The Conversation

Economy: Issues related to the economy and economics

Salon: Let's Nationalize Amazon and Google

Jul 8, 2014 11:50 AM PT

Salon is not quite beyond parody as this excellent parody Twitter account demonstrates. On the other hand it gets harder every day to distinguish the real site from the jokes. Case in point, an article published today proposing that Google and Amazon be turned into public utilities.

Beneath a Photoshopped image of Jeff Bezos standing in front of an avalanche of money lies an article heavy on paranoia. Author Richard Eskow opens his piece on this note, "They’re huge, they’re ruthless, and they touch every aspect of our daily lives. Corporations like Amazon and Google keep expanding their reach and their power."

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Part-time America: Makers who are also Takers

Jul 7, 2014 8:03 AM PT

I thought I'd grown numb to the media's relentless efforts to manufacture good news for Barack Obama, but the June unemployment report really takes the cake.  It was almost universally reported as phenomenal good news, with caveats brusquely related 10 paragraphs into print stories, if at all.  Almost 300,000 jobs created!  Recovery Summer is here at last, five years after Obama promised it!  Pop the champagne corks, America is back in business!

In reality, this was a horrific unemployment report, and there is nothing ambiguous about why.  The headlines should have read "Full-time employment crash: Half a million careers disappear in June."  Quite simply, and to use round numbers, we got to the headline "300k jobs created" because the economy created 800,000 part-time jobs, while losing 500,000 full-time positions.    

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Sad News for Dems: Americans Not Interested in Talking About Income Inequality

Jul 5, 2014 10:36 AM PT

The White House has all but abandoned a message of income inequality it had focused on last year. It turns out Americans are not moved by the topic and prefer a message based on opportunity.

The Washington Post reported yesterday that President Obama had to be pulled away from the message by aides who realized it was not connecting with voters in the run up to 2014.

Last year, Obama personally felt the pull of these arguments. White House political research showed that income inequality was a wonky term that did not always resonate with voters, but he insisted on speaking about it anyway.

That focus culminated in a December speech in a low-income neighborhood in Southeast Washington, where he referenced inequality 26 times and discussed academic findings on the gap between the wealthy and the poor.

“He wasn’t particularly interested in knowing whether that was a good economic message,” said one person familiar with the process, who spoke on the condition of anonymity in order to discuss private conversations. “He wanted to sound alarm and put voice behind that.”

But as 2014 loomed, White House strategists concluded that inequality was not registering with voters on its own.

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Obama Poster Mom Blasts Obama Economy

Jun 27, 2014 10:06 AM PT

A funny thing got left out of this Star Tribune report and much of the other coverage involving mother and accountant Rebekah Erler, whose letter to the White House Barack Obama used in his ongoing push to raise the minimum wage.

White House Press Secretary Josh Earnest told the Star Tribune on Wednesday that the letter from Rebekah Erler inspired the president to launch a series of conversations around the country with regular middle-class Americans. 

The accountant and 36-year-old mother of two wrote to the president about the ongoing financial struggles that she and her husband face despite the economic recovery. Her note made its way into the pile of 10 letters from Americans that Obama reads each night.

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Tipping your waitress is the latest sacrilege against union power

Jun 20, 2014 8:30 AM PT

Writing at the Washington Times, Mike Paranzino chronicles the latest Big Labor crusade, this time against tipping.  When I first saw the headline, I spent a few moments frowning and trying to remember what arcane business or high-finance practice might have become known by the nickname "tipping."  I even briefly considered the possibility that unionized agricultural workers were going after the old drunken prank of cow-tipping.  

But no, Paranzino is talking about the simple and time-honored practice of tipping waiters and waitresses, not some Wall Street maneuver.  Here's a fun little exercise: take a moment before reading on, and try to guess why labor unions would have a problem with tipping - a major source of income for hard-working people, including a lot of young people trying to pay their way through college.  

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Chicago teeters on the edge of financial oblivion

Jun 18, 2014 1:57 PM PT

Sure, I could write that headline about any number of cities, and you could say Detroit is doing a lot more than just "teetering on the edge of oblivion."  But it's going to be a huge deal when Chicago goes down... and I think "when" is the appropriate word to use, not "if."  The lovely state surrounding Chicago isn't in very good shape either, and the nation surrounding that isn't exactly rolling in dough.

Tell me you can't see a story like the one written by the Chicago Sun-Times yesterday being written about the U.S. government, the day after tomorrow, especially after Chicago mayor Rahm Emanuel's old boss Barack Obama has been running the joint for eight long years:

Already facing a host of financial worries, Mayor Rahm Emanuel’s administration could be stuck with a nearly $200 million tab as a result of betting heavily on risky interest-rate “swaps” under former Mayor Richard M. Daley.

The deals required the city to maintain a certain credit rating, but the rating has fallen since the Daley administration made them, putting the city at risk. 

