Paul Ryan on Fixing Entitlements
Rep. Paul Ryan: "We’re really on the cusp of trading our free market democracy, the American idea, for a cradle-to-grave social welfare state that will bankrupt us."
Professor Mark J. Perry's Blog for Economics and Finance
Top Students Earn Big Money for Egg Donations
CHICAGO — "Wal-Mart Stores Inc. has won the support of dozens of church ministers in its long-running battle to expand in Chicago, a sign of how the recession has softened skepticism of the retailer in a community desperate for jobs. The ministers, most of them African-Americans together representing thousands of congregants, are pressuring the city council to grant approval for a Wal-Mart "supercenter"—a store with a full grocery that also sells general merchandise—on the city's South Side. The ministers who support Wal-Mart say that if the city council doesn't act favorably on an ordinance that would allow the Chatham Wal-Mart, they will campaign against elected officials.
Federal Reserve data show that the M2 growth rate on an annual basis fell in the week ending March 15 to 0.85%, the lowest money growth rate since May 1995 (see graph above). Notice also in the graph above that M2 growth in 2001 was actually above 10% for a longer period of time, than the money supply growth in early 2009. Further, there has been a much sharper decline in money growth in the last year than the decline between 2002 and 2005, when the growth rate fell but never went below 2.5%. In each of the last 10 weeks, M2 growth has been below 2.5%. Considering that average annual inflation never got higher than 3.4% in 2005 following the 10% M2 increase in 2001, so it just doesn't seem like there's enough money growth to create inflationary pressure now, at least nothing higher than maybe 3%.
NEW YORK (Reuters) - "What's the value of a pint of beer? Let the market decide, says a new restaurant in Manhattan where prices for food and beverages will fluctuate like stock prices in increments according to demand."
The CBOE Volatility Index (^VIX) closed at 16.35 today, the lowest closing value since May 15, 2008 and the second lowest closing value since July 2007, more than two-and-a-half years ago (see top chart above). The VIX has closed at or below 17.0 for five consecutive days, for the first time since July 2007.
"The free market, by enabling people to compete openly, is the most effective device that has ever been invented for making people pay for their prejudices, and thus for making it costly for them to exercise it. What you do when you impose equal pay for equal work law, is that you make the expression of prejudice costless, and as a result you harm the people you intend to help."
Thanks to Matt Bixler.
"Last Thursday, the Congressional Budget Office reported that health care reform legislation would, over the next 10 years, cost about $950 billion, but because it would raise some revenues and lower some costs, it would also lower federal deficits by $138 billion. In other words, a bill that would set up two new entitlement spending programs — health insurance subsidies and long-term health care benefits — would actually improve the nation’s bottom line.
Median priced existing single-family home in the Midwest (January 2010): $127,200
"Gallup has been polling public opinion about unions since the 1930's. Last year, for the first time, less than half (48 percent) of those surveyed approved of unions. Fifty one percent said unions "mostly hurt" the U.S. economy and 39 percent said they "mostly help." The percentage of the nation's private sector work force that belongs to a union has dropped precipitously. In the 1950's, over 30 percent belonged to unions. Today it's a little over seven percent.
In 2007, the ratio of the median earnings of women and the median earnings of men was 79.6 percent, reflecting a raw gender wage gap of 20.4 percent.
Last November, Martin Feldstein pointed out a fatal flaw of Obamacare in the Washington Post: It will be rational for individuals and companies to drop their current health insurance, pay the penalties, and wait to purchase insurance when they get sick:
"Obama has called on China to adopt a more "market-oriented exchange rate." The US Treasury Department, meanwhile, has set a mid-April deadline to decide whether China truly is a "currency manipulator," warning that America could impose new levies on Chinese products if that's judged to be the case.
The president is playing with fire. For one thing, his country is being kept afloat by China's willingness to keep buying U.S. government debt. Obama really should tread carefully. At the same time, the US is now at risk of sparking what could be an all-out trade war.
The reality is that America's "weak dollar" policy – its long-standing practice of allowing its currency to depreciate in order to lower the value of its foreign debts – amounts to the biggest currency manipulation in human history. At the same time, the U.S. has, for years, shamefully stalled on various rulings passed by the World Trade Organisation that show America to be breaching global trade rules.
Chinese inflation is now at 2.7% – close to the official 3% target. Beijing will eventually allow the yuan to rise, but in its own time and in order to tackle inflation and not because of US pressure. America needs to act smarter and get its own economic house in order. Obama has decided instead to lash out at China in a desperate attempt to placate a U.S. electorate increasingly mindful of their president's failings."
