Sunday, May 30, 2010

Great Sentences

I loved this sentence from Politico (the quotes are from President Bill Clinton stumping for Blache Lincoln):
“'If you want to be used that way, have at it,’ he said to about 200 Democrats at Philander Smith College, speaking without notes for 20 minutes."

Saturday, May 29, 2010

BP Sucks

Just a public service announcement. Go anywhere else but BP. Boycott BP.

Wednesday, May 26, 2010

How To Lose an Election: Vincent Gray Edition

Lesson 1: Do not oppose a popular program that your opponent supports, highlight said opposition, then only to knuckle under once you discover that it is popular within the same day.

Example: Vincent Gray earlier tried to strip funding from the streetcars in the d.c. budget and tried to use it as an issue to bash Mayor Adrian Fenty over the head with. Now this is stupid for many reasons. The streetcars are a good idea. They will enahnce connectivity in the core and are already spurring development. Wait, you ask, "how can nonexistent streetcars spur development?" Well, the streetcars are not running, however, a lot of construction has already occurred. The streets where the first phase of the streecar implementation is supposed to occur have already been dug up to set up the utilities, tracks have been laid for the majority of the routes, and actual streetcars have been purchased and delivered. This sends a signal to investors and potential homeowners. Potential homeowners might be willing to forgo amenities presently for rising property values later. Restaurants are willing to open up now to take advantage of cheap rents. Businesses relocate in anticipation of new foot traffic. So a large part of the work has been done and good amount of the money spent and to some degree the benefit has already started accruing. Unless you think that it is a foolish project it would make no sense to terminate it at this point. Anyhow, apparently Vincent Gray came to this same conclusion after half the city called his office in an uproar (in his defense, the majority of the council voted with him to strip out the funding, it was 11-2 vote- but they were not running for mayor).

Monday, May 24, 2010

"The Battle"

I agree with Bryan Caplan's take on Arthur Brooks new book; I wish I agreed with the premise but I think it is absurd. Brooks is arguing that 2/3rds of Americans are solid free enterprise folks but the other Social Democratic 1/3rd has managed to capture all influence and power and steer the country towards sclerosis (read: Obamacare). I don't think the median voter has all that coherent a political ideology. I think at the federal level politics seems to large, distant and abstract to really have any influence. That Americans are at heart more libertarian is probably true in relationship to the average European but Americans like a lot of interventionism too.

Tuesday, May 18, 2010

Massachusets: Our Health Care Future

It is rare in the policy realm where we can refer to a natural experiment. Massachussets is one such example and what this portends for the nation's future fiscal health is bleak. I think this quote from Megan McArdle sums up the issues with both the Massuchussets universal plan and Obamacare: "It's hard to simultaneously expand demand, while lowering the incentives for supply (i.e. Medicare reimbursements), without having some pretty dramatic mismatches between the two."

Monday, May 17, 2010

Two Sides of the Same Coin: Excessive Spending/Insufficient Revenue

The Center of American Progress has an interesting little bulletin documenting that Greece was not extraordinary in its spending but rather in its lack of revenues which were far below the average for Eurozone members. The bulletin then goes on to state that this notion of excessive spending being the cause of the Greece's demise is a myth. Their argument relies on two basic observations- Greece was close the median amongst Eurozone memers in terms of spending in relationship to GDP and Greece was at the bottom amongst Eurozone members in terms of revenues. I actually get their argument. They are making a technical argument that if Greece had a more efficient tax system they would have collected a similar ratio of revenues to GDP then in theory their fiscal deficit would be nowhere near what it is now.

In reality this argument is stupid. It would be like me saying: "The problem is not that my lifestyle outpaces my means, but rather I am not paid enough". Both statements in that sentence are saying the same thing but from different directions. Greece didn't have an efficient tax system like the median member of the Eurozone, which would lead to the obvious conclusion that it could not afford the median member of the Eurozone's spending habits. That it did spend thusly indicates that in fact, Greece's spending was excessive. There is no such thing as a spending problem that isn't a revenue problem or vice versa. In the end it is question of making tradeoffs which nobody can postpone indefinitely. That is the lesson I hope, but doubt, our lawmakers will take from Greece.

Thursday, May 13, 2010

Public Sector Wages

Though it pains me to say this as a civil servant I think it is absurd that public sector wages have not been reduced or at the least frozen. If private sector wages, which when taxed are fund to public sector wages, stagnate or fall it would seem to me that public sector wages should similarly be reduced or cut. While I recognize stimulus was necessary (though I thought it was wet pile of dog shit), as the economy rebounds we will need to start acting aggressively on budget deficits. Cutting salaries is obviously a small step but it should be among the tools available.

Monday, May 10, 2010

The Next Global Depression

This from Tyler Cowen: "6. Basically the ECB is monetizing bad government debt claims." I think the net result of all this will be that Northern European governments and banks will be able to paper over Southern European's debts for a time but the cumulative result is that moral hazard has become more pronounced and global in nature. Increasingly it seems that the counter measures to this recession will be the proximate cause for a global depression.

Thursday, May 06, 2010

Great Column from Ken Rogoff

Ken Rogoff has been beating the drum for a while that the financial crisis is a precursor to a Sovereign Debt crisis and he appears to be right. Here is a very informative column in the FT.

Wednesday, May 05, 2010

Ezra Klein Has a Stupid Post on Frannie

This post from Ezra Klein seems particularly daft. Ezra Klein is going to great pains to distinguish Frannie from the rest of the financial world due to the fact that Frannie deals with housing and how thus Frannie should be dealt with in a separate housing bill not the FinReg. However, the impetus for the FinReg bill is in large part to prevent another "Great Recession". A proximate cause for the current recession was a bubble induced by the financing of housing of which Frannie where major players (though contributors, contrary to absurd claims on the right, not the cause of the current mess). The only valid point Klein makes is that Republicans are proposing a stupid policy which this day and age is the same as saying the sky is blue.