When we think of "protecting" someone from something in the abstract, we're likely to visualize an innocent party being threatened with some harm. Our natural inclination is to think such protection is probably a good thing, but this creates a problem. It means that any policy which is framed as providing "protection" for someone will seem like a good thing, if we don't think carefully about exactly what that policy does. The label "protection" serves to make the policy sound laudable and to make careful thought about the actual nature of the policy seem unnecessary. Whenever a policy is marketed as providing "protection" for someone, this is a signal that we should think carefully about what the policy will actually do - we should look for an alternative way of framing it which makes clear exactly what the policy will do.
George Mason University Don Boudreaux is a master of this. Consider his recent comment on a senator's statement about "protecting" American exporters.
EXCERPTS from Boudreaux's letter:
Dear Sen. Brown:
In today’s Washington Post you declare that “Demanding that trade agreements work for American exporters isn’t protectionism; it’s common sense.”
In other words, whenever other governments dole out favors to foreign corporations at the expense of foreign consumers, you want Uncle Sam to dole out favors to American corporations at the expense of American consumers.
This isn’t common sense, sir. It’s garbage-heap economics that serves as a convenient excuse for politicians to pick the pockets of hundreds of millions of Americans for the benefit of politically influential businesses.
Saturday, November 27, 2010
Black Friday: Police called after customers rush door at Toys R Us near Appleton | postcrescent.com | Appleton Post Crescent
EXCERPTS:
"Black Friday started with a black mark this year. The line of several thousand waiting customers wrapped entirely around the Toys R Us building at 4411 W. Wisconsin Ave. Thursday night. Moments before the store opened at 10 p.m., the line of those who’d just arrived and line of those who’d waited many hours overlapped.
"Black Friday started with a black mark this year. The line of several thousand waiting customers wrapped entirely around the Toys R Us building at 4411 W. Wisconsin Ave. Thursday night. Moments before the store opened at 10 p.m., the line of those who’d just arrived and line of those who’d waited many hours overlapped.
Wednesday, November 24, 2010
Tennis in Grand Central Terminal - WSJ.com
EXCERPTS:
"Only in Manhattan, where indoor tennis courts are rarer than personal garages, would anyone sign up a year in advance for an hour of tennis. And only on this space-strapped island would they pay as much as $210 an hour for the privilege.
Tennis players with thick wallets and ample foresight have already begun reserving hours at the new tennis facility that's being built in Grand Central Terminal in a space that used to house a CBS recording studio where "What's My Line?" and Edward R. Murrow's "See It Now" were filmed.
The price—depending on the time of day, between $100 and $210 an hour—will likely be the highest in the city for an indoor court, according to Anthony Scolnick who is leasing it from Metro-North Railroad. He predicts hedge fund executives, real estate professionals and others will be willing to pay that price when the Vanderbilt Tennis Club opens in September.
***
Indoor tennis in space-crunched Manhattan has never been for the middle class.
Aside from a seasonal tennis bubble a Parks Department concessionaire erects under the Queensboro Bridge, there are no public indoor courts on the island and the private ones are pricey. The Millennium UN Plaza Hotel, for example charges $110 to $165 per hour for the court there. The same amount of time costs $115 an hour for non-members at the Manhattan Plaza Racquet Club.
***
The bidding was won by Mr. Scolnick, the owner of Yorkville Tennis Club and Sutton East Tennis, both on the Upper East Side. He is a former athletic director at Hunter College. He will pay a starting rent of $225,000 a year to Metro-North.
1.
"Only in Manhattan, where indoor tennis courts are rarer than personal garages, would anyone sign up a year in advance for an hour of tennis. And only on this space-strapped island would they pay as much as $210 an hour for the privilege.
Tennis players with thick wallets and ample foresight have already begun reserving hours at the new tennis facility that's being built in Grand Central Terminal in a space that used to house a CBS recording studio where "What's My Line?" and Edward R. Murrow's "See It Now" were filmed.
