by Beverly Mann

Last week, one of the law blogs I read regularly mentioned a post from May 11 on a law blog read regularly by a lot of law geeks (but not by me) about the oral argument in those cases a day earlier. The blog is The Volokh Conspiracy. Its bloggers are prominent rightwing or libertarian-right law profs, most of whom once were law clerks to a conservative Supreme Court justice. This particular post was by Georgetown law prof. Randy Barnett, who is a veritable font of rightwing legal theory and suggestions for rightwing laws and legal arguments.

He also is, from what I can tell, the farthest right of that blog’s bloggers. Earlier this year, one of the big, big names on that blog, Orin Kerr, wrote that he was pretty darned certain that under the Supreme Court’s Commerce Clause and Necessary and Proper Clause rulings, the ACA was constitutional. One of the other bloggers there—probably Barnett, but I don’t recall—disputed that.

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by Mike Kimel


I am not a Libertarian Because I Believe in Freedom and Property Rights, And I'd Like to Minimize Government Coercion

I wandered over the Libertarian Party and I found their Platform. I'm sure there are a few items here and there with which some libertarians disagree, but in general, it seems to me to be a pretty fair representation of libertarian beliefs, so I encourage you to read the whole thing. That said, I do not believe libertarians live up to their stated beliefs. Here's the first sentence of the pre-amble:

As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.

To that end, of course, the libertarian philosophy also seeks to minimize government, in particular, government coercion.

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There is an absolutely serious hypothesis that the sharp drop in violent crime in the USA since the early 1990s is due to the EPA and, in particular, to the shift from leaded to unleaded gasoline roughly two decades earlier.

Kevin Drum notes that James Q. Wilson ascribes about half of the total decline to lead exposure. The hypothesis makes sense, lead poisoning too mild to cause other symptoms is very strongly correlated across individuals with violent behavior.

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Another edition of my diatribe on QE-II. Here I reply to Noah in comments who discussed debt deflation and also explain my guess about what happened going beyond the evidence.

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I think this article "GOP freshmen get a tough lesson in politics" by David Fahrenthold in the Washington Post perfectly illustrates everything which is wrong with US political journalism.

The theme of the article is explained as follows

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There are reasons to expect the second half of the year to be be stronger than the first. Here are two: (1) the rebound in industrial activity following supply chain disruptions, and (2) possible impetus to investment spending coming from the depreciation allowance that expires this year. These factors, though, are just dressing up what may be weak underlying demand. Why? Because without significant jobs growth, it's unclear that we'll see the wage, salary, and income generation needed for a healthy continuation of the deleveraging cycle.

On the bright side, the Q1 2011 Gross Domestic Income, GDI, report does show a smart rebound in wage and salary accruals. The problem is, that corporate profit growth, which generally leads wage and salary accruals growth, is slowing. (GDI is the income side of the BEA's GDP release and you can download the data here.)


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by Mike Kimel

Robert Waldmann's "How to Solve Many Problems," This Time with a Question Mark

The other day I noted that the S&P 500 leads the economy. A few days before that, my colleague, Robert Waldmann suggested that perhaps it might make sense for the government to issue bonds and use the proceeds to buy risky assets, such as stocks.

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Yesterday I addressed the weak high-frequency indicators, specifically with respect to leading indicators of investment spending on equipment and software (durable goods). I argued that Q2 has not started off well, given that the real core orders for capital goods are down compared to the January to March average.

The BEA reported that Q1 2011 growth was 1.8% on a seasonally-adjusted and annualized basis, which is unrevised from the first release but the composition of spending changed somewhat. On the margin, Q1 2011 looks a bit less stellar (if you can call 1.8% annualized growth 'stellar') with consumption growth being revised downward to 2.2% over the quarter (previously 2.7%). Below is an illustration of the Q1 2011 contributions to GDP growth before 8:30am (1.75%) and after 8:30am (1.84%).

I think that the story is pretty simple: higher gasoline prices is even worse for consumption than initially anticipated, and inventory accumulation remains a large driver of economic performance.

It's still way to early to predict what the entirety of 2011 will bring - the IMF forecasts 2.8% annual growth - but the bar's rising on the quarterly growth trajectory to attain that level of growth. I suspect that forecasts will be revised downward.
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My wife had knee surgery recently.* One of the great things about our then-current health insurer is that they provide complete data—list price, what they negotiated, what they paid, what you owe. Since we’re in the “doughnut hole,” I’m tracking more frequently than I usually would.

