Monday, June 30, 2008

While I'm away 

Please enjoy the new edition of ROI Central Minnesota, containing the Quarterly Business Report that I co-author with Rich MacDonald.

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This week, from Hawaii 

Like many other economists, I will be at the Western Economics Association meetings in Waikiki this week. Several friends I expected to see there have canceled, however, mostly because of high fares due to a decrease in competition.
After the recent bankruptcies or termination of service of the Hawaiian specialists ATA Airlines and Aloha Airlines, fares to and within the Hawaiian islands have soared. When fuel surcharges are included, the cost of flying roundtrip between Los Angeles and Honolulu can be as high as $900 for peak summer dates. The cost of flying from one Hawaiian island to another (like Oahu to Maui), which had gone down to as little as $39 each way, has recently soared to $74 and $84, ...
Posting will be light the rest of the day while I fly; my ticket (booked in early May) was well north of $1000, and the only way I could afford this was to schedule flying home on the Fourth, when travel is typically low.

Lots of miles, though; and I guess I'd better use them soon, before even their costs go up!

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Bulletin board 1 summary 

Over the last three weeks we have shown a bulletin board that was titled "Daily Effects of White Privilege" on the campus. The bulletin board is in a medium-traffic area of a classroom and office building in which I work at SCSU. Each day we have taken a different picture of it and displayed it for you to look at. Above is the bulletin board, and links to each individual entry:
Please come back to the blog for more bulletin boards. They're everywhere. This post will be added to the right-side index of this blog as part of our boards-and-doors features.

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Market solutions to Daily Effects of Indoctrination, Part 11 

New Ebon-Aide� is the adhesive bandage specially designed for people of color. From the licorice look to mocha, coffee, cinnamon, and honey skin, new Ebon-Aide� blends with your skin to help conceal as you heal.

Ebon-Aide� comes in three different sizes and five different shades. At last you've got it made in your shade.
Ask and you shall receive.

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Saturday, June 28, 2008

Politicians and Parades 

Full disclosure: I'm the Republican chair for MN's 2nd Congressional District and volunteer in a number of ways for Representative John Kline, including parades. I was totally unaware of this activity until 2004 and reluctantly said "I'll help."

Frankly, they're fun, plain fun. We meet a lot of people. I love the parades, especially in the towns outside the metro area. Everyone, it seems, comes to watch. You have the local high school band(s), Scout troops, businesses, dance schools, and the requisite fire engines and about any local group possible. A number in our southern towns have ethnic dancing and singing groups whose members are really entertaining.

People stake out "their spot" on the parade route with blankets and chairs, hours ahead of time and nobody moves their "stuff." They show up ready to cheer their neighbors and yes, sometimes their politician. I usually hand out items, high-five the kids, and pet dogs, which I love to do. People, well most people, are very receptive to any overture we make. But there are the sour ones, those who just can't stand conservatives - they ignore a pleasant "Hi, how are you? Great day! Etc." and just snarl at you. Why be so angry? It's a parade, it's fun and it sure beats watching the news!

If you have a favorite candidate, call their office and volunteer to participate. After doing it once or twice, you'll find, you'll have a good time and be supporting "your" guy (gal)!


The anti-captalistic mentality 

After a week of debate where it appeared the saner members of Congress would keep their colleagues from looking like fools, the House passed HR 6377 just before leaving on Fourth of July recess last night, instructing the Commodity Futures Trading Commission to "curb immediately the role of excessive speculation" in energy futures or swaps and
(2) eliminate excessive speculation, price distortion, sudden or unreasonable fluctuations or unwarranted changes in prices, or other unlawful activity that is causing major market disturbances that prevent the market from accurately reflecting the forces of supply and demand for energy commodities.
The bill, introduced by Minnesota Congressman Collin Peterson, passed overwhelmingly, with only 19 nays. I've already written this week about speculation, but some further comments seem justified.

Congress has heard lots of testimony from 'experts' contending that the price of gas would fall to $2 if we could just get those nasty speculators out of the market. The testimony most have focused on is that at the top of the article, by Michael Masters. Here that is. The focus is on index speculators, who are now buying futures contracts almost equal to the entire increase in demand for oil from China. This however does not reduce the supply of oil unless someone takes delivery of the contract. Krugman hints at this very same point; see also Craig Jones. Most futures contracts are going to be closed out by writing the opposite contract as one reaches expiration. (Futures basics.) You might keep your long position by buying another future, but that does not remove oil from supply.

Now that doesn't mean that the price isn't influenced by what is going on in futures markets. Prices have been rising in part by expectations of the future, but it was ever thus since the beginning of asset trading. The key question is, at what point does speculation become excessive? And the reaction of politicians and everyday people, in my view, is emotional rather than economic. Excessive speculation occurs, in the mind of the non-economist or Congressperson, when the price of X is driven beyond the point where he or she can afford to own it. To take just one example: A St. Cloud resident is a Green Bay Packers fan. He owns season tickets to Packer home games. He does not use these often, instead selling them for above face value. Is he a speculator? When I ask him why he still gets the tickets, he hopes some day to return to the Land of the Cheese and attend all the games when he retires. He thinks the price will be higher for him to go to games when he returns than it is now, so he is hoarding his spot in the season ticket queue.

He is preventing others from holding that ticket, and therefore is helping drive up prices now. Unlike the index speculators, he actually HAS THE TICKET. But is his speculation excessive, or is it rational? You don't know, I don't know, and the government regulators don't know.

This does not prevent, unfortunately, government from acting as if they did. Sometimes arrogance is a disguise for ignorance, and as a good example this week consider Tim Walz' antipathy to markets, as Andy Aplikowski documents. He quotes a Rochester Post-Bulletin article in which Walz denies the market.
This idea � this red herring � that all of a sudden you�re going to drill and everything is going to be better, as if the market fundamentals are at work here � that�s not happening... These are the same people that are (getting) $40 billion in profit.
"As if" Walz believes profits do NOT motivate drilling. What do you think they do it for, to drop the rocks they drill in the ocean to watch the ripples? There is, in the Walz mentality, a suspicion that people who earned a profit got this from someone, that it's undeserved. For many years we've understood profits as the return to risk born by the residual claimant, the entrepreneur. But instead we get people who believe corporations are reprobates less worthy of our trust than a government that has a monopoly on force.

But that's not the point either. There's no need to believe the government is more immoral than corporations. There's little argument from either side of this debate that corporations are quite willing to co-opt or corrupt government to do their bidding, or that it's easier for them to do so than the hordes of consumers. It is that Walz and the others in Congress do not comprehend how the wealth we live in today came from. In the book with the title that I made this post, Ludwig von Mises stated this well:

Economics is so different from the natural sciences and technology on the one hand, and history and jurisprudence on the other hand, that it seems strange and repulsive to the beginner. Its heuristic singularity is viewed with suspicion by those whose research work is performed in laboratories or in archives and libraries. Its epistemological singularity appears nonsensical to the narrow-minded fanatics of posi�tivism. People would like to find in an economics book knowledge that perfectly fits into their preconceived image of what economics ought to be, viz., a discipline shaped according to the logical structure of physics or of biology. They are bewildered and desist from seriously grappling with problems the analysis of which requires an unwonted mental exertion.

The result of this ignorance is that people ascribe all improvements in economic conditions to the progress of the natural sciences and technology. As they see it, there prevails in the course of human history a self-acting tendency toward progressing advancement of the experimental natural sciences and their application to the solution of technological problems. This tendency is irresistible, it is inherent in the destiny of mankind, and its operation takes effect whatever the political and economic organization of society may be. As they see it, the unprecedented technological improvements of the last two hundred years were not caused or furthered by the economic policies of the age. They were not an achievement of classical liberalism, free trade, laissez faire and capitalism. They will therefore go on under any other system of society�s economic organization.

And thus there is no check on the ability of people to vilify speculators, because of course the oil can be brought to market in any number of ways! It occurs to me that people do not know what the world was like before the Industrial Revolution (or perhaps they want to go back to those halcyon days?) and how recent our gains against disease and starvation and the Malthusian world. Anthony de Jasay writes about how the modern progressive glorifies envy by its ignorance of these gains on the subsistence level:
Most of us react to the decency or otherwise of large incomes and quickly made fortunes by moral reflexes that evolved under the capitalism of a generation or two ago. They have not yet been adjusted to the changes capitalism has since undergone. One such change is the flood tide of pension funds in the Anglo-American type of capitalism which, after all, sets the mode of operation the rest of the world is beginning to imitate. The needs of pension funds and the competition between their managers sets the maximisation of asset values as the primary goal, and the more classic goal of profit maximisation by corporate enterprise tends to become a mere instrument of the primary goal. Socialists whose rejection of the "system" is visceral rather than intellectual, call this "Casino capitalism," run by and for "speculators".
It is that same visceral reaction that lead 402 Congresspersons yesterday to cast aside the gains that result from finding more ways to spread risk in the world to those willing to bear them, gains that allow pensions, homeownership, life insurance, and the development of new technologies -- the very ones the modern progressive says we should trust instead to give us energy rather than tapping the oil deposits we already know exist. Ignorance of that history is a peril to us all.

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Daily effects of indoctrination, part 13 

This is part thirteen of a continuing series, background here. Previous drawings can be found here, here, here, here, here, and here, and a billboard for the other six here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months. This is the next to last edition, and soon we will have an index for all thirteen days. There will be a second set from another bulletin board next week.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

Honestly, I cannot find a connection between the picture and the plaque in this one and for awhile thought the picture was mislabeled except for the giant #5 on the podium. I can only guess that this is a complaint of a lack of political candidates of color. Ironic, if so, and rather dismissive of politicians as being harassing.

UPDATE (Sat.): This was scheduled to go up Wednesday. I don't know why this remained in draft. I will post more of these pictures next week.

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Friday, June 27, 2008

A dent in the recession story 

A stitch in time? The Chicago Tribune reports,
The Commerce Department reported Friday that after-tax disposable incomes jumped by 5.7 percent in May, the biggest one-month gain since a 6.3 percent increase in May 1975 when Ford was president. He was fighting a recession that year with a program to mail individual taxpayers $50 checks.

This time around individual payments range from $300 to $600 with couples getting up to $1,200. In all, $48.1 billion in rebate payments were made in May and through this week, the government announced Friday, payments total $78.3 billion -- three-fourths of the $106.7 billion scheduled to be paid to 130 million households. The payments are to be completed by mid-July.

Bolstered by the big 5.7 percent surge in after-tax incomes, consumer spending rose by 0.8 percent last month, the best showing since November. Even after removing the effects of higher gasoline and other products, inflation-adjusted spending rose by a solid 0.4 percent, the best performance since last August.

Since consumer spending accounts for two-thirds of total economic activity, analysts said the big jump in May should guarantee a positive reading for overall economic output in the current April-June quarter of around 1.25 percent to 1.5 percent, up from 1 percent growth in the January-March quarter.
Personal income (not including the tax rebates) were up 1.9% in May, with surges in proprietors' income (profits for nonincorporated firms). $179.6 billion was added by the Economic Stimulus Act. Overall, 14% of the increase in disposable personal income (personal income minus taxes) was spent in May. Call that a short-form marginal propensity to consume, mostly from temporary income. Some of it will be spent later, but most will be saved. You can see who's doing what here (h/t: Barry Ritholz) who finds some of the stories "terribly sad". I suspect there's some selection bias going on...

Consumer sentiment is falling, and that might be a bad thing this time around, but so far the economy seems to be in a slow growth period and might stay there for a few more quarters.


Chart of the day 

From the Heritage Foundation. If you live in Minnesota and are in the top bracket, put yourself above Denmark if Obama wins. It's not likely to do much for labor supply, either.

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Send video HERE 

The Moving Picture Institute, producers of Indoctrinate U, blogged recently about the University of Colorado's notion of having a chair of conservative policy.
The ongoing debate about higher ed reform tends to be quite polarized, and there are many issues upon which the different sides of the debate are seemingly never going to agree. But [Bud] Peterson's plans for a conservative chair were different. They had a peculiar unifying effect as commenters from all sides expressed strong reservations about a faculty position that seemed more concerned with candidates' political viewpoints than with their expertise, and that also contained more than a hint of tokenism. Chancellor Peterson's efforts are understandable, many conceded, but that does not make them especially viable.
Very sensible, though some seem quite willing to accept tokens.

We're ordering up a copy of IndocU, by the way, and looking for a place to show it this fall on campus. Interested parties may contact me on the blog's email address, comments at blog url without the www part.

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Heller and universities 

Following onto yesterday's post, I note this article (permalink for Chronicle of Higher Education subscribers) that quotes university officials thinking the Heller decision on gun bans has left the door open to finding campus gun bans unconstitutional.
In elaborating on the decision, Justice Scalia wrote that the "court's opinion should not be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill, or laws forbidding the carrying of firearms in sensitive places such as schools and government buildings."

On the surface, that sentence appears to protect the policies of colleges and universities that prohibit students from carrying guns on campus, said [lawyer] Mr. [Robert] Clayton.

However, the Supreme Court ruling might leave open the possibility that a campus ban on firearms might be challenged on the basis that a particular campus was not a "sensitive" environment, he explained.

The word "school" is often interpreted to mean an elementary school or high school, so one line of reasoning goes that we can't be sure this is supposed to apply to colleges and universities. Another issue is where the school is located.
Even if they remain in place, campus gun bans may be less effective if cities are not allowed to enact tight gun controls, said Mr. White, because the majority of shootings involving students in urban settings occur not on college property but in the surrounding neighborhoods.
Would it be unreasonable to ask that universities keep a lockbox at the edge of campus (at a few different locations) so students would be able to pick up their firearms as they walked home from campus, even while continuing to ban them on campus? Does the Court intend to differentiate between rural campuses and urban, and if so how?

I sincerely doubt the higher education establishment will give up campus gun bans without a fight; I end up agreeing with this article that there is an invitation by the Court to bring the fight to them.

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Another victim under Obama's bus 

Glenn Kessler in the WaPo, June 13,
Sen. Barack Obama said Friday that as president he would impose a Social Security tax increase on people making more than $250,000 a year as part of an effort to extend the program's solvency without cutting benefits or raising the retirement age.

Currently, taxes funding Social Security end once a worker reaches $102,000 in earnings, a ceiling that is indexed to inflation. Workers and employees share the cost, with each contributing 6.2 percent. Under Obama's plan, which the presumptive Democratic nominee outlined at a retirement community here, there would be a "doughnut hole" on earnings between $102,000 and $250,000 where no additional taxes are paid.

Obama has spoken of such a concept before, but Friday marked the first time he had set a threshold for imposing new taxes. Obama was vague on whether that figure would apply only to payroll income.

Video of speech here. This isn't particularly new; he pitched the doughnut plan at the Pennsylvania debate with Hillary in April. Larry Lindsey criticized this proposal in the Wall Street Journal last Friday as being anti-FDR as was as a sharp increase in taxes on the self-employed.
A high-income entrepreneur would see his or her federal marginal tax rate rise to 53% from 37.7% under Sen. Obama's tax plan. He proposes a 4.6 percentage point hike in the personal income tax rate, a loss of some itemized deductions, and a 12.4 percentage point hike in the Social Security payroll tax. This would take a successful entrepreneur's effective marginal tax rate higher than what it was under Jimmy Carter or Richard Nixon, when the maximum tax on an entrepreneur was 50%.
That's enough for run-and-hide, the prevailing tactic of the Obama campaign when its proposals get draw flak.

Obama economic advisor Jason Furman, yesterday in a letter to the WSJ:
Mr. Obama has stated that he would like to extend solvency while protecting middle-class families and asking those making over $250,000 to pay their fair share. As president, he would work with Congress on a bipartisan basis to design the details of such a change, including the tax rate, how it is phased in over time, the linkage between these tax payments and benefits and other critical design elements of this plan. He has not proposed a 12.4-percentage point tax increase on earnings above $250,000.
Bump goes the bus, claiming another victim under its wheels.

