Greg Mankiw broadly states that Bush kept his promise to see that no American pay more than one-third of his Income in Taxes. I would like to state I agree with Greg Mankiw in his view of the Democratic, Liberal pursuit of unionization and Minimum Wages, though it can be statistically proven that increases in Minimum Wage reviberate upwards throughout the Wage and Salary structure as the shelves of Merit Pay and Seniority seek their incentive position. Greg is also one of those Conservative economists who are blind to the difference between Salary and Wage Income and Total Income. Labor, whose Salary and Wage Income equals their Total Income might not notice the difference either, except possible in the amount of their Take-Home Pay. This Author regrets one can so rarely find the Percentage rates of taxation on Total Income.
Brad DeLong and Marginal Revolution enlighten on differing views on Devaluation of the Yuan.
Tyler's taxation of foreign funds investment was of excellent craft, dedicated to the alienation of every side of the debate, due to the loss of Comparative Advantage by All participants. American Consumer, American Government, Chinese Government, and Chinese labor would all suffer economic duress, and both American and Chinese growth would be stunted. I must adjudge this was Cowan's intent.
Tyler, though, did bring discussion of Comparative Advantage to the table, for which he should be applauded. Forms of Taxation should be utilized to alter Comparative Advantage, but in the direction of American Production for the American Consumer market. This could take the forms of high Port fees, high Ship fueling fees, a 2% Purchase fee on Imports placed on all Importers, Fuel fees on all foreign Goods using American transport media--Trucks, Railways, and Airlines, and simple Education and Welfare tax of 2% on all foreign Goods to maintain Social Services in this Country. Artificial Comparative Advantage creation may seem to some Conservatives to be as bad as Welfare transfers, but as long as American Government must foot the bill for all American Production failures in the form of Support payments, why not? lgl
Friday, September 08, 2006
Thursday, September 07, 2006
Regulation and Taxation
Bryan Caplan suggests standardization of Regulations is another big reason why Big Business supports Federal regulation. The serious end of the matter may well be Big Business ability to write this legislation to ensure no conflict with their Business format, eclipsing both Kolko’s thesis of suppressing competition and Caplan’s standardization. Big Business likes regulations where they can tell Federal Investigators where to look for noncompliance.
Calculated Risk gives the lowdown on the Housing industry, be sure to read the links. No one actually talks of the real reason behind the Slowdown: millions of Units have been built in the last Six years, and while Housing has not outpaced Population Growth as yet, it has exceeded Homeowners who possess the capacity to buy–given the current lavish construction mode. The $200k market is saturated.
Stumbling and Mumbling takes on Jane Galt. It is informative Reading, though I have not yet read it; Doctor’s appointment in an hour. It still advance two different views on the hazards of inequality. My personal view states that it is not per se Inequality which inhibits economic growth, but the suppression of Labor’s share of the Total Income. Labor is currently suffering a double whammy–low Wage Income combined with high taxation of Labor, with Business and the Wealthy evading their fair share. This stands not as a Call for sharply Progressive taxes, simply elimination of Tax breaks which allow Business and the Wealthy to pay a lower percentage share of their Income than does Wage Labor. lgl
Calculated Risk gives the lowdown on the Housing industry, be sure to read the links. No one actually talks of the real reason behind the Slowdown: millions of Units have been built in the last Six years, and while Housing has not outpaced Population Growth as yet, it has exceeded Homeowners who possess the capacity to buy–given the current lavish construction mode. The $200k market is saturated.
Stumbling and Mumbling takes on Jane Galt. It is informative Reading, though I have not yet read it; Doctor’s appointment in an hour. It still advance two different views on the hazards of inequality. My personal view states that it is not per se Inequality which inhibits economic growth, but the suppression of Labor’s share of the Total Income. Labor is currently suffering a double whammy–low Wage Income combined with high taxation of Labor, with Business and the Wealthy evading their fair share. This stands not as a Call for sharply Progressive taxes, simply elimination of Tax breaks which allow Business and the Wealthy to pay a lower percentage share of their Income than does Wage Labor. lgl
Wednesday, September 06, 2006
Productivity and Wages
The Associated Press had an article today titled 'Productivity Slows, Wages Post Increase' which aroused my ire by its wording:
Productivity is the key factor determining rising living standards. Strong growth in output allows businesses to pay their workers more without having to raise the cost of their products, which fuels inflation. But the current numbers raise concerns because they show wage pressures rising as productivity growth slows.
Productivity growth, which had been weak for two decades, began to rebound in the mid-1990s, reflecting the benefits produced by the spread of computers in the workforce.
What is wrong with that?
Economists act like Wages are almost an Enemy, which can only be countered by increases in Productivity. A real Truth would state that a concentration on Productivity leads to Labor exhaustion and Labor burnout, brings too critical managerial evaluation of Labor cadres, and is the wellspring of Downsizing, Layoffs, and Offshoring. Another Truth states Wages are responsive to Standard of Living conditions, not vice versa, with Wage demands developing pressure only under increased Living Costs. Robert J. Shiller has an article in which he describes the difference in Chinese and American prospective on Savings. It stands as obvious that while Chinese labor has less Consumer Products which they can buy, it cannot be the sole reason their Savings rate is so much higher. Chinese labor must receive a greater percentage of their actual Productivity than do American laborers. The real wellspring of Productivity is in the form of Business Profits, which may seem only to rise at the same relative rate as Wages, but devolves upon a much smaller economic class.
Don Bondreaux has an article which described a BLS report put out recently. Two important Quotes:
It's important to note that throughout the 20th century, the share of the average household's income spent on non-essential items increased steadily, although noticeably slowing down between 1984-1985 and 2002-2003.
It's surprising that average household annual expenditures changed its trajectory in the mid-1970s from one of rather modest decadal increases before then to much more dramatic increases since then. (It's true that these data are in nominal dollars, but the continuing hefty increases in household annual expenditures post-1975 seem not much muted by the collapse of inflation rates from the mid-1980s on.)
This records the fact cultural aspersions devoloped raising nonessential Consumer products to the level of Necessities. This raised real Living Costs. The Report, itself, details the porportion of Living Costs devoted to different sectors all rose along with Wages and Prices, but did not vary significantly in percentage of total Income. The sum total results in a Spector when the real percentage of Wage Income to Total Income has actually dropped over the Century. Conservatives make much of the fact so many own their own homes, but it is also true that the greatest majority hold the greatest amount of their equity in their homes. This ends with the necessity of lower Incomes gouging each other (because of real value of their Housing) to obtain any advance in their equity, and still requiring an alternate form of housing. lgl
Productivity is the key factor determining rising living standards. Strong growth in output allows businesses to pay their workers more without having to raise the cost of their products, which fuels inflation. But the current numbers raise concerns because they show wage pressures rising as productivity growth slows.
Productivity growth, which had been weak for two decades, began to rebound in the mid-1990s, reflecting the benefits produced by the spread of computers in the workforce.
What is wrong with that?
Economists act like Wages are almost an Enemy, which can only be countered by increases in Productivity. A real Truth would state that a concentration on Productivity leads to Labor exhaustion and Labor burnout, brings too critical managerial evaluation of Labor cadres, and is the wellspring of Downsizing, Layoffs, and Offshoring. Another Truth states Wages are responsive to Standard of Living conditions, not vice versa, with Wage demands developing pressure only under increased Living Costs. Robert J. Shiller has an article in which he describes the difference in Chinese and American prospective on Savings. It stands as obvious that while Chinese labor has less Consumer Products which they can buy, it cannot be the sole reason their Savings rate is so much higher. Chinese labor must receive a greater percentage of their actual Productivity than do American laborers. The real wellspring of Productivity is in the form of Business Profits, which may seem only to rise at the same relative rate as Wages, but devolves upon a much smaller economic class.
Don Bondreaux has an article which described a BLS report put out recently. Two important Quotes:
It's important to note that throughout the 20th century, the share of the average household's income spent on non-essential items increased steadily, although noticeably slowing down between 1984-1985 and 2002-2003.
It's surprising that average household annual expenditures changed its trajectory in the mid-1970s from one of rather modest decadal increases before then to much more dramatic increases since then. (It's true that these data are in nominal dollars, but the continuing hefty increases in household annual expenditures post-1975 seem not much muted by the collapse of inflation rates from the mid-1980s on.)
