Fri, 30 Sep 2005

Hurricane's aftermath on GDP

According to the Congressional Budget Office, there's good news from the hurricanes:

However, even with the additional impacts of Hurricane Rita, the macroeconomic consequences of the hurricanes appear more modest than those that CBO estimated [earlier]... CBO anticipates that, with private and government support for recovery and rebuilding, GDP growth will not be much affected in the 4th quarter and could even be somewhat higher than was projected before the hurricanes.

It gets better:

Overall, GDP will return to its previous trend by early 2006, CBO projects, and subsequently rise above that trend as rebuilding raises overall economic activity.

So when the economy flags a little late next year, we can propose burning down Cleveland as a stimulus?

Really, this is just more evidence that the statistics widely used to measure the health of the economy do as much to mask the important story as they do to tell it. You simply can't rely on the gross aggregates to tell you whether people are doing well, but that's what we do.

(Shameless plug: There's quite a bit more about exactly this issue in the current issue of RIPR. There's no time like the present to subscribe, don't you think?)

11:23 - 30 Sep 2005 [/y5/se] link

Wed, 28 Sep 2005

Georgia on my mind

A novel approach to cutting school budgets was tried in Georgia, where the Governor called two days off from school to save on gas. A friend writes from that great state:

My fellow Americans:

Through the intrepid leadership of our present Governor, Sonny Purdue (no relation to Frank......I think), we citizens of the "Empire State of the South" (aka The Goober State) have just finished sacrificing two days of our children's education as our special way of conserving This Great Nation's petroleum reserves in these trying times.

I wish to inform you that we have now "done our share", and will resume our use of disproportionate numbers of Humvees, SUVs, RVs, jet skis, other PWCs, and F-150s, for the remainder of the Millenium.

See more ...

15:19 - 28 Sep 2005 [/y5/se] link

Mon, 26 Sep 2005

Some followup for the September issue

For more to read on the subject of pensions and the poor coverage of our populace, you might be interested in these:

• Pensioncoverage.net the home of a report called Covering the Uncovered, which provides some discussion of the issues and a fairly modest proposal to deal with the problem. But since the proposal came from a group that included a fairly broad membership, including the AFL, AARP, as well as MetLife and some banks, maybe it will have some legs.
• National Compensation Survey, some very useful BLS data about all kinds of employment issues.
• Unemployment numbers since 1940

22:46 - 26 Sep 2005 [/y5/se] link

Sat, 24 Sep 2005

Governor agrees with us

And we're so glad he has finally seen the error of his ways. Apologies for quoting at such length, but this really is remarkable. From the Governor's office:

Carcieri Testifies in Support of Consumers

Today Governor Carcieri attended a hearing at the Public Utilities Commission, to testify against the adoption of the proposed 24% Narragansett Electric rate increase. Governor Carcieri asked the Commission to postpone action on the increase, in anticipation that the energy markets may soften once the impact of hurricanes on the Gulf Coast has been fully assessed.

"We are here today not because of the actions of Narragansett Electric," the Governor said, "but because oil and gas companies and the power generators that supply Narragansett Electric are totally unregulated. They are making huge profits at the expense of Rhode Islanders, and all Americans."

...

"Speculators on the futures markets took advantage of the confusion by driving up the price of fuel at an alarming rate. And all the while, oil and gas companies continue to reap profits. All of this could be further exacerbated by Hurricane Rita.

...

Governor Carcieri also addressed the larger issue, which is the 1996 decision to deregulate electricity. He asked if this is benefiting Rhode Island consumers.

"There is an inherent flaw in the system," the Governor said. "The price of fuel is controlled by the generators and the futures market speculators. With few new suppliers adding energy to the grid, distributors have little option but to pay and then pass that cost on to the ratepayer. There is no incentive for the distributors to control their energy cost. This is also flawed because the cost to draw the fuel to produce the energy, such as drawing natural gas from the ground or hydropower, remains relatively constant. So, while we pay more, those at the beginning of the chain reap the profits dictated by the market."

Which is to say that the Governor agrees that it can be the case that unregulated markets are bad for consumers and bad for the state. Free markets are not the be-all and end-all. To which we say, Hallelujah! At last someone has the nerve to recognize this explicitly. What's more, it's someone who won't get called a communist for doing so. (The Governor's partisans regularly make that kind of charge in RIPR's direction, but now I guess they'll have to either rethink that, or add him to their list of enemies. We await their apologies.)

