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Economics

March 17, 2015

"Detroit Is Dying Because GM Stuck Around, New York City Booms Because Nabisco Did Not"

John Tammy:

When depressed U.S. cities are talked about in the media, the explanation for their decrepitude is nearly always described through the prism of a departed industry, a natural disaster, or overseas competition.  Pittsburgh is allegedly a shadow of its former self because the steel industry is no longer vibrant,  Galveston, TX supposedly never recovered from a hurricane back in 1900, Flint, MI and Detroit are depopulated because the U.S. car industry has been eclipsed by more efficient global producers, and then Selma, Alabama’s limp economy was recently reported in the New York Times as a function of still-healing scars from the 1960s Civil Rights struggles.

The problem with the diagnoses offered up is that they don’t measure up to the most basic of logical and observable realities.  Particularly the industry explanations for a city’s demise.  Indeed, the departure or decline of already established forms of work would far more likely signal an economic renaissance whereby the economy of a city evolves with the times, with abundant wealth the result.

Mr. Tammy's forthcoming book get a nice review here.

Finally, an elegantly rendered book that makes the dismal science engaging, with real-world examples from Hollywood, rock ‘n roll, and sports, including actor Ben Affleck,  the Rolling Stones’ Keith Richards, and the Dallas Cowboys. Real life stories of people struggling with the real life consequences of government officials who too often view the economy in the abstract.

"'Everybody is reading' a paper about how the world is now at the mercy of the US Federal Reserve"

By Ambrose Evans-Pritchard who, if memory serves, is too excitable and pessimistic. People who are more versed than I am in the intricacies of international finance are especially welcome to comment. 

March 16, 2015

"Explaining the 1990s economic boom — before Hillary does"

Lord, don't let the Clintons take credit for that.

March 15, 2015

"Seattle’s new minimum wage law takes effect April 1 but is already leading to restaurant closings and job losses"

Surprise, surprise. With this great line I hadn't heard before:

. . . liberals have hearts that bleed so profusely that it often prevents oxygen from getting to their brains and results in extreme lightheadedness, and cloudy and defective decision-making.

March 09, 2015

Five on the Federal budget

It is way past time for this crap to stop.

. . . President Obama will unveil his proposed federal budget for 2016. Voters should be warned that virtually all the numbers reported in news coverage of the federal budget will be misleading at best.

That’s because the budget reporting will be written primarily in the language of official Washington rather than the language of everyday Americans. In Washington, if government spending goes up less than expected, the politicians have declared it to be a “cut.” Normal people don’t consider something a spending cut unless spending actually goes down. 

Congress even passed a law in 1974 to make this abuse of the English language official. 

And this:

The president’s budget envisions a $253 billion spending increase in 2015 and another $240 billion hike next year. In fact, federal spending is poised to grow more than $200 billion annually every single year for the next decade.

Most Americans, however, would probably be surprised to learn that these hikes have little to do with the president’s expensive new dreams or the recklessness of Congress.

In fact, just about all the spending increases comes from a handful of established programs: a $53 billion increase in Medicare, $47 billion more spending for Social Security, a $37 billion hike for National Defense and $18 billion more for Medicaid.

Oh, and then there’s interest on the federal debt. That’s projected to go up $54 billion next year.

Add it all up and that accounts for $209 billion of the $240 billion in spending hikes for 2016.

Some ideas for fixes: "106 Radical Ways to Slash and Burn the Federal Budget".

But be real darn careful with cutting the defense budget: "The Navy’s Hidden Crisis: It’s too small—and getting smaller".

And don't think you can get the revenue to make a big dent in our problem from the "upper middle class": "Upper-Middle-Class Americans Are the New Kulaks"

"3 Charts That Show The FCC is Full of Malarkey on Net Neutrality and Title II"

Nick Gillespie puts paid to the "We need the government to protect Internet" argument.

As important, think about how the delivery of the Internet has evolved, first from a university-based system to early commercial providers using phone lines, then to various types of fixed connections (such as DSL and coaxial cable and increasingly fiber and mobile services). Does anyone think that in 2035 we'll be getting the Internet via a cable that pops up in your living room and also provides televison programs? What increased regulation almost always does is freeze into place existing structures and business models. Certainly that's the case with telephony, where the heavily regulated Bell monopoly fought hard, and for a long time very successfully against all sorts of innovation, from alternative methods of long-distance delivery to accessories such as answering machines to letting people own (rather than rent) their phones. “Communism is a drag, man," Lenny Bruce riffed. "It’s like one big telephone company.”

March 05, 2015

"Everybody hates Pearson"

One reason:

In the U.S., testing is the most searingly divisive issue. The business of assessing students through high school has grown 57% in just the past three years, to $2.5 billion, according to the Software & Information Industry Association. Some believe “high-stakes testing” is the best way to create accountability; others think it measures little and incentivizes the wrong things. Either way, it is now the largest segment within educational technology—and in little more than a decade, Pearson has gone from no presence to dominating the realm.

The solution, as many people smarter than I have noted: more school choice.

March 04, 2015

"Two Cheers for Corruption"

By Deirdre McCloskey and it's a tour de force in a small space.

I don't agree--small corruption might be "O,K." but large-scale corruption is not. And cutting the federal government would go a long way to solving the problem. 

But it's an impressive piece: Jay Cost is wrong, Samuel Bryan is wrong, Madison is wrong, and Adam Smith is only half right. You don't read that sort of thing every day.

"Lone Star Resilience"

"Falling oil prices are no longer a threat to Texas."

We'll see, but the author makes a pretty convincing case.

March 03, 2015

"Retirement: When you should take Social Security"

Larry Kotlikoff has co-authored a new book on the subject. I recommend it, especially if you don't know about "declare and suspend" and "spousal benefits"

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