This records the fact cultural aspersions devoloped raising nonessential Consumer products to the level of Necessities. This raised real Living Costs. The Report, itself, details the porportion of Living Costs devoted to different sectors all rose along with Wages and Prices, but did not vary significantly in percentage of total Income. The sum total results in a Spector when the real percentage of Wage Income to Total Income has actually dropped over the Century. Conservatives make much of the fact so many own their own homes, but it is also true that the greatest majority hold the greatest amount of their equity in their homes. This ends with the necessity of lower Incomes gouging each other (because of real value of their Housing) to obtain any advance in their equity, and still requiring an alternate form of housing. lgl
Tuesday, September 05, 2006
Middle Class-Suffering?
Stephen Rose has a new article ($) in American Prospect. His basic contention stands that the Democratic Party fails in its message to the Middle Class because they concentrate on economic ills which the Middle Class actually does not suffer. The affluence current in the American way of life leads me to agree with him. Rose states One should believe the Numbers:
$63,300. That's the 2004 median household income of people in their prime working years, ages 25-59 (it's $70,000 for married households and nearly $80,000 for two-earner households).
$248,700. That's the median net worth of pre-retirement Americans, ages 55-64.
Zero. That's the median credit card debt for all American households.
Drowning in debt? Squeezed to the gills? Living paycheck to paycheck? I don't think so.
Other comments by Rose:
Fully 41 percent of prime-age American adults are in households with incomes above $75,000.
A majority of Americans have no credit card debt.
__________________________________________
The NYtimes also had an article citing Studies discussed at the World Cardiologists Congress which ascribe dangers relevant to Drug-coated stents used in Heart patients. Such stents cost some three times more than bare-wire stents, but were initially deemed beneficial in preventing arterial scarring. The Studies claim coated stents may incite blood clots etc. (this Author wonders if this attestment is not the work of Drug companies, who stand to make about 15 times the profits from daily-administered drugs over the life of the Patient). I only know there stands only minute reason to suggest coated causes more Clots than bare-wire.
_________________________________________
Another article brings Chevron's announcement of a new, potentially large Oil field in the Gulf of Mexico. The kicker here is the depth of the Find, with "the well drilled to a total depth of 28,175 feet." I wonder how much Energy must be expended to get a barrel of Oil to the surface. lgl
$63,300. That's the 2004 median household income of people in their prime working years, ages 25-59 (it's $70,000 for married households and nearly $80,000 for two-earner households).
$248,700. That's the median net worth of pre-retirement Americans, ages 55-64.
Zero. That's the median credit card debt for all American households.
Drowning in debt? Squeezed to the gills? Living paycheck to paycheck? I don't think so.
Other comments by Rose:
Fully 41 percent of prime-age American adults are in households with incomes above $75,000.
A majority of Americans have no credit card debt.
__________________________________________
The NYtimes also had an article citing Studies discussed at the World Cardiologists Congress which ascribe dangers relevant to Drug-coated stents used in Heart patients. Such stents cost some three times more than bare-wire stents, but were initially deemed beneficial in preventing arterial scarring. The Studies claim coated stents may incite blood clots etc. (this Author wonders if this attestment is not the work of Drug companies, who stand to make about 15 times the profits from daily-administered drugs over the life of the Patient). I only know there stands only minute reason to suggest coated causes more Clots than bare-wire.
_________________________________________
Another article brings Chevron's announcement of a new, potentially large Oil field in the Gulf of Mexico. The kicker here is the depth of the Find, with "the well drilled to a total depth of 28,175 feet." I wonder how much Energy must be expended to get a barrel of Oil to the surface. lgl
Monday, September 04, 2006
Taxes and War
I started out to day to write on the effects of Taxes, but simply decided to let Mallaby, Mankiw, and Kling explain themselves. It may be unnecessary to comment that Libertarian Conservatives can join with Leftist Thought on the practical removal of the Mortgage and Health Insurance provisions, but disconnect with the idea of taxing the Rich. Mankiw would shiver, as would Kling, at removal of 401(k)s or IRAs. They and all other forms of Savings and Investment credits have led to the Paper Instrument flood (Stocks, Bonds, etcetra etc.) They are the real Generator of Stock Options and Stock Grants; the Inflationary expansion of these Paper instruments brought on the demand for ever-increasing Corporate profits for Dividends to maintain Stock prices.
A friend, though, lately asked me on a Internet forum at what Point Wars became bad for the Economy. I replied that Wars were always back for any Economy, and here is my rationale:
1) The Government, often pushed by by Business Interests themselves, engage in a spree of military supply Contracts.
2) Business initiate a overcapitalization of Material resources recovery, along with geared up Processing and Manufacturing. This process, along with military subscription of Labor, gives any Economy an aura of prosperity. It is a artifical image, as qualified Personnel often revert to military usage, and inferior Labor cadres (less qualified than pre-war industry standard) are pressed into service by both Government and industry.
3) The economic euphoria lasts only as long as the Period of overcapitalization lasts.
4) The Government has been purchasing these Supply Contracts with either higher taxation or with massive Government borrowing.
5) Citizenry find themselves with larger Tax rates in the Present, and higher Tax rates in the future.
6) The cessation of Hostilities stand equally as bad for the Economy. The military Supply Contracts rapidly diminish in number and size. Materials Supply industries curtail their labor force, who are joined by returning Servicemen, while Business overall slows to transfer their Product lines to Civilian Goods.
7) Even a full employment Economy prior to the War will find itself with a high significant Unemployment post-Conflict; one endured under policies of high Taxes and Public Debt.
8) We have not even discussed the direct Resource Costs of the expended weaponry and munitions, the undercapitalization of Civilian Goods industries in the War years, the increased Medical Costs of returning Casulties, or the loss of Labor cadres or labor potential of Returnees. lgl
A friend, though, lately asked me on a Internet forum at what Point Wars became bad for the Economy. I replied that Wars were always back for any Economy, and here is my rationale:
1) The Government, often pushed by by Business Interests themselves, engage in a spree of military supply Contracts.
2) Business initiate a overcapitalization of Material resources recovery, along with geared up Processing and Manufacturing. This process, along with military subscription of Labor, gives any Economy an aura of prosperity. It is a artifical image, as qualified Personnel often revert to military usage, and inferior Labor cadres (less qualified than pre-war industry standard) are pressed into service by both Government and industry.
3) The economic euphoria lasts only as long as the Period of overcapitalization lasts.
4) The Government has been purchasing these Supply Contracts with either higher taxation or with massive Government borrowing.
5) Citizenry find themselves with larger Tax rates in the Present, and higher Tax rates in the future.
6) The cessation of Hostilities stand equally as bad for the Economy. The military Supply Contracts rapidly diminish in number and size. Materials Supply industries curtail their labor force, who are joined by returning Servicemen, while Business overall slows to transfer their Product lines to Civilian Goods.
7) Even a full employment Economy prior to the War will find itself with a high significant Unemployment post-Conflict; one endured under policies of high Taxes and Public Debt.
8) We have not even discussed the direct Resource Costs of the expended weaponry and munitions, the undercapitalization of Civilian Goods industries in the War years, the increased Medical Costs of returning Casulties, or the loss of Labor cadres or labor potential of Returnees. lgl
Sunday, September 03, 2006
Externalities
Alex Tabarrok provides a link to an excellent article on the Coase theorem. There may or may not problem with Coase:
If transaction costs are zero--if, in other words, any agreement that is in the mutual benefit of the parties concerned gets made--then any initial definition of property rights leads to an efficient outcome
Here is the rub as established by Coase: all externalities are dual. Can Anyone assert that all Effects of any operation can be reduced to two Parties? There is always the ‘ripple effect of water’and the economic impact of sloughing long-run Costs in immediate payments of impactual Costs. Most of the later generate 'build-up injuries' over time, resulting in down-the-road Costs previously dismissed. There is also the hazard of finding limitation to the Cost area. Take the example used in the Coase article by Friedman: Does the Pollution stop at the planned Resort area, or does the Pollution flow over and past the designated area to the Coast, and even the World? Can Property Rights be defined in such a Scenario? lgl
If transaction costs are zero--if, in other words, any agreement that is in the mutual benefit of the parties concerned gets made--then any initial definition of property rights leads to an efficient outcome
Here is the rub as established by Coase: all externalities are dual. Can Anyone assert that all Effects of any operation can be reduced to two Parties? There is always the ‘ripple effect of water’and the economic impact of sloughing long-run Costs in immediate payments of impactual Costs. Most of the later generate 'build-up injuries' over time, resulting in down-the-road Costs previously dismissed. There is also the hazard of finding limitation to the Cost area. Take the example used in the Coase article by Friedman: Does the Pollution stop at the planned Resort area, or does the Pollution flow over and past the designated area to the Coast, and even the World? Can Property Rights be defined in such a Scenario? lgl
Saturday, September 02, 2006
Labor and Wages
Tne News and Internet, for reason known not even to itself, often tends to gravitate to one theme, especially on the Weekends. This time it is Labor and Wages. A NYTimes article stands as the best place to Quote from:
The low unemployment rate has come about despite a slow rate of job creation. At this point after the previous nine recessions, there were an average of 11.9 percent more jobs in the economy than there had been at the end of the recession.