And the bills—possibly because we were moving to a new provider—were processed quickly. So what you see below is, in percent form, the amount of the list price (in relation to the whole) and the net benefit to the provider (ibid.).

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They keep calling it a 'soft patch' in my business; but when's the data going to show otherwise? This soft patch is persistent, and durable goods orders confirm it into Q2 2011.

Note: The 'all manufacturing' orders Y/Y growth rate are available through March only in Datastream for the chart above; the nondefense capital goods ex aircraft orders are current through Aptil.
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Guest post by Mark Provost

Why the Rich Love High Unemployment
via Truthout

Christina Romer, former member of President Obama's Council of Economic Advisors, accuses the administration of "shamefully ignoring" the unemployed. Paul Krugman echoes her concerns, observing that Washington has lost interest in "the forgotten millions." America's unemployed have been ignored and forgotten, but they are far from superfluous. Over the last two years, out-of-work Americans have played a critical role in helping the richest one percent recover trillions in financial wealth.

Obama's advisers often congratulate themselves for avoiding another Great Depression - an assertion not amenable to serious analysis or debate. A better way to evaluate their claims is to compare the US economy to other rich countries over the last few years.

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by Mike Kimel

I recently got an e-mail from a fellow blogger asking me to link a list that blogger made of "top X" economics blogs. (And no, I will not link to the list or identify that blogger.) My response:

Hi. Umm.... I looked over your list, and while there are some very good blogs on it, there are also some that frankly, from what I can tell, specialize in peddling misinformation. By that I do not mean blogs that have a perspective with which I disagree. I tend not to agree, for example, with the folks at Marginal Revolution on many things, but they produce an excellent blog with well thought out posts and which generally get the facts right. I myself have listed them as a daily read at Angry Bear and would recommend them to anyone.

On the other hand, your list contains four blogs that from what I can tell are more likely to state or link to "facts" that are not true. There are also several blogs I do not recognize on the list so it is possible that there are more misinformation peddlers than that on the list. I am very sorry, but I cannot recommend your list to anybody.

Apologies.

Mike

How should one deal with those that peddle misinformation? Your thoughts?

This week further evidence has emerged of Germany's slowing growth trajectory. At 4.9% annual growth (calendar-adjusted) and a tightening bias from the ECB, this was, of course, to be expected.

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by Mike Kimel

Tax Rates and Economic Growth Over Ten Year Time Horizons, plus Why a Flat Tax Would Result in Much Slower Economic Growth

Last week I had a post looking at the the real GDP growth maximizing income tax rate using both top marginal income tax rates and and "average marginal" "all-in" tax rates for all taxpayers (including those who paid nothing) computed by Barro & Sahasakul. The post noted that the optimal top marginal rate was in the neighborhood of 64%, a finding that corresponds with many other posts I've written on the topic. The post also noted that the Barro-Sahasakul rates were not as useful at explaining economic growth as the top marginal income tax rates.

David Altig of the Atlanta Fed commented on the piece here, but he essentially had one very gently delivered criticism and one follow-up comment. The criticism is that my post did not consider long run effects - for each year, it looked at how the tax rate that year would affect growth in real GDP from that year to the next. The comment was that the post's results did not correspond with results of a paper he published in the AER with Auerbach, Kotlikoff, Smetters and Walliser. (Ungated version here. The paper

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Besides her comments on the growing lack of influence of the AMA on Healthcare reform Maggie Mahar at Health Beat Blog writes about Medicare breaking the cost curve of the healthcare industry.

Medicare Breaks the Inflation Curve

Today, S&P released data tracking the growth of health care costs which showed that over the year ending March 2011pending rose at an annual rate of 2.78% posted for the Medicare Index in its six-year history. (Hat-tip to Kent Bottles for calling attention to this report on Twitter). This news is, as Bottles says, “very important”, not to mention timely, given the deficit debate in Washington.)

By contrast, over the same 12 months, health care costs covered by commercial insurers rose by 7.57%. Still, as the chart below shows, even these costs (tracked by the “commercial index”) have been falling, down from a peak inflation rate of nearly 10 percent in the 12 months ending in July 2010 to 7.5% in the 12 months ending March 2, 2011.

