Stupid… (notes for econ class)

Jonathan Gruber explains how Obamacare was passed…


Gruber actually explains the concepts of subsidy distortions and “tax incidence”…


Gruber explains that if you don’t understand that, you’re not ignorant — you’re stupid…


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The Seven-Per-Cent Solution

As reported in the 07-Nov SJ-R, the NAACP may sue if the school district doesn’t hire more black and minority teachers, based on statistics such as blacks comprising only 9% of the district’s teachers vs.  38% of students.  The minority recruitment advisory committee posits an 18.4% figure to be in “compliance” with a 40 year old consent decree.

Answer me this — if we actually were to do that, how will everyone else be able to fill their quotas?

The NAACP argument comparing the population of providers (teachers) to consumers (students) is completely flawed, albeit intentional.  The real question should be “are we discriminating against qualified teachers based on race?”

According to a 2011 National Center for Education Information report, only 7% of teachers in the USA are black.  Given the incredible pressure toward politically correct hiring across the entire educational establishment, 9% is amazing.  We’re  29% OVER the national average, folks.  We’d have to hire over twice the normal minority teacher distribution to hit that 18.4%.

Here’s an ominous sign from the same report for those of you who think that having a kid’s teacher be the same race is important (didn’t that used to be white people?) — while 22% of teachers are under 30, only 10% of black teachers are under 30.  Meaning not only that there aren’t nearly enough black teachers to meet NAACP quotas, but the numbers seem to be dropping.

The district should sue the NAACP to sign a consent decree agreeing to talk 18.4% of young, black, college-bound high school students into being teachers.

Do it for the children.

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Beer taste on a champagne budget

Today’s SJ-R article about whether the government will give Memorial Medical Center permission to spend its own money to expand the hospital cited an interesting statistic.  Although government staff recommended allowing MMC to spend its own money, it did caution that some of the construction would cost $429 per square foot, which “ ‘appears high’ when compared with the board’s current standard of $400 per square foot.”  That’s 7.25% over their standard.

Contrast this concern over organizations spending their own money with last week’s story, where the government spent other people’s money.  Grab your calculator if you’d like to follow along.

Various and sundry state and local agencies and other interested parties proudly announced the opening of the Hope Springs Apartments for the benefit of people dealing with mental illness.  There are 23 one-bedroom apartments at 550 square feet each; 13 efficiency apartments with 330 square feet; and a 2,275 square-foot “resource center.”  If your calculator is working, you should come up with a total of 19,215 square feet.

A bit of time spent researching on the interweb finds per square foot estimates for apartment construction ranging from $100 to about $135 per square foot in this area.

How did our public servants do with our money?  They spent $5.4 million dollars — or $281 per square foot.  Well over twice a high estimate, for the purpose of providing what they term, without any apparent sense of irony, “affordable housing.”  To which one can only ask – for whom??


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if you come to a cliff in the road…

With the election behind us, attention shifts to the next distraction.  That’s the simultaneous expiration of tax cuts and support programs, coupled with automatic, across-the-board spending cuts staged by our feckless national leaders; collectively known as the “Fiscal Cliff.”

Our best hope is that the Washington establishment, the vested interests, the elected aristocracy, et al., just this once will set aside partisan differences, join hands, and for the sake of the country — JUMP!

Of course, a real cliff would be preferable.

Yes, higher tax rates on people earning over $250,000 a year (aka, “millionaires”) would impede business and job creation, but at least decisions can be made.  Uncertainty – including ad nauseum interim extensions – causes paralysis.

On the flip side, there will be higher tax rates on everyone else, coupled with millions immediately losing unemployment benefits, the 2% payroll tax increase, and the slashing of child and earned income tax credits.  This would shift millions back into the “tax payer” category, if only nominally, alleviating the current “free rider” syndrome in the electorate.

And, as frightening as some find sequestration’s military cuts, perhaps we should contemplate whether we really need six- or seven hundred military installations in a gross of countries.  Meanwhile automatic cuts in discretionary non-military spending could prompt the same kind of “is this a critical mission?” analysis.  Is that so bad, if you’re not a military contractor or a welfare bureaucrat?

Sadly, given the current owners of our government, the pols are also more likely to jump off a real cliff than do something right.

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Calming down the Arab Fall

Here we are.

Our embassies are under siege in Muslim-dominated countries around the world.

We are burying a top Mideast diplomat and three others murdered in a planned terrorist attack.  Meanwhile, our Egyptian embassy issued an abject apology for someone exercising their first amendment rights.  Or, as they called it, “abusing free speech.”

Now the administration is spending tax dollars airing commercials where Obama and Hillary Clinton continue to legitimize the pretense that this  uprising is based on “hurt feelings” while begging for peace.  Somehow, our Constitutional Scholar-in-Chief neglected to mention our freedom of speech.

