What on earth is The New Republic running this for?

On his website, DeLong is adamant that there is no such thing as excess capacity in the economy as a whole, only lackluster demand. That's true, as far as it goes. And if you think it tells the whole story, then cutting interest rates is the obvious response to the current situation. But the idea that demand is the problem breaks down once you look at distribution of prices across sectors. Generally speaking, there is steady deflation in manufacturing, where capacity is more difficult to adjust and where global competition can lead to oversupply. On the other hand, there is steady inflation in services--in everything from car insurance to sporting events-- whose capacity is either easy to contract (the former) or was difficult to expand in the first place (the latter), and where competition is more localized. Now that could certainly change--the latest consumer-confidence numbers show a sharp decline. But for the moment, it looks like our biggest problems are on the supply side. And those problems wouldn't have been solved by anything the Fed considered doing at its mid-August meeting.

Huh? Who let this guy in?
- posted by Jason @ 10:31 PM

 
Another entry in the ongoing campaign to demonize countries that are more liberal than the United States:

Then there's this observation: "Sweden has a negative natural growth rate, with more deaths than births now registered every year."

UPDATE: Gee, could this eugenics program involving the sterilization of tens of thousands of women as recently as the 1970s, have anything to do with that?

The link describes how Sweden sterilized "women released from prison, the mentally ill, people with learning difficulties, the poor, epileptics, alcoholics and women of 'mixed racial quality'" from 1936 to 1976. Mind you, the total number of sterilized, 60,000, would have no statistically significant effect on the population growth, but there's something more interesting: the United States did the exact same thing. We apparently stopped a few years earlier than them, and didn't sterilize quite as many people, but those are damned odd things to get all high and mighty about.
- posted by Jason @ 2:38 PM

 
Does anyone catch a real whiff of the old "Southerners understand the negro problem better" in Reynolds posts like this?
- posted by Jason @ 1:36 PM

 
This article, linked from Instapundit, is the silliest justification for invading Iraq I've seen.

Construction at the Abu Ghurayb Presidential Palace features extensive and complex water works. U.S. government web site notes that the Iraqi officials claim extensive crop damage due to drought. Photo shows use of scarce water resources to ensure that the lakes of Saddam's palaces are filled and grounds are well tended. CREDIT: U.S. Department of State.

Filling your swimming pool when there's a drought on is a casus belli now, I guess. The suburbs of the U.S. better watch out.

Yes, yes, I know it's a sign of how little he cares for his people, but give me a fucking break.

- posted by Jason @ 8:22 PM

 

The defamation of Sweden

Remember this study, which said Swedes are worse off than African-Americans? It used purchasing-power adjusted median household income to make its point. This choice of measurement makes it a case study in lying through misuse of statistics.

According to this, the average Swedish household size in 1995 was 2.28; this gives an average African-American household size in the United States of 3.5. Is that the numbers are so different already setting off alarm bells?

The U.S. census gives the average number of workers per African-American household as 1.95. I can't find a complete number describing the number of workers per household for Sweden, but this describes the top 20% of households by income in Sweden as having an average of 1.48 workers.

What does this all mean? Well, if the 1.48 number for the top 20% is close to that of the rest of the population, then the chief reason Swedish households are "poorer" than African-American households is that they're smaller. Throw in that U.S. workers work more hours than Swedish workers, and this study totally does not prove what it claims to: that Swedes are "poorer" than African-Americans in the U.S.

The easy way to show this is to look at hourly median wages for the two groups. Unfortunately, the best I can do is this, which gives a median annual income of 221,600 kroners for Swedish earners. Combine this with the Purchasing Power Parity multiplier of 9.68 from here, and that gives a median annual Swedish income per worker of $22,900. According to this, the median income of African-Americans workers in 1998 was $19,300 for men and $13,100 for women.

Finally, according to this, Swedish workers work an average of 1,552 hours per year, while United States workers work an average of 1,889 hours; apply the multiplier of 1.2 to the Swedish income, to get what they'd earn if they worked U.S. hours, and you end up with $27,900. This looks a tad bit higher than $19,300 and $13,100. Yes, yes, I really should break that hours worked number by race, but I can't find anything on it.

Anyway, I think the above analysis is mostly correct, and it's pretty goddamn obvious that Swedes aren't "poorer" than blacks. The researcher in question is being rather dishonest His numbers are the wrong measuring stick. Hourly compensation is all that matters.

Update: Glenn Reynolds says it's odd that this study is biased against the Swedes, since it was produced by them. It was produced by what appears to be a conservative Swedish think tank, HUI, in support of the conservative opposition party, though, so it's not counterintuitive at all.

Another update: Per criticisms from Todd Bass that the median earners per household number for Sweden is weak, I dug around some more and found this, which puts the mean workers per household at 1.38. Sure, it's 1981, but I doubt the number has changed that significantly since, and the median/mean distinction probably doesn't throw it too far off, either.

