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

Is Venezuela Stabilizing?

Is Venezuela Stabilizing?

Maybe.

It looks the inflation rate in Venezuela maxed  out in January at an annuualized rate of 192,000 % , whiich fell by September to 4,600% rate, still in hyperinflationary teritoryy, but  clearly coming down substantially.  I am not  a fan of this regime and never was, unlike some prominent economists saying nice t8ings about their economic performance, especially back in 2007, just before  the  world crash, when indeed their  numbers  looked prtty good.  But, not more recently unfortunately.  But maybe they are slowly returning to a more functional economy now, with still a long way to go.

There are also reports that oil production in Venezuela has recently risen.  Reportedly some of the recent possible stabilization in Venezuela may reflect influence of Russian advisers.

Barkley  Rosser

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What quid did the president quo and when did he quo it?

What quid did the president quo and when did he quo it?

Aside from the headline news about a July 26 phone call, I learned four big things from the impeachment inquiry hearing this morning. First, the specific corruption surrounding Burisma Holidings had to do with self dealing by company founder Mykola Vladislavovich Zlochevsky — issuing oil and gas licences to his own company when he was Minister of Ecology and Natural Resources. In other words, Zlochevsky did exactly what Donald J. Trump attempted to do with his Doral Golf Club and the G7 summit.

The second thing I learned is that President Trump was nursing a grudge against Ukraine because some Ukrainian politicians said some nasty things about him after he made a comment about letting Russia have Crimea. That’s why he felt Ukraine “owed” him. The third thing is that the Ukraine shit made fanfall just about exactly the time that Trump was extemporizing about Hurricane Dorian hitting Alabama. Who knew Trump could multi-task?

The fourth thing I learned is the big one. There was not one quid pro quo but two. One involved Zelensky, the other Putin. That’s the significance of the timing of the Trump-Zelensky phone call — the day after Robert Mueller’s congressional testimony was a dud. Humiliating Zelensky by forcing him to make a public announcement of a politically-motivated investigation of Biden-Burisma-2016 would hand to Putin his reward — a weakened negotiating partner — for the favor of having helped put Trump in the White House. The art of the deal, indeed.

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A simple Hayekian test for conservatives

(Dan here…Eric will be posting some of his work.  He has read many econ blogs but has not published in the econ blogosphere.  He is experienced otherwise…welcome  Eric.)

Bio for Eric Kramer

I am an economist and lawyer by training and I am currently writing a book on political economy and the role of government.  The book defends the liberal idea that government should actively regulate markets to promote efficiency and to ensure that opportunity and prosperity are widely shared against the leading arguments for limited government, especially the consequentialist arguments of Friedrich Hayek and James Buchanan and their intellectual heirs.  Prior to starting work on the book, I was a finance and strategy executive for The Plymouth Rock Companies for many years.

 

by Eric Kramer

 

A simple Hayekian test for conservatives

Hayek believed that non-economists are frequently dissatisfied with the hardships, risks, and inequities created by capitalism, and that they frequently support harmful government regulation of markets because they do not know how markets work.  As Hayek recognized, this puts economists in a difficult political position.  Successful persuasion requires a perception of common values, but when economists argue against popular, common-sense efforts to address the perceived hardships and inequities of unregulated capitalism, they risk being dismissed as apologists for the wealthy or as ideological extremists.

Hayek was sensitive to the political challenges he faced as an advocate for lightly regulated capitalism.  He famously emphasized – and arguably exaggerated – the values he shared with his socialist opponents.  He recognized that economists cannot simply urge people to reject bad policy proposals, that they needed to offer constructive solutions to the problems created by capitalism.  To be sure, Hayek sometimes does lapse into harsh criticism of egalitarians and a rigid rejection of welfare state capitalism, but at other times I believe he endorsed a larger role for government than he personally approved of to preserve his own credibility.

