Here are a few of the notices I found about this trip, nothing major.

NPR mini report - Note the snide, nasty remark in the second paragraph. Of course, this is NPR, funded by our tax dollars.

Rwanda: We cannot be everywhere but also must recognize that tribal conflicts too often are alive and well in many African nations. The US never colonized any nation in Africa. The Arabs and Europeans did, big time. Both groups, Arabs 700 years before the Europeans, engaged in pitting tribes against each other, originally for a source of slaves, later for other reasons. The Europeans left conflicting boundaries but based on my students, they also left decent school systems for boys and girls. The Arabs wiped out cultures, languages, etc. Schools appear to be for boys only. The US has provide far more hope, support, and direction than any other nation on the planet. Are our students taught this? No.

This unclear article in an unknown paper, includes this comment: "But as far as the international activist community is concerned, Bush's remarks fall on deaf ears." Part of the reason Bush's comments "fall on deaf ears" is because too much of the world's media likes to ignore Bush and any good done by the US while blaming us for any and all problems. They refuse to help, really help.

The list goes on - you get the picture. We need our media to we tout what we do right - which is a lot. When we and others on the planet only hear bad, incorrect, or politically negative news about the US, we all lose. Our children have nothing to believe in when they are shown and taught only the negative. Just ask yourself - what could or would you do if your parents and grandparents only told you what you did wrong? You would have no faith in yourself. A nation can only do good as long as it believes in itself - once that is gone, basic tribal (in the general definition of tribal) instincts take over - it's not pretty.

Labels: education, Media

Listening to the feminists whine, moan and complain about poor Mrs. Clinton's treatment by the press is just making me gag. Grow up, girls, these are not playground games where little girls claim they want to compete with boys and then get the rules changed - this is life.

Many of today's feminists are claiming,"It's not fair. The press is attacking Hillary. She is being treated, like, well, a weak female. " (My paraphrasing.) Cokie Roberts on Stephanapoulos, DeeDee Myers on The Today Show, Ellen Goodman in the Pioneer Press, writer for the Boston Globe all running to Mrs. Clinton's defense because the press is well, not nice to Mrs. Clinton. Give me a break - the hit job by the New York Times on John McCain last week was a real hit piece - the puff balls being thrown at Mrs. Clinton (and Mr. Obama) can't hold a candle to what conservatives have to tolerate.

"The playing field isn't level." No, girls, it's not, never has been, never will be. It's called "who's in charge" and you whiners are not in charge. If your treatment of women who disagree with you is any indication, you wouldn't make the playing field level either, even if you were in charge.

Grow up, get over the victimhood mindset. Live is not fair. Life is not risk free. Mrs. Clinton chose to play in this game, believed she was "entitled" to Potus but she's not. She has accomplished relatively little on her own. She has ridden on her philandering husband's coattails. If she wants to play in the big leagues, she needs to learn the rules: stop whining (along with her "sisters"), stop crying (and running home to a girls school for support), and really earn it.

Frankly, I don't think she's got it. I'm not sure there's a woman today who does have what it takes to be POTUS. Obama doesn't have it either.

Women have had 40 years to make inroads in sciences, mathematics, corporations. They haven't in the numbers the fantasy dreamers thought up 40 years ago. Why not? Most don't want to. I know some who do but the majority of women do not. Those who like the hard sciences and mathematics do well and have no problems getting well-paying jobs. These women are bright and talented. They are not the empty suits comprising Phds. in "women's studies," social sciences and English professors. Nor are they the women who found their security in government jobs (to replace the men they trash so often).

Bottom line, feminists, stop your tired mantra and grow up or be quiet.

Labels: Feminists

The other night when I presented my slides for the presentation described here, I thought someone would catch me on slide 18, where I show employment in the St. Cloud area divided between credit-sensitive and credit-insensitive industries. I was unwilling to classify manufacturing so I made a separate line. The newspaper report picked up my remark that the industry had lost 310 jobs. But wages to the 17,437 workers still in manufacturing in the area -- more than 17% of area employment, much higher than national averages -- had risen $13.1 million between 2006:II and 2007:II. Nobody made any note of this. I wonder, is St. Cloud's manufacturing sector better or worse off?

That same day, Russ Roberts produces a fine essay discussing this very problem in a larger scale. Commenting on an op-ed by Harold Meyerson that observed that the biggest private sector employer now is Wal-Mart, whereas some years ago it was GM, Roberts observes,

It's a fact. Sort of. Actually, the federal government is the largest employer—1.7 million employees and that excludes the Post Office. Does that mean we've become a nation of bureaucrats because a little over 1% of all employees work for the government? Does it mean we're on a perilous downward path where instead of making things, we regulate things? That would be a silly statement. It is equally silly to conclude that because Wal-Mart is the largest private employer we've stopped making things.

Actually, making things is not the road to prosperity. The road to prosperity for a nation is to use the skills of its citizens wisely. The wise use of those skills depends on the skills and desires of people in other nations. Sometimes that means making stuff. Sometimes it means providing services in exchange for making stuff.