The financial institutions involved could terminate the deals and demand immediate payment if the ratings agency Moody’s Investor Service drops the city’s credit rating again — which it has warned it will do unless Chicago’s underfunded pensions are dramatically reformed.

Taxpayers could end up owing bankers and other financial institutions, including Wells Fargo and Loop Capital Markets, $110.4 million if Moody’s drops its rating for Chicago by one notch, according to documents reviewed by the Chicago Sun-Times. Falling two more levels could cost the city another $88.5 million.

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A flight of subsidized fancy

Jun 9, 2014 7:57 AM PT

J.D. Tuccille has a terrific article over at Reason that illustrates the lunacy of government subsidies mixing with madcap regulatory excess.  Flying into Los Angeles on a small commuter shuttle, Tuccille couldn't help noticing that half the seats on the damn plane had been ripped out.  

That's because the flight was part of a heavily regulated, heavily subsidized program called Essential Air Service, which basically forces airlines to provide travel routes that don't make economic sense.  This particular airfield gets over $2 million a year in taxpayer subsidies.  Of course, the vast majority of people paying the subsidy will never take a single flight on the service they're paying for.  Heck, the vast majority of them will never set foot in California.

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52% of Americans Can't Afford Housing Costs

Jun 3, 2014 6:54 PM PT

Over half of Americans (52%) have had to take a second job, stop saving, cut back on health care, move or take on debt to cover their rent or mortgage thanks to the Obama economy. 

That according to “How Housing Matters Survey,” a survey commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation. The survey was conducted by Hart Research Associates. 

“Affordability issues are real and a major hurdle,” says Lawrence Yun, chief economist at the National Association of Realtors, an industry group. Home prices have increased 20% over the past two years while wages have barely gone up, he says. “Only by adding more new supply, via housing starts, can home prices be tamed,” Yun adds. In fact, construction of housing units has averaged around 1.5 million a year for the past five decades, he says, but it’s likely to be less than 1 million in 2014.

What’s more, at least 15% of American homeowners (or residents of 78 counties across the country) were living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30% of the monthly median household income — long considered the maximum for rent/mortgage repayments. Housing costs above that threshold are “unaffordable by historic standards,” says Daren Blomquist, vice president at real estate data firm RealtyTrac. In New York county/Manhattan, mortgage payments represent 77% of the median income and in San Francisco County represents 70%.

Where the Piketty vs. Financial Times Debate Finally Landed

Jun 2, 2014 3:20 PM PT

The debate between French economist Thomas Piketty and the Financial Times continued to play out last week, though it was overshadowed by VA news and the resignation of two administration figures. Here's what you may have missed.

Last Wednesday, FT wrote another long blog post criticizing Piketty's use of data. The critique was mostly focused on two areas, Piketty's U.S. data and his U.K. data. With regard to the U.S. data, FT points out that Piketty is defends himself by referring to new research published after his book came out. While Piketty argues that this proves he was right (and may even have underestimated wealth of the top 1%) it doesn't explain how he arrived at his conclusions using the data he did use.

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Thomas Piketty: Critique of His Work Is 'Just Ridiculous'

May 26, 2014 6:52 PM PT

In an email to Bloomberg News, French economist Thomas Piketty called the criticism of his work "just ridiculous."

Piketty had earlier offered a longer but somewhat nebulous response to Financial Times. The gist of it was that his argument was on solid footing even if the details of his data needed adjustment. Speaking of the historical wealth data he used to create his charts he wrote, "For the time being, we have to do with what we have."

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Hoof-in-mouth economics

May 25, 2014 6:34 AM PT

In response to Piketty's Pickle: Undercut His Thesis or Defend Use of Inappropriate Data:

There may not be any direct accusations of academic fraud against Thomas Piketty yet, but it's pretty obvious his work is false and disingenuous - the Left gets suckered by another fast-talking con man with hockey-stick numbers, just like the global warming scam.  Of course, they want to get suckered.  They deeply want to have something resembling empirical scientific evidence to back up the centralization of power.

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Piketty's Pickle: Undercut His Thesis or Defend Use of Inappropriate Data

May 23, 2014 9:15 PM PT

The Financial Times takedown of Thomas Piketty's inequality data demonstrates a range of errors from the trivial all the way up to errors which seem inexplicable apart from their importance in bolstering his thesis. As Business Insider pointed out late Friday, FT isn't just saying Piketty made mistakes, they are also suggesting he may have "exaggerated" his results.

In his long blog post on the subject, FT's Chris Giles' identifies 7 different classes of errors in Piketty's data. Some of these are as simple as reading the wrong figure from a chart of source data. This is certainly an error but it's correction is unlikely to do any harm to Piketty's thesis or his reputation. Simple mistakes happen.

