Archive

Posts Tagged ‘Economics’
February 6th, 2014 at 2:48 pm
An Idle Generation
Posted by Troy Senik Print

Following on Ashton’s post below (many of the themes of which appear in my column for this week), it’s crucial to note that the hazards presented by Obamacare’s incentives for lower-income Americans to stay out of the workforce are compounding a pre-existing problem. As noted by Mark Peters and David Wessel in yesterday’s Wall Street Journal:

More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t…

… The trend has been building for decades, according to government data. In the early 1970s, just 6% of American men ages 25 to 54 were without jobs. By late 2007, it was 13%. In 2009, during the worst of the recession, nearly 20% didn’t have jobs.

To the crisis amongst men, we can add the crisis amongst youth. As noted earlier in the week by Zara Kessler at Bloomberg:

According to a Pew Research Center analysis of U.S. Census Bureau data, 36 percent of the country’s 18- to 31-year-olds were living in their parents’ homes in 2012 — the highest proportion in at least 40 years. That number is inflated because college students residing in dorms were counted as living at home (in addition to those actually living at home while going to school). Still, 16 percent of 25- to 31-year-olds were crashing with mom and pop — up from about 14 percent in 2007 and 10 percent in 1968. In a Pew survey conducted in December 2011, 34 percent of adults aged 25 to 29 said that due to economic conditions they’d moved back home in recent years after having lived on their own.

Every trend line is pointing in the wrong direction. Yes, there are structural issues (technology, offshoring) that complicate the employment picture, but free markets generally resolve such issues given enough time. Markets can’t resolve, however, the pathologies imposed on the economy by government — whether Obamacare’s perverse incentives or the consistently anti-growth policies of the White House.

If nothing changes, the upshot will be the Europeanization of the American economy: fewer workers toiling to support a growing class of government beneficiaries.

Future generations may note the irony of Mitt Romney being so thoroughly pilloried during the 2012 election for his infamous 47 percent comment. While you can quibble with the statistics, the underlying theme is correct: we’re headed towards an economy with fewer makers and more takers. Changing that trajectory will be the responsibility of the next president — and it won’t be an easy one.

September 10th, 2013 at 3:28 pm
Remembering Ronald Coase’s contribution to liberty

“Transaction costs” are a familiar concept to any Economics 101 students today. Simply put, transaction costs are the costs other than the price that are incurred in trading goods or services. (Time and energy are two of the most obvious transaction costs.)

Given the universal acceptance of the idea of transaction costs, it might come as a surprise that the term wasn’t coined until the 1930s by Nobel Prize-winning economist Ronald Coase.

Coase died last week at age 102, spurring a number of glowing and well-deserved tributes. Perhaps none was more useful in explaining Coase’s impact to economics than an op-ed featured in The Times of London by author and Wall Street Journal columnist Matt Ridley:

Coase spent much of his career in the US, winning the Nobel Prize for Economics in 1991. His fame rested on two papers. The first, in 1937, explained why companies exist — islands of central planning in a sea of market negotiation. His answer was “transaction costs”: you could order a car from the suppliers of its many parts, but it’s a lot simpler to get Henry Ford to assemble it for you.

Not only do companies lower the cost of goods by co-ordinating production, they depend on having a reputation for doing so. You cannot know all the suppliers with whom you might deal, let alone if they can be trusted. Firms such as Amazon spring up to save us these transaction costs.

Companies also face transaction costs: for renting buildings, employing accountants and managers and so on. Coase taught us that the ideal size of a company will be set by the interplay of lower co-ordination costs through central planning and higher transaction costs associated with holding managers accountable.

This is a penetrating insight for markets and government. Steam and electricity, by making production lines possible, lowered co-ordination costs, making bigger firms viable. But bigger companies, like bigger government bureaucracies, have higher management costs. The difference, of course, is that profits in the marketplace signal whether firms are too big or too small.

Coase was not the tireless defender of free markets and competition that contemporaries such as Milton Friedman or Friedrich Hayek were, but his research led to a tremendous amount of skepticism about government’s ability to produce, manage or regulate efficiently and effectively. For that, all devotees of freedom and individual liberty owe Coase a debt of gratitude.

