Newmark's Door

"Congress needs to stop subsidies to sugar farmers"

It sure the heck does.

But I, for one, won't hold my breath.

"Coming Soon To America: A Two-Tiered, Canadian-Style Health Care System"

And after creating this system Liberals will scream about all the . . . inequality. Count on it. 

A fine little lesson in foresighted rent-seeking

Suppose you're a businessman. Suppose you think Mrs. Clinton will probably run in 2016 and will probably win. What do you do? 

Why you throw a little "consulting" business to people who are close to her. Now.
See "Tony's 'Good Fortune'".

My advice to a soon-to-be Harvard economics major

One of my wife's students will begin Harvard this fall. He plans to major in economics so he wrote to her and asked if I had suggestions for "Ways to learn material, books to read, important classes to take?" Here's what I sent her to send to him, for anybody who might find it useful.

On courses, five suggestions:

Most places require majors to take an introductory course--often titled "Principles of Economics" or something similar--and then a second course in microeconomics, often titled "Intermediate Microeconomics". That second course in micro is absolutely vital. I'd tell him to ask around at his university to find out who the best instructor is offering that course. Neither the easiest nor the friendliest necessarily, but who has the best mind and who best expresses that mind. I'd tell him then to concentrate hard on that course. Do well in it, and the rest of the major should be easier and more fun.

Take as much econometrics as he can stand. It is very important and useful. If there is only one undergraduate course, strongly consider taking a graduate course if there is one (and take additional statistics courses). And learn either Stata or R.

If he plans on trying to get a Ph.D., take a lot of math. A full year of calculus and a course in linear algebra is the bare minimum. Most grad econ departments want students to make an A in the second-level calculus sequence (usually called "Analysis" or "Real Analysis"). Here are Davidson's suggestions: https://www.econ.berkeley.edu/undergrad/current/preparing-for-grad-school  Here are suggestions from Harvard: http://kuznets.harvard.edu/~athey/gradadv.html

Take at least one course that teaches students how to write well.

Junior or senior year, write at least one long, research-oriented paper, probably in a seminar course or maybe as an independent study, under the supervision of a good instructor. Examples of what he should aim for are here: http://www.elon.edu/e-web/students/ipe/default.xhtml

On books:

Good introductory books (these can be read before starting coursework, even this summer):

Tradeoffs by Harold Winter

The Armchair Economist, by Steven E. Landsburg

The Economic Way of Thinking, by Paul Heyne, et al.

The Economics of Public Issues, by Roger L. Miller, et al. 

Spin-Free Economics: A No-Nonsense Guide to Today’s Global Economic Debates, by Nariman Behravesh

Good Intermediate Micro textbooks

Price Theory and Applications, Steven E. Landsburg (the most recent edition is the 8th, and the 9th is due soon, but any edition is excellent).

Intermediate Microeconomics: A Modern Approach, by Hal R. Varian. Complements Landsburg.

Exchange and Production: Competition, Coordination, and Control, by Armen Alchian and William R. Allen. Not strictly an Intermediate Microeconomics text, but it’s so good, who cares?

Others:

A Conflict of Visions, by Thomas Sowell

The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor, by David S. Landes

Robust Political Economy, by Mark Pennington

The Myth of Fair and Efficient Government, by Michael L. Marlow

The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, by William Easterly

The Death of Common Sense, by Philip K. Howard

Getting Rich in America: Eight Simple Rules for Building a Fortune and a Satisfying Life, by Dwight R. Lee and Richard B. McKenzie

A Guide to Econometrics, by Peter Kennedy

Eat the Rich, by P. J. O’Rourke

Readings in Applied Microeconomics: The Power of the Market, edited by Craig M. Newmark

On studying: if he doesn't know how to study by now, I can't help him.

What's up in Detroit?

Call it "ruin porn," if you like, but I think Detroit is an extremely sobering cautionary tale. Every policymaker in the country should be paying attention. 

Detroit, with at least $15 billion in long-term debt, is teetering on the brink of municipal bankruptcy, and is slated to remain under state control for at least 18 months. During this period, the mayor and City Council retain their titles, but little else. (This might explain Mayor Dave Bing’s announcement that he would not seek re-election; neither will four of the nine City Council incumbents.) Instead, the emergency manager appointed by Governor Snyder, the bankruptcy lawyer Kevyn D. Orr, will continue to rule Detroit with sweeping powers that include the ability to privatize city services, sell off municipal assets and alter union contracts. . . .