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by Mike Kimel

The Historical Relationship Between the S&P 500 and the Economy, Part 2: The Abrupt Rise of Short Term Investing

Last week I had a post looking at how long it takes for events in the economy (in the guise of real GDP) to affect the stock market (represented by the S&P 500), and vice-versa. I noted that if you go back to 1950 and played with some correlations, you’d find that the S&P 500 tends to lead real GDP with the maximum effect occurring after about 10 quarters, and real GDP tends to lead the S&P 500 with the maximum effect occurring after about 16 quarters. Put another way – both the S&P 500 and real GDP affect each other (i.e., there seems to be virtuous cycle when things are going well, and a vicious cycle when things are going badly).

But… what if you look at shorter periods of time? Do these results hold? Using the same methodology as in the previous post – i.e., comparing the the correlation between the S&P 500 and real GDP in the same quarter, the correlation between the S&P 500 and the real GDP in the next quarter, the correlation between the S&P 500 and the real GDP two quarters later, etc. – we can find the number of quarters for which the effect of the S&P 500 on real GDP is greatest. But this time, instead of looking at for the period from 1950 to the present, we also look at it for the period from 1951 to the present, from 1952 to the present, from 1953 to the present, etc. This can tell us whether the degree to which the S&P 500 leads real GDP changes over time.

And here’s what that looks like graphically.

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Around 6:00 or 7:00a.m. tomorrow, we should know if if Rev. Camping is correct or liable to be sued. This time. (He must read Frederic Sheehan.)

I'm lucky; I get to spend most of the time at a swim meet.

For the rest of you, just in case, a selection featuring Mr. Tom Waits:

Post stimulated by Steve Benen. Content due to John Quiggin.

This is arithmetic "Arithmetic tells us there are two ways to achieve the goal: the government can bring in more money and put out less."

This isn't "a combination of cuts and tax increases were necessary when the deficit got really big"

Revenue doesn't come from taxes only. Consider the TARP big bank bailout. The Treasury turned a profit. The debt is less than it would have been without that program, but it wasn't a spending cut or a tax increase. Or how about the Carter Chrystler bailout (not the Obama Chrystler bailout). Ditto.

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One of my favorite paper presentations ever was by Daniel Parent, who is a good enough reason in himself for pending Labor Economists to apply to HEC. He was trying to present data on income inequalities in the Financial Services industry and was forced to note—all right, I asked—that they didn't have the data to determine if there was a racial difference in earnings because there wasn't enough data on high-earning Blacks in the sample to be "statistically significant." Since the sample used IRS data, among other sources, the answer was clear.

Now (via Tyler Cowen), I see that "not statistically significant" is not just for Financial Services Executives; the WSJ's markets blog notes:

On average, Republican professors gave black students grades that were .2 of a grade point lower than their Democratic colleagues, or about two-thirds of the distance between a B and a B-minus.

(Among eleven black professors in the sample, there were no Republicans, and the Democrats appeared to grade white and black students as their white-Democratic peers did. But there were too few black professors to make that finding statistically significant.)

Again, the finding may not be statistically significant, but the sample, er, complection is.

Their data set is available here.

UPDATE: Thoreau riffs on the subject and finds a link to the paper.

There is growing discord between the ECB and national politicians over a 'soft restructuring' of Greek debt. The ECB doesn't want it, while national policy makers grapple over it.

And just in case you were wondering what a soft restructuring actually is, Joseph Cotterill at FT Alphaville explains.

Beyond the gobbledygook restructuring talk is a simple story of incentives and the outlook for the Greek economy in the face of default. Over at Roubini Global Economics, Edward Hugh investigates the issue:

Put another way, if the most valid argument against going back to the Drachma always was that this would imply default, now that default is coming, why not allow Greece to devalue?

The problem is that Greece's manufacturing sector is NOT competitive, nor will it be under even the most severe fiscal austerity measures...not to mention that the fiscal austerity measures make their problems worse by deepening the domestic recession. Barring permanent fiscal transfers, they need a currency devaluation in order to gain any sort of competitiveness back.
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By Mike Kimel

Optimal Tax Rates for Generating Economic Growth According to Barro-Sahasakul Tax Data

This piece is a bit more wonky than what I normally post.

I recently re-read "Macroeconomic Effects from Government Purchases and Taxes" by Barro & Redlick. I was struck by how different the conclusions they make about taxes are from what you get if you simply make a bar chart of the top marginal rate at any given time versus the growth rate over the next year.

