Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Legislative Seat Counter

It’s getting close to election time, so once again, it’s time for me to release the 2010 version if Legislative Seat Counter shockwave app. The interface looks like the screen shot below.

The app will run in your browser, or you can download the SWF file  it and run it locally in your computers flash player.  The file can be found here: CongressSeats

Oh, and while we’re at it, even though it’s a couple of years early, you can also play with the 2012 Electoral Vote Calculator, too. Just remember, this will have to be revised once the 2010 census updates the electoral votes of each state: PresidentialElection

Observations: The Qando Podcast for 17 Oct 10

In this podcast, Bruce, Michael, and Dale discuss the Economy, and the government’s effect on it.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.

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Looking at the PPI

Today’s release of the Producer Price Index raises some interesting and scary questions. The core PPI was up only 0.1%, but a 1.2% increase in good prices and a 0.5% increase in energy prices brought the overall PPI up by 0.4%.

Now, the reason that food and energy are excluded from the core PPI and CPI is that they often show a lot of monthly volatility. Those prices simply rise and fall quickly, so, on a month-to-month basis, they may not mean much. Ultimately, however, a trend of price increases in, say, energy will trend to raise prices across the board, as that increases the cost of production.

The traditional Keynesian argument about inflation is that it tends to decrease when the economy is struggling, as aggregate demand is stifled. Sadly, in the 1970’s we learned that simply wasn’t true, and the existence of stagflation sent the Keynesians back to the drawing board for about 15 years to reformulate a Neo-Keynesian economic model. Essentially what happened in the late 60’s and early 70’s was that the Fed pursued a very accomodative monetary policy. Ultimately, even a slow economy couldn’t prevent that monetary expansion from showing up as inflation.

Sound familiar?

It should, because the housing boom was kicked off by a similar policy, and since the collapse, the Fed has pursued a policy of “quantitative easing”, i.e., buying $1.2 trillion of securities with hastily printed money. Overall, the monetary base has more than doubled over the past two years, also, as the Fed has kept short-term interest rates at 0%.

So, I guess the question is whether today’s PPI is just a monthly outlier due to the volatile sectors, or whether it’s a sign that monetary expansion is beginning to kick off an inflationary spike that will soon begin to show up in the CPI as real, noticeable inflation.

VFW and VFWPAC come to a crossroads

Veterans of Foreign Wars National Commander Richard Eubank, Sr. Vice Commander Richard DeNoyer, and Jr. Vice Commander John E. Hamilton, all appear miffed at the political endorsements made by the VFW’s independent political action committee. The endorsement of Barbara Boxer (D-CA), known colloquially as “Senator Ma’am” seems to be the straw that broke the camel’s back. They now say they’ll be putting the question of the PAC’s termination to the membership.

California Ballot Propositions for 2010

Once again, it’s time to review the ballot propositions for the upcoming election in California.  While this may seem like an item of limited interest to many of you, you should remember that these propositions, in the fullness of time, often appear in other states once California has passed them.

Proposition 19: YES

A YES vote on this measure means: Individuals age 21 or older could, under state law, possess and cultivate limited amounts of marijuana for personal use. In addition, the state and local governments could authorize, regulate, and tax commercial marijuana-related activities under certain conditions. These activities would remain illegal under federal law.

Drug prohibition has failed.  Although, I guess that really depends on your definition of failed.  If you’re the head of drug cartel that’s made billions of dollars by supplying prohibited drugs at prices inflated artificially by government action, then I guess it’s been a rousing success.  All depends on your point of view, I suppose.

In any event, marijuana, despite being a Schedule I drug according to the Feds, is probably the least likely candidate for continued prohibition.  Perhaps there’ll be horrific outbreaks of Reefer Madness if this passes, but, you know, I’m willing to risk it.  Besides, as of last week, you can’t even get arrested for it any more in California, as possession of less 1 oz is now an infraction that’ll get you a $100 ticket.  Not even a court appearance.  So, it’s pretty clear that, in the big picture scheme of things, marijuana is pretty small potatoes.

Besides, it’ll set up a really nasty legal and political struggle between California and the Feds, which I think would be fun and instructive to watch.

Proposition 20: YES

Removes elected representatives from process of establishing congressional districts and transfers that authority to recently-authorized 14-member redistricting commission comprised of Democrats, Republicans, and representatives of neither party. A YES vote on this measure means: The responsibility to determine the boundaries of California’s districts in the U.S. House of Representatives would be moved to the Citizens Redistricting Commission, a commission established by Proposition 11 in 2008. (Proposition 27 on this ballot also concerns redistricting issues. If both Proposition 20 and Proposition 27 are approved by voters, the proposition receiving the greater number of “yes” votes would be the only one to go into effect.)

California’s redistricting plans have traditionally been made with a keen eye to preserving safe districts for the aging hippies that run the place.  With Prop 11 in 2008, and this proposition, elected politicians will be essentially removed from the redistricting process. One hopes this will result in more bipartisan redistricting that results in more competitive districts.  If not, it can’t be worse than what we’ve already got.

Proposition 21: NO

A YES vote on this measure means: An $18 annual surcharge would be added to the amount paid when a person registers a motor vehicle. The surcharge revenues would be used to provide funding for state park and wildlife conservation programs. Vehicles subject to the surcharge would have free admission and parking at all state parks.

