Archive for the ‘Economics’ Category

LinkSwarm for March 14, 2013

Thursday, March 14th, 2013

This week we’ll do it Thursday rather than Friday:

  • Obama is trying to work the same magic on America’s economy that a half century of Democratic rule has worked in Detroit. More details here.
  • And Detroit’s former mayor Kwame Kilpatrick is going to prison.
  • Since 2002, total federal spending has increased 89% while median household income has dropped 5%.
  • In Iran, 5 of top 10 porn search terms are for gay porn (no nudity, but NSFW-ish terms, and the usual warning that it’s (ick) Gawker).
  • Thanks to ObamaCare, your veterinarian bills are going up as well as your medical bills.
  • Thomas Friedman hates the Keystone pipeline because the oil is dirty, but loves China, where industry is a thousand time dirtier than here in the U.S. And where will that oil go if the pipeline isn’t built? China. Maybe Friedman just wants all the jobs to be in China. That, or actual checks from the Chinese government or their business subsidiaries, would explain an awful lot of Friedman’s writing over the last few years…
  • “Most developed nations are fundamentally broke.”

    The degrees of broke-ness varies: from completely and utterly broke, like Greece or Italy; to wobbly, like the U.K., France, the U.S., or Japan; to getting poorer like Germany. But all of them are going to have to raise the percentage of gross domestic product they collect in tax — and many of them very significantly.

    The U.S. deficit is more than 7% of GDP. The U.K.’s deficit is just as high. There is very little sign that spending cuts to close gaps of that magnitude are on the cards, nor is there any sign that growth will be sufficiently strong to make up the difference — certainly not in countries like the U.K. or Japan.

    Huge sums of additional revenue will have to be raised.

    Willie Sutton once famously remarked that he robbed banks because “that’s where the money is.”

    In the same way, governments will look to raise more tax from companies because that’s where the money is.

    Or they could, you know, actually cut spending…

  • I’ve not been following the Prenda Law case closely. Fortunately, Ken over at Popehat has. Exceptionally brief background: Scumbag copyright troll lawyers operate shakedown operation, filing dubious (at best) copyright infringement lawsuits. Then they compounded the problem by suing bloggers and lawyers in an attempt to silence them. As you might expect, that strategy isn’t working out very well for them… (Hat tip: Dwight)
  • Florida Democrats want mandatory anger management classes for people buying ammo.
  • From Popcap Games, the makers of Plants vs. Zombies, comes Trees vs. Rockets. Wait, did I say Popcap Games? I meant the Israeli Defense Forces.
  • White House journalists as Ring-Wraiths.
  • Third round of Climategate documents released?
  • Michael Totten says that Lebanon is ready to explode from the spillover effect of the Syrian Civil War.
  • News of the horrific 5-year old terrorist who brandished her fearsome Hello Kitty assault bubble gun (link fixed).
  • California: More Boning

    Friday, March 1st, 2013

    Naturally the day after I post my usual Texas vs. California update, I see this five part California in Crisis series by Conn Carroll in The Examiner.

    The first part is a general overview.

    In his state of the state speech, Brown claimed, “California lost 1.3 million jobs in the Great Recession, but we are coming back at a faster pace than the national average.” The first half of Brown’s statement is true, but the second half is not. California has only gained back 556,000 jobs since the recession ended, or 42 percent of those lost — well below the national average of 60 percent regained. As a result, California’s unemployment rate is still near double-digits at 9.8 percent. By comparison, Texas, which lost 427,000 jobs during the recession, has gained them all back and created an additional 265,000.

    California is no longer a model that other states want to or should emulate. It currently has the nation’s third highest unemployment rate, its highest poverty rate and more than one-third of the nation’s welfare recipients.

    What happened?

    To make a long story short, the same political constituencies that have made Brown’s Democratic Party invincible at the ballot box have also made the state unable to compete economically. California public employees, who are represented by the nation’s most politically powerful government unions, benefit from some of the nation’s most generous compensation packages. These unions have made it nearly impossible to keep spending down, thus making debt and higher taxes inevitable.

    These unions also make it impossible to improve how government services are delivered to taxpayers. As a result, while California once had the most admired education system in the nation, it now ranks near the bottom in almost every measured educational category.

