Sunday, August 31, 2008

Hillary's Pants Suit Brigade 

Many of the pundits are accusing McCain of a last minute bait and switch in his selection of AK's governor, Sarah Palin as his running mate. As this article from the Washington Post indicates, Sarah was one of many who were considered by McCain's closest advisers.

Perhaps Palin was selected because she is a she. However, given the maverick's penchant to do things "outside the box" I honestly believe it was Palin's guts and instinctive ability to do what is right that attracted her to McCain. His team had plenty of time to check out her ratings, her plusses and minuses. They did. She surpassed all contenders.

McCain had met her at a governor's conference and was impressed. She along with others were vetted over the last six or so months and the list was shortened. To the McCain vice president search team's credit, very little was leaked. The pundits wanted to be on the "inside" and would grasp at any straw to be the first to break the news. No go.

As for Hillary's pants suit brigade - most won't vote for Palin. This brigade is comprised of many older women who hold leftist/socialist views. It's the latter reason they like Mrs. Clinton, the proponent of letting the government take care of everyone.

Sarah will attract the soccer moms because she is one; she juggles the family schedule; she coaches; she chauffeurs. She will attract young women because they are beginning to realize that the feminists of the left are not what they are or want to be. While I'm all for women's education and equal opportunity, I am totally opposed to equal pay for different jobs - a goal of the leftist feminists.

I say, "go for it," Sarah - no guts, no glory. This will be a truly exciting election and it's looking better every day.


More Thoughts on Sarah Palin 

It's been less than 48 hours since McCain announced his vice presidential running mate, Sarah Palin. We have studied her background and rise in AK politics and concluded, along with others that she knows there is more to life than what professional politicians and pundits assume is life; she comes across as real; she's truly outside the Washington beltway.

Governor Palin provides a refreshing face, independence, decent, family driven behavior and a "can-do" attitude. Sarah Palin knows how to play offense when it is appropriate to do so.

What the analytical pundits, on all sides are missing is this: everyone can identify with some part of Sarah Palin. One valuable piece of training I had while working at IBM was a course in understanding what motivates people to do something. We are not all alike. Sarah is appealing because she recognizes this fact. She knows there are more people in this great country than just talking head babblers and people who want to destroy us from within.

She "gets" the American people. As a result, money is flowing into the McCain campaign like never before. Volunteers are coming out of the woodwork. Every place I've been in the past two days, grocery, gas station, coffee shop, I've heard people commenting how excited they are about Sarah.Why? She has touched their souls - something about her is resonating with the lives of many ordinary Americans. We are excited because we have found someone we know can make a difference - she already has.

As this election cycle progresses, we will see there is far more to Sarah Palin than the negative talking heads have discussed. I'm very optimistic that Governor Palin will be able to stand up to Motormouth Biden's long track record of nasty debating tactics.


Friday, August 29, 2008

Palin's Potential 

My friend Diana, who lived in Alaska for many years, commented this morning:
Sarah Palin has already demonstrated the steely toughness that could make her a Margaret Thatcher for the US.

Addicted to credits 

In the middle of its editorial on the Obama nomination, the Wall Street Journal brings back an old classic: the Demogrant.
He is proposing a steeper tax increase than any recent candidate, yet he is selling it as a net tax cut. He justifies this by asserting that his eight "refundable" tax credit proposals for people who pay no income tax are "tax cuts." But such tax credits are really a government cash transfer from one taxpayer to a nontaxpayer. Mr. Obama is disguising the kind of pure income distribution that Mr. McGovern failed to sell as a $1,000 "Demogrant." Mr. Obama's packaging is post-ideological but his package is from the Great Society.
Interestingly, Hillary Clinton proposed the same thing with her baby grant last year, panned by John Hinderaker. Obama's comes through one of refundable tax credits in his plan:
Provide a Tax Cut for Working Families: Obama will restore fairness to the tax code and provide 150 million workers the tax relief they need. Obama will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family. The "Making Work Pay" tax credit will completely eliminate income taxes for 10 million Americans.
Because he calls for it to "offset the payroll tax they pay", Obama intends that to be a refundable credit. It's worth remembering that the Demogrant proposals of McGovern were intended to replace welfare programs; he eventually shelved the proposal and was hit again for vacillating on economic policy. (h/t: Extreme Mortman):
By talking during the primary campaign of giving what his advisers called a $1,000 "demogrant" to everybody�even though the proposal was meant to replace some existing welfare programs� McGovern excited the social reformers, who are a minority in America, while deeply offending multitudes who thought it contradictory to the work ethic (see THE ESSAY, page 96). As economist Arthur Okun, a McGovern adviser , puts it. "The things that helped him win the division pennant have hurt him in in the World Series." When McGovern belatedly buried the demogrant idea in August, he alienated many more people, who decided that in the realm of economics he simply does not know what he is talking about.
Obama also supports expanding the earned income tax credit and the dependent and child care tax credit, and a new universal mortgage credit. It's a dizzying array; one wonders, as did the Tax Foundation a year ago, why he doesn't just make it one big program. It leads to some of the funny marginal tax rates we discussed last week.

Buiter and Sibert have already written on the problems of the one tax credit Obama has co-authored in Congress (which did not pass). Note the one thing they approve of, the neutrality of companies in union organizing, is actually an attempt to bring card-check through the back door. What other kinds of mischief await in these other tax credits?

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Sarah Palin 


We've got out of town guests all day, more tonight but this is terrific news!

She's got it all!!!!


KING ADDS: I had mused on this possibility last weekend as an appeal to the PUMAs. Howard Wolfson is saying the same thing this morning.
If the pick is indeed Sarah Palin you are going to have a lot of women voters wondering why Senator Obama didn't tap Senator Clinton as his running mate.
In this morning's Political Diary from the WSJ, Colorado state party chair Dick Wadhams is quoted as saying that state's electoral college votes would depend on suburban female voters. Maybe that's the thinking. Powerline is very disappointed; Michael's taking it pretty well given what he's said for weeks.

Update by Janet: Some of us have hoped for this for over a year. True, she is young but she has more executive experience that any of the other 3 top candidates; she is feisty; she has integrity; she's quick - you don't achieve what she's achieved b/c you're short on gray matter. It's not that she's female, it's that she's got guts. She's not bound by the standard network; she thinks for herself yet has conservative values. I would have supported any VP candidate and had my preference in addition to Palin. But this presidential race is crucial. If McCain uses her and does not put her aside, this could be a terrific team! Put Romney in as SoS or Treasury - maybe they will learn from him; Lieberman for SoS or Dept. of Defense; Giuliani for Homeland Security.

The Republicans have a bench, a deep bench; the Dems do not - they had to rely on another leftist liberal Nor' easter. They simply do not understand there are more than seven or eight states in the USA. They are stuck in the 1930's and 1960's mindsets. The world has moved on, they have not. Palin will bring excitement to our party; who knows, we may get back the House. I know, I'm being optimistic here but energy and excitement go a long way. We might even get the Gang of 16 to reconsider. Palin sure knows energy!

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Harshing your recession-free mellow 

After some quiet elation over yesterday's vastly improved second-quarter GDP figures, today's report on July income and spending should cool your jets just a titch.
Spending by U.S. consumers slowed in July as the impact of the tax rebates faded and a pickup in inflation eroded Americans' buying power. Purchases rose 0.2 percent, one-third the pace in June, the Commerce Department said today in Washington, while prices surged the most in 17 years. ...

The increase in spending matched the median forecast of 75 economists in a Bloomberg News survey.

Incomes dropped 0.7 percent, the first decrease since August 2005, reflecting the end of the rebates, after a 0.1 percent gain the prior month. The median projection was a decline of 0.2 percent.

Final sales were revised up from 3.9% to 4.8% growth, so the remainder of that increase comes from an inventory reduction that was less than anticipated. An inventory rebuild will therefore not be as large as we thought (though July production looks like it was pretty strong.) The July figures seem to indicate a much smaller increase in consumption to start us out; the rebate checks appear to have run their course. It appears that credit allows many to have spent their rebates either in advance or at the moment they received their rebates; carry-on retail sales to the third quarter might not be as large as we thought.

Add to this, as spencer notes, that we are getting a good deal of growth in the second quarter from strong exports to a world economy that appears to be slowing, and you have the makings of what could be a very soft second half.


Thursday, August 28, 2008

The great poncho-pup transfer of wealth and the double-thank-you 

There were reports (Mitch has one) that a booth that has mini-donuts at the State Fair is run by a DFL party unit. Oh no! Don't buy your donuts there! I've been meaning to ask Mitch about this, since he's cool with musicians being into the DFL...
But dammit, I like to rock. And it doesn�t bother me that some of my favorite artists - Springsteen, Pete Townsend) have some of the dumbest politics - because I�ll care about what musicians think about politics about the time I care what John Kline or Michele Bachmann think about music; interesting trivia, perhaps, but not why I hired any of them.
...and I assume he buys their albums, and I assume some of that money gets contributed back to Democrats. (Hang on, Michael MacDonald is singing now for "people who want their country back" at the Barackopolis. I'm sure there's some Doobie Brothers vinyl in my closet.)

I was prodded a few minutes ago to write by an ad featuring T. Boone Pickens: In the video a graphic comes on referring to our purchase of oil "no matter how much we drill" as "the largest transfer of wealth in history". And I think to myself, what does this mean?

Begin with something small. Michael rushes onto the Minnesota State Fairgrounds to do our radio show. It's the Fair, he's hungry. The Poncho Pup is his quarry. So he buys. He takes out his $4, hands it over to the vendor, who hands him his first (of many!) meals of the day. He says "thank you", the vendor says "thank you". Think about that: It's so automatic. Seldom do you hear "you're welcome" because neither thinks they got a transfer of wealth. Each actually thinks they got the deal. Each got something they valued more than they gave up. (If you ever have seen John Stossel's Greed, you know the scene I'm referring to in this example.) Think Michael checks the vendor's party ID before he hands over his $4?

So when we send money to an international vendor for a Pronto Pup -- if you can imagine that possible -- are we "transferring our wealth overseas"? Or are we fulfilling our wants with the best of all possible options?

If it costs $200 to pull a barrel of oil out of the ground in the U.S. and $100 to pull it out of Nigeria and send it to the U.S., is it a transfer of wealth to buy from Nigeria? Or did we just buy to give ourselves a better deal?

In all cases, we don't transfer wealth -- we didn't just hand the money over and got nothing back. We got back in fact something we value very much, more than what we gave up. That's not a transfer, that's a purchase. It's a voluntary transaction. Don't want to participate? Buy a bike. And buy one for each of your kids, and bike them to school and bike them home.

Perhaps the message behind Pickens is the same one used about the mini-donuts at the Fair: we can't give money to them. They might use the money to do us harm.

But that doesn't work either, because boycotts seldom do. If the Republicans all crowd the mini-donuts sold by the non-DFL vendors, the lines at the DFL vendor are shorter. That has value; some independents will go to the DFL booth to get shorter lines. A GOP boycott of the DFL donut booth is, in short, ineffective. You just put yourself in a more crowded line.

If you don't buy the oil from overseas, it cheapens it for someone else to buy. Unless the oil you drill is cheaper -- unless its high cost is the product of bad US government regulation -- forcing people to buy high-cost energy is damaging to the US as well. The "transfer of wealth" language is that of a demagogue.

We will produce efficient energy from solar when it is lower-cost; what are the barriers to it being lower cost? Are they technological or policy-created barriers? That will determine whether we should add solar. And so it is with Pickens' wind farms, or natural gas for powering cars, or other fossil fuels, etc.

Be it music, or donuts, or oil, it's not who you pay, it's how much you pay that matters.


Congratulations MDE! 

The other member of the Final Word gets his just reward.
The 2008 Conservative Leadership Conference announced today that blogger Michael Brodkorb of �Minnesota Democrats Exposed� has been chosen to receive the annual Blogger of the Year Award. The award will be presented at the CLC luncheon on Friday.
He says "It's tough for me to write about myself." Glad I didn't have a swig of Coke just then, Michael.

Congratulations to MDE! Pronto Pups on me Saturday.

Wednesday, August 27, 2008

In case you forgot 

The NARN is at the Minnesota State Fair each night from 5-7pm. Tonight it's Michael and me, as Ed and Mitch get a breather from their week-long stint here. If you're not here, you can hear us on AM1280 the Patriot. (Streaming available there.)

UPDATE: Senator Norm Coleman will be with us at 5:20. We will ask about his new support for the expanded "Gang of 16". We also expect Zack Stephenson from MnPublius at 6pm to talk with us as the countdown to the coronation of Obama reaches its climax in Denver.

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What you earn, what you get 

The morning newspaper up here blares "Almost 25% in poverty locally":

The percentage of people living below the poverty line in St. Cloud in the previous 12 months was 23.2 percent in 2007. St. Cloud�s percentage was the highest of all large Minnesota cities, including Minneapolis and St. Paul. The rate is up slightly from 22.7 percent in 2006, and is more than double the statewide poverty rate of 9.5 percent.

St. Cloud-area social service providers say the numbers correspond to what they�re seeing locally: increased demand at food shelves, emergency shelters and financial assistance programs.

�I think a lot of the volume is up just because it�s tougher for people to make their dollars stretch,� said Steve Bresnahan, executive director of Catholic Charities.

You need to go down ten paragraphs in the article to find out that Stearns County real median family income rose 5.9% in 2007.

The graphic is from data in the American Housing Survey. It shows the percentage of poor families that own these items. Compare these to 1970. What do you think matters more: what income you earn, or what goods and assets you have access to? Here's one view from the guys who point out that income is not the standard of living.

StarTribune: EFCA "doesn't make sense" 

The editorial page of the Minneapolis StarTribune weighs in on the debate over "card check":
That pitched national battle is why the issue is at the forefront of Minnesota�s Senate race. The Senate holds the key to EFCA�s future. Democratic contender Al Franken supports EFCA; Republican Norm Coleman does not. Both labor and business have pledged millions for their cause, with some of that well-funded battle resulting in the local ads. ...

