Today's NYTimes features an interesting article by Nelson D. Schwartz headlined "Recovery in US is Lifting Profits, But Not Adding Jobs." Surprise, Surprise!
The main tool for solving unemployment by the White House is to figure ways to make employees more expensive. Businesses aren't dumb. If you make a factor of production much more expensive, businesses will use less of it. Machines aren't more expensive; outsourcing is not more expensive, but hiring American workers is much, much more expensive thanks to Obamacare and numerous "worker protection" rules, laws and regulations.
So, what to do? Obama now suggests raising the minimum wage from $ 7.25 to $ 9.00 -- almost a 25 percent hike in the minimum wage. That is in keeping with the philosophy of making employees more expensive.
The war on workers and the war on the middle class by this White House continues unabated. Schwartz is puzzled by the "golden age for corporate profits" unaccompanied by meaningful increase in the demand for workers. But why is there any surprise. This is the predictable result of White House economic policy.
Tuesday, 5 March 2013
Sunday, 3 March 2013
Three Cheers for Christina Romer
It has been somewhat of a puzzle that Obama's economists haven't rebelled at his Administration's assault on the US economy. Economics is, after all, economics. Finally!
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
In today's NYTimes, Christina Romer, former head of Obama's Council of Economic Advisors, questions the necessity of the minimum wage. She not only wonders openly about increasing the minimum wage, but questions the very idea of minimum wage legislation.
Romer is right that the minimum wage is not the way to go. While she doesn't go far enough to oppose the minimum wage outright, it is hard to see her op-ed piece as anything but a plea for sanity and clear opposition to Obama's recent call for a minimum wage increse.
Thursday, 28 February 2013
Down a little; Up a little
4th Quarter GDP was revised up today from a dismal -0.1 percent to a dismal +0.1 percent, confirming the stagnation character of the American economy. All the fine rhetoric from the White House and its chorus of apologists cannot hide the fact that US economy is stuck in the mud.
This should come as no surprise of course. Why should anyone expand their business or take on new employees in this environment? Heaven forbid that anyone should make a profit or try to get rich. That's the new sin.
So, what is left is stagnation. An economy that rewards people for not working and punishes those who wish to employ capital is an economy that is going nowhere.
Obama has managed to accomplish what few thought possible. He has shut down the mighty American economic engine.
This should come as no surprise of course. Why should anyone expand their business or take on new employees in this environment? Heaven forbid that anyone should make a profit or try to get rich. That's the new sin.
So, what is left is stagnation. An economy that rewards people for not working and punishes those who wish to employ capital is an economy that is going nowhere.
Obama has managed to accomplish what few thought possible. He has shut down the mighty American economic engine.
Wednesday, 27 February 2013
Economic Survey 2013 Highlights
Chief Economic Advisor Raghuram Rajan tabled his first ever Economic Survey.
Key features of the Survey are:
Overall global economic environment remains fragile Gold imports is key contributor to inflation, imports need to be curbed LPG and Diesel prices need to be increased in line with global rates, oil subsidy is a key risk
Key features of the Survey are:
GDP growth for 2012-13 is expected at 5%
GDP growth for 2013-14 is expected at 6.1% to 6.7%
The Average WPI Inflation has come down from 8.9% in 2011-12 to 7.6% in 2012-13
The Average CPI Inflation has increased from 8.4% in 2011-12 to 10.0% in 2012-13
Gross Fiscal Deficit has come down from 5.7% of GDP to 5.1% of GDP
Revenue Deficit has come down from 4.3% of GDP to 3.5% of GDP
The trade deficit increased to US$ 189.8 billion (10.2 per cent of GDP) in 2011-12 as compared to US$ 127.3 billion (7.4 per cent of GDP) during 2010-11.
Current account deficit seen at 4.6% for 2013-14
Friday, 22 February 2013
The "Delay" Tax
Everyone knows, except Obama, that the entitlements are $70 trillion in the hole from an actuarial point of view. This means that, in finite time, they will run out of money.
So that, it is very, very clear that future generations will get nothing at all from social security and medicare regardless of the amount that they pay in. Unless something is done.
This we know (except for Obama, of course, who seems to know nothing).
All of this means that sooner or later, social security and medicare will be fixed. Running out of money is a fix. That does solve the problem.
A simple solution is to move out the age of eligibility for medicare (and index it). Do the same for social security. Means test both programs. Raise medicaid eligibility requirements. Doing these things would mean that social security and medicare will never run out of money.
So, a simple fix, can make things work. If we do it now. Delay means that when you do act, the actions must be much, more draconian. By postponing action, even for only a single year, the size of the cuts and the postponement of eligibility must be far greater than what would be necessary if we acted today.
This is the Obama "delay" tax. The longer you postpone dealing with the problem, the worse is the plight of future seniors. Either Obama doesn't know this (which is probable, because he isn't very focused on real issues) or he knows it and simply doesn't care.
So that, it is very, very clear that future generations will get nothing at all from social security and medicare regardless of the amount that they pay in. Unless something is done.
This we know (except for Obama, of course, who seems to know nothing).
All of this means that sooner or later, social security and medicare will be fixed. Running out of money is a fix. That does solve the problem.
A simple solution is to move out the age of eligibility for medicare (and index it). Do the same for social security. Means test both programs. Raise medicaid eligibility requirements. Doing these things would mean that social security and medicare will never run out of money.
