Wednesday, August 25, 2010

The Case for Optimism and 20 Charts to Prove It

From today's Wall Street Journal article "The Case for Optimism" by Ross Devol, executive director of economic research at the Milken Institute:

"There's a point at which pessimism becomes a self-fulfilling prophesy, scaring businesses away from investing or hiring. The dark tone of today's discourse is at risk of doing just that.

The Milken Institute's new study, "From Recession to Recovery: Analyzing America's Return to Growth" is based on extensive and dispassionate econometric analysis. It concludes that the U.S. economy remains more flexible and resilient—and has more underlying momentum—than is generally acknowledged. In fact, our projections show cause for measured optimism: A return to modest but sustainable growth is close at hand.

America's businesses are capable of navigating around policy uncertainty and the twists and turns of a volatile global economy. While slow private-sector job growth is to be expected in the early stages of a recovery, the U.S. should add 1.5 million jobs in 2010, 3.1 million in 2011, and 2.6 million in 2012. That will translate into real GDP growth of 3.3% in 2010, 3.7% in 2011, and 3.8% in 2012.

In this pessimistic climate, this forecast will likely be considered contrarian. So why is our economic outlook more sanguine than the current consensus? For one, robust (albeit moderating) economic growth in developing countries, particularly in Asia, will provide support for U.S. exports. Look no further than Caterpillar, which reported a doubling of its earnings in the second quarter of 2010 and whose product line is sold out for the rest of the year."

Read the rest of the article here.

See related excellent post today from Scott Grannis: "20 Bullish Charts."

38 Comments:

At 8/25/2010 6:44 PM, Blogger PeakTrader said...

All that positive data would be great, if the macroeconomy wasn't still in the deep hole:

Fed's Evans Says U.S. Recovery Uncertain as Housing Not `Out of the Woods'
Aug 24, 2010

Federal Reserve Bank of Chicago President Charles Evans said that while the housing market and U.S. economy have shown signs of improvement, recovery isn’t yet assured.

The recovery “seems to be extremely modest.”

“I am increasingly uncomfortable with the lack of noticeable improvement in the labor market,” Evans told reporters after the speech.

The Commerce Department will report on Aug. 27 that the U.S. economy is growing more slowly than previously thought.

Evans said that, while he doesn’t see a relapse into a recession as likely, the weak recovery is especially vulnerable to unexpected shocks.

“Inflation is under-running my objective of 2 percent sustainable inflation,” Evans said.

 
At 8/25/2010 6:54 PM, Blogger morganovich said...

that grannis piece has some of the most flawed and wishful reasoning i have seen in some time:

his capital goods and production orders charts are not in real terms. use constant dollars, and you can see how far we have fallen. big percentage moves after huge drops are not as impressive as they sound.

suddenly high commodity prices are GOOD for the economy? really? that's a new one. this isn't canada.

the trade chart is largely irrelevant, and imports are rising faster than exports, which will result in a big drop Q2 GDP when it's revised on friday.

all his credit and bond spread analyses are pretty meaningless given the current manipulation of the US bond markets (QE) and it's resultant skewing of all those curves. not even the fed believes them.

auto sales are incredibly punk, especially in real terms.

corporate profits are the result of underinvestment and cost cutting. he's drawing exactly the wrong conclusion there.

bloomberg home builder's index? seriously? look at CS, look at the sales figures, suddenly, we have over 12 months of supply. new mortgage aps are low and stagnant.

leading indicators are very questionable in their usefulness and are being badly skewed by easy comps.

the ism is going to look a lot worse soon if its relationship to the regional studies remains consistent.

http://www.calculatedriskblog.com/2010/08/regional-fed-manufacturing-surveys-and.html

all in all, this is a really weak argument in which scott tries to substitute quantity for quality.

note what he leaves out:

gdp, employment, personal income, consumer spending, federal deficit, etc.

the real question is whether q3 growth dips under 1%.

 
At 8/25/2010 9:15 PM, Blogger Michael Hoff said...