And as it turns out, we do make a lot of stuff here in the United States. Manufacturing output is dramatically greater today than 30 or 40 or 50 or 60 years ago, the halcyon era that Meyerson imagines once existed. Manufacturing output has almost tripled since 1970. What has happened over the last 60 years is that productivity in the manufacturing sector has increased greatly. That has allowed the US manufacturing sector to produce a lot more stuff with roughly the same or even a declining number of employees.

Wal-Mart is a red herring. It's success hasn't come at the expense of the manufacturing sector. The trends in the manufacturing sector go back 60 years, long before Wal-Mart existed.

Two points flow from this. First, contra Charlie Quimby, it's not true that state public employment has fallen. Go to DEED for the data, and you'll see that in Dec. 2007 state employment was 97,135 compared to 92,425 in Dec. 2002. Where employment fell was in local government, from 298,637 in Dec. 2002 to 292,534 in Dec. 2007. (This data is being revised by the state and will come out on Thursday.) Fewer government regulators at the local level strikes some of us as progress.

Second, and you can see it on slide 19 of the presentation linked above, St. Cloud area output in manufacturing isn't a one-time blip. We produced 5.2% per year more stuff in manufacturing between 2001 and 2005 (the last year for which we have local area GDP). But employment in manufacturing in St. Cloud stayed flat. Is this bad? I guess it depends -- do you want to get more stuff for the same number of workers and have the other workers find new things to produce, or do you want to force those workers into employment? Do you think they'll make more goods there than elsewhere?

If I can have more net worth AND more leisure time, am I better or worse off?

Labels: economics, St. Cloud

As we continue the discussion of the transportation budget today -- liveblogging going on at Let Freedom Ring and Ladies Logic capturing everyone's attention (UPDATE: The override passes) -- it's worth pondering some points that have bothered me. I find as I go through this debate to find confusion on the terms public provision and public financing, about transportation versus transit, and over whether some people have plans. Let's pose this as a series of directed questions.

1. Does Minnesota need more money spent on transportation? Now it is popular for many to focus on where the money we already budgeted was spent: "MVST was supposed to be a fix, but it isn't." "The Legislative Auditor tells us we built too many new roads and maintained too few existing ones." "Our bridges are falling down." "You should have spent less on bike trails." None of these points is now relevant. They are sunk costs. The question before us is simply, should we budget for building new roads and bridges? Since Gov. Pawlenty proposed bonding for bridges, he certainly wants more spent. The House caucus has repeatedly said there's a compromise available, which surely means more to be spent. So the argument isn't over whether to build more roads and bridges. That's been agreed to by all parties. You want to punish for past decisions on bike trails or MVST? There's an election for that. As Mitch pointed out, you had a chance last time.
2. Are we buying the right roads, bridges, etc., or is this another transit boondoggle? The MnGOP has been labeling this the transit tax. Probably so, but how many of the legislators live in the seven county area? If you wanted to stop the transit boondoggle, the only way would be to stop awarding Senate seats by population, and switch to one vote per county or some other geographic division. The next apportionment in 2010 will probably move more legislative districts into the second ring suburbs -- what do you suppose that does to demand for rail projects? So my point is that outstate will always be in the minority on transit; the governor's veto only requires the Legislature to hold party ranks together and to bribe a few legislators -- which they've done. That's not extortion or coercion, that's plain old logrolling. Some payment is already in HF 2800, and others will be forthcoming in the bonding bill that the Legislature will now re-write; after all, there's money to spend!
3. No, but really, are they in the right place? But that doesn't mean we bought the package of roads and bridges that we should have bought. The problem with government provision of public services is that it provides goods in return for political support, not for places where benefits exceed costs. If you want the latter, don't expect government to do it for you. Governments have no profit motive and thus no assurance that what they spend will have the value provided for. Jim Fedako writes at the Mises blog:

   The difference between government and business is the chain of taxation versus the dollar vote. The public school district taxes regardless of value produced. Once the bond issue passes the voters, the bill must be paid, to be enforced by the long, strong arm of government. On the other hand, the entrepreneur must face the consumer every day, product in hand, hoping to make a sale. The consumer can as easily bypass as enter his store, based on a whim if he so chooses. The taxpayer? Well, just try to hide.

   Did we build bike trails that provide too few benefits for their cost? Are we paying for trains that have low ridership? When private firms do this, they fail. Government passes another tax.
4. How would we prefer to pay? Public finance students are given a set of lectures on the benefit versus ability-to-pay principle. I have argued before that since many people will use the roads a generation from now it made sense via the benefit principle to bond for those roads and bridges. The Legislature, seeing the bonding bill as an opportunity for other transfers of public money to political constituencies, chose instead to use something closer to a current benefit principle rather than future benefit. The gas tax is preferred by some for roads because people who buy gas use roads, so they are the ones benefiting from their construction. But when goods are shipped to us in Minnesota we now either pay for transporting them from out-of-state or we get fewer goods. And sales and excise taxes are usually seen as being regressive both on firms and on households (any wonder why the big hitters in the Chamber of Commerce like this bill? It's anti-competitive.) Indeed, the three most regressive taxes in Minnesota are the cigarette tax, the gambling tax, and the motor fuels excise tax. At least one might make the argument for the first two as reducing bad behavior. Does the DFL think driving is a bad?

