Category Archives: Economics

So, how many bags do I GET for that?

As I mentioned the other day (as if you didn’t already know it), inflation and other money-related matters don’t interest me much, but occasionally some small detail grabs my attention for maybe half a minute.

That was the case when I went to buy some Fritos to enjoy with chili — I’m not a big chip-eater, but I consider the Bandito‘s product to be essential to the full enjoyment of chili — and was struck by the sign here that boasted the apparently startlingly-low price of $4.49.

So of course, I immediately wondered, “How many of these little bags do I get for that amount?”

I figured it would have been at least two, and I definitely wouldn’t have felt like I was getting a bargain at the price.

And when I’m really honest about the value of things, and assess what I think it really ought to cost, I set the number at five bags. I’m applying the AMIAVI (that’s the Absolute, Moderately Inflation-Adjusted Value of an Item). No, don’t Google that. That’s my own, made-up standard which, since it’s based in personal experience, makes way more sense to me than such more generally employed acronyms such as CPI or EBITDA.

Only I can apply this standard, because no one else has the sufficiently detailed knowledge of my life experiences. (If I figure out a way to monetize this special skill, I’ll let you know.) In this case, I remember that in the vending machine in the main hall of Garrison-Williams School (nowadays shortened to “Williams School“) in Norfolk, Va., the private school where I attended 1st grade because my birthday was inconveniently timed for the public schools, you could get a small, kids-lunch-sized bag of Fritos for a nickel. Yes, 5 cents. I can’t prove that, but that’s the way I remember it, and that’s what is relevant to the AMIAVI.

Note that I’m allowing generously for inflation here, expecting only five bags for the lordly sum of $4.45. That’s because I’m applying the easygoing AMIAVI. If I were applying my stricter, but seldom-used, ANIAVI (Absolute, NonInflation-Adjusted Value of an Item), five bags would be worth a quarter. That means I could get at least 17, and maybe 18 bags. But that would be the little, kiddy bags, and several (but not many) of those would fit in one of the bags pictured above, so let’s go with the AMIAVI, which involves less math and more gut feeling.

Anyway, enough with the complicated monetary terms. What do you think one of the bags in the picture is really worth? Apply any standard you like, but it would be cool if you’d also explain it…

What would we do if we had REAL inflation?

Yeah, I know we have real inflation now. Of course, unless the economy has come to a halt and is in danger of sliding into deflation, like during the Depression, we always have inflation. It’s just it’s somewhat higher right now. Now, it’s more like what we lived with in the early ’80s. It feels familiar, unless you’re very young.

Oh, and before you think I’m shrugging it off, not only the young are feeling the pinch. My wife, who is the one in the family who has to make our modest income stretch to feed and house us (this is not a task you would want to assign to me), reminds me of it frequently. She did so multiple times when we were shopping together yesterday, and that was at Walmart. She normally shops at Aldi.

But what I mean is, what if we really had the kind of inflation — commonly called “hyperinflation” — that really shows your country is messed up and falling apart? You know, the kind that means your whole system, or your leadership, needs to be replaced? I mean, the kind that you’d think we were having now, if you listened to Republican politicians. And for that matter, some Democrats.

Including some Democrats I really like, such as Abigail Spanberger, who’s in a tough race for reelection to her congressional seat up in Virginia. There was an update on that race on the front page of The Boston Globe today (see above), and it said in part:

Spanberger and her Republican opponent, Yesli Vega agreed that inflation is the most pressing issue for voters.

“We’re facing a time when people have to decide whether they’re going to pump gas or buy groceries,” said Vega, a member of the Prince William Board of County Supervisors and a former law enforcement officer who still serves as an auxiliary sheriff’s deputy. “I do believe that we’re in the condition we are right now because of President Biden’s failed policies and representatives like Abigail Spanberger enabling him every step of the way.”…

“I have certainly found that people want to talk about gas prices, they want to talk about grocery prices, they want to talk about the challenges they’re facing,” Spanberger said after a recent Fredericksburg event highlighting the bipartisan infrastructure law enacted last year that she supported.

“I’m acknowledging the problem and trying to fix it,” she said. “Your other option is somebody who’s just trying to cast blame for the problem.”…

Anyway, I look at this situation in which polls keep showing that voters care more about inflation than anything — as this story states, “ahead of abortion rights, an increase in violent crime during the pandemic, a war in Europe, and attacks on voting rights.” And, presumably, global climate change.

The worst problem in the world? Presumably, you don’t think that if you live, say, in Ukraine. But America is apparently full of people who, at this moment at least, think 8.5 percent inflation is our biggest problem.

They might have had a point, if they were living in the Weimar Republic 100 years ago.

I met a guy named John Toland in 1976. I gave him a ride from the airport to the book festival that had brought him to Memphis. I wasn’t really there to talk to him. I wanted to talk to Mary Hemingway about her new book, being a huge fan of her late husband. The publicists set me up to have lunch with her, but asked me to pick up Toland, who had just come out with a weighty tome about Hitler. I hadn’t read his book, wasn’t planning to read his book, but I gave him a ride, and enjoyed chatting with him.

Years later, I finally read the book, and it left an impression. (I recommend it.) Burned into my memory in particular is an anecdote it related about the night of the Beer Hall Putsch. Hitler and a couple of his boys were hanging out in the beer hall, waiting for the time to make their move. They decided they would blend a bit better if they all were holding beers. So one of his boys went and bought three brews.

They cost three billion marks.

Not having the book at hand — I’m not sure where it is now — I looked up “Hyperinflation in the Weimar Republic” in Wikipedia. It stated in part:

A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.^[14]

By November 1923, one US dollar was worth 4,210,500,000,000 German marks.^[16]

The line about the cost of bread reminded me of another anecdote I read somewhere years ago. I can’t remember whether it was in Toland’s book or somewhere else. Anyway, a woman was on the way to buy a loaf of bread. She had a laundry basket overflowing with paper money to pay for it. Some emergency came up, and she had to put down the basket and go deal with it.

