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

Traumatic Brain Injury: responses by DOD

GAO has a point of information. Pre-screening is essential for any medical diagnosis of “subtle” damage. Imaging pictures would make for a real comparison…external costs will be high. The late start up dates are a cause for sadness(inertia from various quarters), but the newness of this field of medicine is one mitigating factor.

In response to the 2007 NDAA, DOD added TBI screening questions to the PDHA in January 2008 and plans in July 2008 to begin screening all service members prior to deployment. Prior to these TBI screening efforts required by DOD, several installations had already implemented efforts to screen servicemembers before or after their deployments. To help health care providers screen servicemembers for mild TBI and issue referrals, DOD has issued guidance and provided various forms of training.

In response to the 2007 NDAA requirement for pre-and post-deployment screening for TBI, DOD has added TBI screening questions to the PDHA, and plans to require screening of all servicemembers beginning in July 2008 for mild TBI prior to deployment. These screening questions are similar to the screening questions on the PDHA. The questions are included in a cognitive assessment tool that will provide a baseline of cognitive function in areas such as memory and reaction time. In January 2008, DOD released a new version of the post-deployment health…

Comments (0) | |

Real GNP Growth

Greg Mankiw provides a chart of real GNP growth since 1998:

With revised GDP data released today, I thought it might be worth taking another look at recent history.

Whoops – GNP and GDP are not precisely the same thing but the growth in GNP and the growth in GDP have been very similar (the difference between these two series is net foreign income from abroad). I suspect Greg’s point is that real GNP is still growing but notice what BEA said:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 0.9 percent in the first quarter of 2008, according to preliminary estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.6 percent … Real gross national product — the goods and services produced by the labor and property supplied by U.S. residents — increased 1.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $5.3 billion in the first quarter after increasing $37.6 billion in the fourth; in the first quarter, receipts decreased $48.1 billion, and payments decreased $53.4 billion.

The rise in net income from abroad means that GNP rose faster than GDP over the past two quarters. And if one is wondering how Greg’s graph differs from the BEA text – notice the graph is comparing the current quarter to the quarter a year ago.

But let’s focus on something else – growth ever since late 2000. Its average has been rather dreadful. Now some rightwing pundits want to talk about some alleged Bush boom but the data shows that real income growth was quite weak except for the period from late 2003 through 2005.

Comments (0) | |

Labor Shortage in Iowa: Market Solution or Is This a Case of Monopsony Power?

John Leland has Dean Baker needing a vacation. Leland channels the frustrations of businessmen in Des Moines, Iowa:

As rising unemployment and layoffs beset workers around the country, Iowa faces a different problem: a surplus of jobs. Or to put it another way: a shortage of workers. A survey of companies by Iowa Workforce Development, a state agency, found as many as 48,000 job vacancies, in industries including financial services — Des Moines trails only Hartford as the nation’s insurance capital — health care and skilled manufacturing. One estimate projects the job surplus to reach 198,000 by 2014, with vacancies increasingly in professional positions. Greater Des Moines alone faces a shortfall of 60,000 workers in the next decade. The state provides a small, advance view of what some economists predict will be a broader shortage of skilled workers in the next 20 or 30 years, as tens of millions of baby boomers retire from the workplace, and the economy produces more new jobs than workers. Potential consequences include slower economic growth and competitiveness, as well as higher wages for skilled workers and greater inequality … Remedies are not simple. Companies want to be in Iowa because wages are lower than elsewhere in the nation or region, except South Dakota. But low wages also drive young college graduates out of the state, especially as student debt loads have risen, and they discourage workers from other states from moving to Iowa. Some, like Mr. Tew, accept relatively low wages in exchange for Iowa’s low cost of living. Companies compete on amenities and benefits more than salary, said Craig Jackman, president of Paragon IT Professionals, a recruiter and consultant firm.

Dean notes:

Arghhhhhhhhhhhh! There is a labor shortage in Iowa. Wages are the second lowest in the country. Come on folks, the NYT is supposed to be a serious newspaper. I need a vacation.