The argument was not about past decisions. It was not about whether to build roads, and it was not really even about transit versus roads and bridges. Those decisions were already baked in the cake. The decision was over who will pay. Now we know. The question will be whether anyone has enough votes to demonstrate this was not the politically optimal solution.

Labels: gas, legislature, Minnesota, taxes, trains

You would never know it, but two blogs of the Northern Alliance joined at the same time; the last to join was Captain's Quarters in December 2003. But one less will remain after next month.

Beginning on March 1, I will begin working for Michelle Malkin, a friend, mentor, and writer I have long admired. She has offered me a position as writer at Hot Air, and my blogging will appear exclusively there.

That means that I will close out Captain’s Quarters sometime in March. This saddens me, as it has become my ever-ready home and because of the terrific community it has generated. I hope that the CapQ community comes with me to Hot Air, and Hot Air will have open registration today for 12 hours in order to allow CapQ commenters to join me at my new digs.

Nobody who meets Ed ever dislikes the guy; nobody who reads his blog can doubt he's one of the hardest workers in blogging. The friendship between Malkin and Ed goes back a good ways and the move will make Hot Air one of the leading sites for political commentary on the internet for a long time. I know we've had some top blogs retired because of writer fatigue in the past, but has any been subject to a buyout before? (I assume his new compensation plan from Malkin includes a lifetime supply of Notre Dame football jerseys.)

Worth noting: In his 12/03 post accepting NA entrance (NARN was still four months away) Ed said:

I don't listen to a lot of talk radio because I find that a great deal of it is shrill and annoying, and even when people don't make a habit of screaming into a microphone, they still tend to get childish and demeaning.

And Al Franken wasn't even on the air yet! Ed's keeping his archives up indefinitely.

I had to go back and look at the formation of the Alliance while thinking a few minutes about this. Originally considered to be Lileks, PowerLine and Fraters Libertas (now known as Act One, or the Opening Act, or Top Billing, or whatever in our radio lives), we added Mitch and myself in May 2003 before Ed. One guy now runs the blog of a newspaper, another group is giving away $25k for a book prize, and Ed is off to Hot Air.

I guess my life as Pete Best continues. Mitch, Chad and Brian? Your comments invited.

Labels: blogging, NARN

Tomorrow, Saturday the 23rd, I will join Michael Brodkorb for the Final Word of the Northern Alliance Radio Network program on AM 1280 the Patriot. We will be joined by Mary Liz Holberg, MN House Representative from Lakeville. Main topic - the irresponsible transit bill our legislature is in the process of trying to ram through before the actual budget numbers are released.

Please join us and share your thoughts.

Labels: AM1280, Final Word, Northern Alliance Radio Network

While the rest of the Minnesota blogosphere was watching the MN House Transportation debate in either gleeful fascination (tax consumers) or horror (tax producers), I was hunkered down with a presentation to do last night at the Kelly Inn for the Economic Education Winter Institute's Economic Outlook. It's the 12th year we've done it, the fourth for me. The local newspaper report leads with my remarks. I notice at the time of this writing that the article drew over 200 comments. I don't have time to read them -- I'll explain more in a minute. But state economist Tom Stinson was also on the panel, and the paper's reports of his remarks bear noting:

Some of the big factors that are causing the decline are in the housing industry and the credit market, Stinson said.

New housing starts have been the lowest since World War II and have declined 25 percent during the last year.

"We're not making a dent in the (housing) inventory," Stinson said. "We have an 11-month inventory, we would like to have a four-month inventory."

Senior loan officers also are tightening standards of all types of credit in the commercial and home markets, Stinson said.

The state's diversified economy hasn't allowed it to become recession-proof, he said.

"Minnesota is going to have another slow year," Stinson said.

While his and my definition of slow might be different, notice that he DID use the word "slow". Slow could mean slow growth. As I said last night, the growth rate of jobs in Minnesota has to expand enough to absorb new workers. Tom Gillaspy, the state demographer, reminded the audience that this is the year the first of the Baby Boom generation turns 62. It's therefore not clear whether this will slow expansion of the labor force. This and 2009 represent also the last of the boomlet of students graduating high school. Nonetheless, it can easily turn out that Minnesota grows at a very sluggish rate rather than slumps (declining state GDP), and this would lower revenues somewhat below forecast as well as see a rise in unemployment. I don't think Stinson rules that possibility out, and after reading that I conclude his and my forecasts are closer together than I had previously thought. (I'm probably still a little more optimistic than Tom, but that's a pretty normal state of affairs.) We'll have to wait for the forecast on Thursday for more precise figures, but that's my read of what he was saying.