But so far, as the charts show, there are just 3.5 percent more jobs than at the end of the last recession. That is less than half the lowest of the nine previous moves — a gain of 7.6 percent in the period after the 1953-54 recession. And that figure was held down by the fact that another recession, in 1957-58, had taken place by then.
Even the household survey, with its more positive numbers, indicates that little progress on jobs has been made in this recovery. There has been almost no increase, by these statistics, in the percentage of working-age Americans who are working. The decline in the unemployment rate reflects the fact that fewer of those without jobs say they are looking for work, as is required to be counted as unemployed.
This establishes that all is not rosy in the Job market. Another article clarifies the Bush and Congressional position on Americans who think to better themselves by Working overseas. Dean Baker is quite correct in stating that monthly Wage data is relatively useless, only year over year percentage Wage increases and indexing with Price percentage increase indexing give relatively solid information. Greg Mankiw gives the American Prospective to Europeans working less, coming from an European:
Europeans are working less and less for three reasons: first, increasing marginal tax rates (especially from the 1960s to the 1980s); second, a preference for leisure and, third, labor regulation and union-imposed standards for work time, including retirement regulations. Social multipliers compounds these effects: if a family member or friend has more time off, your own benefit from leisure increases, creating more social demand for leisure.
I personally expect it has more to do with a cultural expectation of European Workers that they will not get rich at their Jobs anyway, their Jobs will last the majority of their career, and they have an affinity for Cottage Trade craft labor effort.
The Adam Smith blog complains of the Cost of the European Union to every Man, Woman, and Child in Europe; I believing it is more like the cost to every Britan. Slate reminds Us all that Tax Cuts will not pay for themselves. Why have Either ever expected that Government was ever financially viable? lgl
The low unemployment rate has come about despite a slow rate of job creation. At this point after the previous nine recessions, there were an average of 11.9 percent more jobs in the economy than there had been at the end of the recession.
But so far, as the charts show, there are just 3.5 percent more jobs than at the end of the last recession. That is less than half the lowest of the nine previous moves — a gain of 7.6 percent in the period after the 1953-54 recession. And that figure was held down by the fact that another recession, in 1957-58, had taken place by then.
Even the household survey, with its more positive numbers, indicates that little progress on jobs has been made in this recovery. There has been almost no increase, by these statistics, in the percentage of working-age Americans who are working. The decline in the unemployment rate reflects the fact that fewer of those without jobs say they are looking for work, as is required to be counted as unemployed.
This establishes that all is not rosy in the Job market. Another article clarifies the Bush and Congressional position on Americans who think to better themselves by Working overseas. Dean Baker is quite correct in stating that monthly Wage data is relatively useless, only year over year percentage Wage increases and indexing with Price percentage increase indexing give relatively solid information. Greg Mankiw gives the American Prospective to Europeans working less, coming from an European:
Europeans are working less and less for three reasons: first, increasing marginal tax rates (especially from the 1960s to the 1980s); second, a preference for leisure and, third, labor regulation and union-imposed standards for work time, including retirement regulations. Social multipliers compounds these effects: if a family member or friend has more time off, your own benefit from leisure increases, creating more social demand for leisure.
I personally expect it has more to do with a cultural expectation of European Workers that they will not get rich at their Jobs anyway, their Jobs will last the majority of their career, and they have an affinity for Cottage Trade craft labor effort.
The Adam Smith blog complains of the Cost of the European Union to every Man, Woman, and Child in Europe; I believing it is more like the cost to every Britan. Slate reminds Us all that Tax Cuts will not pay for themselves. Why have Either ever expected that Government was ever financially viable? lgl
Friday, September 01, 2006
World and Chinese Labor
I agree with Dean Baker that the Keith Bradsher article in the NYTimes generates some pain, We joined by PGL at Angry Bear. Baker assumes, though, that there will not be a shortage of Chinese Workers because over half of Chinese Workers are still in Agriculture. Inherent in this assessment stands the belief Chinese Agriculture can acquire the degree of mechanization achieved in American Agriculture. There are several reasons why this will not occur.
The foremost factor forestalling mass mechanization of Chinese Agriculture resides in the sheer mass of Capital equipment which is needed to spread across the entire growing area of Chinese Food production. The Agriculture Implement industry would have to rival the American and European industries--with a corresponding rise in Chinese Steel production. The second factor inhibiting the American model adoption sits within the Energy requirements for the adoption to take place, it eventually demanding an Energy consumption by China almost equalling current American consumption of Energy. The third factor remains the low level of Education of Chinese Agricultural labor. Massive inputs of mechanization into Chinese Agriculture would require advanced education to train proper Operation and Maintenance of the Equipment.
It is doubtful China can pull more than 15% more of its labor force from Agriculture, not now or ever. China faces another massive labor drain in the form of adequate Health Care provision for a definitely Ageing population. Their Health Care industry will never equal the percentage useage of American health care, but it is hard to visualize them utilizing less than half the American percentage use. Business invasion of China for cheaper Production Costs will eventually realize a decade brings vast changes to Chinese labor availability. Bradsher is right about that, though I wonder if Investors are that perceptive as yet.
Other News bring a Reuter's article which states both the PMI and ISM are falling, but still safely above 50, at 55.1 for PMI and 54.5 for the ISM. These means both the American and World economies are still growing, but cooling off. Another article provided a Statement that the ISM was expected to drop below 50 by Q1 2007. I would not lay Bets, but expect to see this by Q4 2006. We are in a Contraction, but not necessarily a Recession. lgl
The foremost factor forestalling mass mechanization of Chinese Agriculture resides in the sheer mass of Capital equipment which is needed to spread across the entire growing area of Chinese Food production. The Agriculture Implement industry would have to rival the American and European industries--with a corresponding rise in Chinese Steel production. The second factor inhibiting the American model adoption sits within the Energy requirements for the adoption to take place, it eventually demanding an Energy consumption by China almost equalling current American consumption of Energy. The third factor remains the low level of Education of Chinese Agricultural labor. Massive inputs of mechanization into Chinese Agriculture would require advanced education to train proper Operation and Maintenance of the Equipment.
It is doubtful China can pull more than 15% more of its labor force from Agriculture, not now or ever. China faces another massive labor drain in the form of adequate Health Care provision for a definitely Ageing population. Their Health Care industry will never equal the percentage useage of American health care, but it is hard to visualize them utilizing less than half the American percentage use. Business invasion of China for cheaper Production Costs will eventually realize a decade brings vast changes to Chinese labor availability. Bradsher is right about that, though I wonder if Investors are that perceptive as yet.
Other News bring a Reuter's article which states both the PMI and ISM are falling, but still safely above 50, at 55.1 for PMI and 54.5 for the ISM. These means both the American and World economies are still growing, but cooling off. Another article provided a Statement that the ISM was expected to drop below 50 by Q1 2007. I would not lay Bets, but expect to see this by Q4 2006. We are in a Contraction, but not necessarily a Recession. lgl
Thursday, August 31, 2006
Recessions Necessary?
Mike Moffitt posted an article today which was a discussion of the necessity of Recessions. He basically found he could not find evidence of the Mark Rostendo argument that:
The "job" of a recession is to clean the "fat" out of the system, mop up excess, and pave the way for the next expansion. Until that process is complete, there isn't much from which a legitimate expansion can arise.
Recessions put weak companies out of business. In so doing, resources (skilled workers, capital) are freed up to be deployed more efficiently elsewhere. For example, Wall Street analysts who touted bankrupt Internet stocks are redeployed at local fast food restaurants to serve people in a capacity for which they are much better suited.