August 1st, 2013 at 5:22 pm
Obamacare Bites Its Handler
Posted by Troy Senik Print

The number of constituencies for Obamacare keeps shrinking everyday. From Elizabeth MacDonald at Fox Business:

Health reform is now causing job turmoil across the country in three key groups that the White House has depended on for support—local government, school workers and unions.

School districts in states like Pennsylvania, North Carolina, Utah, Nebraska, and Indiana are dropping to part-time status school workers such as teacher aides, administrators, secretaries, bus drivers, gym teachers, coaches and cafeteria workers. Cities or counties in states like California, Indiana, Kansas, Texas, Michigan and Iowa are dropping to part-time status government workers such as librarians, secretaries, administrators, parks and recreation officials and public works officials.

The next time you hear the president drone on about income inequality, remember that his signature domestic achievement has a nasty habit of kneecapping the working class. Even if the president’s gripe is that these people had low wages and no health insurance before he took office, consider the net effect of his tenure: they now have even lower wages (thanks to fewer hours) and still have no insurance. Heck of a job, Barry.

July 24th, 2013 at 5:45 pm
If You’ve Lost Dana Milbank …
Posted by Troy Senik Print

The Washington Post’s Dana Milbank is usually a reliable source of center-left hackery, so it bears noting when even he can’t react to a new Obama Administration PR push with anything other than a 650-word eye roll. From his column in today’s Post, reacting to the president’s new agenda of economic speeches (the first of which was given earlier today in Illinois):

… [E]ven a reincarnated Steve Jobs would have trouble marketing this turkey: How can the president make news, and remake the agenda, by delivering the same message he gave in 2005? He’s even giving the speech from the same place, Galesburg, Ill.

White House officials say this will show Obama’s consistency. “We plead guilty to the charge that there is a thematic continuity that exists between the speech the president will give in Galesburg, at Knox College on Wednesday, and his speech in Osawatomie [Kansas, in 2011] and his speech back at Knox College in 2005,” White House press secretary Jay Carney said.

Yes, but this also risks sending the signal that, just six months into his second term, Obama is fresh out of ideas. There’s little hope of getting Congress to act on major initiatives and little appetite in the White House to fight for bold new legislation that is likely to fail. And so the president, it seems, is going into reruns.

I’m actually inclined to go a little easier on the president in terms of analysis while being more damning in the conclusion I draw.

‘Thematic consistency’ makes sense if you’ve got a persistent ideology. This president clearly does on economic issues: intemperate Keynesianism seasoned in rhetorical class resentment.

He’s had half a decade to put that theory into practice — in circumstances sufficiently dire that you can’t rationalize away failure — and it just … doesn’t … work. New ideas would require him to reevaluate first principles, unraveling his entire political philosophy. Is he out of ideas? No, just an ideologue who can’t come to grips with the fact that his worldview has failed the acid test of reality.

July 9th, 2013 at 7:05 pm
Resistance, on the Grapevine
Posted by Troy Senik Print

Make what you will of the fact that the most provocative stories in the Washington Post come from the Style section, but this one is a doozy:

KERMAN, Calif. — In the world of dried fruit, America has no greater outlaw than Marvin Horne, 68.

Horne, a raisin farmer, has been breaking the law for 11 solid years. He now owes the U.S. government at least $650,000 in unpaid fines. And 1.2 million pounds of unpaid raisins, roughly equal to his entire harvest for four years.

For what offense has our scofflaw earned the contempt of the state? I’ll tell you, but you should probably take a moment to get any sharp objects out of your immediate vicinity:

He said no to the national raisin reserve.

“I believe in America. And I believe in our Constitution. And I believe that eventually we will be proved right,” Horne said recently, sitting in an office next to 20 acres of ripening Thompson grapes. “They took our raisins and didn’t pay us for them.”

The national raisin reserve might sound like a fever dream of the Pillsbury Doughboy. But it is a real thing — a 64-year-old program that gives the U.S. government a heavy-handed power to interfere with the supply and demand for dried grapes.