When she came back, someone had dumped out the money and stolen her basket.

Now that’s inflation.

But you don’t have to go back to Weimar to find examples of serious, profound inflation problems. As I’ve often mentioned, I lived in Ecuador when I was a kid. I lived there longer than I lived anywhere growing up — two years, four-and-a-half months. I’ve never been back there since leaving in 1965. But I became aware of the fact that at some point, the currency that we used there in my day — the Sucre — had been ditched, and the U.S. dollar adopted in its place.

One day, I decided to look that up — also on Wikipedia. In my day in Guayaquil, a Sucre was worth a nickel — it took 20 to make a dollar. I didn’t realize it had been declining in value for years. In 1946, it had taken only 13 to make a dollar. After I left, things sped up. In 1970, the dollar was worth 25 Sucres. In 1983, it took 42. In 1990, it was 800 Sucres, and it plunged to 3,000 in 1995.

Just before the switch to the dollar standard in 2000, you needed 25,000 Sucres to buy what the dollar would buy.

That, too, is real inflation, even if not quite on the billion-for-a-cerveza level. I can see how someone living under those conditions might see it as the biggest problem of the moment.

But 8.5 percent? You’d think a country that saw that as its biggest problem didn’t have any real problems.

And yet, we do — and inflation is one of those problems, although not the worst. For the first time in my life, the first time in our 246 year history, our republic is in profound danger. It could really, truly be falling apart. Look at the number of people who are outraged — our senior senator suggests we’re on the verge of riots in the street (again) — that the government thought it out to go take back those classified documents you-know-who stole and hid in his place down in Florida.

Also, many of the same people, and others, think — and I’m using the word “think” very loosely here — that we ought to turn fine people like Rep. Spanberger out of office over something that is in no rational way her fault — inflation. Note the comments in that Globe story from guy who voted for Biden in 2020, but says maybe he’d vote for Trump next time, “because in Donald Trump’s time, we didn’t have these issues.” (How’s that for steel-trap, cause-and-effect logic? As we all know, the condition of the U.S. economy depends entirely on who happens to be in the White House, right?)

These are serious problems, and considerably more disturbing than this other actual, but more transitory, problem, inflation.

Remember, Germany came up with a “solution” to their Weimar problems.

That solution was Hitler…

Adolf and his posse sitting in prison after the Putsch, all hoping someone else offers to buy the next round of beers.

How are y’all doing with the supply chain these days?

Kind of moody and overly dramatic, don’t you think? But it was the only horizontal image I could find that I figured I’d be allowed to use.

This is an update to my July post on the supply chain problem. Then, I was celebrating the fact that my shoes I had waited for for months had finally come.

Now, this issue is fresh in my mind because I’m waiting for my new iPhone. It’s supposed to arrive today.

My “old” phone is an iPhone 8 that I got on my birthday in 2018, during the campaign. In fact, I think James and Mandy were the first people I spoke to on it, sitting in the parking lot in front of the Verizon store. I remember thinking there was something wrong with it because I wasn’t hearing as clearly as usual. That’s because I didn’t have the center of the phone over my ear, because I was used to the narrower iPhone 5. It was fine.

But not any more. Among other problems, the camera has been acting up. Sometimes, when I touch the virtual shutter release button, the camera app shuts down, and no image is recorded. Which is bad. We grandfathers have to have a fully functioning camera at all times. And I also frequently use the camera for work.

But HARK — the UPS man was just here, and the phone has arrived!

So I’ll get back to you later, beyond making my point: Which is that when I went to Verizon on Oct. 12, they told me I’d have to wait until possibly Oct. 29.

Oh, sure, if I’d wanted to spend almost two Gs on an iPhone 13 — for which they had displays all over the store — I’d have probably been OK. But since I’m a sensible guy who thinks the most insane thing Apple has ever done was get rid of the home button, I was getting an SE 2020. So I had to wait.

But apparently the chain wasn’t quite as stressed as they thought, since it just arrived.

So y’all go away and let me play with my new toy. In the meantime, how’s the supply chain acting for y’all now, beyond driving up prices and such?…

My shoes came! How are Y’ALL doing with the supply chain?

My new shoes. I need to break them in, but they’re feeling pretty good…

My new shoes finally came! I’m wearing them right now. They feel pretty good so far, although it will take a while before they’re as comfortable as my old ones.

The old ones are a somewhat tattered pair of Salomon “Fellraisers,” which I got shortly before going to Thailand in 2015. I think of them as my “Thailand jungle shoes,” because when I got them, I was thinking about that day we planned to spend hiking through Khao Yai National Park. (Which was awesome.) Salomon calls them “trail-running shoes,” with knobby things on the bottoms meant to provide traction on natural, unpaved surfaces. I’m not planning on hiking through any tropical seasonal forests in the near future, but when these started wearing out on me, I wanted some more, for one simple reason:

They fit my feet better than any pair of shoes I’ve ever worn in my life. Far and away. It’s like they were painted onto my weird, narrow feet, for which I’ve always had trouble finding shoes that even come remotely close to fitting.

One problem: Salomon quit making the Fellraiser. (You may not know this, but the entire global economy seems to be built largely upon one little-known principle: Produce a product that Brad Warthen really, really likes. Wait until he realizes that, and truly appreciates the product. Then stop making it. I plan to write a post about this later.)

So I kinda freaked. But then I settled down, and started writing to Salomon to ask, as politely as I could, “What do you still make that is as much like the Fellraiser as possible?” They were helpful, and eventually I settled upon the Speedcross 5 Gore-Tex. I went for the color they somewhat ludicrously overdescribed as “Martini Olive / Peat / Arrowwood” (stuff like that always reminds me of Elaine Benes writing ad copy for J. Peterman, which makes me smile). They seemed the closest to my old ones, which in my unimaginative way I call “green.”