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Financial Times Outlines Problems with Piketty's Inequality Data

May 23, 2014 11:55 AM PT

Thomas Piketty's  "Capital in the Twenty-First Century" has been widely praised by the left for its conclusion that capitalism is driving wealth inequality to levels not seen in over 100 years.

Financial Times did some checking on the underlying data which French economist Thomas Piketty used to under-gird his bestselling book. What FT found was a series of errors and unexplained data selections which, taken together, seem to undercut Piketty's main thesis.

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Competition doesn't mean beans when you've got government regulators on your side

May 23, 2014 10:32 AM PT

Tim Carney at the Washington Examiner offers a neat little case study in the power of government-dispensed anti-competition, as hummus maker Sabra pushes for regulations that will block many of its competitors out of the market:

Sabra in February filed a petition with the Food & Drug Administration for stricter rules on what can be labelled "Hummus" -- or, "Hommus," "Hommos," "Humos," or "Houmous."

It must be predominantly chick peas, and at least five percent sesame seed paste. Options allowed include vegetable oil, garlic, acidifying agents, salt, sodium benzoate, spices, sodium bicarbonate, texturizers, buffering agents, and a handful of others.

Sabra is apparently pushing back on the trend of competitors making hummus with so many other beans that the garbanzos get drowned out. "From black beans and white beans to lentils, soybeans, and navy beans," a top Sabra official said in a statement quoted by the Jewish Telegraph Agency, "everyone wants to call their dip 'hummus.'"

This is how to think of much regulation: the tool the dominant incumbent businesses use to keep competition on their terms.

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Obama's America: Pfizer getting ready to skedaddle?

May 2, 2014 4:47 AM PT

Margaret Thatcher famously observed that the problem with socialism is that eventually you run out of other people's money to spend.  Before things reach that point, the other people start running out on socialism.  Get ready to bid farewell to one of America's great companies, Pfizer, which is working on a deal that will help it escape America's economy-crushing corporate tax burden - the highest in the world.

Pfizer is trying to buy the British drug company AstraZeneca.  Some tough bargaining is currently in process, with Pfizer making a few lowball offers that AstraZeneca rebuffed.  Sooner or later, they'll hit on an agreeable price.  And when that happens, Obamanomics will ensure there is absolutely zero chance the new mega-company will remain based in America.

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May Day reflections on capitalism, liberty, and human dignity

May 1, 2014 2:06 PM PT

What better time than May Day to reflect on the indispensable role of capitalism in liberty and human dignity?  The private ownership of capital is intimately tied to both.

If the people do not own capital, they have no meaningful independence.  It is the great lie of the Left that they can build a world where money doesn't matter.  It always does.  Owning capital allows groups of people to voluntarily cooperate in ways that defy the agenda of the State.  That's why the Left is constantly chipping away at the value of private assets, taxing them and restricting the ways in which they can be used.  Some citizens end up as the nominal owners of assets that fall almost entirely under the control of government.

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New Poll Has Obama and Democrats Running For The Toilet

Apr 29, 2014 8:19 AM PT

Just when you thought it couldn't get any worse for Presidente Baracko Obama, a new WaPo/ABC News poll shows that Obama's approval ratings at 41%, far less than where his ratings were at the same time in 2010.

We all saw how Republicans trounced the Democrats in the mid-term election. I can't even imagine how bad this year's election be for the donkey party.

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Saving over spending: consumers are still nervous

Apr 21, 2014 11:05 AM PT

Economic growth is shaped heavily by perception; there's an old chestnut that says recessions wouldn't be so bad, if people just refused to participate in them.  The past few years have seen a number of obvious - not to say clumsy - efforts to kick-start economic growth by changing what people think about the economy.  Some of this has been rather comical, such as President Obama and his allies perpetually claiming the economy is "poised for growth" and "Recovery Summer" is upon us.  It's not merely political spin - it's an effort to manipulate the virtual economy, made by people who believe that the real economy is powerfully shaped by what the American people think of it.

It's grim news for these opinion-shapers to learn from a new Gallup poll that people are much more interested in saving money than spending it:

The majority of Americans continue to enjoy saving money more than spending it, by 62% to 34%. The 2014 saving-spending gap is the one of the widest since Gallup began tracking Americans' preferences in 2001.

It may be surprising that the gap between self-reported enjoyment of saving and enjoyment is as wide as it is in 2014, considering the recent signs of positive momentum in the U.S. economy. Prior to the Great Recession, the saving-spending enjoyment gap was much smaller than it is now. After the onset of the economic downturn, the divergence widened considerably over the next couple of years, including 2010, when the gap stretched as wide as 27 percentage points. But then there was a short-lived narrowing of the gap to 19 points in 2012 before it increased again in 2013 and 2014.

While this question does not measure actual spending or saving, it provides important insight into the psychology of the American consumer's approach to money. At this point, the trend suggests that Americans have shifted their mindset significantly more toward the view that saving is the more enjoyable behavior, not spending.

