Wednesday WaPo Linkage

Three items from the Washington Post today well worth a read. The first is an analysis of why people are so much gloomier about the economy than the data on inflation and unemployment really merit.  Several explanations are put forward by economists, and probably all of them contribute.  My experience discussing the economy with people tends to lend credence to this one:

The biggest reason for people’s gloom might be because of what they’re used to. In the 1980s and ’90s, memories of the double-digit unemployment and double-digit inflation from the 1970s were still fresh.

“People expected very little out of the economy,” said Richard Curtin, who has administered the University of Michigan’s survey of consumer sentiment for 35 years. “Compared to what their frame of reference was, the performance of the economy was absolutely tremendous.”

But now, coming off two decades of prosperity and low inflation, Americans have come to treat low unemployment and inflation as givens. We have gotten so used to things being good, in other words, that even when conditions become somewhat bad, it feels terrible.

This is especially true of my fellow young people.  We didn’t live through Jimmy Carter and sky-rocketing inflation and rationing of gasoline, so to us, the current situation seems terrible.

Speaking of gas, Robert J. Samuelson, in addition to having the best mustache of all the WaPo columnists, has some great ideas for how to reduce the political and economic consequences of $135 a barrel oil:

The first thing is to get out of denial. Stop blaming oil companies and “speculators.” Next, we need to expand domestic oil and natural gas drilling, including in Alaska. Although we can’t “drill our way” out of this problem, we can augment oil supplies and lessen price strains. It might take 10 years or more, because new projects are huge undertakings. But delay will only aggravate our future problems.

How commonsensical.

Meanwhile, my love/hate relationship with Michael Gerson continues apace.  In today’s column, he takes on Al Franken’s so-called satire:

The whole op-ed is really worth a read, because it lists some of Franken’s greatest hits, but I think these two paragraphs really cut to the heart of the problem with people like Franken.  Satirists like Jonathan Swift were certainly hard on their objects of ridicule, but there was a wicked intelligence to their work that someone like AL Franken lacks.  The Left is hard on our pundits, but Al Franken makes Ann Coulter look like Miss Manners.

As for Gerson, here’s what I’ve decided: he shouldn’t write about anything that has to do with actual policy.  Especially if there is money or numbers of any kind involved.  But as a critic of the culture, he has a lot of potential.

Our popular culture, of course, violates even these expansive boundaries of tastelessness with regularity. We laugh at comedies featuring the C-word and at cartoons of foul-mouthed third-graders. In the cause of relevance and realism, our common life is already decorated with excrement. Why should political discourse be any different?

For at least one reason: Because vulgarity is often the opposite of civility. This is not, of course, always true. I know a brilliant and large-hearted academic with roots in south Philly who uses the F-word with the frequency of “like” or “and.” But the vulgarity of “The Jerry Springer Show” or misogynous rap music — the cultural equivalents of Franken’s political “satire” — generally expresses contempt and cruelty. Franken is not content to disagree with Karl Rove; he calls him “human filth.” He is not satisfied to criticize Ari Fleischer; Franken terms him a “chimp.” The objects of Franken’s humor — including political opponents and women — are not merely mocked but dehumanized. His trashiness is also nastiness. Rather than lampooning the emptiness and viciousness of our political discourse — a proper role for satire — Franken has powerfully reinforced those failures.

 

Take Note

This is what we call “the market working.“  It’s what we crazy right-winger, anti-government extremists refer to when we beg Congress not to go around mucking up the works with new regulations.  Price of gas goes high enough, and you don’t need to start forcing minimum efficiency requirements on anyone.

 

Stupidity Reigns in US Senate

The hint of recession is bad enough, but when coupled with a looming election, it becomes the perfect recipe for bad policy.

Far be it for Democrats to let a moment pass without trying to buy someone’s vote, and because the House already compromised with Bushitler on a mere $160 billion drain of the taxpayer’s money, the Senate Democrats felt it was incumbent on them to push for about $30 billion more, to be spent on the following:

… increased benefits for the elderly and veterans; subsidies for low-income families struggling with home heating bills and other energy costs; mortgage counseling for distressed homeowners; extended unemployment benefits; increased food stamps; and tax credits for alternative energy sources.

Harry Reid is all manner of pissed off that the President and his rapacious Republican comrades won’t even consider his ideas for new ways to grow the deficit in pursuit of a goal that will probably already have been attained by the time the policy takes effect.

“I can give you their own speech on unemployment compensation, on food stamps,” the majority leader, Senator Harry Reid of Nevada, said of his numerous conversations with the administration. “They don’t believe in them, O.K.? So there was no way to agree when they don’t believe that food stamps are important, when they believe that if you extend unemployment benefits it only keeps people from looking for a job, which is a little hard to comprehend. So the answer is, we tried to work something out with them and we weren’t able to do that.”

