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Economics

October 15, 2014

"Rent Seeking: America’s National Pastime"

George Will:

Come Tuesday, the national pastime will be the subject of oral arguments in a portentous Supreme Court case. This pastime is not baseball but rent seeking — the unseemly yet uninhibited scramble of private interests to bend government power for their benefit. If the court directs a judicial scowl at North Carolina’s State Board of Dental Examiners, the court will thereby advance a basic liberty — the right of Americans to earn a living without unreasonable government interference.

Related: "Cape Wind: An Unsightly Monument to Political Pull".

October 14, 2014

"Denver Census Whistleblower: Unemployment Numbers Are Being Faked (Again)"

This deserves at least a few questions from the relevant House oversight committee.

See also "The Not-Credible Shrinking Unemployment Rate: Is the government deliberately misclassifying job seekers?"

"Learn Economics Online Using These 33 Free University Courses"

I can't vouch for any of these courses, but they could well be useful.

October 13, 2014

"The Financial Crisis: Why the Conventional Wisdom is Wrong"

By Richard Kovacevich, former CEO of Wells Fargo. It's strikingly clear, concise, and forceful. Everybody who runs for Congress or who manages the Fed or the SEC should be asked about it. Excerpts:

I am sure most of you have noticed the publicity surrounding BaoBao, the new panda cub at the Smithsonian National Zoo this year. Well, BaoBao should fit in well in Washington: she costs a fortune, she has no useful skills, and she is always on TV. . . . 

If you don't remember anything else I say today, please remember this: only about 20 financial institutions perpetuated this crisis. About half were investment banks and the other half were savings and loans. Only one, Citicorp, was a commercial bank, but was operating more like an investment bank. . . . Yet 6,000 commercial banks are being punished with Dodd-Frank penalties in the same way as the guilty parties. . . .

Politicians and regulators have responsed to each crisis by piling on more extensive and burdensome reulations, assuring citizens that they have fixed the problem without addressing the actual causes. 

Today the 6,000 commercial banks and their boards and management are spending most all of their time and resources on compliance, regulatory changes, and litigation for something they didn't do.

"Bankruptcy Judge Hammers Unions by Allowing Stockton Pension Cut"

From Breitbart California:

In what will be a devastating blow to California public employee unions, U.S. Bankruptcy Judge Christopher Klein ruled in the Chapter 9 municipal bankruptcy of the City of Stockton that pensions managed by the California Public Employee Retirement System, known as CalPERS, can be cut in bankruptcy “like any other garden variety” unsecured debt. He rejected the unions’ argument that the world’s largest pension fund is an “arm of the state” and that public employee pensions are protected by federal and state laws.

"Zombie Spending"

I used to use the wool and mohair subsidy program as an example in class and a couple of students all but accused me of making it up. It's here as well as a few other apt and distressing examples.

"When Humans Lose Control of Government"

More on the same theme that Philip K. Howard has been advancing for some years now. (With new examples and details I hadn't seen before.)

But as I've noted before, it's a really good theme.

“Clear law” turns out to be a myth. Modern law is too dense to be knowable. “It will be of little avail to the people,” James Madison observed, “if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood.” The quest for “clear law” is futile also because most regulatory language is inherently ambiguous. Dense rulebooks do not avoid disputes—they just divert the dispute to the parsing of legal words instead of arguing over what’s right. Indeed, legal detail often undermines the regulatory goal. “The more exact and detailed a rule, the more likely it is to open up loopholes, to permit by implication conduct that the rule was intended to avoid,” Judge Richard Posner observed.

October 11, 2014

Yet another first world problem

"Brunch Is for Jerks".

But now that I have a young daughter, brunch is completely impractical. By noon I’ve been up for hours and am ready for an actual lunch — although that meal is an increasingly endangered species on the weekend. For most restaurant owners, serving brunch is mandatory. It’s a revenue stream that also exposes restaurants to diners who might become regular customers. Even our local Thai restaurant insists on topping every dish with a poached egg on weekends and offering an ambiguously Asian mimosa. . . .

This leaves an increasing number of well-off young professionals who are unencumbered by children — exactly the kind of people who can fritter away Saturday, Sunday or both over a boozy brunch. Our once diverse neighborhood now brims with the homogeneity of an elite university. (Julian Casablancas, I imagine, will be disappointed to discover the same crowd of white people brunching in Phoenicia, Hudson or Beacon upstate.)

“Brunch,” said Mr. Micallef, the author, over the phone, “is a visible sign of the changes that sometimes feel out of our control.”

Poor baby!

October 08, 2014

"How Ordinary People Become Millionaires"

A fine little collection of stories of the type I used to present to high school and college students.

I titled my talk, "How to Get Rich". Granted, it was a gimmick, but it did seem to pique their interest, which I found increasingly difficult to do. The formula, as explified in the stories linked to, was simple: get a job and work steadily, save consistently, and then . . . wait. I used to show them that given a reasonable rate of return on their savings--these days the rate I used wouldn't be quite as reasonable--they could be millionaires, in real $, by age 65.

One high school boy was quite perturbed, however, by the punch line. "65?? At 65 you're not even . . . mobile!"

That still makes me laugh.

 

"Deficit Falls to $486 Billion, But Debt Continues to Rise"

The Committee for a Reponsible Federal Budget makes these important points:

  • Simply citing the 66 percent fall in deficits over the past five years without context is misleading, since it follows an almost 800 percent increase that brought deficits to record-high levels.
  • Even as deficits have fallen, debt has continued to rise, more than doubling as a percent of GDP since 2007 to levels not seen other than during a brief period around World War II.
  • Both deficits and debt are projected to rise over the next decade and beyond, with trillion-dollar deficits returning by 2025 and debt exceeding the size of the economy before 2040, and as soon as 2030.
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