While watching the Super Bowl and tweeting like a fool, I commented on the Census ad, wondering how much this cost. The answer, according to the Hill, was $2.5 million; the total budget for advertising the Census is $340 million. The Census twittered itself (spread by many notably liberal sources)

If 1% of folks watching #SB44 change mind and mail back #2010Census form, taxpayers save $25 million in follow up costs

The way the Hill reports this is "one percent of the more than 100 million people expected to watch this year’s Super Bowl football game opt to mail back their Census forms," but we have forms by households. Last year 48 million households, out of about 118 million (304 million people at 2.59 people/HH, via Census), watched the Super Bowl. The response rate from households to the 2000 Census was about 67%. So if 48 million households watch the game, 32 million can be expected to respond anyway. To get a million (actually, 1.18 million) more households to respond out of the remaining 16 million -- off a single ad, shown in the third quarter when many have stopped watching or are well into the adult beverages -- is a bit much. It's this failure to think on the margin that makes me shake my head at the Census' response.

Labels: economics, it's the spending stupid

We'll cover it on the show tomorrow. 9am CT on KYCR, link goes to the show page and you'll find streaming from there on that LISTEN LIVE link. I am working on editing last week's show into a podcast that I will find space to share, as the station doesn't seem motivated to do it themselves.

I'll cover it more then, but I would take some time to read David Altig, Menzie Chinn, and Mike Shedlock and the links they provide. You have three things going on this month that may be slowing others down (and IS slowing me down): We had a revised format of the report, the annual benchmarking, and a change in population controls. That's wonk-speak for "they changed the book." None of this was unexpected, but with so many numbers being multiply revised, teasing out which did what is awfully hard. Altig's summary is a good start:

...overall the news was a mixed bag of a little better news than was expected (the fall in the unemployment rate even as the labor force participation rate rose), a little worse news than was expected (the net three-month loss in payroll employment), and some relatively bad news that was largely expected (the large downward revision in employment growth for the period April 2008 through March 2009).

Certainly, the employment picture is a lot better than this time last year, but it is still a good distance from what anyone would regard as "cheery."

I would point out that today's revision now puts the job loss since January 2009 at 4.022 million workers. Of course some will say it would have been six million without the stimulus. If you get to define the goalposts, I guess you can move them wherever you like.

See you in the morning.

Labels: economics

I have a very short reaction to this poll (HT: PowerLine) that 36% of Americans, including 61% of those who identified themselves as liberal and 53% of those who identify themselves as Democrats, had a favorable view of socialism. My answer would be influenced by what I thought socialism is. If I read Yahoo Answers, I'd find out socialism is a midpoint between capitalism and communism. If I tried to read Wikipedia, I'd get this hopeless list of possible socialisms. If I read Marxists calling it the society of the free and equal, it's hard to oppose.

If on the other hand you thought of socialism as immiseration and murder, you would have a different opinion.

Jonah Goldberg, in his letter from yesterday (by free subscription) makes this same point:

I think this is one of the most fascinating and under-explored areas of 20th-century history. Not just the liberation theology angle, but the whole effort by the Soviets to manipulate world opinion, and thereby politics, in countless and often little-understood ways. So many of the conspiracy theories that have inflamed the moonbat Left over the years were, at least in part, psyop cons by the Soviets. Some scholars made their careers by making pro-Soviet arguments in good faith and then being rewarded with more access to the Soviet Union. Some people were bribed and others simply flattered into aiding and abetting the Soviet cause.

The effect of these academic scribblers lives on and influences how people respond to pollster questions on socialism.

Labels: economics, socialism

She writes about a place I call "Obama Road".

According to Stephen Gaetz, director of public services for St. Cloud, it is hard to answer questions about Pinecone jobs without an operational definition of “job,” especially as it concerns the seasonal nature of the construction industry.

Gaetz reported 162 workers worked “from a few hours to several weeks” for a total of 4,528 hours. That comes out to about 28 hours per worker. One can say this is good, but it’s not even close to 162 full-time jobs — 40 hours a week year-round.

Construction jobs are certainly not like all other jobs, but the administration simply uses the vague word “jobs,” blending them with other kinds of work. Overall, it’s a mistake to use an undefined term like “jobs” as a metric to measure the stimulus. It’s too ambiguous.

...without a workable definition of “job,” it is hard to unravel the question of “created” or “retained.”

I also wrote to Kristen Morrell from the Minnesota Department of Employment and Economic Development. She wrote that the money “was used to augment existing programs that help people who are unemployed and looking for work.”

She cited a public works program for water projects called the Public Facilities Authority that used $107 million and “created or retained 178 construction jobs.” For how long did those jobs last? Projects take six months to two years, she answered. Not all of the 178 workers work that long.

I'm proud of Barbara's efforts to get actual data to look at, and I for one thank Mr. Gaetz for straight answers.