It works like this: In a given year, the government may decide that farmers are growing more raisins than Americans will want to eat. That would cause supply to outstrip demand. Raisin prices would drop. And raisin farmers might go out of business.

To prevent that, the government does something drastic. It takes away a percentage of every farmer’s raisins. Often, without paying for them.

This, by the way, is not a novel approach for the feds. Back in 2007, George Will noted the practical realities that had galvanized the otherwise moderate (then)Senator Richard Lugar to oppose farm subsidies:

Time was, Riley Webster Lugar, a Hoosier farmer, vociferously disapproved of the New Deal policy of killing baby pigs to control supply in the hope of raising prices. When his son Marvin ran the family farm, if a cashier giving him change included a Franklin Roosevelt dime, he would slap the offending coin on the counter and denounce the New Deal policy of supporting commodity prices by controlling supply — by limiting the freedom to plant.

Today, Marvin’s son Dick is carrying on two family traditions — running the farm and resenting the remarkable continuity connecting today’s farm policies with the New Deal’s penchant for economic planning. The grandson, now 75, is again trying to reform what Franklin Roosevelt wrought.

Lugar is gone from the Senate now, but let’s hope that members of Congress taking up a monstrosity of a farm bill can find the time and will to carve up all provisions that irrationally demand artificial scarcity as a means to abundance.

June 17th, 2013 at 4:33 pm
In the Battle of Ideas, the South is Winning
Posted by Troy Senik Print

Federalism essentially allows us a controlled experiment in which we can examine which policies work and which don’t by examining the contrasts between states that have chosen different paths. The results, as Joel Kotkin notes at the Daily Beast, are pretty lopsided:

The North and South have come to resemble a couple who, although married, dream very different dreams. The South, along with the Plains, is focused on growing its economy, getting rich, and catching up with the North’s cultural and financial hegemons. The Yankee nation, by contrast, is largely concerned with preserving its privileged economic and cultural position—with its elites pulling up the ladder behind themselves.

… While the Northeast and Midwest have become increasingly expensive places for businesses to locate, and cool to most new businesses outside of high-tech, entertainment, and high-end financial services, the South tends to want it all—and is willing to sacrifice tax revenue and regulations to get it. A review of state business climates by CEO Magazine found that eight of the top 10 most business-friendly states, led by Texas, were from the former Confederacy; Unionist strongholds California, New York, Illinois, and Massachusetts sat at the bottom.

… Over the past five decades, the South has also gained in terms of population as Northern states, and more recently California, have lost momentum. Once a major exporter of people to the Union states, today the migration tide flows the other way. The hegira to the sunbelt continues, as last year the region accounted for six of the top eight states attracting domestic migrants—Texas, Florida, North Carolina, Tennessee, South Carolina, and Georgia. Texas and Florida each gained 250,000 net migrants. The top four losers were New York, Illinois, New Jersey, and California.

There are only two options for the boutique coastal states and the union-dominated interior: emulate the South or be supplanted by it. This should be fun to watch.

January 4th, 2013 at 12:55 pm
The Cost of New Federal Regulations: $123 Billion and 13 Million Hours
Posted by Troy Senik Print

From Fox News:

By law, each April and October, federal agencies are required to release an accounting of proposed regulations that will have an economically significant impact. That didn’t happen in 2012.

Instead, the Obama administration didn’t release its 2012 regulatory agenda until on the Friday before Christmas.

“The fact that this snuck in after the election, during the holiday season when people were otherwise occupied with their families, is not surprising,” said John Malcolm, senior legal fellow at the Heritage Foundation’s Center for Legal and Judicial Studies.

Since the Dec. 21 release, legal experts and analysts have been pouring through the tens of thousands of pages in order to determine their impact. According to an initial estimate by the American Action Forum, which notes that some entries are missing key fiscal data, the cost of implementing the agenda would top $123 billion. Completing the paperwork could require more than 13 million man-hours.

“It’s massive,” former Deputy Attorney General Tom Dupree said. “There’s no way any human being can sit down and read this whole thing from front to back.”

