March 31, 2004
THE WOODSTOCK MINIMUM WAGE
1969, Minimum Wage -- $1.30, or $6.60 in 2004 dollars.
Today: $5.15
"We've got to get ourselves
back to the garden . . . "
(idea borrowed from Tom Geohagen)
WEIRD SOCIAL SCIENCE
Speaking of not knowing what evidence is, we have the latest of an endless series of hosannas for "welfare reform" from Mickey Kaus, not surprisingly celebrated by that other social science wizard Andrew Sullivan. We've been neglecting them both, and their latest in this vein shows our inattention was well-advised.
Kaus points to the labor market data on single- and never-married mothers to attest to the brilliance of the 1996 welfare reform. These data attest to no such thing. Kaus' citation of the very wise Gart Burtless is misleading, since GB is nowhere as confident of the connection as Kaus.
As Burtless points out, the post 1996 period was unusually good for workers because of the expansion of the Earned Income Tax Credit (one of the Clinton Administration's three big and only achievements), an increase in the demand for unskilled workers, and the generally exceptional performance of the economy. None of these relied on the 1996 reform.
The '96-'00 period is a magic one for Mickey. You could raise all sorts of questions about how to interpret the trends in this period. I discuss them in a chapter in this book (sorry not available online), just published by M.E. Sharpe.
What about the experience of the poor in the recession? This is the new addition to Mickey's rap. It is based on two data points -- changes between 2000 and 2002. Since labor force participation (LFP) unmarried women with children held up, this proves welfare reform is a success.
To the contrary,
1. The data do not prove that welfare reform upheld LFP rates;
2. Even if this is true, it does not prove that welfare reform is desirable.
Why?
1. There is no way to separate the effects of the overall shape of the labor market, the EITC, and welfare reform in two data points. Even less can you show that the controversial, illiberal components of welfare reform -- work requirements and time limits -- were the cause. Work-conditioned benefits which many on the left have always supported increased significantly after 1992.
2. Doubtless, welfare reform -- the nasty kind -- could have a positive effect on LFP, but LFP is not the same as well-being. If we allow ourselves to fall back on the quaint notion that the purpose of welfare reform is to enhance the well-being of dependent children, that goes to the changes in the family's leisure time and income, not LFP, and even less, to caseload reduction.
MK lauds the heroism of moms working, or at least looking for work, through the recession. HHS says the total persons in the caseload (average monthly) from January to December of 2001 decreased, from 5,563,832 to 5,276,089. MaxSpeak would call this a failure of the safety net. During a recession, external constraints on employment would increase, not decrease, putting a greater obligation on authorities to compensate. In the actual event, the opposite policy was enforced. Aid was made less available, not more available.
Here's a couple of stats for you. How was poverty in the bad old days of indulgent welfare, wanton black women, the Great Society, and Woodstock? In 1973, a business cycle peak, the rate was 11.1 percent. How was it after the 1996 reform and the fabulous decade, say, for the business cycle peak of 2001? Why, it was 11.7 percent.
All hail the greatness of Welfare Reform!! Thanks Bill! Thanks Newt!
LAWN INFESTATION
For the record, MaxSpeak holds that demonstrations at peoples' homes are fundamentally bad medicine, unless their home happens to be an official residence like the White House or a governor's mansion.
They amount to a form of non-violent assault. Assault is wrong. (Self-defense is a different matter.)
For anybody on the left, assault is also stupid. Being on the left in the U.S. means being grossly outnumbered. The other side has much greater capacity for this sort of thing and will indulge it when sufficiently provoked.
In my experience, the group in question, National Peoples Action, has never done anything of value. If anyone has knowledge to the contrary, don't hesitate to speak up.
I take that back. One thing they've done is actually pretty difficult -- they've made people feel sorry for Karl Rove.
TRUST ME, OUTSOURCING IS GOOD FOR YOU
MaxSpeak is continually amazed at the gulf between evidence and what people take as evidence. For instance, a study lauding outsourcing commissioned by the IT trade association. All that you can get on the web is the conclusions of the study. There is nothing about how the conclusions were arrived at. To get the study, you have to pay $450 or something like that.
Yet people sit around talking about the study as if they are evaluating it. There was a similar flurry some months ago over a McKinsey study that also touted outsourcing, where the report itself lacked an iota of detail on how the very precise numerical results were derived.