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'Living wage,' unaffordable products

Apr 4, 2014 1:13 PM PT

When President Obama took to mocking Republican budget proposals (which, unlike Democrat proposals, exist) in front of a college audience by calling them "stinkburgers" and "meanwiches," I was struck by how the media lets him get away with being as nasty and divisive as he wants to be.  No Republican would be allowed to get away with insinuating that Democrats are motivated primarily by greed, lust for power, or some inhuman joy they take from watching people suffer... let alone stating it outright, with the language of a third-grader.  Not only would the divisiveness and mean spirit of the rhetoric draw a firestorm of criticism, but such a hypothetical Republican would be excoriated for talking down to his audience.

Andrew Johnson at National Review made a different point about the President's outburst, by focusing on the delicatessen anecdote he told, right before veering into talk of stinkburgers and meanwiches:

The president paid a visit to Zingerman’s Deli in Ann Arbor, Mich., today as part of his push to increase the minimum wage.

Zingerman’s, he says, pays its employees “fair wages.” Whether they’re fair enough to afford the lunch the president had isn’t clear: He ordered a small Reuben for $13.99; larges go for nearly $17.

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Bankrupt Detroit Beats L.A. in Job Growth

Apr 2, 2014 6:27 AM PT

The Los Angeles Times reports Wednesday that a UCLA study showed that "Los Angeles has gone 23 years without job growth," losing 3.1% of the jobs it had in 1990--dead last among U.S. cities, even behind Detroit.

"Among problems plaguing the city: the high cost of housing, congestion, lack of skilled workers and an unfriendly environment for businesses, said William Yu, an economist at the UCLA Anderson Forecast," notes the Times' Shan Li. Much of Li's article is devoted to the finding that California's current drought could lower job growth even more, which is a more convenient explanation for the left than the city's anti-business policies.

Stop Detroit's Shell Game on Assets

Mar 24, 2014 10:40 AM PT

For months now I've been shouting Greg Gutfeld's sentiments on paying Detroit's creditors and pensioners -- "Sell the damn art!"

Next month the city's emergency city manager, Kevyn Orr, will present yet another plan on digging Detriot out of its financial hole.  Despite liberal elitists calls to protect the art -- one of Detroit's largest assets -- from the auctioning block, the calls to "sell the damn art" continue.  From an op-ed in today's Detroit News:

Detroit is unique among major cities in having funded directly huge portions of its signature art museum’s existence, including its building, operations and many of its works. 

The precise value of the collection isn’t known, but the auction house Christie’s appraised 2,800 city-purchased pieces – just five percent of the collection – at more than $800 million. 

In other words, contained within the walls of 5200 Woodward Ave. are billions of dollars in assets that can be used to repay the city’s debts, both to pensioners and to bondholders, many of whom are retirees themselves. 

Officials from the city, state, DIA and private foundations instead have offered a plan that would spin off the institute into an independent non-profit trust, in exchange for some $815 million in funding from state taxpayers and private interests. 

Those proceeds would be earmarked solely for the General Retirement System and Police and Fire Retirement System pension plans. This would turn bankruptcy law on its head, using an asset sale to pay off only one class of unsecured debt. 

Louisiana Puts Its Foot Down: No More Food Stamp Tattoos

Mar 23, 2014 11:30 AM PT

The Associated Press reports on the latest act of unspeakable cruelty from heartless, tightwad red-state officials:

Louisiana welfare recipients will be prohibited from spending the federal assistance at lingerie shops, tattoo parlors, nail salons and jewelry stores, under new limits enacted by state social services officials.

The Department of Children and Family Services announced the emergency regulations late Thursday. They cover the Family Independence Temporary Assistance Program — commonly known as welfare benefits — and the Kinship Care Subsidy Program.

Both programs pay cash assistance to low-income families for items like food, clothing and housing.

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Report: Weak White House Sanctions Rally Russian Market

Mar 17, 2014 7:51 AM PT

As I write this, President Obama is announcing a list of limited sanctions against specific individuals in the Russian government meant to punish them for "violating Ukraine's sovereignty." The idea is to go after the personal finances of top Russian and Ukraine officials, including the former president of Ukraine and members of Putin's inner-circle. Putin, though, is not on the list.

Greg White, the Moscow Bureau Chief for the Wall Street Journal reports that news of the White House sanctions did not have the intended effect. Relieved over how limited they are, the Russian market enjoyed a rally:

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Dereliction of Duty in Detroit

Mar 11, 2014 7:13 AM PT

I've had my eye on Detroit's bankruptcy proceedings because it is indicative of what's to come for a lot of cities.  How Detroit deals with its bankruptcy could also set a precedent for other cities forced to deal with the decisions of bankruptcy, satisfying pensions and debtors.  Unfortunately, Detroit's Emergency Manager Kevin Orr is shirking his responsibilities to the city and creditors by not making the hard choices to put Detroit on sound financial footing.