In a society that prizes both limited government and the rule of law, it’s reasonable to expect regulation to be simple, transparent, and cost-conscious. This new wave of dictates fails on all three counts. And what’s most singularly galling about the whole thing is that there is no one to hold directly accountable. No one who crafted any of these rules ever stood for office or received a single vote.

As ever, when it comes to the administrative state, the delegation of power is the abdication of liberty.

November 27th, 2012 at 1:47 pm
The Hypocrisy of Warren Buffett
Posted by Troy Senik Print

Kudos to Adam J. White at The Weekly Standard for hoisting Warren Buffett on his own petard. Buffett is out with a new New York Times op-ed agitating for — what else — higher taxes. His condescending opening reads as follows:

Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”

Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist.

An addendum: only in Grover Norquist’s imagination and Warren Buffett’s biography. White catches him thusly:

Early in his career, Buffett invested heavily—almost one third of his early fund’s capital—in Sanborn Map, a company that mapped utility lines and such. But he soon grew frustrated with the company’s leadership, which “operated more like a club than a business,” and which refused to return greater dividends to investors. So Buffett amassed more and more stock, and with control of the company finally in hand he pressed the board of directors to split the company in two (one for the mapping business, and one to hold the company’s other outsized investments).

Finally, the board capitulated. But with victory finally at hand, Buffett nearly scuttled the deal because of … taxes. As [Buffett biographer Alice] Schroeder recounts, quoting Buffett, one director proposed that the company just cleanly break the company, despite the tax consequences—”let’s just swallow the tax,” he suggested.

To which Buffett replied (as he recounted to Schroeder):

And I said, ‘Wait a minute. Let’s — “Let’s” is a contraction. It means “let us.” But who is this us?  If everyone around the table wants to do it per capita, that’s fine, but if you want to do it in a ratio of shares owned, and you get ten shares’ worth of tax and I get twenty-four thousand shares’ worth, forget it.’

Buffett was willing to walk away from a deal because the taxes would have taken too much of a bite out of it. Fortunately for him, the board gave in and allowed him to structure the deal that he liked, saving him from his own Norquistian response.

So is Warren Buffett an irrational businessman or an irrational policy analyst? All the evidence points in one direction.

November 19th, 2012 at 4:28 pm
Geithner’s Solution to Debt Crisis: Eliminate Debt Ceiling
Posted by Troy Senik Print

There is a certain logic to this. Why have laws, after all, that exist purely for the purpose of being broken? That being said, it’s telling that the Treasury Secretary (he of “We don’t have a plan, but we don’t like yours.”) seems more interested in eroding even the weakest checks on the national debt than in doing something to arrest — or, heaven forfend, even reverse — it’s growth.

November 5th, 2012 at 4:45 pm
Want to Reduce Public Spending? Make Government More Efficient
Posted by Troy Senik Print

There’s a certain strain of thinking on the right that scoffs at the notion of “efficient government.” The skepticism of what seems to be an unobjectionable goal has a few sources.

First, many pundits point out that the nation’s constitutional design is predicated on checks and balances that make government anything but efficient — the explicit goal, after all, is to slow the lawmaking process in an attempt to ensure some measure of deliberation. They’re right about that, of course, but that’s an observation on the lawmaking process, not on implementing or enforcing the law.

Second, conservatives note (also rightly) that government by its very nature (i.e., the lack of market incentives present in the private sector) has a built-in bias towards sclerosis and waste. That’s true as far as it goes, but arguing that government can’t be administered perfectly is not the same as arguing that it can’t be done better.

For a good example of the potential of reformist public administration, one need look no further than the example that Indiana Governor Mitch Daniels set with that most hated of bureaucracies, the DMV (though in Indiana it’s the BMV — The Bureau of Motor Vehicles). Consider this excerpt from Andrew Ferguson’s fabulous profile of Daniels in a 2010 issue of the Weekly Standard:

The state Bureau of Motor Vehicles, another patronage sump that was routinely ranked one of the worst in the country, was drastically reorganized. “[Daniels] likes metrics,” [Director of the Indiana OMB Ryan] Kitchell said. “He likes to measure outcomes.” Every line item in the state budget has at least one objective formula attached to it to indicate how well each service is being delivered. Regulatory agencies track the speed with which permits and variances are granted. The economic development agency has to compare the hourly wage of each new job brought to the state with the average hourly wage of existing jobs. In the case of the BMV, the two most important metrics were wait times and customer satisfaction. Now each receipt is stamped with the time the customer arrives and the time his transaction is completed. Wait times have dropped from over 40 minutes to under 10 minutes. Surveys put customer satisfaction at 97 percent.