While I would have liked to have stuck around more last night and then discussed the transportation transit tax bill today, I went to my secret life today. I am confessing to being a basketball junkie, particularly when it is Littlest at play. Her school plays in a tournament in New Ulm each February, and this is her last year in the school so our last tournament. I suppose I could have had someone drive her down but I would not miss this for the world. Watching 10-14 year olds from very small schools -- hers has less than thirty students for K-8 -- play co-ed is pretty neat. Watching your Littlest chug up and down the floor with a huge smile on her face, one that does not vary if her team is up 10 or down 20, and seeing it on all the other kids too, is a world I will miss escaping into as she heads to high school next year. She will try to continue playing for her next school -- she can score and she's a ferocious defender, though probably has to move from point guard now -- but I don't think HS will be the same. We were within two with two minutes to go but lost by six today and out of the championship. Momentary sadness, then the kids realized they were here for the rest of the day to play around and have another game tomorrow, and the usual frantic buzzing of tweens and teens resumed.

Janet is kind enough to sit in for me tomorrow on Final Word, and I will not hear the show as her next game -- the last they will play here -- is at 3:15 for a consolation prize. If they win there'll be a small trophy, but regardless there'll be pictures and memories. And for a weekend, not a care about the soft economy or your silly transit ripoff.

I've just been called to pizza.

Labels: blogging, economics, legislature, Minnesota

The MN House passed a transit bill today, 89 to 44 in favor. This bill is not for roads, 75% is for "other" transit (read more light rail that will NEVER pay for itself), trails, etc. This bill is not for the metro area where 60-70% of the state's population resides. This bill is for special projects - it is a TRANSIT bill, not a transportation bill. Very little will help the Metro congestion problems.

The bottom line is that MN taxpayers who rank 11th in tax burden, will be gouged, again. - for what? The legislature could not even wait for the budget to be presented. No, the DFL club had to rush this bill through, the third day after the current legislative session started. What do you think these part time legislators were doing during their off-time? We're supposed to have a part-time legislature. Looks to me like this DFL club is far too eager to "need a year long session" to "get all the work done" - at our expense. They have gotten so busy doubling committees, spending our money on committees, and trying to find more ways to put their hands in our pockets, that they forgot, WE voted them in. Perhaps it's time for us to start finding ways to vote them OUT.

This political behavior of Democrats in general, and some guilt-ridden Republicans who think it is their duty to make the rest of us pay for their dreams is nuts. I'm reminded of this quote by Vernon Howard (word in parentheses is my paraphrase):

Permitting your life to be taken over by the (government) is like letting a waiter eat your dinner. (You pay, he wins.)

It is time Minnesotans say, "Enough is enough. Stop letting people gorge themselves at the government trough; stop spending MY money for unnecessary, irresponsible pet projects because you don't know how to say 'no'."

Labels: legislature, taxes

At this very moment my husband and I are sitting in our office watching an incredibly clear, spectacular lunar eclipse. There is not a cloud in the sky. As we're watching, we're recalling where we were on July 20, 1969, almost 40 years ago - when NASA landed an American space capsule on the moon. It was a night (in the US, daytime in other places) to celebrate, cheer, be proud of what we Americans have always been good at - setting our minds to something and doing it.

It is sad that we dismantled the program and all the engineers who pulled off that achievement. It was awesome. Since then, we have dumbed down our education system, taught our kids most of where we have erred. They do not understand that massive accomplishments of countless men and women of the US. They don't learn that off shoots from the space program drove the computer industry, powdered drink beverage industry, metal alloys applied to wheelchairs, especially those for wheelchair athletes. Countless other inventions came from the space program because it demanded the best of everyone and our society thrives on continual improvement.

It is my sincere hope that that we will find a way back to setting national goals (vs vapid platitudes) and showing the world why we are what we are. We have much to be proud of - much. It's time we teach our children, and do it soon.

If you can, get the DVD for the movie, In the Shadow of the Moon which tells the story of US astronauts landing on the moon wonderfully. Summary is here.

Labels: education

This new trend using information on interstate migration and economic freedom seems to be catching. Phil Miller uses state-level data and argues that the higher your rank on state economic freedom, the more interstate shipping (using United Van Lines data, not U-Haul as I did earlier) flows into your state. Dirck the Noorman does a similar correlation pattern with states voting for Kerry and for Bush in 2004 -- the movement is from Kerry states to Bush states.

However, Charlie Quimby argues that there's a balancing problem for trucking firms to get their fleet to places they are most needed. This seems to help explain the data I saw on U-Haul to some extent. But United Van Lines (which Phil and Dirck use) would have to be explained by intra- versus inter-state shipping, which Charlie could perhaps argue for us.