The price—depending on the time of day, between $100 and $210 an hour—will likely be the highest in the city for an indoor court, according to Anthony Scolnick who is leasing it from Metro-North Railroad. He predicts hedge fund executives, real estate professionals and others will be willing to pay that price when the Vanderbilt Tennis Club opens in September.
***
Indoor tennis in space-crunched Manhattan has never been for the middle class.
Aside from a seasonal tennis bubble a Parks Department concessionaire erects under the Queensboro Bridge, there are no public indoor courts on the island and the private ones are pricey. The Millennium UN Plaza Hotel, for example charges $110 to $165 per hour for the court there. The same amount of time costs $115 an hour for non-members at the Manhattan Plaza Racquet Club.
***
The bidding was won by Mr. Scolnick, the owner of Yorkville Tennis Club and Sutton East Tennis, both on the Upper East Side. He is a former athletic director at Hunter College. He will pay a starting rent of $225,000 a year to Metro-North.
QUESTIONS:
1.
Rules Eased for Some Health Plans - WSJ.com
EXCERPTS:
"WASHINGTON—Amid pressure from employers, the Obama administration on Monday loosened rules for bare-bones health-insurance policies. It marks one of the administration's biggest steps to peel back regulations that big business found onerous under the health- care overhaul.
McDonald's Corp. had warned regulators it might have to drop its health-insurance plans for 30,000 hourly workers unless it got an exemption for these policies, which have low premiums but also limit payments for medical costs.
The administration's move underscores how businesses, after complaining loudly about the overhaul in the run-up to passage, are now winning a handful of modifications.
The change was part of sweeping new rules rolled out by the government Monday that will force insurers to spend a high portion of their premium revenue on medical care.
Consumers will reap some benefits. Insurers that don't meet the new standards will be forced to issue rebate checks, which the administration estimated could affect nearly nine million Americans, for a total payout of up to $1.4 billion.
The rules, codifying language in the health law, say insurers will be required to spend between 80% for smaller carriers and 85% for larger carriers of their revenue on medical care, a calculation known as a medical-loss ratio. That limits how much they put toward salaries, profit and other nonmedical costs.
Providers of "mini-med" policies, like McDonalds, which caps benefits at a low level, had objected that they would have trouble meeting those levels, in part because they have high administrative costs.
About 1.4 million Americans are covered under mini-med plans. They're typically offered by low-wage employers, who have high employee turnover and end up paying out little money in medical claims....
Democrats said eliminating plans with such limited coverage was the reason they passed the law in the first place.
But Obama administration officials said they were determined not to prompt any employers to drop their plans because of the law. "No one's going to lose their coverage," said Jay Angoff, a director at the Department of Health and Human Services.
***
"Starting in 2014, many low wage workers will shift to getting coverage inside new insurance exchanges, because that's where they can tap tax credits to offset their costs. Stricter rules for the minimum benefits that employers can offer are expected to displace the plans altogether.
"WASHINGTON—Amid pressure from employers, the Obama administration on Monday loosened rules for bare-bones health-insurance policies. It marks one of the administration's biggest steps to peel back regulations that big business found onerous under the health- care overhaul.
McDonald's Corp. had warned regulators it might have to drop its health-insurance plans for 30,000 hourly workers unless it got an exemption for these policies, which have low premiums but also limit payments for medical costs.
The administration's move underscores how businesses, after complaining loudly about the overhaul in the run-up to passage, are now winning a handful of modifications.
The change was part of sweeping new rules rolled out by the government Monday that will force insurers to spend a high portion of their premium revenue on medical care.
Consumers will reap some benefits. Insurers that don't meet the new standards will be forced to issue rebate checks, which the administration estimated could affect nearly nine million Americans, for a total payout of up to $1.4 billion.
The rules, codifying language in the health law, say insurers will be required to spend between 80% for smaller carriers and 85% for larger carriers of their revenue on medical care, a calculation known as a medical-loss ratio. That limits how much they put toward salaries, profit and other nonmedical costs.