So it can be done. And by the way, it’s also a cracker jack method for keeping government outlays under control. From Walter Russell Mead, writing at his Via Meadia blog:

… By 2025, fully 34 percent of US GDP will be eaten up by the cost of providing public services. Throw in little items [like] interest on the burgeoning national debt and pension and other liabilities, and we are looking at basic governance costs and obligations close to 40 percent of GDP—and heading inexorably higher…

There are two basic drivers behind these numbers: the first is the well known demographic problem that comes from the combination of increased longevity and falling birth rates. Programs like Medicare cost more as people live longer, and reduced population growth means that the workforce grows more slowly than the number of old people drawing on government services and transfer programs.

But the second driving force, which [an] Accenture [study] highlights very usefully, is less well understood: the catastrophically slow growth of productivity in the government workforce. Think of this as “bureaucracy drag;” while productivity in the workforce as a whole is rising by 1.7 percent per year, and in private sector service industries it is rising by 1.5 percent each year, in government productivity is rising by a miserable 0.3 percent per year.

Bureaucrats aren’t getting the job done. And the rest of us are paying the price. It’s time for public sector executives around the country to take a page out of Mitch Daniels’ playbook.

October 30th, 2012 at 10:42 am
No Growth Without Government
Posted by Troy Senik Print

GDP grew by two percent in the third quarter of this year. That’s not a particularly impressive number, but in this economy — with its now-ubiquitous diminished expectations — it falls under the category of “We’ll take what we can get.” The Mercatus Institute’s Veronique De Rugy and Keith Hall have scratched beneath the surface of those numbers, however, and what they’ve found is even more disheartening than the rate itself:

According to the Bureau of Economic Analysis, the economy grew by a modest 2 percent in the third quarter of 2012. While this was stronger growth than the preceding quarter, all of the increase in GDP growth came from the biggest increase in federal government spending in over two years.  Federal government spending rose 9.6% at an annual rate in the third quarter…Growth in the private sector fell by 0.1 percent to 1.3 percent in the third quarter—down from 1.4 percent in the second quarter.

But the private sector, we remind you, “is doing just fine.”

October 29th, 2012 at 2:53 pm
Required Pre-Election Day Reading: Obama’s Imperial Presidency
Posted by Troy Senik Print

Just in time for Election Day, House Majority Leader Eric Cantor has released a report entitled “The Imperial Presidency,” which serves as an exhaustive chronicle of all the ways in which President Obama has undermined — or outright ignored — the rule of law. It covers everything from regulatory overreach to ignoring the traditional “advise and consent” process to abusing the waiver process, and it’s well worth a read.

As we approach November 6, it’s important to remember that these offenses aren’t just abstract violations of the constitutional order — they’re also ingredients for economic decline. As Conn Carroll notes today in the Washington Examiner:

Conservatives are not the only ones who have documented Obama’s assault on the rule of law and its impact on the U.S. economy. Every year, the World Economic Forum issues a Global Competitiveness Report, ranking more than 100 countries on a number of key economic indicators. When Obama was sworn into office, the United States was ranked as the best country in the world to do business. After just four years under Obama, the U.S. has dropped to seventh. The report specifically cites the collapse in the rule of law in explaining this decline.

Before Obama was president, the U.S. ranked 40th in “favoritism in decisions of government officials.” Today, the U.S. ranks 59th, a fall of 19 places. Before Obama was president, the U.S. ranked 50th for lowest “burden of government regulation.” Today, the U.S. ranks 76th, a fall of 26 places. Before Obama was president, the U.S. ranked 28th in “transparency of government policy making.” Today, the U.S. ranks 56th, a fall of 28 places.

