Stimulus jobs are just about over

An illustration of the futility of creating jobs by just spending government money for construction projects.  Once the projects are finished, we are back to unemployment.  And all of those “shovel-ready” construction jobs are just about finished.  From The Washington Post:

The stimulus was here.

Those words should be embossed on a stretch of Route 29 outside of Charlottesville, where paver operator Clifford Carter poured hot asphalt one year ago.

The $885,000 project, funded by federal stimulus dollars, took two days in November 2009. A few weeks later, he was laid off – temporarily, he thought, until paving season resumed in the spring. But in April, he received his first permanent layoff notice. Without a job, he couldn’t afford to keep paying for life or health insurance, so he let both lapse.

“When they kicked me out the door, I lost everything,” he said.

The end of the stimulus – the $787 billion that Washington approved last year in an effort to forestall another Great Depression – is more than a year away. But for Carter and thousands of other workers in the road construction industry, it has already arrived.

Road construction workers were among the first to benefit from the 2009 American Reinvestment and Recovery Act, which pumped hundreds of millions of dollars into “shovel-ready” road resurfacing projects in order to save or create millions of jobs.

The bulk of highway-related work will be done within a year and more than half of the funds for it have been paid out, said Ken Simonson, chief economist for the Associated General Contractors of America, an Arlington County-based trade group.

But with the economy continuing to lag, private-sector work has all but disappeared, and many states have cut back on road work in an effort to plug gaping deficits.

Without the stimulus, thousands of workers who build and maintain America’s roadways could soon join the 1.6 million construction workers who are unemployed. The construction industry lost an additional 5,000 jobs in November, the latest U.S. Labor Department data show, bringing the sector’s unemployment rate to 18.8 percent.

via After stimulus, construction industry seeing private-sector and state projects drying up.

The Fall of the American Empire

Foreign affairs think tanker Robert D. Kaplan argues in the Washington Post that the United States and the Soviet Union constituted, in effect, two empires that organized the world between them.  Other countries mostly aligned themselves with one side or the other.  The Soviet Empire collapsed, leaving the United States alone in the imperial role.  But now, according to Kaplan, the American empire has collapsed.

Because of our military quagmires, our economic problems, our diplomatic weakness, and our overall popularity abroad, the United States no longer carries much clout with other countries.  We can’t influence even the little ones any more to do what we want.

China is on the verge of replacing  the United States as the world empire.  But it isn’t quite ready yet.  In the meantime, Kaplan predicts global instability since “no one is in charge.”

This raises lots of questions:

(1)  Do you think he is right?

(2)  Does the United States have any business being a de facto global empire?  (The old empires, like that of the Romans and the British, at least profited from their takeover of other countries, unlike the United States with its “soft empire.”)  Wouldn’t it be better for this country if we just hunkered down behind our own borders, letting the rest of the world go its own way?  (On the other hand, didn’t Rome try that, only to find there were no more buffers to keep the Barbarians away?)

(3)  What do you think the world will be like under a de facto Chinese empire, with its free market communism, that strangely effective blend of totalitarian government with money-making enterprise?

via Where’s the American empire when we need it?.

The revenge of the marketplace

The mass transit system in Washington, D. C., is in a financial crisis.  This is because, in an effort to raise money, the government raised prices.  Which has resulted in fewer and fewer people using the system.

The across-the-board fare increase imposed by Metro this summer has led to a drop in bus ridership and less-than-expected rail revenue as a result of changing travel patterns, an initial analysis by Metro shows.

Bus ridership has fallen 7 percent, with overall Metro system ridership 2 percent below the levels of the last fiscal year, which ended in July, and 3 percent below Metro’s projected level. The lower-than-expected passenger revenue is the main factor in Metro’s overall revenue shortfall of 4 percent so far this year.

The number of rail riders remained flat (though it was boosted by major events on the National Mall), but 2 to 3 percent of rail riders have moved their commutes from peak times to the window with the lowest fares, and others avoided certain trips, according to the analysis.

Metro this summer implemented nearly $109 million worth of rail, bus and paratransit increases, including a new 20-cent “peak-of-the-peak” surcharge for some rush-hour riders.

via Revenue, ridership on Metro fall short.

As prices rise, demand goes down.  That is an iron law of economics that cannot be legislated away.  Pricing has to be set by the market, not by government fiat.  The economic marketplace operates as a natural law, whether or not policy makers believe in it.

I lived in Estonia for a few weeks back when it was still a part of the Soviet Union, staying with a family as part of a college faculty exchange program.  Under Communism, prices were set by the state so as to make goods affordable for the masses.  But when the prices were set lower than the cost of production, you couldn’t buy the goods because the stores were virtually empty.