MP: The U.S. has also stalled the free trade agreements with Panama, Colombia and South Korea, which were passed in 2007 and are now languishing into a fourth year.
Link. (Odds at 10:16 a.m.: 84%)
From Reason.tv (via Cafe Hayek).
Fact #1: "America’s Health Insurance Plans (AHIP) is the national association representing nearly 1,300 member companies providing health insurance coverage to more than 200 million Americans. Our member companies offer medical insurance, long-term care insurance, disability income insurance, dental insurance, supplemental insurance, stop-loss insurance and reinsurance to consumers, employers and public purchasers."
"The market is not perfect. It is run by humans who make mistakes. But the same humans run government where they make different, often more costly, mistakes for which the public pays.
Wal-Mart serves customers and members more than 200 million times per week at 8,400 retail units under 53 different banners in 15 countries, and employs more than 2 million associates worldwide.
From my AEI colleague Alex Pollock writing in yesterday's WSJ about America's "homeownership mantra," and how government intervention and public policy contributed to our housing troubles and mortgage meltdown, and why Canada was able to avoid both and achieve a higher rate of homeownership in the process:
Americans spent almost $326 billion on clothing and footwear in 2009 (data here), which as a share of disposable personal income (data here), was the lowest ever in U.S. history, at only 2.98%. Spending on clothing as a share of income has fallen in 20 out of the last 22 years, from 4.78% in 1988 to less than 3% in 2009. Compared to 1950 when spending on clothing was 9% of income, spending last year was less than one-third that amount, and compared to spending on clothing of 6% of income in 1970, spending last year was half of that share.
In other words, clothing is now cheaper than at any time in history, when measured as a share of disposable income. And there's a better selection of clothing now, at higher quality, and with options available today like no-iron fabrics and washable silk that have become increasingly available in recent years. And when it comes to footwear, I don't think anybody would argue that the selection and quality today are far ahead of past decades - just think of the athletic footwear options today vs. Chuck Taylor Converse All-Stars, which were at one time "state-of-the-art" and were only available in two colors (black and white) until 1966.
The chart below explains the falling cost of clothing and footwear as a share of disposable income, by displaying the CPI for Clothing (data here) and the CPI for All Items (data here). Since 1992, prices in general have risen by 57%, while prices for clothing have fallen by 8.5%. With significantly falling prices in real terms, clothing has become more and more affordable almost every year, requiring smaller shares of our income, which has freed up disposable income that can now be spent on other consumer goods (think electronics, travel, entertainment, etc.).
Bottom Line: As a direct result of increased global competition, advances in technology, and increased worker productivity, clothing is cheaper today both in inflation-adjusted prices and as a share of disposable income. We have more clothing today per person than any previous generation (think of the number and size of closets in a typical 1930s, 1940s or 1950s era home), and the clothing and footwear are cheaper and better than ever, contributing to a gradually rising standard of living for the average American.
Newsweek slideshow, including Chuck Taylors, Fenders, Etch-a-Sketch, Levis, some American flags (only 1.5% due to protectionism), NBA uniforms, etc.
Congressman Mike Michaud urges Treasury Secretary Tim Geithner and Commerce Secretary Gary Locke "to immediately address the growing problems associated with China’s continued currency manipulation."
The answer is Yes, especially for reading, according to the Center on Education Policy's latest study, which found that:
Steve Forbes at about 2:46 talking about China's fixed ex-rate at 6.83 Yuan per dollar since the summer of 2008:
"Fixed currencies - we should be in favor of them, because it makes life easier. We have a fixed currency between California and New York, and it's a good thing."
Related: Greg Mankiw's view on China's currency.
"Critics of China say it is keeping the yuan undervalued to gain an advantage in the international marketplace. A cheaper yuan makes Chinese goods less expensive in the United States and American goods more expensive in China. As a result, American producers find it harder to compete with Chinese imports in the United States and to sell their own exports in China.
According to a report released today by the Federal Reserve Bank of Cleveland, the median Consumer Price Index was virtually unchanged at 0.0% (0.5% annualized rate) in February. The "median CPI" is a measure of core inflation calculated by the Federal Reserve Bank of Cleveland based on data in the monthly CPI report from the Bureau of Labor Statistics' (BLS).
The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.1% in February, following a 0.3% gain in January, and a 1.2% rise in December.
From Reuters: "As she turns 76 next week, a message to all those confident young American women from pioneering feminist Gloria Steinem: For all the advances in women's rights in the past 40 years, equality remains a distant hope."