Stronger businesses that have used the contraction to firm up their bottom lines and grow more efficient are able to take advantage of these resources during the ensuing expansion. The economy emerges from a recession leaner, more efficient and in good shape for the next wave of growth and progress.
But in a mild, one-quarter downturn, many weak companies are able to pull through by the skin of their teeth. Thus they continue to suck up space and resources that could better be utilized elsewhere. For example, CNBC commentators, who should have been laid off, continue to prattle on and the dazed public continues to sit slack-jawed in front of the idiot box, hanging on their every word, doing nothing for the economy. Employees and capital are tied up in corporate time-bombs, just marking time before their inevitable demise. The excess that caused the recession remains in the economy, serving only as an anchor with which to weigh down future expansion.
Rostendo almost has it right, but fails in the analysis of what exactly has to be removed. What has to be removed is the excess Profits achieved by Business in the previous Boom. Excess Profits lead to too great a Draft upon Material resources; this generating artifically low-Profit enterprise as Businesses think to invest, and drain of Consumer financial state through the artificial generation of Demand through Advertising.
The Economist asserts that American Purchases currently are running about 106% of Gross Domestic Product. It contends rightly:
In principle, these purchases could fall by six percentage points of GDP, eliminating the deficit, without anyone in America needing to fall out of work. America would not suffer a recession. But it would feel like one: every man, woman and child would have to curtail their spending by $2,600 a year.
How could such a condition be created?
The Answer is simple, but perhaps beyond Economists. Recessions could be avoided by a simple expedient with the loss of fairly few Jobs. What We need is a national law simply stating no Goods can be sold outside of normal Business hours--9 a.m. Monday through 5 p.m. Friday--except for Groceries. What do We have here? We still maintain Services 24-7, still provide for all Temporary Consumers needs, but eliminate the prime Consumer purchase hours. The Result would be less Consumption except for pressing need, greater deliberation in Consumption decision, and less Business Profits. Consumption would decline by some amount, expected by this Author to be double the reduction necessary to reside within the GDP. Labor and Households would increase their Savings ratio, and Business would find less opprotunity to invest. Recessions are not necessary, but intelligence remains a criteria. lgl
The "job" of a recession is to clean the "fat" out of the system, mop up excess, and pave the way for the next expansion. Until that process is complete, there isn't much from which a legitimate expansion can arise.
Recessions put weak companies out of business. In so doing, resources (skilled workers, capital) are freed up to be deployed more efficiently elsewhere. For example, Wall Street analysts who touted bankrupt Internet stocks are redeployed at local fast food restaurants to serve people in a capacity for which they are much better suited.
Stronger businesses that have used the contraction to firm up their bottom lines and grow more efficient are able to take advantage of these resources during the ensuing expansion. The economy emerges from a recession leaner, more efficient and in good shape for the next wave of growth and progress.
But in a mild, one-quarter downturn, many weak companies are able to pull through by the skin of their teeth. Thus they continue to suck up space and resources that could better be utilized elsewhere. For example, CNBC commentators, who should have been laid off, continue to prattle on and the dazed public continues to sit slack-jawed in front of the idiot box, hanging on their every word, doing nothing for the economy. Employees and capital are tied up in corporate time-bombs, just marking time before their inevitable demise. The excess that caused the recession remains in the economy, serving only as an anchor with which to weigh down future expansion.
Rostendo almost has it right, but fails in the analysis of what exactly has to be removed. What has to be removed is the excess Profits achieved by Business in the previous Boom. Excess Profits lead to too great a Draft upon Material resources; this generating artifically low-Profit enterprise as Businesses think to invest, and drain of Consumer financial state through the artificial generation of Demand through Advertising.
The Economist asserts that American Purchases currently are running about 106% of Gross Domestic Product. It contends rightly:
In principle, these purchases could fall by six percentage points of GDP, eliminating the deficit, without anyone in America needing to fall out of work. America would not suffer a recession. But it would feel like one: every man, woman and child would have to curtail their spending by $2,600 a year.
How could such a condition be created?
The Answer is simple, but perhaps beyond Economists. Recessions could be avoided by a simple expedient with the loss of fairly few Jobs. What We need is a national law simply stating no Goods can be sold outside of normal Business hours--9 a.m. Monday through 5 p.m. Friday--except for Groceries. What do We have here? We still maintain Services 24-7, still provide for all Temporary Consumers needs, but eliminate the prime Consumer purchase hours. The Result would be less Consumption except for pressing need, greater deliberation in Consumption decision, and less Business Profits. Consumption would decline by some amount, expected by this Author to be double the reduction necessary to reside within the GDP. Labor and Households would increase their Savings ratio, and Business would find less opprotunity to invest. Recessions are not necessary, but intelligence remains a criteria. lgl
Wednesday, August 30, 2006
The Splash
David Leonhardt authored an article in the NYTimes which does impress. The GDP rose in Q2 by an annualized 2.9% rather than 2.5%, while residential investment declined by 9.8%. Wages and Salaries supposedly rose by a 7% annual rate between Q4-2005 and Q2-2006, so they accounted for 46.1% of Output in Q2-2006 (of course, no mention of the percentage increase of Energy products during the same Period). An ideal Quote:
Joshua Shapiro, the chief United States economist at MFR, said that much of the income increase likely went to people who work on Wall Street or for hedge funds. The biggest spike was in the first quarter, when financial companies typically pay bonuses, and other data — including Labor Department numbers on wage growth and private-sector surveys on consumer confidence — suggest that most families are not receiving pay increases that outpace inflation.
another,
For the first time in a year, foreign trade lifted economic growth, as the value of imports rose just 0.6 percent, while the value of exports grew 5.1 percent.
A Reuters article relates a larger decline in Business investment and equipment to a reduction of 1.6%, the lowest since Q4-2002. Another article tells Us that the EIA says that Gasoline stocks are up 5% year over year, but Distillates are down 1% year over year The Associate Press article on Energy that Demand year over year rose 2.8% over the Period of the last four Weeks. It also mentioned only 300,000 barrels of the Distillates were for Heating (do We smell the scent of roaring Heating bills, especially with the vast number of new Homes year over year). Life in the United States. lgl
Joshua Shapiro, the chief United States economist at MFR, said that much of the income increase likely went to people who work on Wall Street or for hedge funds. The biggest spike was in the first quarter, when financial companies typically pay bonuses, and other data — including Labor Department numbers on wage growth and private-sector surveys on consumer confidence — suggest that most families are not receiving pay increases that outpace inflation.
another,
For the first time in a year, foreign trade lifted economic growth, as the value of imports rose just 0.6 percent, while the value of exports grew 5.1 percent.
A Reuters article relates a larger decline in Business investment and equipment to a reduction of 1.6%, the lowest since Q4-2002. Another article tells Us that the EIA says that Gasoline stocks are up 5% year over year, but Distillates are down 1% year over year The Associate Press article on Energy that Demand year over year rose 2.8% over the Period of the last four Weeks. It also mentioned only 300,000 barrels of the Distillates were for Heating (do We smell the scent of roaring Heating bills, especially with the vast number of new Homes year over year). Life in the United States. lgl
Tuesday, August 29, 2006
Household Despair
I did not intend to again write on the state of real Wages after my last Posting; but flairs in the Internet world suggest that I must. Greg Mankiw appears to be the most Instructive, Tim Worstall poses a viable question left unanswered, and a list of Others (Roberts, Altig, etc.) claim the inciting NYTimes article (find in Mankiw's Post) wrong in ignoring the scope of Labor Benefits in a study of total Compensation of Labor.
I suggest the NYTimes article was not in pursuit of Total Compensation of Labor. Let Us review a few facts about Households and Wages. Households' Consumption makes up about Two-Thirds of the Economy. Consumer Prices have risen over 4% year over year, and is expected to continue at this or worse rates unless something is done. The Question here is what? The Fed interbank rate is now over 5% (notice I do not utilize such pesky things as hard numbers) as marginal rates are immaterial in this Discussion; higher Fed rates would only further damage Household control of Expenses during a Slowdown, without any appreciable curtailment of Inflation. Tim, the Mankiw argument holds very shakey sway, but Labor Hires are inhibited because of those generous Benefits which Business continues to attempt Payout denial; filling your Argument with a hefty relevance. Household Take-Home Pay continues to fail in the face of real Consumer Price Inflation.
