Krugman on new census numbers...

About that Bush Boom …

The 2007 income, poverty and health insurance numbers are out. As far as I can tell on a first read, there’s nothing deeply surprising. Still, they represent a landmark — and not in a good way.

The key point is that 2007 was the end of an economic expansion — whether or not the NBER declares a recession, the employment situation, which is what matters to most people, has deteriorated sharply this year. So 2007 was as good as it got in this cycle. Yet median household income was lower than in 2000, while both the poverty rate and the percentage of Americans without health insurance were higher.

In short, the economic policies we’ve been following just aren’t working.
Is the bad economic news all Bush’s fault? No, of course not — but remember, the key argument of the right has always been that tax cuts and deregulation would produce good news, a rising tide that raised all boats. Boy, has that not happened.
But remember, we’re just a nation of whiners.

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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

compatancy???compentancy??? ahhh competancy!!!!

"The swelling tide of toxic home loans is proving to be even more worrisome than initially feared"

It would be nice if some of the people who get paid big dollars because they supposedly have high skills could acknowledge that they messed up. It would also be nice if the national media did not consider it part of their job to cover up for powerful people who messed up on their job.

Yes, that headline is a a direct quote. It also is the sort of statement that has no place in a serious news article. The swelling tide of toxic loans is not proving to be more worrisome than feared. The problem is that the people who were supposed to be regulating the financial system did not know what they were doling.

The people who did understand the economy knew that an unprecedented run-up in house prices, with no remotely plausible explanation based on fundamentals, with no corresponding increase in rents, was a bubble. We also knew that bubbles burst. And, we knew that when bubbles in a highly leveraged asset like housing burst, that lots of debts go bad and that banks then take really big hits.

The NYT should be exposing the incompetence of people who were paid big dollars to know the housing and financial markets (this includes both bankers at place like Citigroup, Merill Lynch, Bear Stearns, Fannie Mae and Freddie Mac, as well as the top regulators) and completely failed in their responsibilities.

It should not try to tell readers that the housing crash was somehow an unforeseeable event that came out of the blue. It was an entirely predictable event and it was only incompetence that prevented these people from seeing it. Unfortunately, unlike dishwashers and custodians, bank executives and regulators are not held accountable for their performance. Instead, the media covers it up for them.

This goes under contending conservatives because they like to say people who earn a lot deserve it for "obvious" reasons... not so much in the real world.

Move away from sound good feel good theoretical world and conservatives have to run for the hills.



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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

response on taxes and economy...

Anonymous said...
Jim

You say look at what made our economy the greatest in the world. If you don't believe in the FairTax fine. Now look at what is ruining our economy in relation to the tax laws of other nations. We are becoming more and more uncompetitive.

Exactly! This is the consequence of our move away from Keynesian economics towards the back of a napkin supply side economics. The Laffer curve is laughable! But the impacts of cutting taxes at the expense of our infrastructure and making the middle class.. and future generations pay for it has hurt us dramatically.

I'll quote myself...

The impacts of the Bush tax cuts have been huge. And it has hurt our business competitiveness around the globe. That is reason--as the book, "the politics of Bad Ideas" points out--that the World Economic Forum the deterioration of the US public finances has begun to damage US competitiveness. This is a business research institute in Switzerland. The US experienced the most dramatic drop in rankings of ALL nations.

Also there is a myth that American businesses are being strangled by taxation at the expense of competitiveness. I'll outsource to Economist Mark Thoma at U. Oregon "The Greek Menace" who brings together some stuff around the web... I'll quote the larger point--aside from conservatives once again manipulating with hyperbole rather than data...

Economist Dean Baker:

Washington Post Misleads Readers to Push for Lower Corporate Tax Rates

Today, the preferred policy is further reductions in corporate income taxes. To advance this agenda the Post tells readers that, "U.S. companies operating abroad already labor under a bigger tax burden than most foreign competitors."

That's not what the OECD says. Data from the OECD show that in the average member country corporate taxes are equal to about 3.5 percent of GDP. In the United States, corporate taxes have generally been between and 1.5 percent and 2.5 percent of GDP over the last two decades, according to the Congressional Budget Office (Table F-4).

But more broadly this decline comes from the conservative revolution. The Regan myth--keep in mind he raised taxes twice to try to correct the harm done from his tax cut at the beginning of his term--of taxes cuts creating economic growth was considered flawed by many economist in theory... and now we have the data to back it up. But the propaganda has remained useful. Our society has become less equitable with the reductions in the top economic bracket. Disparities of wealth over the long term have a huge impact in undermining the market system. We haven't seen such disparities of wealth since the 20's. And we have Regan and the pathology of tax cuts.


