Tag: stimulus

Categories
incumbents initiative, referendum, and recall

Christmas in California?

California, Covid, corruption

“Gray Davis was never in a position to play Santa Claus,” said Steve Maviglio, press flack for the former California governor who was recalled by voters in 2003.

Maviglio was comparing Davis’ relative misfortune, back then — in not having a pandemic and the resulting economic stimulus — to today’s prospects for current Governor Gavin Newsom, who likewise faces a citizen-​initiated recall. Yet, while 18 years ago Davis both cut budgets and raised taxes, Newsom has now discovered an extra $100 billion of spendable funds to let him off that hook. 

California’s whopping budget surplus of $75.7 billion? Just the beginning. Democrats in Congress wanted to help with even more tax dollars, voting to drop-​ship Golden State pols another $26 billion as part of the stimulus bill … which every Republican opposed, calling it at the time a move to “supply the Governor of California with a special slush fund.”

“Newsom wants to hand out cash before California recall election,” Politico headlined its story on Monday, informing that the embattled governor was quick to “tell Californians he wants to give them cash and pay some of their utility bills and back rent,” and noting specifically: “Checks would arrive in voters’ mailboxes not long before ballots do this fall.”

One key part of Newsom’s $100 billion “California Comeback Plan” is to give $600 “to some two-​thirds of state residents in households making up to $75,000, along with $500 to families with dependents.”*

“It’s very significant,” offered former Gov. Davis, arguing “the future looks brighter as evidenced by the checks the public will soon receive.” 

Whose future, precisely? Not Californians, really. Newsom’s.

This is Common Sense. I’m Paul Jacob.

* “Unlike the federal stimulus aid, undocumented immigrants and their families will be eligible to receive a state tax rebate,” The Sacramento Bee explained. “In fact, undocumented immigrants with dependent children will be eligible for $1,000 for family checks, double what other California families will receive, in order to make up for the lack of support at the federal level, according to Finance Director Keely Bosler.” [Emphasis added.] Must they document that they are undocumented?

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Photo by Rob Growler /​ Photo by Gage Skidmore

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Categories
free trade & free markets national politics & policies subsidy

Unemployed or Misemployed?

couch potato, Covid, stimulus, welfare

“Now Hiring” signs are up everywhere, especially on the windows of restaurants and other retail businesses.

But those signs aren’t disappearing.

Lots of jobs are left open.

No takers.

Week after week.

The job recovery that President Joseph Robinette Biden Jr. says he has placed his fabled “laser-​like focus” upon, has been disappointing, to use the words of Washington Post columnist Catherine Rampell.

Oops, make that “extremely disappointing.”

“Economists and analysts had been expecting around a million jobs to be added on net in April,” Rampell wrote last week, “given the rising share of vaccinated Americans and relaxation of restrictions on business. Instead, employers created a measly 266,000 positions, the Bureau of Labor Statistics reported Friday. Job growth for March was revised downward, too.”

This didn’t come out of nowhere, as another Washington Post columnist made clear a few weeks ago. “Many employers, especially restaurants and small retail businesses, are having a hard time finding workers,” explained Henry Olsen. “This is likely the result of trends in covid-​19 vaccinations and the generous unemployment benefits that were expanded due to the pandemic.”

Normally when talking about employment and unemployment, we are tempted to put on our economist caps and talk about supply and demand, marginal productivity, monetary policy, etc. But most commentators seem to be honing in on the ultra-​obvious: pay people to stay home, they tend to stay home.

Indeed, thinking of the generous unemployment benefits which the U.S. Congress has bestowed upon the country as “stimulus,” we should realize that paying people to stay at home is like hiring them for the cushiest job imaginable. No worker shortage, as many suggest, but malinvestment in the wrong “jobs.”

And thus the opposite of “stimulus.”

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies too much government

Clunker Flunked

When the Obama Administration hit the ground running in 2009, one of its first “hopeful” and “audacious” programs was “Cash for Clunkers,” a sort of triple-​action economic stimulus, carbon-​emission reduction, and automaker bailout bill. Congress got on board, a lot of trades were made, billions spent. There was much brouhaha.

Skepticism should have been the order of the day, of course. So many things could have gone wrong.

And did.

Now, with the clarity of 20 – 20 hindsight, a consensus emerges: Cash for Clunkers was a clunker itself. An economic analysis from Resources for the Future is just the latest (mostly negative) judgment: “[T]he program increased new vehicle sales by about 0.36 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy.”

Further, fuel economy gains and pollution reductions were minuscule.