But the EFCA has the potential to do more harm than good. Its provision allowing unions to bypass a secret ballot with something called a card check is a serious problem. Under the proposed law, unions could bypass a secret ballot if 50 percent of eligible employees signed an authorization form to form a union. It doesn�t make sense: Would you pass a school levy or elect a mayor this way? The proposed card-check system also would invite peer-pressure from union sympathizers and, by making a supporter�s name public, it has the potential to heighten the risk of employer retaliation.

The bill�s stiffer penalties for employers who retaliate illegally are welcome. But backers need to rethink the proposed card check. Even if you agree there�s an imbalance of power, doing away with the secret ballot isn�t the solution. Unions exert a great deal of influence over members. They have the ability to tax through dues. They negotiate workplace rules that govern a big chunk of members� lives. The organizing process should be as democratic as possible. That means honoring the secret ballot, not doing away with it.

Don't expect that, though, for the Wall Street Journal has shown that Big Labor is staking millions on getting it passed. Democrats believe that more union workers means more Democratic votes (as if correlation is causation). The editorial board at WSJ asks a broader question:

The question for Americans more broadly is whether a return to widespread unionization is really the way to raise middle-class incomes. The case for card check is that, amid global competition, the balance of organizing power has shifted to business. Giving unions more power will redress this imbalance and let workers grab a higher share of corporate profits.

But this claim is highly suspect, given the record in autos, steel and the rest of unionized American manufacturing. The only sector of the U.S. auto industry that is prospering is the part not organized by the United Auto Workers. Likewise, Europe, with its high jobless rates and slow growth, argues against unionization as a way to lift middle-class incomes. To the extent a country like Germany has modestly reversed some of this, it has been the result of recent labor-law reforms and labor concessions.

I pointed out in a letter to the editorial board at the StarTribune, in response to a request for comments, that its belief that the pendulum has swung to employers was not really accurate in a world where unions continue to win a majority of certification votes (sources here and here.) What win percentage for unions would you think is correct, if 55% is too few?

Like a sports team owner trying to buy a championship, the unions are trying to buy 100%.

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Tuesday, August 26, 2008

Vets for Freedom - Let Them Win 

Vets for Freedom is a non-partisan organisation established to support vets returning from Iraq and Afghanistan. They have done a superb job keeping the positive efforts of our soldiers in the public eye (far better than our so-called mainstream media). We are fighting a belief system that wants all of us gone - these guys get it.

Now they have released a video with the comments of three Iraqi vets. (My friend, David, is the one with the mustache.) Please take a minute to view the video here. It is so very important that our soldiers who are the ones who really protect our freedom, be heard, acknowledged, appreciated and thanked. Feel free to spread the word far and wide.

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If it be recession, it be wimpy 

These lines measure cumulative job loss from the peak of each recession, assuming that the current recession -- if it is one -- began on December 2007. (I started saying in late January that if there was one, December was a pretty good guess for the peak.) We're now at the end of month eight of the recession, and these typically last ten. The only one that got a positive bounce was the January 1980 peak, and since that one was followed by another peak in just 18 months, I don't suppose that's the one you want to follow.

Let's put it another way: On average, at seven months cumulative job loss for the last four recessions is 1,034,500 jobs; for this one, it's 463,000. There is no more than 500,000 more jobs on average lost in those last four recessions, most of which happens in the next four months. So we may have a recession in which cumulative job loss ends up around 0.5% of payroll employment. And then there'll be data revisions; very possibly they'll end up making that number larger, but suppose they find additional jobs in unmeasured areas?


Toronto non? 

If you have been following the Mark Steyn trials in Canada -- where Steyn has faced legal sanctions for writing about demographic trends in the West and relative birth rates of Muslim immigrants versus native and other immigrant groups, in Steyn's witty and biting style -- you may be interested to read that some political scientists are asking the American Political Science Association to protect the free speech of its conventioneers when they meet in Toronto next year. The Chronicle of Higher Education reports:

The political-science petition, whose initial signers include Robert P. George, a professor of jurisprudence at Princeton University, and Harvey C. Mansfield, a professor of government at Harvard University, warns that scholars visiting Toronto might face legal jeopardy if they made controversial statements. Scholars should be able to speak about �public policy concerning homosexuality or the character of and proper response to terrorist elements acting in the name of Islam, without fear of legal repercussions of any kind,� the petition reads.

The campaign has the flavor of a boycott. According to a report in the National Post, the petition�s authors plan to distribute buttons at this week�s conference that say �Toronto 2009? Non!�

But the petition itself makes a milder demand. It asks the association to solicit legal advice and to consult with the Canadian government to ensure that scholars� civil liberties will be protected. �Our petition is simply asking for clarification,� said one of its authors, James R. Stoner, a professor of political science at Louisiana State University at Baton Rouge, in an interview with The Chronicle today. �We�re asking the APSA to acknowledge that there�s some issue concerning this, and that we can presume that the customary standards of academic freedom will be assured.�

Aside the usual reaoons of low attendance, there are very good reasons to not hold an academic conference in a place like Venezuela -- the regime there might not like, say, a Latin Americanist who researches Hugo Chavez's crimes and discusses them from the podium in Caracas. It would be irresponsible for an organization to invite a speaker into that situation. Likewise, if the APSA cannot assure the academic freedom of speakers to an academic conference, it should make arrangements to either move the conference elsewhere or to make a public statement declaring it cannot provide protection. I would hope it could do the former.

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What if they threw a government job and nobody worked? 

Americans for Limited Government is running a petition protesting a four-day work week for Federal government employees. They only work four days and get paid for five, we're told. Well, no, not really. They still work 40 hours, just over four days. School districts have been proposing this around the country, including here in MN.

But suppose they did cut back to a 32-hour work week? What would be the loss in output? It would be a lot less 20%. The last ten percent of the time we produce just barely enough to cover the wage we receive. It's pretty reflexive to think every hour those workers put in is a waste. Waste is something that occurs at the margin -- we use too many workers. There's no incentive to get the right number of workers. If we asked them all to produce the same output and just removed every fifth worker, they might make it and they might not, but diminishing returns would have to imply the lost work is not one-fifth.

I'm not signing the petition; we might end up with a good experiment.


Monday, August 25, 2008

On the Lighter Side - NASCAR, America 

The August 24th issue of Parade Magazine carried a delightful article by Janet Evanovich, A Day at the Races, NASCAR races. What is it about NASCAR that has attracted her interest? Two ideas stood out from the article.

First, it's a rush. "It's speed and spectacle and raw power and family and the flag. It's hard to explain what produces the rush, but it's deep inside me when I'm at the track. It's about the people and the cars and the competitive spirit of America." A second reason: "....we're all impatient for the race to start. The color guard takes to the track, and everyone stands for the national anthem - 96,000 people have their hats off and hands over their hearts. A roar toes up when the phrase "the land of the free" rings out, .."

She lists four things not known about NASCAR. One caught my interest: Racing is only a small part of a driver's job. ..the off-track duties - test sessions, interviews, and sponsor appearances - eat up more hours than racing, even on race days. "I have a lot of friends in major league baseball," says Jimmie Johnson."They can't believe everything I have to do before a race. Can you imagine Derek Jeter doing meet-and-greets right before a World Series game?"

No, I can't and maybe the patriotism and the connection between NASCAR drivers and their fans are the reasons NASCAR racing is a top spectator sport in America. Gotta love it! I may have to try it myself.


Democrat Pelosi, Catholic Church, Abortion 

Democrat Speaker of the House, Nancy Pelosi, a lifelong Catholic apparently paid little attention to her religious instruction. On Sunday's Meet the Press Ms. Pelosi was asked by Tom Brokaw when life begins. Her waffling answer was a pathetic attempt to pacify the abortion rights arm of the Democrat Party and her religion. She failed, miserably.

Anyone who has any amount of Catholic education knows that the Catholic Church has been an opponent of abortion since the beginning. I was raised Catholic, attended Catholic school for five years and practiced the religion for a number of years. At no time did I ever hear that abortion was sort of, well you know, uh, maybe.... Ms. Pelosi's excuse that church leaders have not been able to determine when life begins is just bogus.

What I was waiting for was someone of authority in the Catholic Church to say something. Well, someone finally did. The Archbishop of Denver, Father Charles J. Chaput and Father James D. Conley, Auxiliary Bishop of Denver, released a clarification document today, the 25th of August.
It clearly states: "...we now know with biological certainty exactly when human life begins. Thus, today's religious alibis for abortion and a so-called "right to choose" are nothing more than that - alibis that break radically with historic Christian and Catholic belief. Abortion kills an unborn, developing human life. It is always gravely evil and so are the evasions employed to justify it. Catholics who make excuses for it - whether they're famous or not - fool not only themselves and abuse the fidelity of those Catholics who do sincerely seek to follow the Gospel and live their Catholic faith." Translated, abortion is wrong, period.

In addition, Cardinal Rigoli and Bishop Lori added their comments to Pelosi's misrepresentations of Catholic teachings.

You, Speaker Pelosi, are being dishonest with yourself, your constituents, and members of your faith when you try to skirt the issue with your incoherent babble.

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Why isn't this just standard macro? 

When I teach grad macro, I use a very old schematic on the first night of class showing three sectors -- household, firms, and government -- and a flow of income to each sector, including transfers between them. The last five lines of the schematic are savings, capital expenditures, budget constraints, financing constraints, and a private balance sheet identity:

W = M + V + K

where W is private sector wealth, M and V are public sector debt in non-interest-bearing (money) and interest-bearing (bond) form, and K is private sector capital. The = represents this as an identity. (The source is a textbook I liked in graduate school, Monetary Macroeconomics by Havrilesky and Boorman.)

I'm thinking with that model in mind as I read Tyler Cowen yesterday:

The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings. The thinking went something like this: As long as your home�s value rose every year, you didn�t have to set aside so much from your paycheck. If your stocks went up, too, so much the better; don�t forget that the Dow Jones industrial average stood in the 800 range in 1982 and seemed to rise almost nonstop for many years.

Of course, asset prices haven�t been rising much lately, so many people will need more savings for their retirement or for possible emergencies.

And I think, well, why wouldn't they? We model them to think in just that way: A rise in private wealth through a change in the value of K (via a rise in the relative price of capital goods Pk to consumer goods P, with capital broadly considered) should produce the same effect as an increase in money -- assuming you consider money to be "outside". The only difficulty with this story is that we don't think the wealth effect is altogether that large, though if the shock to Pk/P is sufficiently large you might not need a large wealth effect. (Read this interview with Martin Feldstein, particularly at the subhead "The Return on Savings".) I am not sure why Cowen thinks that is a "fundamental" problem. It may just be that rising capital goods prices have driven up consumption and masked more serious weaknesses, but then you'd have to explain why rising productivity doesn't lead to higher living standards.

The broader point is that stock adjustments -- in this case an adjustment of current wealth to one's optimized lifetime path -- can lead to changes in flows of consumption and savings, just as we have always thought, and always taught.


Couldn't have said it better myself 

Our friends at Labor Pains went to the Minnesota State Fair and asked some attendees if they would prefer to use an authorization card to vote for Al Franken in lieu of voting. The results are as you might expect, unless you are a union organizer.

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Push, pull and investing in 

I had seen reference to UW-Madison Chancellor John Wiley's valedictory in the Chronicle of Higher Ed and read it, but when Charlie Quimby referred to it I decided to respond to it. Charlie's title, "Competing for (and Investing in) High-Paying Jobs" is provocative insofar as he neatly encapsulates Chancellor Wiley's message. But Wiley is also complaining that his goals were frustrated by Wisconsin's business leadership. He begins...
Wisconsin has lost its way. We've lost touch with our traditions and values. Our politics has become a poisonous swill, and the most influential voice for the business community has been taken hostage by partisan ideologues.
...and goes on to single out a business group as the source of the problem:
According to WMC's website, the organization boasts nearly four thousand member companies and a goal of making Wisconsin "the most competitive state in the nation." Over the years, I've had the opportunity to closely examine the strategies--both the public rhetoric and actions--WMC employs to pursue that goal. Apparently, the organization's definition of being competitive is being among those states with the lowest taxes, lowest wages, and least regulation in the nation.
Here's the funny part of that list -- two of those three things are in the control of government. The third is a response to the other two, along with the attractiveness of the state to people with high-paying skills.

The value of a university (public or private) to its community or state is only in part its ability to create high-skilled workers. It creates educated citizens as well. It creates citizens that desire a good life for their families, with an understanding of what that good life is. As those families grow, parents impress upon their children the value of an education; they look for opportunities to add to their child's appreciation of the world and civilization.

As I listened to our own president's convocation speech last week, I was struck by the amount of marketing his administration engages in. Part of it is with government, and part with business leaders. And to do so means being accountable for what you use public and donated monies for, a point that was driven home for President Potter:

Recently after hearing me talk about my vision and goals for elevating the reputation of St. Cloud State, a local business leader asked me: �How will you know when you get there?� When I offered a detailed, �academic� response, he offered his own ideas�.which I like much better.

In order to succeed we must build a reputation as a place that cares about our students. If we do this, our students will come here because we care about them and help them achieve their dreams. Faculty and staff will come because they know it�s a great place to work. Donors will give because they want to be part of supporting a great university.

Students and business leaders will "pull" from universities those things they want, when it is offered to them in forms they can connect to. Chancellor Wiley's model is an attempt to push Madison onto the business community. It's not as if any of those Wisconsin business leaders are stupid regarding the value of high-skill labor. It is that he and his institutional leadership are pushing solutions without listening to the problems. And one of those problems is a tax system that leaves your high-skilled workers with a lower after-tax real wage, using those tax dollars to be invested in unaccountable public K-12 education systems or in wasteful transfer programs or even the odd public sports stadium or two (including our own National Hockey Center -- a discussion for another time, and one that will make our administration less happy than my approval of the quote above.)