Indeed, the least surprising development to anyone following Detroit’s woes has been Wall Street’s continued ability to squeeze money out of a city that can’t afford to keep its streetlights on or police its neighborhoods (there were almost as many murders in Detroit last year as there were in New York, a city with 11 times the population; Detroit officers are working 12-hour shifts with 10 percent pay cuts; and private businesses recently kicked in $8 million to buy the department new squad cars and ambulances).

In recent years, Detroit’s water department has paid Wall Street banks hundreds of millions in termination fees alone in order to get out of bad municipal bond deals. (The city utility is so broke, it issued new bonds in order to pay the fees to get out of the old bonds!)

See also "Reckoning Nears for Detroit" and "Detroit and the End of ‘Big Unit America’".

"The Democrats’ Walmart Obsession"

Simply terrific.

It is no wonder that a union-backed group of Walmart employee gadflies has not been able to muster more than about 100 workers to strike in protest of their employment conditions — out of approximately 1.5 million employees across the nation.

Recent news on the California Obamacare health exchange: compare and contrast

Read 'em and make up your own mind.

Ezra Klein, Liberal:

Obamacare got some very good news on Thursday.

In 2009, the Congressional Budget Office predicted that a medium-level “silver” plan — which covers 70 percent of a beneficiary’s expected health costs — on the California health exchange would cost $5,200 annually. More recently, a report from the consulting firm Milliman predicted it would carry a $450 monthly premium. Yesterday, we got the real numbers. And they’re lower than anyone thought.

As always, Sarah Kliff has the details. The California exchange will have 13 insurance options, and the heavy competition appears to be driving down prices. The most affordable silver-level plan is charging $276-a-month. The second-most affordable plan is charging $294. And all this is before subsidies. Someone making twice the poverty line, say, will only pay $104-a-month.

Sparer plans are even cheaper. A young person buying the cheapest “bronze”-level plan will pay $172 — and that, again, is before any subsidies.

The L.A. Times report, Semi-Neutral:

Amid anxiety over rising costs from the federal healthcare law, California received better-than-expected insurance rates for a new state-run marketplace, but many consumers still won't be spared from sharply higher premiums.

Forbes, Conservative: "Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%". (With a reply of sorts here.)

And David Catron in American Spectator:

If our national press corps were not utterly corrupt, the misleading assertions contained in Cover California’s press release would have been held up to scorn. Unfortunately, the leading lights of the establishment “news” media have decided to collude with Lee and his bureaucratic accomplices to deceive the public.

And finally, the Wall Street Journal:

Liberals have spent years claiming that "rate shock" under the Affordable Care Act—the 20% to 30% average spike in insurance premiums that every independent analyst projects—is merely the political imagination of Republicans and the insurance industry. So they immediately claimed victory when California reported last month that the plans that will be available on the state's new insurance exchange next year would be cheaper than they are today.

Except now it emerges that California goosed the data to make it appear as if ObamaCare won't send costs aloft as the law's regulations and mandates kick in. It will, by a lot. And now liberals have suddenly switched to arguing that, sure, insurance will be more expensive but the new costs are justified. Needless to say that was not how Democrats sold health-care reform.

"Kotlikoff on 'The Real Problem with Reinhart/Rogoff'"

Professor Kotlikoff states--as he has for quite some time--that the accounting for our deficits and debt is arbitrary and misleading. Our current fiscal gap is $222 trillion. And growing.

See also "Social Security, Medicare Still Face the Abyss" and "Analysis of the Social Security Trustees Report, May 31, 2013".

"It's not a recovery. It's not even normal growth. It's bad."

Someone I once worked for, distinguished UCLA economics professor Ed Leamer, quoted in today's L.A. Times.

"Where are the entrepreneurs? More evidence the very heart of the US economy is failing"

James Pethokoukis, AEI:

The US entrepreneurial spirit may be faltering. Check out these data points from The Wall Street Journal: a) In 1982, new companies made up roughly half of all US businesses, according to census data. By 2011, they accounted for just over a third; b) from 1982 through 2011, the share of the labor force working at new companies fell to 11% from more than 20%; c) Total venture capital invested in the US fell nearly 10% last year and is still below its prerecession peak, according to PricewaterhouseCoopers.