Good deal on The Economist

I've been wanting The Economist for years now but couldn't quite justify the premium $127 per year subscription.

That seems to be the price just about everywhere, including Economist.com and Amazon.

Well here it comes to $71. You need the coupon code: WOOT

So, you know: woot!

Against the Lib-Dems

Via Andrew, The Economist backs the Tories. Here's their case against Clegg:

[L]ook at the policies, rather than the man, and the Lib Dems seem less appealing. In the event of another European treaty, they would hold a referendum not on that treaty but on whether to stay in or leave the EU; odd, given that they also (wrongly) want to take Britain into the euro. They are flirting with giving up Britain’s nuclear deterrent. They would abolish tuition fees for universities, which would mean either letting the quality of British higher education slide still further or raising the subsidy to mostly well-off students by increasing state funding. They are worried about climate change but oppose the expansion of nuclear power, which is the most plausible way of cutting emissions. Their policies towards business are arguably to the left of Labour’s. A 50% capital-gains tax, getting rid of higher-rate relief on pensions and a toff-bashing mansion tax are not going to induce the entrepreneurial vim Britain needs.

I must admit I was a bit caught up in the Clegg-mania, finding his anti-establishment-ness refreshing (Britain has a dreadfully awful establishment). And watching the implosion of Labour's statist scourge has been blissful; one cannot help cheer both dogs against the Brown-Blair axis.

But other than their comment against giving up the UK's nuclear weapons--I'm with the Lib-Dems on this, the Cold War is over for $DEITY's sake--the Economist's policy case seems fairly devastating. Go Tories.

Quote of the day

Mr Yglesias might not be too pessimistic about the crisis of overproduction in journalism because, to put it bluntly, he is the crisis of overproduction in journalism.

—DiA, Does the left need bigger ideas?

What do today's philosophers believe?

The Economist's Intelligent Life magazine takes a look.

Chart of the day

THE ECONOMIST - Between 1960 and 2008, turkeys bulked up by around 11 pounds to 29 pounds, an increase of 64%. Coincidentally, in that same period the average American man gained 28 pounds (166.3 pounds to 194.3 pounds, a 16.8% increase), almost the equivalent of a turkey

(via Perry)

94% abstinence-only in Texas

Staggering:

[W]hen it comes to teenage births, the United States is backsliding. Between 1991 and 2005 the teenage birth rate declined by 34%, according to the National Centre for Health Statistics. Between 2005 and 2007, the last year for which statistics are available, it crept up 5%.

[..] Consider Texas. The state requires only that public schools emphasise abstinence, not that they forsake all other approaches. Any district could choose to be more comprehensive. But few do. Last year the Texas Freedom Network, a religious-freedom watchdog, gathered curricular materials from the state’s public-school districts. Their findings, published earlier this year, are disturbing. Fully 94% of the districts took the abstinence-only approach. Those pamphlets and brochures that bothered to discuss contraceptives were often full of errors, or deliberately misleading.

The materials also traded on shame and fear. Across the state teenagers were warned that premarital sex could lead to divorce, suicide, poverty and a disappointed God. One district staged a skit about a young couple on their honeymoon. The husband presented his bride with a beautiful wrapped present that he had been saving for years. Her gift for him was in tatters.

This approach does not seem to be working.

Higher taxes or Medicare cuts?

Big government's chickens are coming home to roost. It's time for politicians to be clear on what they stand for.

China

Is acting like a great power. (contra The Economist)

Climate change denialism and alarmism

Kevin Drum wrote:

I mean, suppose you accepted that climate change was both real and catastrophic. What options would you have if you insisted on sticking solely to free market principles? Beats me. Hell, it’s hard enough to address even if you don’t. But that’s where we are these days: an awful lot of our most pressing problems simply can’t be solved unless you accept that the government has to be involved. So conservatives are stuck.