Now, obviously, Barro & Redlick take a completely different approach... but at the bottom of everything is the data set they use (see Table 1 of the above referenced paper and this explanation of the "Barro-Sahasakul" data set). To cut to the chase, they use estimates of the average marginal tax rates paid by taxpayers rather than the top marginal rate that I used in the bar chart referenced above. Their overall marginal rate is made up of not just federal tax rates, but also social security tax rates, and even estimates of the state tax rates. It should be noted the Barro is an average rate, and since the average includes non-filers (who pay zero), the Barro rate is often well below the top marginal rate. The top Barro rate is 41.8% which occurred in 1981 (compared to top marginal rates of 90%+ from 1951 and through 1963). The Barro rate is also not correlated with the top marginal income tax rate (correlation going back to 1929 is -30%).

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by Beverly Mann

The Difference Between Defending DOMA and Defending Neo-Nazis and the ACA

A post via Blog of Legal Times on Wednesday titled “King & Spalding Offers New Details on Marriage Mess,” which summarizes a report that day in one of its sister ALM (American Law Media) publications, the Atlanta-based Daily Report Online by staffer Meredith Hobbs begins (subscription needed):

The head of King & Spalding's Washington office is accepting blame for what he calls the "misunderstanding" that led the firm last month to accept, and then drop, the U.S. House of Representatives as a client in same-sex marriage litigation.

(Rdan...slight corrections for readability and sourcing original material)

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by Tom aka Rusty Rustbelt

Health Care Thoughts: Accountable Care "Smackdown" Part II

While the feds were developing regulations for Medicare ACOs, both the feds and the American Hospital Association were developing cost numbers for ACO start-ups.

Today the AHA published its preliminary numbers, listing 23 major competencies to form and operate a hospital-based ACO (the AHA has been generally supportive of reform efforts, seeing a grim future).

The AHA costs estimates ranged from 600% and 1400% higher than the DHHS-CMS estimates. Both estimates are preliminary, but that is a huge difference. In my opinion (without deep analysis) the federal estimates have the substance of cotton candy.

On the list of 23 competencies, some were for formation only but most for formation and operations (my own list was 13 major competencies for on-going operations). The ACO is a very complex business model.

If ACOs do not fly, the major objectives of PPACA (Obamacare) will be difficult if not impossible to achieve.

Smackdown I

Today Eurostat released April 2011 inflation for the Euro area. Prices are increasing at a 2.8% annual pace, up from 2.7% in March and very much above the ECB's comfort zone of around but slightly below 2%.

Today's report is the second release and includes the cross section of price gains below the headline number. The first 'flash' estimate does not specify the breakdown.

Inflation's hitting all sectors, goods (primarily) and services alike, via inputs to production.

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by Mike Kimel

The Historical Relationship Between the Economy and the S&P 500, Part 1

This post is the first in a series on the historical relationship between the economy and the stock market. Data used in this post is the adjusted close of the S&P 500 going back to 1950 and quarterly nominal GDP going back to the same date. Because quarterly GDP figures measure the economy at the midpoint of the quarter, the S&P 500 for February, May, August and November are considered the analogous "quarterly" S&P 500 figures.

The following graph shows how the two series have evolved since 1950.

Figure 1

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By Daniel Becker

Stock market is up, Profits are up and banks are safe. So what? Unemployment is somewhere between going down and I can't get no satisfaction. Housing values are still falling. 

A new nationwide survey from real estate Web site Zillow.com says the value of U.S. homes fell 3% from January 1 to March 30 -- the steepest quarterly decline since 2008.

 

I know, I'm suppose to care. Bigger picture and all. But frankly, when I read comments such as that by Mark Sadowski's:

 

Since Bernanke's Jackson Hole speech the steep rise in stock prices has increased household wealth by some $5 trillion. The rise in inflation expectations has helped to ease the household debt deflation problem. Consumption has been the bright story in the BEA numbers last two quarters,...

I just get all “A vineyard? Really?” Now I know Rebecca's post is about looking for some indication that things are better though tipsy and Mark is responding that with: No, things are rather solid in the “we're moving forward” category.

I'm going to be bold here and state right out that I'm speaking for the middle-class. (Those of this class can correct me if I'm wrong.) Five trillion dollar in new stock market wealth is not reaching us. I'm happy for you all that are now more wealthy, but really, you're only a small percentage of the population and thus your success is not representative of how well We the People in total are doing.