You might as well put credence in the email you got this morning on how to make your balls bigger, assuming you have any to begin with.
March 30, 2004
PUBLIC SERVICE ANNOUNCEMENT: GAS IS CHEAP
Fun facts: in 1960, gas was 31 cents a gallon (regular, leaded), but in today's dollars, that would be $1.95. In 1980, it was $1.25 (unleaded, regular), or $2.82 in $2004. 1990, $1.16, or $1.65 today. The latest average is $1.72.
There has also been a significant increase in miles per gallon. So cost per mile is lower on that account.
If you're one of those enviro wackos, you don't want lower gas prices.
If you don't love the Oil Cartel, now is not the time to cut the gas tax. At least part of the cut would go to the producers. The Gov could just as easily mail a check to King Whosis and the Royal Parasites.
We would like to remind the world that at one time, Clan Bush and the Saudis joined hands and sang, "gas prices are in danger of being too low." (At least, I seem to recall this but I couldn't find a reference. If anybody can, let me know. If not, I'll retract this item.)
The Gov should interest itself in busting up the Oil Cartel and breaking up U.S. monopolies (vertical and horizontal). At the same time, as far as anyone knows, petroleum is a finite resource and there needs to be a long-term project to reduce U.S. dependence on it. The best minds in Progressatopia have been thinking on this and come up with a plan.
March 29, 2004
KERRY’S TAX CUT MAKES ME WANNA RALPH
[Blogging from home. Note disclaimer at left.] Unless John Kerry digs himself so low in the polls that he can look up and see my friend David McReynolds (Socialist Party, USA), I cannot see voting for anyone else. The prospect of a second Bush term is sufficiently nauseating to drive many to say nothing that would enhance that prospect.
Many, but not all. I would like to see Kerry win. I can’t do much about that. On the other hand, I would like to see good thoughts in your head about worthwhile economic policy.
I do not look forward to a restoration of the economic policy of Robert Rubin, but the release of Kerry’s first major economic proposal promises exactly that. The personnel are certainly falling into place – Roger Altman and Gene Sperling, for two, both veteran Clintonoids.
Kerry is foregrounding his corporate tax reform as a jobs measure. Right from the jump, he is mixing up the difference between an anti-recession, counter-cyclical policy, and a long-run structural one. His proposal is structural. As such, whatever its merits, it glosses over the fundamental issue of fiscal policy – deficits and monetary expansion. The implication is that the latter run on automatic pilot. In other words, Kerry has no short-term fiscal policy. Insofar as Kerry fails to distinguish between the harm from long- as opposed to short-term deficits, his fiscal policy stance is perverse.
To its credit, the campaign has commissioned a memo from Harvard wunderkind Lawrence Katz, who testifies that 4.1 percent unemployment is a reasonable goal. This statement is much welcomed, but Dr. Katz offers nothing to support the claim that Kerry’s proposals could get us to 4.1. Perhaps worse, Katz presents the 4.1 goal as something other than a counter-cyclical goal -- a goal to be reached over four years. The implication is that we need structural measures to get to 4.1, not a more effective counter-cyclical policy.
In this vein, some bloggers’ claims that 10 million jobs would be gained under normal circumstances are exaggerated, though they are not completely out of the ballpark. 150,000 jobs a month for four years get you over seven million, which is almost three-quarters of the way to ten. Getting 'normal' might not prove to be so easy.
At the same time, Katz’s memo suggests that ten million would be gained by reaching 4.1 percent unemployment. In general, Kerry’s commitment is not quite as great as it may look, but if it means getting to 4.1 percent unemployment, that would be all that MaxSpeak could ask for in the vein of fiscal policy.
If only Kerry had a fiscal policy.
What about the tax measure as structural policy? The notion that this proposal would be decisive in bringing ten million jobs (compared to what?) could not be more ridiculous. Whether it's worthwhile in and of itself is another mtter. There are three main pieces which have little to do with each other, as far as economics goes.
One is the elimination of special treatment of repatriated foreign earnings of U.S. corporations. This might have the multiple merits of simplifying the corporate tax code and raising revenue. The anti-off-shoring part is iffy, since firms don't necessarily outsource for tax reasons.