Implicitly, of course, our governments have recognized the imperfection of markets for decades, and we regulate all kinds of markets in all kinds of commodities. Taxicabs, tow trucks, haircuts and shellfish are all markets with prices or competitors regulated by our little state. Milk, sugar and steel are all markets regulated or protected by the federal government. And this is just the beginning of the list.

There are several places where the citizens of our state would benefit a great deal by serious market regulation. That is, the electric market isn't the only important market that is failing to serve us well. Just to pick one, the real estate market is currently changing the face of our communities, putting people out of their homes, and forcing good citizens to move elsewhere in search of affordable housing. How about taking on that one next?

09:27 - 24 Sep 2005 [/y5/se] link

Fri, 23 Sep 2005

Government planning can work

But usually it's the folks down in the trenches that are doing important work in spite of the ones above. Here, for example, is Incident News, a NOAA service with important weather and map information for people who are working to clean up the mess of Katrina and Rita and similar events.

You'll find there maps of how deep the water was in what district of New Orleans, reports of oil spills and other hazards, and the locations that need attention because of their vulnerability or hazard.

Especially look at this one for a map of the oil rigs in the Gulf of Mexico.

21:24 - 23 Sep 2005 [/y5/se] link

Wed, 21 Sep 2005

Worker protection

In another country. Wal-Mart learns what it means to operate in an environment where worker protections and the right to organize actually mean something. Or at least we'll see when Quebec's labor relations board issues its penalty.

What happened was that a Wal-Mart store in Quebec voted to unionize, so Wal-Mart closed it down. The Labor Board simply pointed out that Quebec has laws against this kind of thing. It's perfectly ok to close a store, but doing it in retaliation is unacceptable. Wal-Mart won't have to reopen the store, but may wind up owing fines, and maybe compensation to the laid-off employees, when the board issues its final report.

In a decision released late last week, the board said that it did not find the April closing of the store in Jonquiere to be "real, genuine and definitive" under the province's law. The decision makes it possible that the company could be fined and that compensation could be ordered for about 190 former employees.

Expect an appeal, is our bet.

12:30 - 21 Sep 2005 [/y5/se] link

Mon, 19 Sep 2005

New issue

The September issue will be at the printer in the next day or two.

• A proposal to ease tensions over pensions.
• A look at economic development through the lens of John Kenneth Galbraith's thought. A review of Richard Parker's new Galbraith biography.

Wouldn't now be a great time to subscribe?

00:06 - 19 Sep 2005 [/y5/se] link

Tue, 13 Sep 2005

Go read

Everyone who cares about public policy in Rhode Island should read and memorize the new report out from the Poverty Institute. Called the "State of Working Rhode Island," it is a statistical picture of some of the realities of life in the Ocean State, if you're not among the lucky who float on top of the waves.

Among the highlights:

• In 1979, the ratio in earnings between someone in the bottom decile of workers to those in the top decile was 3:1. In 2004, it stood at 4.4:1.
• Wages in the bottom ten percent went down while the top percent saw real wages increase by almost 50%.
• The tax burden for a family in the bottom 20% is equal to 13% of income while for those in the top 1% is merely 6%.

15:32 - 13 Sep 2005 [/y5/se] link

Explain it again.

Please explain why it is important for a judge not to explain how he will vote on a case to come before the court? Roberts claims that he can't do that as a matter of judicial ethics, or some such rot, and I've already heard, this morning, talking heads explain how this is of course the case. But why?

As it happens, I know precisely how Antonin Scalia and Clarence Thomas will vote on every matter to do with Roe v. Wade, and I believe both have used plain english on the subject in their written decisions. I also know how they will vote on property rights cases, and I know how they will vote in a case that might embarrass the President. But for some reason no one thinks there's any problem there. So what's the problem with simply asking a nominee how he will vote? And what's the problem with him answering?

Answer: none whatever, in a legal sense, but plenty in a political sense. But the result is that we're supposed to judge a nominee based only on the things that don't matter. This, of course, is insane, but news organizations pay legal analysts not to mention that.

See here for more on Roberts.

And now that you've explained that for me, explain why it's important that the White House know more about Roberts than me. That is, after all, the only excuse for withholding memos and briefs he wrote for the Justice Department when he worked as deputy solicitor general there.

12:05 - 13 Sep 2005 [/y5/se] link

Wed, 07 Sep 2005

Where there's a Will, there isn't a way...

...to admit you're wrong. George Will wrote a column in the recent Newsweek that appears to concede important points to his liberal opposition. It's gotten passed around on lists I know of because it has some praise in it for activist government. But listen to this:

Thoughtful conservatives-meaning those whose conservatism arises from reflections deeper than an aversion to high marginal tax rates-are conservative because they understand how thin and perishable is the crust of civilization, and hence how always near society's surface are the molten passions that must be checked by force when they cannot be tamed by socialization.