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For all of our economic problems here in the US, a simple measure of 'misery' illustrates that US households are less miserable in March 2011 than those in the Euro area.

The chart below illustrates the simple 'misery index', which is the unemployment rate plus inflation. The blue line is a 45-degree line; those countries below it have seen their misery index fall on a y/y basis. Not one Euro area economy misery index fell since this time last year - French and German misery indices are unchanged despite improving employment. In contrast, the US misery index improved over the year with labor market conditions.

The problem is, that European fiscal austerity is clinching aggregate demand, raising inflation (via higher taxes) and producing unemployment. Consumers and firms alike are feeling this in Europe.

In the US, fiscal policy has been accommodative enough to allow for private sector deleveraging while keeping the economy on an upward trajectory. However, food and energy price inflation in April stabilized the misery index compared to last year (not shown) - i.e., it's no longer improving. Unless the labor market shows marked improvement in coming months, US misery will turn "Euro" as inflation batters consumers amid elevated unemployment. Please see Marshall Auerback's piece at the New Deal 2.0 regarding QE2 - QE2: The Slogan Masquerading as a Serious Policy.

Rebecca Wilder

by Tom aka Rusty Rustbelt

Health Care Thoughts: Accountable Care "Smackdown"

The American Medical Group Association represents about 400 very large and sophisticated multi-specialty physicians groups, such as the Cleveland Clinic group and Intermountain (Utah) group.

The Obama administration had counted on these groups to be the first to create Accountable Care Organizations (ACOs), starting with Medicare ACOs in 2012 and then moving to full service ACOs. These groups were more likely to have the huge resources necessary to start an ACO.

On Wednesday the group announced 90% of its members would not participate, because the draft regulations issued March 31st were too prescriptive, too operationally complex, the move to risk sharing is too quick, the gatekeeper and risk management capabilities too much, and the time line too short. The AMGA consensus is the chance of success is close to zero, so why waste resources.

(see my post of 4/6/11: http://www.angrybearblog.com/2011/04/health-care-thoughts-aco-draft.html)

Not to pat myself on the back, but I just finished two papers with essentially the same comments. I'm not that smart, the flaws are just so terribly obvious to anyone with operations or insurer/risk management experience.

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Today Eurostat released their estimate of Euro area growth for the first quarter of 2011. The economy grew smartly, or 0.8% on the quarter on a seasonally- and working day- adjusted basis. On the face of it, Euro area growth, which is 3.3% on an annualized basis, dwarfs the 1.8% seen in the US economy. Really, though, it's joint German and French growth that tower US Q1 GDP growth.

Eurostat doesn't explicitly highlight how inordinately unbalanced is growth across the region in their report . Germany and France alone accounted for roughly 72% 78% of the quarterly growth of Euro area GDP.

(As I highlight below, the Euro area quarterly growth rate in the chart is slightly different to that in the Eurostat report since some euro area members are missing. The cross-sectional contribution should be roughly unchanged during the revisions, though.)

Update: This chart has been re-posted with only slight modifications from the original. It does not change the article's premise in any way. H/T to Philippe Waechter in comments below.


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Please expect new posts shortly. The Social Security Trustees report was puiblished 12:30 today so Bruce will be posting, Rebecca has a post and chart for Europe, Rusty has some more thoughts, and I have several items in mind.

1. Excess Rents Datapoint of the Day: Since the NYT doesn't pay Paul Krugman for his blog posts, why should reading those count as part of the "20 free articles" non-subscribers are allowed?
   
   
2. I want the Grapelli track, but not enough to pay for a six-CD set.
   
   
3. This—built by government employees—is the greatest accomplishment in music since Alan Lomax.
   
   
4. And, for fun, via my buddy Tom, the best obituary you'll read today.
   
   
5. Bleg of the Day: Anyone have a good source or sources on the structures, organizations, and operations of the old "Tea Companies"? Have been thinking about bubbles, and Tea Companies seems to be the Goldman Sachs of the pre-20th century: always in the middle of the problems, but treated reverentially in the histories.
   
   And, in the Posts I Plan to Write Soon category:
   
   
6. This book is making me wonder if we're asking the wrong question. Maybe it's not "Is Economics a Science," but rather "Is Economics a Discipline." More to come on this.
   