A pursual of the Concept of Benefits might be appropriate at this time. Benefits are structured Promises which Business gives to Employees in lieu of actual Cash Wages. The Thought behind Benefits from the Business viewpoint remains: We can promise now, and pay later; perhaps, We can even deny Payment later, after We have gained a sublevel Wage production. Business can underfund their Health and Pension Funds, and use these funds for their own Investment desires, until Employees, Health needs, or the passage of Time makes a rude demand for such Payments. The central core element here being that the funding does not actually have to be secured, and Business even gets a Tax reduction for the promises. By the way, this also has a heavy impact on Mankiw's generalized marginal productivity argument. There is the final element accuring to Business health stands as Republican Courts and Administrations which allows for easy Business default on such Fund underwriting, though We achieve strict Bankruptcy law to forestall Households from alleging that they cannot pay. Still, Households seem untouched by the wonderous Wand of Benefits; they always destined for other Business organizations, unless of course, Pension awards are actually paid years down the Road. lgl
I suggest the NYTimes article was not in pursuit of Total Compensation of Labor. Let Us review a few facts about Households and Wages. Households' Consumption makes up about Two-Thirds of the Economy. Consumer Prices have risen over 4% year over year, and is expected to continue at this or worse rates unless something is done. The Question here is what? The Fed interbank rate is now over 5% (notice I do not utilize such pesky things as hard numbers) as marginal rates are immaterial in this Discussion; higher Fed rates would only further damage Household control of Expenses during a Slowdown, without any appreciable curtailment of Inflation. Tim, the Mankiw argument holds very shakey sway, but Labor Hires are inhibited because of those generous Benefits which Business continues to attempt Payout denial; filling your Argument with a hefty relevance. Household Take-Home Pay continues to fail in the face of real Consumer Price Inflation.
A pursual of the Concept of Benefits might be appropriate at this time. Benefits are structured Promises which Business gives to Employees in lieu of actual Cash Wages. The Thought behind Benefits from the Business viewpoint remains: We can promise now, and pay later; perhaps, We can even deny Payment later, after We have gained a sublevel Wage production. Business can underfund their Health and Pension Funds, and use these funds for their own Investment desires, until Employees, Health needs, or the passage of Time makes a rude demand for such Payments. The central core element here being that the funding does not actually have to be secured, and Business even gets a Tax reduction for the promises. By the way, this also has a heavy impact on Mankiw's generalized marginal productivity argument. There is the final element accuring to Business health stands as Republican Courts and Administrations which allows for easy Business default on such Fund underwriting, though We achieve strict Bankruptcy law to forestall Households from alleging that they cannot pay. Still, Households seem untouched by the wonderous Wand of Benefits; they always destined for other Business organizations, unless of course, Pension awards are actually paid years down the Road. lgl
Monday, August 28, 2006
Distortions
Russell Roberts produced a Post which left me a little puzzled. It was a Critique of a NYTimes article this morning which I included in the previous Post I delivered today. It must be admitted it was a poorly framed article, but did not deserve the heat which Roberts expressed. It disturbed me further that Tyler Cowan linked to the Roberts' Post.
Everything Roberts claimed was fundamentally True, but his refutation of the Times article was also set to deceive. It becomes apparent in the listed questions which he makes:
1. Why would you use a measure of compensation that ignores benefits, an increasingly important form of compensation?
2. Why would you use 2003 as your starting point when the recession ended in November of 2001?
3. There are no government series that I know of on median earnings. Where did those data come from?
Benefits could be ignored in the Context that such awards channel to other Business concerns, while Employees face ever increasing Living Costs while their Take-Home Pay remains relatively stagnant. It is relevant that the Business Concerns accepting payment for those Benefits express no hesitation in raising Charges because of incipient Inflation. This stands as the vital reason why Business shows reluctance to maintain those self-same Benefits. Use of median earnings cancels out the Advanced Skills Labor who have kept ahead of the Inflation rate in their Wages, but who are in the distinct Minority of Total Employed. I am also quite sure Roberts would derive approximately the same Numbers as attained by the Economic Policy Institute, no matter the agenda of the EPI, if he cared to check on median earnings.
Roberts states:
Both of these claims are puzzling. The first claim, about labor's share of the pie ignores benefits. As I have mentioned here before--the standard claims you hear about labor's share declining come from using wages without other forms of compensation. When you include benefits, labor's share is virtually a constant at 70% of national income and has been steady since the end of World War II, . . .
Is this Statement relatively True? The news on Local Stations tonight is about Good Year cancelling Health Care coverage for Retirees. This sounds like Compensation granted in previous Years has been denied by Business Concerns, even though specifically granted by Union Contract in previous years. What does this do to the rate of Compensation to Workers? A singular Incident would be hardly noteworthy, but Business Concerns have been cancelling Health Care and Pension benefits all over the Country. It also leads to a rather thorny problem as well, which I am sure Our Republican administration has not considered: If Business Concerns were granted Tax Reductions from expressed Benefits provisions, what is the proper Tax burden which should be assessed for noncompliance? lgl
Everything Roberts claimed was fundamentally True, but his refutation of the Times article was also set to deceive. It becomes apparent in the listed questions which he makes:
1. Why would you use a measure of compensation that ignores benefits, an increasingly important form of compensation?
2. Why would you use 2003 as your starting point when the recession ended in November of 2001?
3. There are no government series that I know of on median earnings. Where did those data come from?
Benefits could be ignored in the Context that such awards channel to other Business concerns, while Employees face ever increasing Living Costs while their Take-Home Pay remains relatively stagnant. It is relevant that the Business Concerns accepting payment for those Benefits express no hesitation in raising Charges because of incipient Inflation. This stands as the vital reason why Business shows reluctance to maintain those self-same Benefits. Use of median earnings cancels out the Advanced Skills Labor who have kept ahead of the Inflation rate in their Wages, but who are in the distinct Minority of Total Employed. I am also quite sure Roberts would derive approximately the same Numbers as attained by the Economic Policy Institute, no matter the agenda of the EPI, if he cared to check on median earnings.
Roberts states:
Both of these claims are puzzling. The first claim, about labor's share of the pie ignores benefits. As I have mentioned here before--the standard claims you hear about labor's share declining come from using wages without other forms of compensation. When you include benefits, labor's share is virtually a constant at 70% of national income and has been steady since the end of World War II, . . .
Is this Statement relatively True? The news on Local Stations tonight is about Good Year cancelling Health Care coverage for Retirees. This sounds like Compensation granted in previous Years has been denied by Business Concerns, even though specifically granted by Union Contract in previous years. What does this do to the rate of Compensation to Workers? A singular Incident would be hardly noteworthy, but Business Concerns have been cancelling Health Care and Pension benefits all over the Country. It also leads to a rather thorny problem as well, which I am sure Our Republican administration has not considered: If Business Concerns were granted Tax Reductions from expressed Benefits provisions, what is the proper Tax burden which should be assessed for noncompliance? lgl
Jackson Hole
The Jackson Hole conference of central bankers is over, and they throughly managed to scare themsleves as well as others. They all contemplate all of those Home Equity loans in the time of falling Housing Prices. Andrews at the NYTimes suggests the Import prices of Chinese Goods will increase, and apply pressures for Inflation. The Inflation rate is already over the Target rate of 2%, and all indications exists for even higher levels of Inflation. Disembodied Voices at the Conference whispered that horrid Word--Stagflation--in the Wings, while the Spectre of foreign undersubscription of Treasuries flickered in the air of the halls. Does the Fed fight Inflation, even if it turns a Slowdown to Recession?
DuPont elsewhere informs All they will cut Pension contributions by Two-Thirds, hoping to increase Profits some 3 Pennies per Share in 2007 and a nickel a Share in 2008. Why does this sound like an Act of desperation? Real Wages have not grown in this Cycle and Consumers are faced with the full brunt of the Energy crunch, combined with the Payments on those Home Equity loans coming due. Dupont may be abandoning the last Great Hope of their Employees.