Providers of "mini-med" policies, like McDonalds, which caps benefits at a low level, had objected that they would have trouble meeting those levels, in part because they have high administrative costs.
About 1.4 million Americans are covered under mini-med plans. They're typically offered by low-wage employers, who have high employee turnover and end up paying out little money in medical claims....
Democrats said eliminating plans with such limited coverage was the reason they passed the law in the first place.
But Obama administration officials said they were determined not to prompt any employers to drop their plans because of the law. "No one's going to lose their coverage," said Jay Angoff, a director at the Department of Health and Human Services.
***
"Starting in 2014, many low wage workers will shift to getting coverage inside new insurance exchanges, because that's where they can tap tax credits to offset their costs. Stricter rules for the minimum benefits that employers can offer are expected to displace the plans altogether.
Friday, November 19, 2010
Burton G. Malkiel: 'Buy and Hold' Is Still a Winner - WSJ.com
EXCERPTS:
"Buy and hold investors in the U.S. stock market made an average annual return of 8% during the 15 years from 1995 through 2009. But if they had missed the 30 best days in the market over that period, their return would have been negative.
"Buy and hold investors in the U.S. stock market made an average annual return of 8% during the 15 years from 1995 through 2009. But if they had missed the 30 best days in the market over that period, their return would have been negative.
A Keynesian Defense of QE2
This article by Alan Blinder, a highly-respected Keynesian economist and former vice-chair of the Fed, gives a good explanation of what Bernanke hopes to do with the "quantitative-easing" policy which was put into effect last week.
Tuesday, November 16, 2010
YouTube - Quantitative Easing Explained
This video is very amusing, and, unfortunately, largely [but not entirely] true.
Friday, November 12, 2010
Do Americans Really Hate Each Other?
In an New York Times article David Brooks asked "How can you love your country if you hate the other half of it?” (“National Greatness Agenda,” Nov. 12). In response, Don Boudreaux (one of my favorite bloggers) writes:
"One half of America doesn’t hate the other half. Americans cooperate in countless polite ways with each other every day. I just bought gasoline from an American-owned station near my home; I have no knowledge of the owner’s politics and he none of mine. And neither of us cares, for our interest in a successful commercial transaction is mutual. Ditto for everyone else who buys or sells gasoline – and groceries and clothing and restaurant meals and nights at B&Bs and copies of the New York Times and on and on and on. Americans get along peacefully and productively with each other every moment of the day in ways too many to list.
"The only place the hatred mentioned by Mr. Brooks consistently arises is in the political arena, for it’s there that Jones takes from Smith and Smith tries to protect himself from Jones. In that setting, both persons naturally oppose, curse, and hate the other. This hatred will only intensify the more our lives are politicized, whether by ‘Progressives’ or by ‘national-greatness’ conservatives.
"One half of America doesn’t hate the other half. Americans cooperate in countless polite ways with each other every day. I just bought gasoline from an American-owned station near my home; I have no knowledge of the owner’s politics and he none of mine. And neither of us cares, for our interest in a successful commercial transaction is mutual. Ditto for everyone else who buys or sells gasoline – and groceries and clothing and restaurant meals and nights at B&Bs and copies of the New York Times and on and on and on. Americans get along peacefully and productively with each other every moment of the day in ways too many to list.
"The only place the hatred mentioned by Mr. Brooks consistently arises is in the political arena, for it’s there that Jones takes from Smith and Smith tries to protect himself from Jones. In that setting, both persons naturally oppose, curse, and hate the other. This hatred will only intensify the more our lives are politicized, whether by ‘Progressives’ or by ‘national-greatness’ conservatives.
Sticky Wages Hold Back Job Growth - Real Time Economics - WSJ
EXCERPTS:
"It’s something workers don’t want to hear, but one reason the economic recovery isn’t generating more jobs is that wages are too high, said Robert Shimer, an economist at the University of Chicago.
Speaking on the sidelines of a conference at the Federal Reserve Bank of Atlanta focusing on problems with the U.S. job market, Shimer said a relatively small decline in wage levels of 3% to 5% would result in “significant growth in employment and consumption.” Shimer presented a paper on the topic at the two-day conference on Friday.