High income families may wish to enlist others to help pay for goods they want and thus call them "public", but when push comes to shove, the thing they want most is a higher after-tax real wage. The one best suited to invest in any asset is the one who receives the return on it. To paraphrase Milton Friedman, the least efficient education is other people's money spent on the education of other people.

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It's my lucky day 

What are the two first words you say to your new class of students the first day?

"Thank you."

I was at a party earlier tonight as my sister-in-law and her husband send a son off to college. Another guest is a music professor at another school nearby. SCSU's semester starts today (Monday), a week earlier than in the past due to consolidation of the MnSCU schedules. It really feels wrong: The State Fair is supposed to bring the curtain down on summer, not open the fall. Labor Day is always the barbecue that says goodbye to your kids' summer vacations. It's a little more poignant for us this year as Littlest enters high school (she starts today as well.) You just don't want all these transitions quite so soon.

So this is the conversation with the other professor, and in the middle of this we sort of stop and catch ourselves. "I get no sympathy from my wife about this," he says. And he's right. We get three glorious months to self-indulge, or teach a summer class to make that tuition check for the school in fall, or travel, or what have you. In the fall he gets new studio students to work with. He looks forward to it. And so do I. Does anyone else get to do this? We like to call athletes lucky to play a child's game for money, but my luck is as good as theirs even if the money isn't.

I ran into a former student of mine, one of my first students here from more than 20 years ago, who now teaches at a school in the Cities on Saturday. He's just helped one of my graduate students find some teaching at his school; he sends some of his students up to St. Cloud to become my students. I ran into the grad student later to retrieve some books I had lent him. He is now being helped by my older student. I gave a couple prayers of thanks driving home and thought maybe August isn't so bad.

Putting a monkey wrench into this mistiming is that I'm also on jury duty the next two weeks. I already put this off once when it threatened the conference in Waikiki, so I felt I couldn't ask again. You probably won't notice, as I'll be forward-dating posts. But I'm not so concerned about missing the blog, or the Fair or the RNC next week (where I will be on the air a couple of nights -- details as we finalize them). I hate missing that first time to see students, and thank them for being there, for signing up to have me as their teacher, for wanting to learn economics ("I only took it because it was required for my major" is a challenge I accept; "I didn't think I was going to like this course but I did" is the prize), for coming to SCSU, for allowing a 50-something to feel a little younger (and a little older) every September.

Or August, as it now turns out. I'll get used to it. My lucky day just comes a bit earlier now.

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Saturday, August 23, 2008

Hypocrisy of the Left 

Now that Joe Biden has been selected as Barack Obama's Vice Presidential candidate, one can only wonder at the wisdom (?) of Obama's advisers. We keep hearing how the Democrat Party is the party of inclusion. So many Democrats pride themselves saying they include all these people from all these different groups then they totally ignore the strongest female candidate to appear in the political arena, Hillary Clinton.

Don't get me wrong, I'm not a fan of Hillary Clinton's socialist vision but her supporters have a legitimate gripe/concern/etc. While Obama out maneuvered her to get more delegate votes, Hillary won the popular vote among Democrats but did not get the nomination. (Does this sound a bit familiar?)

Snubbing Hillary indicates a team of petty, immature, and insecure people. As this short article by Bill Kristol indicates, Democrats do have a glass ceiling.

This behavior from a guy who says we should negotiate with our enemies with no preconditions? Heck, if he can't negotiate with Hillary, why does anyone think he can use his glib tongue to sit down and talk with Chavez, etc. ?

HT - Hot Air

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Biden, Gaffes, Etc. 

The press may or may not cover Biden too often but the following quote by William Katz is a winner:
Biden has a way with words - using thousands of them when ten would do and five would be perfect. Thus, the law of averages is against him. The chances of a gaffe increase proportionately with the number of words employed.
This quote from Richard Cohen of the Washington Post is also quite revealing:
The only thing standing between Joe Biden and the presidency is his mouth. That, though, is no small matter. It is a Himalayan barrier, a Sahara of a handicap, a summer's day in Death Valley, a winter's night at the pole (either one) -- an endless list of metaphors intended to show you both the immensity of the problem and to illustrate it with the op-ed version of excess. This, alas, is Joe Biden.
According to some, Senator BIden is an expert on foreign policy though other readings lead one to question his expertise. Regardless, loose lips sink ships.

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Friday, August 22, 2008

Westover does public finance 

Craig goes from a discussion of Federalist 51 to a discussion of classic public goods:

At the heart of [MN House Speaker] Kelliher's misconception is a failure to distinguish between "private benefits" and "public goods," admittedly not always a simple distinction. The problem is, policy-makers who resort to the clich� of taxes as the price of civilization generally don't recognize that there is a distinction. "Public good" cannot simply be applied to the project de jour.

The best way to understand the idea of "public good" is by contrasting it with the more familiar "private benefit." Each of us engages in private benefit transactions when we exchange money for products and services we want. We get in a taxi, and for a fare, we enjoy the benefit of getting from point A to point B. We buy cup of coffee; we drink it, and nobody else gets to drink it. That particular cab ride and cup of coffee are not available to others.

Public goods in support of legitimate government functions provide benefits that, unlike our cab ride or cup of coffee, don't exclude anyone. A streetlight is the classic example: It benefits everyone and anyone equally at the same time. It would be virtually impossible and highly inefficient to limit access or proportionally charge people for the streetlight's glow. Police and fire protection and the court system are other examples � they don't limit discrete benefits to some at the exclusion of others.

The policy distinction boils down to this: If a taxi ride from point A to point B is a private benefit for which an individual pays a market fare, why is a bus or light-rail ride from point A to point B a "public good" subsidized with tax dollars? The only answer is, it is a more "civilized" way to travel.

Let me help my MnFMI colleague out here, because there's a distinction to be made. There are volunteer fire departments. Do they provide any less service than those supported by tax dollars? Well they might -- there was a story a few years ago of a house near International Falls that was allowed to burn to the ground because the home's owner didn't pay his annual fee of $25. They didn't allow the homeowner to free-ride, though they did hose down his garage since it was close to another house that had paid the fee.

The source of the problem there, and in Craig's case for transportation, is one of transactions costs. The situation in International Falls was hampered by negotiation over replacing voluntary fees with a property tax surcharge. Taxes are, as Craig says, the price we pay for not being completely civilized ... and the willingness of people to free ride is a good example of the "angels" that led to Madison's role of government. Transactions costs are another impediment that institutions aspire to overcome, and yes, sometimes those are taxing districts. If all we are going to concern ourselves over is the efficient way of delivering pure public goods, you will continue to combat cases where market failure and free riding are trotted out as explanations for greater use of force.

What folks like Speaker Kelliher lack is not a failure to understand public finance theory, but the ideal that persuasion and cooperation are the best form of social organization. Government is force, wherever it appears. Sometimes force can reduce transactions costs but not often, and the temptation to use force for other things, once granted in the case of fire or police, is something to which every politician, of every party, succumbs. Don Boudreaux makes the case:
Just as many on the right naively fantasize that foreign problems are best solved by force, "liberals" fantasize that domestic problems - real and imaginary - are best solved by force. Jobs disappearing in Ohio? No problem - force Americans to buy fewer foreign goods. Too many Americans without health insurance? Force taxpayers to give it to them. The "distribution" of income doesn't satisfy some Very Caring Person's criterion? Government should forcibly redistribute. A mine collapses in West Virginia? Uncle Sam should force mine-owners to increase safety. See? All very simple.
Kelliher and other liberal DFLers who favor interventionism preach market failure but do not address the likelihood of government failure. And yes, government failure is always a possibility for foreign policy too, as Boudreaux condemns the right of ignoring. A more rational view of government explains why Kelliher ignores the distinction of pure public goods -- private benefits to one's political supporters are often more efficient in building a winning coalition in a democracy than are public goods. The pure public good can waste resources acquired through confiscatory taxes by conferring benefits on political opponents. The DFL is smart enough to recognize that waste.

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WHY? Vaccines, History 

In the August 17 issue of Parade Magazine there was an article on vaccines - who needs which ones and why. One particular point caught my attention. The question was: Why do kids even need vaccines? The answer is very important.

Polio, tetanus and whooping cough seem like dangers that belong to history. It would be a mistake to conclude that the danger of those illnesses has passed. ..whenever vaccination rates slip, those diseases return. A recent outbreak of measles occurred mostly among kids whose parents had not had them vaccinated. We live in a global world and diseases do not pay any attention to borders.

I started thinking. The same logic applies to learning real history. The USA has done more good for more people providing freedom from tyranny than any other nation on the planet. It still is the nation of opportunity. American soldiers have died for more moral causes on behalf of others than any other nation. Our children are cheated when they are taught only a guilt-ridden, victimized view of our history. We owe it to them to teach the entire story as well as teach them the horrors perpetrated by so many other cultures.

Just as ignoring vaccines for diseases that we think no longer can affect us, ignoring the evil of foreign cultures and nations and ignoring the good of US History means the diseases and evil can very well come back to us.

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Media alert 

I will be subbing for Don Lyons on the Morning Show today at 6-8am on 1450 KNSI here in St. Cloud (streaming available through the link). Then at 5-7pm, the Final Word begins its State Fair duties. If you are at the Fair this afternoon, come by the Patriot booth, newly placed on Dan Patch Blvd, and visit with Michael and me. NARN will be at the Fair weekdays 5-7 along with our normal Saturday gig (11-5; the Final Word begins at 3.)

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Thursday, August 21, 2008

I wonder if intellectual diversity would count? 

A note from our faculty union president:
President Potter has asked that a Diversity Task Force be formed and he has created a structure for the task force and a means of populating the task force. Both the formation of and structure for the Diversity Task Force have been reviewed and supported by the Faculty Association.

The Task Force will develop a comprehensive Diversity Plan that addresses all aspects of the University�s efforts to create and sustain a diverse learning community. These aspects include but are not limited to: student recruitment and retention, workforce composition and development, the campus climate, the relationship between academic program development and administration to diversity, the relationship of faculty scholarship to issues of diversity, the role of the University�s community engagement efforts both as service to the community and as a venue for student learning and development and the development of a reflective approach to continuous improvement in the realization of the University�s commitment to diversity.

President Potter has asked that all nominations to the Task Force be people with knowledge and experience with diversity in the educational setting, through prior education and/or scholarship; participation in or certification in diversity training for trainers, a history of activism around diversity and social justice issues or experience working and/or teaching in settings characterized by their diversity.

Question to readers: Should I apply to this task force? Would my research into bulletin boards be considered "knowledge and experience with diversity in the educational setting"?

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Unfavorable deductions 

The hearing on the EFCA ads was held on my father's birthday, and I was in the Boston area at the time. I thought it would be hilarious if I was taken into custody the following Monday.
Other prisoner: What are you in for, son?
Me: Unfavorable deduction about Al Franken.
OP (sliding slowly away): You're his accountant?
(With apologies to Arlo Guthrie.)

As Michael posted yesterday, the complaint was dismissed (he's again posted the Order of Dismissal.) He notes the silence (also evidenced by the lack of posts on the subject found on the BlogNetNews aggregator for the state) of other bloggers who had accused others of lying.

What is "an unfavorable deduction"? The ad states that the Employee Free Choice Act would have eliminated a worker's right to a secret ballot. The defense has been that secret ballots could still happen. True, but as the Coalition for a Democratic Workplace notes yesterday in its press release announcing the dismissal:
Under EFCA, the NLRB must recognize the union without an election if a majority of workers sign an authorization card identifying who they are. Once the 50% threshold has been crossed, the statute is unequivocal in its command: "the [NLRB] shall not direct an election but shall certify the individual or organization as the labor representative."
Could the organizers still seek a secret ballot? Yes they could ... but under what circumstances would we expect them to do so? If they can just get that 50%+1 for signatures, they can dispense with the ballot, and the costs of campaigning, and not ever face the counterarguments against unionization. The cost of proceeding past 30% -- the threshold at which you can seek the ballot -- is relatively small and the benefits large. If they don't think they can get 50%+1 votes, they won't ask for the ballot. If they can get the votes, they can also get the signatures. And there is the distinct possibility that one could get 50%+1 signatures in a card-check campaign without getting 50%+1 votes in a secret ballot. So I would argue that it is highly unlikely a union would ever seek the election option. Justin Wilson of the Employee Free Action Committee makes the same point.

That's what the administrative law judge calls "an unfavorable deduction." And that's what Brian Melendez was calling a lie, and what the DFL was saying should be prevented from the airwaves in a country that still has the First Amendment.

I am quite willing to still debate the analysis and facts of EFCA with Mr. Melendez at any place, at any time. I can come by the DFL booth at the State Fair, if he was of a mind to agree to that. I don't expect he will, though, and you can draw your own unfavorable deduction from that.

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Wednesday, August 20, 2008

Putting the bottle before the cart 

As regards the idea that lowering the drinking age would help campuses combat binge drinking, a thought from Milton Friedman in 1991:
...all of the experience with legal drugs is that there's a tendency for people to go from the stronger to the weaker and not the other way around, just as you go from regular beer to light beer. That's the tendency that there is: from cigarettes without filters to low-tar, filtered cigarettes, and so on.
Perhaps illegality induces binge drinking (the fixed cost of acquiring illicit substances over a larger quantity of booze or drugs), and maybe it doesn't. It appears the evidence on that is mixed. But I'd argue for no drinking age. My parents supervised my consumption of beer and wine, under rather generous limits (two glasses of wine with holiday meals was acceptable -- one beer was acceptable anytime if you asked first), and a couple of trips to unrestricted Europe as a car-less 15- and 16-year-old helped to inform me of the effects of drunkenness.