So instead of a principled statement explaining the power of one of this country’s pillars of exceptionalism, he reinforced an image of weakness.  The escalating unrest is unsurprising to anyone outside Obama’s echo chamber.  Maybe next Obama and Hillary could don a couple of burkas and throw rocks at a U.S. embassy.  That should help.

Or, here’s an alternative suggestion.

For all of the people chanting and protesting and burning effigies and flags outside our embassies, we should applaud them for exercising their rights to express their grievances.  Take them some water to drink, put out some falafels, maybe erect some tents to give them shade.

For anyone who breaches our walls, sets foot on our embassy grounds with malice, or touches our flag, we should calmly but firmly convey to them that such conduct does not constitute civilized interaction — via a belt-fed, recoil-operated, air-cooled, crew-operated .50 caliber machine gun on full auto.

Sometimes, it’s not what you say.  It’s how you say it.

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If this doesn’t sell ’em, talk up our 10 o’clock music curfew!

An 8/27/12 SJ-R letter to the editor proposes Springfield has been remiss in publicizing its “clean energy” accomplishments.  Specifically cited was the benefit of caving in to the Sierra Club’s extortion, with its resultant contracts for wind power running through the latter part of this decade.

While it’s true Springfield’s government and CWLP aren’t exactly shouting the results of this decision from the rooftops, CWLP does in fact mention it on their website, thusly:

“Of the 628,359 MWH purchased by CWLP in 2011, 359,825 MWH was in the form of wind energy … CWLP paid $17,440,716 … for the wind energy and sold it for $5,409,741 … for a net cost to the utility of $12,030,975″

So, we’re losing $12 million a year now and into the foreseeable future, due to our elected officials’ forward-thinking decision to pay someone else over twice CWLP’s production cost for unreliable additional units of its core service, of which it produces a surplus, then turn around and sell them for a third of what they just paid.

Coincidentally, that’s about the shortage in CWLP funds that led to it being declared in technical default on its loans.  Alternatively, if we could apply those funds to the city’s massive pension funding deficit instead of subsidizing an economic and environmental boondoggle, we’d be caught up about the same time those wind power contracts expire.

So this and other examples of how our city runs could indeed be used to attract new businesses and young professionals.  To Bloomington.

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For $2,500 a week, we can maybe promise you… Nothing!

If you have a vested interest in Alzheimer’s research — like those covered in recent SJ-R articles (“Alzheimer’s at a crossroads”,”Drug may help slow disease’s progression”) — you should prepare to be disappointed.

Drug companies have invested billions researching drugs that suppress or remove amyloid plaques on the theory that these “gum up” the victim’s brain.  The problem is, they work.  Clinical trials have had to be abruptly halted when patients taking the drugs markedly worsened or died.

Now the developers are hoping the remaining drugs in trial will  “hit their target.”  Meaning, if they reduce plaque without killing or making the patient worse, they can declare  victory and start selling them at $1,000-$2,500 a week.  Note that definition doesn’t include curing or stopping Alzheimer’s.

A competing theory, published last year in the European Journal of Internal Medicine, posits amyloid plaques, rather than causing dementia, are actually the body’s last ditch effort to prevent destruction of the brain’s neurons.

What is suddenly triggering this amyloid response, and why is it accelerating?  Three co-factors are implicated.  First, our hysterical avoidance of essential natural fats; compounded by their replacement with carbohydrates, which are inflammatory; and finally, the zealous prescribing of statins to lower cholesterol, compromising this essential nutrient’s ability to transport fat to the brain without being damaged in the  bloodstream.

If that’s a correct analysis, the solution to the accelerating rates of dementia — and also obesity, diabetes, celiac, and other “diseases of civilization” — over the last 30 years isn’t another expensive lifetime drug prescription.

The solution would be for the USDA to stop pushing commodity grains, especially processed flour and high fructose corn syrup, the FDA to recognize statins as the neurological equivalent of the thalidomide fiasco, and the ADA — the certifying organization for dieticians — to stop accepting major funding from cereal, candy bar, soft drink, and drug companies.

In other words, you’re on your own.  Hold the muffin.  Have some coconut oil.


Posted in Diet & Nutrition | 11 Comments

Misery loves company

Ever heard of the “Misery Index?”

It’s a metric first proposed in the 1960’s by economist Arthur Okun that combines the unemployment rate with the inflation rate, both of which are indeed miserable things.  Especially if they’re happening to you.  Especially at the same time.

In the Keynesian-based economics of our government experts, by the way, that can’t happen.  Inflation, according to simple government economic theory, is from too many people having jobs, so they’re making too much money, which causes prices to rise when they all try to buy the same stuff at the same time.  Unemployment, on the other hand, reduces that pressure on prices.  So it’s not possible to have them both rising at once.

Jimmy Carter proved them wrong, ending with a 1980 economy sporting 7.6% unemployment and a 14.38% inflation rate for an all-time record 21.98% Misery Index leading into the election.