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Thursday, June 26, 2008

Profits drive trucks 

So it appears the Ford Ranger may not end up in the scrap heap. Because of fuel efficiency issues, the relatively gas-sipping Ranger looks like it might stay in production for two more years.

"With high gas prices, the Ranger is looking a lot more attractive," said analyst Erich Merkle of IRN Inc., adding that he was aware that Ford was considering keeping the truck alive.

The Ranger debuted in 1982 as a 1983 model, replacing the Ford Courier. The truck has been lauded for its quality and capabilities, but Ford has not made a significant investment in the Ranger for more than a decade, leaving it to languish.

But at 21 mpg city and 26 mpg highway, the Ranger is the most fuel-efficient compact pickup on the market today. And despite going more than a decade without a significant redesign, it is still the nation's No. 2 compact pickup after the Toyota Tacoma.

Ford originally planned to end Ranger production this year, but agreed to keep St. Paul open for another year as part of its 2007 contract with the United Auto Workers.

So of course politicians will lay claim to being persuasive about the Ranger. Here's St. Paul Mayor Chris Coleman:
"Today's report that Ford is considering an extension of the life of the plant is welcome news to Saint Paul. Since before I was elected, I have been calling on Ford to keep the plant open indefinitely. We have been in constant communication with Ford, and we are thrilled with the news that a plant extension may be on the table. "
Norm Coleman and Tim Pawlenty have engaged in shuttle diplomacy with Ford's Detroit executives as well. But do we really think this had anything to do with keeping those plants open? Or is it more simply that Ford has found other lines that might be losing more money than the Ranger and intends to close those instead? With sales declining generally but Ranger sales up, you had to think they might keep making them regardless of any political pressure.

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Consequences of daily effects of indoctrination 

Joshua Sharf writes about the Democratic National Convention rules on gender balance for its delegations (which is causing some male delegates to be bumped in favor of females):

So why not by, say, income distribution? (Can't find enough poor people.) Or religion? (Don't want Muslims on the same stage as Obama.) Or educational level? (Yes, professor.)

The possibilities are mindless. Really.

Looks to me like another drawing: "I know when I go to the Republican National Convention, I'll see people who look like me." Of course, the purpose of education is to assure they don't go to the RNC!


Throw the book (or video) at him 

An article in the Chronicle of Higher Ed this week (temp link; permalink for subscribers) discusses "survival training for campus shootings." Seems about time, yes? So what are they recommending?

...some campus-safety experts say colleges must better prepare those who do not wear badges. In April the International Association of Campus Law Enforcement Administrators published "The IACLEA Blueprint for Safer Campuses," in response to the Virginia Tech incident. The group recommended that colleges train students and faculty and staff members in how to respond to such emergencies. Among the training methods it recommends are residence-life programs, orientation sessions, and print and digital materials.

Although colleges everywhere have developed training programs for their employees, many stop short of asking students to think through how they might react if they heard gunshots in their building.

That's a mistake, says Randy Spivey. "Since Virginia Tech, there's been a lot of focus on law-enforcement response strategies and notification procedures," he says, "but very little on what to do if you're that person in the event."

"[R]residence-life programs, orientation sessions, and print and digital materials" to do what? Let's go to the taskforce report. I see twenty points, most of which deal with what the campus security forces should do. Under a heading "Prevention and Education Programs to
Address Campus Safety Risks" is point 19, as close as we get:
Faculty, staff and students should be trained on how to respond to various emergencies and about the notification systems that will be used. This training should be delivered through a number of delivery options, such as in-person presentations (i.e., residential life programming; orientation sessions for students and employees); Internet-based delivery; and documents.
Give them another training, it appears. So what is two paragraphs later? As an "ancillary issue",
IACLEA does not support the carry and concealment of weapons on a college campus, with the exception of sworn police officers in the conduct of their professional duties.
They follow this with a position statement (on page 12 of the report) making it clear they don't want students with guns, using the claims that students would accidentally discharge their weapons "where large numbers of students are gathered or at student gatherings where alcohol or drugs are being consumed, as well as the potential for guns to be used as a means to settle disputes between or among students." And, they argue, in a situation where an active shooter was present, the campus police could have problems distinguishing between the bad guy and the student with a permitted weapon acting in defense.

Instead, they want students to get training videos (watch the trailer and ask, do you want this in your child's dorm orientation?) and pamphlets. They also want (point 16) criminal background checks on all students, faculty and staff,and to have "behavioral assessment teams" including public safety officials to decide in advance which student is potentially a threat to campus (point 17). Qui custodiet custodiens?
Photo courtesy Joel Rosenberg, who really needs to comment on this.

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Wednesday, June 25, 2008

Worrisome graph of the day 

The Minnesota Coincident Indicator series is one of the fifty state series created by the Philadelphia Federal Reserve. The latest data on employment has moved this indicator down substantially, decreasing the odds that we are going to avoid a local area recession here in St. Cloud, though the local area data was more positive for May. I am still waiting for the next budget report (and its estimates of sales and income tax collections), but if that picture above stands, the recession call may be just academic soon.

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Should we restrict oil speculators? 

A reader asks whether a law proposed by some in Congress and Obama to limit oil speculation is a good idea? I was asked at a presentation yesterday how much of current oil prices I thought were speculation. Jim Hamilton has been trying to estimate that for about a month now, and my answer is the same as Jim's and Paul Krugman's -- if you are speculating and forcing price up above equilibrium, there ought to be a surplus that has to be stored somewhere (and storage isn't cheap.) Krugman's graph is instructive.

The story from foreign exchange markets, that we first learned from Milton Friedman, is that speculators stabilize rather than destabilize markets because they are providing new information to the price. If they were providing bad information and destabilizing prices, they would be buying high and selling low, not a good way to make money. Instead speculators are seen as buying when prices are lower than their best guess for equilibrium and selling when prices are higher than equilibrium. Both forces push the price towards the market-clearing level. Mark Perry has another graph that illustrates this.

Stopping speculators either stops the stupid ones from losing money or prevents stabilizing the price of oil. Why would government want to do either? If you're going to blame the speculators for anything, says Arnold Kling, blame them for keeping oil prices too low in 2006-07.

I am reminded in this of a story I always tell in principles classes (again, based on a chapter in Heyne's intro book): We are all speculators. Those who want to expand drilling now think the price is going to go up in the future without increased supply (and look at the flat supply from the last two years as evidence in favor of their view.) Those who don't want to expand drilling are speculating either on finding a warp drive or a willingness of Americans to drive in very dangerous cars. (I listened to a friend the other day happily discuss building an electric car with an old Karmann Ghia chassis with a fiberglass body. All smiles until I asked, "wouldn't that be dangerous?" "Well, I'd only drive it to the nearest town." "What share of accidents happen within two miles of home?")

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Tuesday, June 24, 2008

More trade, more wine! 

My friend Omer Gokcekus is a very curious economist (and I mean that insofar as he plays in more areas of economics than I do, and that he joined me in an Indian restaurant in Yerevan, Armenia one night -- now that's curious!). He also writes interesting articles, but I don't think he sent me this one before:
Our findings show that globalization has benefited the American wine drinker. We find that there is an overall decrease in the real price of a shopping cart of all 100 wines from year to year. For instance, the real price (in 1988 prices) for the basket of the entire Top 100 list was $4,313 in 1988; $3,132 in 1993; $2,533 in 1999; and $2,421 in 2004. That is nearly a 44% decrease in prices from 1988 to 2004. At the same time, there was no significant change in the quality of the wines on the Top 100 list...

Our econometric analyses show that the decreasing wine price over the past 17 years can be explained by the loss of shares of the Old World countries: Replacing a French wine with a U.S. wine lowers the average real price by 1.0%; an Australian wine by 1.1%; and a wine from non-incumbent countries by 1.5%. To put it differently, replacing an Old World wine (French, Italian, etc.) with a New World wine (US, Australia etc.) lowers the average real price by 1%. Replacing an Old World wine with a New-New World wine (Chile, South Africa etc.) lowers the average real price by 2.5%. The increased presence of newcomers puts significant downward pressure on prices.
h/t: Marginal Revolution. His paper on corruption due in my book this fall will be a highlight.

UPDATE: #1 is a local cook at a number of places, most recently he's been cooking at a local bistro that wants to sell good wine and food. I was invited to stop for coffee yesterday and walked in instead on a wine salesman pouring some samples of his latest ideas. Wines from Spain and Australia -- one of the latter an incredible shiraz -- and only one Old World of the nine we sampled. (Nine, by the way, is too many, but that's another post.) How little time has passed since these wines were almost impossible to get.

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An old trick for airlines 

Via OTB, I see that United is having too many leakages from its business travelers (and the price discrimination they impose) and thus is using an old ploy to reinforce their market segmentation.
United Airlines said Friday it will start requiring minimum stays for nearly all domestic flights beginning in October. It is also raising its cheapest fares by as much as $90 one-way.

The second-largest U.S. carrier said the moves are among a number of changes it is making to combat record high fuel prices. The Chicago-based airline has been among the most aggressive in the industry in pushing fares and fuel surcharges higher in recent months, and its latest policy could prompt other carriers to consider following suit.

This has been done before, and the way you got around the rule was to use consecutive ticketing. It does not appear that the airlines can enforce back-to-back restrictions directly, so using a three-night-stay minimum is going to help them. The question will be whether or not low-cost airlines will match United. I'll say 'no'.


Daily effects of indoctrination, part twelve 

This is part twelve of a continuing series, background here. Previous drawings can be found here, here, here, here, and here, and a billboard for the other six here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months. This is the next to last edition, and soon we will have an index for all thirteen days. There will be a second set from another bulletin board next week.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

In this picture, the drawing seems to be of children in a classroom. A student of color at the board (on the left half of the picture) says "Please Listen". Two blonde-haired white children playing to the right say "Yeah I don't care" and "Thank you." A second black student (smaller than the others) says to a third blonde, "Why aren't you listening?"

Think teachers ever go through this in their classrooms?

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Monday, June 23, 2008

Feminists and Universities 

I've written on this feminist mindset in the past, here, here, and here among other posts. This post is lifting comments by feminist professors who attended what appears to be a second-tier conference for Medievalists, professors of medieval studies. A number of them are knowledgeable in their areas of expertise but too often, given the dumbing down of American education, the hard core courses of this topic are sorely lacking for students. So, these professors morph into other areas. Topics of some of the papers from the annual congress in Kalamazoo, MI. included: papers on human waste (yes, you read this correctly), disability studies in the middle ages, major distortions of classic literature with underlying themes not of content but application of today's social agenda to the classics and the typical rant by the feminists. It's not your grandparents' Middle Ages history.

This conference featured such terms as "heteronormativity," "hibridity, "heterosyncrasies" as well as the standard "patriarchy" and typical, defensive mindset. Guess you need a PhD. in something to understand most of these terms.

The feminists appeared in full force. Six female professors met the first day for a discussion by the Society for Medieval Feminist Scholarship. They concluded that feminists needed to redouble their efforts to fight patriarchy (the hardy feminist perennial). The round-table turned into whining, moaning and complaining. Why? Seems that a number of today's young women "don't want to take another feminist class." This was followed by a session devoted to strategies for sneaking postmodernist theory into the heads of reluctant undergrads who would rather not listen to this drivel. "In my students' demographic, they hear the word 'feminist' and they shut down."

I can tell you why - feminism is a losing proposition. BTDT. There is nothing to be gained when young people are exposed to "feminists" whose sole mission in life is to trash men, particularly white men. If you are a female and you want to succeed in life (versus live off the public dole in a university or government position), study something with some substance, like math, hard science, engineering, medicine, business, computers, economics, etc. If you don't want these areas, fine but don't sit around whining about lack of students in your "social" curriculum when the real issue is lack of content. As for students, continue to ignore the feminist babble so rampant on college campuses today and go study something worthwhile.

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I suspect the under-40 American does not remember much of the days of the comedy album (or cassette, or 8-track), but for those of us who were early teens around 1972, George Carlin was the guy that gave you the "seven words you can never say on television", which when played on your crappy stereo in your bedroom caused howls of laughter and a furtive look out the door to see if Mom had heard those words. I had lots of music then, but this and Big Bambu were probably the two records I played most. When #1 son was a teen, we listened to some of Carlin's newer material and I was able to dig out the older stuff (I still have many of my albums) and we howled to Al Sleet the Hippy Dippy Weatherman. Did he become an angry liberal in the 1980s? Yeah, and so what? Even then, his routine on airplanes was sidesplittingly funny. (It's interesting how it evolved before and after 9-11; such was his humor.)

Gone now, a reminder of how time marches past as much as my teen now being in his twenties, and my Littlest starting high school in a few months. What humor will she hear that makes her giggle as much as Al Sleet? (She went camping this weekend with her youth group, came back with a picture of her friend playing "chubby bunny" which is a measure of how many marshmallows you can have in your mouth. Her friend got eight and a photo on MySpace. Good stuff.)


Why you should care about card check 

Here's a good example of why unions want to pass card-check, and how the DFL is helping them:
Workers at the newest hotel in Minneapolis, Hotel Ivy, have signed union cards and organized as part of UNITE HERE Local 17.

The employer was bound to a card-check agreement under the terms of financing provided by the City of Minneapolis to help build the hotel. The City provided $6 million in tax increment financing for the $100 million development, which renovated a historic 1930 Moorish-style tower as part of a larger project that includes 136 hotel rooms, 92 condos, and a 17,000 square foot health club.

The new bargaining unit will include about 50 workers, reported Martin Goff, director of organization for UNITE HERE Local 17. ...

"It took about two weeks to organize," Goff said. "We had some people we knew inside from our other hotels." Once Local 17 recruited an organizing committee, Goff reported, "the committee signed up virtually everyone." Goff said 86 percent of the workers signed union cards.
Now I'm not defending Hotel Ivy here, because if you take the dime of TIF, you do the time of dealing with card-check. But understand how a union card works, versus a private ballot. Let's hear it from a former organizer for UNITE HERE, in testimony before Congress.
A �card check� campaign begins with union organizers going to the homes of workers over a weekend, a tactic called �housecalling,� with the sole intent of having those workers sign authorization cards. Called a �blitz� by the unions, it entails teams of two or more organizers going directly to the homes of workers. The workers� personal information and home addresses used during the blitz was obtained from license plates and other sources that were used to create a master list.

In most cases, the workers have no idea that there is a union campaign underway. Organizers are taught to play upon this element of surprise to get �into the door.� They are trained to perform a five part house call strategy that includes: Introductions, Listening, Agitation, Union Solution, and Commitment. The goal of the organizer is to quickly establish a trust relationship with the worker, move from talking about what their job entails to what they would like to change about their job, agitate them by insisting that management won�t fix their workplace problems without a union and finally convincing the worker to sign a card.

...From my experience, the number of cards signed appear to have little relationship to the ultimate vote count. During a private election campaign, even though a union still sends organizers out to workers� homes on frequent canvassing in attempts to gain support, the worker has a better chance to get perspective on the questions at hand. The time allocated for the election to go forward allows the worker a chance to think through his or her own issues without undue influence�thus avoiding an immediate, impulsive decision based on little or no fact. After all, the decision to join a union is often life-changing, and workers should be afforded the time to debate, discuss and research all of the options available to them.

As an organizer working under a �card check� system versus an election system, I knew that �card check� gave me the ability to quickly agitate a set of workers into signing cards. I did not have to prove the union�s case, answer more informed questions from workers or be held accountable for the service record of my union.

...In addition to the �housecall,� the union frequently employs other tactics to manipulate the card numbers and add legitimacy to their organizing drive. One strategy is to manipulate unit size. One of the most common ways that we ensured the union could claim that we had reached a majority was to change the size of the group of workers we were going to organize after the drive was finished. During the blitz, workers in every department would be �housecalled,� but if need be, certain groups of workers would be removed from the final unit, regardless of their level of union support. In doing so, the union reduced the number of cards needed to reach a majority. Another such strategy is that organizers are told to train workers to �provoke� unfair labor practices on the part of the company in an attempt to create campaign legitimacy and coerce a �card check� agreement.