I wonder if we could convince MADD to accept a change in the laws that permitted one to drink before permitting one to drive? It might be a good test to see whether they'd put their time as drivers where their mouths are.

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Minneapolis housing market woes 

The Twin Cities real estate market continues to be flooded with "lender-mediated" sales. Here's the report. Lowlights from the press release:
The mix of traditional and lender-mediated has changed so much that the net price decline overall has fallen 11.9% over the last two years. Over that same period, traditional home sales have fallen more than 43%, while foreclosures and short sales have risen by a factor of more than five.

Data on the right (from Calculated Risk) shows that the overbuilding of 2004-06 has yet to be worked out nationally. The same appears to be true for the Twin Cities.

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All your book are belong to us 

In the newsletter of our union, regarding the MnSCU Code of Conduct:
Faculty should be aware of one important policy change in the Employee Ethics portion of the Code. State law allows faculty to accept free samples of textbooks and related materials. Even though free samples become the property of the faculty to whom they are given, the new Code includes a policy restricting how faculty may dispose of such items. Part 3, Subpart B (1) prohibits faculty from selling free sample books and materials �for the personal benefit of the faculty member.� Under the Code, faculty are still permitted to donate such items to charity. Alternatively, you may sell such items as long as the sale does not profit the faculty member personally. For example, the policy would permit faculty in a department to pool their unused textbooks to be sold to fund student travel or to benefit the educational needs of the department.
In A.D. 2008, semester was beginning.
Professor: What happen ?
Office manager: Somebody set up us the administration.
Provost's office: We get email as official university communication.
Professor: What !
Provost Office: Main screen turn on.
Professor: It's you !!
MnSCU: How are you colleagues !!
MnSCU: All your book are belong to us.
MnSCU: You are on the way to principles of economics.
Professor: What you say !!
MnSCU: You have no chance to survive make your time.
MnSCU: Ha ha ha ha ....
Provost Office: Professor !! *
Professor: Take off every 'duty day'!!
Professor: You know what you doing.
Professor: Move 'duty day'.
Professor: For great justice.

The above attempt at humor will resonate more with workers here at SCSU. The links may help explain. My textbook sample sales fund a thank-you pizza party for the department student workers and have for several years. But what's the ethic involved here? Do we think selling textbooks makes their price higher? What about the revenue the university gets from renting the on-campus bookstore?

The next step may be the administration choosing our books.

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Local jobs tank 

I'm curious about the increase in unemployment in July here in the St. Cloud area. The data won't tell you too much, unfortunately. 210 fewer workers employed, 269 more workers reporting themselves unemployed.

One speculation I would make -- and I'm still trying to nail down the research on this -- is that the number of local government workers lost is quite large. Statewide, there were 540 fewer local government education jobs in July 2008 over July 2007. I thought perhaps the St. Cloud numbers were a reporting issue. Local government jobs (not broken between education and other) fall every July, but this year the drop was not more pronounced:

Jobs in...June...July.....change

So that's not really it. Retail trade and wholesale/transportation were very soft, belying the supposed benefit of the stimulus checks. Otherwise it simply looks like a slow month in the sectors that were expanding, with continued declines in manufacturing. If we are pulling out of whatever you call these last eight months, July probably wasn't the month the new leg up began.

In a related note, the St. Cloud Times announced twelve positions to be cut last Friday. According to one person I spoke with, the eight people being laid off were notified by this morning. One of the data we use in the Quarterly Business Report is the Times' help wanted advertising linage. Ad revenue generally (for example in autos) is down precipitously, and has been for years. Even a relatively small, relatively unharmed market like St. Cloud's is not immune.

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Tuesday, August 19, 2008

When tax analyses argue past each other 

There are numerous analyses running around right now about the tax plans of Barack Obama and John McCain. I think many of them are talking past each other. Let's consider three different paths an analysis can take.
  1. Efficiency and distortion -- one part of tax policy concerns itself with whether the tax system is extracting a given amount of revenue at the lowest possible cost in terms of deadweight costs, rent-seeking, or otherwise gunking up the price system. (Like Phil, I watched that ethanol piece on and said to myself "good principles of econ clip!") Concerns about efficiency and distortion are addressed by study of the marginal tax rate, since distortion occurs at the margin. It's on this score that McCain's proposal to reduce the corporate tax rate to 25% looks good. It is not at all a statement that businesses are paying too much in taxes. Indeed, it could be that we get more tax revenue at a lower rate; neither McCain nor I am making that claim, but it's important to point out that if lowering a tax rate meant you increased tax take (even as a share of profits or GDP, because multinational corporations were shifting tax liability to lower-tax jurisdictions), the efficiency argument would still be valid. Or the higher marginal rate for earners over $250k in the Obama plan is seen by Greg Mankiw, for one, as reducing the incentives to work, save and invest. Either way, these are arguments made at the margin.
  2. Equity -- the argument that some should pay more than others is a different debate. For example, Mike Moffatt responds this morning to Paul Krugman's statement that the debate over the corporate income tax is much ado about nothing. It's not to Mike because "the U.S. corporate tax system is highly complex and distortionary". True, but that's not Krugman's argument. Take also the debate between Brill and Viard on the one side and Obama advisors Furman and Goolsbee, discussing the Obama plan for income taxes. The former point to the inefficiency and increased distortion created for some middle income familes from the Obama plan; Furman and Goolsbee focus on the fact that taxes overall would be lower. (So too the analyses from the Tax Policy Center.) By focusing on average taxes paid in the past rather than marginal rates prospectively to be paid in the future, the two groups are arguing past each other. Tyler Cowen comes closest to my point here in debating the Brill and Viard article:
    I am not saying that Obama is "raising taxes on the poor." It is about marginal rates and yes marginal rates do matter for incentives. This is a genuine problem of many indeed most anti-poverty programs...
    I'm not making the case that there is absolutely an equity-efficiency tradeoff (a la Okun), just that they are separate cases, and policy advisors and bloggers can put different weights on the outcomes of two second-best proposals.
  3. Scope of government -- the other concern can be the size of government. Many people seem to focus on how much each plan adds to the deficit (that seems to be a concern in the Tax Foundation analysis, for example). So people will want proposals that are "revenue neutral" or "deficit neutral" because the proposal is not to increase the scope of government. Increasing deficits do imply a larger scope of government for future taxpayers who must retire the debt that is created by that deficit.
If you want a sense of which argument is being made, look for the number used for the argument. Tax rates are about efficiency, tax shares are about equity, and government expenditures or debt or deficits as a share of GDP are arguments about scope of government -- this would be a simple shortcut that might help sort out who's talking about what.

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What my freshmen know 

The annual Beloit Mindset List is out for the Class of 2012. What do entering first-year students know? The list is long, here are just a few of my favorites:
  1. They have always been looking for Carmen Sandiego.
  2. GPS satellite navigation systems have always been available
  3. Gas stations have never fixed flats, but most serve cappuccino.
  4. The Warsaw Pact is as hazy for them as the League of Nations was for their parents.
  5. IBM has never made typewriters.
  6. There has always been Pearl Jam.
  7. The Green Bay Packers (almost) always had the same starting quarterback.
  8. Muscovites have always been able to buy Big Macs.
My brother is going through withdrawal from sending his first-born off to college last week; today is convocation at St. Cloud State. First order of business with these students will be to tell them who Stevie Ray Vaughn was.

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Monday, August 18, 2008

Georgia: Reaction times 

It is becoming increasingly apparent that the Russian claim of Georgia starting the war are a stretch; it is also apparent that the Russian government was very ready.

Tom Lasseter visited the disputed South Ossetian capital of Tskhinvali on Sunday and found little evidence of a massive Georgian bombardment of the city, and not very many deaths.
Russian-backed leaders in South Ossetia have said that 2,100 people died in fighting in Tskhinvali and nearby villages. But a doctor at the city's main hospital, the only one open during the battles that began late on Aug. 7, said the facility recorded just 40 deaths.

...Col. Gen Anatoly Nogovitsyn, the deputy head of the Russian military's general staff, said last Tuesday that "Tskhinvali doesn't exist, it's like Stalingrad was after the war."

But in fact, the city still does exist. While there was extensive damage to some structures, most buildings had front doors on their hinges and standing walls. For every building charred by explosions � the Georgians are accused of using multiple rocket launcher systems � there were others on tree-lined streets that looked untouched.

One government center was hollowed out by blasts, but the one next to it teemed with workers.

The Guardian reports that the South Ossetian government has rounded up 130 Georgian nationals and is holding them in its interior ministry -- for what is unclear, though the article speculates it would be for a prisoner exchange. Interesting, in that South Ossetia is an area with only 70,000 people. How many of them could be captive of the Georgian army? And if there had been a massive bombardment of Tskhinvali, how do they organize this? Seems an odd thing for an area that had been supposedly flattened like Stalingrad to do.

Another interesting piece of evidence on reaction times comes from looking at the timing of the arrival of the Black Sea Fleet off the coast of Georgia -- both to move 4000 troops, and to engage the Georgian coastal defense forces.

The war started on Friday August 8th; the Black Sea Fleet was reported to arrive off the coast of Georgia on Saturday August 9th. That's pretty impressive, considering it is about 400 nautical miles from Sevastopol to Ochamchire. While the Moskva, Smetlivy, Muromets, and Aleksandrovets can make good speed and make the trip quickly, those ships sailed from Sevastopol with an assortment of support vessels that could only make 12-16 knots, at best. Simple math reveals that would make it a 25 hour trip, meaning the ships would have had to put to sea almost immediately after the fighting began. For any fleet to deploy that quickly is extraordinary readiness.

[An eyewitness report from Sevastopol] "We took up station guarding the opposed landing on the Abkhaz shore when all of a sudden four high speed targets were detected. We sent out an IFF signal and the targets didn't react. Receiving a command from the flagship, we got into formation and right at that moment the unidentified targets opened fire on the ship formation and flagship. The cruiser was damaged and a small fire broke out aboard. Then, fearing for seaworthiness, the flagship withdrew from the firing area."

Moskva and Smetlivy steamed into Novorossysk the next day. All this seems quite well coordinated.

Reactions in other countries have been swift. Ukraine has stepped up, following the Polish lead, by offering to coordinate its radar systems with those of the West. Because of earlier disagreements with Russia, President Yushchenko has now an opening to greater cooperation. Certainly everyone recognizes that the earlier hesitation to admit Georgia and Ukraine to NATO was an error. The interesting thing coming out of Ukraine this weekend, though was this comment by Prime Minister Yulya Tymoshenko -- considered both at odds with Yushchenko and favored by the Russians, to the point of accusations of Russian warchests for her presidential ambitions -- in an excellent interview by Christia Freeland:

For all their sparring, Tymoshenko and Yushchenko have been more united on foreign policy than many expected, with the prime minister moving towards the robust defense of Ukraine's national interest that the president has long espoused. Even before Russia's attack this week on Georgia, she has been measured but forthright in her attitude to the Kremlin.

Tymoshenko also understands that Ukraine's proudest accomplishment - its democratic revolution - makes it a particular target for its authoritarian neighbours. "They fear Ukraine as evidence that a post-Soviet country can quickly and effectively build a rule-of-law society and a democratic society," she says. "And this example is very, very uncomfortable for those who would like to keep everything undemocratic and untransparent."

There is little doubt to whom she is referring as "they". I hope this isn't just Yulka playing to the Western press. As long as those attitudes persist, there is some chance that western missteps in this conflict might not be fatal to their ambitions for the success of the Rose and Orange.

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Kobe Bryant - He's OK 

Last week an interview of Kobe Bryant by Chris Collingsworth caught my attention. It was well worth the nine minutes of viewing. I understand basketball since we follow the women's team at the University of Minnesota. I am not a fan of professional basketball so all I "know" about the game is what I hear via media and it's not much. I do remember the weak performance by the American Olympic team in 2004. Looks like egos got in the way of common sense.

This first interview with Kobe Bryant was terrific. Kobe particularly addresses the attitude on this years Olympic basketball team, coached by Mike Krzyzewski from Duke University. They are the "redeem" team, out to get back what Kobe (and many others) believe should have been America's in 2004. Kobe holds back nothing. The team is focused on defense and the team - a credit to Krzyzewski. Kobe also is proud of America, our troops and thinks it's cool to feel that way. Collingsworth's most snarly comment is in response to "cool" - does Kobe really think at this time it's ok to be cool about America? Kobe replies with a calm but definite "yes."

Now there is a second interview with Kobe - about meeting our phenomenal American swimming champion, Michael Phelps. Kobe and the interviewer discussed gold medals, Kobe said he'd like one and was shown cheering Phelps in the last relay race.

This is what it's about - cheering on others, being proud of a nation that does good in the world, doing one's best because one has the opportunity to do one's best.

I'll be a Kobe fan from here on out. Thank goodness there still are people who are famous, have a tremendous skill, are articulate (Kobe is also fluent in Spanish), and have the confidence to be proud of our nation - we do much good and it's time our media start sharing the good we do.

HT: Powerline, Hot Air

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A sensible sense 

In signing the Higher Education Act reauthorization last week, Congress and President Bush have created a small opening for student free speech rights. Sec. 104 of the act reads in part:
(2) It is the sense of Congress that--
(A) the diversity of institutions and educational missions is one of the key strengths of American higher education;
(B) individual institutions of higher education have different missions and each institution should design its academic program in accordance with its educational goals;
(C) an institution of higher education should facilitate the free and open exchange of ideas;
(D) students should not be intimidated, harassed, discouraged from speaking out, or discriminated against;
(E) students should be treated equally and fairly;
As FIRE notes, it does not have the force of law, and as we've argued repeatedly in discussion of the Academic Bill of Rights, it should not have a law. But this "sense of the Congress" is an important statement nevertheless, and would seem certain to be cited in litigation when the next assault on student free speech happens.

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Goodbye Garcia? 