Fortunately for economists, their theories are evaluated on political expediency, not results.

Fortunately for Obama, in the 1990’s, government economists began “adjusting” the definitions of unemployment and inflation.  Not surprisingly, these adjustments tend towards understatement.  For example, people who have given up looking for work or whose benefits expired are no longer included in the unemployment number; and if steak prices go up 30% in a year, they assume that you’ll buy hamburger — hence, no inflation.  As a result, the currently reported Misery Index is at an uncomfortable but not outrageous 9.9%.

However, if you were to measure unemployment and inflation the way they were originally defined, which exercise is still performed at the website, you find a current inflation rate of around 9% and a real unemployment rate of 22%.  That makes Obama the indisputable,  but unofficial,  steward of the worst economy ever with a breathtaking 31%.

Now that’s misery.



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From the “This Would Never Happen” file

Here’s a little “what if?” thought experiment for you as we head into the election cycle with its endless coverage about Taxmageddon, green subsidy fails, the exploding deficit, and on and on.

First a few facts:

Corporate tax receipts to the federal government over the last ten years have averaged $228 billion annually.  If you take out the $342 billion average for the three years (2006-2008) at the peak of the bubble with its artificially inflated profits, you have a more normal average of just under $180 billion a year.  Let’s use $200 billion.

Federal spending for the Bush years 2004-2008 averaged $2.7 trillion a year.  Yes, he started the $800 billion “stimulus,” but spending under Obama, including projections through the end of the 2012 fiscal year now averages $3.5 trillion a year.  So, despite all of the rhetoric about “emergency” and one-time jump starts, that $800 billion is now locked in and the feds have spent nearly $3.5 trillion more than they would’ve if they hadn’t heeded the opportunity to “never let a serious crisis go to waste.”  And here we are.

Now for the thought experiment.

Let’s say that upon the 2008 onset of the beginning of the end of this final bubble, George Bush, instead of listening to his Treasury Secretary Hank Paulson (former Goldman Sachs chairman and vested Wall Street shill) and deciding to “abandon free market principles to save the free market system,” had instead decided to embrace free market principles to save the free market system.

Besides no bailouts and no propping up zombie companies and insolvent states, what if he’d also said “and to get America back on track, we’re going to abolish the corporate income tax for ten years.”

Begin thinking.

No one can say it would be too expensive.  We could’ve covered that and still had an extra $1.5 trillion just on what we wouldn’t have spent over the last four years.  The real power, however, is what it would’ve done by removing the distortions that the byzantine tax code wreaks on the economy.

Try to imagine how much creativity would’ve been unleashed, how many jobs and “corporate offices” would’ve shifted away from Washington, D.C. and into productive activity.  Think of how the landscape would change as efficiency (profits) wasn’t penalized and stupidity wasn’t subsidized.  How much money would’ve moved from “tax shelters” and into profit seeking investments.

Think of how much more competitive U.S. companies would be around the world.  Contemplate how much the small business “growth engine” would’ve fired up after the disappearance of all of the myriad special breaks and loopholes that the big corporate players with their departments of tax lawyers and lobbying staffs exploit.

Finally, think of an America where people didn’t think everything they wanted was supposed to be given to them by the government.

Of course that would never happen.  Not on purpose.

Just something to keep in mind for after the bubble.




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“You keep using that word. I do not think it means what you think it means.” — Inigo Montoya, from The Princess Bride

Just when Democrats are on the verge of proving that they’re the most economically illiterate creatures to walk the earth, the Republicans get all jealous and start yelling and jumping up and down until everyone who’s paying attention recognizes that it’s always and evermore a dead tie.

Here’s a little something House Minority Leader Cross and others upset with the idea that schools pay for their staffs’ pensions may want to try getting their heads around:

Having to pay for goods and services you asked for and received isn’t “cost shifting.”  It’s just “cost.”

Taxing satellite TV providers in order to give money to education is cost shifting.  Taxing smokers to give money to Medicaid is cost shifting.  Taxing strip clubs to give money to women’s shelters is cost shifting.  Taxing offshore oil rigs to give money to education is cost shifting.

See a trend here?  You’re funding a benefit (“cost”) for one group of people by taking money from a completely unrelated group of people (“shift”) who won’t receive a benefit.  This shouldn’t be hard to grasp as it currently comprises 98% of all government activity.

Say for some reason and in spite of all evidence, you believed someone when they promised they would pick up the tab for half of something you where considering buying.  So you signed up for a whole lot of extra bells and whistles that you otherwise couldn’t afford and wouldn’t have ordered.

Time passes, and as actuarial reality sets in, you are presented with the bill for all of those goods and services you’ve received.  It may be accurate to yell “fraud!,” or maybe “Ponzi!” (or what I yell — “told you so!”) but it is most definitely not cost shifting.

So please watch your words.  There may be children reading.

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