   

by Mike Kimel

Alex Knapp asks his readers to suggest a campaign slogan for Newt Gingrich. He suggests:

“Gingrich 2012: He will always love America. Unless it gets cancer.”

I suggest this:

“Cheating out of love for America”

But speaking seriously - how strong of a contender do you think Newt is for the Republican nomination?

The only time I personally owned MSFT stock was just after Thomas Penfield Jackson's second break-up ruling, when there might have been an upside.

I sold it shortly after the Appeals Court nixed the only good idea—breakup—in favor of "let them pay a fine to be determined, and let them dawdle long enough that the incoming Administration decides the fine, just so they're really disincented from making money by developing good products."

Barry Ritholtz Explains It All to You.

Via Alternet and the St. Petersberg Times:

A foundation bankrolled by Libertarian businessman Charles G. Koch has pledged $1.5 million for positions in Florida State University's economics department. In return, his representatives get to screen and sign off on any hires for a new program promoting "political economy and free enterprise."

The agreement is here.



Since readers include university professors, what is the deal? What is usual or setting a new bar for funding in a public institution?

by Beverly Mann

Much Ado About Not Much

The big legal news today was the first appellate-court oral argument, this afternoon, on the constitutionality of the Affordable Care Act. The argument—arguments, actually; two separate cases were argued separately—were to a three-judge panel of the Court of Appeals for the Fourth Circuit, the regional federal appeals court for several mid-Atlantic and southern states, including Virginia.

In one of the two cases argued today, Virginia’s Tea Party attorney general, Ken Cuccinelli, had sued on behalf of the state, challenging the constitutionality of the ACA in total and, jointly and severally, the individual-mandate provision providing for a civil fine for failure to obtain health insurance. (OK, the use of the phrase “jointly and severally” is an inside joke among lawyer types; joint and several liability is a personal-injury-law term that means that each defendant found guilty of participating in causing the injury is liable individually for the whole amount of the monetary award if the other defendants can’t pay their fair share.) The lower-court judge held that individual-mandate provision, but not the rest of the statute, unconstitutional, so the state appealed. In the other case argued today, Liberty University and a few individuals challenged the law as unconstitutional on several grounds, including that, according to the university, the law would allow for federal funding of abortions.

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Anyone who has ever worked with data knows that making certain the information is "clean" is much more important than what you do with it. Brilliant analysis of inaccurate data may make heroes (Chamley, Prescott, etc.), but it doesn't make sensible policy. Witness the release of "public" data from the state of Texas.

Jeremy once commented that the transition from a public to a private university was the choice between everyone knowing your earnings(public data) and everyone knowing your student reviews.

What happens when (1) everyone knows your salary but (2) what they know isn't true:

"My salary on the spreadsheet is $30,000 higher than my annual contract salary," a lecturer in the University of Texas system wrote in an e-mail message. He did not want to be named because of his status as a non-tenure-track employee. "Other details are correct, but the number 99 percent of people will want to see is not. The spreadsheet says that it's me, but it is not me."

So why would this happen? Because public universities in Texas aren't allowed to treat their data as if they are private companies:

System officials said the decision to release the data even though it was in draft form and included many gaps resulted from receiving multiple requests for it from news-media outlets under the state's open-records laws. After noting the data's shortcomings, in a disclaimer cautioning that the information was "incomplete and has not been fully verified or cross-referenced," the system released it "in the spirit of openness and transparency" because much of the data was already public anyway, said Anthony P. de Bruyn, director of public affairs.

Except, of course, that the data wasn't already public. Public data is vetted; this had not been. So why was it released?

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How did the German hyperinflation end ? I think the best but totally biased source of information is The Stabilization of the Mark by Hjalmar Horace Greeley Schacht
(just look at the price !?! to understand how German's felt). The book could be entitled "How I Did It" but the point is that he did do it. My book report after the jump.

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For Mother's Day, as it were, xkcd presents The Lawrence H. Summers Memorial History of Math and Science.

Buce at Underbelly does this, probably saving me the trouble of a post. (Consider this a SlothBear moment.)

The problem I want Drek the Uninteresting—or anyone else who knows the research—to address: if we assume that mercury in the vaccine wasn't the cause of the rise in autism, what are the causes that have been identified?

Maligning Tony Kushner by the Trustees of CUNY while he is on the cover of the current issue of his alma mater's alumni magazine probably was not a good idea.

