Burnt Orange Report

Quit Whining and Drink you Starbucks

By Jim Dallas

Dovetailing with a previous exchange over at Greg's place about the sufficiency of 3-ish percent GDP growth (as well as the fact that I've been listening to a lot of old Nirvana albums recently, so I'm already on the level with angst-squared), Daniel Gross of Slate writes that 20-somethings lack the proper perspective on economics:

This is, with apologies to the Broadway musical Avenue Q, the "It Sucks To Be Me" Generation. To hear these authors tell it, college graduates (and twentysomethings who haven't gone to college) are in a world of hurt. The deck is stacked against them: student loans and credit-card debt, budget deficits and McJobs, high housing prices and generational warfare waged by more-numerous baby-boomers...

And so, here we are again. Now, today's twentysomething authors are clearly onto something. College is more expensive today in real terms. There's been a shift in student aid—more loans and fewer grants. The Baby Boomers, closer to retirement, are sucking up more dollars in benefits. There's more income volatility and job insecurity than there used to be. So, why are these books—Generation Debt in particular—annoying?

It's not that the authors misdiagnose ills that affect our society. It's just that they lack the perspective to add any great insight. Writing in the New York Times this weekend, economics reporter David Leonhardt called Strapped, "a grim tale of one-sided generational warfare." Draut argues that "with the possible exception of having a larger array of entertainment and other goods to purchase, members of Generation X appear to be worse off by every measure" than prior generations. Huh? How about the Internet and Starbucks coffee and Lipitor and not having to worry so much about AIDS or crime or Mutual Assured Destruction or getting drafted into the Army and getting sent to Vietnam?

Also, many of the economic issues the authors identify—job insecurity, low savings rate, income volatility, the massive ongoing benefits cram-down—affect everybody, not just twentysomethings. And the people hurt most by these escalating trends aren't young people starting out. They're folks in their 50s and 60s, middle-managers at Delphi whose careers have ended, coal miners in West Virginia who face death on the job, the people at IBM who just saw their pensions frozen.

Today's twentysomethings, by contrast, have their whole lives in front of them...

Gross is probably on to something here; Thomas Frank made the converse observation about the go-go 90's in One Market Under God that (in his view) too many Gen-X'ers were then taking an everything-will-be-okay-forever view of economics. All the applicable criticisms apply - us young people are self-absorbed and lacking in wisdom, etc. Nevertheless, I certainly hope that Gross's valid point doesn't get picked up as an argument for not discussing real structural problems in the economy (like the ones Gross points out himself). Clearly people my age have an even greater stake in economic reform by virtue of the fact that we've got everything to look forward to.

I want to here what you think, commenters. Where should the line be drawn between idle whining and productive social criticism?

Stop or my mom will shoot!

By Jim Dallas

I've always gotten a chuckle out of headlines like this one with multiple, plausible, meanings:

At any rate, expect new and bolder attempts to peddle Social Security privatization now that nobody is paying attention. Keep on your toes.

50cc's of "adjustment so that they're not losing their purchasing power," stat!

By Jim Dallas

To: Rep. DeLay
From: BurntOrangeReport.com
Re: purchasing power

The purchasing power of the minimum wage has fallen by over fifteen percent since 1997, the last time y'all gave poor folks a raise.

If at first you don't succeed..

By Jim Dallas

I've been wondering when the President's permanent campaign to meddle with Social Security would come to an end recently. There had been, if I recall correctly, some talk of it finishing back in March or April, but it got an extension.

Matt Yglesias has a theory:

When George W. Bush first started talking about Social Security, virtually everything he said was false, and virtually nothing he said was challenged by reporters. Then Democrats, bloggers, etc. started a big hew and cry and all of a sudden it was getting challenged. Then everyone got bored with the whole thing. But Bush just kept on plodding. Now he's still saying all the same stuff that was discredited months ago, but isn't getting challenged on it as much -- either from liberals or from the press. So even though just about everyone in the world except me seems bored by this issue already, I still think it's crucially important not to lose focus.

Yglesias's fears are underpinned by the well-established theory that if you repeat something enough times, it'll become accepted as truth. And the well-documented pattern of this President employing this strategy. Watching the Bush team in action is like watching a small-town high school football team run the option play on every down: extremely predictable, almost tedious, but maddeningly effective, particularly when the other guys don't keep their eyes on the ball.