Yet Another Damn Update: I was trying to get at the fact that the median hourly wage (I don't know about you, but to mostly value jobs at income divided by hours worked) for U.S. and Swedish workers isn't all that different. I used the above convoluted process to derive something resembling the number for Sweden, as I couldn't find one.
- posted by Jason @ 4:08 PM

 

A Modest Proposal

I am greatly upset by the continued tactics of the post-Reagan GOP. They have discovered that they can cut taxes virtually independent of spending levels, and then use the resulting chronic deficits to bludgeon the democrats. Liberals currently have no defense against this tactic, being pathetically unable to call for cancellation of tax cuts yet to take effect, much less for tax increases.

Therefore, liberals should call the GOP's bluff, and run on a platform of the elimination of income taxes altogether, without any changes in spending. Government spending will be financed entirely through bonds.
- posted by Jason @ 11:12 AM

 
What the hell are they up to in Delaware? Lots of other people have commented on how creepy the "likely criminal database" they've got going in Wilmington, Delaware is. I don't think anyone's picked up on this part, though:

The police units taking the photographs are known in some Wilmington neighborhoods as "jump-out squads" because they descend on corners, burst out of marked and unmarked vehicles and make arrests in seconds. Up to 20 officers make up each squad.

Police routinely line the people on the corners against a wall and pat them down for weapons. This is known as a "Terry stop," named for a 1968 Supreme Court decision, Terry vs. Ohio, that allows officers to stop, question and frisk people they think are suspicious or people in high-crime areas.

Just one problem: there's not a damn thing in that decision that can be construed as supporting stops of people in "high-crime areas" just for being there. Heck, look at these bits from the opinion:

2. The issue in this case is not the abstract propriety of the police conduct but the admissibility against petitioner of the evidence uncovered by the search and seizure. P. 12.

(c) The officer here was performing a legitimate function of investigating suspicious conduct when he decided to approach petitioner and his companions. P. 22.

Update: Doh! Eugene Volokh says the above are "quotes from the reporter's syllabus, which doesn't have precedental value." Still, I don't see anything in there supporting frisks solely for standing on the street.
- posted by Jason @ 5:24 PM

 
Brad Delong found that Gingrich memo I mentioned a while back.
- posted by Jason @ 10:30 AM

 
Here's the line that finally convinced me Mickey Kaus has gone over to the dark side:

P.P.S.: Does Krugman really think it's a sensible government expenditure to have a whole separate, costly, and not-very-good system of Veterans' health care? If not, why blast Bush for trying to save money by suspending "marketing activities to enroll new veterans" in that white-elephant system?

What the living fuck is going on? This is the same Mickey Kaus that wrote the End of Equality? Bush is trying to hold down spending by indirectly denying veterans health care. This is pretty slimy, as veterans have an entitlement to free health care by virtue of, oh, getting shot at. Kaus's reaction is to question whether should have the entitlement at all and complain about the quality of the system. Last time I checked, free health care was better than no health care.

Talk about jumping through hoops to make your friends look good.

Update: Brad Delong comments:

"But Mickey Kaus can't join the Dark Side. After all, the Dark Side does believe in free medical care for veterans. On this John Derbyshire, Chancellor Palpatine, and Ming the Merciless agree."

Ok, this screws things up. Maybe Kaus has broken off entirely from the political paradigms of mere mortals and found an orthogonal axis of evil.
- posted by Jason @ 8:23 PM

 
It's time for an exciting adventure in contradictions, with your host, Mickey Kaus!

First, let's look at his latest bit, where he quotes Robert Reischauer:

Reischauer refers to a "very rapid increase in discretionary spending, " which in "the last two or three years" has grown about 7.6 percent before inflation.

.....and then extrapolates from that the standard line about porkish congressional spending and so on.

Now let's look at this article this article, where the same Robert Reischauer says this:

Like boastful teenagers, the president and the congressional Republicans are engaged in a reckless game of chicken over the discretionary spending caps that restrain spending in the one-third of the budget not devoted to entitlement programs or interest payments. The problem lies in the unrealistically low caps established for fiscal years 1999 to 2002 by the Balanced Budget Act of 1997.

What's wrong with the "unrealistically low caps" for 1999 to 2002 being broken by a "very rapid increase in discretionary spending"? Wouldn't you assume that's a good thing, from the standpoint of the speaker? Am I missing something?
- posted by Jason @ 8:01 PM

 
A relevant article on Social Security recycling every one of the conservative bits of disinformation out there. You know, stuff like comparing the return on a fully privatized Social Security system, not including the transfer costs, to the return of the current system.
- posted by Jason @ 5:11 PM

 
Working from the last post, the "Social Security crisis" is coming from the baby boom generation. Look at the equation and work it out: they're a generation that's much larger than either the previous or following ones. When they enter the labor force, taxes can be decreased, and when they retire taxes will need to be increased (assuming, mind you, that the program should always stay in balance).

This is the root cause of the "crisis." Now, what sounds like a fair solution to this problem? Well, why should they get to (basically) lower their own SS taxes, and then expect the not-that-big generation that follows them to raise their taxes to pay for boomer retirements? The most obvious solution is that the boomers should pay a little higher SS taxes, so the generation after them isn't completely screwed.

This is kind of what happened, actually. Go here and read the "1983 amendments" section.