The measure would have little expected impact in the big ten million jobs plan. We’re talking about $12 billion in corporate tax revenue a year, out of about $200 billion. A problem is that Kerry proposes to distinguish foreign earnings that are required to serve foreign markets – they would continue to enjoy a tax preference – from the other, bad kind. Good luck writing the regulations for this baby. Will there be more money for more IRS corporate auditors?
The second piece is the proposed cut in the corporate tax rate. That this would have any impact on U.S. jobs is to be doubted. In and of itself, it’s a revenue loser. It embodies a rotten principle. If cutting the rate 2.5 percentage points is good, why not ten percent? Why have a corporate income tax at all? What’s the trade-off here – on one side, a revenue loss that could have financed spending, deficit reduction, or progressive tax cuts, and on the other, some potential increase in investment and economic growth.
This is the essence of Clinto-Rubinomics. Propose a tiny change that fails to roil the base and embodies a fundamentally bad notion, then step back and let the Right practice one-upmanship with the bad idea.
The third piece is a payroll tax credit for new job creation in “manufacturing.” Nothing simplifying came come of any exercise of this type. I would also question the cost estimates. Job turnover means a continuous cycling of jobs from taxed to tax-favored status for the favored categories. Jobs that would have been created in any event – it’s got to start happening sooner or later – would enjoy the credit. And what happens to the Trust Funds?
On the positive side, we could expect workers to see some part of the tax cut, since less tax allows the employer to offer higher wages. MaxSpeak is committed to payroll tax relief, albeit of our own particular sort. Our own could have a similar impact on hiring, though we would not tout it on the basis of short-term fiscal policy, nor as a significant long-run boost to employment. The virtues of our approach lie more in simplification of the worker’s taxes and tax relief for families with children. You remember them.
Broadly speaking, Kerry's plan aims to improve price signals. It could be called marginalist in inspiration. That's what's wrong with it. Elevating improved price signals as a fundamental job creator is supply-side economics. At bottom, it's a crock. It's amusing to see conservatives say price signals don't matter much. Except when Larry Lindsey is waving the semaphore flags, apparently. Supply-sider Bruce Bartlett provides background and relevant citations.
Kerry’s tax relief is aimed at employers, ours at workers. What else is there to say, except . . .
El pueblo contra los poderosos!!
March 28, 2004
HERE ARE MY IDEAS;
IF YOU DON'T LIKE THEM I HAVE OTHERS
I love it when Brad's readers beat him to a pulp (on outsourcing).
March 27, 2004
THE BIN LADIN AIRLIFT
By way of reminder, not too long ago the only person talking about this was that crazy Michael Moore. It was finally covered in the New York Times last September. Now of course it's all over the news.
It appears to have been a joint decision by Richard Clarke, the FBI, and somebody else at the White House who has yet to be named, all of whom in case you forgot worked for President George W. Bush, and none of whom have been taken to task for that decision, until now in the case of Clarke alone, by assorted jingoist morons.
It's not that they're against terrorism. They're just political toadies.
FALSE WITNESS
Senator Bill Frist and his fellow Rethuglicans are threatening Richard Clarke with perjury prosecution. They claim his present testimony conflicts with previous testimony as a Bush Administration official. Their charge reflects bad faith and is stupid (insults our intelligence).
Clarke as Administration briefer was under no obligation to offer his opinions to the world. To the contrary, his job was to offer and defend his bosses' opinions. So any conflict of opinions between now as a free agent and when he was employed at the White House could not be more irrelevant, as far as legal liability goes. That goes to the stupid part.
Now, if there is a factual discrepancy between the two statements, the unfounded fact would be grounds for criticism. Perjury is a legal thing I'll leave to lawyers. If false information was purveyed by Clarke as Administration spokesperson, that is equally the responsibility of his bosses, as well as himself. If he is indicted for it, so should others in the White House. Frist et al act in bad faith by failing to hold the Administration to account for purveying false information in this, not to mention other contexts.
One could go further and argue that as a national security guy, Clarke's job description includes lying, so nothing he said while employed by the Bushies is relevant on procedural grounds. We have people in the Administration like Eliot Abrams whose lies to Congress are not a matter of dispute. U.S. foreign policy has sailed under multiple, gigantic lies for a century. They're all in the same glass house.
I do not defend this as public policy, but it seems to be well-established. So neither the Bushies nor big-shot Democrats have the right to object on this procedural basis. Noam Chomsky does. You do.
More important than procedure, as far as politics and the fate of Man- and Womankind goes, is the substance of the falsehood, and how it affected or reflected policy.