That’s funny, because I recall learning that increasing unemployment benefits actually does tend to increase frictional unemployment, because it makes it cheaper to reject job opportunities and wait for something better to come along. But I guess Mr. Reid, with his training as a lawyer, would probably know more about unemployment than the four Ph.D’s who wrote my Macroeconomics textbook. Nothing about Congress’ response to the economic downturn has been rational, so why should I expect Harry Reid to be?

 

More on the economic stimulus plan

A professor of behavioral science says that if Congress and the President wanted people to spend their stimulus checks, they should have called them a bonus, not a rebate.

A rebate, psychologically speaking, is the return of a loss of one’s own money rather than a pure gain provided by someone else, so it is unlikely to be seen as extra spending money.

Getting a rebate is more like being reimbursed for travel expenses than like getting a year-end bonus. Reimbursements send people on trips to the bank. Bonuses send people on trips to the Bahamas.

Maybe, instead of taking our money only to give it back to us with the directive to spend, spend, spend, Congress could take a little less of our money in the first place. Just a thought.

 

McCain wins Florida

Who would have thought, back in August when his campaign was floundering, that McCain would be the Republican front-runner in January?

McCain does have some advantages over the other candidates worth addressing. First and foremost, despite his tendency to piss off Republicans with his “maverick” identity, he doesn’t alienate any one branch of the Republican party. He is, at the very least, acceptable to social conservatives, acceptable to economic conservatives, and probably more than acceptable to national security conservatives. This is in sharp contrast to Rudy Giuliani, who alienated social conservatives, and Mike Huckabee, who displayed nothing but contempt for the Club for Growth wing of the party and a dearth of foreign policy knowledge.

Despite some serious flaws on issues like immigration and campaign finance reform, he is at least not in any danger of breaking the Reagan coalition. His foreign policy credentials are sound, his record on abortion is good (Planned Parenthood regularly gives him a rating of zero on their legislative scorecard, which says good things about him in my view. Your enemy’s enemy, and all that), and he has a strong record fighting wasteful spending. The stumbling block for a lot of economic conservatives will be his original vote against the Bush tax cuts, and the rhetoric he used to argue against them (he made some classic class warfare arguments).

McCain also has more experience as a legislator than his Democrat opponent would, though it’s unclear whether that will be in his favor or not. After all, it seems that Obama’s lack of record is working in his favor, because he can say whatever he wants about change and a new kind of politics without anyone realizing that his actual issue positions are old-school Democrat.

Here’s my big problem with McCain: he’s been a leader in the Senate, and he’s taken some conservative positions. But he’s never combined the two and been a conservative leader. The big pieces of legislation he’s pushed are outright conservative apostasies: McCain-Kennedy immigration and McCain-Feingold campaign finance.

Also, McCain recently admitted to not knowing much about economics. I guess it’s good that he’s honest, but I’d really like for my president to be economically literate, because so many bad ideas originate from a poor understanding of economics. Like, say, handing out $600 checks to ward off recession.

Speaking of recession, I found a NY Times Op-Ed suggesting that repealing the Bush tax cuts would be a great way to stimulate the economy. The really priceless part was here:

But if they were repealed in a year, the Bush tax cuts could spur a burst of economic activity in 2008. If people knew that their tax rates were going up next year, they’d work to make sure that more of their income is taxed at this year’s lower rates. Investors would likewise have a giant incentive to cash out their capital gains now to avoid paying higher taxes later. In 1986, stock sales doubled as taxpayers rushed to avoid the capital gains tax rate increase scheduled for 1987. If people pour their stock gains into yachts and fast cars, that’s pure fiscal stimulus.

Isn’t having everyone sell large amounts of stock all at the same time something we generally try to avoid? And wasn’t there a stock market crash in 1987?  Don’t we emphatically not want a stock market crash?  And why are we assuming that the money removed from the stock market would be used to buy fast cars and yachts? People are trying to avoid taxes, therefore they will buy luxury items? Huh?

Finally, some wisdom to round things out for the day, we have Thomas Sowell commenting in the economic stimulus package.   A particularly priceless observation:

 Both political parties seem determined that the federal government should create a “stimulus package” of things designed to cushion a downturn in the economy.

That alone should be enough to make us remember that “the devil is always in the details,” because things that are bipartisan are often twice as bad as things that are partisan.

A bipartisan intervention is virtually guaranteed to be a grab bag of inconsistent policies thrown together in order to get the votes of people with contradictory ideas of what ought to be done.

Well said.

 

If you like Europe so much, why don’t you live there?

Interesting op-ed in the New York Times today about consumption and sustainability. The author, Jared Diamond, essentially argues that rising population is only a concern to environmental sustainability insofar as consumption also increases.