None of this really takes into account the enormous amount of money that's going to be taken out of the economy next year by local, state and federal tax increases. Not to mention health insurance premium hikes that are coming. People know they're going to get hammered next year. That's why they're refusing to spend and trying to do their best to stash money away, even if it's earning 1%. That's why businesses aren't hiring, even though they need to.

 
At 8/25/2010 9:17 PM, Blogger VangelV said...

Let us assume that the real economy picks up nicely and that the increased demand jacks up the price for commodities like copper, iron, oil, silver, etc. Doesn't this mean that the US bond bubble will burst and that interest rates will explode?

What does that do to home owners that are already under water and have trouble making payments? Or the interest payments that governments must pay to service their debts?

The problem as I see it is the feedback that an actual improvement would create. How does an increased demand for natural gas, oil and gasoline keep the energy costs manageable enough to permit the recovery to continue? How does the rising interest rate environment effect the consumption patterns of 'savers' who were dumb enough to buy treasuries near an all time low? And how to foreign lenders continue to support the Treasury market when it is collapsing?

 
At 8/25/2010 11:13 PM, Blogger juandos said...

How about letting John Stossel make the case for reality?

Here's a bunch of charts that might splash cold water on some of that hot optimism...

 
At 8/26/2010 2:51 AM, Blogger bobble said...

i think the problem in the US is lack of demand. the consumer accounts for over two-thirds of the US economy.

with that in mind check out the Consumer Metrics Institute's Daily Growth Index as a leading indicator for GDP.

it's currently heading down. here's the CHART.

 
At 8/26/2010 7:20 AM, Blogger Vagabond said...

"America's businesses are capable of navigating around policy uncertainty and the twists and turns of a volatile global economy."

That's true when the policy uncertainty is over primarily technical changes. We have a government that hardly lets a week go by where they're not threatening one industry or another. We have a Congress that was "this" close to passing a Cap and Trade bill. We have a Congress that has already passed a healthcare bill with heavy front-loaded costs. We all know those costs will necessarily increase in 2014 when it comes time to start paying the 'benefits', but no one knows how much higher those costs will be. I was laid off last year because many of the venture capitalists that we relied upon decided they were going to take their ball and go home, and who can blame them? They know they have to try and eek out a return on their investment five years from now. Well that return is sure to be a lot harder to eek out in light of increased burdens for healthcare, environmental taxes, energy costs, and increased labor costs. I have a feeling a lot of businesses have taken their ball and gone home.

 
At 8/26/2010 7:35 AM, Blogger VangelV said...

How about letting John Stossel make the case for reality...

The Stossel commentary is very important for one reason that may have been missed by most people. He ends the commentary by letting Robert Higgs have the last word on the issue. In 1997 Higgs wrote a great paper that explained how Hoover/FDR turned a needed contraction into a Great Depression. The paper was a follow-up on the 1992 paper that questioned the claim that the war years were a time of prosperity for the United States. Few outside of the Austrian School paid attention even though the argument was sound and the empirical evidence was overwhelmingly showing that Higgs was right. In the past two years I have noticed that many commentators have finally figured out the importance of Higgs' paper. While Stossel was always up to speed I have noticed commentators and analysts on BNN (Canadian business channel) and on CNBC begin to make more and more references to Higgs' analysis. This is important because the internet is now allowing views that are not supportive of the ruling political elites to be rapidly distributed among the masses and by doing so limiting the options open to politicians. Please do yourselves a favour and read Higgs' paper by downloading it as a PDF at the link below.

http://tinyurl.com/98l4e

 
At 8/26/2010 7:41 AM, Blogger VangelV said...

i think the problem in the US is lack of demand. the consumer accounts for over two-thirds of the US economy.

Why is lower demand when there is too much debt considered a problem? Prudent consumers should reduce spending and rebuild their balance sheets so that they can survive the economic volatility. The big problem in the US is the governments inability to let the market liquidate all those bad investments made during the bubble years.

 
At 8/26/2010 8:51 AM, Blogger Junkyard_hawg1985 said...