    The state’s powerful environmental lobby has secured a slew of green energy regulations, including strict clean air rules, the nation’s first carbon cap-and-trade program and an ambitious renewable energy mandate. As a result, energy prices have shot up, consumers now have less to spend on everything else they need to survive, and many manufacturers can’t stay profitable in the state.

    Finally, wealthy urban environmentalists have completely inverted the infrastructure spending priorities that once made California an engine of economic and population growth. Endangered species of wildlife are now favored over farmers and food. Highways and suburbs are losing out to mass transit and urban centers. The emerging result is a disappearing middle class, and what’s left of the state is split between a highly educated, landed, wealthy and elderly elite, and a poor, government-dependent, uneducated lower class.

    The second part goes into how Jerry Brown’s budget surplus is illusory: “Since the recession began, governors’ budget projections have overestimated revenue by an average of 5.5 percent. Apply that average to Brown’s 2013 projections, and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.”

    Also:

    California is controlled by the Democratic Party, and the California Democratic Party is controlled by the state’s government employee unions. You can’t win a statewide election there without at least the tacit approval of those unions. And for decades, the cost of their friendship has been protection from spending cuts in lean times and generous retirement package increases in good times.

    Further:

    Throughout the 1990s and 2000s, government unions at the state level won huge increases in retirement benefits, including a lowered retirement age and more favorable benefit formulas. As a result, the state’s two biggest retirement funds, the California State Teachers’ Retirement System, or CalSTRS, and the California Public Employees’ Retirement System, or CalPERS, are both underfunded by $64 billion and $52 billion respectively. According to a recent report, Brown would need to spend an additional $4.5 billion per year just to make CalSTRS solvent.

    The third part focuses on California’s expensive-yet-failing education system, while the fourth and fifth parts deal with green delusions. Including this gem: “fewer than 2,500 green jobs have been created in California since 2010.”

    There’s not a whole lot that will be unfamiliar if you’ve been following my Texas vs. California updates, but it’s a very solid overview series. And yes, Texas gets a mention.

    Read the whole thing.

    Texas Vs. California Update for February 28, 2013

    Thursday, February 28th, 2013

    I’m running out of month! Here’s another quick Texas vs. California update:

  • Is California really back? Yeah, not so much.
  • California to impose tax on rain.
  • Add Costa Mesa to the list of California cities where a pension crises looms.
  • Texas spending on education has outpaced inflation.
  • The Texas Growth Machine.
  • Instapundit’s Favorite Word

    Tuesday, February 19th, 2013

    See if you can fill in the blank for the following headline:

    “Homebuilder Confidence in U.S. BLANK Fell in February”

    Having trouble? Try again with the first sentence

    “Confidence among U.S. homebuilders BLANK dropped in February from a more than six-year high, a sign the real-estate market will take time to accelerate.”

    If you’ve been reading Instapundit for any length of time, you know exactly what the word replaced with BLANK is. And that word is “unexpectedly.”

    Gee, how could anyone possibly have seen that continued high unemployment and an economy that is shrinking might negatively impact the housing market? (And of course, when the economy shrank, the shrinkage happened “unexpectedly.”)

    Obama and friends keep trying and trying neo-Keynesian pump-priming and keep getting the same results: economic stagnation. While trying the same thing over and over again and expecting different results is the definition of madness, that doesn’t matter to them, since it allows them to continue the payoffs to cronies and interest groups that keep the Big Government Class in power (and rolling in taxpayer dough). Germany and Estonia performed no or minimal “stimulus” deficit spending and their economies are growing again. Obama and congressional Democrats have taken the opposite tack: Keep pouring money down the big government rathole and hope that results this year won’t be identical to the last four. My prediction: higher deficits, continued high unemployment and continued economic stagnation.

    And each and every negative economic indicator the media will report as arriving “unexpectedly.”

    Expect it.

    Rick Perry Trolls California (For Business)

    Tuesday, February 12th, 2013

    First Texas Governor Rick Perry put up a 30 second radio spot on California airwaves suggesting businesses in the no longer golden state relocate to Texas.

    Now Perry has gone to California himself to make the same pitch.

    Says Perry: “When you’re fishing, you go where the fish are. I’m not out here forcing anybody to rent a van and head to Texas. We’re just giving a sales pitch here. It’s up to them to make the decision.”

    “Straight-up competition between the states, the way our founding fathers envisioned it when they crafted that 10th Amendment.” And then SF Gate offers up a definition of the Tenth Amendment, for all those Californians unfamiliar with that quaint and curious document known as “The Constitution of the United States of America.”