The population especially of the developing world is growing, and some people remain fixated on this. They note that populations of countries like Kenya are growing rapidly, and they say that’s a big problem. Yes, it is a problem for Kenya’s more than 30 million people, but it’s not a burden on the whole world, because Kenyans consume so little. (Their relative per capita rate is 1.) A real problem for the world is that each of us 300 million Americans consumes as much as 32 Kenyans. With 10 times the population, the United States consumes 320 times more resources than Kenya does.

[...]

People who consume little want to enjoy the high-consumption lifestyle. Governments of developing countries make an increase in living standards a primary goal of national policy. And tens of millions of people in the developing world seek the first-world lifestyle on their own, by emigrating, especially to the United States and Western Europe, Japan and Australia. Each such transfer of a person to a high-consumption country raises world consumption rates, even though most immigrants don’t succeed immediately in multiplying their consumption by 32.

The solution to this quandry, Diamond believes, is for developed and developing nations to meet in the middle:

The only approach that China and other developing countries will accept is to aim to make consumption rates and living standards more equal around the world. But the world doesn’t have enough resources to allow for raising China’s consumption rates, let alone those of the rest of the world, to our levels. Does this mean we’re headed for disaster?

No, we could have a stable outcome in which all countries converge on consumption rates considerably below the current highest levels. Americans might object: there is no way we would sacrifice our living standards for the benefit of people in the rest of the world. Nevertheless, whether we get there willingly or not, we shall soon have lower consumption rates, because our present rates are unsustainable.

The above was very interesting, though I would like to hear more about what an economist has to say about the issue rather than a geographer (which the author is). My conservative bias shining through? Probably, but that’s what you get for reading a conservative blog. Also, I’ll note that we’ve seen predictions of catastrophic population growth before which turned out to be mostly hysterics. Anyway, here’s the part that really interested me:

Real sacrifice wouldn’t be required, however, because living standards are not tightly coupled to consumption rates. Much American consumption is wasteful and contributes little or nothing to quality of life. For example, per capita oil consumption in Western Europe is about half of ours, yet Western Europe’s standard of living is higher by any reasonable criterion, including life expectancy, health, infant mortality, access to medical care, financial security after retirement, vacation time, quality of public schools and support for the arts. Ask yourself whether Americans’ wasteful use of gasoline contributes positively to any of those measures.

First, I’m not an economist, but my Macroeconomics textbook was pretty emphatic that consumption tended to be the largest part of a nation’s GDP, and that per capita GDP growth was inextricably tied to standard of living. So that throws the first sentence into question.

Second, I’m suspicious because the author switched statistics mid-argument, starting with overall consumption, then switching to oil consumption to argue that reducing consumption wouldn’t hurt the USA. But he says earlier:

The estimated one billion people who live in developed countries have a relative per capita consumption rate of 32.

Since the population of the USA is just over 300 million, according to July 2007 estimates, that leaves another approximately 700 million people in other developed countries with a relative per capita consumption rate of 32. So, even though the US is singled out early on in comparisons to Kenya and China, it would appear that Western Europe’s per capita consumption is about the same as the USA. Which doesn’t make any sense if you’re trying to argue that reducing consumption rates won’t really hurt us.

Finally, why does the author get to decide which criteria are “reasonable” when defining a standard of living? Western Europeans get great public schools at the expense of choice, access to medical care at the expense of innovation (and in the hands of government rather than price rationing), and retirement security and vacation time at the expense of economic growth and low unemployment. Why are these more reasonable measures than expected wage growth, low unemployment, low taxes, more living space, etc.

And his credibility just goes down the tubes when he includes support for the arts as a measurement of living standards. What if I don’t give a rat’s ass about painting or opera? Why should my tax money support them? Why is this any more valid than measuring living standards based on how many people have access to a NASCAR track? Or any other entirely arbitrary standard?

The worst arguments, in my humble opinion, are those premised on the idea that the USA should do something that Western Europe has done, because it seems to be working out for them. Thanks but no thanks.

 

A few quick hits, and a tale from retail

A couple items of interest that will otherwise pile up in my bookmarks folder and be lost to the ages:

A good piece on the rising popularity of supply-side tax cuts abroad, written by Stephen Moore. Supply-side economic theory has been under attack as of late, with liberal columnists (most notably Jonathan Chait of The New Republic, whose new book claims debunking abilities) working overtime to discredit not just the ideas, but the men who advanced them.