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Mankiw’s Ideal Democrat (Bloomberg Alert)

Mankiw’s Ideal Democrat (Bloomberg Alert)

Greg Mankiw has always been a Never Trumper:

I just came back from city hall, where I switched my voter registration from Republican to unenrolled (aka independent). Two reasons: First, the Republican Party has largely become the Party of Trump. Too many Republicans in Congress are willing, in the interest of protecting their jobs, to overlook Trump’s misdeeds (just as too many Democrats were for Clinton during his impeachment). I have no interest in associating myself with that behavior. Maybe someday, the party will return to having honorable leaders like Bush, McCain, and Romney. Until then, count me out. Second, in Massachusetts, unenrolled voters can vote in either primary. The Democratic Party is at a crossroads, where it has to choose either a center-left candidate (Biden, Buttigieg, Klobuchar, Yang) or a far-left populist (Warren, Sanders) as their nominee for president. I intend to help them choose the former. The latter propose to move the country too far in the direction of heavy-handed state control. And in doing so, they tempt those in the center and center-right to hold their noses and vote for Trump’s reelection.

In a way I get this and a lot of other centrist Republicans are saying similar things. Enter Michael Bloomberg:

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S&P 500 BY PRESIDENTIAL TERMS

With the presidential election still a year away, Wall Street is starting its normal analysis that if a democrat is elected it will cause a devastating stock market crash.  One would think that after all these years of such claims being proven dead wrong that the street would finally give up on it. In the post WWII era from Truman to Obama it is 70 years and each party has had bad candidates in office for half that time.  Truman was only President for seven years and five months so the Democrats only had 35.4 years in office while the Republicans had 36 years in office.  Over these years the average annual S&P 500 gains was 15.9% for Democrats and 6.6% for Republicans. If you look at the actual returns, you would think if anything; Wall Street analyst would be warning about the dangers of a Republican President for the stock market.

Because the chart is already so cluttered I left Truman and Ike off.  But it seem so obvious that the record shows that it is Republican Presidents that investors should fear.  Just to clearly show that stock market gains have been more that double under Democrats versus Republicans I’ve also presented the data in a table.

 

 

 

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A note about turnout in yesterday’s elections

A note about turnout in yesterday’s elections

I haven’t seen any information yet on how turnout in last night’s elections, particularly in Virginia, which was an “off-off year” election, i.e., no statewide races at all, only state legislative and local races.

The state of Virginia keeps turnout statistics online back to 1976. The bottom line is, clearly something happened in the late 1990s that drove down turnout, which has been reversed in the last two years.
In the 5 “off years” with statewide races between 1977 and 1993, turnout averaged 61.6% of registered voters.
By contrast, turnout in the “off-off years” between 1979 and 1995, turnout averaged 54.6% of registered voters. That’s a 7% decline.
Now, here are the same figures for the 10 state elections thereafter.
In the 5 “off years” with statewide races between 1997 and 2013, turnout averaged 44.8%, a decline of almost 17%.
In the 5 “off-off years” between 1999 and 2015, turnout averaged 31.0%, a decline of over 23%!

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Some Election Results

I am not quite sure how to begin other than say I am angry at why it has to come to this , and still not enough, before people react.

  • Loudoun County, Virginia: One election event ended positively for a woman who had given Trump’s motorcade (and supposedly Trump) a message of defiance, a one finger salute, as it passed her while she was riding her bike. Former government contractor Julie Briskman won a seat on the Loudoun County Board of Supervisors on Tuesday. Ms. Briskman defeated eight-year Republican incumbent, Suzanne Volpe and this is her first time in elected office.

 

  • Virginia House: Gaining 15 seats in the House in 2017; in 2019, Democrats added another five seats and perhaps a few more as other races are still to be decided. Democrats in Virginia  have not lost momentum in the third year of a Trump presidency. The ultimate size of the new Democratic majorities is still to be decided as a few close races were undecided. Republicans held a 51 to 48 edge going into 2019.