One reason this is a particular problem today is the U.S.’s very low inflation rate, said Shirmer. When inflation is high, employers can cut their labor costs simply by stopping or constraining pay increases. When that happens in the face of higher inflation, the cost of employing a worker falls as inflation erodes the value of that worker’s paycheck. One alternative is to offer lower wages to new workers, but that also creates problems, said Shimer. “Companies are reluctant to do that because it creates equity issues.”
“Wages will fall eventually,” which will help revive hiring, he said, but it will take a long time. That’s one reason he predicts the economy won’t return to more normal levels of unemployment, say 5.5%, for “many years.”
“But I really don’t have an answer for the question of how long it will take for wages to adjust,” he said. “It depends on things I can’t foresee — like how much inflation [the Fed’s bond-buying program known as] QE2 will generate.”
COMMENT:
Does this sound familiar? It should. If it doesn't, reread chapter 8 on what happens when the economy experiences a recessionary gap.
"It’s something workers don’t want to hear, but one reason the economic recovery isn’t generating more jobs is that wages are too high, said Robert Shimer, an economist at the University of Chicago.
Speaking on the sidelines of a conference at the Federal Reserve Bank of Atlanta focusing on problems with the U.S. job market, Shimer said a relatively small decline in wage levels of 3% to 5% would result in “significant growth in employment and consumption.” Shimer presented a paper on the topic at the two-day conference on Friday.
One reason this is a particular problem today is the U.S.’s very low inflation rate, said Shirmer. When inflation is high, employers can cut their labor costs simply by stopping or constraining pay increases. When that happens in the face of higher inflation, the cost of employing a worker falls as inflation erodes the value of that worker’s paycheck. One alternative is to offer lower wages to new workers, but that also creates problems, said Shimer. “Companies are reluctant to do that because it creates equity issues.”
“Wages will fall eventually,” which will help revive hiring, he said, but it will take a long time. That’s one reason he predicts the economy won’t return to more normal levels of unemployment, say 5.5%, for “many years.”
“But I really don’t have an answer for the question of how long it will take for wages to adjust,” he said. “It depends on things I can’t foresee — like how much inflation [the Fed’s bond-buying program known as] QE2 will generate.”
COMMENT:
Does this sound familiar? It should. If it doesn't, reread chapter 8 on what happens when the economy experiences a recessionary gap.
Wednesday, November 10, 2010
"We have tried spending money ... and it did not work." - Who said it?
EXCERPTS:
"Guess who said the following: "We have tried spending money. We are spending more than we have ever spent before and it does not work." Was it Sarah Palin? Rush Limbaugh? Karl Rove?
Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, "after eight years of this Administration we have just as much unemployment as when we started. . . And an enormous debt to boot!
"This is just one of the remarkable and eye-opening facts in a must-read book titled "New Deal or Raw Deal?" by Professor Burton W. Folsom, Jr., of Hillsdale College. Ordinarily, what happened in the 1930s might be something to be left for historians to be concerned about. But the very same kinds of policies that were tried-- and failed-- during the 1930s are being carried out in Washington today, with the advocates of such policies often invoking FDR's New Deal as a model.
"Guess who said the following: "We have tried spending money. We are spending more than we have ever spent before and it does not work." Was it Sarah Palin? Rush Limbaugh? Karl Rove?
Not even close. It was Henry Morgenthau, Secretary of the Treasury under Franklin D. Roosevelt and one of FDR's closest advisers. He added, "after eight years of this Administration we have just as much unemployment as when we started. . . And an enormous debt to boot!
"This is just one of the remarkable and eye-opening facts in a must-read book titled "New Deal or Raw Deal?" by Professor Burton W. Folsom, Jr., of Hillsdale College. Ordinarily, what happened in the 1930s might be something to be left for historians to be concerned about. But the very same kinds of policies that were tried-- and failed-- during the 1930s are being carried out in Washington today, with the advocates of such policies often invoking FDR's New Deal as a model.
