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

The Kosher Butcher Who Was Not a Person Until He Incorporated Himself*

Religious liberty, [Tenth Circuit Court of Appeals] Judge Tymkovich wrote, cannot turn on whether money changes hands. “Would an incorporated kosher butcher really have no claim to challenge a regulation mandating non-kosher butchering practices?” he asked.

Court Confronts Religious Rights of Corporations, Adam Liptak, New York Times, today

Why, yes, Judge Tymkovich, of course an incorporated kosher butcher really would have a claim to challenge a regulation mandating non-kosher butchering practices.  But that’s because the kosher butcher also is an actual human and was one even before he incorporated himself, er, his butcher shop.

The butcher would have a claim as, um, the butcher–Ira Greenberg, human being, exercising his religious right to use kosher-butchering practices to kill his own food, and his religious right to obtain kosher meat in order to limit his meat eating to kosher.  He also would have a due process right to practice his trade and make a living, unencumbered by an utterly arbitrary and irrational prohibition (or, to use legal formality, a prohibition that has no legitimate governmental interest). And Ira Greenberg Kosher Meats, Inc., would have a similar due process claim, a constitutional claim that, unlike campaign-contribution claims or free-exercise-of-religion claims, could be invoked legitimately by a corporation, because it, unlike political contributions and religious practice, actually would concern the right to operate as the sort of business that it is.

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Fix the Debt

Via Digsby

Oh, my goodness. Can it be that Fix the Debt is using patented right wing astroturf tactics?Say it ain’t so!

Our friend Jon Romano, press secretary for the inside-the-beltway PR campaign “Fix the Debt” and its pet youth group, The Can Kicks Back, have been caught writing op-eds for college students and placing the identical op-eds in papers across the country.
This is the latest slip-up in Fix the Debt’s efforts to portray itself as representing America’s youth. Previously, they were caught paying dancers to participate in a pro-austerity flash mob and paying to gather online petition signers for them.
The newspapers involved in the scam were not amused.
Gainesville Sun to Fix the Debt: “Lay Off the Astroturf and Outright Plagiarism”

The identical op-eds were discovered by Florida’sGainesville Sun. The paper’s scathing editorial on the topic makes for an entertaining read.
Via Campaign for America’s Future

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Subsidy insanity in western Missouri

I have written before about the gross waste of taxpayer monies on retail in the St. Louis region. According to the East-West Gateway Council of Governments (p. 18), governments in the bi-state metropolitan area pumped about $2 billion worth of subsidies into retail projects from 1990 to 2007, but only saw a net increase of 5400 jobs, meaning that each low-wage, low-benefit retail job cost the cities of the region $370,000 apiece. The price is only this low on the generous assumption that the subsidies were solely responsible for this job creation. However, given the growth of incomes in the metro area during that time period, it is likely that most if not all the jobs would have been created without the incentives provided.

It turns out something similar has been happening in the Kansas City region. As regular readers of this blog know, the border job piracy in the Kansas City metro area is probably the second-worst in the country, after metro New York City. As it turns out, there has recently been data released on the scope of job piracy there.

Less than a year after Governors Jay Nixon (D-Missouri) and Sam Brownback (R-Kansas) told New York Times reporter Louise Story, on camera, that there was no way they would back off of their wasteful poaching, a new Times story reveals that Nixon is now calling for an end to their futile battle.

Part of the reason for his change of heart probably lies with a recent study by the Hall Family Foundation showing that since 2009 alone, Missouri and Kansas City have spent $212 million on relocation subsidies to drag existing operations across the border, sometimes more than once as in the case of Applebee’s. The net effect, however, has been virtually nil: 3200 jobs moved to Kansas, while 2800 move to Missouri, for a net movement of 400 jobs.

The math of course is simple: $212 million/400 equals $530,000 per net moved job. And remember, these aren’t net new jobs, merely net moved jobs. As I’ve written on numerous occasions, job piracy is the least defensible use of development incentives, precisely because it creates no new jobs. Good Jobs First had a detailed analysis of the issue overall and the Kansas-Missouri border war in particular in January 2013.

However, if the most recent Times article is to be believed, we could be on the verge of ending this particular border war. Mind you, don’t hold your breath. The two states tried before, according to Good Jobs First, and failed miserably. Indeed, there has yet to be a successful voluntary no-raiding agreement between states, even though there have been at least three attempts. But in this case, there has been a strong push for a cease-fire from a number of prominent Kansas City businesses, so there is a better-than-usual chance that this could be successful.

Really, though, there oughta be a law. A federal one.

Cross-posted at Middle Class Political Economist.

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Traveling China and Thailand

I am nearing the end of my 16 day jaunt starting in China and ending in Thailand. It has been 7 years since I have been in Thailand and the same for China other than an overnighter plus a day in Shanghai, China. Both places are surging in infrastructure and in business. Let me explain why I say such.