I appreciate the charts and am hoping for an economic uptick. I agree that the world economy is in expansion and that has definitely helped several items on Grannis' list (Baltic dry index, commodity prices, trade figures, corporate profits, and industrial production). All of these tie back to what I see as the lone healthy part of the economy - exports.

The others on the list were not signs that the economy is healthy. The yield curve is being manipulated by the Fed in an effort to jumpstart the economy. Car sales are still at extremely depressed levels (>20% below normal). He had a couple of real estate charts. Real estate is in a deep depression, not a recession and getting worse.

The headline on Yahoo! was that new unemployment claims dropped this week. The four week moving average increased again to 486,750 and last weeks numbers were revised up. I expect this week's numbers to be revised up as well.

 
At 8/26/2010 8:52 AM, Blogger juandos said...

"He ends the commentary by letting Robert Higgs have the last word on the issue. In 1997 Higgs wrote a great paper that explained how Hoover/FDR turned a needed contraction into a Great Depression"...

CHA-CHING!...

Very good VangelV! Exactly right sir!

We are repeating history...

BTW did anyone else catch this story link from the Drudge Report this morning?

Morgan Stanley Says Government Defaults Inevitable

 
At 8/26/2010 10:08 AM, Blogger juandos said...

Another case for optimism?

The AP tells us: All told, about 10.1 million people were receiving unemployment checks in the week ended Aug. 7, the latest data available. That's up about 260,000 from the previous week...

 
At 8/26/2010 10:35 AM, Blogger morganovich said...

KC fed-

Tenth District manufacturing activity slowed in August, and producers were somewhat less optimistic than in previous months.
...
The net percentage of firms reporting month-over-month increases in production in August was 0, down from 14 in July ... The shipments, new orders, and employment indexes dropped into negative territory, and the order backlog index slipped from -2 to -16.

 
At 8/26/2010 10:51 AM, Blogger Free2Choose said...

"The Stossel commentary is very important for one reason that may have been missed by most people. He ends the commentary by letting Robert Higgs have the last word on the issue."

For other "fellow Higgs fans", Russ Roberts did a great invterview with him a couple of years ago and the podcast is probably still there for download at Econtalk.org. It's definitely worth listening to.

 
At 8/26/2010 11:15 AM, Blogger Ron H. said...

"Please do yourselves a favour and read Higgs' paper by downloading it as a PDF at the link below.

http://tinyurl.com/98l4e
"

If nothing else, the charts in figures 1 and 2 should be required viewing for proponents of the keynesian bucket theory.

 
At 8/26/2010 11:28 AM, Blogger Benjamin said...

Vange:

Interest rates explode?

Oh please. There are global capital gluts. Capital is abundant. It is a new era in that regard. Bond holders who want safety should get prepared for real zero yields.

I agree with you re debt, btw. Our tax code should tax debt, not equity, and consumption, not work.

We should especially tax large houses.

 
At 8/26/2010 12:13 PM, Blogger marmico said...

I am confused about Higg's point. Gross private domestic investment increased from $12.9 billion at the 1932 low to $101.5 billion at the 1937 temporary peak which matched the prior 1929 peak. Regime uncertainty, my ass.

Source: BEA Table 1.1.6

In a deflationary spiral business sits on its hands. You don't run around building new structures (homes, offices, hotels, factories, etc.) or purchasing new equipment. You hope to hang on and outlast your competitors. Business did exactly what common sense suggests.

 
At 8/26/2010 12:56 PM, Blogger VangelV said...

Oh please. There are global capital gluts. Capital is abundant. It is a new era in that regard. Bond holders who want safety should get prepared for real zero yields.

I disagree. There is a lot more fiat money than capital and the supply of that fiat money is exploding at a time when that capital is depreciating. We do not become wealthy by printing more paper money and extending cheap credit so that people can consume.