The study is far from exhaustive. A lot of old cars were scrapped, recycled. Guess what this does to the used car and parts market? It’s been devastating.

Who’s hurt by supply reductions and consequent price rises? Cash-​strapped folks, the kind of people who usually buy used cars, or keep old cars running — which is a lot of people during a depression.

I bet that Cash for Clunkers served, on net, to transfer wealth from the working poor to far wealthier individuals.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Nails & Ball-​Peen Hammers

When all you have is a hammer, every problem looks like a nail. When it comes to “jobs,” our politicians prove the truth of this adage over and over. They think that they have to “do something,” or at least “look busy” providing “leadership.”

Wrong — unless they take the lead to get out of the way.

Alas, few have the courage for that kind of leadership.

Republican politicians — fearing “looking bad” — are, even now, floating various “plans” to create “jobs.”

“I thought it was incumbent on me to at least say … ‘We’re working on a plan,’” says one incumbent.

Trouble is, whatever plan he or his colleagues put up to counter the president’s absurdities, odds are that it, too, will not work.

Why?

The trouble with markets right now is uncertainty. Several sectors went bust, and it’s not easy to get progress started again … especially when the government keeps cooking up game-​changers. Solutions. “Fixes.” Political machinations — subsidies or regulations or any of the usual tools in the politicians’ tool belt — just increase uncertainty, muddying up the recovery.

The neat thing about markets is that none of us need to know how, exactly, to order the “economy” for order to be discovered. It works out. This is old wisdom, but even actual experimentation has shown that this is the case.

The economy is not a mess of boards half-​nailed down. The last thing it needs is more hammering from politicians.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Off to See the Wizard?

Tonight, President Barack Obama will ride down Pennsylvania Avenue with his sinking approval ratings, to stand beside our most unpopular Congress ever, so he can give a speech about jobs (before the football game starts). Our prez is a good speaker, but I doubt this speech will do any more to soothe our economic stress than have past speeches.

Speeches don’t create wealth — or jobs.

But image can entice votes, and with the election year rapidly approaching, he needs to look like he has a plan. 

Or at least a clue. 

So, the White House back room boys have been busy re-​packaging. News reports say the president will suggest spending $300 to $400 billion to stimulate the economy. But he won’t use the word “stimulus.” For some reason, that word rings hollow.

Rest-​assured, his non-​stimulus stimulus will be “revenue neutral.” In other words, the spending will happen now while the offsetting spending cuts (or tax increases) will happen … later.

Not every provision of whatever plan Obama orates will be a terrible idea, but the thrust of it — the notion that with proper central planning and fiddling by our wizard-​in-​chief the federal government can create prosperity — will be tragically mistaken.

We need a president who understands that Americans could pick themselves up, dust themselves off and get moving economically … if only Washington politicians would stop stage managing the whole show.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Big Government Bigger Than All Else

No sooner had the president signed the new debt limit, and then up went federal debt — to $14.58 trillion. 

Brave new world, that has such numbers in it.

What’s so amazing about this number is that it is larger than last year’s GDP of $14.53 trillion. 

I know, Gross Domestic Product figures are a mess, and don’t measure exactly what we think they measure. But they are the most popular form of national income accounting, and indicate, in a very rough sense, “the size of the economy” for a given year.

And, boy, for our federal government to owe the amount of the whole economy it rules, and more — what a milestone!

The last time debt was more than GDP? The late 1940s.

Recovery happened swiftly, then. This should give us hope: There is a way out.

But remember: World War II didn’t bring us out of the Great Depression, the end of the war did.

And remember, further: Most of the big names in economics — by then, Keynesians all — had predicted a huge economic downturn as government spending plummeted and wartime regulations (chiefly wage and price controls) hit the dustbin. 

Bad prediction. The economy soon took off.

Why? Less government spending, less regulation.

Alas, I don’t see that happening, today or tomorrow. With the budget deal, overall spending is now set to rise still further. The medical industry — a huge growth sector for government spending as well as private spending — is set for increasing regulation.

Brace yourself.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Why Such Slow Growth

Why such slow growth, after the federal government spent trillions to spark recovery?

Could it be that binges of throwing borrowed money around don’t matter? Spending money can’t be the solution if the problem is low or dark expectations of the future — and the spending of borrowed money feeds that dark view.

So what is the solution? 

Well, take a step back. According to economic historian Robert Higgs, the key to economic growth is “private domestic business net investment.” And that’s down. 