I'm reminded of some accidental Bushian wisdom right about now...

Nerd Quotas

By Jim Dallas

Continuing my riff on zero-sum games, I'd draw your attention to the controversy sparked when Bill Gates said that Congress should eliminate the cap on H1B visas. Currently, the number of high-tech workers from overseas is limited by this cap.

Do technology workers need protectionism?

The Commerce Department undersecretary for technology, Phil Bond, cautioned Gates during his talk that unemployment among U.S. computer engineers regularly exceeds unemployment in other industries. "The politics of that are real," Bond said. Government figures showed 5.7 percent of information technology employees were out of work last year versus 5.5 percent of all workers.

The debate over U.S. technology companies hiring more foreigners occurs in the wake of the 2001 terrorism crackdown on immigration and amid increasing concerns about the theft of U.S. corporate secrets. The Bush administration has set up a counterintelligence office and published a first-ever strategy for preventing espionage against U.S. companies and the government.

"We still have to focus on border security," Rep. David Dreier, R-California, told Gates at his talk. "We can't be so naive as to believe there is not a very serious border security problem with which we have to contend."

Some labor groups criticized Gates' remarks.

"It's increasingly difficult for U.S.-based programmers to find work," said Marcus Courtney, organizer of the Seattle-based Washington Alliance of Technology Workers. "There is no support in the American public for completely abolishing the H1-B visa program and allowing companies to import foreign labor for these high-paying jobs."

Indeed, the tech sector is feeling a bit squeezed as the long hangover from the go-go 90s continues. Still, it's painful to watch the train wreck that is the H1B debate; I think I stand for all if not most of my friends trying to make it as engineers right now when I say that it would be much nicer if there were more technology jobs.

It's getting better all the time

By Jim Dallas

The 2005 OASDI trustees' report it is out. A lot of the assumptions are (surprise!) overly-pessimistic. Still, Brad DeLong says that the report actually has good news, despite efforts to paint it as fortelling doom. Brad Plummer has a pretty chart illustrating the point.

The real story here is the politicization of the Social Security Administration and the manipulation of the media.

There is no Social Security crisis.

Good Idea, Bad Idea

By Jim Dallas

Nathan Newman's Labor Blog always has interesting things to say about organized labor. But this post , which is cross-posted from another labor blog (Confined Space) by contributing blogger Jordan Barab is really a must read. It seems the only reform likely to get passed at the AFL-CIO convention this year is the one which will do the least amount of good for union organizing.

From what I can tell, it seems like getting the unions on the same page has been a little bit like cat herding. As an interested observer, it's been a little frustrating; that said, reinvigorating labor is a task that will take years - decades - to succeed, if it's even possible. So here's to hoping.

Another Sign The Economic Recovery Isn't

By Vince Leibowitz

When most people think of indicators that tell us what the economy is really like, we think of retail sales, unemployment statistics and the like. However, foreclosures are a pretty good indicator, in my mind, of how well the economy is really doing. After all, if lots of people can't afford to make their house payment, are we really in that much of an economic recovery?

While using Google News to perform my nightly search for new Texas news stories, I came across a startling factoid via a real estate news site: Texas leads the nation in foreclosures. And, nationwide, things aren't much better.

Though the number of new foreclosed residential properties dropped 41 percent nationwide from December to January (a common thing from the end of one year to the start of the next) 20,279 new foreclosed residential properties were listed for sale during January, and the total number of residential foreclosure properties available for sale in the U.S. during the month of January was 78,694, according to Inman Real Estate News"

"A reduction in the number of new foreclosures is common at the beginning of a new year, resulting from properties not being processed as quickly during the holiday season," said Brad Geisen, president and CEO for Foreclosure.com. "The more striking number is January's total inventory level, which remained very high despite the drop in new foreclosures."

"In Texas, for example, new foreclosure inventory dropped by 2,320 properties compared to December -- nearly a 50 percent reduction. On the other hand, total inventory only dropped by 553 properties to 9,375. This means that foreclosed properties are not selling as fast and indicates a very strong buyer's market."