Two quibbles with Phil's and Dirck's posts unrelated to Charlie's critique. First, the flow in the 1980s was almost exactly the opposite -- people moved from Flyoverland to the coasts. I don't know that the Midwest is a whole lot more economically free now than twenty years ago. You would need to do a similar study over time to demonstrate this better. Also, I really hate regressions that regress on a ranking when we don't know the degree to which the ranked states are separated. That is, states 4 through 13 might be almost identical in economic freedom but all very different from state 14, but you are asserting that state 14 is as different from 13 as 13 is from 12. I realize Phil is doing a quick-and-dirty for a blog, but we should acknowledge that is what it is. It would be fun to have a senior student write a thesis with a more careful analysis of this data.

Labels: economics, taxes

Discussing the recent attempt by bars to circumvent the smoking ban in Minnesota by exploiting a loophole allowing actors to smoke on stage, James Lileks notes:

But the underlying issue is amusing, too: if the legislators want to cinch the loophole shut, this means the state will regulate not only the content of a theatrical performance but the definition of a theatrical performance.

In the olden times, of course, everyone knew what a play was, and what it wasn’t. People standing on a stage thee-and-thouing to a seated audience: a play. People milling saying anything that came into their heads: not a play. But having redefined theater to mean anything its practitioners wish it to be, we accept with shrugs the idea of a spontaneous plotless event as theater. And now the state has to say it’s not. Moreover, the state will base its decision on the intentions of the play’s author. Heck of a precedent.

Delightful, and yes indeedy, it looks like Tom Huntley will be delighted to be thrown into that briar patch.

Labels: Freedom, smoking

From this morning's StarTribune:

It was a sight that would catch anyone's attention, a woman riding a bicycle around St. Cloud Monday night in bitter cold. Turns out there was another reason a citizen took notice: The cyclist was carrying a gun.

Police caught up to the bicyclist a few minutes after a call came in around 11:15 p.m. They found her near 14th Avenue N. and St. Germain Street with a shotgun strapped to her back, said Sgt. Joe Kraayenbrink.

Turns out the 22-year-old suspect is a felon and had a warrant out for her arrest, police said.

About a mile from where I'm sitting right now, in an older section of town near small businesses and the new city library still under construction.  There are many people who ride bikes here in town, but none I know who carry weapons.

(h/t: Ken Doyle)

Labels: St. Cloud

The battle over the budget deficit -- with a revenue forecast still ten days away -- is heating up and before we even get to that the Minnesota Legislature is trying to salt away some money for transportation. I talked a little below about a corner of that debate, but let's get some additional information together.

The big news today is that the Legislative Auditor produced a report on transportation that said several things. I'm reading the report in bits, so don't consider this a thorough review, but what I have gleaned is this:

1. "After 2003, inflation-adjusted revenues from Minnesota motor vehicle and fuel taxes declined, and the state made substantial use of debt financing to support the state trunk highway system." According to the last Tax Handbook, Minnesota collected $650 million on the gas tax in 2005 and $646 million in 2006. Which will of course lead people to think we aren't taxing enough, but consider the reasons offered: people are driving no more miles than before, in no small part because of more efficient vehicles and rising gas prices causing a reduction in the amount of gas used. Now I doubt we've raised the price of gas to the point where it's elastic in demand -- which would mean the gas tax revenues would fall for an increase in gas tax rates -- but it's almost certainly true that it's more elastic than previously estimated, so that a proposed 42.5% increase in the gas tax rate will not increase the amount of gas tax revenue raised by anything close to 42.5%. Yet it appears from reading the research summaries on the transportation bills that the DFL intends to spend more than $300 million per year on transportation, immediately freeing up that amount from the bridges to make pork.
2. "Since 2002, the ride quality of state trunk highways has generally declined. The structural condition of bridges has generally improved." Call me paranoid if you must, but I think that second sentence isn't going to appear in news reports. MnDOT uses some qualitative measure of ride quality and for principal highways aims for 70% of them in good or very good condition. It looks like we're at 66-67% rather than 70%: Not very good, but we seem to be exerting a lot of effort for 3% improvement. Expected remaining years of useful life of the roads has indeed declined, but this was not enough of an emergency for the Legislature to pass anything more than a lights-on transportation bill. If the highways are in such dire condition, why is the Legislature this year threatening to not fund transportation unless their one bill is passed?
3. We've spent more on highway expansion than on highway preservation. OK, that one looks real, though in a state where population is moving so dramatically away from the west to the east, do we really want to spend money preserving roads in places the people have left? 21.5 per 100 in-migration to Sherburne County, with large gains also in Isanti and Morrison counties. Name a western county, and you will see population decline. I find the LA's analysis, though correct, a little too macro-oriented. But because the Legislative Auditor isn't thinking that way, the office is arguing for much greater spending on highways.