I received a very short note from Tony Garcia that his 1-3pm show Sundays on KNSI was "on hiatus until further notice" based on a decision by station management. I have enjoyed being a frequent guest on Tony's show, and hope he will appear either back on that station or someplace else soon.

No announcement has been made on a replacement.

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Adventures in numeraire choices 

In Zimbabwe, the new currency of choice as a medium of exchange (and soon as a unit of account?) will be gas coupons.

Bidders (at a car auction) must put down a deposit of 1,000 liters (220 gallons) of gas coupons, worth about $1,500 at the current gas price in Zimbabwe, and pay the rest in coupons when they pick up their purchases.

Zimbabweans face acute shortages of local currency. Already gas coupons can be used to pay some household accounts. Many businesses also pay workers part of their earnings in scarce foodstuffs, or demand dollars for purchases, which is illegal.

It's worth remembering that this currency shortage doesn't mean that there's not enough currency. Rather, there is so much money that nobody wants to use it. (cf. Hans Sennholz.)

From the same story, the removal of zeroes from the currency had as expected no effect, but

Obsolete coins also have been revalued, sending Zimbabweans hunting for coins they squirreled away in recent years.

Shops battled to count heaps of coins, causing long lines at checkout counters. One enterprising Harare business on Tuesday advertised coin weighing machines that even banks had discarded after coins went out of circulation in 2002.

Shopping and visits to cafes and restaurants became further confused this week by a range of different exchange rates used against the U.S. dollar.

On Wednesday, banks quoted the official exchange rate at about 10 new Zimbabwe dollars (1 billion old Zimbabwe dollars) to a single U.S. dollar. Businesses quoted an exchange rate in new dollars of between 25-1 and 100-1.

There is thus not only uncertainty about which currency gets used as the medium of exchange, but also what numeraire to use. At these levels, the output costs of hyperinflation must be huge.

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New adventures in private financing of elections 

Charging for lawn signs:

Purchased in bulk, a two-color lawn sign might cost the Obama campaign $1. I checked the Obama '08 Web site. They offer the budget-conscious supporter a generic 26-by-16-inch sign for $8. For those Obamites into conspicuous consumption, the site advertises a variety of 22-by-15-inch designer signs for $19.99. If this were an oil company, the Democrats would be accusing it of price gouging. As Kurt Vonnegut put it, "So it goes."

I called the Obama '08 Minnesota office for clarification. Media spokesperson Nick Kimball told me it is "generally a policy of the campaign nationally to charge a nominal fee for lawn signs." "An occasional exception might be made for an outstanding volunteer," he added. Kimball later called back to report that "if someone balks at paying for a lawn sign and really wants one, we'll work something out."

Celebrity has its privileges! h/t: Michael.

Seriously, I have thought about this in terms of t-shirts for, say, our radio show. Do we give them away as advertising? Do we sell them for profit? Do we price them at cost and somewhat split the difference? I suspect the marginal value of one more Obama '08 sign isn't that great to the campaign, so perhaps that is the point where you begin to charge. But wouldn't you vary the price by state, and give them away in the toss-ups?

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Sunday, August 17, 2008

Congressman Kline, Energy, Independence, Security 

Last week, I was fortunate to hear Congressman John Kline of Minnesota's Second Congressional District (CD 2) speak at two venues: A CD 2 wide Chamber of Commerce meeting and the CD 2 monthly volunteer meeting. (Full disclosure - I am the Republican Chair of MN's Second Congressional District.) Congressman Kline's talks focused on earmarks and energy.


Washington is simply stuck. Sometimes this may be good, other times bad but when important issues that affect Americans and business are ignored, all lose. The earmark system is an example of a system gone amok. My understanding is that local governments can request that their DC representative request money for X project. In the past, the project was raised in Congress, the merits were debated and a decision to allocate or not allocate the funds was made.
Unfortunately, the system has lost its transparency. Today earmarks are slipped into bills without debate, without voting, without transparency to the taxpayer. What Congressman Kline did in 2007 was say, "No more. We've got to fix the system (ie, make it transparent)." There were 12 Congressmen who agreed with him; in 2008, there are approximately 50 who have signed on board. We, the taxpayers, foot the bills for such stupid earmarks as the researching the fruit fly in Paris, France. Excuse me, the French can do their own research.


In 2007, the USA imported 4,915,957,000 barrels of crude oil and petroleum products from all countries. The price per barrel was significantly lower than in 2008 when prices have ranged from $84/barrel in January to $125 in June, and reached $140 in July/August. Bottom line: through May of 2008, Americans spent over $193,000,000,000 for oil imports.

The Republicans have proposed the American Energy Act, an all-encompassing energy plan to free the US from the potential shackles of foreign oil producers. Counter to what much of the press is reporting, the Republican energy bill is thorough. It supports: Increased conservation; increased alternative energy sources; increased nuclear; increased oil refineries; opening the Outer Continental Shelf and North slope of AK for oil and gas drilling. However, the Democrats won't allow the bill to come to the floor of the House for a vot. Their maneuvers, described below, show that they really don't care about Americans.

The US House of Representatives has a procedure whereby any member who is on the floor is allowed to speak for 5 minutes. On August 4, 2008 when Republicans were lined up to speak on energy, as is their right by House rules, Democrat Speaker Nancy Pelosi (San Fran Nan) and her buddies forced adjournment for the next five weeks, turned off the lights and microphones. This procedure denied Republican representatives their right to speak.

Hm, what to do? Another rule says if a House member is speaking, visitors can be seated on the House floor. Republicans rounded up visitors inside the Capitol, invited them to the House floor because Republicans believe Americans should be represented- their representatives should have a vote on energy bills. These actions have been continued for the past two weeks.

Why won't the House Democrat leadership allow a vote? The bill would pass because many Democrats are in favor of it. But, there are problems. The Democrat leadership is beholden to the environmentalist lobby (as well as trial lawyers and the teachers' unions). We have been fed a bill of goods on the damage to the environment. This is ludicrous - no nation drills, processes and transports fuels as cleanly as Americans. (An aside, a Norwegian acquaintance of mine who is working in the Gulf of Mexico says the Mexican drilling sites are no where near as clean as the American platform sites and ours are 30+ years old.)

The numbers are all over the map but sending $500,000,000,000 or more a year to overseas oil suppliers, many of whom would like to see us disappear is just dumb.

The briefest summary of the root cause of our energy problem is the actions taken by environmentalists and Democrats over the past 30+ years that have literally prevented the US from building nuclear plants and refineries, drilling for its own oil, mining clean coal, etc. Already we have made significant investments in alternative energy sources and will continue to do so. However none has proven financially viable for a large marketplace, yet. In time, yes but not now.

The House did pass an excuse for an energy bill, HR 6 which will be the topic of a separate post.

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Helping Soldiers Vote 

Earlier I wrote a post, encouraging people to get the necessary information to their soldiers so they can be sure their vote in this November's critical election counts. I will post every few weeks through October. Please spread the word to any family or friend who has someone serving in our military. Without them, we would not be free.

A soldier can register to vote absentee at this site.

Thank you.

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Friday, August 15, 2008

Some Thoughts on Georgia - European Georgia 

King has posted on the Georgian situation here and here. While there is much hand-wringing, far too many so-called and wannabe "leaders" are spouting pabulum. Putin believed he could get away with this attack because he's been watching the cowardly press in the west. The bully Russia is back and the outcry is grossly underwhelming.

What can be done? This article by Charles Krauthammer actually lays out actions that can be taken. We do have leverage without sending in our military. As with most bullies, they need to be taught a lesson. If they are not properly taught, they bully again. As I've said before, "Appeasement doesn't work."

However, there is another angle that has not been discussed much - that of tribe. Many Americans have difficulty comprehending tribal cultures, that is, tribal in the ethnic sense. For all the complaining about race, culture, belief, etc. in the USA, we have more people from more nations with more spoken tongues than most anywhere else on earth. We have also learned over time to get along.

Most American immigrants to the USA came because they were of the wrong tribe, religion or social class in their home country. Even the original African slaves were either tricked or kidnapped by other African tribes and sold the the highest bidder - first the Arabs, then the Europeans. Today many Christian Africans come to the USA so as to practice their faith without fear of being hurt. Other immigrants come for jobs, others to get away from civil war (war within cultures in a given location). Previous immigrants also made it a point to take advantage of our education system, learned English, and cherished the opportunity to succeed.

In many parts of the world, these freedoms are not available. Ethnic and tribal groups harbor hatreds, some that go back over 1000 years. They are caught up in a "I'm perfect, better than ________, will get even, etc." mindset.

The situation in Georgia is reminiscent of these historical conflicts. Ethnic groups in this region still cling to old patterns to attack and in Russia's case, destroy a free state. We have a choice: take action, as outlined by Mr. Krauthammer, or revert to letting tribes destroy themselves.

KING ADDS: Janet's writing reminded me of Douglass North, the Nobel Prize winner in Economics in 1993. From his Nobel lecture:
There is no guarantee that the beliefs and institutions that evolve through time will produce economic growth. Let me pose the issue that time presents us by a brief institutional/cognitive story of long-run economic/political change.

As tribes evolved in different physical environments they developed different languages and, with different experiences, different mental models to explain the world around them. The languages and mental models formed the informal constraints that defined the institutional framework of the tribe and were passed down intergenerationally as customs, taboos, and myths that provided cultural continuity.

With growing specialization and division of labor the tribes evolved into polities and economies; the diversity of experience and learning produced increasingly different societies and civilizations with different degrees of success in solving the fundamental economic problem of scarcity. The reason is that as the complexity of the environment increased as human beings became increasingly interdependent, more complex institutional structures were necessary to capture the potential gains from trade. Such evolution requires that the society develop institutions that will permit anonymous, impersonal exchange across time and space.

...Not only has the pace varied over the ages; the change has not been unidirectional. That is not simply a consequence of the decline of individual civilizations; there have been periods of apparent secular stagnation - the most recent being the long hiatus between the end of the Roman Empire in the west and the revival of Western Europe approximately five hundred years later.
But at the end of this lecture, in which North discusses the rise and decline of the USSR and world communism, he includes this point:
It is adaptive rather than allocative efficiency which is the key to long run growth. Successful political/economic systems have evolved flexible institutional structures that can survive the shocks and changes that are a part of successful evolution. But these systems have been a product of long gestation. We do not know how to create adaptive efficiency in the short run.
Krauthammer thinks we can impose that from outside, but we really cannot, at least in the short run. Russia and Georgia are still very young in their existence, and the institutional structures have not developed yet. As North, Wallis and Weingast (2005) noted:
For much of the world, the relevant alternative to the natural state is not an open access order like the United States or France, but a descent into the hell of disorder.
I admit to the pessimism of that quote in regards to Georgia this week.

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Thursday, August 14, 2008

Further thoughts about Georgia 

Once again, when Ed and I get on a topic, the second topic we plan never gets to air. Georgia dominated our conversation. I wanted to put in a few more thoughts.

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Media alert 

I will be on Hot Air with Ed Morrissey at 2pm today, discussing both economics and Georgia. Please join in the conversation! In re the Obama tax plans, see this from the campaign (as published in this morning's WSJ); my summary of the Boskin editorials to which Furman and Goolsbee are responding; and contrast to Brill and Viard,

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Wednesday, August 13, 2008

Opening act of an academic life 

Reading Mitch yesterday was depressing. Not to find out that there are feminists teaching freshman comp; I'm fine with that, if it's composition that they're teaching. The problem is that it's the most important course a freshman takes (please, not freshperson, and first-year-student is too cumbersome -- thank God they never thought of freshtron!) So what is this 26-year-old grad student thinking as she plans her new course?
And next Monday, a whole new round begins�and this year, I�m doing more socially-conscious assignments than last year. Could be interesting. But I realize now, that if I don�t ask them pointed questions about how they view the world (be it television, themselves, etc), no one else will, either.
And if you worry about how socially conscious your assignment is rather than how well the student can write the assignment, it won't matter how many other classes ask them pointed questions. They won't know how to answer.

My advice to the young Oxsana -- if you want to teach women's studies, teach in their programs. Leave the teaching of composition to those who will focus on the construction of clear paragraphs and proper sentences.

Unfortunately, the senior professors of English are just as bad.

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Shocking news! Firms without taxable profits don't pay income taxes! 

At least one liberal reports this as proof we need to keep corporate taxes high:
The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.

More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study.

The report did not name any companies. The GAO said corporations escaped paying federal income taxes for a variety of reasons including operating losses, tax credits and an ability to use transactions within the company to shift income to low tax countries.
It might be worth noting, though, that a majority of these firms had no taxable income. For U.S. corporations, 9% had no gross profits (sales minus cost of goods sold), another 7% had no total income (gross profit plus dividend, interest, rent, royalties and capital gains or losses, and other losses.), and a clear 58% more had no taxable income before any net operating loss deductions or special deductions. 69% of that last number comes from deducting things like salaries, interest, depreciation, advertising and the like. (Source: GAO study.)

The Tax Foundation notes that 99.7% of the corporations in the study that paid no income tax in 2005 were large. Why did they not pay taxes?
For example, in a "clever tax dodge", American Airlines avoided income tax for 2005 by losing $862 million. General Motors lost $10.5 billion in 2005; I bet those greedy fat cats didn't pay any corporate income tax, either.
What should be clear is that governments that have higher taxes induce their firms with overseas operations to move revenue to the low-tax countries. The graph below (source) comes from 2003. The Tax Foundation has shown Germany's corporate tax rate falling below ours by 2006, leaving on Japan at 0.6% more than ours. (See also the KPMG survey.)
Senator McCain's and Congresswoman Bachmann's support of cuts to corporate tax rates are in fact consistent with trends around the world. And the GAO study, if anything, shows the ineffectiveness of trying to collect taxes on multinational corporations by a high corporate tax rate.

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Tuesday, August 12, 2008

You'd never know it, but... 