This was back in April. But I just got the shoes. Why? Because of the way the global supply chain got backed up by COVID. They told me in April to get back to them the second week of July. So I did, and it worked out, and that’s great.

But I was wondering what sorts of supply-chain problems the rest of you have been running into. Because this goes way beyond shoes.

COVID did (and is still doing) a lot of a lot of stuff to the economy, and one was that it knocked its rhythm off.

New York magazine recently laid it out this way:

At the beginning of the pandemic, it felt like everything essential was in short supply. Toilet paper, hand sanitizer, dumbbells, flour, and even baby wipes were nearly impossible to find as we all hunkered down for what we had no idea would be more than a year of quarantine. But now, as pandemic restrictions ease in the U.S., so too does our once-overwhelming inclination to hoard. If our lives are (slowly) returning, shouldn’t the availability of the things we want to buy get back to normal too?

As it turns out, no. Soaring demand from our lockdown lives and fewer workers have left suppliers strapped for major materials like lumber and aluminum — not to mention the semiconductors that power everything from our cars to our laptops. Those shortages trickle down into less-major things, too, which means that, Girl Scout cookies aside, lots of products are hard to come by. If you’re among the millions of Americans who bought a pandemic house, you may be struggling to get materials to build a new deck or repair a fence. Or maybe you’re just trying to get your hands on a can of your dog’s favorite wet food, a set of patio furniture for under $1,000, or a Playstation 5. Maybe you’ve finally decided to buy a used Subaru, if you could just locate a dealership that has one, or you went to re-up on your go-to organic cotton underwear, only to find the price has risen $2 per pair. Whatever your need, if you want something right now, you may well have to either pay a lot more to get it or find a suitable alternative.

On a more personal level, I go to the store now, and usually can find what I need — but I can’t help noticing how thinly populated the shelves seem. I keep hearing from family members about their troubles finding basic things that would not normally be hard at all to find, seeing as how we’re not actually living in the Soviet Union of circa 1980.

Anyway, as I said, I wonder what y’all are seeing…

My old shoes, when they were new. This is the morning we were about to set out in Khao Yai. The canvas things were issued to us to protect against leeches.

Hunter-gatherer version of ‘You didn’t build that’

Are we really sure this farming innovation was a good idea?

I ran across this quote in a WSJ review of a book about work and leisure among hunter-gatherers. A researcher in the 1960s studied a group of the few such people left, and got this quote from a member of the tribe:

“When a young man kills much meat, he comes to think of himself as a chief or a big man, and he thinks of the rest of us as his servants or inferiors. We can’t accept this. So we always speak of his meat as worthless. This way we cool his heart and make him gentle.”

So, a culture like that one could never accomplish anything, could it? Depends on how you define that, I guess. The subhed of the review is, “If the inventions of the technological age save us labor, why do we work more than our ancestors?”

Why, indeed. Here’s what that researcher learned among this group:

He found that they managed remarkably well. Their diet was varied and nutritious. Life expectancy at birth among the Ju/’hoansi was 36; if a person was still alive at 15, he or she could expect to survive beyond 60. This was probably as good as it got in Europe until the 18th century. And the Ju/’hoansi enjoyed a lot of leisure. Economically active adults put in about 17 hours a week gathering wild plants and hunting, plus about 20 hours on cooking, child care and making and maintaining shelters and tools. This was less than half the time that the average American adult spent each week commuting, doing their jobs and managing their households…”

Fascinating.

In Opinion pages of that same edition of the Journal, we find this headline, which is more stereotypical of what we expect from the WSJ: “Capitalism Is What Will Defeat Covid.”

I haven’t read that piece yet, but I suspect that hed was written by some young person who has killed too much meat.

I could also add that we didn’t have pandemics when we were hunter-gatherers. Such infectious diseases didn’t catch on until we started domesticating animals, working in cities, and overcrowding Lowe’s on Saturdays.

I will add this to my growing stash of evidence I’ve been collecting that suggests that this turning-to-agriculture lark that engulfed us 10,000 years ago wasn’t as great as it’s cracked up to be…

Wait! Isn’t that one of my campaign tweets?

One of the many occasions on which we spoke out about this very thing…

Just saw this, which gave me flashbacks:

Wow, it’s like one of our tweets from the campaign just came roaring out of a time warp… @JamesSmithSC @MPowersNorrell https://t.co/NwoAhTntmE

— Brad Warthen (@BradWarthen) December 4, 2018

Man, how many times in the last few months did I say or type — in Tweets, on Facebook, in press releases, in statements to reporters — some variation of “Some of the best jobs in South Carolina are threatened by the tariffs that Henry McMaster refuses to take a stand against?”

More times than I care to remember…

Not gonna say we told you so… not gonna say we told you so…

More about those job-killing tariffs Henry won’t stand up against — but y’all don’t care about that, do you?

As Levon Helm said as Jack Ridley, All right, y’all — here we go again.

The P&C brings us twin stories today about the continuing ill effects of Trump’s tariffs — up to which McMaster will not stand (I’m nothing if not grammatical). Of course, they’re doing what anyone with any understanding of the way the world works would expect: threatening some of the best jobs in the state:

I’m not going to repeat myself. I’m just going to refer you to this release, and this one and this one and this one, and then stop there, because you’re probably not even following the links to those.

But yeah, we told you so.

And what did reporters keep asking me about? The next ad buy, or when some yahoo who plans to run for president in 2020 might be coming to South Carolina…

All right, y’all — here we go again…

Yes, this COULD be the winning formula for Democrats

Can the New Deal Coalition rise again?