So with that in mind, look at where we are. The DFL leadership came out with a press release today decrying the lack of money and that we need the tax increase. Not that it will do a thing for the deficit if it comes forward -- indeed, my argument is that the DFL is hurrying this bill along because they fear the revenue forecast will suck all the air out of this plan, forcing them either to pass more tax increases for that or cut spending, in which case nobody will be able to support both a tax increase for a budget deficit AND THEN a tax increase for transportation. But if they can pass the transportation tax increase first, they can pretend that didn't happen while fixing the budget.

Meanwhile, Governor Pawlenty continues to say he's going to veto the transportation bill.

Brian McClung released a statement in response to the DFL news conference. In his statement, McClung said:

"We appreciate the legislative auditor's report. It contains many helpful suggestions that we expect MnDOT to implement. Regarding the DFL press conference this afternoon - it appears DFL legislators are determined to pass a massive and overreaching $8 billion tax increase that the Governor has said he would veto. Just recently, DFLers increased the overall amount of their gas tax hike to 8.5 cents, in addition to license tab tax and sales tax increases. They are essentially disregarding the Governor's concerns and appear to believe they have the votes to override a veto. We'll soon find out the answer to that."

The governor's red veto pen is going to be challenged early, and while I am not sure this is more than a wild goose chase, the DFL is undoubtedly trying to buy some votes somewhere. (At least AAA's girlfriend got a good meal.) It's easy to have it both ways as Drew Emmer suggests -- you could have six GOPers vote for the bill but then vote to uphold the veto (they'd've voted for it before they voted against it.)

The Governor is taking an ax to the state payroll, implementing a hiring freeze. Now, there are some folks who are trying to make an argument that savings by budget cuts are just as harmful as tax increases. The logic is pure Keynesianism: if you cut spending by a dollar there's a dollar less of aggregate demand, but if you increases taxes by a dollar some taxes are paid out of savings, so aggregate demand only falls by the part that is funded by reduced consumption. It's part of those bad principles of macro courses where the instructor teaches the students government spending and tax multipliers. But, the story is always told using lump-sum taxes. For it to be right, the taxes must be taken from the public in some way that doesn't change the return on labor, capital, land or entrepreneurship, or alter the relative prices of goods purchased. (A head tax would be one example.) If the tax change DOES change the return on any productive resource, then the tax increase will decrease the supply of output and has an effect that could be more harmful than a spending cut. Increasing income taxes would be one example of a tax that changes the return on productive resources. It's an empirical question, as I often say, and the devil is in the details. Don't be fooled by simplistic explanations.

Still working on some other items so this post tonight might have to substitute for more over the next couple of days. We'll see. 80 days down for the Legislature (including the one in Special Session), 40 to go.

Labels: gas, legislature, Minnesota, Pawlenty, taxes

I've been thinking about today's kids living in their protected world, where they are perfect, all brilliant, all beautiful, all talented. Too often, their parents wait on them, give them what they want (versus need), in other words, spoil them. Adults provide an excuse for failing, why something went wrong and usually someone else to blame. Personal accountability is avoided.

For decades, I loved watching ABC's "Wide World of Sports." It exposed me to sports I never knew existed. The best in the world attempted to win in their field. Sometimes they won, mostly, they didn't. It was life.

Recently I've be replaying the opening theme: "The Thrill of Victory (followed by incredible clips of athletes achieving success) and the Agony of Defeat" (followed by incredible clips of accidents, missed gates, poor landings, etc.). I learned from an early age that sometimes you win, sometimes you lose; sometimes it's your fault, sometimes not but only the individual can "fix" it.

When we prevent our children from experiencing losses and all those emotions that go with losing, we are robbing them of life. Adults who protect children so they never experience the "agony of defeat," are saddling them with an attitude that will result in far more failures in life. All will experience losses but if they do not learn how to handle them, they will lose confidence, not be able to cope. They will not learn that you can turnaround negatives, that personal changes can produce different results, that individual hard work benefits one and the team. If we continue raise our children in a la-la environment, they will not learn what they need to stay free because they will always expect someone else to "fix" their loss. They will look for the easy way out. Dictators are only too willing to take advantage of their delusions.

Labels: education

Reader KT thought the new "about" link to the right needs a Buttercup picture. We'll do you one better, sir.

This is Buttercup in training for basketball. Video courtesy of Littlest Scholar, creator of Buttercupland. Littlest loves the linkage.

Labels: Buttercup

Michael noted a comment by state Senator Steve Murphy that raised an eyebrow:

Minnesotans would pay more for gasoline with the DFL bill, Murphy said, but they will see transportation improvements.

“They’re definitely going to notice a difference because their roads are going to get fixed,” he said. “That’s the bottom line here, fixing roads and lowering the (vehicle crash) fatality rate.”

The state’s gas tax is 20 cents a gallon. Indexing would have resulted in a rate of 31.4 cents a gallon in 10 years, nonpartisan legislative experts said. By removing the inflation provision, the tax should be 28.5 cents a gallon by 2018.

Two thoughts: First, if I am driving on a better road, don't I drive faster? Potholes tend to slow me down. What part of building new roads leads to lower fatality rates? Certainly not during construction. If more and better roads leads to increased driving, will this increase or decrease the number of fatalities of vehicle occupants? I realize he said fatality rate, but as a matter of public policy do I care more about rates or about the number of fatalities?

Sounds like another job for cost-benefit analysis.

Meanwhile, did anyone notice how 7.5 cents of increase plus indexing became 8.5 cents? It appears the rate goes up five cents in September and then a half-cent a year after next if I read this right. I need to run off to something now, but I'll update this if I can draw a comparison between this and the old bill. The headline figures show a decrease in the total dollars spent, but they always sum 2015 dollars and 2008 dollars at the same value, ignoring discounting.

Labels: gas, Minnesota, taxes

My book is about two weeks away from shipping (anyone got a good idea for cover art?), but before that I have the Economic Outlook presentation, so I'm thinking about state recessions. David Beckworth has pointed to an article in the Economist on state recessions, but the map in the latter uses unemployment rates, which are a lagging indicator. Beckworth looks instead at the Philly Fed's dataset on state coincident indicators, using the model of Crone and Clayton-Matthews (REStat 2005 -- there's a readable recent article by Crone here. He points out that there has never been a recession in Minnesota without one nationally. As recent concerns about a national recession begin to fade, we have to wonder whether the statements of local recession are accurate. And yet Beckworth's chart shows that for December alone, Minnesota's coincident index fell at an annualized rate of over 3%, eighth worse in the nation. I have to spend a couple days pondering that data.

Between both these things and a report for the university for planning (ugh!) posting might be lighter than usual here.

Labels: economics

Zimbabwe has created a ten million dollar note, which will currently buy about two loaves of bread. I believe I will purchase tonight a piece of the Million Zimbabwean Dollar Homepage, following the lead of Felix Salmon.

I hope I don't have to bribe someone to get that.

The official inflation rate for 2007 exceeded 66,000% (and suspected by some to be closer to 150,000%.) The record is Yugoslavia at 313,000,000%. The question will be whether Zimbabwe hits that Yugoslav record before President Mugabe is forced from power. The usual path of hyperinflations is for acceleration.

Labels: economics

Check out the picture at EclectEcon to see how much further the Canadian dollar is going these days.

Maybe this means a continuation of the trend of our trade deficit falling from 5.7% of GDP in 2006 to 5.1% in 2007? Exports up 12.2% last year, imports up 5.9% (which with rising oil prices is pretty indicative of switching to domestic production.) The decline in the dollar has to have an effect at some point.

Labels: economics

King Banaian says,

I get occasional comments, sometimes rather hostile, as to what this blog is. I needed an "about" post anyway and don't have that in the template, so I decided to create one tonight.

Here is the very first post on this blog from September 2002 in full:

This is an opening post for a group weblog for SCSU members of the NAS to discuss events at SCSU and elsewhere that would be of interest to us and to the SCSU faculty and staff. It's a team list; if you're a member and want to join in the fun, let me know.

It was that simple: The St. Cloud Association of Scholars was an organization that affiliated with the NAS and MAS here in Minnesota. I'm still a member of MAS, but most of the rest of the (the SCAs) organization has withered away. At one time there were four people regularly posting here, plus a couple of occasional posts by other SCAS members, but that ended a few years ago with retirements and the movement of me to the NARN.

NARN meant this blog changed roles. Needing material each week, which frankly this blog didn't lend itself to at the time. So more politics, and more economics. When Final Word was launched in August 2006, even greater focus on state politics ensued. Shortly thereafter I invited Janet Beihoffer to co-author SCSU Scholars, and she continues here to this day, though my output tends to dominate the page. (Her information is just below.)

Starting on NARN meant a decision -- do I change the name of the blog to, say, my own name? I decided against it. I had hoped, in vain it turns out, that other SCSU scholars would join this page. (If you're one reading this, the offer is still open.) The blog is my own work for the most part, and what appears here under my signature is mine alone, and does not reflect the views of my department, college of university.

For those looking to know my professional career, here's my university page, including all the coursework I do, the research, etc. There's a brief bio there if you really must know. My wife is referred to on this blog as Mrs. Scholar, our daughter is known as Littlest, and there's a high demand among readers for Buttercup and Pepper photos.

Janet Beihoffer says:

A Gen-xer was defined as someone born after 1965, who would hold multiple jobs and pursue multiple careers during their lifetime. I'm a bit older but the definition fits. My succinct previous career list includes: elementary teacher (grades 4,5,6); CPA (Peat Marwick which has become KPMG); small business consultant (U of M), IBM marketing career (large systems, telecommunications); EDI seminar instructor. I am currently an Adjunct Professor of Management Information Systems (MIS) at Metropolitan State University (I've also taught at the University of St. Thomas).

At the present time I am rather active in politics. I was elected chair person of the 2nd Congressional District Republicans in February.

King and I crossed paths via The Minnesota Association of Scholars, where we both serve on the Board of Directors. My blogging is erratic but I tend to discuss points avoided by the mainstream media (MSM) talking heads. I believe the vast majority of people are smart enough to figure out their own answers, if taught and given the necessary information, . It galls me no end when MSM information slants, hides, ignores or otherwise obfuscates real facts to protect someone's "agenda." My main focus areas include: education, the environment, the US military, the USA and the destructive results of the feminist and various (but not all) '60's "movements."

My husband and I have four adult children. Two are married and our first grandchild arrived in January. One is a 2nd Lt. in the US Army, currently stationed stateside. I've been a dog lover all my life. Our last one got very ill in December of 2006. There was nothing the vets could do. It was a sad time. We have not replaced her yet but that may change.

Blogging with King provides a terrific opportunity to express my opinions. I have enjoyed reading comments from so many of you. Thank you for your participation. Here's hoping we will see and hear from you in the future.

We will have two interesting, different guests with one message: Stop spending. At 3:15 House GOP leader Marty Seifert will be on to discuss the first week of the legislative session. Think he knows something about taxpayer protection pens? I'll ask him whether the House GOP would be willing to take a hike from any House business until the I-35W bridge money is released by TCAG.

At 4:15 we will be joined by Erick Kaardal, lawyer for , whose group Citizens for the Rule of Law (and also Neopopulism) are suing the legislature and various over the abuse of per diems. I'm shocked, shocked! to hear that we would have groups wishing to deny per diems to our state legislators. I mean, how are they supposed to live on less than $96 a day? Readers will recall that we provided several dining tips for state senators struggling to make ends meet. (Just take the March 2007 archive and search for "per diem".) I would like to find out from Kaardal how we could simply limit the number of days legislators get to take per diem, as done in New Hampshire. It might keep a certain farmer home more. Sarah Janacek suggested last fall that the per diem issue never seems to work for challenging incumbents in elections ... but a lawsuit might get their attention.

Don't forget that there are eight total hours of local programming Saturdays on AM 1280 the Patriot. The David Strom Show 9-11, then NARN's Opening Act of John Hinderaker, Chad the Elder and Brian Ward 11-1, and Mitch Berg and Captain Ed as the Headliners from 1-3.

Labels: Final Word, NARN

While the debating on how to fund transportation continues unabated (and apparently unsuccessfully, as it appears the bill is going forward with little change -- though the indexing of the gas tax might be pulled?), it's worth noting what the Legislature wants to fund instead. From the Anoka County Watchdog (thanks to Drew Emmer for posting), vote for that transportation bill and you will still get all that bonding money, now diverted to such wonderful items as

• A hockey arena in Hallock;
• An orchestra hall for Minneapolis;
• Upgrades to the John Rose skating rink in Roseville;
• The “Prairie Ecology Center” in Jackson County;
• An ATV trail in Kittson County;
• The Thief River Falls multi-events complex;
• An ice arena for Crookston;
• A senior center in Mora;
• The Hinkley Fire Monument;
• Expansion of the Saint Cloud Civic Center;
• The Pine Grove Zoo in Little Falls;
• The Northwest Hennepin Family Center;
• The Austin Area Success Center;
• Improvement to the Duluth Convention Center;
• The Voyageurs Heritage Center;
• The Alden Community Center;
• The Blazing Star Bicycle Trail;
• A snowmaking machine for the Battle Creek Recreation Area;
• Heritage Village Park in Inver Grove Heights;
• The Mayo Civic Center;
• The Southern Minnesota Women’s Hockey Exposition Center;
• A community Center in Pemberton.

So it's worth understanding this -- these pieces of pork, these dollops of cream for legislators looking for a ribbon-cutting ceremony to occur, oh say, around October, are part of the inducement to pass an $8.4 billion transportation bill. To achieve these ends the DFL leadership seems prepared to go to any length, even to crippling the reconstruction of the I-35W bridge.

Make no mistake -- it is not only DFLers asking for these bits of largesse. Indeed, the bills introduced by Republicans are little more than offers to sell out some bit of the resolve the House GOP had last session in return for a photo op. As a companion to the earmark reform cry that may be a centerpiece of the McCain national campaign, I hope the Minnesota GOP leadership will ask each member of its caucus to withdraw these requests and refuse to put any more in this session. And refuse to vote on ANY bill on the floor until the Transportation Contingency Advisory Committee releases the money for completion of the I-35W bridge reconstruction. Like the U.S. House Republicans over FISA, just walk away from the floor until the money is passed over to MnDOT.

No pork: Bond for bridges.

A house that lasts 50 years is paid for over 30 years. A bridge that lasts 50 years doesn't have to be paid for in two. Let those who will benefit in the future share in the cost.

Labels: legislature, Minnesota

It's one thing when you hear liberals argue that we need to re-institute the draft to share the costs of national defense (as for example Rep. Charles Rangel has proposed for years.) Liberals dragooning a certain segment of society to serve their political ends ... and have others pay the cost. The kind of thing we pro