Is the Economy slowing down? The Answer is Yes! I am reminiscent of the Stock Collapse of the late 1980s, where I sat with a University Professor who was the then Director of the University Pension portfolio. I attempted to assure him that Day that the slump was not a recurrence of the Stock Market Crash of 1929. I reminded him that We would all still be here on the following Day; it did not even equate to a Holocaust. Anything I relate Today will probably work as well as my platitudes did that Day. I will only state that if the Economy goes South once more, We will simply have to fix it. lgl
DuPont elsewhere informs All they will cut Pension contributions by Two-Thirds, hoping to increase Profits some 3 Pennies per Share in 2007 and a nickel a Share in 2008. Why does this sound like an Act of desperation? Real Wages have not grown in this Cycle and Consumers are faced with the full brunt of the Energy crunch, combined with the Payments on those Home Equity loans coming due. Dupont may be abandoning the last Great Hope of their Employees.
Is the Economy slowing down? The Answer is Yes! I am reminiscent of the Stock Collapse of the late 1980s, where I sat with a University Professor who was the then Director of the University Pension portfolio. I attempted to assure him that Day that the slump was not a recurrence of the Stock Market Crash of 1929. I reminded him that We would all still be here on the following Day; it did not even equate to a Holocaust. Anything I relate Today will probably work as well as my platitudes did that Day. I will only state that if the Economy goes South once more, We will simply have to fix it. lgl
Sunday, August 27, 2006
National Health Care
Maggie Mahar works herself into a position where Taxpayers finally absorb some 74% of the total $2 trillion health care bill already. Some aspects of her addition may be a bit hazy, but she presents fairly salient points:
private insurers pick up just 30 percent of the tab -- and the money they lay out comes from the premiums paid by employees as well as employers. In other words, private sector employers pay less than 30 percent of the total. The remaining 19 percent of the $2 trillion total is covered by patients themselves (14 percent) and by the nonprofit philanthropy sector (5 percent). {still in the middle of her argument}
Arnold Kling counters the Mahar argument that Government avoids a National Health Care system because of the Real Cost of present Health Care, along with the Political fear of the power of the Special Interests. Arnold may be right, as I have not yet read his book advertised in the Post.
Why don't We adopt a National Health Care System?
We operate within a Private Health Care System where Doctors, Clinics, and Hospitals utilize professional health associations (dare We talk of Oligarchical collusion here) to set proscribed Product charges. We have a Pharm industry who possesses 2 Centuries of Clinical Research trials and Product Development studies, and who can conduct Lab trials for about $300/Hour utilizing the current method of Lab technicans; Companies who can reduce actual Production Costs of Drugs to mere Pennies per Dosage; still, who can claim Billions of Dollars in Research Costs due to current Tax law. We have Insurers who spend 40% of their total assessed premiums in Varification Costs, and 18% of those premiums in Profits for Management and Stockholders. We finally have understaffed Health facilities due to low Pay, and Business-proclaimed excessive Labor Costs.
What We need is a formal List of Procedurial Charges organized by Health Care Economists, not by the Recipients of that Pay. We need Research funded by a central organization who distributes allocation of Research funds based upon health need, not upon Profits-generating potential. We need Drug Costs to be generated by actual Production Costs, not by the principle of whatever the Market will pay. We need Government intervention which defined precisely what Procedures are paid for by Private Insurers, and what the largesse of that Payment will be. We need Government regulation of the staff requirements of health care facilities, and limitations on what the Average Costs of such Staff labor will be. What We need is a National Health Care System. lgl
private insurers pick up just 30 percent of the tab -- and the money they lay out comes from the premiums paid by employees as well as employers. In other words, private sector employers pay less than 30 percent of the total. The remaining 19 percent of the $2 trillion total is covered by patients themselves (14 percent) and by the nonprofit philanthropy sector (5 percent). {still in the middle of her argument}
Arnold Kling counters the Mahar argument that Government avoids a National Health Care system because of the Real Cost of present Health Care, along with the Political fear of the power of the Special Interests. Arnold may be right, as I have not yet read his book advertised in the Post.
Why don't We adopt a National Health Care System?
We operate within a Private Health Care System where Doctors, Clinics, and Hospitals utilize professional health associations (dare We talk of Oligarchical collusion here) to set proscribed Product charges. We have a Pharm industry who possesses 2 Centuries of Clinical Research trials and Product Development studies, and who can conduct Lab trials for about $300/Hour utilizing the current method of Lab technicans; Companies who can reduce actual Production Costs of Drugs to mere Pennies per Dosage; still, who can claim Billions of Dollars in Research Costs due to current Tax law. We have Insurers who spend 40% of their total assessed premiums in Varification Costs, and 18% of those premiums in Profits for Management and Stockholders. We finally have understaffed Health facilities due to low Pay, and Business-proclaimed excessive Labor Costs.
What We need is a formal List of Procedurial Charges organized by Health Care Economists, not by the Recipients of that Pay. We need Research funded by a central organization who distributes allocation of Research funds based upon health need, not upon Profits-generating potential. We need Drug Costs to be generated by actual Production Costs, not by the principle of whatever the Market will pay. We need Government intervention which defined precisely what Procedures are paid for by Private Insurers, and what the largesse of that Payment will be. We need Government regulation of the staff requirements of health care facilities, and limitations on what the Average Costs of such Staff labor will be. What We need is a National Health Care System. lgl
Saturday, August 26, 2006
Productivity and Health Care
The Grossman and Rossi-Hansberg thesis indeed does indicate that Outsourcing actually pays for increases in American real Wages. Don Boudreaux and Arnold Kling both take Gladwell to task for alleging American Manufacturers operate at a disadvantage having to supply Health and Pension benefits to Labor, instead of some Univeral Health and Pension system. What do these articles have in common? The Grossman and Rossi-Hansberg thesis clarifies that real American Wages are not matching the real American increase of Health and Pension Costs. Boudreaux insists there is still Comparative Advantage in Trade even American Manufacturers face higher Production Costs: so far, everything is True.
What is my Point?
Everyone forgets important elements. Increases in Productivity can produce increase Health Care Costs, especially Repetitive Impact injuries. The increased Production Costs of American industry fails to cripple Profits' increase--only the transmission of Wage increases to Households who are suffering from escalating Costs. Check this Reuter's article on the expected increase in Chnese Imports Cost, an indication that Comparative Advantage may be evaporating for American Households. Japanese Beef Imports seem again ready to raise Business Profits while raising Prices at American Meat Counters. American Wage scales are being calified, while American Consumer Prices continue to soar, though Business Profits are in a Golden Age.
At least We are not talking about Iraq!
the inflation rate has reached 70 percent a year, up from 32 percent last year. Wages are flat, banks are barely functioning and the consensus among many American and Iraqi officials is that inflation is most likely to accelerate.
"It’s a very serious problem," said Anthony H. Cordesman, a Middle East analyst at the Center for Strategic and International Studies in Washington. "You don’t have stable trucking; you don’t have stable distribution. You have a constant protection racket, with security forces who are involved in sectarian fighting often taking bribes to have things operate. All of that builds up pressure on prices."
The spike has come as a shock to Iraqis, who make only about $150 a month on average — if they have jobs. Estimates of unemployment range from 40 to 60 percent.
I wish I could say it comes as a Shock to me. lgl
What is my Point?
Everyone forgets important elements. Increases in Productivity can produce increase Health Care Costs, especially Repetitive Impact injuries. The increased Production Costs of American industry fails to cripple Profits' increase--only the transmission of Wage increases to Households who are suffering from escalating Costs. Check this Reuter's article on the expected increase in Chnese Imports Cost, an indication that Comparative Advantage may be evaporating for American Households. Japanese Beef Imports seem again ready to raise Business Profits while raising Prices at American Meat Counters. American Wage scales are being calified, while American Consumer Prices continue to soar, though Business Profits are in a Golden Age.
At least We are not talking about Iraq!
the inflation rate has reached 70 percent a year, up from 32 percent last year. Wages are flat, banks are barely functioning and the consensus among many American and Iraqi officials is that inflation is most likely to accelerate.
"It’s a very serious problem," said Anthony H. Cordesman, a Middle East analyst at the Center for Strategic and International Studies in Washington. "You don’t have stable trucking; you don’t have stable distribution. You have a constant protection racket, with security forces who are involved in sectarian fighting often taking bribes to have things operate. All of that builds up pressure on prices."
The spike has come as a shock to Iraqis, who make only about $150 a month on average — if they have jobs. Estimates of unemployment range from 40 to 60 percent.