David Leonhardt had a good piece in the NYT last night. He promoted it this way:

There’s a roiling debate about whether Democrats should move to the political center to win back Trump voters or focus on energizing the party’s progressive base. On some issues — like abortion, guns and immigration — Democrats really do face this difficult choice. The policies that excite progressives alienate many of the white working-class voters who swung the 2016 election to Donald Trump, and vice versa.

But there is also one huge area where no such tradeoff exists: economic policy….

In the column itself, he asserted that economic stagnation and inequality added up to “the defining problem of our age, the one that aggravates every other problem. It has made people anxious and angry. It has served as kindling for bigotry. It is undermining America’s vaunted optimism.”

And people across the political spectrum have lost patient with timid, incremental approaches to the problem. Which helps to explain both Donald Trump and Bernie Sanders.

Leonhardt writes:

Some observers remain confused about all of this. They imagine American politics as a simple two-dimensional spectrum on which Democrats must move to the center. But every issue isn’t the same. Yes, there are cultural issues, like abortion and guns, on which the country is classically divided. On these, moving to the center, or at least respectfully acknowledging our differences, can help Democrats. Representative Conor Lamb recently showed how to do it in Pennsylvania.

Economic policy is different. Most voters don’t share the centrist preferences of Washington’s comfortable pundit class. Most voters want to raise taxes on the rich and corporations. They favor generous Medicare and Social Security, expanded Medicaid, more financial aid for college, a higher minimum wage and a bigger government role in job creation. Remember, Trump won the Republican nomination as a populist. A clear majority of Americans wants the government to respond aggressively to our economic problems….

So, the smart thing would be to drop the topics that divide us — the culture war stuff, the Identity Politics, the “pussy hats” and such — and set out a vision for a rising tide for all.

But are national Democrats willing to do that? The occasional Conor Lamb aside, it remains to be seen.

In South Carolina, it’s not such a leap. SC Democrats — those who have actually served in office and understand political realities — have long understood that they have to reach across superficial barriers and appeal to as many voters as possible. You wonder why I like James Smith for governor? One reason is that he manifests that smart, inclusive approach. He’s identified with issues that could benefit all of us, such as trying to liberate renewable energy from artificial caps.

This is underlined when you look at his opposition: Phil Noble hits Smith for not being orthodox enough, for instance for being (allegedly) insufficiently hostile to gun-rights advocates. Noble is one of those Democrats who wants to divide the electorate into sheep and goats. Marguerite Willis seems to be pinning her hopes on getting women to vote for her simply because she’s a woman — despite Smith’s strong support within that largest of demographics.

So, the question is whether Democrats — on the state as well as the national level — are willing to take Leonhardt’s sensible advice, and identify themselves with issues that unite rather than divide. Mind you, he’s not talking about moving to a hypothetical center, but embracing issues with broad support among everyone but the most libertarian folks on the right.

I think they will in South Carolina, but polls tell us that’s far from certain. And nationally? I just don’t know…

Samuelson will tell you the truths you don’t want to hear

Robert J. Samuelson — whom I don’t read as often as I should because of his tendency to write about money and other things one can measure with numbers — is not a guy to read at all if you want him to tell you things you want to hear.

Robert J. Samuelson

Well, let me amend that: I think the things he has to say are fine, when I can cut through the numbers and read him. But based on voting patterns I’ve seen in recent years, he’s likely to give a lot of other folks apoplexy.

For instance… not satisfied merely to slice and dice the Republicans’ contemptible tax “reform” plan last month, he strode right past the nonsense to speak a home truth: “Americans aren’t taxed enough.”

He didn’t mean it in absolute terms, of course. There is no perfect amount of taxation, and saying “this isn’t enough taxation” in a vacuum would be as idiotic as say, also in a vacuum, that “Americans are taxed too much.” And Samuelson is not an idiot.

No, he means that as long as America means to spend X amount — and there has been no credible effort to reduce the lion’s share of spending — it must have the common sense and maturity to pay X amount in taxes. And it’s been a very long time since we’ve done that.

As he put it:

The truth is that we can’t afford any tax reduction. We need higher, not lower, taxes. What we should be debating is the nature of new taxes (my choice: a carbon tax), how quickly (or slowly) they should be introduced and how much prudent spending cuts could shrink the magnitude of tax increases.

To put this slightly differently: Americans are under-taxed. We are under-taxed not in some principled and philosophical sense that there is an ideal level of taxation that we haven’t yet reached. We are under-taxed in a pragmatic and expedient way. For half a century, we haven’t covered our spending with revenue from taxes…

We resist the discipline of balancing the budget, which is inherently unpopular. It’s what Eugene Steuerle of the Urban Institute calls “take-away politics.” Some programs would be cut; some taxes would be raised. Americans like big government. They just don’t like paying for it….

But if you think that’ll make some people mad, consider his column today. But first, someone bring the smelling salts for Bud and Doug. The headline is, “Why we must raise defense spending.” An excerpt:

Politically, the vaunted military-industrial complex has been no match for the welfare state’s personal handouts. There has been a historic transformation. In the 1950s and 1960s, defense spending often accounted for half of the federal budget and equaled 8 to 10 percent of gross domestic product (the economy). In 2016, defense spending was 3 percent of GDP and 15 percent of the federal budget, according to the Office of Management and Budget. Meanwhile, welfare programs — called “human resources” by the OMB — accounted for 15 percent of GDP and 73 percent of federal spending….

The result is this:

Here is the assessment of Mackenzie Eaglen, a defense specialist at the right-leaning American Enterprise Institute:

“The United States now fields a military that could not meet even the requirements of a benign Clinton-era world. The services have watched their relative overmatch and capacity decline in almost every domain of warfare . . . for nearly two decades. As rival nation-states have accelerated their force development, the Department of Defense has stalled out, creating a dangerous window of relative military advantage for potential foes. . . . While the United States continues to field the best military personnel in the world, policy makers have asked them to do too much with too little for too long.”…

So, to summarize, we’re not taxing enough for the spending we’re doing, and we’re not spending enough to adequately perform what was originally the government’s chief responsibility.