One egregious example was when Ernest Bennett, the Director of Organizing for UNITE at the time, told a room full of organizers during a training meeting for the Cintas campaign that if three workers weren�t fired by the end of the first week of organizing, UNITE would not win the campaign. Another strategy is that organizers are told not to file any unfair labor practice charges because it would slow the �card check� process and make time for the workers to question their decisions.
Coercion in voting should offend us all; we watch Zimbabwe this week where an opposition party that won a plurality of the votes in a primary has chosen to withdraw rather than risk violence against its supporters by the Mugabe government. But we hear very, very little about the legitimate threats made to workers -- not violence, but getting workers fired so that you could pass a unionization effort -- in order to support the L of DFL. That's what the city council in Minneapolis did to those workers at the Hotel Ivy. Do they care?

The AFL-CIO reports that Barack Obama has said he would sign the bill that creates card-check for all workplaces, not just those that take government money. They are hoping for change that reduces employee freedom.

UPDATE (6/24): Andy reports that CD6 DFL and Independence Party candidate Elwyn Tinklenberg is also in favor of removing voting rights from the workplace. Funny, I don't see that on the IP platform.
These are our core values:

1) A democratic process with integrity and broad citizen participation

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That's stimulating! 

Every retailer has a suggestion for where you should spend your stimulus check. Courtesy my colleague (and Vegas winter resident) Bill, I learned that Nevada has its own stimulating industry.
Only in Nevada though -- at least, legally -- will businesses be inviting customers to come spend those federal handouts with ... a lady of the evening.

Bordellos aren't legal in far-flung Clark County, or in Reno or Carson City, for that matter. They tend to cluster outside the county limits.

That was fine when gasoline was a dollar a gallon. But now even your most eager sporting gentleman may think twice about spending $50 filling his tank for the 300-mile round trip to the Shady Lady Ranch, just north of Beatty.

The long-haul truckers just aren't enough, obviously. In recent years, Shady Lady owner Bobbi Davis has seen her two closest competitors, Angel's Ladies to the south and the Cottontail Ranch to the north, close their doors. So Ms. Davis is now offering a $50 gas card to anyone who purchases $300 worth of services at her establishment, and a $100 gas card to anyone who visits and spends $500.

Not to be outdone, owner Dennis Hof at the Moonlight Bunny Ranch outside Carson City is offering to double the money of the first 100 customers who cash their federal "stimulus" check at his brothel.

He's asking customers to sign a giant thank-you card in the brothel's parlor. Once it's filled up, Mr. Hof plans to send the card to President Bush at the White House, expressing his customers' gratitude for the way Mr. Bush has helped "spur" the economy.

"What are you going to do, take your stimulus check to Wal-mart?" Mr. Hof asks. "That money is going back to China. Give it to the hookers, and it will go to tattoo parlors and beer and massage therapists and hairstylists and manicurists. We're keeping the money in America."
I am saddened to learn that prostitutes do not inhabit Wal-Mart. I would appreciate them not competing with me for my beer.

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Daily effects of indoctrination, part eleven 

This is part ten of a continuing series, background here. Previous drawings can be found here, here, here, and here, and a billboard for the other six here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

Certainly there was an attempt to make Band-Aids look the color of the people they covered, but even in the Caucasian world there are many colors. Littlest Scholar liked her Garfield Band-Aids when she was small, and they can still be part of a fashion design.

Stores, of course, market to their customers. When I am in a downtown hotel on business and have forgotten something in my toiletries, I go to a nearby druggist. In many, because their client�le has a higher share of people of color, there is a separate section for hair products aimed at people of African descent. For the very same reason, I cannot buy most of the Middle Eastern food products I like to eat here in St. Cloud; this is not an act of discrimination but an act of marketing, of lowering transactions costs for the greatest number. I instead travel to the Twin Cities when I want to buy, say, halvah treats for the house. In contrast, because my family likes Asian foods and St. Cloud has a substantial Asian community, I do not have to go to the Cities for those products. So why isn't the Band-Aid story analogous?

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Friday, June 20, 2008

Mother Nature is the Boss 

For years we've been hearing how the ice in the Arctic Sea will melt creating havoc for polar bears, native Alaskans and other life that dares tread there. This May, the "massive Russian icebreaker" Kapitan Khlebnikov brought on board passengers for a tour of the sea with the intent to travel from the northeastern corner of Russia, across the Bering Sea and the op of Canada to Resolute Bay in Nunavut. It's spring, ice was to be melting, you get the marketing picture.

They just had a little problem - ice, massive amounts of ice, in Russian waters. In fact, there was so much ice, this Cadillac of ice breakers was forced to stop, turn off its engines, and wait for Mother Nature to decide to let her go. Seven days later, the ice finally releases the ship. Engines are turned on, speed ahead to make up for lost time.

The ice may or may not have been moving because of climate change but fooling with Mother Nature can show one's lack of intelligence, respect for her power and ability to change on her schedule. As the ice master of the ship commented after the seven day "lock down" in the ice sheet: "This waterway may look like an easily navigable shortcut across the top of the globe, but we are not in charge of the itinerary. This is still an unpredictable passage."


Suggested reading for Michele Bachmann 

Dear Michele,

After reading about your comments on how the caribou have lived better in Alaska after drilling in Prudhoe Bay started, I was reminded of a paper I had to read in graduate school. Co-authored by my professor Tom Willett (along with Ryan Amacher; it's in this book if you want to read it), it talked about the preservation of the marshes in Louisiana where birds wintered over that were atop gas and oil reserves. Meanwhile let me refer you to this 2005 study by the Reason Foundation, which has a synopsis of what happened.
Deep in the marshes of Louisiana, there is living proof that oil and wildlife can mix. The Rainey Sanctuary is such an important bird sanctuary that even the public is not allowed to visit, but because they own the land, many years ago Audubon weighed the benefits of oil and gas development against the environmental hazards, and chose to go ahead. Of course, they took the precautions they thought necessary to protect the birds, but they also reasonably determined that the risks of environmental damage were outweighed by the size of the revenues from development.

Rainey�s 26,000 acres of brackish and freshwater marshes are a rich feeding area for wintering waterfowl. And in the early 1980s, gas wells in Rainey brought in close to a million dollars in revenues to the preserve. The wells have been in operation for decades, and the wildlife doesn�t seem to mind.

Thus, despite the National Audubon Society�s opposition to oil and gas exploration on public lands like the Arctic National Wildlife Refuge, state chapters of the Audubon Society have demonstrated that it can be done responsibly at the Rainey preserve in Louisiana and in Michigan at the Baker Sanctuary.
Here's the policy summary from which the above is taken, and the whole study. The secret is to call the Nature Conservancy or some other environmental group -- it's irrelevant economically, but I'm sure important politically -- and give them ANWR. Then turn to the exploration firms and say "you want that oil? Work it out with this group." I only use the Nature Conservancy in this example because they have experience with selling oil rights. It's time to put the power of Coase to work for energy by offering some of the proceeds to the environmental groups. Call it "free-market environmentalism". I encourage you to read the links in this paragraph.

Best wishes,

P.S. Notice also the principle of privatizing public lands. You could make a mark in this area.

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Stifling the "Educated-Take-All" Economy 

Mark Perry titles his post "It's an 'Educated-Take-All' Economy", with a graph showing the returns to education for median family income. Quoting a news article first (in italics):
Barack Obama said that he was trying to put together tax and spending policies that dealt with two challenges. One is the competition from rapidly growing developing countries, like India and China. The other: the U.S. becoming what he called a "winner-take-all" economy, where the gains from economic growth skew heavily toward the wealthy.

...Wouldn't one way for Obama to solve this "problem" be to have the government shut down all American colleges and universities, eliminate all federal funding for higher education, or have the government put limits on the number of students attending college?

There is rising income inequality, but the inequality is due to the increasing gains to education over time. It's not so much that the "rich are getting richer and the poor are getting poorer," as much as it's "the college-educated are getting richer in an Information Age Global Economy, and the high school dropouts are staying the same or getting poorer."
So is it possible to use the tax code to correct for income inequality that is the result of educational differences? And is it desirable? When we've debated the creation of public funds for higher education financial aid through scholarships, one issue was the tax rate on human capital formation. Should the tax system be changed to raise the tax rate on human capital formation through education, as it appears a President Obama would do? Note that his plan includes higher marginal rates on the wealthy compared to McCain, as much of the revenue going to lower-income households are in the form of credits rather than rate cuts. More highly progressive systems are, in fact, a means of taxing human capital. Maybe he'd be better off just taxing height.

Larry Lindsay
notes this morning that the combined effects of the Obama tax proposals would move the entrepreneur earning more than $250,000 per year would see a rise in his marginal tax rate to 53% from 37.7%. Obama thinks the entrepreneur will simply take it in the shorts. Lindsay says, not quite:
One of the lessons from the disastrous economics of the 1970s and the subsequent Reagan tax cuts is that everyone � particularly entrepreneurs � responds to incentives. If you take away 10% of a high earner's after-tax income at the margin, he will cut his taxable income by at least 4%. At the margin, this taxpayer now takes home 62.3% of his earnings, a figure that will drop to 47% under the Obama plan. According to a widely accepted economics rule of thumb, the entrepreneur's taxable profit would drop by 11.2%.

Now consider how the Obama plan would affect the taxes paid by such an entrepreneur with a taxable profit from his business of $500,000. Under current law, he would pay $27,148 in Social Security and Medicare taxes, plus $142,969 in personal income taxes, for a total of $170,117. If the taxpayer did not change his behavior at all, under the Obama plan he would face a $31,000 Social Security tax hike and a $11,494 hike in his personal taxes � or a 25% tax hike. But, if the taxpayer responds as the economic models predict, his taxable profit would drop to $444,000. His Social Security and Medicare tax bill would still soar to $51,580. But his income taxes, even with a higher tax rate, would drop to $132,882 for a total of $184,462.

In other words, Sen. Obama is planning on a combined series of tax hikes to produce $42,000 in tax revenue, but consensus economic modeling suggests the government's net take would rise only $14,000.
See also J.T. Young from earlier this week. But even that is a short-run analysis. What is the incentive for someone to study for the higher-income majors in school if we raise the rate of taxation on human capital formation by 25%? With smaller cohorts of new workers coming into the labor force in the future, each worker will need to be more productive to fund current Social Security and Medicare liabilities. The Obama tax plan stifles the incentive to be educated in fields that are highly productive. People don't luck into MBAs and law degrees or medical research (though perhaps Mrs. Obama thinks so) ; they do so in pursuit of their dreams, of which Mr. Obama would like 53%.

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Two great paragraphs 

Progressivism is politics as religion. Left-leaning progressivism strives to impose values on society every bit as aggressively as the Christian right pushing a moral agenda of 'family values.' Whether the supreme authority over individual liberty is a secular state or a religious one, the operative word is 'supreme.' Progressivism is ultimately about total control.

Progressivism is immune to restraint; it respects no constitutional limits on government. The progressive may prefer the near-sacramental word 'holistic' to describe the effort to create a better world, but, as National Review's Jonah Goldberg reminds us, Mussolini coined the word 'totalitarian' for the progressive vision � a society where everyone belongs, where everyone is taken care of, where everything is inside the state and nothing is outside the state, where there are no hard trade-offs.
Craig Westover in today's PioneerPress. I cannot stress enough the connection between Goldberg's (and Westover's) view and those expressed by Thomas Sowell, described by Kenneth Silber:
The "vision" of the anointed is a world view in which social problems exist because of the negligence or malevolence of the benighted and thus can be solved by imposing the views of the enlightened few on the rest of society via government action. To believe otherwise to view social conditions as largely outside of anyone's control and subject to innumerable trade-offs and constraints is repugnant to left-leaning political and intellectual elites, Sowell argues, because it robs them of the opportunity to display their superior concern and insight.
The "anointed" is the modern progressive.


Daily effects of indoctrination, part ten 

This is part ten of a continuing series, background�here. Previous drawings can be found here,�here, and�here, and a billboard for the other six�here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

Perusing the Forbidden Library list of books includes books removed for being racially insensitive, such as Huckleberry Finn, To Kill a Mockingbird or the Little House books.

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Thursday, June 19, 2008

Luck, the boat, and prosperity 

Like many, I've tried to trace back my family history, particularly on my father's side. His parents are Armenians who came from Ottoman Turkey to live in America. My grandmother had two brothers and two sisters. One died, the other was spirited away to Egypt where he had children who eventually emigrated to America. My grandmother and one of her sisters married men bound for America; in my grandmother's case, her husband would be a man who had already emigrated and came to Cairo to find a bride. It's a long story not important here.

My grandmother's other sister Sara, the oldest child of the five, stayed behind to take care of their mother who had been widowed. She left Turkey and lived in the general area of Lebanon north of Beirut with a husband and a couple of children. One day after WW2 a ship comes to the area from the USSR, offering Armenians in the area an opportunity to help rebuild Soviet Armenia. Sara, her husband and son take the opportunity and move to a village about twenty miles outside of Yerevan. (Sara's daughter stayed behind because she was married to a local Arab -- at last report she lives in Syria but we have no contact.)

Once there contact with Sara's two sisters was infrequent, ending with a postcard written in 1980. More than twenty years later I took the postcard to Armenia -- no longer Soviet -- to see if I could find the descendants. Indeed the son, Movses, was still alive, at that point more than 80 years old. The house they lived in had two large rooms and was the house he had built in 1948 with his father. His parents were buried about a mile away. The family lived on a fairly meager income supplemented by kids remitting from abroad (both, by the way, also in construction. I got none of these genes.) This picture shows Movses and his wife outside their home.

I was reminded of this reading Russ Roberts' description of motivation for his new book, The Price of Everything.

The novel is the story of Ramon Fernandez, a Cuban-American tennis prodigy who finds himself in the middle of a campus protest at Stanford. ...

Ramon is the son of a legendary Cuban baseball star. After the death of his father, Ramon's mother comes with him to the United States, bringing the young boy to America.

And while the story is fiction, I was inspired by the Elian Gonzalez story. What would have happened to Elian if he had stayed in America. Would he have prospered? Would he have been torn between an allegiance to his new country and his father's Cuba?

A number of pundits at the time of Elian's return to Cuba talked about how he was lucky not to grow up in such a materialist society as America's. I try and explore this issue in the book as well.

Word comes from out of Cuba, that the real Elian Gonzalez has joined Cuba's Young Communist Union.
When I visited Movses, his oldest son's fondest wish was to travel to Moscow to see how it looked now after transition (I took it he had been there before, but I do not know this.) Of course that trip was cheap if you could get permission to travel while the Soviet Union existed. Now it was not cheap, and sometimes being Armenian in Moscow is a little difficult. In contrast I had been able to travel to many capitals around the world and lived a very different life. Not only because Nana got on that boat to Piraeus and eventually Ellis Island, but for the statue she saw when she got there and what it represented.

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How did I ever beat this guy for mayor? 

You know, that Andy sure has some power.
When a nation manipulates a market, like energy it gives them an advantage over other nations, or imposes mandates that increase prices domestically, it harms their economy.
Less than 24 hours later, China caves in.
China will raise domestic gasoline and diesel prices by 17%-18% from midnight, the government said Thursday, as it responds to near-record crude oil futures and criticism of its fuel subsidies.

The surprise move raises prices by 1,000 yuan ($145.30) per metric ton and will be the largest increase in over four years although local prices will still be below the international market.

In a statement, the government's National Development and Reform Commission said the decision was aimed at ensuring domestic supply, noting that refiners were suffering "heavy losses."