As I wrote a few months ago, the key is the art.  

If you or I were to file for bankruptcy, we would be forced to sell our assets before defaulting to our creditors and other contractual obligations.  That Warhol passed down from your crazy aunt who partied at Studio 54?  Gone in 15 minutes.  And that's exactly what should happen in Detroit.

The Detroit Institute for Art (DIA) has billions of dollars in art, but elitists in Detroit suburbs are conspiring to keep the art so the collection can't be split off and sold.  A few foundations attempted to raise money to secure and "own" the art through a private fund of $300-500 million, just a fraction of what it is worth.  Basically, this fund was trying to buy the art at a deep discount so it was off-limits and Detroit's entire debt would fall on taxpayers and pensioners.  Pensioners that include firemen and police officers.  We may not agree with public sector unions and their tactics, but promises were made to these workers and the city must put all options on the table before sticking pensioners with the bill.

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Michelle Obama Offers Relief for Nation's 'Confused' and 'Bewildered' Shoppers

Feb 28, 2014 2:02 PM PT

Gotta give a quick shout out to "everywoman" Michelle Obama, who yesterday was kind enough to introduce the administration's new, improved nutrition labels for food packages. The new labels are designed to make shopping less difficult for easily confused moms who are flummoxed by nutrition labels.

The "bewildering" dilemma women have been experiencing in grocery stores, was described by Michelle Obama, thus:

"So there you stood, alone in some aisle in a store, the clock ticking away at the precious little time remaining to complete your weekly grocery shopping, and all you could do was scratch your head, confused and bewildered, and wonder, is there too much sugar in this product? Is 50 percent of the daily allowance of riboflavin a good thing or a bad thing? And how on Earth could this teeny little package contain five whole servings?

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Obama's Highly Touted List Of Pro-Minimum Wage Economists Includes A Few Crackpots

Feb 27, 2014 9:30 PM PT

As part of their election year strategy of steering the public's attention as far away from ObamaCare as humanly possible, Democrats have been pushing for a vote on a minimum wage hike in the Republican-led House - which they know, is not going to happen.

Not that it matters. Because Democrats want to put Republicans on the defensive for failing to care as much about the poor as they do. Throwing a wrench into their plans last week, however, was the CBO with a study that showed a minimum wage hike to $10.10  an hour would lead to a reduction in employment of anywhere from 500,000 to 1 million workers. Thursday, Federal Reserve Chairwoman, Janet Yellen backed the CBO's analysis. 

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California Couple Finds $10 Million in Gold Coins in Back Yard

Feb 26, 2014 6:11 AM PT

A couple in California stumbled across the most valuable buried treasure find in U.S. history, the Los Angeles Times reported Tuesday, when they discovered rusting cans on their property that contained 19th-century gold coins with a face value of over $28,000 and a market value of more than $10 million. 

The coins include several rare finds, including an “1866-S No Motto Double Eagle,” which the Times’ Ruben Vives reports is worth more than $1 million.

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40 hour work weeks: too much, or not enough?

Feb 21, 2014 7:01 AM PT

If you noodle around liberal web sites a bit, you'll come across a talking point designed to cushion the blow of ObamaCare job losses: a lot of those cuts, such as the 2.5 million "job equivalent" losses predicted by the CBO in their bombshell forecast, are more about reduced hours than outright termination.  The old-and-busted O-bot talking point was that business owners would never cut hours to get under the 30-hour threshold needed to escape the worst Affordable Care Act mandates, and any executive who explicitly stated he was carrying out such plans was a lying Republican hack.  Presumably the hundreds of thousands of employees who said their hours were indeed trimmed to 29 or less were also lying Republican hacks.  

But that talking point is dead now, especially since the government is one of the employers that has explicitly stated hours are getting shaved to evade the mandates.  So the new brainstorm bubbling up from the fever swamps of the Left is that working less is a good thing.  If you can get by on working 29 hours, with subsidies looted from other taxpayers to support your food, housing, and medical needs, what's the problem?  That's paradise, right?  We should celebrate the dawn of a new age in which everyone gets to be a "child" until they turn 27, then work 25 hours a week, have their EBT card automatically refilled with digital food stamps every month, and have their health needs covered by heavily subsidized ObamaCare policies!

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The Obama Economy and Lingering Effects of Long-Term Unemployment

Feb 20, 2014 9:08 AM PT

A recent survey done by CareerBuilder.com shows the effects of unemployment on job seekers.  For many, it's not just the loss of income. 

According to a new CareerBuilder survey, the loss of a regular income has affected the long-term unemployed in various ways, such as not having enough money for food (25 percent), strained relationships with family and friends (25 percent) and maxing out credit cards to pay other bills (12 percent). 

