Free Markets, Free People

Daily Archives: June 12, 2012


Economic Statistics for 12 Jun 12

The following statistics were released today on the state of the US economy:

A strong dollar—thanks to trouble in the Euro Zone—is keeping imported inflation restrained. Export prices fell -0.4% in May, down -0.1% on a year-over-year basis. Import prices fell -1.0% for the month, and -0.3% year-over-year, both due to falling agricultural prices, and petroleum-related supplies.

In weekly retail sales, Redbook reports a weak 2.0% rise in same-store sales, one of the weakest readings of the recovery. Meanwhile, ICSC-Goldman reports same-store sales down -0.7% for the week, and up 2.9% on a year-over-year basis, which is right on trend.

The NFIB Small Business Optimism Index fell -0.1 point to 94.4, with the report saying that there are no signs business will pick up this year. Expectations for future sales are the lowest for a recovery since 1973.

~
Dale Franks
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Do we need “more teachers?”

The latest little dust up is about President Obama claiming we need to hire more teachers (i.e. we need more government jobs) and the Romney campaign saying we really don’t. Who is right?

Former Gov. John Sununu steps in with the following:

Former New Hampshire Gov. John H. Sununu, a surrogate for Mitt Romney’s presidential campaign, defended the presumptive Republican nominee’s comments that the nation should have fewer teachers, firefighters and police officers, saying there was "wisdom" in Romney’s remarks.

"There are municipalities, there are states where there is flight of population, and as the population goes down, you need fewer teachers. As technology contributes to community security and dealing with issues that firefighters have to issue, you would hope that you can as a taxpayer see the benefits of the efficiency in personnel you can get out of that," Sununu said during an interview on MSNBC’s "Jansing & Co." Monday, prefacing that he was speaking "as a taxpayer" and not a representative of the Romney campaign. "There may be others who run away from those comments, but I’m going to tell you that there are places where just pumping money in to add to the public payroll is not what the taxpayers of this country want."

So do we or don’t we need more teachers?  That should be fairly easy to determine, shouldn’t it?  And, as it turns out it is:

 

cato-percent-change-public-schools

 

Since 1970 we’ve seen a 100% increase in Public School employment and a, what, an 8% increase in Public School enrollment?

Am I missing something here?  It would seem we have a plethora of educators available.  Or at least education employees.  If they’re not educators, then my suggestion is perhaps the way to get “more teachers”, if they’re really needed, is to look at the current employee mix and reduce administrative overhead while increasing the number of teachers.  Problem solved.

That, of course, could be done without spending a dime.  And that, as Sununu points out, would certainly be satisfactory to taxpayers.  Oh, wait, teacher’s unions – yeah, not going to happen is it?.

But let’s get real about this Obama gambit – it is the usual appeal.  Whenever the Democrats want to increase the size of government, the first jobs they talk about are “teachers, firemen and cops”.  Without exception.  It is a tired old ploy that most people ought to be on too by now.

And yet we continue to see it employed and, unfortunately, it works.  The scare factor.  See the above chart if you don’t believe me.

In the case of schools, what has it given us over the years as the taxpayer has answered the inevitable appeal and thrown money at schools?

 

cato-percent-cost-schools

 

A 90% increase in cost and flatlined (and even subpar) achievement.

We don’t need more teachers.  

We need less government.

~McQ

Twitter: @McQandO


Obama: Excuses R Us

It has been fairly well established that unless something that happens on his watch reflects well on him, President Obama is in the habit of trying to pass off all bad things to someone or something else.

In the case of our economic woes, the latest pass off target is Europe.  But the Wall Street Journal does a pretty darn good job of taking that argument apart.  First with history:

In 1997 Asia’s economy imploded. Currencies collapsed, countries had their ratings downgraded to junk, millions of people lost their jobs, governments were replaced, regimes fell. In October a jittery Dow, fearing the effects of "Asian contagion," lost 7.2% of its value in a single day. Trading had to be halted twice.

And yet the American economy was unscathed. In 1997 GDP grew by 4.5%. In 1998 it grew again by 4.5%, this time despite the Russian ruble crisis. In 1999, annual growth reached 4.9%, a pace it hasn’t exceeded since. Unemployment fell to 4.2%. The government ran a surplus.

Obama claims that Europe is our “largest trading partner”.  Well, they’re not:

Europe is not our largest trading partner. Canada is. Followed by China. Followed by Mexico. Followed by Japan. "Europe" only counts as America’s largest trading partner in an aggregate sense. An honest apples-to-apples comparison would find that U.S. trade with North America or East Asia dwarfs trade across the Atlantic.

And, tossing his blatantly false claim aside, is trade where our problem really lies?

Now take the question of how much trade matters to America. In 2009, foreign trade accounted for 24.3% of the U.S. economy. By contrast, the foreign-trade-to-GDP ratio was 51.9% for China, 71.1% for Canada and 89.2% for Germany. When it comes to foreign trade, the U.S. is the world’s least dependent major economy.

That’s right, it isn’t Europe and it isn’t trade that’s the problem.  It is economic policy. Domestic economic policy and a rudderless ship of state, the captain more interested in fund raising and re-election than doing the hard work of trying to turn the situation around. 

Which brings us to another excuse  – Congressional Republicans:

Again, a little history is in order. The Bush tax cuts of 2001 passed the Senate 58-33 in an evenly split chamber. Bill Clinton managed to do business with a GOP that controlled both houses of Congress for six of his eight years in office. Ronald Reagan passed all of his economic agenda through a House that was under constant Democratic control.

Somehow it is only Barack Obama—whose party, in an inconvenient truth for his campaign, still runs the Senate—who seems incapable of working with any Congress not under full partisan control. (And even then he had trouble.) Americans expect their presidents to be able to assemble coalitions of the politically willing in order to achieve pragmatic and relatively popular results. The Obama administration method, by contrast, has been to shove what it can down the public throat, then act surprised when the public gags, or throws up.

Leadership, of course, makes a difference – Clinton, Reagan and Bush were able to exert the sort of leadership necessary to work with Congress to get what they wanted.  Obama seems to think “working with” means he dictates and Congress passes what he dictates.  And when that doesn’t happen, well, it’s off to another fund raiser.

Peggy Noonan talked about politicians “laying down lines” before an event so they can spin what happens in a positive way even if what happens isn’t at all positive.  That’s what you see here – the President of the United States laying down a line of BS about Europe and trade so, if and when Europe collapses he can point his finger across the Atlantic and blame that continent for the problems here.

For the record, it isn’t the first or last time:

As president, Mr. Obama has attempted to make scapegoats of bankers, bondholders, private-equity firms, insurance companies, energy companies, ATMs, the Chamber of Commerce, the Catholic Church, opponents of illegal immigration, European politicians, Supreme Court justices and even Japanese tsunamis.

But he got bin Laden, didn’t he?

However, the 14.3% unemployed are not particularly impressed.

Forward!

~McQ

Twitter: @McQandO