    Ross Ramsey covers the story with his usual lack of insight.

    Texas vs. California Roundup for February 6, 2013

    Wednesday, February 6th, 2013
  • CalPERS: the pension fund that ate California. A tale filled with lies, waste, and outright corruption that’s even worse than I thought (and I thought it plenty bad).
  • Via the indispensable Will Franklin comes this eye-opening comparison of welfare in California vs. Texas. “As you can see, California is practically in a quadrant unto itself, indicating a lot of people receiving a lot each in welfare benefits. Meanwhile, Texas is situated precisely in the opposite corner of the graphic, indicating that a low percentage of Texas’ residents are receiving welfare, and among those who are receiving welfare, they’re receiving smaller benefits than those living essentially anywhere else in the country.” Read the whole thing. And get a gander at the chart.
  • Jerry Brown gets voters to approve a measure that cuts California public employee union pensions a tiny, weensie bit. The result? “California Public Employees’ Retirement System is essentially going to defy the order that pensions will be calculated based on base pay by declaring enhancements and bonuses are part of base pay.” And some unions are suing to opt out. And Brown isn’t even willing to defend the reforms in court.
  • “The highest-paid 10 percent of Southern California Edison employees earned at least $418.8 million in combined total compensation during 2011, and charged at least $11.8 million to their expense accounts, according to a report the public utility filed with the state. SCE’s most recent annual report showed 19 executives and other SCE employees received more than $1 million in total compensation during 2011, and at least 130 others received $300,000 or more in total compensation.”
  • Judge in Stockton bankruptcy: Sure, it’s OK to screw bondholders. Go right ahead.
  • Professional athletes are leaving high tax states like California for low-tax states like Texas and Florida.
  • At least Texans know how much they owe.
  • Here’s the official Texas state document on local debt. Texas cities, alas, haven’t been nearly as frugal as the state legislature has been.
  • Speaking of not being as frugal as they could be, here’s the place to search Texas pension funds. I might delve more into these two links when I have time.
  • Texas Public Policy Foundation on keeping Texas competitive.
  • And if you haven’t kept up with Dwight’s updates on the Bell corruption trial, you really should.
  • Rick Perry’s State of the State Address

    Wednesday, January 30th, 2013

    Rick Perry delivered his State of the State address on Tuesday. Here’s the complete text.

    And here’s the speech itself:

    A mixture of interesting tidbits on the Texas success story, some generic inspirational boilerplate, and some broad outline policy proposals.

    Good: More constrained spending, tax cuts, no ObamaCare expansion.

    Probably bad: “$3.7 billion from the Rainy Day Fund for a one-time investment in infrastructure programs.” There are, in fact, some infrastructure improvements that would be made around the state, but Perry has occasionally supported infrastructure boondoggles (like the Trans-Texas Corridor) in the past.

    The general outlines are very good, but the devil is in the details, which should be forthcoming in the current legislative session.

    California: Completely Screwed

    Tuesday, January 29th, 2013

    Instead of going out and doing the heavy lifting myself on a Texas vs. California update, Victor Davis Hanson [[Corrected. – LP]] has done another of his California is totally screwed pieces, and it’s a cornucopia of facts on California’s decline.

    A few tidbits:

  • Salinas just named an elementary school after a serial cop killer
  • Racist Latino gangs are now driving black families straight out of Compton
  • “Hundreds of thousands of the working and upper-middle class, mostly from the interior of the state, have fled — maybe four million in all over the last thirty years, taking with them $1 trillion in capital and income-producing education and expertise. Apparently, they tired of high taxes, poor schools, crime, and the culture of serial blame-gaming and victimhood.”
  • “One of every three welfare recipients lives in California.”
  • Read the whole thing.