Dean’s assumption that there is a competitive market for labor certainly is a valid one for the nation’s future labor market. Leland is claiming that slower growth of the national labor force will lead to labor shortages. That’s just stupid unless one assumes there is some force that will prevent increases in real wages. OK, some rightwing idiots (e.g., those clowns who write for the National Review) think that increases in real wages is un-American or something but that’s how competitive markets respond to situations where the demand for labor rises relative to the supply of labor.

But could it be that there is some simple explanation why the quantity of labor supplied and the real wage are both low in Des Moines? This sounds like a movement along the supply curve, which just might be generated by a group of employees at least trying to exercise monopsony power. OK, Des Moines isn’t the classic example of a one company town but if there were a monopsonistic cartel, businessmen would certainly bitch if somehow their cartel was being eroded by other local businesses acting in a manner consistent with competitive behavior. Those of who actually celebrate market place solutions, however, should cheer rather than call this a problem.

Comments (0) | |

$10,000 limit. Can’t fill the tank

Seems another sign of the new era of banking fraud awareness comes from the price of gasoline/fuel. You can’t pump more than $75 worth.

The $75 limit “ensures merchants and customers are protected from fraud,” says MasterCard spokesman Tristan Jordan.

Visa and Mastercard are worried about you and the station getting ripped off. Really? Interesting though how the station owners say it is the policy of the card companies but Visa said it’s the fault of the owner.

Visa and MasterCard have no immediate plans to go higher. “It’s something we always look at,” Wilke says.
Visa raised its pump limit from $50 in April, but $75 isn’t keeping up with gas prices. At $4 a gallon, $75 buys 18 3/4 gallons. A 2008 Toyota Sequoia SUV’s tank holds more than 26 gallons, a Chevy Avalanche sport pickup totes up to 31 1/2 gallons, and a 33-foot or longer Winnebago Adventurer RV hauls 75 gallons.

Of course there is a solution. Swipe it twice, or in the case of the RV, 4 times. Too much? Then they offer that you can run your card inside. Frankly, I’m not sure what difference there is in protection if you swipe the card inside. The card company is still going to be on the hook if the cashier doesn’t ask for ID.

Where are you goin to
What are you gonna do
Do you think that it will be easy
Do you think that it will be pleasin, hey

Stand back, whatd you say
Stand back, I wont pay
Stand back, Id rather play
Stand back

Comments (0) | |

What Happened: Jonah Goldberg’s Review Sine Reading a Single Word

Jonan Goldberg must be omniscient as he pens a stinging review of Scott McClellan’s What Happened even though:

I have not read the book. I will once I finish eating the contents of my sock drawer (which ranks slightly higher on my to-do list).

Now if you think the second sentence in this quote is juvenile – don’t bother reading the rest of Goldberg’s rant. OK, I lied. It is not a stinging review. In fact, it is about as idiotic as anything from this worthless pundit. But please consider this:

McClellan’s only legitimate beef seems to be his unjust treatment during the Valerie Plame investigation.

Really? The book has no other legitimate complaints? How on earth would Jonah know if he hasn’t even bothered to read anything? I guess his mommy told him so. Incidentally, NRO has other attacks on McClellan’s writing, which are also just as worthless.

Comments (0) | |

Soc Sec XV: Why do they care?

Properly speaking this is not an economics post. So most of it is below the fold.

I started a Social Security blog in Nov. 2004 in the wake of Bush’s announcement that he would expend his new political capital on Social Security ‘reform’. At that point in time I had been looking at these numbers for about seven years and had largely formed the conclusions I have been laying out in this series. In blunt terms I knew that ‘crisis’ was in context bullshit, and I also knew along side Dean Baker that this was “well known to those who have looked at the numbers”. So this post is an attempt to answer two questions: one, ‘why do they persist anyway?’ and two, a question I posed in one of my first posts ‘Who the hell am I to be lecturing economists on Social Security?’