Also, production was not determined by market demand; rather, the government set quotas.  Factories had to meet their quotas or the managers and workers would get in big trouble.  So they took shortcuts.  A shoe factory could meet the quotas easier if they didn’t have to keep resetting the machinery to manufacture different sizes.  So they would produce a whole run of, say, size 6 shoes, the smaller size also having the advantage of saving material.  So if you went into a shoe store, you might find that it only had shoes in size 6.  If you wore a different size, you were out of luck.

Governments can certainly interfere in the marketplace, but the marketplace will have its revenge.

Fighting debt problems by encouraging debt

The usually liberal Fareed Zakaria on the incoherence of the government’s attempts to fix the economy:

Washington is asking consumers to stop saving and start spending, while the government issues more debt and the Fed lowers rates – all measures designed to increase debt. In other words, we are fighting a crisis caused by excessive debt by encouraging excessive debt. Is that really the best way to get growth?

The investment manager and guru Jeremy Grantham says no. In his latest quarterly letter, he points out that over the last generation, American government has created conditions that encouraged everyone to keep accumulating debt. But far from getting a bang, the country’s growth rate actually slowed down over that period. In fact, the effect of all this government-subsidized debt has been deeply destructive. It created asset bubbles in stocks, bonds, commodities and more. One stunning chart in his letter underscores the extent to which the Fed created what he calls “the first housing bubble in history,” meaning the first time that U.S. house prices rose dramatically across the board – and are now falling just as dramatically.

Debt-fueled growth “is, in an important sense, not the real world,” Grantham writes. “In the real world, growth depends on real factors: the quality and quantity of education, work ethic, population profile, the quality and quantity of existing plant and equipment, business organization, the quality of public leadership (especially from the Fed in the U.S.), and the quality (not quantity) of existing regulations and the degree of enforcement.”

This strikes me as the common-sense view of economics. We can push and pull fiscal and monetary policy all we want, but long-term growth depends on these broader and deeper factors.

via Fareed Zakaria – Economic policy needs common sense, not Fed magic, for long-term growth.

Atheists seeking market share

Get ready for a bunch of ads promoting atheism, funded by at least four different sects of atheists, each seeking market share.  From the New York Times:

Just in time for the holiday season, Americans are about to be hit with a spate of advertisements promoting the joy and wisdom of atheism.

Four separate and competing national organizations representing various streams of atheists, humanists and freethinkers will soon be spreading their gospel through advertisements on billboards, buses and trains, and in newspapers and magazines.

The latest, announced on Tuesday in Washington, is the first to include spots on television and cable. This campaign juxtaposes particularly primitive — even barbaric — passages from the Bible and the Koran with quotations from nonbelievers and humanists like Albert Einstein and Katharine Hepburn.

The godless groups say they are mounting this surge because they are aware that they have a large, untapped army of potential troops. The percentage of American adults who say they have no religion has doubled in the last two decades, to 15 percent, according to the American Religious Identification Survey, conducted by researchers at Trinity College in Hartford and released in 2008. But the ranks of the various atheist organizations number only in the tens of thousands.

That is one reason for the multiple campaigns: the groups are competing with one another to gain market share, said Mark Silk, founding director of the Greenberg Center for the Study of Religion in Public Life, which is also at Trinity College.

“There’s a competitive environment for ‘no religion,’ and they’re grabbing for all the constituents they can get,” Mr. Silk said. . . .

Several of the campaigns are pitched not just to nonbelievers, but also to liberal believers who might be alarmed about breaches in the wall of separation between church and state. The atheist groups believe that people who are religious and politically liberal have more in common with atheists and seculars than they do with religious conservatives.

“We must denounce politicians that contend U.S. law should be based on the Bible and the Ten Commandments,” said Todd Stiefel, a retired pharmaceutical company executive who is underwriting most of the ad campaign that cites alarming Scripture passages. “It has not been based on these and should never be. Our founding fathers created a secular democracy.”

The most expensive campaign is staged by the American Humanist Association. Mr. Stiefel’s foundation donated $150,000 — three-quarters of the cost, part of which goes for television and cable advertisements. That campaign plucks out bracing Scripture passages about women, homosexuality or the wrath of God, like this one from the Old Testament:

“The people of Samaria must bear their guilt, because they have rebelled against their God. They will fall by the sword; their little ones will be dashed to the ground, their pregnant women ripped open.” (from Hosea 13:16, New International Version).

This is contrasted with a quote from Albert Einstein saying that he “cannot imagine” such a God.