Care to venture a guess as to where those rankings would be after another four years of Obama?

October 25th, 2012 at 6:32 pm
Income Inequality: It’s Easy to be Poor When We Don’t Count the Safety Net
Posted by Troy Senik Print

The American Enterprise Institute’s Kevin Hassett and Aparna Mathur have an important (and devastating) piece in today’s Wall Street Journal breaking down the misleading facets of the left’s argument that the U.S. is currently suffering through a crisis of economic inequality. Here’s a particularly eye-opening excerpt:

In the first place, studies that measure income inequality largely focus on pretax incomes while ignoring the transfer payments and spending from unemployment insurance, food stamps, Medicaid and other safety-net programs. Politicians who rest their demands for more redistribution on studies of income inequality but leave out the existing safety net are putting their thumb on the scale.

Second and more important, it is well known that people’s earnings in general rise over their working lifetime. And so, for example, a person who decides to invest more in education may experience a lengthy period of low income while studying, followed by significantly higher income later on. Snapshot measures of income inequality can be misleading.

Thomas Sowell frequently makes a point complimentary to Hassett and Mathur’s second observation above: that measuring income inequality over time tends to be deeply misleading because membership in any given income bracket is highly fluid, with people’s income often shifting dramatically over time. Thus, someone who’s in the bottom quintile of income in today’s measurements may be in the second quintile from the top in 15 years’ time. But we tend to analyze these groups as if their composition is static.

Hassett and Mathur’s first point, however, is the one that always bowls me over. If the point of a safety net is to remove people from the perils of indigence, yet the government refuses to factor those provisions into measurements of income, we end up with a perpetually imperiled underclass that only exists on paper. As Mark Twain said (supposedly quoting Disraeli), there are three kinds of lies: “Lies, damned lies, and statistics.”

September 24th, 2012 at 3:14 pm
The Libertarian Dream … in Honduras?
Posted by Troy Senik Print

From Fox News:

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

It’s a fascinating experiment, though we can’t quite call it a novel one — this is, after all, a more extreme version of what Hong Kong does on a larger scale. And therein lies the rub. While there are a few minor shortcomings in the mechanics of this project (there’s already some protectionism in the new city’s labor laws, for instance, with businesses forced to meet quotas for native-born Honduran employees), the bigger concern is that it will be a lonely success.

Hong Kong, for instance, is consistently deemed the freest economy in the world, a trait that has led to it having a higher per capita GDP than the United States. Were this simply an argument on the merits over whether free markets work, the jury would be in. But this is no academic seminar. In less economically free nations, ideology may inform some of the hostility to capitalism, but the bigger issue is that opening up markets takes the power to select winners and losers away from government — a bridge too far for many politicians. Embracing economic freedom in the fashion of the Honduras experiment is laudable. But the hard work is not in allowing capitalism to succeed; it’s in convincing politicians to give it the chance to do so. That’s the biggest accomplishment here.

August 9th, 2012 at 5:38 pm
Donald Trump Provides Econ 101 Lesson … In 140 Characters or Less

Early this week, the liberal group Americans United for Change and the American Federation of State, County and Municipal Employees launched a $280,000 ad campaign targeting some Republicans who voted to extend all of the Bush tax cuts for all Americans.  The ad charges them with voting “to give people like Donald Trump a tax break worth $150,000 a year…” [Emphasis added]

In response, the Donald took to Twitter and fired back with the following:

To the geniuses at ‘Americans United for Change’: the more you tax me the less people I employ. Get it?

That’s the problem, Mr. Trump.  They don’t get it.

July 30th, 2012 at 1:39 pm
California’s Surging Exports … of People
Posted by Troy Senik Print

We’ve made a bit of a cottage industry here at CFIF of chronicling the downfall of California, a truly great state where metastasizing liberalism threatens to kill its host. Over the weekend, the Daily Caller’s Angelica Malik put the results into sharp relief:

The California Manufacturing and Technology Association found in a recent study that 82 percent of companies surveyed did not consider California when expanding or opening a new facility.