It's the first oil product price increase since Nov. 1 and comes at a time of widespread fuel shortages in China as filling stations run out of diesel to sell or ration purchases by truckers. China is also increasing jet kerosene and jet fuel prices and from July 1 is raising retail electricity prices.

China's stock market has fallen 50% since late last year; it may be that the engine that is the Olympic Games is about to run its course. Mark Perry has a great graph of construction in China, proxied by its cement output. This supply shock won't help. Along with India and Malaysia, higher net prices to consumers could signal a decrease in quantity demanded as it already has in the US, and a peak in oil prices. As Asia last time led oil prices down in the late 1990s, could that happen again?

UPDATE: See also this from Ironman.

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Daily effects of indoctrination, part nine 

This is part nine of a continuing series, background here. Previous drawings can be found here, and here, and a billboard for the other six here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

From yesterday's New York Times, an image makeover for Michelle Obama. Kind of dampens that drawing. Have you seen Oprah yet today?

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Wednesday, June 18, 2008

Military Fundraiser 

MN's Military Appreciate Fund (MMAF) is a state-wide fundraising initiative by the citizens of Minnesota for the Minnesota military personnel and their families. The group focuses on support for families affected by deployments to Iraq and Afghanistan since 2001.

This Saturday, June 21, is the 4th annual MMAF 5K walk/run. Leading the event this year will be the family of PFC Ed Herrgott, the first Minnesotan killed in Iraq. You can participate in this walk/run by downloading the entry form here. Sign up your friends and relatives, take a walk, and contribute extra support to the families of our best and brightest. Added bonus: participants get free tickets to the Twins game at 1:00 PM on Saturday.

Weather should be great! If you've wanted to help our military, this is an excellent way to let our soldiers' families know they are special and we appreciate their sacrifices so the rest of us can continue to live in the freest nation ever envisioned.

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Well we can't have that, can we? 

The Chicago Tribune reports that about a hundred professors at the University of Chicago are protesting the creation of The Milton Friedman Institute at the school where he taught for about thirty years starting in 1946.
"It is a right-wing think tank being put in place," said Bruce Lincoln, a professor of the history of religions and one of the faculty members who met with the administration Tuesday. "The long-term consequences will be very severe. This will be a flagship entity and it will attract a lot of money and a lot of attention, and I think work at the university and the university's reputation will take a serious rightward turn to the detriment of all."
The school is putting about $500,000 and using some buildings being abandoned by its seminary to attract a group of $1 million and $2 million donors. Perhaps Prof. Lincoln thinks that money would have come to a center for the history of religions if it wasn't for that little Milton?

Well, it's worse than that. Here's a copy of the letter, posted by one Michael K Bourdaghs while sitting in a coffee shop in St. Paul, who notes
I guess I should be happy that we at least aren't selling liver transplants to Japanese yakuza gang leaders.
Now that's some real collegiality!

h/t: Newmark's Door


Steeling seigniorage 

A recent bill, HR 5510, authorizes the substitution of steel for zinc and a bit of copper in U.S. pennies. But they can't look different -- the law says the coins must continue to "impart a copper color to the appearance" of the steel penny. This wasn't true of the pennies issues during WW2 when, like now, copper was scarce. Nobody complained then because the scarcity was due to the use of copper in war munitions. Now it's foreign competition for precious metals, which has driven the cost of the zinc-copper penny to 1.26 cents.

Dan McLaughlin
writes that this is inflationary, a form of seigniorage. Yes it is, but in an oh-so-small way, not likely to be noticed by any of us. The U.S. Mint makes approximately $74 million face value in pennies each year, which it sells to the Federal Reserve. The Mint receives back Federal Reserve notes. As long as those notes are not new (or otherwise sterilized), the new coins are not adding to money. And this is a gross value -- we would want to deduct the pennies that are taken out of circulation by the Fed because they are too worn. On currency issue of hundreds of billions of dollars, it's unlikely that even $50 million in penny-inflation is going to make that big a deal.

Of course the best reasons have been offered already by John Palmer. The penny is a waste of time, it is argued. Removing it might cost us a few cents from rounding up prices, but the return in saved time might be worth that. But worth it to whom?

(says he whose daily coffee-and-bagel-with-cream-cheese at Panera currently costs $3.51.)

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Stay home and drink? 

Apparently, not too many do.

Scott Adams and Chad Cotti, "Drunk driving after the passage of smoking bans in bars." J. Public Economics 92 (5-6), June 2008, page 1288-1305.
Using geographic variation in local and state smoke-free bar laws in the US, we observe an increase in fatal accidents involving alcohol following bans on smoking in bars that is not observed in places without bans. Although an increased accident risk might seem surprising at first, two strands of literature on consumer behavior suggest potential explanations � smokers driving longer distances to a bordering jurisdiction that allows smoking in bars and smokers driving longer distances within their jurisdiction to bars that still allow smoking, perhaps through non-compliance or outdoor seating. We find evidence consistent with both explanations. The increased miles driven by drivers wishing to smoke and drink offsets any reduction in driving from smokers choosing to stay home following a ban, resulting in increased alcohol-related accidents. This result proves durable, as we subject it to an extensive battery of robustness checks.
Here's a report from ScienceDirect, and an earlier draft of the paper. Hennepin County 2005 is in this sample, which covers 2000-2005 for 117 counties that had bans in at least one full year. Add this to the evidence already existing on the economic impact of smoking bans, and the case against them grows.

Thanks to my colleague Phil Grossman for the link.

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Daily effects of indoctrination, part eight 

This is part eight of a continuing series, background here. Previous drawings can be found via yesterday's item here and a billboard for the other six here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

The yellow-faced person to the left is lecturing a group of stick figures drawn in brown sitting in chairs, as if the person to the left is leading a classroom. The balloon voices for the leader or lecturer, "In today's meeting everyone will listen to me! Because I am the boss!" 83% of SCSU faculty are white, as is about 80% of the student body. (Data from here.) Less than 3% are black, and 7% domestic-born students of color overall. More than 6% are international students. I'm not sure the university this picture describes; had the student-artist drawn one student of color in a classroom with otherwise all-white students (and a white faculty member), I would get the point. One might then discuss the white valedictorian at Morehouse.

Along that line, your discussion question for today: Last year two researchers at the Virginia Tech claimed that students who attended historically black colleges and universities earned higher income than those (black) students did in more diverse universities. Here's a link to VaTech's press release; I do not see a copy of the paper itself, but its abstract is available. Assuming these findings are valid, how would you explain them?

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Tuesday, June 17, 2008

Update: Gary notes my trifecta. Off to get some more Celtics swag...

DFL -- Democrats Funding (big) Labor 

The Mankato Free Press weighs in against a local proposal to impose prevailing wage laws.

The state already has prevailing wage rules for state-funded projects. Under the proposal before the Mankato City Council, the same rules would apply to city-funded project. The state sets the prevailing wage in dozens of job categories.

During initial discussion, there have been widely varying estimates of how much a local prevailing wage would add to project costs � from zero to some 40 percent.

Unions representing many of construction workers in the area argue that the prevailing wage rules used in state contracts don�t drive up the cost of projects.

That appears to be true in the Twin Cities metro area, where the going market cost for construction projects is about the same as the cost required under the state�s prevailing wage law.

But in outstate Minnesota, where wages and living costs are lower, prevailing wages do appear to drive up the cost of public projects, sometimes substantially.

A St. Cloud contractor doing a state project at St. Cloud State, told a television station that he is paying more than 30 percent more for the wages of his employees than he normally would.

That news report was on KARE 11 early in May, detailing how much we pay for labor outstate is creating excess costs for outstate projects:

In Koochiching County, up along the Canadian border, we found the state mandating pay rates for the most basic labor - they call it "common labor" - at $34.43/hour. This is a combination of wages and benefits.

If the employer doesn't have benefits totaling at least $10.61/hour, the state requires that the difference be made up in cash.

The bottom line is, the minimum pay ordered for entry level and unskilled labor in Koochiching county is $34.41/hour, if your tax dollars are being used to pay the bill.

That rate holds true (within a few pennies) all the way to the far arrowhead region along the northern border.

Points west drop as low as $26.70/hour.

In St. Cloud, the W Gohman Construction Company is building a parking ramp and public safety office on the campus of St. Cloud State University. It's a job paid for with your state tax dollars, so prevailing wages must be paid. The total job cost is about $7 million - half of it is labor costs.

Company president Michael Gohman tells us, if he could pay the market rate on this job, instead of the 'prevailing wage' he would save taxpayers between $350,000 & $700,000.

What's more, he took specific labor groups and compared the cost with and without the prevailing wage to show how prevailing wage inflates the cost of a project.

Gohman says those working under the state classification of "common laborers" are normally paid $25/hour in wages and benefits.

But on this taxpayer-funded project, the prevailing wage requires that they be paid $32.99. That's a 32% raise.

Cement Masons who are normally paid $32/hour have wages set by the state under the prevailing wage at $42.30. That's another 32% raise.

Gohman says he generally pays carpenters $30/hour. Under the prevailing wage laws he is required to pay them $32.99/hour. That's a more modest 8% raise.

The reason offered is that "prevailing wage" is set based on the mode of the distribution of wages; since most building projects happen in the Metro area, Metro wages are imposed across the state. This protects those contractors and labor unions from competition by other outstate Minnesota firms. A simple bill that would have made wages determined on something other than the mode, sponsored by Rep. Steve Gottwalt (R-St. Cloud), died in committee in the last legislative session.

Peer-reviewed research, as opposed to legislative auditor reports or working papers, finds the prevailing wage to be inefficient in the construction of public buildings. Kessler and Katz (2001) show that overall wages decline only slightly (2.3-3.9%) in construction from the repeal of prevailing wage laws, but that union wages declined much more than 6% in the short run and near 11% in the long run. Prevailing wage laws are a means of funding big labor, at taxpayer expense. And the DFL legislature has no intention of stopping the booty paid to its supporters.

(Same goes for living wage laws, says David Neumark.)

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Democrats- All Inclusive Party? Nah! 

This article from the Owatonna (MN) People's Press appeared in the print edition on Sunday June 8, 2008:
The Steele County DFL [Democratic-Farmer-Labor party] Central Committee will meet at 6:30 p.m. on June 12 in the Gainey Room at the Owatonna Library. Please note that at this meeting we will be electing a new Secretary and Director to the Executive Committee. The secretary position is open to a member of either gender and the Director position is to be filled by a person of the male gender. If you or anyone you know is interested in screening for either of these positions, screening will take place from 6-6:30 p.m. in the Gainey Room on June 12.
It's not just Hillary supporters who have reason to believe that Democrats discriminate against women in their party politics.

Full disclosure: I, Janet, am the current Chair of Minnesota's Second Congressional District Republican Party organization. Owatonna is less than an hour down the road from my home.

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Knowing your limits 

A minor discussion broke out on the blog by Janet that became a blog post for Jeff Rosenberg. It is a repeat of the Democrat refrain that you can't drill your own way out of the energy problem. "The days of cheap oil are over," Rosenberg declares in a follow-on to an early post with even greater grandiosity:
Instead of looking resolutely back to the past and trying to figure out how to return there, why not recognize the challenges of the future and actually propose a plan to meet them? We can no longer find large enough oil deposits to make oil a viable energy source in the long term, EVEN IF we didn't care about the consequences to the environment. It's time to invest in alternative energies, raise gas mileage (CAFE) standards, and start building our cities in a way that does not require us to drive everywhere.
I admire people with breathtaking, sweeping visions of the world, and I have to think from this statement that Rosenberg is intimately familiar with geological formations around the country. That capitalized "EVEN IF" gives lie to his argument that we cannot -- if we showed him we had trillions of barrels of oil in North Dakota, we would never be allowed to do that because "we don't care about the consequences to the environment." He does, he's better than we are, and he will tell us that we cannot drill. This is the vision of the anointed. The process costs, as Vinod points out, are simply incidental. Feasibility is something we can just overcome by force of will.

Let's imagine that John Palmer and Jerry Taylor are right and that in the long run a 1% increase in oil supply would reduce the price of oil by 1%. The rate at which you would extract from the new find would be determined by both extraction costs and by the rate of interest one could get on the proceeds from selling oil. If prices go up 3%/yr and the rate of interest is 5%, you're better off getting as much as you can out now and investing the proceeds rather than leaving it in the ground. If prices are going up 10%, your best investment is to wait. But as you extract more oil, the cost of extraction rises. This really doesn't require a great deal of thought, but it requires a recognition of the limits of drilling and the alternative costs of changing to alternative energy, of increased deaths from lighter cars that meet CAFE standards, of tearing down whole cities to rebuild them in Rosenberg's cosmic vision. One that recognizes no limits ... as long as you just believe. Not a world in which there are tradeoffs.


Statistics as a government plot 

There are two kinds of statistics: the kind you look up and the kind you make up

I got an email after last week's appearance on the David Strom show that accused me of lying because I was using official data. Here's a snippet:
The Government data you cite is a fraud. Government lies on unemployment numbers, GDP, CPI, inflation and any other numbers should be suspect. Inflation is understated because the government doesn�t want to pay out Cola�s to Federal Employee retirees, SSRI recipients and other retirees. Think of the cost. Unemployment is deliberately understated and they don�t count people who stopped looking for work. John Williams who writes Government Shadow Statistics gives you accurate numbers and received praise for his work. We are headed for the worst Recession and Depression we will face in our lifetime. The big banks in New York are insolvent.
This is not the first time I have heard this, and I'm familiar with John Williams' work. Barry Ritholz has written not too long ago about the "disappearance" of M3, suggesting sinister intent. (I would argue for Goodhart's Law instead -- if M3 ever worked enough to use it, targeting it would cost us the information content in M3. So Barry should be happy they don't publish it, because that keeps its forecasting power intact!) And it's not new -- counting employment has been hard for decades, and so has been kvetching about the counters. David Leonhardt gives his usual sensible look at how people misperceive CPI.

Now many of us have favorite statistics, adjustments we make to data, that we think help us with forecasting or explaining what is happening currently in the economy. And between revisions and the results of budget cuts, most of us have gone through periods where data we used to look at disappears. Our local economic indicator series used to rely on a measure of local electricity hookups. When Xcel Energy bought Northern States Power we lost that series because the office that collected it was moved from Minnesota to Colorado. Nobody of course thought this sinister (except maybe those folks who worked in the Minny office -- one of whom was a former student that helped us get the data!) and nobody complains. So when government actually makes a choice to cut a budget and save a few dollars -- or suggests outsourcing or raising private funds to improve data collection -- I think that's something we should support.

People will believe what they want, and some will sift and sort data to fit a story line they already have. For example, Lee Egerstrom seems determined to look at data and decide things must be bad: He's not necessarily right or wrong, but reasonable people can look at the same data and see two different things. Thus is the nature of turning points in the business cycle, and in making any argument you want to de-emphasize or discredit the data of the other side. But some people seem determined to view government data with more than just a good dose of scientific skepticism when it doesn't fit the story they already believe.


Daily effects of indoctrination, part seven 

This is part seven of a continuing series, background here. Previous drawings can be found from yesterday's item here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

The bubble thought of the checkout clerk in this supermarket reads "She looks classy, rich and white ... she can afford what she wants." The indoctrination I received at the supermarket was a sign that read "In God We Trust. All others pay cash." And indeed, the "classy, rich and white" woman is in the picture. Had she been trying to write a check, I might have understood this picture better.
I think to a man, a check is like a note from your mother that says "I don't have any money, but if you'll contact these people, I'm sure they'll stick up for me... If you just trust me this one time I don't have any money but I have these... I wrote on these... is this of any value at all? -- Jerry Seinfeld

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Monday, June 16, 2008

Late media alert 

My friend Ed Morrissey just wrote to ask me to be on The Ed Morrissey Show around 2:30. We will discuss the economy and maybe the series of posts on the bulletin boards. The series is in progress and will continue for another two weeks or so -- as I mentioned to Gary while he was here on campus this AM, SCSU is a target-rich environment for such posts. I've only explored one building thus far. Here are the first six photo-posts:

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An amazing admission 

The Chronicle of Higher Education is an industry newspaper, that industry being colleges and universities. It reflects back the belief system of its readers -- as, I believe, any newspaper does, which is why I don't waste lots of electrons here venting about the liberal bias of the StarTribune. Readers want to hear their views confirmed by those who are supposed to be unbiased; academia and Minneapolis are liberal places.