As most readers know I am not an economist, I never took even an Intro course in Economics and the closest I got to the tools of the trade was Statistics 20, Introduction to Statistics for Non-Majors, and that 33 years ago. So who am I to take this subject on? Well the answer is that Social Security ‘crisis’ is not at bottom an economic question to start with. Certainly all of the surface action suggests that the issue is retirement security and that the question revolves around whether or not that will be economically sustainable at some future point. But having poked around in the numbers for years I knew that really wasn’t the core issue, the results under Intermediate Cost were certainly acceptable, while results closer to Low Cost were at least plausible. Which raised the question ‘Why do they care?’. After all these people have no problem cutting heating oil subsidies for today’s seniors, with requiring kids to remain uninsured for a full year before they can transfer from a private plan to a new government alternative. Many of the same people who want to privatize Social Security to ‘save’ it simultaneously advocate for abolishing the Department of Education. These are the farthest thing from bleeding heart liberals, yet they profess to be deeply concerned about retirement security for future generations, aye verily even unto the Infinite Future Horizon. But why? And just as importantly ‘Why now?’

Well I explored the question in a July 2005 post Social Security: is it about Solvency or about Ayn Rand?. And the conclusion I came to was this:

The numbers are important, if you are going to participate in the debate over the future of Social Security you need to understand them, you need to understand their implications, you need to be able to measure them against the numbers you read in the paper every day. Because oddly enough this debate is not about numbers and in most respects it never has been.

The oppostion to Social Security has always been driven by the ideology, and that ideology can only be understood in historical perspective, and particularly in the millennia long struggle between the powerful and the people over the distribution of production. Which is where I come in, I was in fact a trained historian with a speciality in Medieval Europe but substantial side work in Classical Greece and Ancient Rome. And over the course of that study I learned a couple of fundamental truths, one the issues hadn’t changed much between the time of the Gracchi brothers (133 BC) and the Cato Institute of today, and two the historiography is almost always charged with the class struggle of the time. The modern study of Rome can hardly be separated from the economic ideology of those first historians. That is we see the Gracchi brothers and later Caesar through a historical lens fundamentally hostile to what were considered dangerous democratic and even socialistic impulses. It is worth noting the Cato the Censor, after whom the Cato Institute is named, was the sworn enemy of the Gracchi brothers’ grandfather Scipio Africanus, and for same reasons, although Africanus like Caesar was the ultimate son of privilege, achieving all the highest offices, he dared to suggest that the interest of the people at large be considered.

Who knew that proposals for land distribution in 2nd century BC Rome or the history of the Statute of Laborers (1351) and successor acts in England would be relevant to the Social Security debate today? Well that is why we are here.

The powerful have always been alarmed and often to the point of physical violence at any scheme that remotely smacks of being redistribution and this impulse historically preceded by centuries the development of classical economic theory. If you examine the actual economic history that paralleled the development of the new theory you can clearly see that the former infused the latter, there is only one degree of separation between a nineteenth century liberal economist and a nineteenth century liberal manufacturer. When examined in the historical perspective of the centuries before and close to two centuries after you see an academic discipline shaped by the political class struggle of the day, although admittedly perhaps largely invisible to the actual theorists involved.

A successful Social Security system is a threat to the powerful in much the same way that the throughly aristocratic Gracchi brothers land distribution plans were. Because once you let the camel of ‘greatest good for greatest number’ get its nose under the tent who knows where it will stop. Which of course was Hayek’s premise in Road to Serfdom, admit that government planning works in some cases, next thing you know you are in the gulag. (For those who think this too strong, try reading the authorized 18 panel cartoon version of The Road to Serfdom (hosted on Marek’s mothership

The question of ‘Why now?’ is itself explained by this 1998 article from our friends at Cato The Myth of the 2.2% Solution. On my reading they had simply panicked, people like Baker and well, Webb were pointing out some inconvenient numbers, which led the Cato folk to assert the following:

The 2.2 percent figure assumes that the reform would take effect at the beginning of calendar year 1998. Thus it is already out of date. Each year Congress waits, the magnitude of the tax hike required to balance the Social Security trust funds rises.