To answer at least one critic in the comments on her article -- it would be a straightforward, honest answer for the Administration to say "we used $1.6 million to spread 4,528 hours of paid work over 162 people." When you say "we saved or created 162 jobs", (or 80, if I'm reading the report from recovery.gov right -- that's a problem) you imply that is a permanent job, not a drive-by job for a day or a week. That's the ambiguity.

There is also the question of whether the project provides some value to the area. Part of the problem I thought about for this road is that it largely lies in one community (St. Cloud) but serves another (Sartell.) If you just grant money to St. Cloud they might want to use it somewhere else of greater benefit to their own population. St. Cloud is a destination for Sartell much more than the reverse flow, I am assuming. So it may be that a higher level of government (county, state or national) solves a coordination issue. That's not the stated goal of the money, though -- the metric we get is only "jobs saved or created."

Labels: economics, Obama, St. Cloud

Bottom Line: An improvement in labor markets would not be unexpected given the GDP surge at the end of 2009. But sustainability is the key, and sustainability requires 4Q09 GDP numbers in the absences of inventory effects. Few forecasts are looking for such growth, certainly not yet at the Fed. ... I don't see an actual return to recession short of another negative demand shock, but I am expecting the economy to settle into an anemic pace of growth. In this environment, I don't see how the Fed is interested in substantially tightening policy...

Tim Duy, reviewing the case for the inflation hawks. I'm still reviewing the employment report and may not post on it until this afternoon as I try to the rebenchmarking, but the quick peek indicates concerns about the birth/death model were justified. I'll try to explain in the next post.

Labels: economics

I have been recording episodes of John Stossel's new show on Fox Business and a couple of weeks ago was pleasantly surprised to see two people from Minnesota on it. They were discussing a company called Serious Materials which seems to get a high amount of tax credits from the energy programs of the Obama Administration. Then we learn that the connections run much deeper: There are frequent visits from both the president and vice-president, but even more frequent are the visits between Energy Department official Cathy Zoi and Robin Roy, vice president for policy at Serious. You see, they're married. The Freedom Foundation of Minnesota provided much of the evidence that demonstrates this non-transparent use of weatherization funds. They've provided a video you can watch to see more.

On its website, Serious Materials says it did not get a taxpayer subsidy. But that's just playing with terms. What it got was a tax credit, an opportunity that its competitors did not get: to keep money it would have paid in taxes. Let's not be misled. Government is as manipulative with selective tax credits as it is with cash subsidies. It would be more efficient to cut taxes across the board. Why should there be favoritism?

Because politicians like it. Big, complicated government gives them opportunities to do favors for their friends.

Labels: economics

A story bubbling around the econoblogosphere (you like that? I think we should coin it) is an expected change in reporting the number of jobs lost since April 2008, due to a bad forecast in the number of new firms that adjusts the payroll employment survey figure reported by the Bureau of Labor Statistics. You can get an illustration from Bloomberg to see the issue. CNN is also reporting:

Job losses during the recession may have been underestimated by close to a million jobs. So instead of employers cutting just over 7 million jobs from their payrolls since the economic downturn began in December 2007, it's expected that the Labor Department's new estimate will be a loss of 8 million jobs.

"It's an enormous understatement of the severity of the crisis," said Heidi Shierholz, labor economist with the Economic Policy Institute, a union-supported think tank. "It confirms that things were actually worse on the ground than what the reports suggested."

The new reading will come when the economists at the department's Bureau of Labor Statistics release their annual revision of U.S. payrolls from April 2008 through March of 2009 Friday, using data that wasn't available as the monthly readings were being estimated and reported.

...There is a concern that this problem didn't end in March of 2009. In fact, the adjustment added even more jobs -- 990,000 -- in the nine months reported since then.

So another big revision in the payroll numbers could be looming a year from now. That means this Friday's report should give pause to anyone who is depending on the official numbers to signal real improvement in the economy.

Mike Shedlock says the birth/death model is broken (if so, how would someone fix it? Hard to say.) Casey Mulligan thinks this brings the data from the two employment surveys (households and payroll) into closer alignment. He has argued for awhile that the household data may be better to use right now, which I think is a minority position among economists.

The important issue to remember is that if birth/death misses turning points we may see an upward revision in a few years that offsets this one. The data for this one covers most of 2008 and a few months of 2009, so watch and reprimand those who want to use this as an argument against Porkulus. This data revision ends about when Porkulus starts. But another revision in February 2011 will possibly increase the size of job losses experienced since its passage. For now, we just don't know.

Labels: economics

If there's to be a Question Time, I have a proposal for the first question. "President Obama, will you agree that your presidency's success on fiscal policy should be judged on whether or not you maintain the U.S.'s AAA corporate sovereign debt rating?" (UPDATE: Corporate? What was I thinking??)

It appears the Conservatives in the U.K. are willing to make that pledge.

U.K. opposition Treasury spokesman George Osborne said Tuesday that if elected, a Conservative government should be judged on whether it can defend the country’s AAA credit rating. ...