...there were 23,000 more firms established in the fourth quarter of 2007 than there were firms that went out of business.

Opening and expanding private sector business establishments gained 7.7 million jobs in the fourth quarter of 2007, an increase of 401,000 from the previous quarter. Over the quarter, expanding establishments added 6.2 million jobs while opening establishments added 1.4 million jobs.

Gross job losses totaled 7.3 million, a decrease of 151,000 from the previous quarter. During the quarter, contracting establishments lost 6.0 million jobs, while closing establishments lost 1.3 million jobs.

The difference between the number of gross jobs gained and the number of gross jobs lost yielded a net change of 317,000 jobs in the private sector for fourth quarter 2007. This marks a return to positive net job gains after a net job loss (-235,000) in third quarter 2007.

Source. This despite a net loss of 107,000 construction jobs and 66,000 manufacturing jobs.

Using the QCEW database I found that 1,184 net new private-sector firms were formed in Minnesota; for the year as a whole, 16,450 more private sector jobs were in the state.

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Russia, Georgia and Armenia 

I'm beyond hope that the situation there will resolve in anything other than the replacement of the current government of Georgia with a puppet regime run by Russia. This has been, after all, the model employed in Armenia to disastrous effect. Unilateral ceasefires and pullouts from pointless alliances are all the Georgian government has left. It has even sunk to blaming NATO for not providing quicker membership; that would have only made the Russians move faster. Ralph Peters points out correctly that this has to have been planned for months now. Stratfor notes this morning on Russia's call for a withdrawal:
The Russians have achieved the desired psychological effect with the West, shattered Georgian self-confidence and set in motion recalculations by other countries in the region. The pacification of Georgia was not on their agenda.
Global Voices has a special page on South Ossetia that should be required reading; GV uses local bloggers and independent reporters for its information, and the news is not filtered. There I found a report that reminded me of a phone call to Hugh Hewitt's show that I thought he handled too cavalierly: the Kosovo precedent. The argument has been brewing almost from the moment Kosovo became independent in February. Contra Austin Bay, it does not really matter whether the country from which the government which to separates is like Milosevic's Serbia.

In Nagorno-Karabakh there was an Armenian enclave in Azerbaijan. With help first of Armenia and then of Russia, it has been an area of Russian influence (through the Minsk Group of the OSCE) since 1994. As such it has insisted on maintaining a presence in both Armenia and N-K, not dissimilar to its role in Abkhazia. It is as Tom Barnett notes:
...whenever something breaks off from something larger, you always find this littler bit inside the smaller entity that identifies more with the larger entity. Saw--and still see--this in the Balkans. Ditto for the Caucasus. Go back a bit farther and you see that Stalin set this up purposefully in many instances, shifting borders just so to trap a chunk of one historical state within another, also purposefully settling Russians for the same effect. Go back even further and you see the Russian empire using the pretext of the "fellow Slavs" needing protection to expand its borders ...

What I see here is Putin working familiar Russian themes for both domestic consumption and signaling to the West that Russia is once again a full-spectrum great power that defends its perceived interests like any other (admittedly, South Ossetia isn't exactly Iraq, but that's what a Russia can muster at this point). Timing is good (end of Bush term, Olympics, Iraq winding down but Afghanistan winding up). Man knows how to pick his moments.

What saddens me today is that Armenians look to Russia as "this littler bit ... that identifies more with the larger entity." We have Armenians and diaspora cheering Russia on, apparently without care that this may doom Armenia to being a satellite of Russia forevermore. We are more worried about sticking it to the Turks (and their Azeri brothers) still than about creating our own nation.

Michael Totten is traveling to Azerbaijan, and links to this excellent background piece on South Osseita by Joshua Kucera from this past spring.

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Congressman Kline's Energy Blogger Call 

I have just completed participating in Congressman John Kline's blogger conference call. He returned to Washington, DC Monday evening to join other responsible members of Congress to discuss the Republican energy policy.

Democrat Speaker of the US Congress gaveled the House to summer adjournment for five weeks and left unaddressed, the pressing need of the USA to face its energy crisis. Of course, this behavior pattern has been repeated over the last 20 or so years by either a Democrat president (President Clinton vetoed the key energy bill in 1996) or Democrat members of Congress. While they claim they're for the little guy, their behavior indicates otherwise. Then there is the national security angle, but why should Democrats be concerned about national security?

The Speaker, Democrat Nancy Pelosi, promised that when the Democrats took over Congress they would grant the minority party the right to offer alternatives to proposed bills. She and her Democrat party leaders have reneged on this promise. Not only have the Democrats refused to even address Republican suggestions, they have also ignored Speaker Pelosi's statement upon the Democrat wins in 2006 that they, the Democrats had a comprehensive energy plan. She even has blocked her own party members from addressing this issue.

We Americans can continue to elect Democrat representatives who are so out of touch with what we, the little guys of America, want and need or we can toss out the Democrat members of this Congress, one of the most lame congresses in US history. There is a reason this Congress' approval rating is in single digits - it's the Democrats ignoring real needs of Americans coupled with their inability to get anything done.

(For those of you who were short-changed on being taught American government, it's not the president who makes laws, it's Congress and this Congress has done zip.)

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Monday, August 11, 2008

No tipping! 

A note on campus email tells a sad story. Somebody (or -bodies) knocked over some potted plants on the south end of the campus, pulled out the flowers that were in them and scatter flora and soil around the walk that they sat near. The walk is near a child care center run by the university. "The 3-5 year old children of the Lindgren Child Care Center, who enjoy these pots daily as they go for campus walks, sat by one of the overturned pots and reflected on the destruction," the note told us.

OK, I know where you think I'm going, but I kind of think it's good to have kids realize there are jerks in the world. After having the children say they felt sad and the flowers were "happy", "pretty" and "smelled good", they were asked what they would say if they could talk to the perpetrator(s).
I will never say the word "dammit" without a smile from here on. Thanks to the people of Building and Grounds who were able to turn something crappy into something cute.

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Go ahead, prove me wrong 

Minneapolis city councilor Gary Schiff: liar:
The Minneapolis City Council is considering a resolution that would require passengers to pay a $1 surcharge per cab ride during the Sept. 1-4 Republican National Convention. A subcommittee will vote on it Wednesday. Final approval rests with the full council and Mayor R.T. Rybak.

City Council member Gary Schiff, the measure�s author, said he�s not worried about irritating visitors to the Twin Cities by targeting them for fare increases. �Republicans will be very generous and heavy tippers,� he predicted.

Schiff said he wanted to tailor a fare surcharge so that most Twin Cities residents would not be affected. �I�m targeting it to a time when most city residents won�t have to pay it,� Schiff said.

He suggested most residents won�t be taking cabs that week because it will be �next to impossible� to grab one during the convention because taxis will be so busy shuttling visitors around the city for convention parties and events.

Minneapolis and St. Paul are trying to cash in on the GOP convention in ways beyond cab fares. They are also selling licenses to bar owners who want to extend their hours of operation during the convention. Only a handful of bars have so far applied for the licenses, possibly because of their $2,500 cost, according to a report in the Minneapolis Star Tribune.

While the Twin Cities are seen as a liberal enclave, Schiff said he wasn�t deliberately trying to target Republicans with the fare increase. If Democrats were holding their convention in the Twin Cities, he would have raised the same resolution, he said. �Or if it was Alcoholics Anonymous or the real estate leaders of America,� he said.
Here is the schedule for the Minneapolis Convention Center for the next three months. The American Diabetes Association is having an expo on October 11th. Tax it! Show me one of those events you would tax. Target Center?

And if it's about there not being enough cabs for the locals, didn't you just allow more cabs to enter the marketplace? How about making that market truly free? You were against exploitation when it was done by the government cab monopoly your predecessors created, but not when it's a chance to line the government's purse?

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At least he got a good meal 

I would have been happy to show up to visit with Al Franken as only one other person did, but I was out of town. Not because I support Al, but because the french toast and hash browns at Brigitte's are awesome.

To Duane's comment that "Maybe there is record low unemployment in St. Cloud" I would reply, no, unemployment is an issue here, even though we've got a place charging $3.49 for a gallon of gas. I suspect it's simpler than that -- with the Benton County Fair going on across town, the DFL faithful answered a different cattle call.

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Sunday, August 10, 2008

Honor Murders and the Feminists 

Sunday's article by columnist Jeff Jacoby in the Boston Globe addresses a very sticky issue for the feminist leftists and the "we're all the same/equal" and "all cultures are alike" crowds. What is the topic? The totally unjustified murder of women by male members of the religion of peace, Islam.

For those of you who are unaware, there is a definite two-tier status within Islam, one perpetrated by far too many religious practitioners. Women are literally second class humans. In many Islamic societies women cannot go outside their homes without a male escort. Others, women cannot drive, go to school, practice any sort of independence. There was this report of a 19 year old Saudi woman who was gang-raped and SHE got 200 lashes plus a prison sentence. Why? They claim she was in a car with an unrelated man.

Too many Islamic men decide that when a woman violates their view of Islam, they have the right to murder women because it is the will of Allah (their god). This is the topic covered by Mr. Jacoby. What used to occur "over there" is now occurring "here." Our response should not be a "tolerance" of silence. Any true supporter of women's rights (feminists, pay attention!!!) needs to speak out to condemn this atrocious behavior in the strongest possible terms.

Political differences aside, all women ought to be able to join together in opposition to these barbaric attitudes and behaviors.


John Kline's Opponent - Bummin' a Free Ride? 

John Kline, US Congressman from Minnesota's Second Congressional District is being challenged by Democrat Steve Sarvi. The Kline campaign has registered and paid the entry fee to walk in almost 40 parades in communities throughout the district.

John Kline and his supporters have turned out in force, in numbers ranging the low 30's to over 70 per parade, and expect to continue such turnouts through the fall. Sarvi has missed a number of parades, and the number of his supporters has been much smaller when he has shown up. (See this report noting attendance in the parade in Steve's home town, Watertown.)

But there is another problem with the Sarvi campaign. At yesterday's parade in Lonsdale, we checked the parade registrant list. Sarvi was not listed as a participant, yet he "doubled up" to walk with a local MN House representative. Is this the first time that Sarvi has ducked the parade registration fees while showing up to walk the parade route with several of his supporters, all wearing campaign T-shirts with his name on it? Probably not.

Stiffing local parade organizers over registration fees indicates irresponsibility on the part of a candidate. It raises the question: How many times this season has Mr. Sarvi just bummed a ride from some other candidate? Do we want to even consider someone who mooches like this to represent us in Congress?

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Saturday, August 09, 2008

Olympics - A tragedy 

The Olympics are an event unto themselves. People participate and visit sites of a host country, sites they may never see again. Usually, visits and events go well. Unfortunately, the current Olympics have experienced some very, very sad news.

Minnesota residents Todd Bachman and his wife, Barbara, were attacked while they were touring the Drum Tower in Beijing. Todd was killed, and Barbara and a Chinese tour guide were seriously wounded. The Chinese murderer committed suicide. Todd was the father-in-law of the men's indoor volleyball coach, Hugh McCutcheon, and father of 2004 Olympian, Elisabeth Bachman McCutcheon, who was not injured.

We are proud of all Minnesota athletes and coaches. Please remember the Bachman and McCutcheon families in your thoughts and prayers.

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And I'm proud still I hung doorhangers for him 

The key provision of EFCA is a change in the mechanism by which unions are formed and recognized. Instead of a private election with a secret ballot overseen by an impartial federal board, union organizers would simply need to gather signatures from more than 50% of the employees in a workplace or bargaining unit, a system known as "card-check." There are many documented cases where workers have been pressured, harassed, tricked and intimidated into signing cards that have led to mandatory payment of dues.

Under EFCA, workers could lose the freedom to express their will in private, the right to make a decision without anyone peering over their shoulder, free from fear of reprisal.

There's no question that unions have done much good for this country. Their tenacious efforts have benefited millions of workers and helped build a strong middle class. They gave workers a new voice and pushed for laws that protect individuals from unfair treatment. They have been a friend to the Democratic Party, and so I oppose this legislation respectfully and with care.

To my friends supporting EFCA I say this: We cannot be a party that strips working Americans of the right to a secret-ballot election. We are the party that has always defended the rights of the working class. To fail to ensure the right to vote free of intimidation and coercion from all sides would be a betrayal of what we have always championed.

Some of the most respected Democratic members of Congress -- including Reps. Marcy Kaptur of Ohio, George Miller and Pete Stark of California, and Barney Frank of Massachusetts -- have advised that workers in developing countries such as Mexico insist on the secret ballot when voting as to whether or not their workplaces should have a union. We should have no less for employees in our country.

Former Sen. George McGovern, yesterday in the WSJ. H/T to Gary. I'll have more details later, but they are still trying to silence our ads rather than debate the point. Mr. Melendez, my offer is still good: Let's debate the facts, and I promise to quote at least Sen. McGovern as a good Democrat.

(And yes, in 1972, this then-fifteen-year-old did hang literature on NH doorknobs for McGovern. Michael will have a fit about this on air next week.)

So who gets to ask Elwyn Tinklenberg why he disagrees with George McGovern?

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Friday, August 08, 2008


Fifteen GOP senators debuted a web ad yesterday that called for Harry Reid to bring the Senate back for deliberation and vote -- with amendments permitted -- on an energy plan. It's a pretty good ad:

Harry Reid thinks a month recess "will allow everyone to cool down," while the Gang of Ten continue to meet and try to get past the election with what seems to be a bad compromise. Intriguingly, two of the ten -- Bob Corker and John Thune -- appear in this ad. Are then in or out of the Gang?

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Light posting today, as I'm in New England this weekend for my father's 80th birthday today. I'll have some stories later tonight or Saturday morning.