I wish I could say it comes as a Shock to me. lgl
Friday, August 25, 2006
Lazy Friday
I spent my morning at Exercise and a Doctor's Appointment, where as usual, I only learned I was still overweight and should exercise more. They did take an Echogram this time, a waste of another 20 minutes extra to inform me I was the same as usual. I adopted the Attitude, and find some reluctance to exercise by Typing, so I will provide a Reading List with some commentary.
http://www.the-idea-shop.com/papers/usatoday-propertytax.html
http://www.taxfoundation.org/blog/show/1775.html
Property Tax opposition is growing, and pressures will increase with Housing Market Prices reductions in the offing. Bureaucracy has always been adamant in refusal to reduce any Tax without legislative action.
=================================
http://washingtontimes.com/upi/20060823-051747-8542r.html
Remember that the Congressional Research Service probably underestimated the War Costs by some 24%.
=================================
http://forestpolicy.typepad.com/ecoecon/2006/08/why_do_people_s.html
I do not agree with Dave Iverson on the ineffectiveness of Costs/Benefits analysis, but he brings up some good points, if you survey the links.
=================================
http://www.env-econ.net/2006/08/minumum_wage_re.html
I do not agree with the basic Tim Haab premise, understanding the positional role of Minimum Wage labor. I do tend to agree with the McCulloch argument. Minimum Wage is paid for labor which rarely disappears at the same rate as more Skilled Labor. Businessmen may cut half his staff, with that Cut rarely reaching to Custodians. David Card could easily find Unemployment rates do not vary drastically with Minimum Wage increases.
The McCulloch argument is countered by the very real labor demand all Business faces of Labor unrest, if labor category Wages rate ratios are not maintained. Minimum Wage increases invariably lead to Skilled Labor demands for Raises. lgl
http://www.the-idea-shop.com/papers/usatoday-propertytax.html
http://www.taxfoundation.org/blog/show/1775.html
Property Tax opposition is growing, and pressures will increase with Housing Market Prices reductions in the offing. Bureaucracy has always been adamant in refusal to reduce any Tax without legislative action.
=================================
http://washingtontimes.com/upi/20060823-051747-8542r.html
Remember that the Congressional Research Service probably underestimated the War Costs by some 24%.
=================================
http://forestpolicy.typepad.com/ecoecon/2006/08/why_do_people_s.html
I do not agree with Dave Iverson on the ineffectiveness of Costs/Benefits analysis, but he brings up some good points, if you survey the links.
=================================
http://www.env-econ.net/2006/08/minumum_wage_re.html
I do not agree with the basic Tim Haab premise, understanding the positional role of Minimum Wage labor. I do tend to agree with the McCulloch argument. Minimum Wage is paid for labor which rarely disappears at the same rate as more Skilled Labor. Businessmen may cut half his staff, with that Cut rarely reaching to Custodians. David Card could easily find Unemployment rates do not vary drastically with Minimum Wage increases.
The McCulloch argument is countered by the very real labor demand all Business faces of Labor unrest, if labor category Wages rate ratios are not maintained. Minimum Wage increases invariably lead to Skilled Labor demands for Raises. lgl
Thursday, August 24, 2006
Arbitrage and Bad Signs.
There is an excellent article in the NYTimes which outlines Milton Friedman's 1953 argument on Speculation. He basically states that Speculators could not continue to Buy High and Sell Low over the long-run. He thereby attests Speculators stabilize Prices. Dell asserts that Speculators can affect immediate Pricing, due to their inexperience and flush funds. Mr. Dell is correct to assert that Speculators can affect present Pricing, but wrong in his analysis. Speculators must be very experienced to profit immediately. Friedman ignored the fundamental principle that Speculation is Short-term in character, with the process of dredging Short-term profits from quick Rollovers. They buy quietly as the Market begins to slide off the Top Price, until they have a Hold position, then start to buy minor amounts at high Offers. They finish by selling their Hold position to the Herd stampede Buy which they generated. They do not lack experience!
Durable Goods were very disappointing in July, and not just in the area of Transportation. Manufactured Durable Goods seem good, but without Defense Goods, everything gets a little shakey. There is a definite softness in Managerial Scheduling.
India begins moving to control foreign investment. India has not had the security apparatus utilized by China, which the later has used effectively to control the flow of funds into and out of the Country. India starts to realize the danger of unhampered flow of Capital, with its sudden potential disappearance. India will commence with simple Security measures, but will quickly emplace Economic Fail-Safes. This, along with the Asean Agreements, will soon slow the rapid transmission of foreign investment. American Corporations may even have to pay their Tax burdens, as foreign Investment ventures disappear. lgl
Durable Goods were very disappointing in July, and not just in the area of Transportation. Manufactured Durable Goods seem good, but without Defense Goods, everything gets a little shakey. There is a definite softness in Managerial Scheduling.
India begins moving to control foreign investment. India has not had the security apparatus utilized by China, which the later has used effectively to control the flow of funds into and out of the Country. India starts to realize the danger of unhampered flow of Capital, with its sudden potential disappearance. India will commence with simple Security measures, but will quickly emplace Economic Fail-Safes. This, along with the Asean Agreements, will soon slow the rapid transmission of foreign investment. American Corporations may even have to pay their Tax burdens, as foreign Investment ventures disappear. lgl
Wednesday, August 23, 2006
Inequality and Government Policy
Paul Krugman wrote a NYTimes column recently which caused a Blog furor. Many of the Majors wrote on it. What follows is a list of most relevant Posts, Clicks will lead to the commentary.
Andrew Samwick, Mark Thoma, Brad DeLong, and Greg Mankiw. The Readers may be bored at this point, but Someone may want to check the original Pual Krugman for his Thoughts on the matter, which has been around for awhile. One might also ask why I have delayed writing on this Issue, and I can only say I wanted some prospective on the Argument.
Does Government polices actually affect Inequality?
I agree with Krugman more than with the Others-including Thoma. It does indeed impact pre-tax Income, mainly in the arena of managerial Wage and Product Price settings. A higher Business Tax and Personal Income taxation will induce higher Wage grants to minimal Wage employees, while reducing the incentive of productivity Wages. Even Business Profits assume less desirability, and so generating less inflationary pressure on Product Pricing. Contraction of Tax rates around a norm, though Stepped, gives incentive to Managers to search for forms of economic profits above normal Business profits.
Do Higher taxes actually reduce Investment Capital?
Here again We are faced with a common homily. Every Economists unites to proclaim lower Taxes (more compressed Steps in the Tax rates) promotes Capital aggregation, and thereby Investment. The trouble here lies in the proliferation of Tax Breaks of every kind to Business, which obscures the actual effect of compressed Tax rates. It is further confused by the fact there is little evidence of Tax Breaks actually producing viable Capital investment; they mainly being known for Production of submaximizing Profits for tax purposes, and Paper instrument investment inflation (such instruments actually hamper Production with an additional Cost of excessive Investor payments).
Do Government policies impact Inequality of Incomes?
Most certainly! There remains much difference between a 20% Tax rate on two Incomes: $50,000 and $50 million. Economists never quantify impact of Tax rates on Living Standards, and there is no doubt that reduced Tax rates on the Wealthy must be made up in some form (including the future taxation of Public debt) by the Economy as a whole. The forms of Taxation also often discriminate against poorer Incomes, forcing a greater devotion to Consumption over Savings (showing an inverse relationship with compressed Tax rates). I will not even enter into the Issue of Corporations moving taxable Funds overseas as early as 1995, in expectation a potential Republican Administration and Congress could gain compressed Tax rates before The Taxman Cometh. lgl
Andrew Samwick, Mark Thoma, Brad DeLong, and Greg Mankiw. The Readers may be bored at this point, but Someone may want to check the original Pual Krugman for his Thoughts on the matter, which has been around for awhile. One might also ask why I have delayed writing on this Issue, and I can only say I wanted some prospective on the Argument.
Does Government polices actually affect Inequality?
I agree with Krugman more than with the Others-including Thoma. It does indeed impact pre-tax Income, mainly in the arena of managerial Wage and Product Price settings. A higher Business Tax and Personal Income taxation will induce higher Wage grants to minimal Wage employees, while reducing the incentive of productivity Wages. Even Business Profits assume less desirability, and so generating less inflationary pressure on Product Pricing. Contraction of Tax rates around a norm, though Stepped, gives incentive to Managers to search for forms of economic profits above normal Business profits.
Do Higher taxes actually reduce Investment Capital?