And before I get the cliche response — citing numbers showing how much more we spend than other nations is pretty pointless. We emerged from 1945 as the chief guarantor of a security order designed to stave off World War III. And the only nations that have shown any interest in taking that mantle of dominant military power off our hands have been the very last big countries a believer in liberal democracy would want to see do so.

Samuelson may write too much about numbers, but I have to hand it to him: He goes right where the number lead him, regardless of whose ox gets gored, on both the left and the right…

Who can be as foolhardy and reckless as Trump? The Democrats…

Here’s an excellent example of why it won’t be the Democrats who save us from Trump.

At least, not these Democrats.

Possibly the most foolish thing Trump has done in the last few days (and yeah, I know there are a lot of exciting entries in a crowded field) is this, at the very moment we’re facing an increased threat from North Korea:

President Trump has instructed advisers to prepare to withdraw the United States from a free-trade agreement with South Korea, several people close to the process said, a move that would stoke economic tensions with the U.S. ally as both countries confront a crisis over North Korea’s nuclear weapons program.

Withdrawing from the trade deal would back up Trump’s promises to crack down on what he considers unfair trade competition from other countries, but his top national security and economic advisers are pushing him to abandon the plan, arguing it would hamper U.S. economic growth and strain ties with an important ally. Officials including national security adviser H.R. McMaster, Defense Secretary Jim Mattis and National Economic Council director Gary Cohn oppose withdrawal, said people familiar with the process who spoke on the condition of anonymity to discuss internal White House deliberations.

Although it is still possible Trump could decide to stay in the agreement to renegotiate its terms, the internal preparations for terminating the deal are far along, and the formal withdrawal process could begin as soon as this week, the people said….

You know why those top aides don’t want him to do this, especially now? Because they have brains. They know that free-trade agreements bind nations closer together, aside from producing more wealth overall.

This is absolutely no time for slapping allies in the face in that part of the world — or anywhere, of course.

But fortunately, there’s a loyal opposition out there poised to the save the country from this nonsense, right?

Uhhhh… no (imagine I said that in a Butthead voice). This was in the Post the same day as the above:

WILKES-BARRE, Pa. — Democrats facing reelection next year in states President Trump won are seizing on trade at this early stage as a crucial issue and a Republican vulnerability.

But rather than jeer Trump’s protectionist positions, Democrats are echoing them and amplifying them, arguing that Trump has failed to fulfill his dramatic campaign promise to rip apart trade deals.

“When we say renegotiating NAFTA, we mean a transformation, something substantial, not just going through the motions,” Sen. Robert P. Casey Jr. (D-Pa.) told union leaders recently, referring to the administration’s talks over the North American Free Trade Agreement.

For Democrats, Casey’s pitch signals a wholehearted revival of their labor roots and a sharp departure from the free-trade tilt of the past two Democratic presidents, Barack Obama and Bill Clinton….

So, according to these Dems, the trouble with Trump is that he’s not Trumpy enough.

Notice how eager they are to repudiate the views of the last two Democrats who won presidential elections?

Brilliant, just brilliant….

Low demand? I don’t like the sound of THAT…

A lot of folks are reacting in a lot of ways — mostly negative — to the decision by SCANA and Santee Cooper to abandon their nuclear power project.

We’ve heard a good bit about the $9 billion already spent, the $1.4 billion in rate increases, and all the folks whose jobs depended on the continuation of the project.

But I’d like to see more on one aspect of the decision: The explanation that the utilities bailed because power demand isn’t turning out to be as great as projected.

Is it that the original projections were just entirely unrealistic? Or were the projections sensible at the time, but then rendered inaccurate by the economic collapse of 2008? In which case, assuming we ever fully recover from that, maybe we go back to the kind of growth that was originally projected…

Another way to put it: Is weakened demand a temporary condition, or the New Normal?

I don’t know. I just know that when I hear “low demand,” like the characters on “Seinfeld” reacting to the news that their new shower heads were “low-flow,” I don’t like the sound of that.

I mean, that can’t be good, can it? Doesn’t less power demand track closely with less economic growth? A lot of us have had to adjust to lowered economic expectations in the last few years. News like this seems to tell us, Get used to that; it’s not getting better.

Or does it? I’d like to know more about this. In the meantime, I don’t like the sound of it…

Robert Samuelson reminds us vegetables must be eaten

I wish to call to your attention this piece by Robert Samuelson of The Washington Post Writers Group.

An excerpt:

Let’s be clear: America is an undertaxed society. Our wants and needs from government — the two blur — exceed our willingness to be taxed. This has been true for decades, but it’s especially relevant now because the number of older Americans, who are the largest beneficiaries of federal spending, is rising rapidly. Unless we’re prepared to make sizable spending cuts (and there’s no evidence we are), we need higher taxes.

To the extent that President Trump’s proposed “tax reform” obscures or worsens this inconvenient reality, it is a dangerous distraction. We cannot afford large tax cuts, which are pleasing to propose (“something for nothing”) but involve long-term risks that are not understood by the president or, to be fair, by economists. Piling up massive peacetime deficits is something we haven’t done before. We cannot know the full consequences….

Looks like Samuelson’s bucking to be named patron saint of the Grownup Party, noting matter-of-factly that not only are vegetables good for us, but we must eat them.

By the way that line, “America is an undertaxed society,” goes double — no, triple, nay, 100 times — for South Carolina. I just thought I’d point that out for those still confused, especially the senators who think you can’t raise a tax that badly needs raising — the gas tax — without lowering some other taxes that has nothing to do with it.

The bad news: Our $206 Trillion Fiscal Gap

Laurence Kotlikoff, Joseph Von Nessen and Doug Woodward.

There was good news and bad news today at USC’s 36th Annual Economic Conference.