Sadly, Texas led all states in its total number of foreclosed properties for sale, and total new foreclosures in January.

Somehow, amid all the unemployment figures, retail sales figures, and the usual economic indicators we hear so much about, foreclosures seem to take a back seat. Nevertheless, they are not only an important economic indicator, but also a sad commentary on just hoe bad things have become, even in Texas

Take, for example, this article from the Houston Business Journal (via Foreclosure.com) on foreclosures in Harris County:

A record year for construction of new homes in Houston was offset by a negative side effect as the number of residential foreclosures increased sharply in 2004.

A total of 19,866 homes were posted for foreclosure in Harris County, a significant jump from the 17,230 posted in 2003, according to the Foreclosure Listing Service.

Amanda LeCureux of the listing service says the number of postings in 2004 was the highest total the company had seen since mid-1989.

Oddly, this article I found in a North Carolina paper sums it up best:

It’s not necessarily the unemployment rate that tells the best story of the economy, says Shelby Bankruptcy Attorney O. Max Gardner III. The key indicator is the number of home foreclosures.

"When you see the foreclosure rates escalating for such a long period of time with such dramatic increases, I think that tells the state of the economy more than any other factor," he said.

For 30 years, Gardner has helped people who have filed for Chapter 13 bankruptcy, which prevents creditors from trying to get money from a person in debt while they create a plan to pay their debt in three to five years, in general.

All it takes, says Gardner, is "one bump in the road" to throw a family’s finances off track. That can be: credit card payments, losing a job, finding a job that doesn’t pay as much or have health benefits; increases in the cost of gas for heating.

But no matter what, most people try to make their mortgage payment, he said. The foreclosure statistics are indicative of the hardships many are facing, he said.

"They tell me that the economy is really not improving. It’s getting worse. It’s pretty frightening," Gardner said.

Thinking Outside the Box

By Jim Dallas

Paul Krugman hits what has now become one of my favorite reasons for why privatizing Social Security is unlikely to work as promised: that the comparisons between a privatized system and promised benefits under the status quo involves a little bit of economic hanky-panky.

But just as my precious meme hits the big time, I've realized that there's an escape hatch for the privatizers on this one.

At the core of Krugman's argument is an assumption which does not bear out - that the only rate of return that matters is the rate of return for American corporations in the American economy.

Investors can send their dollars overseas and get higher rates of return as the developing world "catches up." Under the status quo, however, payroll tax revenue is tied to the good ol' USA.

It's possible that you could earn 6.5 to 7 percent abroad even if you couldn't possibly get such a return in U.S. equity markets. That's the escape hatch I am postulating.

The thing is, do privatizers want to admit that their plan necessarily will involve high-risk-for-high-rewards investing in foreign countries? (Or in more politically-charged language, "outsourcing"?)

Shake'n'bake

By Jim Dallas

Kevin Drum links us to what may very well be the lowest form of human life: a whiney Big Pharma hack.

In other news, Santa Claus does not exist

By Jim Dallas

(I'm sorry if any kids under the age of 12 are reading this).

Mike Huben links us to classic Krugman on the nature of economic fundamentalisms.

Drink More Libertarian Kool-Aid Or Else

By Jim Dallas

The Wall Street Journal informs us that America has slipped six places in the "Economic Freedom Index" since George W. Bush took office in 2001:

For the first time in the 11 years that the Heritage Foundation and The Wall Street Journal have been publishing the Index of Economic Freedom, the U.S. has dropped out of the top 10 freest economies in the world.

In 1998, the U.S. was the fifth freest economy in the world, in 2001 it was sixth, and today it sits at 12th, tied with Switzerland. The U.S. drop in ranking is explained in part by a slightly lower score, but mostly by the good performance among its competitors. The lesson? Stand still on the highway to economic liberty and the world will soon start to pass you by.

The 2005 Index, released today, ranks Hong Kong once again as the world's freest economy, followed by Singapore and Luxembourg. But it is Estonia at No. 4 that makes the point. This former Soviet satellite is a model reformer, setting the standard for how fast countries can move ahead in the realm of economic liberalization. Ireland, New Zealand, the U.K., Denmark, Iceland, Australia and Chile, all relatively recent converts to free markets, also outpace the U.S. this year.

Incidentally, it seems that the tax cut juju isn't making us more free:

Most alarming is the U.S.'s fiscal burden, which imposes high marginal tax rates for individuals and very high marginal corporate tax rates. In terms of corporate taxation as an element of economic freedom, the U.S. ranks a lowly 112th out of the 155 countries scored, and its top individual tax rate ranks only slightly better at 82nd. U.S. government expenditures as a share of GDP increased less in 2003 than in 2002, but the rise since 2001 is what explains the U.S.'s decline in score over the period.

The Wall Street Journal also expresses shock and horror over such communistic ideas as corporate responsibility and not being raped by the global economy:

The U.S., with its strong property rights, low inflation and competitive banking and finance laws, scores well in most. But worrying developments like Sarbanes-Oxley in the category of regulation and aggressive use of antidumping law in trade policy have kept it from keeping pace with the best performers in economic freedom.

Somehow, I get the idea that the slippage will (1) be treated as a major catastrophe in Washington; and (2) is largely the product of ever-more ridiculous expectations by ascendant market fundamentalists. But you know, gotta keep up with the Joneses.

Up-is-downism continues

By Jim Dallas

The U.S. dollar has fallen more than 20 percent in value since President Bush took office, hit an all-time low against the Euro this week, and has finance ministers around the globe rather concerned.

The Bush administration response:

The Bush administration hasn't changed its ``strong-dollar policy,'' Treasury spokesman Rob Nichols said today, adding the Treasury doesn't comment on daily ``market fluctuations.''

This is gonna be a long four years...

Job Growth...Cough, Cough

By Karl-Thomas Musselman

To put it visually for you.

That leaves how many more that Bush now has to create before November 2 in order to not be the first President since Hoover to have have a net loss of jobs after four years? I'm not smirking (and neither are those out of work, who can't find work as hard as they try, or are not working where they want because their job skills aren't matched to the economy). I'm disappointed.

Eminent-ly Important

By Jim Dallas

And now for something totally different, Prof. Eugene Volokh has a few words about the most important property rights case you will never hear about.

Poletown’s “economic benefit” rationale would validate practically any exercise of the power of eminent domain on behalf of a private entity. After all, if one’s ownership of private property is forever subject to the government’s determination that another private party would put one’s land to better use, then the ownership of real property is perpetually threatened by the expansion plans of any large discount retailer, “megastore,” or the like. Indeed, it is for precisely this reason that this Court has approved the transfer of condemned property to private entities only when certain other conditions—those identified in our pre-1963 eminent domain jurisprudence in Justice RYAN’s Poletown dissent—are present.

While I hope that this will encourage other state courts (and federal courts) to turn back the tide of governments using eminent domain to favor developers (which are forcing out homeowners so cities can build malls and such), my inner commie informs me that this could also endanger less evil uses of eminent domain, such as the Hawaii Land Reform Act and takings stemming from environmental concerns. Indeed, the organized property rights movement scares me (for about the same reason that I think religion is peachy keen but some organized religionists scare me).

On the other hand, if courts were to base there arguments on the three-pronged test in the Poletown dissent, which this case does, then it would probably benefit everybody.

Hey, We Don't Suck As Much As We Thought We Would!

By Andrew Dobbs

Greg puts it best. The Bush Administration is bragging that the record $420 billion deficit isn't nearly as big as the $477 billion to $525 billion predicted earlier this year by the administration. This is idiocy at its finest.

If I took a class and made a 57% average in it I failed. If I retake it the next semester and make a 59% average I don't get to brag that I improved, that I did better than expected. I still failed. The Bush Administration is spending half a trillion bucks more than it takes in. Anyone who has been in debt before know it isn't something to brag about and letting our country sink into massive debt is shameful.

Dale Bumpers used to have a great saying- you let me spend $100 billion in hot checks and I'll show you a good time too. Bush's economic "recovery" (which, by the way is slowing down precipiously) is built on the shoulders of irresponsibility and is setting us for long term failure.

I'll see your berry-berry and raise you a John Kerry

By Jim Dallas

Newsweek has an enlightening article on behavioral economics, specifically dwelling on neurological investigations into the mechanics of rational decision-making:

Much of Glimcher's work is with monkeys...Monkeys, obviously, don't save for their retirements, and you couldn't expect them to grasp the rules of the ultimatum game. But they do have a rudimentary concept of economic choice, and researchers have discovered a medium of exchange—Berry Berry fruit drink—that can usefully stand in for money in a monkey's mental life. To illustrate how monkeys make economic decisions, Glimcher's former colleague Michael Platt, now at Duke, has investigated how they value status within their troop. Male monkeys have a distinct dominance hierarchy, and Platt has found they will give up a considerable quantity of fruit juice for the chance just to look at a picture of a higher-ranking individual. This is consistent with field observations, Platt says, which have found that social primates spend a lot of time just keeping track of the highest-ranking troop member. It isn't known exactly why monkeys do this, but the finding might help explain the behavior of human beings who pay $1,000 just to sit in a hotel ballroom with the president.

Economics is a pretty abstract science that is good at guessing what people will do in the aggregate over the long-haul (when rational decision-making tends to rise above the signal-to-noise ratio of daily life). The problem is, according to the behavioral scientists interviewed, that much of what is often dismissed as "noise" actually has a logic to it -- and understanding this will be a necessary part of enlightening people of their own self-interest.

This got me thinking about the applicability of this research to political science. Especially in the shadow of "rational choice" scholarship in poli-sci, economic theory increasingly finds itself applied to analysis of political decision-making, among government officials as well as among ordinary citizens.

I'd imagine that careful attention to this sort of research could help to explain why people don't vote. It might also suggest strategies for encouraging civic participation, reducing mistrust of government, and building more social cohesion.

Very important stuff indeed.

For me but not for thee

By Jim Dallas

Nathan Newman hits the nail on the head:

But the real money quote comes from Wal-Mart defending its lack of health care for its employees:

[Wal-Mart spokesperson] said that while critics say 40 percent of Wal-Mart's workers do not have company health insurance, 90 percent of its employees have health benefits through some plan - perhaps a spouse's or through state Medicaid.
Read that quote carefully. What Wal-Mart is saying is first, they are depending on other companies to provide health care for their employees, thereby driving up health costs for other businesses-- a nice trick of unfair competition.

But secondly, this Wal-Mart spokesperson is admitting that a lot of their employees are paid so badly that they qualify for MEDICAID?!!! Essentially, Wal-Mart is stealing money from overburdened health care for the poor to subsidize their low-wage employment practices.

This is admission of guilt straight from the horse's mouth-- Wal-Mart admits they pay poverty wages and steal health care funds from the rest of us.

If you need any argument on why we need to make Wal-Mart a prime target for progressive organizing, this is the best reason.

It's time to kick the Wal-Mart Welfare Queens (and in so many ways - perhaps the most obvious being the special tax deals small towns give to big-box stores)off the public dole!

Ack! They're On To Us!

By Jim Dallas

The Associated Press ran a story Wednesday about college students being lazy (as if that were newsworthy!):

A national student survey recently found that nearly two-thirds of students spent 15 hours or fewer per week doing coursework, and about 20% of both freshmen and seniors claimed to spend fewer than five hours per week.

For the truly lazy, a feature on the Web site student.com generates automatic excuse-requesting e-mails. Users pick the phrases they want, asking for "a bit of slack" or a "slight favor" because they "have SO much work to do" and could never finish the assignment "in the complete way you deserve."

"As an isolated phenomenon it might not be so serious, but it has to be seen in the overall context of diminishing expectations," said Bradford Wilson, executive director of the National Association of Scholars, a group that is working to combat what it believes is a decline in college standards.

Meanwhile, back in the real world, non-farm payroll employment was up this last month by 288,000, or about 2.7 percent (annualized over 12 months). Meanwhile non-farm business productivity was up 3.5 percent. Translation: The Man currently has more interest in screaming "work faster!" at current employees than it has in hiring new ones.

Which reminds me, Byron and others, are y'all still planning on graduating this month?

:: stifles evil laugh ::

On the upside, though, wages are finally starting to go up (at a snail's pace). Over two years after the official end of the recession.

UPDATE: While I'm on topic, I'd just like to complain about having to pay $1.80 per gallon for gasoline. This is so ridiculous I may start riding my bicycle again.