    Texas vs. California: January 24, 2013 Roundup

    Thursday, January 24th, 2013

    Meant to put some of these up with Tuesday’s roundup and just misplaced them:

  • Orange County pension members find out that it’s not about politics, it’s about math.
  • Jerry Brown’s ostensibly balanced budget does nothing to pay down huge pension liabilities.
  • In the quest to shake ever-more-money out of the pockets of taxpayers, California just ignores that pesky “no ex post factor laws” section of the Constitution, eliminating a tax credit retroactively back to 2008.
  • More on that Moody’s recalculation of liabilities:

    Six California counties with their own pensions (instead of paying into the Golden State’s Public Employees’ Retirement System) would actually have to pay down $10 billion in pension deficits, versus the $4 billion they currently report bad on inflated rates of return. As a result, these counties would be expected by bondholders to pay out $1.4 billion a year just to pay down their pension deficits, more than double the $640 million they currently pay. For Contra Costa County near San Francisco, the percentage of property tax dollars devoted to pension deficit pay down would increase from 33 percent to 54 percent, crowding out funding for basic municipal activities. In short, these governments would be considered technically insolvent under Moody’s model.

  • That recalculation and other reforms should make California’s pension debt crises even more apparent.
  • CalPERS has a lot of ‘splain’ to do. Their rate of return and assets under management simply don’t add up.
  • It certainly can’t help that CalPERS managers are double-dipping for their own benefits.
  • High California taxes are one of the reasons the Sacramento Kings are about to become the Seattle Supersonics 2.0. Which seems fitting: the tax-and-spend kings in Sacramento don’t deserve a basketball team.
  • John Stossel: “It’s good that we have places like Texas and New Hampshire to which fed-up citizens can escape. In Europe, you’d have to leave your country to escape its worst laws.” And one of the states they’re escaping is California, “the Greece of America.”
  • Meanwhile, Texas notched its 72nd consecutive month with unemployment rates below the national average.
  • David Cameron Suddenly Remembers He’s a Tory

    Wednesday, January 23rd, 2013

    Well well well, maybe David Cameron has some cobbles after all.

    Cameron has generally presided over the “wettest” Tory administration the UK has seen since Neville Chamberlain, but today he delivered a veritable pipe bomb of a speech on the future of the European Union.

    First, the problems in the Eurozone are driving fundamental change in Europe. Second, there is a crisis of European competitiveness, as other nations across the world soar ahead. And third, there is a gap between the EU and its citizens which has grown dramatically in recent years. And which represents a lack of democratic accountability and consent that is – yes – felt particularly acutely in Britain.

    Also this:

    If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.

    While Obama is certainly doing his best to make sure America’s portion of that last figure increases (driving down Europe’s share as a side effect), what Cameron is saying here is both obviously true and absolutely unacceptable to the Euroelite: The European cradle-to-grave welfare state is unsustainable.

    And this:

    People are increasingly frustrated that decisions taken further and further away from them mean their living standards are slashed through enforced austerity or their taxes are used to bail out governments on the other side of the continent.

    Cameron basically stood up and pointed out that the Emperor has no clothes.

    Still more:

    More of the same will not secure a long-term future for the Eurozone. More of the same will not see the European Union keeping pace with the new powerhouse economies. More of the same will not bring the European Union any closer to its citizens. More of the same will just produce more of the same – less competitiveness, less growth, fewer jobs.

    “Hey dumbasses: stop digging!!”

    And still more:

    I want us to be at the forefront of transformative trade deals with the US, Japan and India as part of the drive towards global free trade. And I want us to be pushing to exempt Europe’s smallest entrepreneurial companies from more EU Directives.

    These should be the tasks that get European officials up in the morning – and keep them working late into the night. And so we urgently need to address the sclerotic, ineffective decision making that is holding us back.

    That means creating a leaner, less bureaucratic Union, relentlessly focused on helping its member countries to compete.

    In a global race, can we really justify the huge number of expensive peripheral European institutions?

    Can we justify a Commission that gets ever larger?

    Can we carry on with an organisation that has a multi-billion pound budget but not enough focus on controlling spending and shutting down programmes that haven’t worked?

    And I would ask: when the competitiveness of the Single Market is so important, why is there an environment council, a transport council, an education council but not a single market council?

    And here we have a Tory Prime Minister actually sounding like…a Tory! Who would have thunk it?

    Thatcher or Reagan he’s not, but this is bold stuff given the Eurocentric tenor of post-Thatcher UK governments.

    Oh: He also wants a referendum on EU membership by 2017.

    Reactions from the Eurocratic elite has been predictable: How dare Cameron slander our magnificently robed Emperor? And naturally all of them focus on the referendum than his substantive critique of the increasing collectivist, bureaucratic and unsustainable EU.

    Good show, Cameron old boy, good show. (Golf clap)