If I am right we will see a massive increase in the price of silver, gold, agricultural commodities, oil, natural gas, fertilizers, and other essential commodities and at some time over the next two or three years a basket of those commodities will be selling for twice the current level in terms of the USD. At that point most of the deflation trade people should be wiped out and cursing the day they decided to believe Bob Prechter, Mish, David Dreman or the countless of other prominent deflationists who have been wrong for the better part of several decade.

If you look at the 2009 market activities you would see that there was no deleveraging of the debt bubble. The financial players, Congress, and the Central Banks simply transferred the bad debts to the tax payers and the massive derivatives positions expanded.

The first quantitative easing action was a large scale monetization of debt, which prevented the necessary contraction and liquidation of bad debts. We now have evidence that once the monetization of debt begins it will not stop. Given the terrible reaction of the markets to QEI we have the Fed proposing a sequel, QEII, which is designed to further weaken the currency so that debtors can have their liabilities inflated away. But given the duration trends in treasury holdings there is an obvious problem for the government. A short duration means that a great deal of debt is maturing every few weeks. That gives the bond managers and traders a huge advantage and allows lenders to ask for greater compensation for the risk they take by lending to the US government. When confidence is lost and lenders decide that they need to hedge their holdings we could see a tipping point that has the US follow the path taken by Argentina, Yugoslavia, Greece, Hungary, China, or Zimbabwe.

 
At 8/26/2010 1:10 PM, Blogger VangelV said...

I am confused about Higg's point. Gross private domestic investment increased from $12.9 billion at the 1932 low to $101.5 billion at the 1937 temporary peak which matched the prior 1929 peak. Regime uncertainty, my ass.

You are right. You are confused. First, there was no regime uncertainty issue in 1932. The decline in private investment would be expected given the massive investments made in the late 1920s that created a great deal of excess capacity. Second, you have to compare apples to apples. FDR devalued the USD by 40% after he confiscated private gold holding in the US. That still puts the 1937 holding well below the 1929 peak in real terms.

As Higgs points out, if you use current-dollar investment as a proportion of current-dollar GDP you see that, "..gross private investment (gray bars) plunged from almost 16 percent of GDP in 1929 to less than 2 percent in 1932; recovered to 13 percent in 1937 before falling again in the recession of 1938; and as late as 1941 stood at only 14 percent. During the war years, private investment ratios ranged from 3 to 6 percent. From 1946 through 1950 they ranged from 14 to 19 percent and averaged 16 percent—the same as in 1929." It took until after FDR died for private investment to recover to the pre-crash levels.

Then there is the other point that you missed; depreciation. You can't look at gross investment in nominal terms. You need to look at net investment in real terms. On that note Higgs points out that, "For the eleven-year period of 1930 to 1940, net private investment totaled minus $3.1 billion."

Please read the paper and figure out what Higgs is saying. When trying to make a point please take into account all of the factors that go into your point. Whether you like it or not, depreciation is a huge factor that needs to be offset when looking at the numbers. Our Chinese friends are about to figure that out eventually, but that is a point for another thread.

 
At 8/26/2010 1:12 PM, Blogger VangelV said...

n a deflationary spiral business sits on its hands. You don't run around building new structures (homes, offices, hotels, factories, etc.) or purchasing new equipment. You hope to hang on and outlast your competitors. Business did exactly what common sense suggests.

I have three words to refute your claim; the computer industry.

I do not see Dell, Apple, or HP sitting around avoiding investments because the price of computers is in decline.

 
At 8/26/2010 4:56 PM, Blogger marmico said...

Higgs data shows that business (as measured by fixed investment) was uncertain in the Hoover regime and certain in the FDR regime.

Higgs makes a fundamental error in his fixed investment less capital consumption allowance* analysis. He includes changes in private inventory in his calculation of fixed investment.

Correcting that error and including the year 1929, fixed investment less capital consumption was positive for the 1929-1940 period.

*I have no idea why he didn't use consumption of fixed capital (BEA, Table 7.5) as the proxy for depreciation.

 
At 8/26/2010 7:39 PM, Blogger juandos said...

"Higgs data shows that business (as measured by fixed investment) was uncertain in the Hoover regime and certain in the FDR regime"...

