U.S. CPI Falls In April At Fastest Rate Since 2008 - Is It Overstating The True Rate Of Inflation? [View article]
The phrase was "gradual progress toward full employment," not that we are at full employment. Please do not try to turn a statement about a direction of change into a statement of where we are.
Most of the indicators you mention are improving, although none have reached their pre-recession best. For example, U-6 is now at 13.9%, down from its peak of 17.4%. Components of LFPR that are not related to aging of population are also improving, for example, a gradual trend toward decrease of fewer discouraged workers (down to 3.2% of population from over 5%). The number of involuntary part-time workers is also trending down (over 6% at start of 2011, 5.1% now).
Yes, it would be nice to have higher wages and more jobs. At the moment the economy is not offering us that option. Perhaps you would prefer fewer jobs at higher pay. That is a legitimate preference, I don't argue with it, although it is not my own preference.
Why Hasn't The U.S. Become Another Greece? [View article]
If I understand you correctly, you are saying that historically, the trend of real tax revenue grows faster than the trend of real GDP. That has been true in the US because the tax system is progressive, and because brackets have been legislated in nominal terms. As a result, we need tax "cuts"--really, adjustment for the long-term trend of nominal income--to keep tax revenue constant as a percent of real GDP. If that is what you have in mind I agree.
The issue of automatic stabilizer is a little different; it is a short-term phenomenon that pertains to what happens to tax revenues as a result of movements of real GDP above and below the trend over the business cycle. I think it is legitimate to omit them from the analysis in this case and treat the long-term bracket creep as a separate issue.
The People Of The EU Support The Euro For The Very Reason It Is Destroying Them [View article]
"It is the same for the euro. Everyone would benefit from a devaluation"
I'm not sure I agree with that. I see different reasons why the euro is so popular even though it is harming the European economy as a whole.
1. Leaving the euro would hurt people whose debts are denominated in euros. If they have borrowed from domestic banks, maybe the loans would be redenominated back to the drachma, peseta, or whatever, but some people and firms have borrowed from foreign sources, so it would not be so easy to redenominate their debts. They would be hurt badly if their country left the euro and then devalued.
2. Since the start of the crisis, real effective exchange rates in Greece, Portugal, Italy, and Spain have all risen relative to that of Germany. That has hurt competitiveness of the economies, but at the same time, it supports the standard of living of people who have incomes or savings denominated in euros. If their countries left the euro and devalued, they would suffer a loss of purchasing power.
These two factors together mean that even if a breakup of the euro helped competitiveness, growth, and employment in the countries that left, many individuals in those countries would suffer.
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
"A carbon tax would disproportionately impact low-income families. "
There are many arguments for and against a carbon tax, and I am willing to engage on the issue at great length at any time. However, the argument that such a tax would harm low-income families is one of the most illogical, even though it is used frequently both by those on the left and those on the right.
If you want to help the poor, using targeted policies that help the poor, not pricing that provides a trickle of benefits to the poor while bestowing most of their benefits on higher income families.
If you think higher prices would help promote conservation and clean energy, while should you let the poor off the hook and encourage them to use energy wastefully?
For a full development of these arguments, see "When does 'It would hurt the poor' outweight 'It's good for the environment'?" http://bit.ly/12u3oCT
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
" I also think that cheap local energy is a huge multiplier for the economy."
This is a widespread view, but it is not well substantiated by cross-country data. On the whole, countries with low energy prices tend to have weak economies and those with high energy prices do quite well, thank you. For example
Countries with very low gasoline prices include: Venezuela, Turkmenistan, Libya, Iraq, Iran, etc.
Countries with very low electricity prices: Russia, Iran, Pakistan, Ukraine, Serbia
Countries with high gasoline prices include fast-growing economies like Turkey and Hong Kong, also many of the countries most successfully fighting the European slump like Norway, Finland, Netherlands
Countries with high electricity prices (aside from obvious case of island countries) also include many rich and/or dynamic countries like Brazil, Denmark, Germany, Chile.