...

Challenges of finding work

One of the main concerns job seekers often have when they've been out of the workforce for a while is that they'll lose valuable skills. In fact, 45 percent of long-term unemployed say they're worried that their skills have depreciated. Of these respondents, more than half say their technology skills declined.  

When asked to share some of the major challenges they encounter when looking for a job, the long-term unemployed point to:

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CBO Director Fires Back at White House Claims He is Wrong on Minimum Wage

Feb 19, 2014 10:00 AM PT

Congressional Budget Office Director Douglas Elmendorf fired back Wednesday morning at criticism from the White House over his most recent economic report. The White House and CBO disagree over the effect raising the minimum wage would have on employment.

The argument is much more than an academic disagreement. Having the President's signature economic proposal labeled a job killer would be another political blow to Democrats already facing an uphill climb in 2014.

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Happy 5th Anniversary Porkulus Act

Feb 17, 2014 9:47 AM PT

Five years ago, Presidente Obama saw his failed Recovery Act sail through the Congress and give birth to that crazy like a fox Tea Party.  The Act cost some 40 billion more than originally expected, and helped catapult Mike Lee and Marco Rubio into the Senate, as well as help Republicans retake the U.S. House of Representatives.

As expected, Rubio and others in the Senate, have come out swinging against the Obama's Porkulus Act.

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'Job lock' and supply-side economics

Feb 13, 2014 8:26 PM PT

Back when that H-bomb of a Congressional Budget Office forecast landed on ObamaCare, and panicked Democrats began running around like maniacs and burbling that unemployment is the essence of freedom, I thought they were making a huge and dangerous concession by admitting that government benefits provide a concrete and effective disincentive to work.  

It's a concession to reality, to be sure.  Of course people respond to such disincentives.  But it has been an ironclad tenet of socialist dogma for decades to deny this, insisting that no significant number of people prefer welfare to work, refuse employment when it doesn't pay appreciably better than their government benefits, or reduce the amount of work they perform in response to tax policy.  Remember, dynamic economics is the eternal bane of socialism; they are static theorists who insist as a matter of religious faith that only the most extreme government burden could possibly make the private sector go wobbly in the knees.  Atlas does not shrug.

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Union strongarm tactics mean big bucks

Jan 27, 2014 6:50 AM PT

Hard times for AFSCME in Wisconsin, according to the Milwaukee Journal-Sentinel, as Governor Scott Walker's collective bargaining reforms cut an astounding 45 percent from the union's revenue stream.  A union official lets slip the reason, in the course of attempting to peg a smiley face to the end of the grim news: "Council 40 executive director Rick Badger says that while the declines in revenue stemming from Act 10 are expected, he has been encouraged by the number of workers who have continued to pay voluntary dues."

In other words, once the government isn't acting as a taxpayer-funded super-powered collection agency and stripping mandatory dues out of public employee paychecks - a service every business enterprise in America would pay handsomely to receive, never mind getting it for free - the union's financial muscles immediately went limp.  Were they really expecting more than forty or forty-five percent of their members to stop paying dues, and therefore find last year's receipts encouraging?

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California's Leaders Are Watching the Wealthy's Movements

Jan 22, 2014 9:25 AM PT

California state leaders are monitoring millionaires to assess whether a recent jump in income taxes could lead to an exodus of the wealthy.

The San Francisco Chronicle reports that in 2011 "the top 1 percent of tax returns accounted for 41 percent of the state's personal income tax revenues." That was before the passage of Prop. 30 which raised California's top income tax rate to 13.3 percent, the highest in the country. The increasing reliance on soaking the rich means "state leaders are watching closely" the movement of wealthy people out of the state. The Chronicle offers a number of examples of individuals who have decided to move out:

Lee Schneider, a hedge fund salesman who works from home, also cited Prop. 30 as the "deciding factor" for his move from Walnut Creek to Austin, Texas, in 2012. The California native had recently built a $2 million house at the foot of Mount Diablo and took a loss on the sale, but "I can make half of it back in one year of tax savings," he says.

Schneider's neighborhood in Texas, which has no state income tax, is full of cars with license-plate frames from California dealerships. On a flight from Austin to Los Angeles shortly before Christmas, 11 of the 12 seats in the emergency row were occupied by people who had moved from California to Texas, he says.

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Inequality between the apples and oranges

Jan 21, 2014 8:31 PM PT

Thomas Sowell calls out the merchants of envy for two of their biggest "income inequality" myths in his latest column.  In both cases, a political crusade is built upon willful misrepresentation of data.  

