Relevant and even prescient commentary on news, politics and the economy.

The shallow industrial recession is fading in the rear view mirror

by New Deal democrat

The shallow industrial recession is fading in the rear view mirror

A year ago the “shallow industrial recession” induced by the strong US$ and imploding oil patch was bottoming.  At that time I described the historical pattern:

Typically new orders turn positive first (red, left scale in the graph below), followed by sales (green, right scale), and finally inventories (blue, right scale):

At that time I concluded:

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The C-Span Ranking of Presidents

C-Span just released a ranking of US Presidents based based on a survey of historians, journalists and other scholars. Obama came in 12th.

Here is the survey’s description of the process used to generate the rankings:

C-SPAN’s academic advisors devised a survey in which participants used a one (“not effective”) to ten (“very effective”) scale to rate each president on ten qualities of presidential leadership: “Public Persuasion,” “Crisis Leadership,” “Economic Management,” “Moral Authority,” “International Relations,” “Administrative Skills,” “Relations with Congress,” “Vision/Setting An Agenda,” “Pursued Equal Justice for All,” and “Performance Within the Context of His Times.”

Surveys were distributed to historians and other professional observers of the presidency, drawn from a database of C-SPAN’s programming, augmented by suggestions from the academic advisors. Ninety-one agreed to participate. Participants were guaranteed that individual survey results remain confidential. Survey responses were tabulated by averaging all responses in a given category for each president. Each of the ten categories was given equal weighting in arriving at a president’s total score.

I looked through the overall rankings and some of the rankings by category. Having co-authored a book on ranking Presidents, I have a lot of quibbles with the rankings. But many of them would be controversial. So I thought to myself – is there a simple way to decide whether this list has merit?

Here’s what jumps out at me. Take a gander at the list by economic management. Note that Teddy Roosevelt came in 4th place in that category. (First, second and third were Washington, Lincoln and Clinton. I find that to be borderline insane in and of itself. However, since Washington and Lincoln are names the public can recognize and Clinton was recent, I will not discuss them so as to avoid controversy.) TR also came in 4th in that category in the two previous surveys in 2009 and 2000 so it seems that ranking is pretty stable.  The, ahem, experts surveyed seem to be pretty sure TR belongs right up there.

Now here’s the problem. TR was President from September 1901 to March 1909. He did some effective things on the economy – some of his Square Deals, the Trust Busting, regulation, etc.  But… his outcomes were not very good. For instance, there was a fly in the ointment – the recession from September 1902 to August 1904. That would seem to cast doubt on his economic performance. But… that isn’t the problem with ranking TR as fourth best on the economy. There was another recession from May 1907 to June 1908. And that was no ordinary recession. The Panic of 1907 occurred in October of 1907, close to the middle of that recession. And who saved the day? Was it TR and his administration? Was it their policies? Nope. It was JP Morgan. Yes. That JP Morgan.

And the aftermath of the recession wasn’t pretty either. Data from that era isn’t great, but by all accounts, there was a big spike in unemployment, bankruptcies, etc.

The US economy is not worse than that of Zimbabwe in 2017. And yet, something along those lines would need to be true if TR turned in the fourth best economic performance among all US Presidents. I am no historian, but to me, any survey placing TR in fourth place for economic performance is indistinguishable from parody. It is enough for me to conclude that those responsible for this nonsense simply have no idea what they are doing.

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Industrial production: We’re DOOO …. oh, wait, it’s the global warming hoax

by New Deal democrat

Industrial production: We’re DOOO …. oh, wait, it’s the global warming hoax

At first blush yesterday’s negative industrial production print gives the lie to the proposition that the economy has left last year’s “shallow industrial recession” behind, as it looks to be going mainly sideways:

But a closer examination shows that is not the case.  Industrial production is broken up into three groupings: manufacturing (by far the biggest), utilities, and mining (including oil and gas).

So here is the information for manufacturing (blue. left scale) and mining (red, right scale):

Although the trend is modest, manufacturing has broken out to new highs.  And the energy patch is clearly seeing a rebound.

Which means that the *entire* reason for the decline is utilities:

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Recall and the General Strike

by Sandwichman

Recall and the General Strike

The tradition of the oppressed teaches us that the “emergency situation” in which we live is the rule. — Walter Benjamin, On the Concept of History, 1940

Back in December, I posted Full Employment and the Myth of the General Strike to start the conversational ball rolling about the idea of a general strike. It was the middle post in a three-part series on full employment.
Events move fast in 2017.
In the past two days, op-eds have appeared in the Washington Post and the Guardian taking up the issue of job action — and the general strike — as forms of resistance. On Monday, the Guardian published a Comment is Free by Francine Prose, “Forget protest. Trump’s actions warrant a general national strike.” This morning, “Where’s the best place to resist Trump? At work.” by labor lawyers, Moshe Marvit and Leo Gertner, was published as a PostEverything by the Washington Post.
Apparently, a call has gone out for a general strike on February 17, which strikes me (no pun intended) as rather precipitous. But the conversation is rolling.
Another element I would like to throw in is “what are the demands?” That Trump stop doing nasty things? That the GOP house and the GOP senate impeach the one who is going to sign their tax cut bills? I propose recall — total recall. Not only are the elected officials themselves corrupt, incompetent and unrepresentative but the electoral system that has installed them has been thoroughly corrupted and undemocratic. Throw the bums — AND THE NAG THEY RODE IN ON — out.
To give context and American (U.S.) historical resonance to that demand, it is useful to consider Populist and Progressive proposals for “direct democracy,” through initiative, referendum and the “imperative mandate” (recall) from over a century ago.
What am I really talking about here? What am I doing? The narrative time dimensions of the revolutionary general strike and of the reformist recall, as conceived by Populists and Progressives, could not be more contrasting. The general strike takes place in what Walter Benjamin referred to as jetztzeit — “not homogenous, empty time, but time filled by the presence of the now.”