To be more specific, there was mildly, moderately good news, and really Terrible, Horrible, No Good, Very Bad news.

I’ll start with the good, which is on the local level. USC economists Doug Woodward and Joseph Von Nessen said that while growth has sort of leveled off in South Carolina, we’re in for a fairly good 2017. Advanced manufacturing remains strong, and things are going really well in construction — particularly along the coast — and retail. Merchants should have a good Christmas. If there’s a concern, it’s that employers are now having trouble finding qualified employees, particularly ones who are up to the challenges of automation — humans who can work with robots, basically.

On the other hand, we’re basically doomed.

That’s the message I got from the conference’s keynote speaker, Laurence Kotlikoff of Boston University, who started out noting that few Americans seem to have a clue what a fiscal hole we’re really in. Political leaders don’t speak of it, he said, pausing to complain about the “content-free election season” we just experienced. (Of course, you’d expect him to be dissatisfied with that, since he actually ran for president — unsuccessfully, he added dryly.) Oh, sure, they might speak of the $20 trillion national debt — which he noted isn’t really that, since the Fed has bought back $5 or 6 trillion of it — but they ignore the bigger problem.

That’s the true Fiscal Gap, as he calls it, which includes the liabilities that have been kept off the books. You know, Social Security, Medicare and the like — liabilities that aren’t acknowledged in the federal budget, but which are obligations every bit as binding as if the future recipients held Treasury bonds.

That adds up to $206 trillion.

There’s more bad news.

If we think in terms of what it would take for the nation to deal with that liability, our government is currently 53 percent underfinanced. That means that to meet these obligations, we’d have to have 53 percent across-the-board tax increases.

It gets worse.

If we don’t raise taxes by 53 percent now (or make drastic cuts to current and future spending that might somewhat reduce that need), then they’ll have to be raised a lot more on our children and grandchildren.

Dr. Kotlikoff has been raising the alarm about this for years. Here’s an oped piece he wrote for The New York Times in 2014. As he concluded that piece:

What we confront is not just an economics problem. It’s a moral issue. Will we continue to hide most of the bills we are bequeathing our children? Or will we, at long last, systematically measure all the bills and set about reducing them?

For now, we blithely sail on. But prospects aren’t good. None of the three economists, who spoke at a press conference before the event, had anything good to say about incoming political leadership on the national level. In fact, quite a bit of concern was expressed about 3 a.m. Tweets, any one of which could trigger a trade war with China before the day is out.

I came away feeling a bit like Damocles — or rather, like the nation is Damocles, since the sword fell on my head sometime back. And we just elected a guy who thinks he’s a national hero because he interfered with one business that was going to send some jobs out of the country (an interference in the market that none of the economists think was a good idea).

I’m not holding my breath for any leadership on closing the Fiscal Gap. (Nor would I be had the Democrats swept the elections.) Are you?

“What’s THAT hanging up there?” “Oh, that? I call it the Fiscal Gap…”

Why we need each other: ‘The $1,500 Sandwich’

We tend to put those who place their faith in the market economy at the libertarian end of the political spectrum, as far away from us communitarians as you can get.

But… the fact is that the modern marketplace itself, properly understood, starkly demonstrates that no man is an island, and that we are profoundly interdependent in the modern world.

I enjoyed this little demonstration of that fact in this passage from a Cato Institute blog (of all places), quoted by The Wall Street Journal today:

From an online post by Cato Institute researcher and editor Chelsea German, Sept. 25:

What would life be like without exchange or trade? Recently, a man decided to make a sandwich from scratch. He grew the vegetables, gathered salt from seawater, milked a cow, turned the milk into cheese, pickled a cucumber in a jar, ground his own flour from wheat to make the bread, collected his own honey, and personally killed a chicken for its meat. This month, he published the results of his endeavor in an enlightening video: making a sandwich entirely by himself cost him 6 months of his life and set him back $1,500. . . .

The inefficiency of making even something as humble as a sandwich by oneself, without the benefits of market exchange, is simply mind-boggling. There was a time when everyone grew their own food and made their own clothes. It was a time of unimaginable poverty and labor without rest.

We are light years removed from the society of totally independent yeoman farmers that Thomas Jefferson idealized. And personally, I would never have wanted to live that way, anyway.

I liked this parenthetical from the Cato post, which the WSJ left out:

(It should be noted that he used air transportation to get to the ocean to gather salt. If he had taken it upon himself to learn to build and fly a plane, then his endeavor would have proved impossible).

Kind of reminds me of that joke about the hubris of science:

God was once approached by a scientist who said, “Listen God, we’ve decided we don’t need you anymore. These days we can clone people, transplant organs and do all sorts of things that used to be considered miraculous.”

God replied, “Don’t need me huh? How about we put your theory to the test. Why don’t we have a competition to see who can make a human being, say, a male human being.”

The scientist agrees, so God declares they should do it like he did in the good old days when he created Adam.

“Fine” says the scientist as he bends down to scoop up a handful of dirt.”

“Whoa!” says God, shaking his head in disapproval. “Not so fast. You get your own dirt.”

Actually, the version I heard was more involved, with the scientist saying something like, “First, I’ll mine for the requisite minerals, and…” But the punchline was the same: “Get your own dirt,” or maybe “Make your own dirt.”

You get the idea.

The majority isn’t always wrong, but it isn’t always right, either

With Scott Walker in town today, I took a moment to read a letter that some New Hampshire Democrats wrote to him upon his visit to that state. An excerpt:

We wanted to welcome you to the First in the Nation Primary. You are a little late to the game, so we decided to help you out with some information about New Hampshire.

Last night, you said that raising the minimum wage was a “lame idea.” Lame idea? Really? Well, it’s an idea that 76% of Granite Staters support…

Which got me to thinking about Henrik Ibsen.