Then it started to go horribly, horribly wrong.

• It costs more to have the money sit there than it does to pay down the debt with it; why not save money? Just have the rest of the government buy bonds from the program, and pay it back in 20 odd years.
  
• The government began running ever increasing deficits in the 1980s. This was exacerbated by the social security surplus, which effectively drove down the cost of running deficits.
  
• As time went on the deficit that the surplus was supposed to pay down came right back, as politicians discovered they could cut taxes and make it up out of the surplus.
  

The last point there is an oversimplification. Here's the history in detail:

• The 1983 reform creates a surplus over the course of the 1980s, through increases in the FICA tax rate.
  
• The surplus is rolled over into the deficit.
  
• The surplus grew, but the deficit grew even more.
  
• The elder Bush and Clinton both raised taxes to lower the deficit.
  
• The Social Security surplus kept growing and growing, eventually becoming so insanely large that when combined with the tax receipts of the 1990s boom, the "total" deficit virtually disappeared. Sure, the on-budget deficit was still there, but it was less than the FICA surplus.
  

Projecting forward from this point, the very large reduction in the deficit due to the Social Security surplus would let the next generation have a reasonable total tax burden; sure, their income taxes would be a little "higher" as they paid back the trust fund bonds, but they would also be a little "lower" due to the room freed up in the deficit, and their Social Security taxes wouldn't need to change.

What actually happened was that the younger Bush passed an absolutely enormous tax cut which brought back deficits. Oh, sure, if the recession hadn't come about the damage wouldn't have been quite as bad, but between 40% and 60% of the net change in the government's position is due to the tax cut, not the recession. Also, over the long run, the recession won't have as much of an effect; recessions only last a few years.

You can summarize the whole thing as the 1983 Social Security commission being punished for their sins of actually being fucking responsible: the GOP managed to use the changes to effectively shovel part of the tax burden from the rich to everyone else. FICA taxes went up, income taxes went down, and the net position of the government debt didn't improve; in the short run, the poor will pay more taxes, and in the long run the next generation is absolutely screwed on paying for their parents' retirement.

It's a good thing we're in an Era of Responsibility.
- posted by Jason @ 4:01 PM

 
What with all the hyperventilating about how an unreformed Social Security program is doomed, I thought it'd be interesting to go over the basic fundamentals of an intergenerational transfer retirement program.

You know the deal: you pay for the retirement of your parents, more or less. In general, I think only the following variables matter when looking at the long-run health of a program:

• Annual % change in per-capita GDP; let's call this A.
  
• Annual % change in the working population (from population growth and immigration); B.
  
• Annual % change in the lifetime retirement payments received by retirees (from increased life expectancy and income); C.
  
• Annual % change in the size of the retired population; D.
  

The state where the program will be in balance, and no changes in the tax level are necessary, is:

A * B = C * D

If the left side is greater than the right side, than taxes can be reduced. If the converse is true, then taxes must be increased. Yes, instead you can cut benefits, raise the work requirement, or so on, but it's equivalent to "raise taxes." Furthermore, benefits are pretty much going to be a constant related to GDP; an "ok retirement."

How does this apply to our situation today? Well, A * B is about 3%, so as long as C*D is less than that, we're just fine. If you assume that population growth is constant, then you're just matching per-capita GDP growth to time in retirement, and though I can't find any numbers to actually back this up, it's seems awfully likely for the foreseeable future that the annual change in total retirement time will be below 1.5% a year.

This begs the question: where is the Social Security "crisis" coming from?

Edit: If lifetime retirement payments increase at the same rate as per-capita GDP, then you can just divide A & C out, and you get B = D, which should be mostly true over the long run. One problem with assuming A = C is that the time in retirement will increase in addition to income, so the annual per-capita GDP change has to equal (annual retirement income change * annual life expectancy change). You'll probably have to fiddle with total time of retirement, but that doesn't change the basic point.
- posted by Jason @ 6:10 PM

 
We have a sale today on fish n' barrels.....

Focus on the Family's psychologist-in-residence, Bill Maier, said BBBSA should realize that "matching fatherless boys, starving for attention, with homosexual men is reckless and irresponsible, not to mention a recipe for disaster."

Not-so-subtle implication that all homosexual men are pedophiles: win!

A friend of mine's paraphrase:

"It's like a grocery store for homos," writes Tom Powell of Focus On The Family. "They can just walk into a Big Brothers & Big Sisters center and pick a tender piece of ass right from the produce section. It's disgusting."

- posted by Jason @ 4:56 PM

 
Cato has declared the Federal Reserve "obsolete," and has a few amusing suggestions:

• Repeal all laws giving the Fed monopoly power to issue currency.
  
• Eliminate all government regulation of banks and financial institutions.
  
• Change the tax laws so there was no preference given to transactions done in dollars (payment could still be required in dollars but there should be no capital gains if you choose to hold your money in yen, for example).
  
• Completely privatize the Fed either through an auction or fair distribution of shares to taxpayers.
  
• Exempt banks and financial institutions from antitrust laws.

Props to the Amateur Economist for digging this up.
- posted by Jason @ 10:57 PM