The study also noted that companies looking to expand their operations favored states with proximity to their customers, generous tax incentives, low cost labor, proximity to suppliers and a comprehensible and a favorable tax system.

California ranked last or bottom tier in all of those categories.

This comes on top of the recent news that the Golden State ranked last in CEO magazine’s ratings of state business climates for the eighth straight year.

The upshot: billions in lost revenues, millions in lost citizens, and hundreds of fleeing businesses (with scores more downsizing or dismissing the prospect of heading to California in the first place).

There’s little here in the way of silver linings, except for this: there’s a fair bit of education here for the rest of the nation. If the Lilliputians of liberalism can tie down even mighty California, they can wreak untold havoc anywhere. No one is immune. It’s just a shame that it requires such a significant casualty to convey this point.

July 26th, 2012 at 5:18 pm
Gail Collins: Moron
Posted by Troy Senik Print

I have a working theory to explain the existence of pundits like the New York Times’ Gail Collins, self-parodists who find themselves incapable of escaping the intellectual shallows of liberalism: they must all be secretly financed by a group of wealthy conservatives who regard providing endless fodder for bloggers on the right to be a form of public service.

In Collins’ newest dispatch from the outskirts of sentience, she travels to Williston, North Dakota, a sort of 21st century boomtown where unemployment hovers around one percent thanks to the huge oil reserves now accessible from the Bakken formation.

The reality of the economic dynamism in Williston is so painfully clear that Collins is forced to present it in a fairly positive light, though that doesn’t keep her from some of the reflexive sneering of a Manhattan imperialist (she sniffs that there’s a Wal-Mart instead of an adequate mall and that “The most ambitious restaurants would be classified under the heading of ‘casual dining.’).

Because Williston’s success is fueled by conventional (read: useable) energy, however, the gravitational pull of Collins’ liberalism kicks in when, in the second half of the article, she sets out to expose the unseemly side of Williston’s growth. The results are pathetic.

First, Collins takes a swing at fracking so half-hearted that she doesn’t even seem to have bothered indulging her reflexive impulse to crib some talking points from a Huffington Post op-ed by Alec Baldwin (lest you think I’m joking, it’s here).  Her devastating critique includes the fact that the process “uses a lot of water” and makes the town dustier. Well.

Where she really goes off the rails, however, is in her attempt to portray the local economy as a thing of horror:

… Right now … there’s no place to live. Honestly, no place. To house its teachers, the school district has already purchased two apartment buildings, which have long since been filled even though the residents are all required to share their homes with another teacher. Superintendent Viola LaFontaine has taken to the radio airwaves, urging citizens to come up with places for the new faculty to stay.

“We’ve been getting good applicants,” LaFontaine said. “But they’ll make $31,500. When they find out an apartment is $2-3,000 a month, they say they can’t pay that.”

Yes! Housing costs in Williston, N.D., are approaching those in New York City. Many of the oil workers stash their families back wherever they came from, and live in “man camps,” some of which resemble giant stretches of storage units.

If the place you love can’t quite climb out of the recession, think of this as consolation. At least you’re not living in a man camp and waiting half an hour in line for a Big Mac.

Ms. Collins, meet supply and demand. Supply and demand, meet Ms. Collins.

What our fearless columnist is describing is the typical trajectory of boomtowns. The sudden surge of demand sends prices skyrocketing. But if her view extended beyond the tip of her nose, Collins might realize that this is the predicate for a second round of employment growth and a general lowering of prices. When demand is so high that a remote region of North Dakota can charge rents rivaling those of the beating heart of New York City, it’s an open invitation for developers to make their way to Williston, relieve the housing shortfall, and get rich in the process. Ditto the overcrowded restaurants. That means new jobs created. And the increased supply means lowered prices.

One final note: it’s telling that teachers are Collins’ go-to example. Reading her column, one could reasonably wonder how Williston’s housing stock could be both (a) so expensive that it’s prohibitive for many potential tenants and (b) filled to the gills. The answer: private-sector workers are making more than enough to meet the demands of the city’s rent. Only in the public sector, where wages are set by government diktat instead of the market, are crucial employees priced out of a place to live. That’s a real shame for the teachers of North Dakota. If the school system was privatized, they’d all be getting rich now too.