Yglesias responds:

I think this is far too kind to the behavior of right-of-center institutions—Heritage, AEI, Cato, National Review, Weekly Standard, the Chamber of Commerce, Rush Limbaugh, etc.—on the issue of climate change. It implies that there’s some genuine ideological dilemma that makes it impossible for a committed free marketer to propose constructive policies to avert catastrophic climate change. But how about reductions in subsidies for fossil fuel production and consumption? The free market credentials seem impeccable. Or how about a “green tax shift” in which carbon is taxes or carbon emission permits are auctioned and the revenue is used to finance deficit-neutral reductions in other taxes? Again, it surely can’t be that free market principles commit people to the precise series of revenue streams currently used in the United States.

Now of course in the real world it’s going to be impossible to legislate a pure free market “tax shift” policy just as it’s going to be impossible to legislate a pure “tax polluters to subsidize clean energy” approach or a pure “cap and rebate” or a pure anything. But if people started from the premise that emissions need to be reduced, and then debated the extent to which this needs to be done in a free market way versus some other kind of way, then compromise would be easy to reach and a solution could be within reach. But that’s not what we have. Not because market-oriented approaches are inadequate to the challenge but because too many of the key institutions that espouse market-oriented approaches are run by people who are too corrupt, incompetent, immoral, stupid, or cowardly to get their side to take the problem seriously.

It doesn’t have to be this way. The German Federation of Industry had a bunch to say, not all of it sensible on the merits, about making German climate policy friendly to export-oriented manufacturers, but none of it involved ranting about “cap and tax” or denouncing “socialism” or pretending that the whole problem was made up by Al Gore.

I agree: the many climate change deniers on the right are awful.

However, alarmists from the left are also contemptible. Al Gore, Barack Obama, Matt Yglesias, et. al. did not make up the problem. But they sure do exaggerate, peddling end-of-the-world-as-we-know-it scenarios and distorting our extremely limited ability to mitigate the more moderate warming that's actually likely to happen.

Jim Manzi's non-denialist, non-alarmist cost-benefit analysis looks correct to me. You can read his many detailed posts on the subject at The American Scene.

Moderate is the new liberal, or we're all socialists now.

DIA ponders the reform kerfuffle.

Comparative manufacturing

This Free Exchange post is illuminating:

CONTRARY to popular belief, America's manufacturing base has not entirely vanished. Americans do, in fact, still make things. Manufacturing employment has shrunk considerably since peaking in the late 1970s, but this has largely been a product of productivity growth. As it happens, America remains the world's largest manufacturer, responsible for 20% of global manufacturing. China's share is currently around 12%.

This ratio has been moving steadily in favour of China, and it seems fairly clear that within a decade China's share will overtake America's. This has been cause for some hand-wringing in the press, a recent example of which is this piece in the Wall Street Journal, with additional comments added by Noam Scheiber. But one wonders: why should America, with 5% of the world's population, produce 20% of the world's manufactures?

We could try and make a comparative advantage or factor endowments argument to justify persistent American dominance in manufacturing, but in practice, developed nations tend to devote more or less the same share of employment to industry—between 20% and 30%—and tend to involve themselves in intra-industry trade. Everyone produces some manufacturing goods, and then trades them with other rich nations that produce similar goods (think automobiles, for example).

If developed nations tend to employ similar shares of their labour force in manufacturing and tend to use broadly similar technologies, then we should expect that manufacturing shares should correspond roughly with population shares. And this is generally what we observe—among developed nations.

But China is an emerging market. At present, output per person is well below the developed nation average; over time that will rise. And at present, the share of the labour force in manufacturing is around 50%; over time that will fall. And China, of course, has a little over 1.3 billion people.

So if over time output per person rises to developed nation levels and the share of the labour force in manufacturing declines to developed nation levels, then we would expect China to produce about three to four times as much manufacturing output as America. Note that this need not be excessively damaging to the American economy, which obviously imports many manufactures from other, smaller developed nations.

America will have to get used to not being the biggest kid on the block, I'm afraid.

Minimum wage debate

Dean Baker writes (emph. mine):

The impact of a rise in the minimum wage on employment is one of the most heavily researched topics in economics. Virtually all of this research shows that it will have little or no impact on employment. It would have been useful if the news reports had mentioned this research instead of treating this topic as a he said/she said, implying that those who claim that it will lead to large rises in unemployment are on an equal footing with those who emphasize the benefits to low wage earners. Reporters should have the time and expertise to find the evidence on this issue, readers do not.