So, a simple fix, can make things work. If we do it now. Delay means that when you do act, the actions must be much, more draconian. By postponing action, even for only a single year, the size of the cuts and the postponement of eligibility must be far greater than what would be necessary if we acted today.
This is the Obama "delay" tax. The longer you postpone dealing with the problem, the worse is the plight of future seniors. Either Obama doesn't know this (which is probable, because he isn't very focused on real issues) or he knows it and simply doesn't care.
Monday, 18 February 2013
Joe Stiglitz and Inequality
Joe Stiglitz has penned an interesting article on the growing inequality of measured income in the United States. The facts that he uses, of course, are subject to the usual limitations. If you ignore everything the government does and all employee benefits, then you get one answer. If you include government spending and employee benefits you get an entirely different answer. But, lay that aside for the moment, because, I think, Stiglitz is on to something. There is growing inequality of opportunity in America, but not for the reasons Stiglitz is implying.
It is no wonder that wealthy liberals are at the forefront of the call for reduced inequality. They know that their policies will solidify their exalted status in society. They are not at risk.
The simplest example can be read in today's editorial in the NY Times in support of raising the national minimum wage from $ 7.25 per hour to $ 9.00 per hour. That kind of policy won't hurt the liberal elite, protected with incomes far, far above these numbers. This kind of policy -- outlawing jobs for folks with limited skills -- only hurts those who might have trouble affording a copy of the NY Times, not those writing their editorials.
Minimum wage laws are one of the many reasons that inequality is growing in the United States. Entitlement programs, welfare programs and the takeover of public schools by teacher unions are other reasons for the growing inequality. I doubt that many of the editorial writers for the NY Times send their own children to public schools or need access to welfare programs of entitlement programs, so, by all means, make them available to others.
Providing government largesse for those less fortunate inevitably increases the number of those less fortunate. Outlawing jobs for those with limited skills is cruel and makes things far worse. Stiglitz is right. Inequality is growing. But the reason is that government is growing. Growing government puts lower income citizens in the penalty box and makes it difficult for them to ever escape. That is what causes growing inequality.
It is interesting that Stiglitz thinks America was much more a land of opportunity one hundred years ago. That was a time that predated minimum wage laws, teachers unions, social security, medicare, medicaid and welfare programs. That was a time when a real land of opportunity existed because government played a much more limited role.
It is no wonder that wealthy liberals are at the forefront of the call for reduced inequality. They know that their policies will solidify their exalted status in society. They are not at risk.
The simplest example can be read in today's editorial in the NY Times in support of raising the national minimum wage from $ 7.25 per hour to $ 9.00 per hour. That kind of policy won't hurt the liberal elite, protected with incomes far, far above these numbers. This kind of policy -- outlawing jobs for folks with limited skills -- only hurts those who might have trouble affording a copy of the NY Times, not those writing their editorials.
Minimum wage laws are one of the many reasons that inequality is growing in the United States. Entitlement programs, welfare programs and the takeover of public schools by teacher unions are other reasons for the growing inequality. I doubt that many of the editorial writers for the NY Times send their own children to public schools or need access to welfare programs of entitlement programs, so, by all means, make them available to others.
Providing government largesse for those less fortunate inevitably increases the number of those less fortunate. Outlawing jobs for those with limited skills is cruel and makes things far worse. Stiglitz is right. Inequality is growing. But the reason is that government is growing. Growing government puts lower income citizens in the penalty box and makes it difficult for them to ever escape. That is what causes growing inequality.
It is interesting that Stiglitz thinks America was much more a land of opportunity one hundred years ago. That was a time that predated minimum wage laws, teachers unions, social security, medicare, medicaid and welfare programs. That was a time when a real land of opportunity existed because government played a much more limited role.
Wednesday, 13 February 2013
Round Two
The President enjoys a good fight. The only question is will there be an opponent. Reality, of course, is one major opponent. But, the Presidents seems adept at ignoring reality.
The State of the Union speech last night was the Hugo Chavez plan for the US -- more body slams to the private sector, more money to be wasted on government and government's pals. As for the poor, raise the minimum wage. One wonders why Obama did not advocate a $ 100 per hour minimum wage. Using his logic, that should solve the problem of poverty in one grand stroke.
As for the hopes of the unemployed and underemployed, forget it. This President is not bothered by slack economic growth and growing numbers of folks disappearing from the work force. Just expand medicaid and food stamps. That should do it.
As for the national debt. Hey! That's one area where we lead the world. Let's maintain that lead!
Meanwhile, the war on capitalism continues unabated. Tax rich people!! That seems to be the main mantra of this White House.
So, what's the future. It isn't good.
The State of the Union speech last night was the Hugo Chavez plan for the US -- more body slams to the private sector, more money to be wasted on government and government's pals. As for the poor, raise the minimum wage. One wonders why Obama did not advocate a $ 100 per hour minimum wage. Using his logic, that should solve the problem of poverty in one grand stroke.
As for the hopes of the unemployed and underemployed, forget it. This President is not bothered by slack economic growth and growing numbers of folks disappearing from the work force. Just expand medicaid and food stamps. That should do it.
As for the national debt. Hey! That's one area where we lead the world. Let's maintain that lead!
Meanwhile, the war on capitalism continues unabated. Tax rich people!! That seems to be the main mantra of this White House.
So, what's the future. It isn't good.
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