July 24th, 2012 at 1:44 pm
The Reality of Obama’s ‘All of the Above’ Energy Strategy
Posted by Troy Senik Print

An instructive study in the contrast between the president’s rhetoric and results.

Rhetoric:

“We can’t have an energy strategy for the last century that traps us in the past. We need an energy strategy for the future – an all-of-the-above strategy for the 21st century that develops every source of American-made energy.” — President Obama, March 15, 2012

Results:

Pennsylvania’s PBS Coals Inc. and the affiliated RoxCoal Inc. announced that they would idle some of their deep and surface mines, laying off 225 employees in the process.

…  According to the Pittsburgh Post-Gazette, which first reported the layoff, the company employs 795 workers.

In Alledonia, Ohio, Murray Energy Corp. announced Friday it would lay off 29 union coal mining jobs at The Ohio Valley Coal Co.’s Powhatan No. 6 Mine.

“The failed energy policies of the Obama administration and the ‘war on coal’ that the president and his Democrat supporters have unleashed are the direct causes of this layoff,” said Powhatan mine general manager Ronald Koontz, according to The Wheeling Intelligencer. “Unfortunately, for us, this is just the beginning [of] the work force reductions.” — The Daily Caller, July 23, 2012

There comes a point at which the cognitive dissonance that underpins grandiose pronouncements with no relationship to reality simply make the speaker look buffoonish. Looking for that line, Mr. President? It’s behind you.



July 23rd, 2012 at 4:28 pm
Enjoy the Games, But …
Posted by Troy Senik Print

This Friday, the 2012 Summer Olympics kick off in London (with an opening ceremony that shows Britain will respond to Beijing’s 2008 triumphalism with cultural self-loathing). Will it be a triumph for national pride, sheer athleticism, and the indomitable human spirit? We can certainly hope so. For the city of London itself? Not so much. Matthew Stevenson gets it right over at New Geography:

Why does anyone persist with the Greek mythology that the Olympics are an engine of economic development, sportsmanship, or peace on earth? London is spending $15 billion on the hope that it can sell enough tickets to synchronized swimming, and earn enough from television ads, to cover the costs of the 30,000 rent-a-cops and military personnel being deployed in the spirit of Olympic harmony.

Even though the Games break few economic records, except those for non-performing sovereign debts, governments around the world scramble madly every four years for the right to act as host, as if influence peddling were an Olympic sport.

The original cost estimate, sold to the British public to convince them to get behind the bid for the 2012 Games, was about $4 billion. Those budget forecasts imagined that, after the event, Olympic sites would be recycled for use as schools, homes for the aged, and handicapped parking, even though earlier Olympic cities have found little use for their table tennis stadiums and aquatic centers…

… At the end of three weeks of the London Games, even if the British army has had to shoot off a few of its surface-to-air missiles, TV commentators will pronounce the Games an immortal success, a triumph of Spartan proportions, and an epic not seen since Jason came back with the golden fleece.

Then, in three years, if not sooner, London will get the $15 billion invoice for its fun summer, and all it will have to show for it will be a few used diving boards and, with luck, some new light-rail. In the words of George Best, the great Northern Irish footballer: “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”

The record of Olympic Games failing to deliver on grandiose economic promises is simply too consistent to be ignored. Much like stateside subsidies of facilities for professional sports teams, the inevitable outcome is a massive redistribution of resources rather than a surge of economic growth.

We wish the London Olympics well. But we also wish the people of London weren’t footing the bill for the rest of the world’s party.

July 19th, 2012 at 12:19 pm
A Little Touch of Genius From the Romney Campaign
Posted by Troy Senik Print

The newest item available in the gift shop at Mitt Romney’s campaign website:

As my colleague Mollie Hemingway notes at Ricochet, indignation at the president’s remarks seems to be taking root with a swath of the American people much broader than the conservative base. One can only hope that trend will lead to this t-shirt someday being featured in the wing of the Obama Presidential Library describing what went wrong in 2012.