This was surprising to me, because I've read plenty of things to suggest the minimum wage raises unemployment. Unfortunately Baker doesn't provide links to his evidence. I went looking for an introduction, and Wikipedia's overview of the debate is helpful. The bottom line there seems to be: "Today's consensus, if one exists, is that increasing the minimum wage has, at worst, minor negative effects". This has a citation from an Economist article, which is now premium content, but I found a copy via google:

The minimum wage
A blunt instrument
Oct 26th 2006 | WASHINGTON, DC
From The Economist print edition

A higher minimum wage may not kill many jobs, but won't help many poor people

IF THE mid-term elections have one central economic issue, it is higher minimum wages. Nancy Pelosi, the leading Democrat in the House of Representatives, has vowed that if her party wins control of that chamber on November 7th, she will introduce legislation to raise the federal minimum wage from $5.15 to $7.25 an hour within her first 100 hours as speaker. In six states, including the swing states of Ohio and Missouri, voters will also decide on whether to raise their state minimum wage. Democrats hope the presence of such initiatives on the ballot will lure their supporters to the polls. Politically, the strategy makes sense. Americans are hugely in favour of raising minimum wages. In one recent poll 85% of respondents said they supported the idea. Over half said they would be more likely to vote for a candidate if they found out that he supported introducing a rise.

Advocates claim more than politics on their side. They argue that a higher minimum wage also makes economic sense. The Economic Policy Institute (EPI), a left-wing think-tank, recently published a letter signed by over 650 economists, including five Nobel prizewinners, which
advocated a rise. Since the federal minimum wage was last raised in 1997 its real value has eroded dramatically. It is now less than in 1951 (see chart). Not only would a modest rise have “very little or no effect” on employment, the letter said, it would be an important tool in fighting poverty.

Strong stuff. But, laureates notwithstanding, it does not reflect a consensus among the dismal scientists. Overall, economists have become less worried about the job-destroying effects of a modest hike in the minimum wage. But most still reckon that it is at best a blunt
instrument for fighting poverty.

The academic argument—and there has been plenty of it in recent years —has focused on the employment effects. Elementary economics would suggest that if you raise the cost of employing the lowest-skilled workers by increasing the minimum wage, employers will demand fewer of them. This used to be the consensus view. But a series of studies in the 1990s—including a famous analysis of fast-food restaurants in New Jersey and Pennsylvania by David Card at Berkeley and Alan Krueger of Princeton University—challenged that consensus, finding evidence that employment in fast-food restaurants actually rose after a minimum-wage hike. Other studies though, particularly those by David Neumark of the University of California at Irvine and William Wascher at the Federal Reserve, consistently found the opposite. Today's consensus, insofar as there is one, seems to be that raising minimum wages has minor negative effects at worst. Lawrence Katz, an economist at Harvard University and signatory of the EPI's letter, agrees that “most reasonably well-done estimates show small negative effects on employment among teenagers”.

So the academic debate has shifted elsewhere, although the division between sceptics and advocates remains much the same. Mr Neumark, perhaps the leading sceptic about the minimum wage, has published several papers arguing that employers spend less on training their workers as their labour costs rise; that more students drop out of school, lured by fatter pay-packets; and that workers in their late twenties earn less if they were exposed to high minimum wages as teenagers. Other studies, however, do not find this.

Where most economists agree is that the higher minimum wage does not do much to relieve poverty. That is partly because many poor people would not gain (since they do not work); partly because some of the costs of higher minimum wages are shifted onto poor consumers; but mainly because many minimum-wage workers are not poor. Only 5% of the workforce—some 6.6m people—will gain directly from a rise in the minimum wage, and 30% of those are teenagers, many from families that are not poor. Supporters of an increase, though, argue that once you include the “spillover” effects on workers who earn just above the minimum wage (but whose wages would rise as a result), the income gains from a hike are concentrated among poor families.

Not surprisingly, studies that try directly to measure the distributional consequences reach divergent conclusions. Several studies of the 1990s find that higher minimum wages helped reduce poverty, albeit modestly. Mr Neumark, unsurprisingly perhaps, finds the opposite result. He claims that increased minimum wages actually increased slightly the number of families in poverty (presumably because these workers disproportionately lost their jobs while well-off teenagers got higher wages).