Here again We are faced with a common homily. Every Economists unites to proclaim lower Taxes (more compressed Steps in the Tax rates) promotes Capital aggregation, and thereby Investment. The trouble here lies in the proliferation of Tax Breaks of every kind to Business, which obscures the actual effect of compressed Tax rates. It is further confused by the fact there is little evidence of Tax Breaks actually producing viable Capital investment; they mainly being known for Production of submaximizing Profits for tax purposes, and Paper instrument investment inflation (such instruments actually hamper Production with an additional Cost of excessive Investor payments).
Do Government policies impact Inequality of Incomes?
Most certainly! There remains much difference between a 20% Tax rate on two Incomes: $50,000 and $50 million. Economists never quantify impact of Tax rates on Living Standards, and there is no doubt that reduced Tax rates on the Wealthy must be made up in some form (including the future taxation of Public debt) by the Economy as a whole. The forms of Taxation also often discriminate against poorer Incomes, forcing a greater devotion to Consumption over Savings (showing an inverse relationship with compressed Tax rates). I will not even enter into the Issue of Corporations moving taxable Funds overseas as early as 1995, in expectation a potential Republican Administration and Congress could gain compressed Tax rates before The Taxman Cometh. lgl
Tuesday, August 22, 2006
Rites of Spring
It is Fall or thereabout, isn't it? I have been reading about Immigration today, and I was reminded of the James Michner novel; excellent Read, but then again, it is a Period piece which might be misunderstood by newer Generations. Why does it remind of the novel? It was Michner's attempt at a Coming-of-Age novel. The Pieces read today resembled the trevails of Youth.
The Washington Post article stated the CBO accounted the Cost of the Senate Immigration Bill, if turned into law, would cost some $126 billion over ten Years. Dean Baker said this was a gross exaggeration of the facts, based on a previous CBO estimate on the intent of the Sponsors of the Bill made earlier. He claims that the Bill would cost no more than $35 billion over the decade. There are two very bad aspects of consideration! The First is legislation rarely conforms to its Sponsors' desires by the time is passes whatever House it is aired within, such places known for Special Interests, Add-Ons, and Pork Barrel. The Second states that the CBO does not bother to consider the intent of Anyone, simply evaluates what it will cost if passed into law. It was the bad Wording which was approved by the Senate, not the Intent.
The New Economist also had a blog contemplating Bulgaria's introduction into the EU, along with the present relaxation of Immigration rules from Bulgaria to Britain. The Author suggests that Bulgaria has too high a level of Corruption, with a Criminal class on the order of the Russian mafia, whose Eyes are on Western Europe. Of course, what is new about this? It is always Criminals who find it easiest to migrate.
Short Word on Immigration: It is the Traditional route of native Business to recruit manual labor without the horrid prospect of granting a Living Wage. The Immigration law should be much simpler: State that Guest Workers would be allowed, but Immigration allowed only in native Employment Agency busses; said Agencies accountable with heavy Fines for the geographic position and Job of every Worker. lgl
The Washington Post article stated the CBO accounted the Cost of the Senate Immigration Bill, if turned into law, would cost some $126 billion over ten Years. Dean Baker said this was a gross exaggeration of the facts, based on a previous CBO estimate on the intent of the Sponsors of the Bill made earlier. He claims that the Bill would cost no more than $35 billion over the decade. There are two very bad aspects of consideration! The First is legislation rarely conforms to its Sponsors' desires by the time is passes whatever House it is aired within, such places known for Special Interests, Add-Ons, and Pork Barrel. The Second states that the CBO does not bother to consider the intent of Anyone, simply evaluates what it will cost if passed into law. It was the bad Wording which was approved by the Senate, not the Intent.
The New Economist also had a blog contemplating Bulgaria's introduction into the EU, along with the present relaxation of Immigration rules from Bulgaria to Britain. The Author suggests that Bulgaria has too high a level of Corruption, with a Criminal class on the order of the Russian mafia, whose Eyes are on Western Europe. Of course, what is new about this? It is always Criminals who find it easiest to migrate.
Short Word on Immigration: It is the Traditional route of native Business to recruit manual labor without the horrid prospect of granting a Living Wage. The Immigration law should be much simpler: State that Guest Workers would be allowed, but Immigration allowed only in native Employment Agency busses; said Agencies accountable with heavy Fines for the geographic position and Job of every Worker. lgl
Monday, August 21, 2006
Trade Advantages
Tyler Cowan has an excellent Post today on Trade. Be sure to read the Overview on Comparative advantage. One needs to read Tyler's last paragraph on the relevance of Fixed Costs in consideration of Trade. Fixed Costs in Trade include all the immediate Production Costs involved in obtaining the Trade Goods, the Distribution Costs of trading these Goods, and otherwise finalized Communication Costs of Trade. These things must all be considered in terms of Trade Cost, but there are additional elements which also must be studied.
The Variable Costs of Trade must also be fused into the equation of Trade Advantage. What are the Variable Costs of Trade, you may ask. Well, the answer is We start to drift into Space! The Variable Costs are certainly present, but are hard to catalogue. The probable easiest to list is the Educational Cost required to retrain Labor after a shift to specialized Goods for Trade. Previous Employment contracts as old technology is discarded; creating loss of Labor Income, Retraining Costs, and substitute Welfare payments to replace lost Income. Another element here resides in a basic conponent shift in Labor rolls, the new technology necessitating a greater or lesser Labor force (almost universally Labor reductions with complement Welfare payment increases). Trade Advantage can easily be canceled by the Educational Cost of Trade alone.
There is also the Cultural Cost of Trade. What is this? Introduction of Trade levels past a certain extent alters the basic Wage/Salary/Profit ratio of the entire economy. Increase of Trade changes the Wage scale of not only the Labor involved in the Direct Trade area, but the Cost of Professional fees, special Skill Labor, and shifts the Income attainment of Propertied Interests tied to the pre-Trade mix of Economic activity (not to forget the Static Income elements whose Income was tied to Pensions, etc., of the old technology Products). Other Costs derive from revision of old Income allotments (like Insurance premiums, basic Utilities Costs, medical treatment Costs, etc.).
There are the Economic Costs of Trade. Elements here include increased Infrastructure Costs to distribute Trade products--almost always borne by the Communities, not the importing industry. Materials Costs increase or decrease relative to being Complementary or Competitive to Trade Goods manufacture, again shifting the Wage/Salary/Profits ratio of native competing industries. There is a final Cost in the required Skill level required for advanced Trade, where a certain segment of Labor cannot attain the advanced Training. Trade is an Icon of Economists, but can definitely be the Enemy of Labor and Management. lgl
The Variable Costs of Trade must also be fused into the equation of Trade Advantage. What are the Variable Costs of Trade, you may ask. Well, the answer is We start to drift into Space! The Variable Costs are certainly present, but are hard to catalogue. The probable easiest to list is the Educational Cost required to retrain Labor after a shift to specialized Goods for Trade. Previous Employment contracts as old technology is discarded; creating loss of Labor Income, Retraining Costs, and substitute Welfare payments to replace lost Income. Another element here resides in a basic conponent shift in Labor rolls, the new technology necessitating a greater or lesser Labor force (almost universally Labor reductions with complement Welfare payment increases). Trade Advantage can easily be canceled by the Educational Cost of Trade alone.
There is also the Cultural Cost of Trade. What is this? Introduction of Trade levels past a certain extent alters the basic Wage/Salary/Profit ratio of the entire economy. Increase of Trade changes the Wage scale of not only the Labor involved in the Direct Trade area, but the Cost of Professional fees, special Skill Labor, and shifts the Income attainment of Propertied Interests tied to the pre-Trade mix of Economic activity (not to forget the Static Income elements whose Income was tied to Pensions, etc., of the old technology Products). Other Costs derive from revision of old Income allotments (like Insurance premiums, basic Utilities Costs, medical treatment Costs, etc.).
There are the Economic Costs of Trade. Elements here include increased Infrastructure Costs to distribute Trade products--almost always borne by the Communities, not the importing industry. Materials Costs increase or decrease relative to being Complementary or Competitive to Trade Goods manufacture, again shifting the Wage/Salary/Profits ratio of native competing industries. There is a final Cost in the required Skill level required for advanced Trade, where a certain segment of Labor cannot attain the advanced Training. Trade is an Icon of Economists, but can definitely be the Enemy of Labor and Management. lgl
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