Thursday, September 29, 2011

Nationwide look at sales taxes

Scott Drenkard over at the Tax Foundation (see here) has a nice map showing the sales tax rates for the U. S. (see graph below, click to enlarge).

Are we in the midst of a structual change in employment patterns?

Dave Altig at the Federal Reserve Bank of Atlanta (see here) has a very interest graph posted. (see below, click to enlarge). "The following chart shows pre- and postrecession, cross-sector average monthly changes in payroll employment, broadly defined according to U.S. Bureau of Labor Statistics' classifications. For reference, the size of the circles in the chart reflect the relative prerecession size of the sector in terms of employment."  


He states:

In general, the pattern of circles is such that those sectors with relatively high employment changes prerecession are those that have exhibited relatively high changes during the recovery. In other words, we have not yet seen a widespread reshuffling of cross-sectoral employment trends outside of the recession.

Wednesday, September 28, 2011

What accounts for the number of "strange" claims about economics?

This question of this post has puzzled me for some time now.  That is, I have wondered how it can be the case that people (some of them well-regarded) can make such "strange" claims about economics.  By strange I mean claims that are absent any empirical support.  What do I include in this list?
  • Claims that the federal government can do nothing to mitigate an economic downturn.
  • Claims that there is no such thing as a multiplier effect.
  • Claims that modern Keynesian models provide no guidance to the current economic challenges.
  • Claims that simply cutting taxes is a solution to the downturn in employment.
  • Claims that "austerity" measures will actually end up being expansionary.
  • Claims that we need to return to the gold standard.
You get the idea.  Presently, the most vocal peddlers of these claims are often to be found among the current crop of GOP presidential candidates, but there are plenty of non-Republicans to pick from as well. Well, Kevin O'Rourke has a post (see here) that might just serve to provide an explanation.  He says,

One lesson is that it is one thing to play counter-intuitive intellectual parlour games in order to get tenure at a fancy university, but another thing entirely to say something about the real world. For that you need a little common sense.

Another lesson is that economists need at least some training in economic history. No-one with the slightest feeling for historical reality could believe that the Great Depression was due to supply side forces, for example. I observe that Krugman, along with such luminaries as Maurice Obstfeld and Ken Rogoff, did his graduate work in MIT, and I surmise (without having any inside knowledge on the matter) that all three were exposed to Charlie Kindleberger and Peter Temin. They are all distinguished theorists, but also have a historical sensitivity, and this makes them better economists — if your definition of a good economist includes the ability to say sensible things about our very messy real world.

I suppose I should include "attacks on Ben Bernanke and the Federal Reserve" in the list as well.  Matthew O'Brien at The New Republic (see here) calls this line of attack (and some of the others) the result of intellectual Dark Ages.  He says,


It is not clear if this intellectual Dark Age will pass. Bernanke has become such a persona non grata in Republican circles that it is easy to forget he is a Republican. Among these competing theories for Republican Fed-bashing, the scariest, of course, is that the attacks are not just cynical, but represent genuine belief. It’s enough to make a liberal long for Milton Friedman.

In some ways, this all makes me think about the famous article by Ron Suskind (who is in trouble with the White House again - different White House this time) in the New York Times magazine in which he recounts a meeting with a Bush aide after he published a piece they didn't like (see here).

In the summer of 2002, after I had written an article in Esquire that the White House didn't like about Bush's former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House's displeasure, and then he told me something that at the time I didn't fully comprehend -- but which I now believe gets to the very heart of the Bush presidency. 

The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''

Maybe I'm just longing for political types to at least take a vacation back in the "reality-based" world.

Technology and the Great Recession

Kathleen Madigan (see here) has a piece at the Wall Street Journal about the increasing use of "machines" and the continuing slowdown in hiring.  The pieced contains the following graph (click to enlarge).


In the Operations Management course that I teach we look at the role of technology (and its evolution).  There is a school of thought that argues that increased replacement of labor by technology accounts for much of the "hollowing out" of jobs.  That is, they argue that reducing the need for "skilled" labor is one of the legacies and continuing pursuits of "scientific management."  Technology, of course, has also made possible many improvements in work and productivity.  But there is another side that gets too little consideration and one doesn't have to be a Luddite to find it troubling.

The piece also contains the following statement:

Businesses’ preference for equipment — while understandable from a cost perspective — is also a big reason why policymakers are stymied to find ways to ignite job creation.

Monday, September 26, 2011

Economic consequences of the Iraq/Afghanistan wars

Menzie Chin over at Econbrowser (see here) helps us "see" the real impact (see graph below, click to enlarge).

The graph is "cumulative real direct costs in constant 2010 dollars."  As the analysis states:

By the way, the macro challenge posed by the unfunded war (combined with tax cuts and a new, unfunded, Medicare Part D mandate) was not unforeseen.

Decade tough on incomes for males

Mike Mandel (see here) has looked at the new data coming out and with the help of the Progressive Policy Institute has a graph that tells a disappointing story (see below, click to enlarge).

Data on property taxes

Over at the Tax Foundation (see here) they have a very interesting map of the growth of property taxes by state (see below, click to enlarge).


Nick Kasprak of the Tax Foundation says,

Today's Monday Map looks at the growth of property taxes between 2009 and 2010. The basic metric we use to judge property tax levels is the median real estate tax divided by the median home value. This figure more than doubled in Louisiana, rising over 140% (though it should be said that Louisiana still ranked lowest overall in 2009, and only jumped to 3rd lowest for 2010.) North Dakota and Indiana are the only two states that saw a decrease.

I need to think about this measure some (median real estate tax divided by median home value).  As you can see, using this metric Mississippi had the second highest percentage increase from 2009 to 2010.