 

  • Virginia Senate: Ms. Ghazala Hashmi will be the first Muslim woman in the Senate, a state which was the former seat of the confederacy. Democrats have picked up at least two seats in the Senate shifting the balance from 20 to 19 favoring Republicans going into the 2019 election. Wondering if people would speak up against the assault on civil liberties, Ms. Ghazala Hashmi anxiety was relieved with her upset victory in a suburban Richmond district.

 

  • Kentucky Governorship:  Andy Beshear appears to have beaten incumbent Matt Bevin by ~5000 votes. Andy Beshear’s message in his victory “It’s a message that says our elections don’t have to be about right versus left, they are still about right versus wrong.” Other races in Kentucky went to Republicans with the Democrats losing the State AG office for the first time in 70 years with the election of an African American, Daniel Cameron.

Update: While a recanvas (less than 1% margin) will follow, the Republican dominated state legislature is poised to establish who is the winner of this election. Kentucky Republicans are going to try and steal election in favor of Bevin.

Stivers said he thought Bevin’s speech declining to concede to Beshear was “appropriate.” He said believes most of the votes that went to Libertarian John Hicks, who received about 2% of the total vote, would have gone to Bevin and made him the clear winner.

A candidate can file a formal election contest with the state legislature, but it must be filed within 30 days of the last action by the state board of elections. The state board is scheduled to certify the results of the race for governor on Nov. 25 this year.

Under this contest, the candidate challenging the results must specify the grounds for the action, such as a violation of campaign finance rules or specific problems when it comes to how ballots were cast.

Such an election contest is covered under Section 90 of the state constitution, which addresses a “contest of election for Governor or Lieutenant Governor.”

Section 90 states: “Contested elections for Governor and Lieutenant Governor shall be determined by both Houses of the General Assembly, according to such regulations as may be established by law.”

Sam Marcosson, a constitutional law professor at the University of Louisville Brandeis School of Law, told The Courier Journal that this language of the state Constitution suggests there must be procedure established by law for a review of a contested election to take place by the House and Senate.

Mr. Marcosson contends the legislature can not just make a procedure up.

“If the House and Senate were just to proceed on vague allegations without proof, that raises serious questions about disenfranchisement of the voters who voted for Attorney General Beshear. It’s an extraordinary proposition to suggest that the General Assembly would take vague allegations of unspecified irregularities and call into question a gubernatorial election.”

 

  • Arizona Tucson:  Democrat, Regina Romero appears to be victorious in the Tucson mayoral race and becomes the first woman and Latina to lead Tucson.

 

  • Mississippi: Republicans won the open Governor’s seat with former Lieutenant Governor Tate Reeves beating former Democrat AG Jim Reeves . In the Senate, Republicans have expanded their control to a super majority which they already had in the House. No surprise here.

 

  • New Jersey: Republicans appear to be to picking up two seats in the Assembly and one in the Senate due to a surge in the southern part of the state where Mr. Trump won easily in 2016.

If you have other election results from Tuesday, feel free to add them. Otherwise, we still have a long way to go to beat Trump and Republicans.

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Innovative bureaucrats?

by David Zetland    (Via One handed economist)

Innovative bureaucrats?

The Dutch are fond of subsidies for arts, sustainability and… innovation.

These subsidies arise when bureaucrats with “topical portfolios” award cash to winners of various “promise to stimulate [topic]” contests.

On the one hand, I am pleased to see the government providing public goods, i.e., stimulating efforts to help everyone.

On the other hand, these programs tend to find the least-productive incentives to advance the “topic”

(My one-handed view is that this structure is wrong… keep reading…)

So the irony is that the bureaucracy in charge of innovation…

  • …has permanent employment contracts and long vacations;
  • …gains nothing from success but loses nothing from failure;
  • …works in non-market areas where the lack of objective measures of performance leads to subjective choices of winners and losers; and
  • …happily spews a meaningless whirlpool of jargon borrowed from strategic plans, conference videos, and social media #buzzwords.

If I was in charge of these topics, I would follow the new development model of “pay for results” by specifying the criteria for success and then rewarding the most successful efforts to reach those goals with cash and publicity.