That letter — a good example of the kind of letters that partisans send, not meant to communicate with the purported recipient privately, but to taunt him publicly (or in this case, to tell the 76 percent what an awful person Scott Walker is) — got me to thinking of some of my favorite Ibsen quotes back when I was 17, from “An Enemy of the People:”

“The majority is never right. Never, I tell you! That’s one of these lies in society that no free and intelligent man can help rebelling against. Who are the people that make up the biggest proportion of the population — the intelligent ones or the fools?”…

“Oh, yes — you can shout me down, I know! But you cannot answer me. The majority has
might on its side–unfortunately; but right it has not.”…

“What sort of truths are they that the majority usually supports? They are truths that are of such advanced age that they are beginning to break up. And if a truth is as old as that, it is also in a fair way to become a lie, gentlemen.”…

I fear that I’m giving you a rather ugly picture of myself when I was 17. Well, I had my share of youthful arrogance and alienation, a bit of a Raskolnikov complex, which is common enough. Some of us outgrow it. Others among us end up like Edward Snowden, convinced that we know better than everyone else, especially established institutions.

I outgrew it, thank God. Which is to say that I’ve come to disagree with almost everything Ibsen seemed to be on about.

All that remains of it, with me, is a belief that the majority is not always right. It can be right, and I think it probably is considerably more often than the proverbial stopped clock. I think there’s really something to the notion of “the wisdom of crowds.” Or as Stephen Maturin said in The Mauritius Command, “whoever heard of the long-matured judgment of a village being wrong?”

Yes, and no. It is very often right, but it can be wrong, I fear.

In any case, it seems unreliable as an indicator of whether an increase in the minimum wage is a good idea, or a “lame” one.

I’ve heard the arguments for and against, and I just don’t know. If anything, I may lean toward the against — the assertions that a mandatory increase in wages could lead to fewer jobs, particularly for the poor, seems to make some sense.

But I don’t know, regardless of what 76 percent of Granite Staters may say…

Hispanic buying power

Shell Suber over at the Felkel Group has been sending out releases on behalf of a business groups pushing for what President Obama (and his predecessor, and John McCain, and Lindsey Graham) has been pressing for — comprehensive immigration reform.

Here’s the latest:

NEW REPORT SHOWS HISPANICS RESPONSIBLE FOR

$605 BILLION IN ANNUAL U.S. SPENDING POWER,

$190 BILLION IN TAX REVENUE

One Out of Every Ten Dollars of

Spending Power in U.S. in 2013 Held by Hispanics

COLUMBIA, SC — Yesterday the Partnership for a New American Economy released a new report highlighting the important role that both native and foreign-born Hispanics play as consumers, purchasing goods and services that circulate money through the economy and help to grow and sustain businesses. The report also highlights their contributions to tax revenue, Medicare, and Social Security programs.

“In South Carolina, we have known for some time the positive and vital impact Hispanics play in our state’s economy,” said Gustavo Nieves of the South Carolina Hispanic Chamber of Commerce. “This report from PNAE vividly quantifies that positive impact. At the SCHCC, we work with Hispanic businesses throughout South Carolina to promote growth, employment, and profitability. This report demonstrates the contributions of Hispanics as both consumers and entrepreneurs in the economic engine of our state and nation.”

Report Key Findings

Hispanic households, both native and foreign-born, account for a large portion of America’s overall spending power. In 2013, Hispanics had an estimated after-tax income of more than $605 billion. That figure is equivalent to almost one out of every  10 dollars of disposable income held in the United States that year. Foreign-born Hispanic households made up a sizeable portion of that figure: We estimate their spending power totaled $287 billion that year.

The growing earnings of Hispanic households have made them major contributors to U.S. tax revenue. In 2013, Hispanic households contributed more than $190 billion to U.S. tax revenues as a whole, including almost $67 billion in state and local tax payments. Of this, foreign-born Hispanics contributed more than $86 billion in tax revenues nationwide. That included almost $32 billion in state and local taxes and more than $54 billion in taxes to the federal government.

In some states, Hispanics now account for a large percentage of spending power and tax revenues overall. In both Texas and California, Hispanic households had more than $100 billion in after-tax income in 2013, accounting for more than one of every five dollars available to spend in each state that year. In Arizona, a state with a rapidly growing Hispanic population, their earnings after taxes accounted for almost one-sixth of the spending power in the state. In Florida, Hispanics contributed more than one out of every six dollars in tax revenue paid by residents of the state.

Hispanics, and foreign-born Hispanics in particular, play an important role sustaining America’s Medicare and Social Security programs. In 2013, Hispanic households contributed more than $98 billion to Social Security and almost $23 billion to the Medicare’s core trust fund. Foreign-born Hispanics in particular contributed more than $46 billion to Social Security, while paying in more than $10 billion to the Medicare program. Past studies have indicated that in Medicare in particular, immigrants draw down far less than they put in to the trust fund each year, making such tax contributions particularly valuable.

See the full report, “The Power of the Purse: The Contributions of Hispanics to America’s Spending Power and Tax Revenues in 2013.”

About the South Carolina Hispanic Chamber of Commerce

The South Carolina Hispanic Chamber of Commerce promotes the economic growth of Hispanic businesses in South Carolina. We are committed to developing programs and facilitating the resources that help Hispanic businesses reach their full potential. The Chamber is accomplishing its mission in very practical ways. We are committed to making a real, positive impact in the businesses we represent. We accomplish our mission in three ways: Network, Education, Advocate. First, we make sure you have the networking opportunities available to you that help you grow your business. We have also developed a directory for our members as well as a jobs board. Our “Resources” page provides the necessary resources to start, grow, and sustain your business. Our education component is based on the Entrepreneur Empowerment Series. This program gives entrepreneurs the skills necessary to run their business. The EES is offered in English and Spanish throughout the state. You can find the next Empowerment Series event on our “Events” page. Our advocacy initiative starts with our legislative agenda. Each year, the Chamber’s government affairs office meets with local, state and federal elected officials to discuss the issues that affect Hispanic business owners in South Carolina. Learn more at http://schcc.org/.

