People Are Not Goods: A Response to Nick Gillespie


I’m an unabashed fan of Reason’s Nick Gillespie, but that doesn’t mean he’s always right. In a video released earlier today, he bats exactly .500, making an extremely persuasive case in favor of open trade… and a deeply flawed one regarding open immigration. Take a look for yourself:


How Dirigiste Are We?


AAA red tape vs small businessThis CNNMoney list of the best jobs in America caught my eye. Obviously, it’s subjective, but someone thought these sounded like great bets for “big growth, great pay, and satisfying work.” Here’s the methodology they used.

Go through the list, and give me your best guess: What percentage of the week do these people devote, in some way, to dealing with the government? What percentage of their income comes in one or another fashion from the government? How many of these jobs exist for the purpose of navigating between citizens and the government?


Why Those ‘Reagan Recovery’ vs. ‘Obama Recovery’ Comparisons Don’t Tell Us Much



The Drudge Report recently linked (“OBAMA VS. REAGAN ON GROWTH — NOT EVEN CLOSE”) to a Gateway Pundit blog post featuring the above jobs chart, which was first posted at IJ Review. Now, it is hardly the only or first chart to highlight that the economic recovery after the 1981-82 recession was stronger than the recovery we’ve seen after the 2007-2009 recession. I’ve done a few of them myself. I mean, it’s not a difficult point to argue when economic growth was so much faster in the 1980s. In the 23 quarters since the end of the Great Recession, real GDP is up 14% vs 30% after Really Bad Recession. Or to put it another way, the “Reagan Recovery” was twice as strong as the “Obama Recovery.” The Four Percent Recovery vs. the Two Percent Recovery.


The Fed’s Failed — And That’s a Good Thing


shutterstock_236267482Don’t expect any miracles from the economy. But don’t expect a collapse either.

In political terms, it’s kind of a Mexican standoff. Team Obama says they saved us from another Great Depression. And they point out that 3.1 million jobs have been created in the last 12 months. Republicans counter that this is the slowest post-WWII recovery on record and that real GDP is roughly $2 trillion below potential. They add that the labor-force participation rate is 62.7 percent, a 39-year low, and that there are at least 15 million people who work but can’t get jobs.


The Story of the Most Amazing Economic Chart in Western Civilization



I have referred to the above chart as “The most important economic chart in Western civilization.” How did that amazing growth trajectory happen? As Deirdre McCloskey suggests, the West became a business-admiring civilization and that changed everything. We started respecting and rewarding innovators — and the creative destruction they unleash. But as James Bessen explains in Harvard Business Review, it took awhile for workers to benefit:


Given the Choice, George Soros Opts, Ever So Gingerly, For Lower Taxes


Approximately $13.3 billion of Soros’s net worth is owed to tax avoidance or deferral, say some attorneys at Cravath to Bloomberg. His total federal/state/NYC tax liability on these monies is $6.7 billion, which is payable by 2017.

The article also contains this beauty from a Soros tax attorney:


Will Lord Keynes Save Lord Baltimore’s City?


Baltimore RiotsBaltimore was torn to bits last night. But according to the economic philosophy introduced by Lord John Maynard Keynes and espoused by the progressive elite across the world, this is great news for the city! Broken windows, burned cars, shattered lives. It’s as if the people of Baltimore have hit the Keynesian Powerball! The people will be swimming in prosperity any day now.

Nuts, right?


Here Comes Generation Katniss. What do They Believe?


042715katnissWikipedia tells me that “Generation K” refers to “the collective nickname given to a trio of young starting pitchers in the New York Mets organization in 1995.” Of course, “K” is baseball shorthand for a strikeout. But the next time you hear about “Generation K,” it will almost assuredly be pop-culture shorthand for “Generation Katniss,” the catchy demographic title given to girls ages 13 to 20 — devised by British economist Noreena Hertz — assumed to be fans of Hunger Games heroine Katniss Everdeen.