The campaigns range from friendly to confrontational. On the confrontational end of the spectrum, American Atheists, which was founded in 1963 by Madalyn Murray O’Hair, will just before Thanksgiving put a billboard on the busy approach to the Lincoln Tunnel from New Jersey heading into New York.

It features a Nativity scene, and the words: “You Know it’s a Myth. This Season Celebrate Reason.”

David Silverman, the president of American Atheists, said that the idea of the campaign is to reach people who might go to church but are just going through the motions. “We’re going after that market share,” he said.

The United Coalition of Reason, a group in Washington, is sponsoring billboards and ads on bus shelters in about 15 cities that say, “Don’t Believe In God? Join the Club.”

The ads by the Freedom From Religion Foundation take a more inviting approach, with big portraits of some famous and some workaday people, listing their hobbies and professions and giving a punchy, personal declaration of independence from religion. The group, which has been running advertisements on and off since 2007, has spent about $55,000 this year to put up 150 billboards in about a dozen cities.

via Atheists’ Holiday Message – Join Us – NYTimes.com.

Another conversation with my brother

In case you missed it on the George Bush & Aids post, my brother and I had another exchange, in the course of which I formulate what I consider a truly conservative economic ideology:

He says: OK. I (“Dr. Veith’s” younger brother who is still and always will be a Democrat) hereby give George Bush credit for saving millions of lives as a result of his AIDS initiative. Hey, that felt kind of good!

Now for you conservatives, isn’t it about time to give President Obama credit for the bailout of General Motors?

I say: Jimmy (my brother) @3: Thank you for that concession. That was all I wanted. But what you want from conservatives shows that liberals do not understand the many different ideologies that they lump together under that label. Most people on this blog, I daresay, are suspicious of BOTH big government AND big business.

We do believe in free markets. To return to your earlier illustration, if doctors and pharmaceutical companies and everyone else in the health care professions could not make a lot of money from their work, we soon would be back to what you decried in the primitive health care endured by Adam Smith back in 1776.

However, the really big companies hate free markets. They don’t want competition that brings prices down and increases supply. This is the lesson of Monopoly, at which I beat you so many times, the object of which is not prosperity and abundance for everybody, but one person putting everybody else out of business and getting–with the state-run socialist bank–ALL of everyone’s money.

And even worse for us crunchy-conservatives or front-porch conservatives or social conservatives or whatever you want to call us than big government and big business is when both of those behemoths combine together into something that so gargantuan that it crowds out everybody! This is why we don’t like Obama’s bailout of the big banks and his merger with General Motors. This is also why we don’t like Obama’s health care system, which is a marriage of big government with the big insurance companies.

Then he says:

To my big brother,”Dr. Veith”. Thanks for reminding me how often you beat me at Monopoly.

I agree with much of what you said in your comments at #26. I agree that the individual can be harmed by both BIG government and BIG business. My question for you is how can we check the powers of BIG business?

Historically, it has been done in two ways, with unions and government. With the decline of unions, government is the principal way we can check the powers of big business. When conservatives reject any government role in a “free market system” as a mater of ideology, they are left with nothing to check the powers of big business.

I don’t think that a corporation should be allowed to make money any way it pleases. Corporations are fictional “persons” created under the law. Corporations exist to serve the people, we do not exist to serve the corporation. It is perfectly appropriate that the government that created corporations can and should regulate its activites. For example, the government should prohibit companies from selling dangerous products to the public, and should protect the safety of the company employees. I acknowledge that rules and regulations imposed by government on business can be too burdensome and heavy handed. So the rules and regulations imposed by government should be smart and pragmatic. But I think it is insane to reject the role of government in a modern free market economy on purely ideological grounds.

This is why I support Obama’s health care, because I think it is perfectly appropriate for government to prohibit insurance companies from denying people coverage for a pre-existing condition. Allowing insurance companies to only insure healthy people is a business model that does not benefit the public and is not sustainable in the long run.

Now I don’t want to start another debate on the wisdom or lack of wisdom of Obama’s health care. Time will tell. My point is that we should not reject the power of government to regulate the health care insurance industry as a matter of principal.

Does this make me a soci@list? I don’t think so.

I repost these exchanges because my brother is actually very perceptive, liberal though he is, and because they demonstrate the lesson I have been trying to impose on you all, that it is possible to disagree without being disagreeable, to remain one big happy family through it all, and that it is possible to use discussions consisting of different opinions to come to actual insights.

Anyway, who is with me in this suspicion of big government and big business and, especially, their marriage with their hideous spawn?

And can anyone answer Jimmy?  What can limit both big government and big business?


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