This week's edition marks the 30th anniversary of the Bakke decision with a headline article "'Bakke' Set a New Path to Diversity for Colleges" (permalink; temporary link for non-subscribers.) It is, of course, from Bakke that we get the term "diversity" as the motivation for current university efforts at minority recruitment:
Before Bakke, selective colleges regarded race-conscious admissions policies mainly as a way to remedy past societal discrimination against black, Hispanic, and Native American applicants. The Bakke ruling declared that justification off limits, replacing a rationale grounded in history with one grounded in educational theory.
But has anything really changed? The article contains more than a modicum of doubt:

So broad was the imprint left by Justice Powell's reasoning in Bakke that Justice John Paul Stevens would later remark, in a speech delivered three months after the Grutter decision, that he had argued to his fellow justices that rejecting the diversity rationale would cause a "sea change" in American society.

Truth be told, however, many college administrators still describe race- and ethnicity-conscious admissions policies as tools for improving black and Hispanic access to their institutions. Relatively few colleges have done any research showing that their policies produce favorable educational outcomes.

Arthur L. Coleman, a veteran higher-education lawyer now at EducationCounsel, a for-profit law and policy center, says many people "still don't get" that "we are looking at issues of diversity in a fundamentally educationally oriented way." In advising colleges, he says, he does not use the term "affirmative action," and he warns that focusing on enrollment numbers or talking about promoting social justice is "at core a mistake."

Emphasis mine. This admission, which can be refuted if one can produce the studies the Chronicle says does not exist in volume, should stand as an indictment of modern universities, and should be an invitation for rolling back some programs. As many including Hugh Hewitt are today in a conference asking How Free Is the University, I'd hope the meaning and the departure from Bakke is not lost on them.

It is worth remembering that the Justice Blackmun's view that "in order to get beyond racism, we must first take account of race" was in fact the minority opinion of the Court. Diversity is supposed to be about education, neither about social justice nor combating white privilege. While some might have wished for later cases like Grutter to have rolled back some of Bakke -- and, fair to say, I'm one such person -- a stricter reading of the case and an agreement among us that demonstrated improvement of educational outcomes should be the goal of minority student recruitment efforts would make for a vast improvement in what is happening here.


Film subsidies 

Remember the story last month about Minnesota passing tax benefits for filmmakers, with the purpose of getting the Coen Brothers to make a movie here? Massachusetts has done the same thing, and now is having a little bit of buyers' remorse:

But a new government study suggests much of the money will go to high-paid Hollywood actors, raising questions about the value of the incentives.

The analysis by the Department of Revenue this week estimated that at least half the film-industry payroll spending will go to out-of-town residents, mainly actors, directors, and producers commanding salaries of more than $1 million each. The Revenue Department assumes they will spend only a fraction of their paychecks in Massachusetts, limiting the benefits to the local economy.

"It's not the best use of taxpayers' money," said Representative Steven D'Amico, Democrat of Seekonk, who requested the study. "I don't think it's good business to be subsidizing the salaries of rich movie stars."

Dang those leakages!

(h/t: Newmark's Door)

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Daily effects of indoctrination, part six 

This is part six of a continuing series, background here. Previous drawings can be found from yesterday's item here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

In this picture the white privilege is a presumably white person getting served at a hospital before a person of color. I'm pretty sure I've seen this happen at hospital emergency rooms, even to me. Is it racism, or rudeness, or triage? This reminds me of a story in Paul Heyne's The Economic Way of Thinking when discussing non-price rationing. When price doesn't ration scarce goods, discrimination is possible. But there are many other non-price rationing mechanisms.

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Friday, June 13, 2008

June 14 - Flag Day 

A reminder - tomorrow is Flag Day. Fly our American flag proudly!

In 1916, President Woodrow Wilson issued a presidential proclamation establishing a national Flag Day on June 14. Later, President Harry Truman signed Congressional legislation making June 14 National Flag Day.

For a history of our flag, go here. Regardless, fly it tomorrow.


Irrational Educational Fear 

This time, from Australia.

Under the guise of education many Australian schools have "adopted environmental education programs that teach children that human intrusion into nature is to be condemned and that man's life must be subordinated to the preservation of nature, by government force if necessary. Under this view, nature is not to be preserved for the benefit of man, but rather, it is to be preserved for its own sake against the encroachments of man."

A further quote states the goal of the educational bureaucracy and environmentalists: "This curriculum is not designed simply to teach facts about the environment � it is designed to alter behavior in ways that are acceptable to environmentalists and government bureaucrats."

It proceeds to offer a access to a game called "Planet Slayer," a game paid for by Australian taxpayers, hosted by the Australian Broadcasting System. This "game" encourages students to understand their own carbon footprint. In fact, doing some of the "exercises" in the program, inform a student that he/she spreads so much CO2 that all humans should be dead by age 9.3.

It's interesting that the group that screams for more government money and control of schools is a member of the same political party that is comprised of environmentalists.

This group that "cares for the children" has no qualms about striking fear into them and laying guilt on them over something they cannot control.

What is ignored are a few facts:
1 - Humans release CO2 when they exhale; plants use this CO2 to create food. Therefore, humans are needed for increased food consumption for increased population on planet Earth;
2 - There are now 31,000 scientists who have signed the latest paper, an increase in the 17,000 of a few years ago; they do not believe CO2 causes global warming (oops, climate change);
3 - CO2 makes up 38 molecules of 100,000 in our atmosphere; therefore CO2 is a trace element, hardly the stuff of massive climate change (let alone global warming);
4 - Also omitted is the impact of the oceans and sunspots;
5 - Man is an adaptable animal; we have lived through warming and cooling trends though warming trends result in longer life spans, more arts and sciences, etc. than cooling trends.
To take a questionable political agenda and use the public school systems to ram fear down the throats of our children is irresponsible, reprehensible and grossly unfair. In essence, we are lying to our children. What will they believe when they eventually discover that they've been fed a bill of goods? Trust, a foundation of a civil society will be lost. When an actual fear needs to be addressed, they will ignore it.

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How sad 

It seems weird that a man who wrote two books about his father would die on Father's Day weekend. I remember sitting in hotel rooms overseas stuck with CNBC and BBC World waiting for Tim Russert to come on. One show had him in Cooperstown with four Hall of Fame catchers. You could feel his excitement, and why not? if you were there, you'd've felt the same. And he behaved just as you would have wanted to, asked the questions you would have wanted to ask.

Whatever one thought of Russert's politics, you thought he was like you, would like you, and you would like him if you had a cup of coffee with him. And so you watched.


Finally - Senator Coleman - YES 

The mantra of conservatives and other reasonable Americans is now: "Drill here, drill now, pay less." To address our energy snafu, our Republican Senator, Norm Coleman has introduced a bill that makes very good sense.

SB 3126 includes the following, energy independent points:
1 - Drill off the continental shelf for oil.
2 - Tax credits for nuclear energy.
3 - Funding and credits for alternative sources.
We've seen the results of the 40-year partnership of the Democrats and environmentalists:
1 - Dependency for oil on enemies of freedom in general, the US in particular
2 - Sky-high gas prices because the economics of the market place finally reflect the absurdity of playing ostrich with energy demands: increased cost of building materials; increased food prices; (stock up on meat now - ranchers are dumping b/c they cannot afford feed - meat prices will jump in the fall);
3 - A refusal to build more refineries or nuclear plants yet France, the darling nation of the left, gets 75-80% of its power from nuclear plants but we Americans, with some of the most strict construction laws on the planet cannot build a nuclear power plant?
Benefits of energy independence include but are not limited to:
1 - Lower prices for energy - affects housing, driving, food production, etc.
2 - More private sector jobs (regardless of the Obama mantra, government solves very little but officials are very eager to tell us they do)
3 - Cheaper food
4 - Investment funds to continue to develop cleaner and more efficient products.
In other words, couple energy independence with American ingenuity, the entire planet wins!

Updates to come but this is terrific news! Thank you, Senator Coleman!

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Easy as it goes 

Despite my quasi-skepticism over the current state of the economy, I highly doubt we will see an increase in interest rates, and particularly after today's CPI report. I do not find the report alarming, even if a 0.6% headline rate of increase will still focus the minds of many on the possibility of inflation. But two factors are still present:
James Picerno is correct that the current structure of the FOMC leans towards the hawks, but those hawks will know that if they push interest rates up too fast and move the economy into a longer recession, the next appointments to the Board of Governors will not include many of their species. He quotes three reasons from Thomas Higgins of Payden & Rygel Investment Management that make sense to me:
  1. The lower fed funds rate has yet to translate into lower borrowing costs for the average American.
  2. The Fed would appear confused and damage its credibility with the financial markets if it were to raise interest rates so soon after cutting them.
  3. Higher interest rates would aggravate the pain in the housing market especially given the large number of adjustable rate mortgages that are in the process of resetting to higher interest rates.
Thus Fed policy is likely to stay under the radar as much as it can, leading to a favorable environment for a second-half uptick.


And now this message from the "we just can't get enough" coalition 

St. Cloud school board members voted unanimously Wednesday to conduct a referendum in November asking voters to provide money to sustain and possibly add school programs.

The number of ballot questions, the amount of money the board will seek and the duration of the tax will be settled later.

A vote that would have provided $5.7 million a year failed in 2007.

Without a property tax increase this fall, the district will have to deal with a $4.3 million budget shortfall.
Translation: We want more money, or else we have to make choices. We don't know how much we need, or how we can deploy the referendum get you to vote for it yet, but don't worry, we're asking! Don't ask the details yet.

Note that the message says both "sustain and possibly add".
When I'm not with you taxpayer, I go out of my head
And I just can't get enough, I just can't get enough
All the things I do to you and everything I've said
And I just can't get enough, I just can't get enough
Some people make choices. Others make strategies to close the Washington Monument.
We slip and slide as we fall in debt
And I just can't seem to get enough, ahhh
Several months a member of the school board said he wanted to have a longer dialog after the last levy failed. Never heard from the guy.
And when it rains, you're shifting taxes down on me
And I just can't get enough, I just can't get enough
Just like a rainbow you think my money comes for free
And I just can't get enough, I just can't get enough
With apologies to Depeche Mode.

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Daily effects of indoctrination, part five 

This is part five of a continuing series, background here. Previous drawings can be found from yesterday's item here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

In case that picture is too small for you, the book they are all looking at is titled "History by Whites". This is specific to the U.S., given the map and flag. Is white privilege a uniquely American experience? Perhaps we could have a map and flag of Rwanda and change "Whites" to "Hutus". Or Chinese looking at a history of Indonesia or Malaysia.

Thomas Sowell wrote of the success of the M Street School, later Dunbar High, from the 1880s on to 1955. It was the only black high school in DC, along with three white public high schools. In 1899 each took a standardized test, and M St. beat out two of the three white schools in test scores. Nobody was reading Zinn back then.

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Thursday, June 12, 2008

The price of leadership keeps going up 

Boy, the cost of provosts has certainly gone up.
The new UW-Madison chancellor, Biddy Martin, was hired with a salary of $437,000 a year, more than $100,000 higher than her predecessor John Wiley was paid. President Kevin Reilly was granted a raise of nearly $80,000, moving from $342,000 a year to $421,500 annually by next June.

And to make it all the more difficult to follow, the board discussed the raises and voted to enact them in a secret session.
And what does $437,000 buy you? A Donna Shalala look-alike that is making domestic partner benefits an issue for hiring success at UW and a scholar of women's studies and German that attracts Wisconsin legislators' attentions. Her vitae is here. She got her degree in Madison; I guess in academics you don't get a hometown discount.


More fodder for the recession-or-not contest 

The Census reported today that retail sales were surprisingly strong in May. The April and March figures were also revised upwards. Michael Mandel doesn't believe the number, while the economists at Morgan Stanley believe it enough to swing their forecast for Q2 GDP growth from -0.2% to +0.5%. They write:
We doubt that the tax rebate checks had much impact on this report. Indeed, from an arithmetic standpoint, most of the upward adjustment to our [second quarter] estimates reflected the revisions to March and April � and, distribution of the checks did not even start until the end of April�.So where is all this spending coming from? We do not have a good answer to this question.
Well, it ain't Ricardian equivalence, Mankiw says. Growth of consumer spending has also spread to China, Ironman says, and also to visiting Europeans. Maybe globalization has a good side to it after all.

On the other side (again), Calculated Risk graphs that year-over-year real retail sales are still negative, extrapolating February-April price changes into May. I have no idea whether that is really justified. Probably better we address that next week when the price data for May come out.


Working in school and paying taxes 

Bob Collins writes an interesting commentary about a student interning at the National Republican Convention who says she is "paying her way through school" (and thus interested in candidates that support tax cuts.) Bob's questions are intriguing, so let's try to answer a few of them:
I'm generally intrigued when a young person can pay their own way through college; I have no idea how that can be done without significant help.
Bob notices that her school is a private school with tuition over $30,000. It also turns out she's a history major. Unless she is planning on a graduate or professional degree, the return-on-investment story isn't there. And it would be most likely that the student is not speaking of her current taxes; given the standard deduction and exemption, her taxes are likely to be zero. (She would pay $605 in federal income taxes if she earned $15,000 in 2007, which is probably the maximum she would earn and still a full-time student. Maybe she has investment income?)
Is there a role for the taxpayer to pay for funding higher education, depending on where you choose to attend? For example, you could if you could afford it, attend a private Catholic university for $32,656 a year and pay your own way. Admirable, indeed, but would you base a tax policy on the assumption that everyone could? Or is there a role for the taxpayer-funded public university, which is funded by taxes?
Well, before you can say this you have to get at what our student actually is paying. Only a few students pay the full tuition; there are a variety of private scholarships and grants available particularly in a private school. (And yes, I did pick that story because the university president's name was King. What about it?) Raising the sticker price of college allows for greater price discrimination and more revenues for the schools. Providing public funding contributes to higher sticker prices for college, and possibly with ill effects.
What are the limits on taxation? Basic services? Is higher education a basic service?
I can only answer the last question: no. Higher education is a middle-class transfer. Even our community colleges are full of children of middle-class families that do not need the subsidy and expand public education from the possibility of targeted assistance to college-ready students from poor families.
Does a "tax cut" per se help or hurt the person paying tuition. For example, you would have more money to pay your tuition bill, but what if more of the cost of providing that education is passed along to you?
Here's the issue I see with this question: Suppose the student's parents are in fact footing her tuition. Does this not cut into what money she would inherit later on? If you then tax her parents on the one hand and give her an option for public education with the other, is she better off? Not necessarily, particularly if the public university system created is a poor substitute for the private school she would attend without the taxes. Even more so if public education crowds out some private universities from even existing, because the non-poor have fewer funds and thus lessens demand for them. There's no easy answer to this question.

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Daily effects of indoctrination, part four 

This is part four of a continuing series, background here. Previous drawings can be found from yesterday's item here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

The picture is innocuous enough, containing two houses with one neighbor greeting the other, "Hey how's it going?" Kids on the swing. But the caption indicates that the reason they great each other so cheerily is because they are of the same race. Does your neighborhood look like this? Or is this some hazy memory of the past?

UPDATED (1pm): While tossing out papers on my desk -- a neverending task -- I stumbled across this article from the Philadelphia Fed. The data provided says neighborhoods are still relatively segregated, and argues that when given experiments to choose which neighbors someone would like to have, African-Americans preferred a neighborhood where two of five of their neighbors were of their own race, a fraction greater than you would find in the general population. The author believes discrimination does play a role, but not the only role, in the racial composition of neighborhoods.