I understand this to be saying that liberals are blind to those molten passions. But I don't think I'm blind to them, and I suspect people like me are who he has in mind. But I also think that there are often times when meeting force with force is stupid and, worse, doesn't work. That's a wholly different point of view, but one that conservative debating partners generally refuse to acknowledge.

So Katrina has provided a teaching moment. This is a liberal hour in that it illustrates the indispensability, and dignity, of the public sector. It also is a conservative hour, dramatizing the prudence of pessimism, and the fact that the first business of government, on which everything depends, is security.

In other words, liberals are right about the need for the public sector, but they're too soft on crime. So let's talk about the conservative triumphs in public safety, huh? Let's talk about the decline in crime during the 1990's and the increase during the 1980's, shall we? Oops, can't do that. Well how about we talk about the ineffective Rockefeller drug laws, shall we? Or let's talk about the war on drugs that jails people for possession of tiny amounts of marijuana and confiscates their property, but can't even increase the price of heroin, shall we?

14:57 - 07 Sep 2005 [/y5/se] link

Sun, 04 Sep 2005

Manufacturing still alive

An article in today's New York Times points out that some manufacturers haven't fled to low-wage Asia. Thanks for the reminder. In terms of value added, the US still leads the world in manufacturing. Who knows how much longer this will last, but our share (by this measure) hasn't dropped appreciably in the past 20 years.

But that's partly an artifact of the measure used. Domestic manufacturers have competed by moving up the price ladder, trying to find niches in markets where there are more important factors than price. So while employment in manufacturing has plummeted, the value added remains high, due to productivity gains from automation. It can work: manufacturers can remain here and remain profitable. It's just not clear that they can support the mass prosperity that once was the norm in the rust belt states of Michigan and Ohio, among many others.

20:35 - 04 Sep 2005 [/y5/se] link

Maybe you're not better...

Another article in the New York Times, writes about deceit in animals:

Deceit of the Raven

By DAVID BERREBY

It began with apes. In the 1960's and 70's, scientists taught captive chimps to use words and documented wild ones using tools and planning hunting expeditions. Then other smart mammals -- monkeys, elephants and porpoises among them -- also proved to have surprisingly ''human'' mental powers. And in the last few years, the circle has expanded to still other mammals and beyond.

Last year, in the journal Animal Cognition, the behavioral biologist Thomas Bugnyar described a twist in an experiment he was conducting with laboratory ravens. The birds' job was to find bits of cheese hidden in film canisters, then pry open the lids to get the food out. One raven, Hugin, was best at this, but a dominant bird, Munin, would rush over and steal his reward.

So Hugin changed his strategy: when the other bird came over, he went to empty canisters, pried them open and pretended to eat. While the dominant bird poked around in the wrong place, Hugin zipped back to where the food really was. He was deceiving Munin.

To do that, Hugin had to grasp that ''what I know'' and ''what he knows'' are different. He had to understand, on some level, that other ravens have their own individual perceptions, feelings and plans, just as he does. It was big news when scientists found evidence that apes could grasp this. That some birds can as well is even more remarkable.

Bugnyar and his colleague Bernd Heinrich have uncovered still more evidence for avian ''mind reading.'' In another experiment, described in The Proceedings of the Royal Society, they had ravens watch as a scientist gazed fixedly at a spot on the other side of a barrier. All the birds, apparently understanding that the big featherless biped knew something they did not, hopped off their perches to get a look.

Deceit in ravens is very cool, but the rest of the article is just moaning about how hard it is getting to define what makes a person better than a chimp or a robot. To which I say, if you need to feel that our entire species is better than all chimps in order for you to feel like you're better than a chimp, then maybe, after all, you're not better than a chimp.

Have you considered that?

20:34 - 04 Sep 2005 [/y5/se] link

Sat, 03 Sep 2005

Ah, the consultants.

As you might imagine, because in a business-oriented administration like this one, where you can't trust government employees to be competent, FEMA relied on consultants to do a lot of its disaster planning, including in New Orelans. Apparently they (we) paid an outfit called Innovative Emergency Management, of Baton Rouge a half-million dollars to make the plan. I'm sure you're as curious as I am to find out how much of that plan was executed. It's funny, but I'm not sure I feel like we got our money's worth.

Via Lenin's Tomb, we learn that, at least for a while, the link to the above linked press release was pulled from the IEM web site. You don't suppose they're embarrassed by something?

22:44 - 03 Sep 2005 [/y5/se] link

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