The solution is not permanent. In fact, an additional tax hike would be required every year to keep the trust funds in balance over a full 75 years.

The 2.2 percent solution is based on the Social Security trustees’ “intermediate” projection. If we accept the trustees’ “high-cost” projection, whose key economic and demographic assumptions more closely reflect historical experience, the necessary tax hikes would be at least twice as large.

The 2.2 percent solution focuses only on the program’s solvency. But simply raising taxes (or cutting benefits), while it may balance the Social Security trust funds, does nothing to redress the program’s other underlying problems, most notably the declining rate of return for young workers.

Only problem none of these are factually true. In fact in the years since the magnitude of the tax hike needed has gone down, the solution is permanent and requires no additonal tax hikes during the 75 year window, the high-cost projection doesn’t remotely reflect historical experience, and at best the declining rate of return is dubious, indeed the 78% of 160% = 125% equation suggests just the obvious.

In short they were and are panicking, the debate was slipping out of their control, and their only response was half-truths and lies to disquise their actual, ideological committment to the principles of Cato the Elder. Social Security is thus not an economic question at all, instead it is a case study in the centuries long struggle between democracy and reaction.

Tags: Comments (0) | |

Oil and oil addictions

The Economist poses some conjectures for oil and Iraq:

…Things may be changing. Iraq’s deputy prime minister, Barham Salih, said in April that Iraq’s total reserves, could be as high as 350bn barrels, triple the 115bn that has been its officially stated level for many years. The figure is aspirational and should be treated carefully but, given that there has been barely any new exploration of Iraq’s promising geology in 30 years, an upward revision of the official reserves figure seems long overdue. This underlines Iraq’s uniquely large reserves-to-production (RP) ratio, which was already the world’s highest and, based on Mr Salih’s estimate and at the expected production level of 2.3m b/d in 2008, would stand at a remarkable 415 years (compared with a world average of about 40 years). If Iraq were able to achieve the average Middle East RP-ratio of 80 years then it would be pumping 4m b/d based on the current reserves, and 12m b/d based on Salih’s aspirational estimate. Getting there would take some time, around five years for 4m b/d and probably more than 20 years for the most optimistic level. It would also require Iraq to achieve a sufficient degree of stability. However, if there are promising signs of progress over the next 18 months, then it might be enough to mitigate fears of shortages next decade and dampen the futures market.

Although there is some way to go, 2008 may be seen as the year in which Iraq’s oil industry began to recover and, when the markets recognise this, it may take some of the edge off the oil price. However, given Iraq’s history of dashed expectations, it would be unwise to factor major production increases into oil supply projections until Iraq has passed a series of important tests. One of these is whether the Iraqi army will be able to maintain security as the US draws down its troops. Another is whether the rival Shia movements led by Muqtada al-Sadr and Abdel-Aziz al Hakim can make the transition from street fighting to purely political competition—an issue that will probably not be resolved until the next general election in December 2009. Finally, the KRG and the rest of Iraq will need to conclude that it is worth reaching a compromise on Kirkuk (the disputed northern province that contains Iraq’s largest oilfield) and regional autonomy in order to share in the benefits that a major expansion in the oil industry will bring.

Hakim is replacing Iraqi troops specifically with his followers, so some of the Army and Badre Brigade overlap. The next question might be whether Maliki can ever defy Hakim if ever he even desires it, or how it plays out in 2009 elections by province. And to see how the Awakening Council holds together and participates.

In addition, Conoco Phillips Oil points to a US based dilemma-access to supplies is dwindling in testimony to Congress.

I cannot over-emphasize the access issue. Access to resources is severely restricted in the United States and abroad, and the American oil industry must compete with national oil companies, who are often much larger and have the support of their governments. We can only compete directly for 7% of the world’s available reserves, while about 75% is completely controlled by national oil companies, and are not accessible.

Comments (0) | |