Update: The one I left out earlier: the Second Quarter Kauffman Economic Bloggers Survey is out (warning: PDF). I'm especially thrilled by Mark Thoma's victory (p. 12), though surprised that the margin was so small. Suggestions that the 35% who voted for the second-best option were desperately attempting to deny incompetence are, of course, beyond the pale.

by Mike Kimel

Four Graphs Looking at Real Economic Growth

This post contains four graphs looking at real economic growth, three of which also contain some tax information.

The first graph shows the five year annualized growth in real GDP for every five year period beginning the one ending in 1934. (I begin then simply because data on real GDP is only available from the BEA beginning in 1929.)

Figure 1.

I took the liberty of adding in two lines free-style. The first is my attempt to trace the high points over time, leaving out WW2. The second traces the low points, assuming the collapse from 1929 to 1932 and the post-WW2 drop are special cases. (That huge dip from 1945 to 1950, economic shrinkage and all, is what libertarian professors like David R. Henderson keep referring to inexplicably as a post-war miracle.) Those ad hoc lines seem to indicate that any "Great Moderation" in the economy - whether it began in the 1980s or earlier - is more due to a slowing down of the rapid periods of growth than to a reduction in the severity of downturns. Put another way... the Great Moderation = the Great Suckening (for readers who aren't economists, that's a technical term like "sterilizing monetary policy" or heteroscedasticity).

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Over the last couple of months, a string of events made policy makers and investors alike say, what? Greece must raise capital next year and meet a 7.5% deficit target this year? Yes, they do, unless circumstances change. It's near impossible to bet successfully on what Euro area policy makers are going to do, so let's just review the facts here.

Greece missed its 2010 budget deficit target by near 1%, 9.6% of GDP projected (see .pdf page 45) vs. 10.5% actual (see Eurostat release, .pdf). The 2011 target is 7.5% of GDP.

Greece needs to raise roughly 30 bn euro in the private market next year - see .pdf page 50 here, where the IMF projects that Greece will finance 40.3bn in 2012, up from the 11 bn required in 2011. Furthermore, they'll need to issue debt with longer maturity than the 3-month bills they've been marketing this year. At 1200 basis points over German bunds on a 10yr note, Greece cannot 'afford' this and is very unlikely to be tapping markets for term loans anytime next year.

Greece's privatisation plan - selling state-owned assets - is probably too aggressive, amounting to roughly 4% of GDP per year through 2015 (10 bn euro average per year, see .pdf of presentation here, as a percentage of average GDP spanning 2010-2012).

But here's something that is really important, and another reason why I do not believe that Greece would voluntarily default until at least next year: they're expected to run a primary surplus in 2012. I take note that one can challenge the IMF's forecast, but it's the best information that I have at this time.

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The headline number of payroll jobs was strong and the markets are reacting strongly to the report that 224,000 jobs were created last month. Moreover, the job gains were widespread with the only secctors to show an employment drop were temporary jobs and government.
Private payroll employment rose 268,000, the largest increase this cycle.


But the household survey reported an employment drop of some 190,000. The unemployment rate is based on the household survey so the unemployment rate ticked back up to 9.0%.



On balance, this employment report showed essentially the same news as the last several reports of weak employment gains that are well below historic norms. However, by the standards of the recent jobless recoveries this cycle continues to underperform the 1990s cycle and show stronger growth than the 2000s cycle.


The workweek was unchanged so that despite the large increase in private payrolls aggregate hours worked only rose 0.2 from 100.5 to 100.7. This is about the same that we have seen for the past several months.

Average hourly earnings rose rose from $19.32 to $19.37, or 0.2%. The year over year gain in average hourly earnings remains at 1.9%, where it has been for several months. Moreover, average weekly earnings growth at 2.5% continues to moderate. But with yesterdays plunge in oil prices real earnings might actually rise this month. But the wage data shows absolutely no signs of inflationary pressure.

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At Balloon Juice, Doug Harlan J wrote

I’ve seen posters around for Kaplan test prep where it lists a bunch of answers and says “if you think you have to know the question to know the answer, you need to visit Kaplan”.

That is the correct answer. The question is after the jump.

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From his column in today's FT:

Even this is too simple, once one allows for banking: Ireland's net debt was a mere 12% of GDP in 2007

In other words, in FT World, privatizing the profit and socializing the risk is A Great Idea that deserves the full support of the government.