YouTube - Joe Biden's Weak Case for Government Meddling
YouTube - Joe Biden's Weak Case for Government Meddling: "- Sent using Google Toolbar"
Saturday, November 6, 2010
Fed Treads Into Once-Taboo Realm - WSJ.com
EXCERPTS:
"The Federal Reserve will print money to buy nearly as much U.S. Treasury debt in the next eight months as the U.S. government will issue.
The Fed's decision this week to buy $600 billion more of U.S. Treasury debt is setting off a debate about the risks of a central bank entwining its policies so tightly with the government's fiscal fortunes. The Fed is essentially lending enough money to the government to fund its operations for several months, something called "monetizing the debt."
In normal times, this is one of the great taboos of central banking because it is seen as a step toward spiraling inflation and because it risks encouraging reckless government spending.
The central bank is betting these aren't normal times. Financial markets Thursday responded warmly to the Fed move, but outspoken critics of the policy issued full-throated critiques.
"The Federal Reserve will print money to buy nearly as much U.S. Treasury debt in the next eight months as the U.S. government will issue.
The Fed's decision this week to buy $600 billion more of U.S. Treasury debt is setting off a debate about the risks of a central bank entwining its policies so tightly with the government's fiscal fortunes. The Fed is essentially lending enough money to the government to fund its operations for several months, something called "monetizing the debt."
In normal times, this is one of the great taboos of central banking because it is seen as a step toward spiraling inflation and because it risks encouraging reckless government spending.
The central bank is betting these aren't normal times. Financial markets Thursday responded warmly to the Fed move, but outspoken critics of the policy issued full-throated critiques.
Hey, What’s the Big Idea?! - Don Boudreaux
EXCERPTS:
Speaking of modern "liberals," Boudreaux writes that they
"overflow with ideas.... But these ideas are almost exclusively about how other people should live their lives. These are ideas about how one group of people (the politically successful) should engineer everyone else’s contracts, social relations, diets, habits, and even moral sentiments.
"Put differently, modern “liberalism’s” ideas are about replacing an unimaginably large multitude of diverse and competing ideas – each one individually chosen, practiced, assessed, and modified in light of what F.A. Hayek called “the particular circumstances of time and place” – with a relatively paltry set of ‘Big Ideas’ that are politically selected, centrally imposed, and enforced not by the natural give, take, and compromise of the everyday interactions of millions of people but, rather, by guns wielded by those whose overriding ‘idea’ is among the most simple-minded and antediluvian notions in history, namely, that those with the power of the sword are anointed to lord it over the rest of us.
Speaking of modern "liberals," Boudreaux writes that they
"overflow with ideas.... But these ideas are almost exclusively about how other people should live their lives. These are ideas about how one group of people (the politically successful) should engineer everyone else’s contracts, social relations, diets, habits, and even moral sentiments.
"Put differently, modern “liberalism’s” ideas are about replacing an unimaginably large multitude of diverse and competing ideas – each one individually chosen, practiced, assessed, and modified in light of what F.A. Hayek called “the particular circumstances of time and place” – with a relatively paltry set of ‘Big Ideas’ that are politically selected, centrally imposed, and enforced not by the natural give, take, and compromise of the everyday interactions of millions of people but, rather, by guns wielded by those whose overriding ‘idea’ is among the most simple-minded and antediluvian notions in history, namely, that those with the power of the sword are anointed to lord it over the rest of us.
Friday, November 5, 2010
The Lessons of the Great Depression - Robert Barro
Robert Barro | FiveBooks: "- Sent using Google Toolbar"
YouTube - Quantitative Easin'
If you'd like a non-technical explanation of the Fed's new policy, try this.
Monday, November 1, 2010
60 Minutes: "Fallen Flat" Recovery Has Brought "Anger In The Land"
Lots of interesting interesting examples which demonstrate that in a dynamic, ever-changing economy, businesses and workers often have to make big adjustments, and those adjustments are sometimes very painful for the people involved.
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