I am a Global Procurement Manager for a $500 million division of an $8 billion corporation. My VP and I have been hitting the machining, die casting and casting, extrusion, forging, fabrication, and steel manufacturers in both countries at the rate of 2-3 per day. We have traveled by train, plane, and automobile in China and plane and automobile (besides tok-tok) in Thailand.

The China pros: The 200 mph train ride to Ningbo, Suzhou, etc. The seats were comfortable, the stops few, and the time sent moving between cities quick. A lot of infrastructure building going on in the cities and outside of the cities. A company I visited (TonTech ) was making a $1 billion investment in a milling machine / fabrication facility and another $1 billion investment in a casting and forging facility. We stopped to see a needle bearing facility which can meet our needs and beat McGill with a lower cost and similar capability. It is a startup and the owner lives on site with his family and one huge dog. The food is good and the people mostly friendly.

The China Negs: Air Pollution is everywhere. The quality of air is typically poor to bad on most days without a strong wind. Haimen, China I thought had the worst for quality of air. It was always smoky and the air irritates. Even with license plates exceeding $10,000 per vehicle for Shanghai, China; traffic is still horrific with travel measured in hours during certain parts of the day. Shanghai is one of the biggest cities in the world. Some of the Chinese are just plain rude to each other.

The Thailand Pros: It is warm for sure and in the nineties even now. The sky train above Sumhumvit Road in Bangkok is cool. Again there are many small businesses at $2 million to $250 million which would suit our needs. The intelligence of how to machine and extrude is excellent and they bring things to the table. Remember what I have always preached, it is about Overhead and not Labor in Asia when comparing against the US. Travel in Bangkok and the surrounding areas is easier even with poor roads.

The Thailand Negs: It is hard not to walk the streets and see crippled people, moms with kids, and the elderly begging for coins. If you have a soft heart, carry plenty of small change (20 baht) in your pockets. Safety at machining is a lesser priority than what you would find in the US. There is civil unrest with the government and corruption also. There is a fair amount of pollution; but, it is not a serious as China.

In general inequity is far more wide spread in China and Thailand than in the US; however, China with all of its infrastructure building and investment in domestic improvements will overtake the US in in time as we continue to invest in Defense and tax breaks for a few. It is just a matter of time before the US is a Tier 2 nation.

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A Short Economic Explanation of Nearly Everything

Simple explanations are always suspect. So do with this what you will. It’s my basic framework for thinking about how economies work. It of course doesn’t explain everything; the headline here is tongue-in-cheek. But I find it very useful in thinking about everything else.

This thinking clashes quite definitively with traditional economic teachings. But it conforms very nicely with economic understandings that have demonstrated those teachings to be bunk. (Think: the Cambridge Capital Controversy, wherein the traditionalist economic powerhouse, Samuelson, admitted that his model — the model that almost all economists and many others even today run natively in their heads — was “definitely false.”)

It starts with money.

There is a pool of financial assets, financial “capital.” Stocks, bonds, money (bank deposits and currency), etc. etc.

People and businesses can transfer those financial assets between themselves.

Some of those transfers are in exchange for real goods and services (things that humans can consume immediately or over time to derive real human utility).

Some of those transfers are simply exchanges of one financial asset for another.

Transfers in exchange for real goods (“purchases,” “spending,” “expenditure”) create income, and spur production.

Production yields surplus. (That surplus is monetized through trade, supported over time by new financial-asset creation by banks and governments — allowing producers to turn their surplus into generalized claims, hence giving them incentive to produce.)

Surplus from production is the source of aggregate “saving.” (Though for clarity I prefer to call it accumulation. National/world wealth is about accumulating real stuff, not claims on real stuff, a.k.a. financial assets).

Transfers in exchange for other financial assets may result in better allocation of real resources.

There is a declining marginal propensity to spend (on real goods) out of wealth. So a person with ten million dollars in financial assets will spend a smaller percentage of that each year than a person with ten thousand dollars.

If wealth is more concentrated, that declining propensity means there is less spending per the amount of financial assets; the turnover is lower.

So there’s less production. And less surplus. And less income. And less saving/accumulation. And there’s less pressure/incentive for banks and governments to create and fund new financial assets, because there’s less surplus that needs monetizing. (Paradoxically, spending causes saving.)

Arithmetically, more-equal distribution of wealth means more spending, income, production, surplus, and accumulation.

There are limits, of course. Perfectly equal distribution would result in seriously problematic incentive effects. But with the wildly unequal wealth distribution we see today, it’s not crazy to suggest that the straightforward arithmetic effects utterly overwhelm those incentive effects.

You can see a simple arithmetic model of this thinking here and here, and download the spreadsheet to play with it yourself.

Cross-posted at Asymptosis.

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Labor Power and Economic Growth

Lane Kenworthy has done some of the best work on this subject. Read all his stuff.

One great piece, on determinants of growth:

Institutions, wealth, and inequality

Only one institutional factor is strongly supported as a determinant of growth in prosperous countries, according to Lane’s really excellent statistical work: “corporatist concertation.”