In short, what is really a "huge multiplier" for an economy is an energy policy that prices each energy source realistically according to market forces, modified where necessary by taxes to reflect negative environmental effects. On the contrary, subsidies and protectionism to keep prices artificially low are economically destructive.
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
Comment: I am interested to see that the trend of comments here is pro-export. When this item was reposted to a popular web site that attracts a general readership, less business-oriented than SA, it provoked a very lively discussion that was strongly biased against exports. The argument was not always gas specific--it seems that a lot of people think it is foolish for any country anywhere ever to export raw materials instead of either processing them at home or hoarding them for a rainy day.
U.S. Unemployment Rate Falls To 7.5%, Strong Upward Revisions For Job Growth [View article]
No, I don't think that is fair to the BLS. The BLS provides all of the information, including the workweek data that you cite, and just lays it out there. It is up to us, the blogging community, to pick out what we want from it and to spin it as we wish. Don't blame the BLS if you don't like the spin.
U.S. Unemployment Rate Falls To 7.5%, Strong Upward Revisions For Job Growth [View article]
The net increase in the workforce for April was 210,000. This is a very volatile number month by month, but the trend has been toward growth of the workforce. It has increased by 748,000 people since April 2012.
What Energy Efficiency Tells Us About Healthcare [View article]
First, with regard to oil: Great charts on response of energy efficiency to price. Just think how much farther down that road we would be now if we had a carbon tax.
With regard to health care:
--"Change the tax code so that NO ONE can deduct healthcare expenses."
--"Encourage employers to turn the choice of healthcare coverage over to the employee -- if everyone bought their own policy, the portability "problem" would cease to exist." Well, maybe, IF we have an Obamacare rule that requires that insurers cover preexisting conditions.Without that, turning healthcare coverage over to employees would be a disaster for diabetic employees, those with chronic heart disease, etc.
--"Allow insurance companies to compete by selling policies across state lines." Fine, but this is a minor tweak.
Finally, getting the market to work in healthcare may sometimes require more regulations, not less, for example, regulations that require transparency in pricing policies. Right now it is often impossible for consumers to comparison shop even for elective procedures because hospitals and doctors don't or won't give you up-front inclusive pricing.
Slovenia Is Not The Next Cyprus, But That Doesn't Mean It's Not In Trouble [View article]
Slovenia is very small, so there would be little direct contagion. However, I think the EU authorities would be happy to avoid the need to confront a crisis. It would force them to decide whether to follow a Cyprus-like bail-in strategy, or to show that Cyprus was a one-off, and it is back to bail-out of unsecured creditors and large depositors. Either way, banks in other peripheral countries would be affected.
Impressive Progress In The Federal Budget [View article]
What I see in these charts and numbers is the continuation of a consistently procyclical fiscal policy. No wonder we are having a slow recovery. Yes, controlling the course of the federal debt over the long term is important, but tightening policy during a recession and then letting out all the stops on spending and tax cuts whenever there is a boom is something to weep over, not celebrate.
Why Hasn't The U.S. Become Another Greece? [View article]
First, nothing is cut off. These are OECD data that only go out to 2014 and they are presented in full.
Second, the chart you link to shows current budget deficits, whereas mine shows underlying primary deficits. Making a comparison between the two is totally meaningless; they are two different animals entirely. For example, for 2013 the US underlying primary deficit was -3.8 percent whereas the current deficit for that year was -6.8 percent. Using the underlying primary deficit is not, as you seem to think, an attempt to deceive, but rather, an attempt to accurately compare the policy stance of the two countries without distortions caused by differences in interest rates and the state of the business cycle.
If you had read my post instead of skimming it for things you disagree with, you would have seen this explanation:
" Next, we adjust the budget balance to account for the effects of automatic stabilizers, such as income taxes and unemployment benefits, that move the budget toward deficit during recessions and toward surplus during expansions. That gives us the structural budget balance, which is the surplus or deficit that would prevail under given tax and spending laws if the economy were operating with a zero output gap. We then remove interest payments from the expenditure side of the budget to get structural primary balance. If we make one more adjustment, by removing the effects of one-off budget measures like privatization revenues and tax amnesties, we get the underlying primary balance."