Either way a better tool exists for helping the working poor: the earned-income tax credit (EITC). This tax subsidy, a “negative income tax” that tops up the earnings of the low-paid, was introduced in the 1970s and has been expanded four times since. Its benefits are currently focused on families with children. Single men get little from the EITC. Some left-leaning economists argue that it is important both to raise the minimum wage and expand the EITC. But a big EITC expansion is politically hard (unlike raising the minimum wage, it involves spending taxpayers' money). So others support a higher minimum wage as a second-best solution. If it were up to the economists though, fatter tax subsidies would be top of the list for helping the working poor.

Good information, but do note that the analysis is from 2006. Perhaps back then a higher minimum wage would not have killed many jobs, but surely it will kill relatively more now that conditions are bad, just as raising taxes and reducing spending during a recession is harmful.

Rebalancing the economy

Videographic:



The 1980 shift to consumerism is stark, and lefties with a sense of irony should point to the faster growth from Reagan's 1980 reforms that made the country richer as having the "unintended consequence" of imbalancing consumption and savings, as people forgot that the real key to lasting wealth is savings.

So basically, we've had it too easy with all the easy credit. The economy is adjusting—people are saving more, and there is agreement that this will be good in the long term—but this means a painful transition of low demand for the short-term.

Supply and demand is not—repeat NOT—optional

Caracas, July 22 - Venezuela, a traditional coffee exporter that boasts one of the best cups of java in South America, may have to import coffee for the first time ever this year or face shortages, industry experts said. Producers say rising costs and prices fixed by the government have caused production to fall and illegal exports to rise. The government says poor climate and speculation by growers and roasters is to blame.

Venezuela is known to produce some of the best quality Arabica coffee anywhere and, unlike many countries in the region, traditionally consumed most of it itself. But more recently large quantities of coffee have been smuggled across the border to Colombia, where prices have been more than double the fixed 470 Bolivares ($218) per bag that producers are paid in Venezuela.

Perry remarks:

This story provides yet another example of how central planning and price controls always fail. The laws of supply and demand are not optional. Artifically fix a price below (above) the market-clearing price and you create a guaranteed shortage (surplus). Period.

Meanwhile, in the US, Michigan has the highest unemployment rate -- 15.2%. State leaders are looking for a solution. Here's what they've come up with:

A $10 minimum wage in Michigan is the centerpiece of a number of populist proposals unveiled Wednesday by the Democratic Party, which hopes to get some of the initiatives on next year's ballot...

Increasing the state's minimum wage from $7.40 an hour to $10 an hour would give Michigan the highest standard in the nation. Washington state has the highest rate at $8.55 an hour.

The initiative also would remove exceptions that allow employers to pay less than the minimum wage to some workers, such as restaurant wait staff.

Labor unions and Democrats were pushing a ballot plan to raise the minimum wage in 2006, but the Legislature approved an increase before it could go to voters. That measure gradually raised the minimum wage from $5.15 an hour to $7.40 an hour, which went into effect July 1, 2008.

Union officials see the minimum wage as a quality of life issue for hourly workers, but business groups say many employers, especially small businesses, can't afford another increase.

So the state is bleeding jobs, and Democrats' solution is to price-fix wages even higher so that hiring low-skill workers becomes even more expensive, resulting in a greater labor surplus—more unemployment. Unfuckingbelievable!

Any economist worth a dime will explain how the minimum wage reduces employment. But the Democratic Party and labor unions, they think they know better. Cough. Gag. Spittle.



(via Free Exchange)

Trouble

Another boring press conference?

Politico: "Obama works to avoid being exciting"

Andrew: "I'm beginning to regret watching this terribly dull and unnecessary pseudo-event."

A New York Economist blogger:

I'm starting to wonder after last night's presser, what the purpose of these things are. Barack Obama's first few prime-time appearances before the press were refreshing in their novelty; George Bush seemed allergic to reporters' unscripted, live questions. But do they really accomplish anything? Even when a reporter peacocks with a "tough" question (that he's obviously very pleased with himself for asking), the president can filibuster without saying much. Mr Obama did just that many times last night. Unlike his predecessor, he did allow a few follow-ups, but he still didn't say much that surprised anyone who has been alive since November. I'm starting to feel suckered into watching an hour-long campaign advertisement.