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Thursday, August 07, 2008

Best paragraph I read this morning 

While waiting for a plane.
A society that worries itself about which chromosomes scientists have isn't a society that takes science education seriously. In 1900 the mathematician David Hilbert famously drew up a list of 23 unsolved problems in mathematics; 18 have now been solved. Hilbert has also bequeathed us a way of thinking about mathematics and the sciences as a to-do list of intellectual challenges. Notably, Hilbert didn't write down problem No. 24: "Make sure half the preceding 23 problems are solved by female mathematicians."
Peter Wood, from the Chronicle of Higher Education.

This got me to thinking about the reactions I've gotten to Littlest's latest explorations: literature (her high school sent a list of classics deemed "important for college-track students" -- she's decided to work through the entire, two-page list) and military history, an interest she shares with me since doing her 8th grade history project on Alexander the Great. The reactions have been either "military history? That's odd" or "No! She is so good at math!" She still is. She's also 14. Let the girl grow, please. Laissez lire.

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Why haven't economic conditions helped Obama more? 

Dick Morris and Eileen McGann write something rather provocative: If the economy is as bad as "everyone" says it is, why isn't this helping the Obama campaign?
The conventional wisdom has it down pat: A bad economy works against the candidate from the party in power as voters take out their rage and fear on the president's party and back the challenger, just like they did in 1992. But this is not a normal economic slowdown (or recession) and Obama is not a normal challenger. I think the conventional wisdom may be dead wrong.

It is not so much that unemployment is so high (5.7%) or that the economy is in the tank (1% growth this quarter) as that everything seems to be falling apart.
Voters tend to be more retrospective than prospective, in study after study of voting patterns. Models that predict voter behavior based on past economic performance tend to do pretty well. So in June forecasted Obama to win 380 Electoral College votes. Ray Fair's model generates now a very small gap between McCain and Obama (about 3% of the two-party vote share.) If you input data for third quarter GDP greater than 3.2% (i.e., there's good news about the economy on that last weekend before the election), McCain pulls ever-so-slightly ahead. (I don't know the error bands here, but I'll bet both results are within two standard deviations.) House Republicans are seen doing relatively poorly.

It is interesting, though, that the economy (ex energy) has not gained more traction in the campaign. Even the quite different positions of the candidates on taxes has not to this point grabbed the attention of the public. Perhaps they're just not paying attention, though new polls say otherwise. Or perhaps it's what they are asked to pay attention to; the campaign is one more of personality than policy. Still, you'd think a campaign that focused on uneasiness about voters' future economic fortunes would favor the Obama campaign. I'm puzzled he has not done more with that. Perhaps it's because the economy isn't as bad as many think.

UPDATE: Obama fatigue? Can campaigns have a third stage of production? Bill Luksetich and I wrote a paper on campaign financing and House elections (Economic Inquiry, 1991) in which we modeled campaign spending as having diminishing marginal returns; I don't think we looked to see if anyone got to negative marginal returns. I'm traveling today and will have to check to see what we wrote when I get back. But negative returns might make the prediction equation perform less well.

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Wednesday, August 06, 2008

A professional dilemma 

The McCain campaign, for a second time, has invited my signature to a letter of support from economists. When it first came a couple of months ago I deleted it because of one and only one thing: the gas tax holiday, which I think most economists agree is a terrible idea. The letter makes no reference to it, however; it makes in fact no reference to energy policy whatsoever. Its focus is on fiscal policy and trade, two areas where in fact I am in broad agreement with Senator McCain. (The corporate tax rate cut, for example, is something I think needs cutting.)

So here's the question: Obama supporters will take a signature by any economist as meaning that economist agrees with every position McCain has taken. I do not; I'm probably in the 75-80% range on fiscal policy and regulation, near 100% on trade policy, and in the sixties on his financial market policies. I'm more inclined with hearing his views change regarding energy; I'm still unhappy about him tossing Phil Gramm under the bus (I understand it's the right thing to do politically, I just don't agree with it as the behavior of a 'maverick'.) Is 100% agreement on issues required to sign this document?

Advise me in comments. In doing so, please identify if you are an economist and if you are or are not a McCain supporter, unless you're someone I already know.

UPDATE (8/7): Thanks for your comments. I am impressed by the range of opinion. I understand that one cannot find someone you agree with 100% -- Steve Forbes is certainly closer to me on economic policy than John McCain, but even he wouldn't align perfectly -- but I've never been sure where the line is where you decide to sign a letter like that. And as someone noted, there are some very fine economists on that list. Being in the company of an Allan Meltzer is rarefied air.

But there's a difference between being a political supporter (there's little doubt who I'll vote for here) and giving a professional opinion. The letter seems to be asking for that higher standard. Give me another day to think about it.


Tuesday, August 05, 2008

The Union Card Check Doublespeak 

There is a move afoot by Democrat members of Congress, including The Ego-bama, to enact a law called the "Employee Free Choice Act." It sounds innocuous enough but typical of Orwellian doublespeak, the act would eliminate a union member's right to vote, via secret ballot, the current law. As soon as half (or one more) employee have been "persuaded" or intimidated or coerced into signing cards, all employees lose their right to a secret ballot vote.

Thus, I propose this 15 second commercial for Republicans. To be accompanied by solemn background music.

Question - As a union member, do you wish to keep the secret ballot provision for election of union leaders and decisions?

Worker (multiple workers) - "Of course." "Absolutely!" "Yes!" "No way do I want to give up that right!"

Announcer - To keep your free votes, options, choices, vote for _________ for senator. He/she supports every worker's right to a secret ballot.

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Cheeseburgers and candy bars 

I meant to blog this yesterday, forgot, but Mark Perry reminded me. The question is: Can you break the buck and still call it a Dollar Menu? (Second link for WSJ subscribers; see Mark's link if you're not.)
McDonald's Corp. is testing modifications to its popular $1 double cheeseburger, and higher prices for the sandwich, as it prepares to change its Dollar Menu by next year.

In an interview, Don Thompson, president of McDonald's U.S. business, said the company has tested ways to make the burger less expensive to make. Some restaurants are selling it with one slice of cheese instead of two, and billing it as a "double hamburger with cheese." Others are offering a double hamburger without cheese. Some are selling the traditional double cheeseburger at prices ranging from $1.09 to $1.19.

...Launched in 2003, the Dollar Menu has been a key driver of sales at McDonald's 14,000 U.S. restaurants and has helped it ride out dips in consumer spending. But recently, franchisees have complained that the menu has brought too much unprofitable traffic into their restaurants.

The biggest question for the eight-item menu is what to do with the double cheeseburger, considered its anchor. High dairy prices have pushed up the cost of cheese, and McDonald's predicts more pressure because its beef costs will be higher this year. Mr. Thompson said if McDonald's moves the double cheeseburger off that menu, there would still be some type of $1 burger.

Shrinking the cheese, burger and/or bun -- which is the item that has risen most in price percentage-wise, though the second slice of cheese is the best chance to have McDonalds adopt the candy bar inflation strategy of hiding its price increase. 14% of McDonalds sales receipts come from Dollar Menu purchases (and a lot more of its traffic, assuming those purchasing from the Dollar Menu have a smaller ticket than those that do not.) Following Don Lloyd's argument, the value of the second slice of cheese is probably pretty small, and the transaction cost of creating smaller burgers and buns relatively large, so dumping the second slice seems the most rational strategy. But at some point in the past the value of the second slice to the consumer was greater than its cost to McDonalds (otherwise Mickey D's been wasting money and you've been consuming wasteful calories!) so how does a 6.6% increase in cheese prices move us over the line? Do we believe that?

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Daily effects of indoctrination: A reaction 

The first bulletin board has now been up for the better part of eight months and aside this blog has had no public reaction ... until today.
In case that note doesn't read well for you, it says "Is there not a black man about to be president? This rhetoric divides not solves. -- Black Man"

It is possible that the note isn't really from a person of color. But presuming the display has been erected for educational purposes, it should please its creator(s) that it has received a public reaction. We'll continue to follow that story.

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Oil later reduces prices now 

I have tried to explain the idea of how future values of an asset drive both current price and use of an asset to a number of people. I think Robert Murphy's explanation from last week was particularly useful in application to oil and ANWR (or any other untapped fields held in the US):

Imagine that you are sitting on a huge oil deposit, which has (let us suppose) one billion barrels that can be brought to the surface for $20 each, so long as you don't pump more than one million barrels per day. (If you want to pump at a higher rate, you have to spend more money per barrel, and you might reduce the total number of barrels you can extract from the deposit.) So the question is, how fast should you pump?

You might at first think that you should pump at the maximum extraction rate, without raising your marginal costs � i.e., that you should pump at one million bbls/day. But this clearly is wrong, if you expect oil prices to keep rising. Why sell 365 million barrels in 2008 at an average of $150 each, when you could postpone production for a year and then sell those same million barrels for, say, $200 each?

In light of this consideration, maybe you think you should just hold your barrels off the market forever. By letting them sit in the ground, the market value of your asset rises over time, as the market price of oil rises.

But that isn't necessarily the right thing to do, either. What if oil prices rise an average of only 10 percent per year over the next two decades? Do you really want to put all your eggs (oil) in one basket, by leaving them sitting underground? Especially if your deposit is located in the Middle East, you might feel more comfortable selling off some of the oil now, and then using the revenue to buy stocks and bonds, not to mention a few surface-to-air missile silos. (And of course, you could be wrong in your forecasts; maybe oil prices will tank in two years.)

That story looked kind of familiar to me; it has the flavor of the Hotelling extraction story but told in a simple way. My recognition was of the story of the trees in Alchian and Allen's Exchange and Production. Let me type out a little bit of this for you. Imagine a tree that can yield only one service, producing lumber, which it can provide at only one date in the future. (Oil wells can provide service over many years, we'll get to that in a minute.) At the moment of planting the present value of the tree as lumber at some future date will be greater than the cost of planting the tree.
As time passes and we apprach that future date, the present capital value rises towards that anticipated future value, and rises at the market rate of interest. Consequently, the date at which you might invest in that resource has no effect on your realized rate of return. If you invest in the first year, or any year, you will get the same annual percentage rate of growth, as long as beliefs about the future value of the lumber don't change. (p. 122)
The return on the tree, or an oil field, is equalized at the market rate of interest whether you buy a new or old tree, a new oil lease or an established field.
What ensures that equilibrium? People don't give away opportunities to get more than the rate of interest -- that is, profitable opportunities. If a young tree were priced so low that people expected to get a higher return over its life than [the market rate] per year, everyone would want to buy it; if it were priced to high, the return would be smaller, so no one would want to buy it: The price would adjust. Every durable good whether new or old will be priced on the expectation of the same interest rate of return. (ibid.)
The risk of holding that asset is that there would be additional supplies that reduce the rate at which the price of your asset increases. This intertemporal analysis would make an increase in future supply of trees -- reducing future prices -- encourage the cutting of trees now. Likewise, an increase in future production of oil would reduce the rate of return to the Saudis of their reserves, and encourage them to produce more oil now. Such a point is made explicitly by Coats* and Pecquet [2008], but the same can be found in Lee [1978 J Pol Econ; JSTOR link here if you have access.] Coats and Pecquet demonstrate that the effect of a reduction in scarcity rents -- the marginal cost of using oil now rather than later -- has an identical effect to a reduction in extraction costs. This applies to a good that grows until harvest or a durable asset that generates revenue over time. And this applies both to the monopolist or cartel as it does to a competitive oil industry.

This difference between comparative static and dynamic analysis is at the base of the argument between the drill and don't drill debaters. The don't drill side has an argument that future oil production can only affect future oil prices; good economic analysis would tell you otherwise.

*updated to get Morris Coats' last name in that post. He blogs, by the way, and wrote a nice letter. The paper was presented at the Southern Economics Association. Professor Coats reports that he was inspired on this by Dwight Lee's work.

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Teachers for higher taxes 

Mr. [Mike] Antonucci reports that during the current fiscal year the NEA sent the Hawaii State Teachers Association $20,000 to conduct polling on a state constitutional convention. It sent the Massachusetts Teachers Association $60,000 to oppose a state income-tax repeal. And it sent the Florida Education Association $200,000 to oppose property-tax cuts in the Sunshine State.

Expect more of the same going forward in a state near you. 'Unlike most previous years,' writes Mr. Antonucci, 'NEA finished 2007-08 with a surplus of nearly $5.9 million, which means the union will enter the 2008-09 school year with almost $20 million available to spend.' It's a shame the NEA doesn't spend as much money and effort trying to improve lousy schools as it does trying to keep taxes high.
From Antonucci also reports that the Oakland teachers union is actually opposing a tax increase that would increase teacher pay ... because it gives money to charter school teachers too. Should make the kindergarten lesson on sharing a little more poignant, no?

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Monday, August 04, 2008

Congresswoman Bachmann Nails It - Energy Wise 

Just watched Congresswoman, Michele Bachmann, on CNN. She along with Republican Governor Haley Barbour of Mississippi represented the accross-the-board, sound Republican solution to energy demands for the USA. Governor Richardson (D - NM) and a Phd from UC Berkeley tried to paint Senator McCain as someone who opposed all their pet topics: solar, wind, etc. Richardson also attempted to justify releasing oil from the Strategic Reserve ala The Ego-bama's "plan." (The reason it's a "strategic" reserve is that it is for national security, not a stopgap solution to the Democrats' blocking energy independence for us.)

When Larry King returned to Bachmann for her comments in response to Governor Richardson, it was over. She nailed the problem clearly and succinctly. She and Barbour showed how the Democrats have been obstructionists for decades on energy. After the commercial, the topic was changed. Score one more for the Republicans.

A few minor points: the Phd. was big on blaming the US for not investing in solar (and wind power) for the past 10 years. I know for a fact that there were windmills and solar experiments in CA for at least the past 25 years. Perhaps the Phd. never traveled to southern CA to observe them. What he conveniently omits is that if solar and windmills were financially sound, we'd have more than 1% of our energy from them. It's not for lack of investment, it's because it's not economically sound.