And what are political and policy impulses of Generation K? Hertz, who discussed her research at the Women in the World event last week, outlined some her findings in a recent Financial Times note:


Snarking about Hillary Is Not the Way to the White House


YER-economic-growth-sqA number of GOP candidates are engaging in Hillary-bashing over allegations that she used her office as secretary of state to help her husband’s business dealings, prop up speech-making fees, and grease the path for foreign governments to donate massive amounts of money to the Clinton Foundation. But here’s a warning to my friends on the presidential campaign trail: Bashing Hillary is only going to make the Republican party look mean-spirited and snarky. It’s no road to the White House.

I would suggest laying off Hillary and instead showing us what you got in the way of economic-growth policies that will foster 4 to 5 percent growth and maybe another 12 million jobs. The GOP needs a positive growth message, along with a strong national-security message, because the party needs a positive rebranding and a positive vision. But Hillary-bashing will drown that out.


The Real Lessons of Reaganomics, At Least As I See Them


Official_Portrait_of_President_Reagan_1981If you want to promote pro-market policies by citing the success of Reaganomics, don’t do it the wrong way. And the wrong way is suggesting that the Reagan tax cuts paid for themselves. They didn’t (although their deficit impact was smaller than a static analysis shows). And that’s true whether you look at (a) income tax revenue/GDP or (b) real GDP growth to real revenue in the 1970s vs. 1980s, or (c) academic research.

Nor should you suggest the Reagan tax cuts immediately ushered in a period of crazy-go-nuts hypergrowth.They didn’t. Real GDP growth in the 1980s was about the same as the 1970s. Nor was their a pickup in productivity.


Why Does Hillary Clinton Want to ‘Topple’ Americans Making $346,000 a Year?



Oh, Piketty and Saez, what you have wrought? From the New York Times:


There’s No Good Conservative Case Against Fast-Track Trade Authority


shutterstock_142905070 (1)The Senate Finance Committee is taking up the topic of “fast track” trade authority today, which would empower President Obama to negotiate trade deals, namely the Trans-Pacific Partnership, an ambitious free-trade area that would cover most of our Asian trading partners (except China) and rival the European Union in size. Some conservatives, however, are resisting the proposal, claiming that it only further consolidates power in an already out-of-control executive. While I’ve been a staunch critic of President Obama’s executive overreach, I don’t think that argument holds up here. As I write at National Review:

…Critics are missing the mark by confusing fast track with Obama’s executive power grabs. Fast track does not delegate any power to the executive branch. Under fast track, the president does not exercise any new authority that he lacked before. Under normal constitutional practice, the president negotiates an international agreement and then submits it to Congress for approval. Fast-track doesn’t change that fundamental order. President Obama can negotiate any agreement he likes, and Congress is free to vote it up or down.


Does a Tesla Electric Car Qualify as a Disruptive Innovation?



Here is a brief description of disruptive innovation theory, via the Clayton Christensen Institute:


Are Republicans Going to Abandon Entitlement Reform?



A few quick facts on entitlement spending: (a) CBO projects federal spending on Medicare and Social Security over the next 25 years will rise by roughly 3 percentage points of GDP, to 11% from 8%; (b) an aging US population will be the prime driver of that projected higher spending; (c) a middle-class, one-earner couple retiring in 2030 will receive $1.3 million in lifetime Medicare and Social Security benefits having paid in just under $500,000.


A Challenge for Hillary Clinton: Return to a JFK Growth Agenda


JFK 2_0When John F. Kennedy was elected president he surprised both Democrats and Republicans with a bold tax-cutting plan to solve the problem of a moribund economy. He had campaigned on “getting the country moving again,” and had set a 5 percent economic-growth target, but he never specified how he was going to do it. Then he opened everyone’s eyes with a plan to lower marginal tax rates across-the-board.

JFK’s advisors proposed a traditional Democratic approach: temporary targeted tax cuts. But Kennedy insisted on lower tax rates that would create much higher rewards for work, saving, and investment. And Kennedy argued that his lower tax-rate incentives would so expand the economy that after a few years his tax cuts would pay for themselves.


Tipping: The Mr. Pink Solution?