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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

still not doing homework!! I swear I'm leaving now!

Scale in the Housing Market

The NYT discusses efforts by local governments to use public money to purchase and renovate foreclosed properties to help revitalize hard-hit areas. At one point the article presents a comment from an economist at the CATO Institute complaining the program that supports this effort will distort the housing market and that it would be best to leave this process to the private sector.

It would have been helpful to put the size of the program in context. The program involves $4 billion in federal money. This is equal to approximately 0.02 percent of the value of the $20 trillion housing stock. It is equal to approximately 0.3 percent of annual housing sales. Spending of this magnitude is not likely to lead to large distortions in the housing market.

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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

Doctors opinions... from the comments page

Interesting comment--thanks for posting by the way!--on Doctors opinion about "National Health Care"

Jaxon said...

Did you see the Bunk study stating 2/3 of doctors in America want National Health Care. The doctors who did this study also conducted one in 2002 and found that the majority of doctors did not want national health care, the problem with this is that the 2 question surveys drastically differ in their 2nd question. I found this article, 60% of Doctors Surveyed Oppose Switching to a National Health Care Plan, It's worth a read.

Unfortunately I honestly don't have the time to read up on this, though I think it would be interesting to look into. I always like debunking good data. But I'll assume Jaxon is correct.

1) We rank 37th in the world for health care according to the world health organization. We spend 2 to 3 times more than other industrialized nations on that care. Meaning we spend MORE to get LESS. So somebody is making huge profits. Doctors probably aren't doing too shabby since protectionism keep them from facing market competition.

I can't help but think of the Upton Sinclair quote:

“If is difficult to get a man to understand something when his salary depends upon his not understanding it”

So I could see how this is a plausible thing to find and explain--that speaks nothing to using the approaches that have succeeded for the other industrialized nations

2. "National Health care" Jaxon, if you could just clarify your meaning because there are so many words and labels being thrown around on this issue and unfortunately that causes a lot of confusion.

The approach I am for... is socialized health insurance. It does not nationalize the system meaning it doesn't make the Doctors or medical field government employees but creates basic requirements that would fix our current dysfunctional health care market. Right now we have a major market failure on our hands... it comes from major waste and inefficiencies from the insurance companies who are trying to squeeze out profits for shareholders over insuring people. Second reasons is there is a lot of protectionism--on medicine, and doctors, specifically.

Its unfortunate that John McCain is running around saying he supports a free market approach to the health care crisis. Either that shows he is trying to pull the wool over the eyes of voters--since he is not for removing the protectionism I just spoke of. Or else he doesn't know much about how market systems work. Neither give a very positive impression of McCain--nor a very good reason to think he merits the job of President.

Universal Health Care in 2008... our economy is hurt by the current crisis making us less competitive globally, hard working Americans are going bankrupt over things they can't control much of the time, and it speaks to the values I believe in--that which we do to the least of these.

Oh yeah.. and I pay 800-1400 a month in health care costs since I lack health insurance...

Obama in 2008. McCain is 4 more years of the same.

Thanks again Jaxon I appreciate people bringing more items of interest to the table. Maybe one of my readers can dig around on that issue so that we can do some debunking if possible. Thats what we bloggers do!
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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

Before Stiglitz... before Keynes, before Adam Smith...

You can find an acknowledgement of how an economy works... and how destructive Conservative's economic policy of "every man for themselves" is...

“If the Kingdom is divided against itself that kingdom cannot stand.” Mark 3:24

This speaks to how important it is to address disparities of wealth within the economy. Economists have a pretty strong grasp now of how disparities of wealth harm an economy over the long run... but this shows that it has been understood for ages.

Conservatives don't even blush when one points out disparities of wealth. They don't see it as a problem--since they hold the incoherent view that an economy is not a collective effort but individuals out on their own with boot-straps pulled up to their knees...


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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

response to Bellum omnium contra omnes comment...

On my political and rhetorical approach...

Stating people possess the scenario between conservative or liberal cognition seems like an "either-or" fallacy. I will need to read the study further to be certain. I too believe in checks and balances in the form of policy. There is no evidence one form of political rhetoric is more harmful to our republic than another, at the least there is no harm when there is balance between the ideologies. The combination of conservative and liberal values (independence versus social welfare) can work together in the government system. Evidence for my claim can be found here.