The more complex matter he discusses is something he has written about many times in the past: the way individual people move up and down income brackets over time, but the income inequality crusade is based entirely on the performance of the brackets.  In other words, the top "one percent" might be pulling in more dough these days, but not all of the actual individual people in the One Percent today were there five or ten years ago, and not all of them will be there five or ten years from now.  Another way this fallacy manifests itself is deliberate ignorance of the effect age has on income and net worth - a person of modest means in his twenties might well end up with significant income, savings, and property by the time he retires.  

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LA Unions Use 'Provocative' Billboard to Campaign for $15 Minimum Wage

Jan 17, 2014 2:39 PM PT

The Los Angeles County Federation of Labor is using a billboard campaign that it calls "provocative" to campaign for a $15-per-hour minimum wage. The billboards resemble the signs posted on municipal boundaries and read: "Los Angeles: City Limited, Poverty Wage Pop 810,864." The term "poverty wage" refers to residents who earn hourly wages of less than $15. The current federal minimum wage is $7.25-per-hour, which President Barack Obama has proposed to raise to $10 as part of his campaign against inequality.

Curiously, the billboards do not mention the number of unemployed people in Los Angeles County: 466,257 as of November 2013, which does not include those who have given up looking for work in the era. One of the principal arguments against higher minimum wages is that they discourage businesses from creating new jobs.

Detroit Deal Satisfies Liberal Elites, Not Debts

Jan 16, 2014 6:30 AM PT

A few weeks ago I wrote about Detroit's bankruptcy and an adequate solution for paying Detroit's creditors.  Greg Gutfeld summed it up on The Five when he said, "Sell the damn art."

Columnist and radio host Derek Hunter has a great piece on Townhall today that summarizes the problems with the recently announced $330 million deal to save the art.  He writes:

This deal actually is a symbol of what's wrong with Detroit. Liberal elites prioritize the art collection, not safety, not balanced budgets, not services to the city. Unions prioritize their members first, not overall city success. Democratic politicians prioritize short-term deals to help their constituencies rather that long-term financial stability. Recognize that song? It’s the same old crony tune that got the city here in the first place.

Repeating old patterns of short-sighted deals, putting emotion (the DIA love is real, but irrelevant given the bankruptcy and how few people visit it) ahead of reason and protecting small constituencies at the expense of everyone else won't get the city out of this mess.

And that's why this DIA deal is wrong. It's not part of a long-term revitalization plan. I'm not even sure it's really has anything to do with bankruptcy.

Let me be specific.

First, the $330 million put up by foundations is a ridiculously low number. Even Christie's valuation was $866 million and that was considered very low because they only appraised a small percentage of the art. An estimate by the Detroit Free Press pegged the value at more than $2.5 billion. It seems the DIA collection is being deliberately undervalued to "protect" it. Admirable, I suppose, but that doesn’t change the city’s economic reality so it’s irrelevant.

Second, this deal does NOT really aid bankruptcy. Bankruptcy is about debtors and creditors. This does not involve creditors so it does nothing to stabilize Detroit's finances. Without a strong credit rating and investor confidence, Detroit will have to borrow at higher rates, if it can (eventually) raise new capital at all. And if the city can't raise new capital, how will it repair its long neglected infrastructure and aid economic development?

Helping pensioners is noble, but many live in Florida or Arizona and will not contribute to Detroit's revitalization. That may sound cold, but it’s the reality no one wants to face. If the city’s actions don’t prioritize its own financial stability this will all have been for nothing. And pensioners can be helped through a broader bankruptcy deal.

Lastly, I question the bankruptcy judge's priorities. Detroit has an $18 billion problem and Judge Steven Rhodes has spent an enormous amount of time and effort to engineer a deal between foundations, the DIA and pensioners. It seems to me Judge Rhodes should be focusing on a deal between the city and its creditors. A deal that should include maximizing the city's assets.

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Income inequality and crony capitalism

Jan 13, 2014 1:16 PM PT

National Review has an article from James Pethokoukis of the American Enterprise Institute in which he offers suggestions for the Republicans to swipe the "income inequality" issue, by highlighting how political connections and favoritism account for much of that growing gap between rich and poor:

Inequality has increased across advanced economies. Macro factors such as globalization and technology deserve most — but maybe not all — of the “blame.” Big Government loves to pick winners and losers in the private sector. Some lucky ducks owe their place in the 1 percent or 0.1 percent or 0.01 percent to federal favoritism. Conservatives shouldn’t mind at all when value-creating innovators and entrepreneurs strike it rich while crony capitalists do not. The precious tax breaks and subsidies that go to rent seekers, such as those in the agriculture and alternative-energy sectors, should get the ax. Sorry, Big Sugar and Big Solar.

At its core, such an anti-cronyism, anti-inequality agenda would use competition and markets to fight Washington’s natural bias for elite and entrenched interests. 