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Wednesday, June 11, 2008


Are you kidding me? The guy who handled economic policy for the John Kerry campaign is too centrist? Paul Krugman gives Furman's progressive bona fides. On the other hand, The Hill recently placed him firmly in the pro-business wing of the Democratic Party. That might make him just the typical economist that Bryan Caplan describes, "a moderate Democrat who thinks that supply-and-demand governs prices, welcomes foreign competition, and sees the upside of downsizing."

Just the kind of guy labor unions hate.

So which guy -- Furman or Goolsbee -- advised the boss on this interview?


Daily effects of indoctrination, part three 

This is part one of a continuing series, background here. Previous drawings can be found from yesterday's item here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months.

I am not interested, for those who have asked, in having this display taken down. It's not my job to decide what the university wants to present to students, staff and visitors (read: parents and incoming freshmen visiting campus for orientation). I would rather have this material out there for people to see, as it is my opinion that this is what the campus views as part of its function.

This picture is of a person of color with a mop and pail in the foreground. To the left, one white person says to another "May I speak with the manager?" At top and in background, a white man emerges from a room labeled "manager's office." The number 24) on this tag would suggest to me that there were many other 'effects' offered for drawings. We cannot be sure we have the entire set here, perhaps only a best-of display.

Perhaps we should learn more about white privilege; they have entire conferences. There's a lot of groups -- in particular church groups -- promoting this agenda. But they say "this conference is not about beating up white folks." You see, you were supposed to be blind:
I have come to see white privilege as an invisible package of unearned assets which I can count on cashing in each day, but about which I was 'meant to remain oblivious. White Privilege is like an invisible weightless knapsack of special provisions, maps, passports, codebooks, visas, clothes, tools, and blank checks. (emphasis added, though the apostrophe in the original.)
You might want to look at a few earned assets as well, however. For instance, a government study of the working poor showed that black males with a bachelor's degree were less likely to be below the poverty line than white males with a bachelor's. Marital status has a bearing on earnings and employment as well.

And again, tell me, who is the source of the intentionality of this obliviousness?

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Line of the day 

Politics delivers Svengalis, not salvation.
Don Boudreaux.

Tuesday, June 10, 2008

In a less than perfect world 

In a perfect world we would know how much damage pollution does, we'd know who did it, and we'd know how to costlessly assess those who create the harm and transfer the money to those who are harmed. We could total the costs and benefits and arrive at a measure of whether the ratio was greater than one, and if so we would be able to do it.

In a perfect world those costs and benefits would be compared to those for other projects and, given a limited budget, could be decided whether we should take care of these things first or wait to deal with more pressing needs. Bjorn Lomborg's Copenhagen Consensus provides the answer for that perfect-world question.
Scarcity is a core economic concept, though politicians and even many economists prefer to ignore it. There isn't an unlimited amount of money to be spent on every problem, so choices have to be made. The question addressed by the Copenhagen Consensus Center is what investments would do the most good for the most people. The center's blue-ribbon panel of economists, including five Nobel laureates, weighed more than 40 proposals to improve the world by spending a total of $75 billion over the next four years.
The top investments on their list, ranked by benefit-cost ratio, were heavily populated by issues of malnutrition and disease prevention. The top-ranked item for dealing with global warming was research and development of low-carbon emitting technologies ... but the consensus group had expended their $75b budget by then. Other items provided a better return on investment.

But the world is not frictionless. Knowledge is imperfect. Identifying who gains and who loses from environmental degradation (if you accept it happens -- not all do) is difficult. And each scheme we try creates incentives for "capture". This month's Wired has the provocative cover "Inconvenient Truths about Global Warming" and contains this admonition against cap-and-trade:
All the so-called clean development mechanisms authorized by the Kyoto Protocol, designed to keep 175 million tons of CO2 out of the atmosphere by 2012, will slow the rise of carbon emissions by ... 6.5 days. (That's according to Roger Pielke at the University of Colorado.) Depressed yet? Kyoto also forces companies in developed countries to pay China for destroying HFC-23 gas, even though Western manufacturers have been scrubbing this industrial byproduct for years without compensation. And where's the guarantee that the tree planted in Bolivia to offset $10 worth of air travel, for instance, won't be chopped down long before it absorbs the requisite carbon?

Nationally managed emissions-trading schemes could do a better job than Kyoto's we-are-the-world approach by adding legal enforcement and serious oversight. But many economists favor a simpler way: a tax on fossil fuels. A carbon tax would eliminate three classes of parasites that have evolved to fill niches created by the global climate protocol: cynical marketers intent on greenwashing, blinkered bureaucrats shoveling indulgences to powerful incumbents, and deal-happy Wall Streeters looking for a shiny new billion-dollar trading toy.
Carbon taxes aren't a panacea either, though, as the debate last week among economists (captured well by Brad DeLong) demonstrates. You might argue that the second- and third-order effects are a wash, and you might be right, but the truth is you don't know. Both cap-and-trade and carbon taxes create pools of money for government to shovel out to favored constituencies (the latter pointed out this morning in Rep. Bachmann's editorial) but, as one of my colleagues pointed out this morning, that's money that is supposed to compensate those who are harmed by carbon emissions. The excuse of high transactions costs in making the transfer to the harmed is no excuse for letting government charge the tax on the beneficiaries of carbon emission and pass it among its political benefactors.

The value of the Copenhagen Consensus in the global warming debate is to identify the benefits of using carbon taxes or cap and trade. In it, the benefit cost ratio of these actions alone are estimated to be 0.9, i.e., the benefits are less than the costs. The return is greater only when used in conjunction with research and development (or which, to put it bluntly, the expected benefits are speculative. That's the imperfect world in which we live.


Nonprofits recruiting voters among their clients 

Only one question should be asked regarding the MinnPost report that 501(c)(3)s will now be expected to help with voter registration: Cui bono?
"... [A] nonprofit corporation that contracts with the state agency to carry out obligations of the state agency shall provide voter registration services for employees and the public. A person may complete a voter registration application or apply to change a voter registration name or address if the person has the proper qualifications on the date of application. Nonpartisan voter registration assistance, including routinely asking members of the public served by the agency whether they would like to register to vote and, if necessary, assisting them in preparing the registration forms must be part of the job of appropriate agency employees."
So if I want to give money to Habitat for Humanity, a piece of my donation is now required by law to help pay for a voter registration GOTV campaign by Habitat. And the government favors that donation with tax deductibility (not so for a contribution I might make to AARP, which advocates for seniors and does GOTV voter registration already.) One can even use a tax-deductible donation to a 501(c)(3) to support a school levy referendum. (Yes, they're at it again.)

What nonprofit will not want to recruit those voters who are most likely to favor programs that allow nonprofits to get more taxpayer money through grants and other aid?

UPDATE: In comments Jeff Rosenberg catches my mistake in mixing up GOTV and voter registration. Not the same thing, though voter registration can be part of GOTV, particularly in the state of Minnesota which allows same-day registration. And that's part of the problem. Should we really make it so easy for people to vote? Interestingly, the public choice literature on this that I have read doesn't make it clear that easy registration necessarily means more of the poor vote, but I think the purpose of this particular law is to address the perceived imbalance of voting towards those in higher socio-economic status.

Another thing to wonder about: If we put more of the clients of nonprofits on the voting rolls (who are likely to be less educated), they also appear more in the jury box. It's possible that getting more people involved in the political process will induce more learning, but I have my doubts.

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Is Lewis Black the root of all stupidity? 

While I usually will ignore comedians' political views (this is also true for sportswriters -- if some sports columnist wants to use a political metaphor somewhere in a story, who it skewers doesn't affect my enjoyment or not of the column), there are times that try men's happy souls. Take for example this blather from Lewis Black, who has been employed as a spokesman at minimum for the SEIU, one of your more militant trade unions in America. (Notice the "stop corporate greed" wrapped in a fist; the image does not beget visions of dialog.) The video attacks Henry Kravis and private equity firms that buy out companies.

Apparently Mr. Black does not know that KKR's financiers are often pension funds, as Fortune magazine pointed out a few years ago:
From the beginning, KKR's key investors-bound to the firm with almost religious devotion-have been the investment arms of two states, Washington and Oregon. Both figure their annual returns from KKR over the years to have exceeded 16%, which they think both entirely satisfactory and a reason for them to dig deeply when KKR periodically brings its collection plate around. Their latest act of fealty occurred early in this decade as KKR worked to raise what came to be called its Millennium fund and ran into two problems: first, resistance from investors because of KKR's recent spotty record, and second, the fierce blow of 9/11. In the end Oregon stepped in with an unprecedented investment of $1 billion, and Washington topped that with $1.5 billion. So of the $6 billion fund KKR raised, two investors amazingly account for just over 40% of its dollars. No problem, says Joseph Dear, executive director of Washington's investment board: "KKR has a demonstrated capacity to show good returns."
Those investment returns go to government retirees, many of whom worked for AFSCME or some other union. Funny how Mr. Black missed that one. They've done it for private firms they've bought as well.

As WSJ's Wealth Report notes, the Democrats seem convinced that crusading against the "rich" is profitable for them. How far will Team Obama push this? In today's Political Diary, Stephen Moore writes that if you make "the rich" just those families earning over $250,000, the revenue gain of letting the Bush tax cuts expire on them is only $40 billion a year, about 10% of what the Obama proposals would cost. The main source of revenue would be to let the cap on Social Security taxes move up sharply on those earning between $100k-$200k. Many of those family members watch Comedy Central ... or used to.

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Daily effects of indoctrination, part two 

This is part one of a continuing series, background here. The picture from yesterday is here. This appears in the classroom and office building stairwell nearest my office, and has been left up for months. Some people do not have trouble finding dolls of color, and the possibility of Tyra Banks or the Williams sisters on magazine covers has apparently not made much of an impression on the classroom. (I caught Littlest looking at the inside picture of Ocho Cinco over the weekend; he was, um, less clothed than on the cover, with a strategically placed magazine.)

What do you think was the educational purpose of this assignment?

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Monday, June 09, 2008

Education Bureaucracy Run Amok - Australia 

This post by William Katz says it all:

"There is deep concern in the Australian educational establishment over teachers who actually raise their voices in order to control their classrooms. Those cruel, inhuman teachers:
TEACHERS are under scrutiny for shouting while trying to control students in the classroom and playground.

Education Department officials are investigating teachers for shouting at students to "put that down'', "leave him alone'', "sit down'' or "pick up those papers'' and demanding to know, "who told you that you could go there?''

The Sunday Telegraph has obtained letters sent from the department to teachers, asking them to explain their actions.

One letter stated: "It is alleged that while you were employed as a teacher you engaged in unreasonable conduct towards students, contrary to the Code of Conduct 2004, in that on unspecified occasions in class you unnecessarily yelled at students''.
Teachers have launched legal action against the department, claiming the investigations are eroding their authority and affecting discipline."

If you have not been in a classroom lately, maybe you should visit one. Teachers are in a real bind (some of it is of their own making). If they discipline, they're "picking on someone" and often are told, "My parents will sue you and the school system." Boards of Education often refuse to back teachers.

Result: Teachers cannot teach; students do not learn.

Wake up!

I have major differences with the teachers' unions but I will support their efforts to control their environment. When teachers work in an environment where students can attack them and parents threaten to sue over anything and boards and administrators fail to support teachers, we all lose. Spoiled parents and students deny others their right to learn.

Finally, check this article for the absurd attitude of parents in Japan - all students got to play Snow White - no witch, no dwarfs, etc. We do children no good by letting them think they will always win, be first, get A's in all subjects, etc. In essence, we are lying to them.


Just a thought 

Via BusinessPundit, a list of the ten most expensive and ten cheapest states in which to buy gasoline. Did you know Minnesota was 7th cheapest? So let's take that ten cheapest list and add on the current rate of gas taxes (combined state and federal) in parentheses, data as of 1/08 via API. National average is 47.0 cents.

Wyoming����.$3.776 (32.4)
Iowa�������.3.813 (40.1)
Missouri�����.3.815 (36.0)
Oklahoma����.3.825 (35.4)
South Carolina�.3.828 (35.2)
Kansas������3.855 (43.4)
Minnesota����3.860 (40.4 42.4 on April 1)
Tennessee���..3.863 (39.8)
Mississippi����3.876 (37.2)
Alabama�����3.900 (38.6)

Obviously taxes aren't the only thing -- transportation costs make Alaska's gasoline price quite high even when it has the lowest state excise tax on gas -- but is Minnesota's place relative to Iowa a function of the transportation bill? Or is all the money coming from gas companies?

Don't know if our rank will change, but Georgia might soon appear on this list.

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Daily effects of indoctrination, part one 

This is part one of a continuing series, background here. This appears in a classroom and office building stairwell, and has been left up for months. The first picture is of the caption provided at the bottom of the picture, as seen in the second. The balloon on the guy speaking on the right reads "He's shady looking." That word in the first picture that was mutilated reads, I believe, "trained". There is no authorship offered for either the caption or the art anywhere on the display.

Your question for today: Who did the student who drew this picture thought did the training? Who did the caption writer think did it? If these are from a class -- student organizations must identify themselves when they post flyers -- what do you think was the professor's intent?

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Not so fast there 

I'd like Bleak and Captain Capitalism to meet each other. Both commenting on the unemployment report from Friday (my comments here):
Is Ben Bernanke going to end up becoming this generation's Arthur Burns? (bleak)

how much you want to bet they'll blame Bush and Republicans for the recession we'll be in, even though it's the sub prime deadbeats and the corrupt mortgage lenders/bankers that are truly to blame? (CC)
Hold the phone, guys. I'm not convinced we're even in a recession. Ironman uses interest rate spreads to show that the worse is over, and that it's only 50-50 we even have had one. I'm wondering how likely it is we have a recession underway when we have yet to have a single quarter of negative GDP growth, and barely a 50-50 chance of one in this quarter. The first big numbers for May -- retail sales -- comes out Thursday. We'll see.


Feminists - Democrat Style 

On June 7, Minnesota's Democrats (DFL = Democrat-Farmer-Labor Party) held their state convention in Rochester, MN. They endorsed Al Franken as their candidate to the United States Senate, to oppose incumbent Norm Coleman.

For those of you new to this story, Mr. Franken has had a number of financial issues, all blamed on his accountant and others in the past few months. Among them: non-payment of state income taxes in 17 states for several years; non-payment of workers' compensation insurance in NY; and receiving a seven figure salary while his New York Employer stiffed a Boys and Girls Club charity for a"loan."

By Friday, June 6, it became known that Mr. Franken had made "jokes" about rape and bestiality. That doesn't show much class let alone sensitivity towards women, the backbone of the Democrat Party.

In spite of his record, MN Democrats rallied behind Mr. Franken. US Representative Betty McCollum was one of the minority of Democrats who had the courage to disavow Franken because of his poor taste in "jokes." She was booed by convention goers and had to watch as other feminists made nicey nice to Mr. Franken. On Sunday, June 8, Mari Urness Pokornowski, of Cokato, MN, the president of the Board of Directors of the Minnesota Democrat feminist caucus resigned in protest of Franken's endorsement.

Too many of today's feminists :
- whine, moan and complain about their perceived unfair treatment but only by white males outside their political party;
- ignore the real atrocities against women in so many other parts of the world;
- brainwash far too many young women with misleading "statistics;"
- inculcate the belief that women are entitled to safe, secure government and non-profit jobs or private sector executive positions for which there is some supposed "glass ceiling" while dismissing other factors that come into play.
These feminists seem only to want political power. NOW mercilessly trashed Chief Justice Clarence Thomas for alleged verbal sexual harassment. They hounded former Republican Senator Robert Packwood from office for what turned out to be one woman's unwanted "kiss on the lips." But these actions paled by comparison to Democrat Bill Clinton's abuses. No CEO of a corporation would have held onto his position under similar circumstances, but most "feminists" made excuses because Clinton was "their" guy. Using women for sexual favors is wrong, period. These feminists are hypocrites when it comes to political parties. If a Republican acted like Al Franken, they and the press would pound away incessantly. Yet, when one of their own behaves in a slimy, condescending, sexist and abusive manner towards women, they simply ignore the behavior and support him - "he's really on our side."