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Let my Congress vote 

I've followed the Republican House funnies (mostly by Rep. John Boehner's blog and Twitter), and Rep. Tim Walberg's comment got me to write a little bit of doggerel. To the tune of the old spiritual Let My People Go (if you can stand midi, this tune) this should be done as call-response, with the chorus singing the italicized line and the refrain in full. The meter doesn't work perfectly, but that's what you get for 20 minutes before class:
When at the gas station did I stand,
Let my Congress vote!
Oppressed so hard by Sierra Club�s demand,
Let my Congress vote!

Go down,
Way down in Fruit and nut land,
Tell old Pelosi
To let my Congress vote!

No more shall we hear enviros roil,
Let my Congress vote!
Let them come out with Democrats� spoil,
Let my Congress vote!

Oh, let us all from Pelosi flee
Let my Congress vote!
And let those blue dogs all be free
Let my Congress vote!

You need not always pay more
Let my Congress vote!
And consume one hundredth of Al Gore
Let my Congress vote!

Your foes shall not take away your AC
Let my Congress vote!
And it won�t be a crime to drive a Humvee
Let my Congress vote!

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Democrat Hypocrisy on Oil Drilling 

Until the U.S. opens its offshore waters to oil drilling, it will be seen as the world�s worst energy hypocrite.

The above is the lead sentence in an article in The American magazine. At the World Petroleum Conference in Madrid, Spain, the leaders of OPEC in essence told American reporters, (paraphrased) "Quit telling us to produce more oil - get your own from your own shores." The big three talkers included the Algerian head of OPEC, Chakib Khelil, who told the press that there are bidding wars in Algeria (not in the US, home of the free market concept) and Americans should open the OCS.

The Petrobras (Brazilian oil company) CEO, Sergio Gabrielli, told the press to drill in the Gulf of Mexico. The Saudi Arabian oil minister Ali Al Naimi said, "The limits to future petroleum supplies have more to do with politics (in the US, it's the Democrats) than with geology and resource availability. ...The most promising acreage remaining in the U.S. is located offshore, most of which is off limits to the industry."

The obstructionist attitude of Democrat politicians is just phony rhetoric. These Democrats denounce the Saudis and OPEC; they complain about the price of gasoline and claim that $10 a gallon is OK; they rant about the evils of Big Oil while The Ego-bama talks about taxing only Big Oil but no other industries (like high-tech, Democrat Warren Buffet's funds, George Soros funds, etc.). Until the US opens its offshore waters to oil drilling, the world will continue to hate us - not for protecting them or removing thugs but hate us because we will be seen as the world's worst energy hypocrite.

A final point - for all the whining by the leftist Dems, their obtuse concept to "protect the planet" in reality hurts the little guy and their union base. This vague "save the world" mindset stifles innovation, ignores the safest oil drilling system on the planet. The Democrat impediments to increasing domestic oil production along with nuclear plants and mining of clean coal ship jobs overseas, jobs that could be in the U.S. Their behavior increases the federal deficit thereby penalizes our kids and grandkids. I hope Americans wake up in time to make the change in November that will provide more energy, better food, safer drilling, warmer homes, and jobs for all of us.

Who were these speakers? Only the leaders of the world 's oil producing nation.

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Taxes clear as mud 

I was going to write about Michael Boskin's earlier editorial on Obamanomics, but today he has published a revision. In short, it's better than what he published before because the Obama campaign keeps clarifying statements that are hard to decipher. But you still have to be careful, as the Tax Foundation has recently pointed out. So for example, if you assume that Obama will only raise Social Security taxes by 4% on incomes above $250k rather than 12.4% as originally thought, and you do that calculation for Minnesota rather than California, you find that Obama would raise taxes on labor income above $250,000 to 52.44% from 43%, a 16.5% decline in the after tax wage for high-income earners. Boskin's numbers find for a 32% decline. Note that this number is quite like the number for the decline in after-tax returns on dividends and capital gains (where, outside using California's abusive state tax rate on capital gains, there is no difference between the numbers.)

For those of us without a lot of deductions and therefore using the standard, if you believe that Obama will only take us back to the Clinton-era tax law, here's a chart that tells you how much more you pay. But as Boskin notes, it's not even that good -- Clinton signed off on a capital gains tax of 20%, but Obama wants to take us back to 28% ... at least until he clarifies again.

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A Repeat Winner? 

By now most people have seen the reports that John Edwards has fathered a child with a woman who is not his wife. This story is totally ignored by most of the mainstream press. But I could not pass up this element of hypocrisy about a Democrat who just might have been vice-president.

On June 7, 2007, John Edwards was named "Father of the Year" in New York City. This site had the video but now, surprise, surprise, the video is gone. Maybe "cabinet member to be" should be a candidate for a repeat "New Father of the Year" award.

This man has so little class. His wife deserves better, then again, it's more hypocrisy on the left and it just disgusts me. Why is the press refusing to cover this? Hint - from this story in The Independent. What is really odd, papers in the USA are losing readership left and right but hey, if it's a Dem who commits a crime, we'll just pretend it doesn't exist. Heck, any kind of real balanced coverage could save the industry but the herd mentality of the mainstream press will just lead it over a cliff.



I was in high school when I read The Gulag Archipelago. Having just been part of a Nixon-Ceausescu cultural exchange program, and thus touring Romania for three weeks in August of 1974 (I know, weird, but Nixon had a thing for Romania from the beginning of his presidency) the book was like a shot across my complacency about touring that country, experiencing the queues, the poverty, the restrictions on where you could and could not go. I recall looking at a border installation with the USSR and feeling the isolation.

Over the years the book has become an anachronism, replaced on school reading lists along with most of his novels ("One Day in the Life of Ivan Denisovich" probably remains on some.) Peter Boettke reminds me of the Museum of Communism in Prague, which could be also placed in Bucharest, Tirana, or any other Central European capital. In a year in Kyiv in 1995-96, I saw very little of the nostalgia for the USSR, not because capitalism was helping them live their lives in their minds but because they remembered the Holodomor.

It's worth remembering today that communism killed over 110 million in the 20th century. You can count on one hand the number of people who did more than Solzhenitsyn to bring this to the attention of the West and stand against it. Bryan Caplan laments that there will never be a Nuremberg trial for those deaths. I doubt Solzhenitsyn would have wanted that; he was no liberal democrat but rather a Russian nationalist, as Ilya Somin states correctly. Still, he served admirably in holding up communism as something that even the Left should not stand for (though they do anyway).

This quote, of all the ones I have seen today, is why we should keep Solzhenitsyn's Gulag alive on reading lists:
Oh, Western freedom-loving "left-wing" thinkers! Oh, left-wing labourists! Oh, American, German and French progressive students! All of this is still not enough for you. The whole book has been useless for you. You will understand everything immediately, when you yourself � "hands behind the back" � toddle into our Archipelago.
Hand the book to the next student you see with a Che t-shirt.

Update: Steve Horwitz notes:
For example, every summer I do IHS student seminars, and they often have a large number of central and eastern European students. I�d like the Chicago humanities faculty [who are protesting the creation of the Milton Friedman Institute on their campus --kb] to tell me how I�m supposed to feel when these students ask me why so many US humanities faculty, including some of my colleagues at SLU, still think Marxism and socialism have social value when those ideas were the inspiration, even if wrongly interpreted, for thugs who engaged in the killing of tens of millions of innocent people and the destruction of the economies of billions. I�d like them also to tell me how I�m supposed to feel when a Cuban refugee who risked his life to come to the US asks me why some US college students, including some at SLU, think it�s cool to wear Che Guevara t-shirts, implicitly honoring a murder and torturer.

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Hide the women 

I heard this joke long ago, that the prostitution business dries up in convention cities when the economists come to town.

About 30 years ago, we were at an economics convention, doing the usual stuff -- meeting people, going to paper presentations, interviewing candidates and/or interviewing for jobs, looking at book displays, drinking like fish, etc. After about a day and a half, one of the bellhops at the convention hotel asked us, "What do you guys do for a living, anyway?"

We proudly informed him we were economists. "Why do you ask?"

"I've never seen a convention like this," he said. "More booze than I've ever seen before, but no broads. What's wrong with you guys? Where are the hookers?"

The St. Paul police are saying that RNC conventioneers will be so busy they won't have time to use the services of ladies of the evening.
St. Paul police spokesman Tom Walsh said his department discussed the issue with police in New York and Boston, which hosted the 2004 Republican and Democratic conventions, respectively.

"And what they have reported to us is that is that there is not an increase in that kind of traffic," Walsh said.

"There is so much going on, I don't know that there is a lot of unstructured time to be involved in any other activities."
I can tell you economics conventions have lots of free time ... and that's when the booze happens. I can also tell you this was not true at the 1984 AEA meetings in San Francisco where a certain A.B.D. job-seeker stumbled to a coffee shop at 11pm for an impromptu meeting with a small college that was interviewing and whose interviewer was friend of a friend; said job-seeker was approached once going to the coffee shop and twice going back.

But it hasn't happened in many years, at least not to that job-seeker (who learned the words "no money" worked well.) Instead, economists write about prostitution.

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O-Force One 

The fawning mainstream media has just published another article about their messiah, The One and Only Obama. The CBS News "O-Force One" headline about Obama's corporate jet shows the continuing presumptuous arrogance of Obama's presidential campaign.

The embroidery on The Ego-bama's plush leather seat has "Obama '08" on the top line, "President" on the next. This removes any doubt that Obama has a breathtakingly oblivious sense of self importance.


Global Warming? Here we Go Again - Half the Facts 

The climate gods have been predicting the disappearance of much of Bangladesh for the past 30+ years. Quotes from a recent article on the demise of Bangladesh's land mass include these:
The United Nations Intergovernmental Panel on Climate Change (IPCC) has predicted that impoverished Bangladesh, criss-crossed by a network of more than 200 rivers, will lose 17 percent of its land by 2050 because of rising sea levels due to global warming.

Director of the US-based NASA Goddard Institute for Space Studies, professor James Hansen, paints an even grimmer picture, predicting the entire country could be under water by the end of the century.
Well, turns out the doom and gloomers are only partially correct. While Bangladesh might lose land because of rising sea levels, it is gaining land as you read this. Turns out Mother Nature actually has a compensating solution - called deltas. You know, the silt that collects at mouths of rivers. This land is incredibly good farm land, and Bangladesh is experiencing the benefits from these silt deposits.

Maminul Haque Sarker, head of the department at the government-owned centre that looks at boundary changes, told AFP sediment which travelled down the big Himalayan rivers -- the Ganges and the Brahmaputra -- had caused the landmass to increase. (deltas)

Mahfuzur Rahman, head of Bangladesh Water Development Board's Coastal Study and Survey Department, has also been analysing the buildup of land on the coast. He told AFP findings by the IPCC and other climate change scientists were too general and did not explore the benefits of land accretion. "For almost a decade we have heard experts saying Bangladesh will be under water, but so far our data has shown nothing like this," he said.

"The land Bangladesh has lost so far has been caused by river erosion, which has always happened in this country. Natural accretion due to sedimentation and dams have more than compensated this loss," Rahman said. "If we build more dams using superior technology, we may be able to reclaim 4,000 to 5,000 square kilometres in the near future," he said.

Gee, who would have thought that man just might be able to improve situations? Humans can adapt and societies that allow free thinking create free market ideas that solve the problems. Maybe it's time for the doomsayers to include ALL the facts before pushing their so-called predictions.


Friday, August 01, 2008

Assorted bulletin boards 2 

Here are the remaining shots that struck me as interesting of bulletin boards in the classroom and faculty office building in which I work. This consists only of certain posters I found.

There are lots of posters for internships, being as internships are seen by many recruiters and placement officers as a great way to get into a potential position with an organization. But some are more interesting choices. Here's one to intern with Working America, an arm of the AFL-CIO, whose job is political activism. You have a chance to "get paid to fight back" -- now that's an educational experience, isn't it?Most workplaces have posters that ask workers who are victims of discrimination to report their experiences to the proper office. I had paid this one no mind at all until I read the small print. Did you know if you discriminate against someone who is a member or active in "a local commission as defined by law" you get the same rights as someone discriminated against them for their race or sexual orientation? Who thought that law up? I haven't heard of such crimes, or even that it was one. I don't think I've ever had a beef with the parks commissioner.Two comments about this. First, it is on a board in a very high-traffic area and has been on this board for almost a year. So thousands of people walk by a brochure about female genital cutting. Towards what end? I probably have passed this a couple hundred of times without figuring that out; maybe I'm just dense. Second, this is a criticism of a practice that happens "extensively in Africa" and many countries in the Middle East. Many years ago I knew an Egyptian immigrant couple whose son went to school at SCSU. They ran a long-since-gone restaurant that was the only place I could get a good plate of baba ganouj back then. One night the wife of this couple came to me quite upset; her son was supposed to write a paper about the practice, and it was clear that he was surprised to hear it happened in his home country. The son did not know what to write.

There are over 100 students studying here from countries that appear on that list; the ESL classes for intensive study each summer are taught in a classroom close to this poster. I wonder what they think about this.

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My wife the art critic 

Inspired by a new and rather odd piece of art made from exhaust pipes purchased with public monies at the soon-to-be-opened new St. Cloud city library, Mrs. S. writes about the nature of public art.

Rather than glorifying God, a party or a king, what was the inspiration behind the library sculpture? To glorify Division Street?

...Even in good times, spending $44,000 for a glorified garden trellis isn't a wise use of taxpayer money.

This fall, Minnesota voters will be asked to increase the state sales tax, in part so that about $60 million a year in tax dollars can go toward arts funding. Such money would have to be spent; the elected official could simply say "you voted for this, so there it is" � vines growing around exhaust pipes.

Mrs. S is a pianist; this isn't going to make her many friends in the arts community.