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This economy isn't going to get the medicine it needs

Jan 8, 2014 11:01 AM PT

After President Obama toddled forth to once again extol the amazing stimulus powers of perpetual unemployment welfare - a stimulus that has been completely undetectable for the past five years, but Democrats assure us it will kick in any day now - people who don't wear leftist ideological blinders wrote a number of columns explaining what we should be doing.  As Donald Lambro pointed out, we know what works, just as we know Obamanomics doesn't:

In Congress this week, the focus is on legislation that would provide funds for extended unemployment benefits, when the debate should be about growing the economy to produce jobs and higher incomes.

We know what’s worked in the past — cutting taxes on capital investment, on businesses that have the second-highest tax rate in the industrial world, and on income.

Right now, the government is taxing every nook and cranny of our economy, and Obama wants to raise taxes even higher so he can spend more.

In his second term, after carrying 49 states by ending a deep recession in two years, President Reagan signed a bipartisan bill to cleanse the tax code of corporate welfare and other loopholes. He used the increased tax revenue to lower income tax rates to further boost economic growth.

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NC Councilman Who Resigned In Klingon Should Have Used Chinese

Jan 5, 2014 3:47 PM PT

By the time the Klingons arrive to lay waste in glorious battle we may have fallen to the Chinese in economic battle. 

It begins with one word, debt. The current US National Debt stands at $17,314,687,938,331 and growing every second. Indian Trail, NC Councilman David Waddell resigned in Klingon but also due to fiscal irresponsibility and what he saw as runaway development in the town with taxpayer dollars. Waddell, a plumber by trade stated he thought he would be more effective by going to board meetings as a citizen. There is a lesson to be learned here that when operating within the system does not work it is time to get engaged as a citizen.

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The longer someone takes benefits the longer they are unemployed

Dec 27, 2013 6:43 PM PT

The longer someone is on employment benefits...

  • Skills atrophy 
  • New people enter their particular field 
  • The economy suffers in an aggregate manner as productivity stays low 
  • Labor participation rate suffers 
  • More tend to drop out of the workforce and rely on government assistance or others such as relatives which also drains the overall economy 
  • The money to pay unemployment is borrowed and accrues interest which has to be paid back by taxpayers  
  • I know it sounds harsh but time for hard decisions by Americans to take whatever job they can and multiple jobs if needed 
  • Time to go back to 26 weeks maximum of unemployment benefits and if necessary we can gradually but must scale back from 99 weeks for the nations economic health.

Income Inequality via The Institutional Left Meets Reality By The Numbers

Dec 9, 2013 11:00 AM PT

Income inequality is an easy phrase for the left to throw around but the issue is more complicated. Yes there is a growing income gap, but there are also a growing number of wealthy Americans. It is easy for the left to attack the 1% but we can't ignore the other 99%. 

Of the remaining 99% in 2012 the top 20% of US households earned 51% of the nation's income. 

While paychecks shrank for most Americans after the 2007-2009 recession, theirs held steady or edged higher. In 2012, the top 20 percent of U.S. households took home a record 51 percent of the nation's income. The median income of this group is more than $150,000.

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Income inequality, minimum wages, and inflation

Dec 6, 2013 1:56 PM PT

The latest distraction from ObamaCare failure is a renewed emphasis on "income inequality," which is one of those endless, highly subjective crusades the Left views as a bottomless well of power.  It's like global warming in many ways: its definition is fluid, there's no way to "disprove" it because it will always exist, and it's a problem that can never be "solved."  There will always be a relatively small group of people who make considerably more money than the average.

Another useful thing about the "income inequality" equation of power is that the variables can be manipulated at will by the power-hungry leftist.  After all, such inequality has gotten worse - much, much worse - under the policies of the modern era's most left-wing President, Barack Obama.  And yet, he gives speeches and complains about it, as though he were a mere spectator to an economy controlled by his government to an unprecedented degree!  And his audience laps it up, without a single curious soul bothering to point out that Obama's been the one who made "income equality" worse over the past five years!  

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NY Fast Food Strike: A Roving Band with Minders

Dec 6, 2013 1:31 PM PT

The union organized fast food walkout Thursday turns out to have been heavy on the walking and light on the "out." In New York at least, there was a group of about 100-150 who walked from one restaurant to another. According to Reason, any place the roving band wasn't picketing it was business as usual.

Reason interviewed several people about the protest, one of whom admitted they were being paid through by a union slush fund to be there. Eventually one of the group's organizers decided it would be best if everyone stopped agreeing to talk. Toward the end of this clip you'll see him stepping in and whispering in people's ears.

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Minimum wage distractions

Dec 5, 2013 11:29 AM PT

In response to Unions Organize Fast Food Workers Demanding $15 an Hour:

This is all part of a coordinated Democrat strategy to change the subject away from ObamaCare, which is absolutely killing them.  The only way it could be more obvious would be to have these rented union goons and Occupy Wall Street leftovers start whacking people in the forehead with Nerf bats and scream, "Stop talking about ObamaCare!"

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