EXCERPTS:
"With unemployment compensation ...you are in fact giving someone something. "Extending unemployment benefits" always sounds good politically-- especially if you do not ask the basic question: "For how long should they be extended?" A year? Two years? No limit?
Studies have shown what common sense should have told us without studies: The longer the unemployment benefits are available, the longer people stay unemployed.
If I were fired tomorrow, should I be able to live off the government until such time as I find another job that is exactly the same, making the same or higher pay? What if I am offered another job that uses some of the same skills but doesn't pay quite as much? Should I be allowed to keep on living off the government?
With the government making it more expensive for employers to hire workers, and at the same time subsidizing unemployed workers longer and longer, you can have as much unemployment as you are willing to pay for, for as long as you are willing to pay for it.
Thursday, December 30, 2010
Promises and Riots
EXCERPTS:
"Economists are the real "party of No." They keep saying that there is no such thing as a free lunch-- and politicians keep on getting elected by promising free lunches.
Such promises may seem to be kept, for a while. There are ways the government can juggle money around to make everything look OK, but it is only a matter of time before that money runs out and the ultimate reality hits, that there is no free lunch.
We are currently seeing what happens, in fierce riots raging in various countries in Europe, when the money runs out and the brutal truth is finally revealed, that there is no free lunch.....
"Economists are the real "party of No." They keep saying that there is no such thing as a free lunch-- and politicians keep on getting elected by promising free lunches.
Such promises may seem to be kept, for a while. There are ways the government can juggle money around to make everything look OK, but it is only a matter of time before that money runs out and the ultimate reality hits, that there is no free lunch.
We are currently seeing what happens, in fierce riots raging in various countries in Europe, when the money runs out and the brutal truth is finally revealed, that there is no free lunch.....
Friday, December 17, 2010
Mass prosperity - an achievement of governments, or markets?
Russ Roberts, coming on the belief that prosperity for the masses is the result of the "progressive tradition" - government action - makes the following comments.
EXCERPTS:
"What is the evidence that progressivism made prosperity a mass-market phenomenon? A minimum standard of living? The social safety net in the US is modest. For most of the 20th century, there was a minimum standard for single women with children but not for men. Welfare programs didn’t create mass prosperity. The minimum wage, passed in 1938, has never been set very high and affects very few people. It also discourages employing the lowest skilled workers. That works against mass prosperity. Time off from work? Mostly a market phenomenon, I think. To the extent it has been imposed in opposition to market forces, it has worked against measured mass prosperity. Education? It would be useful to know the impact of mandatory schooling and child labor restrictions. How much impact did they have beyond what would have happened voluntarily? And any impact of mandatory education would have to be offset by the quality loss of public provision. I’d be curious to know what else Leonhardt has in mind. I do think his view is a staple of some folks in their world view. I’ve just never seen a serious attempt at making the case. It’s just asserted as a truth. It could be a truth. But my suspicion is that it’s a myth.
Mass-market prosperity has been driven by innovation combined with competition forcing producers to share productivity increases with consumers. This is the story I tell in The Price of Everything. Some innovation was created by the government, though perhaps not cost-effectively. but most innovations have been driven by the potential for profit combined with a love of creating. Happy to hear facts to the contrary or a book that makes the case for progressive policy as an important force in creating the middle class or mass prosperity.
EXCERPTS:
"What is the evidence that progressivism made prosperity a mass-market phenomenon? A minimum standard of living? The social safety net in the US is modest. For most of the 20th century, there was a minimum standard for single women with children but not for men. Welfare programs didn’t create mass prosperity. The minimum wage, passed in 1938, has never been set very high and affects very few people. It also discourages employing the lowest skilled workers. That works against mass prosperity. Time off from work? Mostly a market phenomenon, I think. To the extent it has been imposed in opposition to market forces, it has worked against measured mass prosperity. Education? It would be useful to know the impact of mandatory schooling and child labor restrictions. How much impact did they have beyond what would have happened voluntarily? And any impact of mandatory education would have to be offset by the quality loss of public provision. I’d be curious to know what else Leonhardt has in mind. I do think his view is a staple of some folks in their world view. I’ve just never seen a serious attempt at making the case. It’s just asserted as a truth. It could be a truth. But my suspicion is that it’s a myth.
Mass-market prosperity has been driven by innovation combined with competition forcing producers to share productivity increases with consumers. This is the story I tell in The Price of Everything. Some innovation was created by the government, though perhaps not cost-effectively. but most innovations have been driven by the potential for profit combined with a love of creating. Happy to hear facts to the contrary or a book that makes the case for progressive policy as an important force in creating the middle class or mass prosperity.
Saturday, December 11, 2010
Companies Keep Tight Grip on Cash - WSJ.com
EXCERPTS:
"Corporate America's cash pile has hit its highest level in half a century.
Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies' total assets—the largest share since 1959.
The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers' ability to spend.
***
In one bright sign, the Fed's data show that the net worth of U.S. households increased to $54.9 trillion in the third quarter, up from $53.7 trillion in the second quarter, as rising stock-market wealth more than offset declining home values.
That was still well below the second-quarter 2007 peak of $65.7 trillion. After-tax household income rose to an annualized $11.42 trillion from $11.37 trillion in the second quarter.
The cash pooling up at companies has the potential to help the economy grow more vigorously and bring unemployment lower—if they start spending it on new plants, equipment and employees.
But in the wake of the worst economic downturn since the 1930s, companies are hesitating to make that shift, said Brian Bethune, economist at IHS Global Insight.
"Corporate America's cash pile has hit its highest level in half a century.
Rather than pouring their money into building plants or hiring workers, nonfinancial companies in the U.S. were sitting on $1.93 trillion in cash and other liquid assets at the end of September, up from $1.8 trillion at the end of June, the Federal Reserve said Thursday. Cash accounted for 7.4% of the companies' total assets—the largest share since 1959.
The cash buildup shows the deep caution many companies feel about investing in expansion while the economic recovery remains painfully slow and high unemployment and battered household finances continue to limit consumers' ability to spend.
***
In one bright sign, the Fed's data show that the net worth of U.S. households increased to $54.9 trillion in the third quarter, up from $53.7 trillion in the second quarter, as rising stock-market wealth more than offset declining home values.
That was still well below the second-quarter 2007 peak of $65.7 trillion. After-tax household income rose to an annualized $11.42 trillion from $11.37 trillion in the second quarter.
The cash pooling up at companies has the potential to help the economy grow more vigorously and bring unemployment lower—if they start spending it on new plants, equipment and employees.
But in the wake of the worst economic downturn since the 1930s, companies are hesitating to make that shift, said Brian Bethune, economist at IHS Global Insight.
Saturday, December 4, 2010
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