This system would have nothing to say about who did the work, what angle they took, or how fancy their method. It would pay for results.

My one-handed conclusion is that governments should stop chasing “creative,” “innovative,” “smart,” or “sustainable” and just reward results.

What’s your experience on this topic?

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Buried Lede … all time record

They got the goods, but some editor made them semi bury them.

By Mark Mazzetti, Eric Lipton* and Andrew E. Kramer note that the first shipment of Javelin missiles to Ukraine was mysteriously held up by the OMB until April 2018 when then prosecutor general Yurii Lutsenko froze the investigation of Paul Manafort. This isn’t a scoop. Both events were reported at the time.

To me the odd thing is that the key evidence is reported in the second to last sentence of the article. The two references to April 2018 are separated by Ten (10) paragraphs. In any case, the facts are devastating for Trump

Near the end of 2017, just as the government in Kiev was trying to get final approval from the Trump administration on the sale of the Javelin anti-tank weapons, Mr. Poroshenko’s prosecutor general, Yuriy Lutsenko, had begun freezing cases in Ukraine relevant to the Mueller investigation, including an inquiry tracing millions of dollars that Ukrainian political figures paid to Mr. Manafort.

The other two involved the law firm Skadden, Arps, Slate, Meagher & Flom, which wrote a report with Mr. Manafort’s help that came to be seen as whitewashing the arrest and imprisonment of a Ukrainian politician.

[skip]
No evidence has surfaced of an earlier quid pro quo of making the Javelin missile sale contingent on the halting of investigations relevant to the Mueller inquiry.

Except for the timing which makes it very clear what happened (it was clear at the time, but no one was interested)

Mr. Lutsenko took further steps to slow walk the Ukrainian cases related to the Mueller investigation in November and gave an official order to freeze them in April 2018.

One examined possible money laundering in a $750,000 payment to Mr. Manafort from a Ukrainian shell company. Another scrutinized a Ukrainian politician who signed entries designated for Mr. Manafort in a secret ledger of political payoffs uncovered after the 2014 revolution in Ukraine.

The other two involved the law firm Skadden, Arps, Slate, Meagher & Flom, which wrote a report with Mr. Manafort’s help that came to be seen as whitewashing the arrest and imprisonment of a Ukrainian politician.

[skip]

the White House Office of Management and Budget briefly held up the weapons sale after the Pentagon and the State Department had both approved it. The reason for the holdup, first reported by The Daily Beast, is unclear.

The logjam eventually broke, and in April 2018 the first of 210 Javelins and 35 launching units were shipped to Ukraine.

The second “April 2018” is in the second to last sentence in the article.

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It would not be safe for Democrats to play it safe.

Many liberal Democrats vote for the more moderate candidates in primaries, because they think half a loaf is better than none. The claim is that to win in the USA (or any first past the post system) you have to capture the middle. This is based on silly theory which requires the assumption that the set of eligible voters and the set of people who actually vote are the same. The contrasting view is that the key issue is getting people who might or might not vote (read young people) to the polls. The safe nominee can be risky. I want to make two arguments (after the jump)

1) There aren’t many swing voters. There aren’t all that many whose vote can’t be predicted right now given demographic characteristics.

2) The median US adult has policy preferences on bread and butter issues which are classified as left wing in the elite discussion, so going to the left of Hillary Clinton on those issues is a way to win their votes.

But first note how Democrats have done when playing safe. Mondale was the safe choice, Dukakis presented himself as a technocrat, Clinton was a DLC new Democrat welfare reforming capital punisher, Gore was the safe candidate (clearly to the right of Bradley), Kerry was the safe electable candidate. Black freshman senator Barack Hussein Obama was … you have got to be kidding me. H Clinton was the safe choice,

The record is crazy dream 1 out of 1, play it safe 1 out of 6. The crudest analysis of hardly any data points sure doesn’t suggest that it is good strategy to play it safe.

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