Apparently the hidden hypnosis is wearing thin.

But seriously, better too many press conferences that we can skip watching rather than not nearly enough, as Bush gave us.

Library Grape embeds the video and other reax. Transcript here.

I appreciated the part on Arlen Specter and Republicans:

QUESTION: Thank you, Mr. President. On Senator Specter's switch to the Democratic Party, you said you were thrilled.

I guess nobody should be surprised about that. But how big a deal is this really?

Some Republicans say it is huge. They believe it's a game changer. They say that if you get the 60 votes in the Senate, that you will be able to ride roughshod over any opposition, and that we're on the verge of, as one Republican put it, one-party rule.

Do you see it that way? And also, what do you think his switch says about the state of the Republican Party?

PRESIDENT OBAMA: Well, first of all, I think very highly of Arlen Specter. I think he's got a record of legislative accomplishment that is as good as any member of the Senate.

And I think he's always had a strong independent streak. I think that was true when he was a Republican; I think that will be true when he's a Democrat. He was a very blunt in saying I couldn't count on him to march lockstep on every single issue. And so he's going to still have strong opinions, as many Democrats in the Senate do. I've been there. It turns out all the senators have very strong opinions. And I don't think that's going to change.

I do think that having Arlen Specter in the Democratic Caucus will liberate him to cooperate on critical issues, like health care, like infrastructure and job creation, areas where his inclinations were to work with us but he was feeling pressure not to.

And I think the vote on the recovery act was a classic example. Ultimately, he thought that was the right thing to do. And he was fiercely berated within his own party at the time for having taken what I consider to be a very sensible step.

So -- so I think it's a -- overall a positive.

Now, I am under no illusions that suddenly I'm going to have a rubber-stamp Senate. I've got Democrats who don't agree with me on everything. And that's how it should be. Congress is a coequal branch of government. Every senator who's there, whether I agree with them or disagree with them, I think truly believes that they are doing their absolute best to represent their constituencies.

And we've got regional differences, and we've got some parts of the country that are affected differently by certain policies.

And those have to be respected, and there's going to have to be compromise and give-and-take on all of these issues.

I do think that, to my Republican friends, I -- I want them to realize that me reaching out to them has been genuine. I can't sort of define bipartisanship as simply being willing to accept certain theories of theirs that we tried for eight years and didn't work, and the American people voted to change. But there are a whole host of areas where we can work together.

And -- and I've said this to people like Mitch McConnell. I said, "Look, on health care reform, you may not agree with me that I've -- we should have a public plan. That may be philosophically just too much for you to swallow. On the other hand, there are some areas like reducing the cost of medical malpractice insurance where you do agree with me. If I'm taking some of your ideas and giving you credit for good ideas, the fact that you didn't get 100 percent can't be a reason every single time to oppose my position." And if that is how bipartisanship is defined -- a -- a -- a situation in which, basically, wherever there are philosophical differences, I have to simply go along with ideas that have been rejected by the American people in an historic election, you know, we're probably not going to make progress.

If, on the other hand, the definition is that we're open to each other's ideas, there are going to be some differences, the majority will probably be determinative when it comes to resolving just hard- core differences that we can't resolve but there is a whole host of other areas where we can work together, then I think we can make progress.

QUESTION: Is the Republican Party in the desperate straits that Arlen Specter seems to think it is?

MR. OBAMA: You know, politics in America changes very quick. And I'm a big believer that things are never as good as they seem, and never as bad as they seem. You're talking to a guy who was 30 points down in the polls during a primary in Iowa so -- so I never -- I don't believe in crystal balls.

I do think that our administration has taken some steps that have restored confidence in the American people that we're moving in the right direction, and that simply opposing our approach on every front is probably not a good political strategy.

100 days in seven haikus

Via Democracy in America, from the editor of More Intelligent Life:

In 100 days
A super-majority.
What next? A hushed Rush?

Seventy percent
Of Americans dig him
The dog didn't hurt.