“Judge us by whether we can protect the U.K. credit rating,” Osborne said in a speech in London, adding that this was a “political gamble.”

“But the economic risk of not setting ourselves this benchmark is not one I am willing to take,” Osborne said.

Who else will step up? The threat in the U.S. is not idle:

Steven Hess, senior credit officer at Moody’s, said the deficits projected in the budget outlook presented by the Obama administration outlook this week did not stabilise debt levels in relation to gross domestic product.

“Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note.

I am expecting a couple of communications people from the Congressional Republican staffs to start emailing me about this. If you want me to take you seriously, you had better be willing to match Mr. Osborne's pledge.

Labels: debt, economics

South Dakota is contemplating economic suicide.

After a number of years of finishing second to Wyoming, South Dakota had the best business tax climate in the nation. Perhaps owing to their humble nature, South Dakota seems to have its minds made up to not repeating their performance. HJB 1002 if passed would impose a 6% corporate tax.

Here's one of their gubernatorial candidates pitching the idea.

Labels: economics, Minnesota

I was reading John Taylor this morning and needed a free 20 minutes to redraw the first graph he has. He is trying to make the point that there has been no effect of the stimulus, by first showing (in an earlier post) that increased tax rebates and transfer payments were not stimulating consumption. In yesterday's piece, he adds that "changes in government purchases have had virtually no effect. The turn-around in growth has been mainly due to private investment." But I looked at his graph and it has total private investment. Much of that increase has come from inventories. How much? I've redrawn his graph dividing his investment figure between fixed investment (including residential investment) and inventories. The green line is inventories and the red line is fixed investment.



Inventories were responsible for $105.7 billion of the $182 billion change in GDP in quarter 4. This is just another way of saying pay attention to final sales of domestic product instead, which was up 2.2%. Up, yes. Up more than the previous quarter, yes. But again it needs to reach a more sustainable level.

As to Prof. Taylor's earlier point, worth noting that personal income less transfer payments has fallen by 4.1%. As many people are now learning, those transfers don't last forever, and spending on their basis may be more tentative than spending from income one thinks is more permanent. Seems we learned about this once. Between transfers and inventories, we are seeing a good deal of this statistical recovery based on temporary phenomena.

Labels: economics

Scott Beaulier reports on a presentation at his school by Joshua Hall, in which Hall discusses a loss of data for measures of economic freedom. (Hall blogs at Division of Labor.)

When discussing the Economic Freedom Index, Josh talked about some of the challenges they may soon be facing. According to Josh, organizations like the ILO might be making it more difficult for them to gather labor data for the index.

The World Bank and other organizations are being pushed to stop asking questions about paid leave, the costs of hiring workers, and hiring/firing regulations. Critics argue these "costs" are actually "benefits." Rather than allow organizations to recode these data as benefits, pro-labor organizations are putting strong pressure on them to stop asking questions about labor market policies altogether.

If successful, this would have a big effect on one of the core components to the EFI.

As Bryan Roberts and I wrote in our book, The Design and Use of Political Economy Indicators, governments in developing countries respond to these rankings by seeking to enact policies that increase economic freedom. That is, the measures are educational to policymakers in the developing world. Critics of growth-generating policies would rather not have this response, so they attempt to suppress the data.

I argue in that book that labor policies are largely a subset of property rights. If you have properly measured the presence or absence of laws that support private property -- including the right of contract between worker and entrepreneur -- you may not really need all of the elements in that index. Strict labor laws, expropriation of private property, and even central banking that credibly commits to price stability are simply facets of one of two logically consistent economic systems. (See Mises, Planned Chaos.)

Labels: economics, Free Markets, Freedom

As I teased on Monday, there is a new survey of economics bloggers out from the Kauffman Foundation, based on a list of 200 economics bloggers kept by Palgrave. I was 1 of the 80 who responded. The poll is pretty well balanced across ideology: respondents self-identified as 16 percent Republican, 19 percent Democratic, 47 percent independent, and 18 percent libertarian/other.

71% thought government was doing too much. What should government do more of? The only answers with broad support concerned immigration (57% supported increasing all legal immigration, and slightly more supported increasing it for high-skill workers.)

What should they do less of? Less business regulation (only 9% favored more of it) and lower tariffs. I think that simply represents the profession as a whole, as it has for many, many years. As Arnold Kling notes, economists do have some substantial differences in viewpoints from the general public, and on these two there is much more consensus than average.

Another example of that comes from taxation -- 47% support flatter taxes and a strong majority want fewer taxes on income and wages. However, taxing carbon and gasoline, and consumption generally, won support from the group.

The most interesting point to me was the split between those who thing the government should address high budget deficits now and those who think that should wait while job growth is stimulated. That debate is reflected in the current political discourse. A majority want entitlement reform ... though if you dug into that position I doubt you'd find consensus on how to do it.

23% of the panel thought recession was still with us, while only 7% thought the economy was strong. That should be a sobering thought for the V-shapers out there.

Labels: economics