Hmmm, on what page was that again?

Maybe a small dose of Milton Friedman might clear up your misunderstanding (Courtesy of the Freeman): The Great Depression Could Have Been Avoided if the Fed Had Not So Badly Botched Its Monetary Policy...

Over at Cato Jim Powell has this: Mounting evidence, however, makes clear that poor people were principal victims of the New Deal. The evidence has been developed by dozens of economists -- including two Nobel Prize winners -- at Brown, Columbia, Princeton, Johns Hopkins, the University of California (Berkeley) and University of Chicago, among other universities.

New Deal programs were financed by tripling federal taxes from $1.6 billion in 1933 to $5.3 billion in 1940. Excise taxes, personal income taxes, inheritance taxes, corporate income taxes, holding company taxes and so-called "excess profits" taxes all went up.
...

Something sounds familiar here, eh?

 
At 8/26/2010 9:35 PM, Blogger VangelV said...

Higgs data shows that business (as measured by fixed investment) was uncertain in the Hoover regime and certain in the FDR regime.

I have no clue where you are getting this from. While both Hoover and FDR were meddlers and refused to allow the market to liquidate malinvestments most of the damage done by Hoover occurred when he signed Smoot-Hawley while FDR's biggest sin had to do with using Mussolini's tactics to gain control over the American economic system. By attacking the rich and business owners verbally, in print, legislatively and via the tax code, FDR discouraged capital formation and assured that depreciation would be much greater than new private investment. I see the same thing now with the Obama administration. By demonizing those that are in a position to invest and create new jobs, Obama is ensuring that no meaningful recovery takes place. The hundreds of new agencies created by the healthcare and financial reform legislation will do as much to prolong the slump as FDR's National Industrial Recovery Act did. The way things are going Obama might not be reelected. His hope is to have the idiots in the Republican Party nominate a right wing statist who angers independents and divert just enough votes to a third candidate that he manages to squeeze through.

 
At 8/27/2010 2:16 AM, Blogger sethstorm said...


juandos said...

Something sounds familiar here, eh?


Revisionism. If FDR's in any good light, it will happen.

 
At 8/27/2010 2:23 AM, Blogger sethstorm said...


while FDR's biggest sin had to do with using Mussolini's tactics to gain control over the American economic system. By attacking the rich and business owners verbally, in print, legislatively and via the tax code, FDR discouraged capital formation and assured that depreciation would be much greater than new private investment.

If it takes pursuit and capture those willing to kill our nation to prevent a recovery, then do so. The people that purposely hold back are the enemies within that have been warned about.


By demonizing those that are in a position to

The problem is that they would rather withhold work until they have the right politicians in place. But don't let your attempts on me dissuade you from your revisionism.

 
At 8/27/2010 5:44 AM, Blogger marmico said...

Vangel, your Austrian revisionism is unimpressive.

Fixed capital investment decreased between 1929 and 1932/33 and then rose until 1937.

Why would anyone expect that when output declines that the stock of fixed assets net of depreciation would rise. After all, it fell in 2009.

Taking 1929 as the baseline, the average nominal output(GDP) for the 1930-1940 period was 77% of baseline.

You are aware that investment in structures collapsed more than investment in equipment. BTW, William Gates III was not monkeying around with DOS in 1929. Big deal, real residential investment has collapsed 60% in the 2000s episode, real investment in equipment and software peaked 10 years ago. Is that Higg's definition of regime uncertainty? Hardly.

It seems to me that Higgs is attempting to recreate BEA Table 5.9. There is no data for the period he is reviewing. Take it with a grain of salt or two.

 
At 8/27/2010 7:39 AM, Blogger Paul said...

" The people that purposely hold back are the enemies within that have been warned about."

Yeah, like those who hold back by sitting on the couch complaining that nobody will hire him at the salary he is entitled to receive.

"The problem is that they would rather withhold work until they have the right politicians in place."

Yes, so stop witholding work and get a job, Sethstorm.

 
At 8/27/2010 8:59 AM, Blogger VangelV said...