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Why You Should Never Use a Supply and Demand Diagram for Labor Markets

by Peter Dorman    (published originally at Econospeak)

Why You Should Never Use a Supply and Demand Diagram for Labor Markets

You would know this if you read your Cahuc, Carcillo and Zylberberg, but you probably won’t, so read this instead.
A standard S&D diagram for the labor market might look like this:

It’s common to use W (wage) on the price axis and N (number of workers) on the quantity axis.  Equilibrium is supposed to occur at the W where quantity supplied equals quantity demanded.  From here you might introduce statutory minimum wage laws, or jobs with different nonpecuniary benefits and costs, etc.  The default conclusion is that free markets are best.

But hold on a moment.  S and D don’t tell you how many workers actually have jobs or how many jobs are actually filled—these are offer curves.  The S curve tells you how many workers would be willing to accept a job at various wages, and the D curve tells you how many jobs would be made available to them.  That’s not the same as employment.

They would be the same in a world in which labor markets operated according to a two-sided instantaneous matching algorithm, something designed by Google with no human interference at any stage of the process.  In such a world all offers would enter a digital hopper, and all deemed acceptable by someone else’s algorithm would be accepted immediately.  Maybe not Google but Priceline.

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Resettling Refugees – A Thought Experiment

Consider a country with a vicious ongoing multi-sided Civil War which includes some amount of deliberate large scale civilian extermination.  You know the sort of thing: Syria today is just the most recent example, but there are other well-known examples from the last few decades.  To keep things generic, let us refer to the various sides in the Civil War as A, B, C, etc.

Militias from each group have been caught massacring civilians from the other group.  Or maybe the evidence points toward only one side being responsible for such atrocities.  Truth to tell, nobody in the US really has a firm and unbiased grasp of what is going on.  If this sounds like the vast majority of wars since 1945, it should.

Now, let us say that the US has a pre-existing immigrant population from Group A.  For whatever reason, they have mostly settled in  Lincoln, NE.  (I picked Lincoln completely at random.  I understand some Thai and Burmese refugees have settled in Lincoln, but I would say that for the most part, the city doesn’t have a strong connotation with refugees among the general public.).   Lincoln now has a neighborhood called “Little X” where “X” is the capital of the country with the ongoing Civil War.   

If the Civil War results in more people from Group A are admitted to the US as refugees, it is natural to relocate them or at least encourage them to live in Lincoln.  But what if refugees from Group B are also admitted in not-insignificant numbers?  Groups A and B have a long history of distrust, and are vicious enemies in the current Civil War.  And if there is one thing Americans have managed to figure out about the ongoing war that is accurate, it is that there are some horrific atrocities going on.

So…  should it be the policy of the US government to try to settle the new refugees from Group B in Lincoln, NE?  There would be scale economies due to similar language, culture, food, and possibly even religion.  Or should it be the policy of the US government to try to get the refugees to settle somewhere far away from Lincoln, NE to minimize the possibility of conflict and ill will?  And does your answer change if we manage to learn that both sides are not equally at fault?  For example, do we make the same decision vis a vis Lincoln, NE if Group B was responsible for all or most of the atrocities and committed them against A, or vice versa?  You can assume that all the refugees are properly vetted and that none of them are known to have been involved in committing the atrocities.  


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Dumbest Statement Coming Out of Congress Yet on Healthcare . . .

A partial of the Republican plan:

introduced by Rep. Mark Sanford (R-S.C.) and Sen. Rand Paul (R-Ky.), would end Medicaid expansion, decouple health insurance from employers, offer a tax credit of up to $5,000 to fund HSAs, and eliminate most regulations on what health plans must cover. Insurers would be able to sell policies across state lines; regulations that mandate birth-control coverage would be nixed.

Hmmmm, that’s nice . . .

This is about the dumbest statement I have read yet by Senator Rand Paul;

“What if 30 percent of the public had health savings accounts?” Paul asked. “What do you do when you use your own money? You call up doctors and ask the price. . . . If you create a real marketplace, you drive prices down.”

“What if” we were all billionaires, able to buy the best care, and negotiate with multi-billion dollar hospitals? Yea “what if” . . . “What if” all the Senators and Congressmen, and Judges had our very same healthcare plan? Yea “what if” . . . “What if” all of those people fighting against the PPACA had really put some effort into learning about it, put the effort into forcing Congress to move forward with making it better . . . where would we be today? Yea “What if” . . .

Still love kicking the one layer deep naysayers around as they too will get a douse of what this is all about if ESI disappears as well as birth-control. Healthcare policies across state lines will be similar to what bank chartering is like with a couple of states controlling all the policies and no real competition (just like interest rates and usury).

“What if . . . “

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Bad news: real non supervisory wages have actually declined over the last year

by New Deal democrat

Bad news: real nonsupervisory wages have actually DECLINED over the last year

This morning’s inflation news was even worse than I expected based on the increase in gas prices.

On a monthly basis prices rose +0.6%. Core prices rose +0.3%.

More importantly, YoY CPI was up +2.5%.  Core YoY CPI was up+2.3%:

This means real nonsupervisory wages are now actually *down* -0.1% YoY for the last year.

Here is the actual level of real nonsupervisory wages for the last 3 years:

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