Sunday, September 25, 2011

There are pensions and then their are pensions for state legislators

USA Today has an interview with Cardozo Law School Professor Edward A. Zelinsky (see here) regarding State pensions and the way they are calculated.  Mr. Zelinsky has done considerable work in this area and he finds many things "offensive" about the way pensions are managed.  One of these offensive items is that many states calculate the pensions for State Legislators (wait for it.....) differently than they do for everyone else in the pension plan (always, of course, in a way that increases the future pension benefit).  Below is a graph from the interview (click to enlarge) showing which indicates which states have "special" retirement laws (the darker green the state, the more special laws are in effect).  And, yes, Mississippi is one.  The full article (read it here) contains this sentence: Mississippi legislators get two pensions that on average add up to 165% of their salary.

Grading the statements of the candidates

The blog 538 (see here) points us to PolitiFact's grading of statements by the Republican contenders for president (see graph below, click to enlarge).


Micah Cohen at 538 says:

As you can see, some candidates have fared better than others. Over 60 percent of Representative Michele Bachmann’s statements were ruled either False (“The statement is not accurate”) or Pants on Fire (“The statement is not accurate and makes a ridiculous claim). Herman Cain and former Senator Rick Santorum didn’t fare any better, although both have not had that many grades given to them.

If he were alive, would conservatives listen to Friedman?

Bruce Bartlett has an informative piece over at the Fiscal Times (see here) in which he is as perplexed as anybody about the "Fed bashing" that is all too common among the Republican candidates for president.  He points us to a 1997 piece that Milton Friedman wrote for the Wall Street Journal regarding Japan's similar recession.  Professor Friedman said:

“The surest road to a healthy economic recovery is to increase the rate of monetary growth, to shift from tight money to easier money…. Defenders of the Bank of Japan will say, ‘How? The Bank has already cut its discount rate to 0.5 percent. What more can it do to increase the quantity of money?’ The answer is straightforward: The Bank of Japan can buy government bonds on the open market, paying for them with either currency or deposits at the Bank of Japan, what economists call high-powered money.”

I confess that simply do not understand some of the statements about the Fed from the likes of Rick Perry and Ron Paul; moreover, it is disappointing that people take their statements seriously.  Milton Friedman has always been something of an economic hero to Republicans.  I can't believe he would happy with the current crop of leaders in the GOP.

New data on rising student loan debt

Over at the Atlantic (see here) Daniel Indiviglio has a good piece on the student loan issue.  The piece has the following graph (see below, click to enlarge).  He says,

The chart above is striking for another reason. See that blue line for all other debt but student loans? This wasn't just any average period in history for household debt. This period included the inflation of a housing bubble so gigantic that it caused the financial sector to collapse and led to the worst recession since the Great Depression. But that other debt growth? It's dwarfed by student loan growth.

American spending on debt service decreases

Justin Lahart over at Real Time Economics (see here) has an update on the after-tax amounts Americans are spending on debt service (see graph below, click to enlarge).

Data on bank failures

The blog Calculated Risk (see here) has an update on bank failures for this recession (see graph below, click to enlarge).

Thursday, September 22, 2011

The "Great Tax Divide"

The New York Times (see here) has the following interesting graph.

States and the role of higher ed

The Wall Street Journal (see here) has this data (click to enlarge) from the Bureau of the Census.

Monday, September 12, 2011

New data on student loan defaults

The Department of Education released the following today (see here):

The U.S. Department of Education today released the official FY 2009 national student loan cohort default rate, which has risen to 8.8 percent, up from 7.0 percent in FY 2008. The cohort default rates increased for all sectors: from 6.0 percent to 7.2 percent for public institutions, from 4.0 percent to 4.6 percent for private institutions, and from 11.6 percent to 15 percent at for-profit schools.

Over at the Huffington Post (see here) Chris Kirkham has the following graph (click to enlarge).


This is even more troubling when you take into account the data on employment for people with a college degree.  The graph below (click to enlarge) is from the blog Rortybomb (see here).

Sunday, September 11, 2011

A little statistics humor

Thanks to Austin Frakt (see here) for pointing me to this bit of statistical humor.

Can manufacturing recover?

Louis Uchitelle over at the New York Times (see here) as a piece today about the extent to which manufacturing just isn't "on the radar."  He has the following graph (see below, click to enlarge).


He says:

A tipping point may already have been reached. Manufacturing’s contribution to gross domestic product — roughly equivalent to national income — has declined to just 11.7 percent last year from as much as 28 percent in the 1950s, according to the Bureau of Economic Analysis. In this century, the 20-percent-or-more club draws its members mainly from Asia and Europe.

Tuesday, September 6, 2011

I'm with Allan Sloan

Over at Fortune (see here), Alan Sloan writes:  What the hell is going on?  Forgive the shouting, but I'm with Mr. Sloan.  He continues:

What's ailing us? It's not just unemployment. It's not just Europe's debt woes. And, no, it's not Wall Street this time. It's the takeover of the economic debate by fanatics who are up to no good. Fix that -- and maybe you fix the economy.

His piece (yes, a bit of rant, but maybe it is time for one) includes the following graph (click to enlarge).


He doesn't hold back:

If I sound angry, it's because I am. Think of me as an angry moderate who's finally fed up with the lunacy and incompetence of our alleged national leaders -- and with people stirring up trouble from which they hope to benefit politically or financially. Some policies and statements you hear from Tea Party types about the economy and the debt markets are utterly insane. Any competent economics instructor would give you an F if you asserted the same sort of nonsense on an exam.

His piece is worth reading; that is, unless you have become so ideological that you no longer think the data matters.