Federal Budget Deficit Declines By Almost One Third [View article]
"two beneficial (sic) trends are continuing: revenues for the past 12 months are up 10.3% relative to a year ago, and spending is up only 0.1%. Revenues have been rising steadily for the past years, while spending has grown hardly at all. . . And it also means that spending restraint is not necessarily bad for economic growth."
Uh--OK, fiscal drag is now good for economic growth? Like the 0.1 percent growth in Q4, before the main drag from the cliff deal and the sequester even begin to bite? Give me a break.
Are Banks Safe Enough? Risk Weighting, Regulatory Arbitrage, And Other Issues [View article]
To its credit, Basel III does acknowledge the importance of off-balance-sheet risks, and it tries to adjust capital requirements accordingly. However, Basel III is just a guideline, the real responsibility is up to national regulators to uncover the specifics and take action. I am not too confident about that.
What May Be Good About The Sequester [View article]
Check out the chart in this post that shows that government spending has been making a negative contribution to GDP growth in almost every quarter for the past three years. It looks to me like the sequester is an increase in the rate at which government spending is shrinking rather than a decrease in the rate it is growing.
U.S. CPI Falls In April At Fastest Rate Since 2008 - Is It Overstating The True Rate Of Inflation? [View article]
Most of the indicators you mention are improving, although none have reached their pre-recession best. For example, U-6 is now at 13.9%, down from its peak of 17.4%. Components of LFPR that are not related to aging of population are also improving, for example, a gradual trend toward decrease of fewer discouraged workers (down to 3.2% of population from over 5%). The number of involuntary part-time workers is also trending down (over 6% at start of 2011, 5.1% now).
Yes, it would be nice to have higher wages and more jobs. At the moment the economy is not offering us that option. Perhaps you would prefer fewer jobs at higher pay. That is a legitimate preference, I don't argue with it, although it is not my own preference.
Why Hasn't The U.S. Become Another Greece? [View article]
The issue of automatic stabilizer is a little different; it is a short-term phenomenon that pertains to what happens to tax revenues as a result of movements of real GDP above and below the trend over the business cycle. I think it is legitimate to omit them from the analysis in this case and treat the long-term bracket creep as a separate issue.
The People Of The EU Support The Euro For The Very Reason It Is Destroying Them [View article]
I'm not sure I agree with that. I see different reasons why the euro is so popular even though it is harming the European economy as a whole.
1. Leaving the euro would hurt people whose debts are denominated in euros. If they have borrowed from domestic banks, maybe the loans would be redenominated back to the drachma, peseta, or whatever, but some people and firms have borrowed from foreign sources, so it would not be so easy to redenominate their debts. They would be hurt badly if their country left the euro and then devalued.
2. Since the start of the crisis, real effective exchange rates in Greece, Portugal, Italy, and Spain have all risen relative to that of Germany. That has hurt competitiveness of the economies, but at the same time, it supports the standard of living of people who have incomes or savings denominated in euros. If their countries left the euro and devalued, they would suffer a loss of purchasing power.
These two factors together mean that even if a breakup of the euro helped competitiveness, growth, and employment in the countries that left, many individuals in those countries would suffer.
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
There are many arguments for and against a carbon tax, and I am willing to engage on the issue at great length at any time. However, the argument that such a tax would harm low-income families is one of the most illogical, even though it is used frequently both by those on the left and those on the right.
If you want to help the poor, using targeted policies that help the poor, not pricing that provides a trickle of benefits to the poor while bestowing most of their benefits on higher income families.
If you think higher prices would help promote conservation and clean energy, while should you let the poor off the hook and encourage them to use energy wastefully?