"The combination of conservative and liberal values (independence versus social welfare) can work together in the government system."

To protect and empower... you can't do any of that with conservative policy goals... so I would disagree. Every man for themselves pull yourself up by your boot-straps... individualist ethics is destructive economically and socially. See Adam Smith... Stiglitz... modern economics as a whole on the importance of infrastructure investment which the private sector never does...

So i'd totally disagree on that one. Oh and I'd love to see the impacts on people from the welfare reform now that the growth of the Clinton era are now gone.

Science can't create either/or fallacies. The world is either flat or its not...

if the empirical data doesn't hold then that would be the legitimate challenge. Not likely though... we're getting better and better at cognitive science and neuroscience... and free will as we conceive of it... and all of that nonsense entailed in it will soon fade (okay not likely... but a boy can dream.)

the age of reason is quite dead...

Thats the biggest problems with philosophy in general... it sticks to theory and all these "ideas" that are reasoned out...

My philosophy professor at UC Davis... a guy name Cummins had a great cartoon it had an armchair with a red cross over it... like no smoking. It was "no arm-chair philosophy".

To see logical knock-out blows to metaphysics as an accurate description of the world and all that is there-entailed see Logic, Truth, and language by A.J. Ayer.

Metaphysics is useful for subjective truth and the way individual brains understanding the paradoxes and complexities of the world, as well as human interaction. But science is the method for accurate descriptions of the world that can be verifiable and therefore the only rational public discourse that one can use in areas such as politics.

Its fine for interpersonal relations and religion and such... but those are subjective at their core... (think of the bond between two friends... or the subjectivity of what one person means by god... as compared to another... see the quote by Dennett at the top of the page)

Bellum omnium contra omnes... kudos to you for using a blog the way its supposed to be used... to debate and create a dialogue... I'm learning a lot from you and improving my ability to explain and understand my own positions. Thanks!

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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

Dean Baker on financial waste and economic productivity....

The Post's Whining for Wall Street Billionaires

The Post ran a lengthy piece in the Sunday Outlook section about the plight of the Wall Street investment banks and the millionaires and billionaires who run them. According to the article, without the sleaze practices of the last decade, they just can't make any money.

It's touching to see that some of the richest people in the country might be worried about their future and the future of their industry, but why would a serious newspaper devote space to such nonsense. Is there a public interest in ensuring that incompetent investment bankers can still make millions, tens of millions or even hundreds of millions a year pushing deals that harm the economy?

While the author tries to argue the case, anyone who has taken an intro econ course or has enough intelligence to tie their own shoes can recognize the argument as nonsense.

Let's take the author's worst case scenario. Suppose Goldman Sachs, Merrill Lynch, Lehman Brothers and the rest go out business. Does that mean that no one is doing underwriting of stock and bond issues?

Absolutely not. The whole premise of the piece is that the profits have been driven down so much by competition that there is no money in this line of business any more. The demise of these Wall Street giants would simply mean that a large number of overpaid bankers would have to look for jobs elsewhere in the economy. The elimination of this huge layer of waste in the industry would mean an enormous increase in the productivity of the investment banking sector and for the economy as a whole. Perhaps we should have government retraining programs for unemployed investment bankers, but there certainly is no reason to stand in the way of economic progress.

The real outrage is that the Post allows this sort of shallow special interest pleading for investment bankers, while it would never publish a comparable piece on behalf of autoworkers or textile workers. Even worse, the Outlook section would never consider a piece that would correct some of the inaccurate impressions given by this article.

As every economist knows, the public should be applauding the elimination of waste in the investment banking sector (i.e. the loss of tens of thousands of investment banking jobs and big pay cuts for those remaining). It is unfortunate that the Post will not allow an economist to make this point in its newspaper.

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Jim Nichols
A Speculative Fiction
www.JimNichols4.com

blog comment on free market grandstanding....

I made here

I next to never see a "capitalist" support the free market.

They love their patent protections that keep the costs high for consumers. They love restrictions on the free flow of labor--which would for example help bring the cost of going to your local doctor down if we let foriegn doctors in the country since they'd be willing to work for a cheaper wage.

Take John McCain who claims "a free market" approach. Thats nonsense. He just wants a market approach that is full of protectionisms and subsidies that protect certain people in the market. It has nothing to do with "free market" theory. He either doesn't know much about the theory or doesn't mind using propagandha to buy votes on the cheap.

More market sure... but less "free market" grandstanding from those who really don't want a free market at all.

Go read the post... the blogger has some good points in his post...