The big lie of this decade remains. Saddam Hussein was not a threat to the national security, and Al Queda was (and is). The fatal vision of the Bush Administration is to steer policy and resources in the wrong direction. For all we should care, as Administration official, Clarke might have said we were due for an invasion from Mars. The testimony he offers as to the seamless under-emphasis on Al Queda, from Clinton through Bush prior to 9-11, is what matters.
I don't blame Bush for 9-11. Like everyone else not professionally involved, I observed the first attempt on the WTC and blew it off as the inevitable result of incompetence by fanatics. I didn't take them seriously. But it was not my job to do so.
We have politicians in both parties whose job includes taking security seriously. That includes oversight of all executive agencies, so responsibility for the weaknesses of security fall to them. Nobody in either party succeeded in raising this to the top of the agenda. It's not clear that any of them even tried. It wasn't a part of the 2000 campaign. Bush's imprecations against nation-building came off as a rebuke to Clinton ventures in Somalia and Bosnia. Fair enough as far as that went. The Dems were defensive, offering little in the way of luminous paens to humanitarian internationalism. Instead we had gadflies in the political wilderness, like Warren Rudman and Gary Hart.
This goes for the neo-cons too. They were always big on anti-Israel terrorism. How much of a fuss did they make of anti-U.S. terrorism? We hear criticism of Clinton for not retaliating for the USS Cole attack, among others. Shouldn't Bush have retaliated for the Cole? Shouldn't Reagan have retaliated for the Marine Barracks bombing in Beirut (fatalities roughly on the same order of magnitude as in Spain)?
Dan Drezner makes a big deal of Reagan putting the hammer to Libya. This sounds like a self-refuting example. Libya had nothing to do with Beirut. Libya has been implicated in serious crimes, crimes that U.S. policy seems to be letting them buy their way out of (and celebrating that as a policy success). If I murder someone, can I in likewise fashion make any sort of amends with the authorities? Wouldn't that be compromising with Evil?
The big Bush lie remains. Iraq was not a threat. 500-plus Americans have died in an unnecessary war. More will die as a result of a misplaced priority. Those responsible will try to blame someone else. Remember that when the next atrocity splashes across your television screen.
March 26, 2004
PRIVATE HEALTH INSURANCE IS UNSUSTAINABLE
Here's a fun chart (source). You may have heard that Medicare is growing at an unsustainable rate. Well as Gomer Pyle used to say, "Surprise surprise." So is private health insurance. Guess we'll have to liquidate the private health insurance companies.
March 25, 2004
NEVSKY'S PROSPECT
On the spur of a suggestion from reader Art Nevsky, MaxSpeak is cooking up a spin-off site. Anyone locally connected with the upcoming Safeway/Giant strike (or anything similar) who is inclined to a little cyber-activism, please drop me a note.
REPUBLICAN SEES BUSH AS THE NEW NIXON
This column is why I visited NRO. Bartlett should know. Personally, I'd be happy to junk the entire Medicare drug bill and start over. We can do much better. It might cost more, but it and much else would be easy to finance with tax cut roll-backs.
The comparison is unfair to Tricky Dick. Tricky's domestic policies -- minus the abuses of Constitutional democracy and civil liberties -- make Bill Clinton look like a reactionary. That's why I look like a communist. Reagan warped our minds.
UPDATE: More from Bartlett on Tricky v. Pricky (my terminology).
NRO IS THE SHORTER ENRON
Some quality reporting by National Review Online:
"Last week the Congressional Budget Office (CBO) released its updated long-term fiscal forecast. BuzzCharts wants to make a point that this is the “non-partisan” Congressional Budget Office, a fact that is always emphasized when the CBO presents fiscal news that might reflect poorly on the Bush administration. But this fact should also be emphasized when the office has fiscal news that reflects well on the administration."
What is this good news? Our correspondent, Jerry Bowyer, breathlessly informs us the CBO budget projections show deficits decreasing. He provides a helpful chart. What this dumb-ass fails to inform his credulous readers is that the numbers that have him excited are from the baseline forecast, which assume all the Bush tax cuts are terminated, among other improbabilities.
On the numbers improving, that is just flat wrong too. They are slightly worse, since January (see "Changes in CBO's Baseline Projections," Table 1.8).
I suppose if I visited NRO more often I'd have new material every day.