PinkThere’s a famous scene in Quentin Tarantino’s film Reservoir Dogs — and it’s so far out of compliance with Ricochet’s Code of Conduct that I’ll have to just point you here, with a warning for delicate sensibilities, if you want to see it — in which Steve Buscemi’s Mr. Pink refuses, on principle, to chip in for the tip at the end of a group meal. The original dialogue is so heavily spiced with trademark Tarantino scatology that it can’t be reproduced here, but here’s the argument with the saltiness elided:

I don’t tip because society says I have to. If they really put forth the effort, I’ll give ’em something extra. But this tipping automatically is for the birds. As far as I’m concerned, they’re just doing their job.


How Chris Christie Will Try to Put a Pro-Growth Spin on Entitlement Reform


shutterstock_180967034-e1429040149655Yes, Governor Chris Christie is still going to run for president. And it appears that, just as pension reform has been a core part of his New Jersey agenda, entitlement reform will be key to his national presidential agenda. From the WSJ: “Gov. Chris Christie called for reduced Social Security benefits for retired seniors earning more than $80,000 and eliminating the benefit entirely for individuals making $200,000 and up in other income, along with raising the retirement age to 69 from 67.”

This proposal will get lots of attention for touching the “third rail” and all that. (Here is AEI’s Andrew Biggs on the Christie plan.) Republicans have recently seemed less enthusiastic in talking about Social Security and Medicare reform. House GOP budgets, for instance, have only called for a plan to create a plan on Social Security. But here’s where it gets interesting. Again, from the WSJ: “Mr. Christie’s speech comes at a moment when the fiscal austerity impulse in Washington has diminished.”


An Important Piece of Evidence That Argues Against America’s “Great Stagnation”


041315chipsIt’s an economic puzzlement. The US producer inflation index suggests computer chip prices have been flattish in recent years after a rapid decline from the mid-1980s through the early 2000s. Yet there is also evidence that microprocessor performance has continued to improve. Given the apparent relationship between declining chip prices and the pace of innovation, it would be really bad news if the slowing pace of price declines means innovation is slowing too. And really bad news for the overall economy. After all, semiconductors are “general purpose” technology behind advances in areas such as machine learning, robotics, and big data. As researchers David Byrne, [AEI’s] Stephen Oliner, and Daniel Sichel explain in “How Fast are Semiconductor Prices Falling?”:

… adverse developments in the semiconductor sector could damp the growth potential of the overall economy. On the other hand, if technological progress and attendant price declines were to continue at a rapid pace, powerful incentives would be in place for continued development and diffusion of new applications of this general-purpose technology. Such applications could both enhance the economy’s growth potential and push forward the ongoing automation that has generated concerns about job displacement.


Has the Internet Really Been a “Colossal Economic Disappointment”?


shutterstock_59508448That’s the strong claim made by venture capitalist and former Intel executive Bill Davidow for Harvard Business Review“For all its economic virtues, the Internet has been long on job displacement and short on job creation. As a result, it is playing a central role in wage stagnation and the decline of the middle class.”

I took issue with Davidow in a recent piece for The Week. It’s just too much. While there is little doubt that automation has driven job polarization — bad for clerical workers and those doing repetitive factory work — one also has to acknowledge that the US economy is creating gobs of jobs right now. And there is some reason to believe wages will soon be on the upswing. Also, Davidow doesn’t offer evidence that the Internet or robots or other smart machines are behind the sharp drop in labor force participation or the employment rate vs. demographics and the aftermath of the Great Depression. Oh, and what about the nearly million app developer jobs created by the Internet? What’s more, economist David Autor argues that the “the deceleration of the U.S. labor market after 2000, and further after 2007, is more closely associated with … the bursting of the dot-com bubble, followed by the collapse of the housing market and the ensuing financial crisis … and the sharp rise of import penetration from China following its accession to the World Trade Organization in 2001.”


Still Worth Arguing About the Financial Crisis


shutterstock_73682491Who controls the past controls the future. — George Orwell, 1984

The candidates who are announcing for president will be cheered to know that the Democratic Party has been hemorrhaging popularity the way the housing market lost value in 2008. In 2009, 62 percent of Americans had a favorable view of the party. In January, only 46 percent said the same.