The chart above shows the dramatic gender shift over time in college degrees (data here). In 1949, men earned 76% of all college degrees, i.e. men earned 317 degrees for every 100 degrees earned by women. By 1981, women earned 50% of all college degrees, and in almost year every since then have increased their share of all degrees to the current level of 58.61%, which is down slightly from the peak of 59.06% in 2007. The 60-year trend may now have stabilized at 59% of all college degrees earned by women and 41% earned by men, or 144 degrees earned by women for every 100 degrees earned by men.
For the 32-year period between 1948 and 1979, the average male-female jobless rate gap was -1.21% in favor of men (lower male unemployment rate compared to female unemployment), and for the 30-year period from 1980 to 2010, the average jobless rate has been 0.187% in favor of women (lower female unemployment rate compared to male).
Hypothesis: As college degrees have shifted gradually in favor of women over the last sixty years, and especially since 1981 as women got a disproportionately higher and higher share of all college degrees year-by-year, women have become both better-educated than men on average, and also better protected against unemployment, especially during recessions (see chart above of jobless rates by education). In other words, the Great Mancession of 2008-2009 was directly related to men's decreasing share of college degrees, and therefore greater exposure to unemployment, especially during the Great Recession.
Intrade. I'm not sure what's going on here, any ideas?
From The Economist, an excellent article about how an unconventional glut of natural gas in America is shifting the balance of power in the world’s gas markets:
From a survey of physicians conducted by The Medicus Firm in December 2009, and appearing in the latest issue of the New England Journal of Medicine:
"The average member of Congress – House and Senate – is first and foremost only a self-serving inconvenience-minimizer who doesn't have a lot of principle they stand on in the first place. It doesn't take much to move a jellied spine, so they'll probably get their votes."
Intrade odds for Obamacare.
The gap between what Americans and the rest of the world pay for sugar has hit its widest level in at least a decade, breathing life into the battle over U.S. import quotas that prop up the price of the sweet stuff. For years, U.S. prices have been artificially inflated by import restrictions designed to protect American farmers. That has kept the price well above the global market (see top chart above - the U.S. beet sugar price has averaged more than twice the world cane price, data here, Tables 2 and 5).MP: Oh, and the efforts by the American Sugar Alliance to be protected against more efficient foreign sugar producers with government price supports, domestic marketing allotments, and tariff-rate quotas are NOT an attempt to boost profits for the U.S. sugar growers?
But the difference between the two has ballooned recently, giving new impetus to U.S. sugar processors and confectioners to step up their long campaign to pressure the government to increase import limits.
About 85% of the sugar consumed in the U.S. grows domestically, with the rest imported from about 40 countries under a quota system and Mexico, which isn't bound by the program under a free-trade treaty. Within the quota, exporters get higher prices paid by U.S. buyers but are subject to stiff tariffs once that limit is exceeded.
Sugar growers have used their lobbying muscle to fend off any increase in quotas for decades. The efforts by big brands to ease imports are just an attempt to "boost profits," according to Phillip Hayes, a spokesman for the American Sugar Alliance, a trade group of cane and sugar-beet farmers.
From CPAC's 2010 Blogger of the Year, Ed Morrissey of Hot Air, "Retail Health Care and Reform":
With the ObamaCare bill approaching a final vote, this seems like a good time to remind readers that other options are available for reforming the cost structure of American medical care.Bending the Cost Curve Downward, EXHIBIT A:
What are “retail health clinics”? Chances are, you’ve already seen them. These clinics have begun rapidly spreading to malls, big-box retail stores such as Wal-Mart and Target as concessionaires, and drug stores like Walgreens. Instead of hiding behind insurance co-pays, the clinics offer pricing up front to consumers, so that they can decide for themselves what to “buy” and how much they want to pay for service.
This is the same mechanism that works to keep prices down and supply consistent in other areas of health care that insurance plans do not traditionally cover. For instance, cosmetic surgery and Lasik rely entirely on consumer compensation. There are no third-party payers to get in the way of rationally allocating resources to demand. In those markets, producers and consumers find each other in the normal manner, advertising, discounts, and price competition, and the market attracts new providers when scarcity appears and prices rise.
If we want to reform care, bend the cost curve downward, and promote supply in the health-care industry, we need to learn the lesson from retail health clinics. The top-down reform proposed by Congress threatens to stop real reform and amplify everything that’s currently wrong with the system.
Robert Samuelson nails it in his column today, here are some excerpts: