Posterity! You will never know how much it cost the present generation to preserve your freedom! I hope you will make good use of it!
John Adams
Unemployment Number Goes Up to 9.8%
It's always fascinating to look at Wall Street on days like today; for instance, sometimes the market sells off on good news. Consumer confidence has been on the rise; there have been positive after-the-fact adjustments to national statistics; in October, there were 172K jobs added (we would really like to see that number double to say that a meaningful jobs recovery was underway). Instead, unemployment climbed for the first time in months to 9.8%, the number of jobs added shrank to 39K (mostly in temp agencies and health services--not good, because health care expenditures can only be sustained under a robust private sector). So the question is: why did the stock market all but shrug off the bad economics news? Neil Cavuto on his Fox News suggested that it was seen as an outlier, probably mistaken and will be adjusted up in the future.
This naturally leads to the kerfuffle regarding unemployment benefit funding and the talking points of both sides. Nancy Pelosi continues to argue obsolete Keynesian notions that unemployment benefits constitute stimulus. In fact, you would think after the last two stimuluses--which most people saved rather than spend--this theory had been discredited. Milton Friedman had a competing hypothesis--the Permanent Income Hypothesis. I'll give some practical context: if I was unemployed and did not believe that my job prospects were promising, I would reduce my consumption (e.g., move to a smaller apartment), even if I was receiving (limited duration) unemployment (maybe using unemployment compensation to stretch my rainy day resources). On the other hand, if I believe the period of unemployment was transitory, I might take some training classes, buy a new suit, etc., in the belief that the related purchase of goods and services would be an investment resulting in higher income in the long run.
There are issues that most of us conservatives have with the concept of unemployment compensation. A principal consideration is the problem of moral hazard: if I believe that the government is going to guarantee me a living income through recessionary periods or retirement, what incentive do I have to go out and pick apples in Washington state at over minimum wage--when unemployment, courtesy of the federal government, pays more than the apple grower, with no labor expected in return? What incentive do I have to look for jobs in other areas? (I'll never forget several months back someone was recruiting me for a position in New Jersey--or so I thought until a project manager called me back to let me know the position wasn't really in NJ, but in Iraq. Those pesky little details...) But when I worked in the Chicago suburbs, Santa Clara or Maryland, it wasn't because I had relatives or friends in the area (I'm a native Texan).
In many cases, if we can't find a position, we might create our own opportunities. For example, I've done some independent IT consulting or subcontracting, I've discussed joint ventures with past clients, and I have some writing projects. One of my best friends is an IT manager, and he has an unrelated web-based business he's started.
We conservatives are frustrated by a number of things; we have had an administration that has been manically pursuing new business taxes, mandates and other regulations, which has done little to expand new markets for American goods and services, and which is playing a game of chicken over continuing current tax policy for job creators (among other things). We have seen unemployment extended to a record 2 years and counting. For Democrats, the answer is black-and-white: we must extend indefinitely, no matter what the cost. (That's the kind of thinking behind trillion-dollar deficits.) We have a different approach: we want to encourage prudent saving and investing in rainy day funds, we don't want to provide so big a check the recipient elects not to work, we may want to stagger and limit payment periods and to provide incentives for workers to move when necessary to find work and/or to engage in retraining and related activities.
Bipartisan Commission Passes Deficit Plan 11-7: Thumbs UP!
Failed Based on 75% Criterion: Thumbs DOWN!
I have to admit that I have been pleasantly surprised by the bipartisan commission, led by former Clinton chief Erskine Bowles and former Republican senator Alan Simpson. This was a commission that suggested some bold steps: taxing health benefits, eliminating farm subsidies and the mortgage deduction, gradually extending age eligibility of social security, making payments more progressive and capping benefits for more financially able retirees, introducing medical malpractice reform, simplifying and lowering business and individual income tax bands, increasing certain excise taxes (e.g., gasoline), plus steep cuts in both defense and domestic spending.
What is particularly notable about the commission is all but one senator voted for it (Baucus (D-MT) and all but one representative voted against it (Spratt (D-SC)), and, of course, the former union chief Andy Stern voted against it.
I am particularly frustrated by Paul Ryan (R-WI) and Jeb Hensarling (R-TX), both of whom I've praised in other contexts in this blog. Ryan thinks the taxation of health benefits in effect locks in the Democratic Party Health Care Law because employers will simply drop their plans and pay the penalty, forcing the individuals to join into these health care exchanges. I personally believe that the tax-free basis of health plans was misguided to begin, and other steps (of the repeal/replace nature) can deal with some of issues Ryan is concerned about. He also thinks there are too many taxes raised. I'll simply point out taxes can be implemented in a way which has minimal impact on consumption (e.g., a national sales tax) and we need to retire a $13.8T national debt. It's unlikely we can simply grow ourselves to a zero national debt.
In my judgment, Obama simply paid lip service to the effort put forth by the commission and did not imply that he supported the bold suggestions made; I consider this to be a failure in leadership.
Neither Pelosi nor Reid are compelled to bring the matter to a vote because that was only guaranteed if the 75% criterion (14 votes) was achieved. However, even if this plan never gets approved directly, I expect it will provide a baseline for future legislation.
Political Humor
"WikiLeaks’ Julian Assange said Secretary of State Hillary Clinton should resign for ordering American diplomats to spy on their foreign counterparts. Thanks, creepy Australian guy who’s wanted for rape in Sweden, we’ll make a note of that." - Jimmy Kimmel
[It wouldn't surprise me if Assange also released videos of Bill Clinton indiscretions and then lectured Clinton on his personal ethics...]
An original:
- NASA announced the much-hyped discovery of alien microbes from the mud under a toxic California lake that use arsenic versus phosphorus as a building block of its DNA--but no E.T. California progressives were clearly disappointed; they were prepared to offer any extraterrestrial resident a full-ride state scholarship in a sanctuary city.
Musical Interlude: Holiday Tunes
Arthur Fiedler & the Boston Pops, "Sleigh Ride". Before Mannheim Steamroller, there was the Boston Pops Orchestra... I remember singing the vocals of "Sleigh Ride" with the rest of the high school choir...