But such political opportunism is short-sighted. As the editor of Feministe, Jill Filipovic said yesterday in the Washington Post, "Mainstream liberal Democratic guys don't have to take feminism seriously because they know that, at the end of the day, we're going to be there." Filipovic supports Obama, but recognizes that "most of the time, appeasement is not the solution."

At least two of Minnesota's female Democrat leaders, Rep. Betty McCollum and Mari Porkownowski, had the courage and integrity to say that Al Franken went too far to warrant election to the Senate. I applaud their actions.

Equality comes when you are equally qualified, work equally hard and are held to the same standards. When all women can take a stand against nasty and stupid behavior by men such as Al Franken, we will have made major strides.

The Democrat "feminists" have no moral authority until they are willing to hold their own men accountable to the same standards they piously assert for those outside their party.

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Coming attractions: Daily Effects of Indoctrination 

I thought about trying to create a full photo essay of this. But instead, we will do this with one a days. The picture above is a bulletin board that appears in the back stairwell (at the first landing) of the classroom and office building in which I work. Its title, "Daily Effects of White Privilege", describes a set of thirteen sketches -- amateur, perhaps done by children but I do not know the artists, they are not signed -- that are to describe things that white people take for granted about the lives they lead. Next to each is a sentence describing that privilege. I have a second board also photographed that has similar art but seems to have been drawn for a different purpose. Both are in areas where students, faculty, and staff walk every day. This one pictured above has been in the hallway for months; the photos were taken in early April for this set, in May for the other.

We now have freshman orientation going on and the young students and their parents are walking by these displays. Keep that in mind as you view the individual pictures. What message is SCSU sending to prospective and incoming students?

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Friday, June 06, 2008

A double-dip 

Per our usual agreement, I'll be on the David Strom Show tomorrow at 10am to talk about some of today's posts and a more general discussion of economics. Then the Final Word appears at its normal time of 3pm. Michael says he'll be live-blogging the DFL Senate endorsement debate, so I might be riding solo back at the mothership (though if there's an empty seat, guess who will take it?)

We'll see you tomorrow then, from 9-5 for Strom and the NARN, all on AM 1280 the Patriot.

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Springtime: Flowers bloom, liberals try to draw graphs 

Talking with some public finance specialists this week, I commented on this new study from Minnesota 2020, "Doesn't it seem like we get one of these every year or so?" Yes, they answered. You should just look them up.

The newspapers nevertheless dutifully report that the study shows "less investment public spending of tax dollars, less return."

The organization of the report is to draw two trends and then claim a correlation. The first trend is the decline in government expenditures as a share of economic activity in the state. Twenty pages of that stuff, either as a share of population or share of income. The second trend is a set of measures of economic activity, poverty, education, etc. (even "percentage of deficient bridges" -- that's a new metric!) that are meant to show that Minnesota is slipping relative to other states.

Now "relative to other states" is important. Most of the economic literature since Barro and Sala-i-Martin shows that when you have states that are rich and others that are poor, the poorer states tend to grow faster. This confirms a basic tenet of growth theory that dates back to the work of Robert Solow in 1957. In America, one of the issues that confounds the research on taxes and state growth is that the places that tend to have low state tax rates are often in the South, which has a worse position in economic performance when you look at long time series of performance going back to Reconstruction. This confounding factor creates a problem for correlations like the MN 2020 study. You would need a more careful regression analysis that teased out these complications. (There are other issues besides convergence, but this one might be the most important based on my experience with international cross-sectional regression analysis.) In short, (no) correlation does not mean (no) causation when you've got confounding factors like this. MN2020 don't need no steenkin' ceteris paribus.

But I need to show you more. If we don't believe that they've made a proper argument for no effect, what do we have to show that there is a negative effect from state tax rates to state economic growth. I thought I'd look to see what economists have said about the relationship. This is not a full list but a sample, more on which at the end. I restricted myself to papers I found on a site anyone could access, and to papers that had been through a peer-reviewed process. Thus we'll stay away from any of the publications of conservative or libertarian think tanks (which have many such citations.)

Anyway, here's a sample of three articles and relevant parts of their abstracts; go to the site and try your own search engine to find others if you want:

Tomljanovich, The Role of State Fiscal Policy in State Economic Growth. Contemporary Economic Policy, July 2004.
Using pooled annual U.S. state-level data from 1972 to 1998, a fixed-effects model is employed to examine the effects of changing tax rates on both state per capita output levels and growth rates. The results indicate that higher tax rates negatively influence short-run state economic growth, which lowers state output levels. However, long-run growth is unaffected by changes in state tax rates, even after adjusting for the effects of initial per capita output levels, state expenditures, and aid from the federal government. Nor do changes in state public spending rates and federal aid permanently alter state growth rates, implying that state fiscal policies have only transitory effects on state growth.
Becsi, Do state and local taxes affect relative state growth? Federal Reserve Bank of Atlanta Economic Review, March 1996.
This article presents an overview of relative state growth and relative state and local taxation from 1960 to 1992. After a brief discussion of the theoretical issues, the article surveys simple--but revealing--correlations across states and across time that characterize states' experiences. The correlations indicate convergence but also imply that shocks, including tax policy, matter for long-term growth. ; The author argues that the evidence on the growth effects of taxes has been mixed because empirical models imperfectly separate the growth effects of other government policies that occur simultaneously with tax policies. He demonstrates a simple way to get a more nearly accurate specification. His analysis shows that state and local taxes appear to have temporary growth effects that are stronger over shorter intervals and a permanent growth effect that does not disappear. ; In terms of policy implications, if long-term growth rates seem too low relative to other states, lowering aggregate state and local marginal tax rates is likely to have a positive effect on long-term growth rates.
Mofidi and Stone, Do State and Local Taxes Affect Economic Growth? Review of Economics and Statistics, July 1990.
Estimates for net investment and employment in manufacturing for 1962-82 support this conjecture, indicating that state and local taxes have a negative effect when the revenues are devoted to transfer-payment programs...
Let me add one paper that doesn't meet yet the criterion of peer-review, so should be treated as lesser evidence than the above, but it has a rather sharp conclusion about specification that strikes me as useful.

Reed, The Robust Relationship Between Taxes and State Economic Growth, Working Papers, University of Canterbury (NZ).
I estimate the relationship between taxes and economic growth using data from 1970-1999 and the forty-eight continental U.S. states. I find that taxes used to fund general expenditures are associated with significant, negative effects on economic growth. Further, this finding is robust across (i) alternative variable specifications, (ii) alternative estimation procedures, (iii) alternative ways of dividing the data into five-year periods, and (iv) allowing for individual-specific time and state effects. I also provide an explanation for why previous research has had difficulty identifying this robust relationship.
I've been meaning to put one of these together for awhile, and if someone wants to work with me on a meta-analysis of the literature, I've got access to enough databases to put together a long list of articles. You will, for awhile at least, need to accept that I've not cherry-picked these studies, or you will have to take up my offer. I'm not convinced that there's enough variability in the professional economics results to make a meta-analysis interesting, but I'd be happy to give that a try. Write if interested.


Graph of the day: Distribution of St. Cloud wages by industry 

The top five areas of the metro St. Cloud area by wages paid were health care and social assistance, manufacturing, retail trade, finance and insurance, and wholesale trade. Those five areas account for 80% of wages (total area wages were more than $1.8 billion.)

UDPATE: Several commenters note that this is only private employment. Public employment would add another 15% or so to the picture here (and reduce the others by the same.) We have a fairly large state university here, and there are over 9,000 (of about 103,000) workers in local government. Data here.

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How to parse a jobs report 

Let's begin at the beginning. What did we expect?
  1. The Bloomberg economic calendar page tells us we expected a loss of 60,000 jobs; we got a loss of 49,000. (WSJ carried the same number this morning.) Not good at all, but not a blow-out bad month.
  2. We expected hourly wages to rise 0.2%, they went up 0.3%. Average workweek came in right where we expected.
  3. We expected the unemployment rate to be 5.1%, but we got 5.5%. Whoa! How did that happen? The answer, quite simply, is that the level of people entering the job market went up.
Have a look at Table A-8 from the report. We can decompose the 5.5% unemployment rate into the reasons by which they are unemployed. Here are the numbers for May, with April numbers in parentheses.
So had we had the same behavior of people entering the labor force as we had for April (which was the same as for the entire first quarter), the unemployment rate would have come in at 5.2% rather than 5.5%. So the employment-population ratio, which many have used in the past to account for what's happened in the labor market when the unemployment rate didn't provide them the gloom and doom they wanted, only dropped by 0.1 to 62.6%, virtually unchanged since February.

200,000 new teens are in the labor force in May 2008 vs May 2007 (table A-2, with a nod to Paul who spotted it while I was writing this.) That's one source of the new workers into the workplace, but not all of them, as the number of people not in the labor force fell by 369,000.

That last number is the surprise, the reason we will end up talking about the unemployment rate all weekend long. The rest of the data should have come as no surprise. The job market is weak but not in free fall; an oil shock and a housing contraction should do what we're seeing here, but so far the loss of jobs in the first five months 2008 has been 324,000, not much different than the first five months of 2001. That's about what we grow in two good months.

UPDATE: Ed Morrissey ties the increase in teen unemployment to the minimum wage increases:
In summer, teenagers and college students enter the marketplace looking for seasonal and part-time work. This accounts for the significant rise in job-seekers and the 0.4% increase in unemployment. Otherwise, an overall job loss of 49,000 jobs would account for a 0.0004% increase in a market of 138 million workers.

Why have these new job seekers found it difficult to get jobs? One reason is that Congress made jobs costlier just in time for this economic slowdown. Congress raised the minimum wage last year by seventy cents an hour, from $5.15 to $5.85. It will rise again in July to $6.55 an hour, and next year will hit $7.25 per hour. That makes entry-level labor as much as 27% more expensive this summer, when consumers have already slowed down their spending. The natural loss of work from the slowdown amplifies the effect of the minimum-wage increase, because businesses now cannot afford to raise prices to maintain their entry-level positions.

When the minimum wage increase was under debate last year, many of us warned that it would have precisely this effect. Now we see it unfolding before our eyes.
Aside what I think is a math error in that first paragraph (I think he means 0.04%, not 0.0004%), what he is proposing is that the higher minimum wage is inducing a large increase in the supply of labor. Setting aside the timing issue (did really all the teenagers wait until May to decide "hey, let's get a job"?), we still have a 12% increase this summer, which is to have led to a 3.7% increase in labor supplied by teens two months prior to the change in wages. And most of these teens will give those jobs up by Labor Day. I don't have a very good feel for teen labor supply elasticities, but Ed's suggesting that the short run elasticity here is above 0.3, which feels high to me. In the long run, it would certainly be higher than that.

In terms of teen unemployment rates, though -- which involves both supply and demand -- the jump is quite large but not necessarily unbelievable if you think demand shifted down due to recession and then moved along the new, lower demand to reflect the minimum wage increase.


D-Day - We must Remember 

Today, June 6, is the 64th anniversary of D-Day, the day on which the Invasion of Normandy began. The purpose of this massive military effort was to liberate mainland Europe from Nazi occupation in World War II.

Too often today, in our schools, this successful effort to free millions of people from the dictatorship of Adolf Hitler and his German machine, is ignored and the focus morphs to a guilt trip. The idea no longer discussed is where would we be today if the German/Japanese Axis had won? We would be speaking German or Japanese. Open schools for all - no. Racial advances - no. Concepts of free thought, ideas, real choice would not exist. Neither the Nazis nor the Japanese (who at the time believed their emperor was a direct descendant of the gods) would have tolerated what we today take for granted. If you question this, check here, here, here, and here for the real atrocities conducted in Nazi concentration camps and Japanese prisoner of war camps.

Freedom is not free. When free nations are attacked from within or without, there are times they must fight back. Those who oppose fighting at all costs are usually people who have never lacked freedom. They have no clue as to how ruthless and dogmatic dictators can get; how barbaric some societies still are. Though WWII was a war that would hopefully end all wars, the military defeat of the Axis powers, coupled with their unconditional surrender, did not take into account societies outside the two major fighting groups: Germany, Japan (with help from some Arab nations), and Italy versus the Brits, Americans (with help from the French resistance, Canada and Australia).

This omission resulted in the western thinking of today: peace at any cost; a naive belief that the UN, dominated by dictators who could care less about freedom and choice, actually want to help people; a blindness to existing societies that discriminate against women, dark-skinned peoples, and still rule via military thuggery. A culture of pacifism, which has always existed, gets far more press today. "If only..." my view of the world could be forced on all others, all would be fine. Ignored is the fact that there are people who will never agree with my "if only..." view.

The WWII soldiers fought to keep freedom. Without this ability to live where one can create, think, and express ideas without fear for life, progress comes to a grinding halt. Humans will revert to their most basic state - fighting.

We who are the children of the greatest generation, the group that saved the world from dominance by the Germans and Japanese, must remember the D-Day Invasion - it led to the longest period of peace and prosperity for so many hundreds of millions of people ever.

Thank you, WWII vets, especially D-Day veterans and families.

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DNC pulls the punch bowl, RNC puts on the dog 

Via Hugh, I read that the response of the Democratic National Convention host committee to the shortfall of funds for their shindig is to cut down the number of parties that the Party can have.

...the idea of a single party originated in the past two weeks as host committee officials started talking with the Democratic National Convention Committee over ways to cut convention costs. [T]he committee hasn't settled on a venue but is considering holding the event at the Colorado Convention Center.

One of the officials with the New Orleans group is television commentator and Democratic superdelegate Donna Brazile, a friend of the DNCC's chief executive, Leah Daughtry.

"This consolidation, supported by the (DNCC), will enable the host committee to focus greater resources and energy into activities taking place in and around the Pepsi Center, where the actual convention is being held," the host committee said in a release.

In other words, they need the $25 million they've banked just to throw Sen. Obama his coronation, so let the delegates suffer through a 4,000+ gathering in a convention center. That should improve the mood of the 48% of them who will see their candidate not win the nomination.

What's the deal with Denver, anyway? Here in Minnesota, many firms have contributed to make sure that the RNC convention will be a fine time for all. Look at this list of donors that have contributed to the host committee. Why? I think it reasonable to say they are contributing for the purpose of showing off Minneapolis and St. Paul as world-class cities, a great place to live and to do business or headquarter a business. Twenty corporations headquartered here are part of the Fortune 500, and thirteen stepped up for the convention. That list doesn't include private companies (not publicly traded) like Cargill, also a donor. Surely Denver has such civic pride, don't they? Instead...

By holding one party, the committee can save on labor, transportation and economies of scale, Aiello said, adding: "It's got to be a significant amount of money."

Aiello said she's heard some grumbling from civic boosters, event planners and caterers.

"I'm certain it's very disappointing for these wonderful attractions. They are going to have to be creative to replace the opportunity that has been lost."

We don't need to be creative. As the Patriarch of the Sesquicentennial tells you, come to the Fair. (And tell Hugh, the Mayor of the MOB will be there; eating contest is on.)

Mrs. S writes about SCCC 

This month's column is on the protest of the Students for Concealed Carry on Campus. Her view:
The counter argument: If students are allowed to carry concealed weapons, their lack of emotional maturity might lead them to draw the weapons when provoked by something trivial. But this argument rests in the mistaken belief that guns are completely stopped by a law or a sign. There are no metal detectors. Students and staff are on their honor to obey the ordinances. Someone who wants to cause mayhem with a weapon is not going to be deterred by a sign.
Thanks, by the way, to the many generous offers to take me to a shooting range. We're working out details for a safety class and practice shooting soon.