If it takes pursuit and capture those willing to kill our nation to prevent a recovery, then do so. The people that purposely hold back are the enemies within that have been warned about.

First, the reason why your nation was great was its focus on individual liberty and the rule of law, not of men. Second, FDR did not manage to get the economy to recover. It did not recover until FDR died.

The problem is that they would rather withhold work until they have the right politicians in place.

Withhold work? What does that mean? If you want to create work for others you are always free to do so at any time. The fact that you do not does not make you a criminal or does not mean that you are denying someone of their rights.

But don't let your attempts on me dissuade you from your revisionism.

The revisionism is yours. As I wrote, Hoover and FDR meddled and turned a need correction into a Great Depression. FDR was an admirer of Mussolini and used Il Duce's playbook to gain control over the economy. By doing so he created uncertainty and prevented the capital accumulation that is necessary to create wealth and jobs. Compare that to Harding, who cut spending and taxes and got out of the way. The Harding non-action supported a sustainable recovery less than two years after the post WWI collapse began.

 
At 8/27/2010 9:09 AM, Blogger VangelV said...

Fixed capital investment decreased between 1929 and 1932/33 and then rose until 1937.

Yes it did. But much of that investment went to offset depreciation. Net investment was negative.

Why would anyone expect that when output declines that the stock of fixed assets net of depreciation would rise. After all, it fell in 2009.

You have it wrong. The Austrians expected a collapse in output because the malinvestments of the second half of the 1920s, which Austrian economists of the time were warning about, should have been liquidated. They weren't so there was no basis for a sustainable recovery. Hoover and FDR encouraged trade organizations to conspire to keep prices high enough to keep the weak players alive. Wages were kept artificially high. What this meant is that the Great Depression was a good period for those that had jobs but terrible for those that needed them. Given the high tax rates there was clearly no incentive to take risks by investing in productive capital formation even though there was a huge natural demand for housing and for various consumer goods.

We saw what happened when the government got out of the way after WWII. As the labour force exploded when the troops came back home the economy did not contract. It actually took off because the lower tax rates encouraged capital formation and flooded the markets with cheap consumer goods that were in very high demand.

This is always the case. When governments decide to control economic activity people output suffers and investors, consumers, and workers become poorer.

 
At 8/27/2010 9:18 AM, Blogger VangelV said...

Taking 1929 as the baseline, the average nominal output(GDP) for the 1930-1940 period was 77% of baseline.

You forget that there was a 40% devaluation of the USD. Real output was far lower than the figures show.

You are aware that investment in structures collapsed more than investment in equipment. BTW, William Gates III was not monkeying around with DOS in 1929.

The 1920s were a period of great innovation and technical advancement. That stopped in the 1930s because there was no incentive to take risks. When 90% of your last dollar is taxed away it makes more sense to take it easy and live large than it does to work hard. Why do you think that people like Bing Crosby and Bob Hope found so much time to work on their golf games?

Big deal, real residential investment has collapsed 60% in the 2000s episode, real investment in equipment and software peaked 10 years ago. Is that Higg's definition of regime uncertainty? Hardly.

We certainly live in an era of regime uncertainty. That is why many American investors have moved a substantial amount of their holdings abroad. As Bush expanded the size of government at an extremely high rate and Obama has done him one better the momentum has increased and the real economy has had the supports take away from it. This is why you won't see a real pick-up in real investment until there is a change in Washington.

 
At 8/27/2010 11:26 AM, Blogger juandos said...

sethstorm whines: "Revisionism. If FDR's in any good light, it will happen"...

You of course have something credible to back up your silly comment, right?

"Yeah, like those who hold back by sitting on the couch complaining that nobody will hire him at the salary he is entitled to receive"...

Well you know Paul there are jobs out there if this Reuters story on MSNBC site is factual: Lack of skilled workers threatens recovery

'The shortage of skilled workers is the No. 1 or No. 2 hiring challenge in six of the 10 biggest economies, Manpower found in a recent survey of 35,000 employers. Skilled trades were the top area of shortage in 10 of 17 European countries, according to the survey.