About the Partnership for a New American Economy

The Partnership for a New American Economy brings together more than 500 Republican, Democratic, and Independent mayors and business leaders who support immigration reforms that will help create jobs for Americans today. The Partnership’s members include mayors of more than 35 million people nationwide and business leaders of companies that generate more than $1.5 trillion and employ more than 4 million people across all sectors of the economy, from Agriculture to Aerospace, Hospitality to High Tech, and Media to Manufacturing. Partnership members understand that immigration is essential to maintaining the productive, diverse, and flexible workforce that America needs to ensure prosperity over the coming generations. Learn more atwww.RenewOurEconomy.org.

###

Yeah, I know; it’s kind of a non sequitur — this is ALL Hispanics, not just illegals. But I pass it on…

DCCC tries to show Obama has been a success

The Democratic Congressional Campaign Committee sent out the above chart today.

And while I usually have nothing but snarky remarks for these blatant fund-raising emails, I have to say I actually thought the number look pretty good.

So… are we a lot better off than we were when this POTUS took office? I have to say, I am not — but then, I’m no worse off than I was two months after he took office, when I got laid off.

And yeah, I would hope we’d look good when compared to the very low point of the recession. But still, I thought the numbers looked good…

Do the number lie? Are they the right number to be looking at? Thoughts?

How much weight should we give to bad jobs news in SC?

The state Democratic Party has been sending out a steady stream of bad SC jobs news as a way of undercutting Nikki Haley’s big strength — the narrative that, whatever else you think of her, she’s done a good job of recruiting jobs for the state.

I’ve been inclined to ignore these, because, let’s face it — companies are always going as well as coming, or shrinking as well as growing, and you can’t disprove a trend with anecdotal evidence.

Also, you have to wonder how seriously the party takes these bad-news announcements, since on the “Haley’s Smoke and Mirrors” website, they accompany each one with a cutesy GIF, like the one above. As a guy who’s spent a good bit of time unemployed after being laid off, I find myself wondering what’s so funny about these situations. Even if the overall trend in SC is good, each of these items is very bad news for some individual South Carolinians.

But in the last few days, the sheer volume of these news items has worn away my doubts to the point that I’m wondering whether this is an unusually bad streak of developments.

I don’t know. But you can peruse them at the website. And here are the headlines of the last 11 such releases I’ve received, over just the second half of this month:

OK, one of those is out of place — Jobless rate now highest in state — since some part of the state will always be the highest in the state, regardless of how good things are. But the other 10 provide a fairly steady drumbeat of actual bad news.

Now, here’s a HUGE grain of salt: These were not real-time announcements. They were from over a much-longer period of time than the dates of the releases would indicate. Some weren’t even from this year. So consider that.

By the way, did you make the connection on that first one? That’s the gun manufacturer that caused our governor’s eyes to light up so…

Business Insider sees S.C. economy as 5th worst in U.S.

46-south-carolina

The South Carolina Democratic Party is touting this story (“Nikki Haley claims South Carolina’s economy is booming, but don’t be fooled by her smoke and mirrors,” etc.), but I found it sort of interesting in its own right.

It’s a list from Business Insider ranking the respective states’ economies from worst to first. We rank 46th, or fifth worst. Here’s the reasoning they gave:

South Carolina’s largest private-sector industries are professional and business services, retail trade, and manufacturing. Here’s how South Carolina did on our variables:

South Carolina lost 4,600 nonfarm payroll jobs in July, the third-worst loss in the country.

Gross Domestic Product per capita was just $30,728, also the third-lowest.

The average annual wage was $39,800.

I was intrigued by the photos chosen to illustrate each state. We were represented by the sand sculpture above. I think I recognize it as being from just before a presidential debate down at the beach, either in 2008 or 2012.

My fave was the New Mexico one, which showed Jesse Pinkman being held prisoner down in the pit by the neoNazis. Which is appropriate, since N.M. ranked three positions below even us (Mississippi, of course, came in last). Maybe they’d be doing better if Mr. White were still alive and cooking, bringing in mad stacks, yo…

My son-in-law’s study mentioned by The Atlantic

This morning I happened to be searching for something unrelated and came up with an article that appeared last week in The Atlantic. I skimmed it, and it suddenly started looking very familiar, right at this point:

There are more variables at play than just pronunciation, though. In competitive fields that have classically been dominated by men, such as law and engineering, women with sexually ambiguous names tend to be more successful. This effect is known as the Portia Hypothesis (named for the heroine of Shakespeare’s The Merchant of Venice who disguises herself as a lawyer’s apprentice and takes on the name Balthazar to save the titular merchant, Antonio). A study found that female lawyers with more masculine names—such as Barney, Dale, Leslie, Jan, and Rudell—tend to have better chances of winning judgeships than their more effeminately named female peers. All else being equal, changing a candidate’s name from Sue to Cameron tripled a candidate’s likelihood of becoming a judge; a change from Sue to Bruce quintupled it….

And sure enough, I followed the link and found that the study was one co-authored by my son-in-law, an economist who teaches at USC.

If I recall correctly, the idea for the study grew out of a conversation several years ago between him and my daughter, an attorney, regarding such female federal court judges in South Carolina as Bruce Hendricks and Cameron Currie. The subject was particularly, personally interesting to them both because it was about the time their twins were born. The twins are named for their great-grandmothers. Twin A is called by my wife’s mother’s unmistakably feminine first name. Twin B is known by my mother’s neutral maiden surname.

The twins are six-and-a-half now, so it’s a bit early to see whether Twin B will be a federal judge, while Twin A follows a different path. We’ll see. They’re just precious little girls right now…

What’s in a name? The twins last week, trying to get their cousin to smile with them for the camera.

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