Sadly noting that Lawrance G. Lux has declared that his blog is at an end.

It does not take great skill reading between the lines to know that the blog is not the only thing nearing its end.

This post seems to come from a happier time, not just a month ago.

by Mike Kimel

Libertarians Looking Vaguely in the Direction of Apostasy

Tyler Cowen is a prominent libertarian, a professor at GMU and Director of the Mercatus Institute. He is also on very, very dangerous ground. Lately he has had a couple of posts - the latest one here - that quote a new book by Alexander Fields. I haven't read the book yet, but it seems to describe the 1930s as a period of great innovation despite pervasive misery.

But some of the passages Tyler quotes come tantalizingly close to noting that the economy was actually growing very rapidly by 1939. But what happens if he realizes it isn't just after 1939, that real growth under FDR was faster than under any President since data has been collected - even if you leave out 1941 through 1945. See Figure 1 at this post. (Or that FDR was followed by LBJ, and then JFK, and then Clinton.) What if he takes a look at private investment during the New Deal era. What if he looks at the relationship between tax rates and economic downturns or comparison of growth rates between the "roaring 20s" favored by libertarian myth and the New Deal era?

Could a person really remain a libertarian if they realized things like that? Cowen has a lot at stake. I wonder if he'll take the next step.

Note... Arnold Kling is also skating on the same ground. As of this writing, his readers, usually good for at least a few comments on every post, are stunned into silence.

Cross-posted at the Presimetrics blog.

by Tom aka Rusty Rustbelt

Human Resources: Coincidence or Trend

I have been around a long time, and have worked with and taught many people, so I get calls from people on career and workplace advice (I also have done expert witness work on certain aspects of employment practices).

In the past two weeks I have received 4 contacts from people 55 - 64 years old wondering about being "reorganized" (gracefully fired) from their managerial jobs.

Now I am certain people in that age group are having trouble being hired, but I wonder if fire-to-retire is going to become more common place. Bad economy paranoia? Smart intuition?

Coincidences or trends. Any thoughts out there?

What is wrong with this sentence ?

It is true that making the headline corporate income tax rate lower would be a good idea since that might give us a less distortionary tax code,, but in light of the long-term budget crunch that means we need to make up for any rate cuts by closing dividends.

Yes I write about grammar partly as a joke (I don't joke about spelling -- it is too painful). But I am serious. Matthew Yglesias draws a very definite conclusion in the italicized indicative from a claim in the subjunctive. It is always a mistake to say that something "is" true because something else "might" be true. This point is too elementary to be elementary logic.

I think I have something medium serious and almost worth reading on the corporate income tax after the jump.

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by Mike Kimel

The Effect of Oil Prices on Oil Drilling in the U.S.

Oil markets have changed dramatically in the past couple of decades or so. Except for a few years following the second Oil Embargo - prices got as high as $60 (in 2005 $) a barrel in 1981 - real prices have tended to be below $25 a barrel through about 1999. Conversely, 2003 prices have been higher than that - in some years quite a bit higher. Now, there are all sorts of explanations for this big change we've observed over the past few years, ranging from Peak Oil to the war in Iraq to the rise of the BRICs to market manipulation, but that's the point of this post...

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I thought that the whole point of fiscal austerity was to turn the balance of trade and capital flow within the Euro area: debtors becoming savers and capital flows out of the Periphery and into to the core. We're seeing the outset of such a shift; but it's probably too slow in the making.

The chart below illustrates the trade balance (exports minus imports) within the Euro area (17) for key austerity - Ireland, Greece, Spain, and Italy - and core - Germany, France, and the Netherlands - countries. The data span the last six months and are normalized by the European Commission's 2010 GDP estimate for each country (listed on the Eurostat website).

(Let me be clear here: the trade balances illustrated below include only trade flows within the Euro area.)

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by Tom aka Rusty Rustbelt

A Modest Tax Proposal

The GOP is all breathless about deficits, but this is the same GOP of Dubya Bush that fought a war in Iraq (unnecessary) and Afghanistan (overextended) funded entirely by debt.

So, the following proposal.

A 3% surtax on taxable incomes over $75,000 until the cost of both wars is paid.

This level of tax should not slow the economy, and we should face up to the responsibilities of having troops in the field.

Your thoughts?