There was an article in the New York Times today about namesake earmarks. I was amused, because this is hardly news - during my summer internship, I helped scroll through spreadsheet upon spreadsheet of earmarks, marking ones that seemed suspicious or particularly egregious, researching them, and compiling data. One great example is Rep. Charlie Rangel’s (D-NY) earmark for a self-named Center for Public Service at the City College of New York. It’s common practice for colleges to name buildings after big donors, so considering that it’s taxpayers footing the bill, shouldn’t it be called “The American Taxpayer Center for Public Service?” Or maybe just “Boondoggle Hall” for short? I think it has a nice ring to it. But I digress. Another interesting set of earmarks belongs to Sen. Arlen Specter (R-PA), who funneled a total of $882,000 to 25 abstinence-only sex education programs in his state. Either Pennsylvania teenagers are a particularly promiscuous bunch, or Mr. Specter has realized that he needs to buy the social conservative vote to win reelection.

Kind of makes me proud to live in a state that Senator Jim DeMint represents. He, Tom Coburn, Jeff Flake and John McCain deserve some applause for their very lonely work challenging federal earmarks.

Speaking of applause, I was at work one day, folding clothes and talking with a guy whose wife was shopping. He asked me what I was studying, and I told him (somewhat shamefacedly - I’m not deluded enough to believe it was a practical career choice) that I was a political science major. The gentleman, all Southern drawl and old-timey curiosity, asked what side I wanted to work for.

“Well,” says I, in a solidarity-seeking approximation of his accent. “I’m a conservative Republican.”

He looks at me for a long minute, then remarks:

“You probably need a hug right now.”

Yessir, I surely do.

He settles for shaking my hand, and tells me to keep up the good work. I hope he was talking about my politics, not my clothes-folding and cash register skills.

 

Should I Change My Major?

Economics 258 isn’t a course about markets and supply and demand. My course catalog calls it “the study of Marxist and institutionalist political economy;” it applies communist and socialist ideas to many different matters, including “race and gender issues.” To earn a degree in economics at my University, I am required to take this course. Welcome to the wonderful world of liberal arts.

In today’s class we began our study of feminist theory and women’s work, a unit that will comprise one quarter of the 15-week course. A roomful of eyeballs nearly rolled out of their sockets when, on the chalkboard, our professor scratched, “What is a woman?”

“A biological category” was not a satisfactory answer. That’s simply what society tells us. According to my Economics 258 professor, a woman is a social construct.

Now, throughout my two and a half years of University indoctrination, I’ve learned a few things about feminism. I know that “sex” means male or female, and “gender” refers to masculine or feminine characteristics. Feminists and even the LGBT crew talk frequently about how society determines gender. That is, they believe women and men behave differently not due to biological factors, but because these behaviors have become social norms over time.

That’s fine, and to an extent it might be true that girls like pink and boys like blue because that’s what society dictates. But today was the first time I heard someone say that your sex, your physical anatomy, is a social construct.

I’m no biologist, but I have taken my fair share of science courses. Whether an embryo develops with two x chromosomes or one x and one y is determined long before society presents itself in that child’s life. One’s genetic constitution is a physical entity. Arguing that society constructs one’s sex is like saying that society is responsible for my naturally curly hair.

Once this apparent absurdity was brought up in class, our conversation turned to the reality of multiple sexes, as my professor put it. As we learned in a lecture my classmates and I attended last week, there is a broad spectrum of sexes; male and female are just two types. The social construct lies in our categorization of people into these two and only two sexes.

My professor didn’t seem to accept the idea of genetic mutations. Yes, of the billions of people on earth, there are a few who are born with both male and female genitalia. This is unfortunate (though not in my professor’s opinion), but it doesn’t mean every Jamie Lee Curtis with three chromosomes is a newfound sex. I was too afraid of the PC-police to mention this in class, but people with three chromosomes aren’t normal. Their genetic makeup is - wait for it - abnormal. Similarly, people who have genetic mutations that result in six toes aren’t normal. They are not bad people; they just have a mutation in their genes. Six toes does not warrant the classification of a new species, just as three chromosomes doesn’t warrant the creation of a third sex.

If labeling someone with an extra sex chromosome is a social construct, as my professor claims, then labeling someone with an extra 21st chromosome must be as well. That’s saying that Down Syndrome is a social construct. Down Syndrome is not a social construct, but a physical abnormality. Those with the condition are different from a majority of the population. My professor just cannot admit that hermaphrodites are different too.

If I were to take seriously everything I learned today in Econ 258, I could conclude that a “woman” is just a fabrication of society. I would believe that gender roles are not only oppressive and misleading, but one’s physical anatomy is as well. This leaves me more confused than hermaphrodites must be about their sex. Social roles of women aside, why can’t we embrace our bodies as they are? It’s a blessing that one day I’ll be able to carry a baby inside me and nurse him after he’s born. It’s nature that mandates this, not society. Why is that bad? I suppose I’ll have to figure that out if I want to do well in my econ class.