For a full development of these arguments, see "When does 'It would hurt the poor' outweight 'It's good for the environment'?" http://bit.ly/12u3oCT
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
This is a widespread view, but it is not well substantiated by cross-country data. On the whole, countries with low energy prices tend to have weak economies and those with high energy prices do quite well, thank you. For example
Countries with very low gasoline prices include: Venezuela, Turkmenistan, Libya, Iraq, Iran, etc.
Countries with very low electricity prices: Russia, Iran, Pakistan, Ukraine, Serbia
Countries with high gasoline prices include fast-growing economies like Turkey and Hong Kong, also many of the countries most successfully fighting the European slump like Norway, Finland, Netherlands
Countries with high electricity prices (aside from obvious case of island countries) also include many rich and/or dynamic countries like Brazil, Denmark, Germany, Chile.
In short, what is really a "huge multiplier" for an economy is an energy policy that prices each energy source realistically according to market forces, modified where necessary by taxes to reflect negative environmental effects. On the contrary, subsidies and protectionism to keep prices artificially low are economically destructive.
Please don't fall for the "Myth of Affordable Energy." http://bit.ly/18FEYee
Why Arguments Against Exporting Natural Gas Don't Add Up [View article]
U.S. Unemployment Rate Falls To 7.5%, Strong Upward Revisions For Job Growth [View article]
U.S. Unemployment Rate Falls To 7.5%, Strong Upward Revisions For Job Growth [View article]
What Energy Efficiency Tells Us About Healthcare [View article]
With regard to health care:
--"Change the tax code so that NO ONE can deduct healthcare expenses."
--"Encourage employers to turn the choice of healthcare coverage over to the employee -- if everyone bought their own policy, the portability "problem" would cease to exist." Well, maybe, IF we have an Obamacare rule that requires that insurers cover preexisting conditions.Without that, turning healthcare coverage over to employees would be a disaster for diabetic employees, those with chronic heart disease, etc.
--"Allow insurance companies to compete by selling policies across state lines." Fine, but this is a minor tweak.
Finally, getting the market to work in healthcare may sometimes require more regulations, not less, for example, regulations that require transparency in pricing policies. Right now it is often impossible for consumers to comparison shop even for elective procedures because hospitals and doctors don't or won't give you up-front inclusive pricing.
Slovenia Is Not The Next Cyprus, But That Doesn't Mean It's Not In Trouble [View article]
Impressive Progress In The Federal Budget [View article]
Why Hasn't The U.S. Become Another Greece? [View article]
Second, the chart you link to shows current budget deficits, whereas mine shows underlying primary deficits. Making a comparison between the two is totally meaningless; they are two different animals entirely. For example, for 2013 the US underlying primary deficit was -3.8 percent whereas the current deficit for that year was -6.8 percent. Using the underlying primary deficit is not, as you seem to think, an attempt to deceive, but rather, an attempt to accurately compare the policy stance of the two countries without distortions caused by differences in interest rates and the state of the business cycle.
If you had read my post instead of skimming it for things you disagree with, you would have seen this explanation:
" Next, we adjust the budget balance to account for the effects of automatic stabilizers, such as income taxes and unemployment benefits, that move the budget toward deficit during recessions and toward surplus during expansions. That gives us the structural budget balance, which is the surplus or deficit that would prevail under given tax and spending laws if the economy were operating with a zero output gap. We then remove interest payments from the expenditure side of the budget to get structural primary balance. If we make one more adjustment, by removing the effects of one-off budget measures like privatization revenues and tax amnesties, we get the underlying primary balance."
Federal Budget Deficit Declines By Almost One Third [View article]
Uh--OK, fiscal drag is now good for economic growth? Like the 0.1 percent growth in Q4, before the main drag from the cliff deal and the sequester even begin to bite? Give me a break.
Are Banks Safe Enough? Risk Weighting, Regulatory Arbitrage, And Other Issues [View article]
What May Be Good About The Sequester [View article]
http://seekingalpha.co...