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Thursday, June 05, 2008

It's all a matter of timing 

I suppose we should expect politicians to make appeals to businesses to keep plants in their state. So this story about Sen. Norm Coleman talking to Ford about the St. Paul plant makes sense in an election year. But the timing of this, after Ford just announced May sales down 16% from a year ago would make me think he's barking up the wrong tree. They're not likely to want to retool plants just now, not when they're shedding workers elsewhere.

Want to help Ford? Make gasoline cheaper.

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Are you suggesting socialism? 

It seems many want to take Gov. Pawlenty to task for vetoing the bill the DFL legislature passed that would have suspended mortgage foreclosures. An admiring history lesson in the MinnPost calls attention to Floyd Olson's "bold move":
On Feb. 24, 1933, Floyd B. Olson � the state's first Farmer-Labor Party governor � issued an executive order halting mortgage foreclosures in the state. The short-term suspension, scheduled to last until May 1, was intended to buy time for people facing sheriffs' sales and to pressure the Legislature to come up with a longer-term approach to combating foreclosures.

Knowing that he was on shaky legal grounds, Olson maintained that he was not ordering a foreclosure moratorium although that was the effect of his action. The executive order applied to urban homesteads as well as to farm property, but the governor's proclamation focused on the rural impact of the wave of forced evictions sweeping through the state.

Olson's bold move at the start of his second term would do much to embellish his reputation as an activist governor who used the powers of his office to combat the economic and social devastation caused by the Great Depression in Minnesota.
This from the same governor who once said that same year "I do not believe there can be any economic security for the common man or woman in this country until and unless the key industries of the United States are taken over by the government." (Geo. Mayer, The Political Career of Floyd B. Olson, University of Minnesota Press, p. 149.) Olson had also acted to depress farms by, for example, offering the previous year to use the state militia to prevent the "export" of farm crops to the rest of the country, if other farm states would join in. (They didn't.)

It's hard to imagine why anyone thinks that, when all discussion turns to a credit crunch, violating the property rights of creditors will make more credit flow. Unless you intend to seize the property itself. A propos today, this column by Jerry Bowyer makes a similar point. The bill vetoed makes banks a target, after which nothing else really matters.

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Charter School Success 

Charter schools are designed as alternatives to standard public high schools. They must take all students who wish to attend. If there are more applications than slots available, a lottery is held - at least in Georgia.

This article tells the story of Tech High Charter School's first four years in existence. They average cost of education for Atlanta Public Schools (APS) is $13,500/student; Tech, $6,000/student. Tech High started in the 2004-5 school year with 100 students. The attitude of the administration was clear: Because the entering 9th grade students were reading and doing 5th grade level math, some of the more ambitious technology projects were put on hold in favor of some old-fashioned fundamentals.

Yes, you have to do your homework.
Yes, you have to wear a uniform (nothing exotic: khaki pants, and any solid-colored shirt with a collar and no words on it).
Yes, you have to shut up when the teacher is talking.
Yes, we're going to hire teachers who actually give a damn about the students.
What are the results? Of the 50,000 students who attend the other schools in APS (no comparative drop-out rate was given), maybe one per year gets into Georgia Tech; for Tech High, of the 43 who decided the environment was worth the work and made it through the four years, three are getting into Georgia Tech - no preferences.

One might think Atlanta would be proud of this accomplishment - nah - it flies in the face of all the educational pabulum that's been spewed for the last 40 years by far too many school administrations as to why kids fail. If and when the public school systems start looking at what it takes for kids to succeed instead of making excuses for failure, THEN we will be servicing our kids. Until then, we're wasting money. Our kids are not learning what they need to succeed in life. And talented children born into stressful circumstances are denied the opportunity to succeed by a system that gives priority to the interest of the job-security minded adults.


Read the fine print 

I'm at the end of a three-week intensive course that I teach every other year (in sports economics) and so this week has been light blogging. It's mostly because I'm busy reading sports business and not much else. And I am tired from four-hour-a-day lecturing for three weeks. But I couldn't miss the morning headline in the St. Cloud paper: Home prices stable here. I thought I heard "Happy Days are Here Again" while I read this.

Where the two-county St. Cloud area saw declines in housing prices in the last half of 2007, it saw an increase in the first quarter of 2008, according to the data. Prices increased 1.19 percent in first quarter 2008. Before that, values changed negative 2.54 percent in the fourth quarter and negative 0.91 percent in the third quarter.

This report shows St. Cloud will likely see stable home values for at least the next two quarters, said Louis Johnston, associate professor of economics at the College of St. Benedict and St. John�s University. Values won�t grow as fast as they did during the housing bubble, he said, but they likely won�t collapse.

That�s good news for people looking to sell their homes, as well as for cities, counties and school districts� planning budgets, Johnston said. Taxes that fund government are based on property values.

I'm looking at that and thinking, "hmmm..., that doesn't fit what I think is going on." So I first get the OFHEO report discussed. Yup, there it is. St. Cloud for 1-year price change is ranked 212 of 292 metropolitan areas reported. I don't know that I would be too happy about being in the 212th best market.

Second, the OFHEO data looks both at sales and at refinancings, and only at single-family homes. In the FAQ of the report:
The House Price Index is based on transactions involving conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Only mortgage transactions on single-family properties are included. Conforming refers to a mortgage that both meets the underwriting guidelines of Fannie Mae or Freddie Mac and that does not exceed the conforming loan limit, a figure linked to an index published by the Federal Housing Finance Board. The conforming loan limit for mortgages purchased in 2007 was $417,000. Legislation enacted in February 2008 has raised the limit on a temporary basis to as much as $729,750 in high cost areas in the continental United States. Conventional means that the mortgages are neither insured nor guaranteed by the FHA, VA, or other federal government entities. Mortgages on properties financed by government-insured loans, such as FHA or VA mortgages, are excluded from the HPI, as are properties with mortgages whose principal amount exceeds the conforming loan limit. Mortgage transactions on condominiums, cooperatives, multi-unit properties, and planned unit developments are also excluded.
Well, that seems to exclude rather a lot. When you compare this to the sales report of the St. Cloud Area Association of Realtors, which shows prices falling 10% in the first quarter, you get quite a different story. Now some of that might be that the houses sold in the first quarter were of lower quality; the OFHEO measure looks at repeated sales (as does the Case-Shiller index), to hold quality relatively constant (though the improvements you put into the house don't get reflected, as I understand these measures.)

But it's important to recognize the limited coverage of those data the Times' story uses. Looking only at Fannie and Freddie insured loans takes a more stable, less bubbly portion of the real estate market. Including refinances in the national index revises the data from a decline in the first quarter of 1.7% to a decline of only 0.2%. (I don't see a number for purchase-only for St. Cloud.) 82.3% of the data used nationally came from refinances. I think you'd have to account for that before writing a headline quite like what the Times uses.

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Mr. Gore, call your office! 

The CEO of Exxon Mobil, Rex Tillerson, isn't going to roll over for the global warming religionists.
"My view is that this is so extraordinarily important to people the world over, that to not have a debate on it is irresponsible," he said. "To suggest that we know everything we need to know about these issues is irresponsible.

"And I will take all the criticism that comes with it. Anybody that tells you that they got this figured out is not being truthful. There are too many complexities around climate science for anybody to fully understand all of the causes and effects and consequences of what you may chose to do to attempt to affect that. We have to let scientists to continue their investigative work, unencumbered by political influences. This is too important to be cute with it."
Some shareholders were not happy with Tillerson's lack of leadership on greener energy technologies, but he answered that even 25-30 years from now, even with the development of all the other technologies currently being explored, oil and natural gas would represent 2/3 of the energy market.

Your product is growing so rapidly in price that your revenues from a 25% price increase rise by more than 20%. Why would you want to make less? And of course if Tillerson were allowed to explore new fields and increase supply, what would happen to price?

(Note also from the Economist story (second link) the second law of demand -- prices always rise more in the short run than the long run, as quantity adjustments take time. Another reason why this price spike might be near the end. David Leonhart is experiencing this too.)

(h/t: Mises email list.)

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Continual Improvements - #1 

One of the most unique characteristics about American environment is the ingenuity and desire to constantly improve products, processes, and procedures. I've had a number of examples of this in the past but have not blogged on them for whatever reason. It's time for this practice of mine to change.

Most of us know about CorningWare products since we use them all the time and they are incredibly durable, come in the right sizes, etc. A key feature of their cooking products are that they can go from freezer to microwave or regular oven with no hassle. Now they have invented a new line of baking products called SimplyLite.

This new line weighs up to 50% less than traditional ceramic bakeware. Reviews and descriptions from earlier purchases can be read here.

Many of you know I teach a number of foreign students in my MIS class. We discuss this constant improvement attitude. This mindset is a trait many societies do not have because of belief systems, social structure, homogeneity, etc. The US attracts people from around the world, people who want a chance to be free, to express themselves, to have the opportunity to try something from which they may be prohibited at home. This concept is rare. A key advantage of this way of thinking is the constant improvement available in all aspects of our lives. If you're a baker, give these products a try.

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Wednesday, June 04, 2008

How monopolies price 

I won't disagree with my friends at PIM that the concession prices at the Mayo Center in Rochester are bad, but I got water in my backpack in just fine. Simple suggestion -- get up on the skyway and walk back towards the Marriott. There's a Starbucks there. Nobody stopped my dry capp into the hall each morning.

Tuesday, June 03, 2008

Minnesota economy "tepid" but still above zero 

The Creighton University survey of the Mid-American states found that while inflation is a concern for business executives, Minnesota is doing at least OK.
�Durable-goods producers in the state reported healthy business activity for May. The cheap U.S. currency, especially against the Canadian dollar, has been an important ingredient in Minnesota�s economy and has partially offset weakness in other areas. The May new export orders index was a healthy 61.8,� said [Prof. Ernie] Goss.
Whenever we've surveyed local businesses, the dollar does not come up as a significant factor in the health of their firms. Still, unlike some gloomy Gusses, Goss' survey comes up with results that support the data we are observing right now.

I was in the car yesterday in the Cities, as usual tuned to the Patriot, when I hear my own name in the newscast. Apparently the Minnesota News Network picked up my comments to a local radio station last week on expecting gas prices to stay where they are right now. This morning Ben Bernanke's comments on the dollar have put crude prices below $124. Not much off the peak, but a start. And the morning news on factory orders has bolstered some comments I've made in the last week or two that perhaps sunlight is peeking through the economy's dark clouds. This is not a comment on whether or not we have actually missed having a recession -- business cycle dating committees are above my pay grade -- but on what may come next.

My lack of blog output is in no small part from writing the new QBR; first draft is at the editors' place. See this space for more as it heads to press.

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Minn. court dismisses per diem lawsuit 

Ramsey County District Court Judge Kathleen Gearin has rejected the lawsuit filed by Citizens for the Rule of Law, arguing that per diem raises were within the purview of the Legislature and should not be counted as pay raises.

St. Paul restaurateurs rejoiced at the news.

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Sunday, June 01, 2008

Review - Republican Convention Speakers 

Now the politicians and it was quite the crew:

Senator Tom Coburn of OK is one terrific senator with his head on straight. He shared the problems we will face rather shortly if the entitlement programs and other government waste are not addressed. Two are listed below:
1 - By 2030 all government entitlement programs except SS and Medicare will have to be dropped.
2 - Government waste - $300,000,000,000/year. Biggest contributors: Medicare - $80,000,000,000; Medicaid - $30,000,000,000; $15,000,000,000 in NYC alone. DOD - $50,000,000,000. The list continues.
The belief that we can spend our way to prosperity through government programs has NEVER worked - a nation spends its way to oblivion. Senators Obama and Clinton and supporters - take heed. Nations or governments that collapsed, failed because of loose fiscal policy, including far too many give-away programs.

Senator Norm Coleman - gave a stemwinder of a speech, including the need for a domestic oil source (not ANWR), border security, energy independence, reduced spending, etc. He was his best! If he believes and implements what he said, he will be remembered as a very strong senator. His strength is the UN and its behavior.

Governor Tim Pawlenty - also gave a terrific speech. The audience thanked him for his vetoes this year. If not for the six RINOs, we would not be facing the largest tax increase in 150 years. Governor Pawlenty held the line on all other DFL nonsense.

Congressman John Kline - low key as usual but emphasized the importance of voting and that elections have consequences. This election is truly important.

Now, our other Congressional District (CD) Candidates and they are an OUTSTANDING crew!

CD 1 - Brian Davis - low key but really knows what's happening in Washington. He gets the ramifications of tax increases on the average American, the energy problems, the impact of corn going to ethanol and the resulting repercussions. He's married, has four kids, is a physicist and physician - this guy is smart! More info here.

CD 3 - Erik Paulsen - did not speak. Information here.

CD 4 - Ed Matthews - dynamic speaker! He's a CPA (and attorney) and you wonder if the CPA side can deliver - let me tell you, this guy delivers in spades! He had the hall on its feet. Betty McCollum is not safe with this guy running and run he does - energy, facts, wit, a long shot? Maybe not. Check his website, here.

CD 5 - Barb Davis White - Keith Ellison has to be very, very nervous. True Mpls. is so DFL one wonders if they'll ever get rid of their blues but if anyone can crack it, Barb Davis White can. She is doing what needs to be done. Another unbelievably dynamic speaker! She takes the stage, knows her stuff, and delivers in spades. Check out her website here.

CD 7 - Glen Menze - Glen lives in a district that lives Republican and votes Democrat. This year may be the best chance to unseat the incumbent, Colin Peterson. Why? Taxes, taxes, taxes - all imposed by Democrats. Glen is not low key and not dynamic but simply a rock-solid midwestern
guy who understands that elitist attitudes are not what made Americans and CD 7 residents great. Learn more about Glen here.

Our candidates are absolutely first rate - help, donate, do whatever you can - we have a real shot at making some headway this year. Remember, taxes, taxes, taxes - all Democrat Party imposed. Our candidates are candidates with common sense, ideas and solutions.

The closing speaker was Karl Rove. There is a reason he is so influential. There is not a Democrat in sight who has Rove's grasp of the issues and ramifications of various outcomes. He is so knowledgeable. His comments are backed with data. He understands how people think, how they are motivated. He is humorous and witty. Even if you don't agree with his policies, he's worth hearing because he is a terrific speaker.


Review - Republican State Convention 

King has written a number of posts about the statewide Republican Convention held Thursday, Friday and Saturday in Rochester. I attended the convention as a delegate and also the State Central Committee meeting that followed the convention as a Delegate-at-Large.

Here are some of my observations starting with the party and Ron Paulers (RPers).

Talks were by party officials and committee chairs. King covered the details. However, I want to make an observation about the behavior of some people on the floor of the convention. While I have some concerns about they way some issues were handled, all-in-all under the current circumstances, I think the party did ok. Changes need to be made but it was also known that the Ron Paul contingent (RPers) might prove a bit testy. They have been studying and communicating amongst themselves for months. They share information and ideas as to how to work the various state systems and they are very well funded. They had a good many delegates but many were first-timers. It takes a round to learn the system.

The Convention Rules were released close to the convention (too close? who knows? There's always room for criticism.) and review time was limited but there were only seven pages and they could be reviewed in less than 30 minutes. Thus, most people had no problem reading through the rules before the convention started. Unfortunately, even after the rules were approved by attendees, the RPers kept trying to suspend the rules. After the 3rd try, the other attendees became impatient. When the 4th, 5th, 6th (?) attempts were made, there was shouting and some boorish behavior. The RPers were outnumbered significantly. All their attempts to change the rules failed, substantially.

My personal opinion is that the McCain team made tactical errors: posting their list of desired delegates and having floor people attempt to sway votes were practices that were foolish and degrading. We're smart enough to make our own decisions. For the record, they didn't get all their desired candidates.