The peak occurred in 2007. The next two years saw the very opposite of growth, a precipitous fall in investments in private business. Last year, Higgs tells us, “net private investment increased smartly for three quarters, reaching an annual rate of $270 billion in the third quarter, then contracted sharply — by almost 47 percent — to $144 billion in the fourth quarter,” which is about a third of what it was at peak in 2007.

“Jobs,” which everybody’s thinking about, don’t come from spending as such. New jobs happen when people who save take their unspent money and invest it in production processes that they hope will yield goods that consumers in the future will spend money on.

So, private investment depends on positive expectations, a kind of rational hope.

What could government do? 

Provide less reason for fear by putting a halt to doing things that elicit rational fear instead of rational hope.

Saner government, more productive economy.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government U.S. Constitution

Not His Job

President Obama will address the State of the Union, today, speaking before Congress. These annual efforts are almost uniformly unbearable, with too much applause and too much rah-​rah-​boy politicking. And far too little thought.

Scuttlebutt has it that the president will concentrate on the economy, on “jobs.”

After the sea change of the last election, one might hope that he’d stay on topic and address constitutionally-​mandated issues of his office.

“Jobs” are none of his business. “Jobs” — by which I mean the number of people employed this way or that out there in the non-​governmental sector, and by which he means the number of jobs total, including those paid for out of taxpayer expense — should not be his chief worry.

No president in recent memory has excelled by fiddling with policy to micromanage “the economy.” No one knows this stuff. Not even college professors specializing in macroeconomics.

What government operatives know is how to get elected, stay in office. How to preen for television cameras, read a prompter.

You know, the essentials.

But they cannot possibly know enough to “run the economy.”

And yet, Obama talks about making the country “more competitive.” Oh, come on. Just open up trade — which promotes widespread co-​operation as well as competition — stop micromanaging the money supply through the Fed, make regulations fit a rule of law and not a vast bureaucratic command system, and let it go. Let individuals and businesses worry about “competiveness.”

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies porkbarrel politics too much government

How to Simulate Stimulation

Historians have noticed something interesting about the Great Depression: The bulk of Roosevelt’s New Deal money and effort wasn’t directed at the hardest-​hit states. It was directed at swing states.

FDR’s New Deal could thus be seen as a vast re-​election drive.

Economist Veronique de Rugy, of the Mercatus Center, recently testified before Congress about her studies of recent stimulus spending. She noticed that Democratic districts received bigger bucks than did Republican ones. Coincidence?

Nick Gillespie wrote about this on Reason magazine’s blog, Hit and Run. And, nestled in the comments section, is testimony from someone in the federal government about how stimulus money is actually spent. The government does not look for especially hard-​hit areas. It looks for prospect projects that have been designed and engineered and ready to be funded to reach completion quickly.

This is useful to know. If believed, I’ll leave to you the explanation why Democratic Districts might be further along this pork-​project train than Republican Districts. But it’s worth noting that this method does not really show any targeted expertise on the part of the federal government. It’s just a spend-​and-​spend-​quickly program. Throw out enough dollars and hope something “sticks” … to produce real growth.

You see, this is nothing like how markets for capital projects work in the private sphere. And it’s nothing like a good way of jump-​starting a wounded market economy.

It’s just government-mismanagement-as-usual.

This is Common Sense. I’m Paul Jacob.

Categories
media and media people national politics & policies tax policy too much government

Smart Reaction?

If you balk at having more and more of your life run from the nation’s capital, you’re stupid. 

Or, so blares Joe Klein in a Time magazine online article, “Too dumb to thrive.”

See, “smart” Americans understand that a trillion in federal “stimulus” spending can only do “good.” Apparently dumb Americans are the ones telling pollsters that the “stimulus” money is being wasted.

Klein says the biggest part of the stimulus is a tax cut for most, meaning more money in their paychecks. But ignorant Americans focus on the huge debts we’ll have to pay back … in higher taxes.

Klein says that the second biggest portion of stimulus money went to state governments to keep our kids’ teachers from being laid off and state taxes from being raised. The notion that without the stimulus all the public school teachers would have been pink-​slipped is a bit much. 

As for higher state taxes, couldn’t state spending actually be cut? And not just on police, teachers and firemen?

Klein’s blithering blathering reminds me of Chris Matthews, and other MSNBC geniuses, who contend that politicians are in deep doo-​doo because “people are angry and scared” and want to take their frustrations out on someone.

People are angry and scared, sure. But taking out our anger out on those responsible for destroying our wealth and freedom seems … well .  .  . smart.

This is Common Sense. I’m Paul Jacob.