Examples of successful, targeted migration include an Ohio shipbuilder that brought in experienced workers from Mexico and Croatia; and a French metal-parts maker that hired Manpower to find welders in Poland
'...

Still there's a problem that needs fixing first according Mort Zuckerman over at US News: The Most Fiscally Irresponsible Government in U.S. History

Current federal budget trends are capable of destroying this country

 
At 8/27/2010 12:13 PM, Blogger Ron H. said...

This comment has been removed by the author.

 
At 8/27/2010 12:20 PM, Blogger Ron H. said...

"Well you know Paul there are jobs out there if this Reuters story on MSNBC site is factual: Lack of skilled workers threatens recovery"

The keyword is skilled. It seems that Sethstorm has allowed his skill set to grow stale, and now expects an employer to hire him as-is, and then give him a new set at their expense, all the while paying him as if he were already at the required skill level.

 
At 8/27/2010 12:37 PM, Blogger VangelV said...

The keyword is skilled. It seems that Sethstorm has allowed his skill set to grow stale, and now expects an employer to hire him as-is, and then give him a new set at their expense, all the while paying him as if he were already at the required skill level.

I have attended a few natural resource oriented conferences over the past few years and have been hearing companies complain that there are few people capable enough to fill the highly paid jobs they were offering. The issue went beyond just skills but to having the mindset required to be effective. Sadly, the US has seen much of its highly skilled labour base deteriorate over the years.

 
At 8/27/2010 12:54 PM, Blogger juandos said...

"The keyword is skilled. It seems that Sethstorm has allowed his skill set to grow stale..."...

"...and have been hearing companies complain that there are few people capable enough to fill the highly paid jobs they were offering"...

Hence the reason for the Americans With No Abilites Act...:-)

 
At 8/27/2010 4:28 PM, Blogger Ron H. said...

"Hence the reason for the Americans With No Abilites Act...:-)"

Actually, Congress has recently streamlined this process. It is no longer necessary for qualified applicants under AWNAA to trouble themselves by actually going for a job interview.

Continued qualification under this act is assumed if no change of status is received by the department, and continued benefits are provided for another 90 days.

 
At 9/10/2010 3:50 PM, Blogger Mark J. Perry said...

This is from a private email from Robert Higgs:

On 8/27, Marmico wrote: "It seems to me that Higgs is attempting to recreate BEA Table 5.9. There is no data for the period he is reviewing. Take it with a grain of salt or two."

Marmico, whoever he may be, is the one who does not know what he is talking about. The data shown in my 1997 article all come from the sources given there, primarily from the national income and product accounts, or are derived from them. The data are exactly what they are represented to be, and are correctly transcribed from the sources given for them.

I have just gone to the BEA website and checked the data currently displayed there on gross private domestic investment (table 1.1.5) and consumption of private fixed capital (table 7.5). If you derive net private domestic investment from these two data series, you find that net private domestic investment was exactly as

I described it in my article: negative for each year from 1931 through 1935 (except, as the BEA data are currently displayed, zero for 1935), positive for 1936 and 1937, negative for 1938, then positive again from 1939 to 1941.

I never said anything in my article, as Marmico implies I did, about gross private domestic FIXED investment. But if one uses that concept (that is, if one takes out inventory investment or disinvestment), one finds that my description of which years had negative and which had positive net private domestic investment still holds true.

Given that my article has been widely cited, reprinted in books, and used in many graduate economic history courses, Marmico might well consider making his mark as an economic historian by submitting a paper to the Journal of Economic History showing that I relied on data for a period when "there is no data." That's a pretty devastating thing to show about an economic historian of more than forty years standing in the profession. What are you waiting for, Marmico?

 
At 9/10/2010 11:21 PM, Blogger VangelV said...

This is from a private email from Robert Higgs:...

Ouch!!! Didn't we see this movie some time ago?

http://tinyurl.com/285c6g

 

Post a Comment

Links to this post:

Create a Link

<< Home