Screen shot 2013-11-18 at 7.41.39 AM

Corporatist concertation is not what you think. It’s euphemistic sociologist-speak for labor having a strong place and voice at high-level bargaining tables — not just in labor negotiations, but in determining the institutional and policy structures that set the rules of the game.

Labor power is the strongest determinant of growth in prosperous, advanced countries. More labor power, faster growth.

I’d love to see equally well-executed statistical work analyzing labor-share of income and wealth relative to economic growth across prosperous countries.

Cross-posted at Asymptosis.

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The Not So Bad PPACA Numbers

After 10 days scurrying around the Shanghai, China area; I am now sitting in Bangkok, Thailand and reading more of the news. Such is the life of a Global Purchasing Manager dealing with automotive and industrial. I have been reading and watching the typical media reporting about the PPACA while drinking my green tea.

Greg Sargent as reported on Crooks and Liars – How the Obamacare numbers actually look pretty good picks up on what the numbers to date mean for the PPACA. So what is the big deal???


Republicans are gleefully pointing to the numbers as proof Obamacare needs to be scrapped entirely.

That confirms two things we’ve long known to be true: the website is a disaster, and short term enrollment figures are a serious political problem for the White House and Democrats. But to Larry Levitt, a vice president at the nonpartisan Kaiser Family Foundation, another very telling number is this one: over 975,000 have been determined eligible for a marketplace but haven’t yet chosen a plan.

‘That’s one of the most telling numbers — a million people have been determined eligible,’ Levitt tells me. ‘That means if the website had been working well, and a million people had gotten to the end of the process, we’d be looking at a very different trajectory now. We heard about the surge in traffic when went live. This suggests there is in fact a lot of interest.’”

We can establish the PPACA website which was more or less designed as a backup to expected state run exchanges and did not function as expected. We can also safely say > half of the states who were supposed to have systems in place declined to implement state exchanges much less pass the PPACA. My experience as a part of multiple MRPII/ERP implementations where businesses decided to either change source code or make other extensive changes has always resulted in system issues. this leaves me to say, the crowing about commercial enterprises being far more successful in system implementations is just plain nonsense. Even so, the federal exchange was never meant to handle the traffic which showed up at its doorstep due to obstinate political and moneyed interests (such as in Michigan) who are more interested in seeing a President in failure than helping their constituents. 20 years since Hillarycare and little has happened to help the uninsured or stem the rising cost of healthcare (sans insurance).

Looking at the chart, Larry Levitt of the Kaiser Foundation points to the “975,000 being determined eligible in the marketplace but not having yet chosen a plan.

if the website had been working well, and a million people had gotten to the end of the process, we’d be looking at a very different trajectory now. We heard about the surge in traffic when went live. This suggests there is in fact a lot of interest.” A lot of interest in having some type of healthcare insurance

Because we have issues with the PPACA software; the proposal by Republicans, tea-baggers, and those who simply dislike the president is to scrap the PPACA this decade and wait for another decade or two to implement another version? Hmmmmmmmmmm, nope! There is no way another bill would get past the Republican held House in this decade. I have not participated with a commercial interest yet which has shut down when there have been software issues and we should not be so willing to back away from the PPACA. The companies worked through the issues and went onward for the most part. When the TSA was blowing $200 million a year (since 2007) trying to read your personality in conversations while you were getting x-rayed and patted down, no one was calling for an immediate halt to it. 6 years later, > $1.2 billion spent, and the TSA finally determined their Vulcan mind-meld methodology did not work. Even so, we do need to move forward much faster with a PPACA website fix.

”’Assuming the website gets fixed, I would assume a surge of enrollment in December, and another surge in March,’ KFF’s Levitt explains.”

But what about the lowly numbers (100,000) who did get insured through the state and federal exchanges? This is an extremely low number when compared to expectations for the individual market place; but, the critics and pols conveniently side step the 400,000 who were made eligible for Medicaid in states which embraced the expansion. Isn’t this about insuring more people whether through the individual exchanges or through Medicaid?

”‘In total that’s over 500,000 people who signed up for insurance in the midst of a tumultuous launch,’ Levitt says. ‘People make a distinction between the marketplace and Medicaid, but those are both elements of the Affordable Care Act — both are mechanisms to get people insured.’” 500,000 in one month?

The argument put forth by the Obama foes have been about people experiencing negative impact (as if the Republicans actually cared for their constituents as opposed to the moneyed interests) from the PPACA website failures, purposeful insurance company cancellations, and higher rates due to broader coverage. All of this is occurring in the individual market as opposed to the much larger group market. The cancellations have been made by companies, the increased costs have mostly been disproven, and the website is being worked on feverishly. Going forward, the answer to today’s issues and the success of the PPACA will be determined by the numbers who benefit from coverage. As a result, the outlook is still unsettled but positive when the entire numbers are reviewed as shown. The PPACA is moving forward albeit slower than expected. It is accomplishing at a less than spectacular rate on the exchanges what it is supposed to do . . . cover people. Given time, it will succeed.

What the Obamacare enrollment numbers really tell us,” Greg Sargent, Washington Post November 13, 2013

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