As long as his foes
Hold lame "tea-party" protests
The force is with him.

A plump government
Is grand if it means cheap meds,
Not water-boarding.

Such ambition! Well,
Roosevelt would be impressed
If not Kim Jong Il.

It is a fine thing
To have a smart president
Whose sentences work.

A fine amuse bouche
For what promises to be
A grand, filling meal.

Seems I need to continue working on my effete librulness, for I didn't know about amuse bouches.

Let's just say my idea of a pre-meal snack is more pedestrian. Why not order a few packs? It's $0.37 a stick, half the price of brick and mortar stores.

Pandemic flu planning is not stimulus

Democrats are jumping on the revelation that Sen. Susan Collins (R-MN) objected to funds for pandemic flu planning in the stimulus bill.

I'm with The Economist's New York blogger:

Stimulus bills are meant to quickly stimulate demand in the economy and create jobs. They are not meant to account for all unforeseen contingencies. Congress could've included all sorts of funding in the stimulus—volcano monitoring, tornado tracking, alien surveillance—if the only reason needed was "just in case". Perhaps it's not the best time to brag about it, but Ms Collins was right to oppose the inclusion of this funding in the stimulus measure. Put those items in the annual budget, where they belong.

Update: A more valid criticism of the GOP is that they've delayed the confirmation of a HHS secretary.

Holding the Democrats accountable

The Economist's New York blogger has it exactly right (emphasis mine):

AT PRESENT there is a general consensus that government spending needs to rise in order to make up for the shortfall in demand from American consumers. A great deal of federal money also needs to be put toward rescuing the financial system. Thus, even this magazine has endorsed much of Barack Obama's expansive economic agenda. But at some point in the future the economy will stabilise, private spending will once again be counted on to spur growth, and a more restrained government should return. At that point, will the Democrats in power (assuming they're still in power) be able to turn off the tap?

Jon Henke of The Next Right suggests how we might measure the Democrats' seriousness about long-term fiscal responsibility and deficit reduction.

Watch how Obama funds programs that are not successful, or that do not have clear metrics for success/failure. Recall a point that Obama made in his inaugural address.

The question we ask today is not whether our government is too big or too small, but whether it works ... Where the answer is yes, we intend to move forward. Where the answer is no, programs will end.

Here's my prediction: programs that Democratic groups are inclined to like will almost never end. They will be given additional funding. For those programs, the answer will almost never be "no".

Therein lies the fear of every centrist now supporting Mr Obama. The Republicans, of course, were no better in managing the budget. But should the president fail to make a dent in the deficit by 2012, the opposition will have an issue to run on. Sensing this, Mr Henke puts his party on notice:

We can't dig our way out of this fiscal hole by "cutting waste". We certainly can't afford any significant tax cuts at this point. Proposals that are not politically viable are not "serious"; they are grandstanding for the base.

Hating Obama

From the new Economist: Hating Obama: a trap for the right:

The president is driving some people mad. That may be to his advantage in the short term.

[..] there are millions of Americans who do not like the cut of his jib—and a few whose dislike boils over into white-hot hatred. The American Spectator, which came of age demonising the Clintons, has run an article on its website on Mr Obama entitled “Il Duce, Redux?” The internet crackles with comparisons between Mr Obama and various dictators (Hitler, Stalin and Mussolini) or assorted psychotics (Charles Manson and David Koresh). When Jonah Goldberg, a conservative pundit, praised Mr Obama over the dispatching of the Somali pirates, his e-mail inbox immediately overflowed, he said, with “snark and bile”.

[..] Rush Limbaugh claims that he has seen an uptick in his audience since he announced that he hopes that Mr Obama fails. He has no time for the idea that all Americans should wish their president well (“We are being told that we have to hope Obama succeeds, that we have to bend over, grab the ankles…because his father was black”). Mr Limbaugh is not the ankle-grabbing type. He has also added Robert Mugabe to the list of people to whom Mr Obama can be likened.

[..] Bush-hatred eventually spread from a molten core of leftists to set the cultural tone of the country. But Obama-hatred could just as easily do the opposite and brand all conservatives as a bunch of Obama-hating cranks.”

I see it happening.