A new tax–excuse me, “surcharge”–on one of the most highly taxed population in the country?  Uh…no. Raising taxes is always the politicians’ answer to fiscal problems.  Instead, let’s force them to cut spending–especially the unsustainable pension agreements for public workers, some of whom can retire at 50 with 85% of their salaries.  The state of California is already taking a huge chunk of money from the taxpayers, and their cry is always for more.  It’s past time for our cry to be , “Enough.”

Proposition 22: YES

A YES vote on this measure prohibits the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.  The state’s authority to use or redirect state fuel tax and local property tax revenues would be significantly restricted.

California’s General Fund tramples on every type of revenue in the state.  Local property taxes? Right into the General Fund’s maw. Fuel taxes to pay for transportation and infrastructure? Right into the General Fund. That has to stop.  I note that the teachers and firefighters unions, etc., are against it, so I assume it must be a good thing.

Proposition 23: YES

A YES vote on this measure means: Certain existing and proposed regulations authorized under state law (“Assembly Bill 32″) to address global warming would be suspended. These regulations would remain suspended until the state unemployment rate drops to 5.5 percent or lower for one year.

This proposition would, in effect, completely gut the global warming bill’s provisions.  Requiring an unemployment rate in California to remain at 5.5% for one year means that the bill will, as a practical matter, never be implemented.  So, the billions in costs for CO2 reduction, etc., will never be imposed.

Proposition 24: NO

A YES vote on this measure means: Three business tax provisions will return to what they were before 2008 and 2009 law changes. As a result: (1) a business will be less able to deduct losses in one year against income in other years, (2) a multistate business will have its California income determined by a calculation using three factors, and (3) a business will not be able to share tax credits with related businesses.

Another tax hike.  Go screw.

Proposition 25: NO

A YES vote on this measure means: The Legislature’s vote requirement to send the annual budget bill to the Governor would be lowered from two-thirds to a majority of each house of the Legislature.

I’m happy forcing a 2/3 majority for the budget, especially since California is a one-party state.  It’s really the only way to force bipartisanship on the legislature, and it gives the minority party a chance to do something besides getting run over roughshod.

Proposition 26: YES

A YES vote on this measure means: The definition of taxes would be broadened to include many payments currently considered to be fees or charges. As a result, more state and local proposals to increase revenues would require approval by two-thirds of each house of the Legislature or by local voters.

This makes it harder to raise fees or surcharges without explicit voter approval, or a supermajority in the legislature.  I have to live within a budget, let them try it for a while, instead of simply using my wallet to fill up the holes they create with overspending.

Proposition 27: NO

A YES vote on this measure means: The responsibility to determine the boundaries of State Legislature and Board of Equalization districts would be returned to the Legislature. The Citizens Redistricting Commission, established by Proposition 11 in 2008 to perform this function, would be eliminated. (Proposition 20 on this ballot also concerns redistricting issues. If both Proposition 27 and Proposition 20 are approved by voters, the proposition receiving the greater number of “yes” votes would be the only one to go into effect.)

Nope.  We already decided that we didn’t want politicians to create safe districts. Let’s keep this as a technical, bipartisan process.

Unemployment officially remains steady

As I expected, the official unemployment numbers showed little change from last month. The big spikes in private-sector unemployment came at the end of September. The government’s statistical collection period ends in the middle of the month, however, so all of that was missed by the official number. And today’s release is the last one prior to the election.

Still, it can’t be said that this is a good number, with the official rate hovering at 9.6%.

My personal calculation of the unemployment rate, using the historical average of labor force participation, shows the rate of unemployment also holding steady at 13.2%.

Unemployment Preview

According to Gallup’s private read on unemployment, we currently stand with an unemployment rate of 10.1%. Gallup says:

Unemployment, as measured by Gallup without seasonal adjustment, increased to 10.1% in September — up sharply from 9.3% in August and 8.9% in July. Much of this increase came during the second half of the month — the unemployment rate was 9.4% in mid-September — and therefore is unlikely to be picked up in the government’s unemployment report on Friday.

The government’s final unemployment report before the midterm elections is based on job market conditions around mid-September. Gallup’s modeling of the unemployment rate is consistent with Tuesday’s ADP report of a decline of 39,000 private-sector jobs, and indicates that the government’s national unemployment rate in September will be in the 9.6% to 9.8% range. This is based on Gallup’s mid-September measurements and the continuing decline Gallup is seeing in the U.S. workforce during 2010.

So, when looking at the numbers we have from ADP, showing a 39,000 job loss for the month, plus the sharp spike upward in the last half of September, tomorrow’s unemployment figures from the BLS will miss most of the job losses, and will show a national unemployment rate that is smaller than it truly is.

Federal Judge: HCR Mandate is Constitutional

U.S. District Court Judge George Steeh has ruled that the individual mandate to purchase health insurance is a constitutional exercise of Congress’ power under the commerce clause.

The plaintiffs have not opted out of the health care services market because, as living, breathing beings, who do not oppose medical services on religious grounds, they cannot opt out of this market…

As inseparable and integral members of the health care services market, plaintiffs have made a choice regarding the method of payment for the services they expect to receive. The government makes the apropos analogy of paying by credit card rather than by check. How participants in the health care services market pay for such services has a documented impact on interstate commerce…

Obviously, this market reality forms the rational basis for Congressional action designed to reduce the number of uninsureds.

The Supreme Court has consistently rejected claims that individuals who choose not to engage in commerce thereby place themselves beyond the reach of the Commerce Clause. See, e.g., Raich, 545 U.S. at 30 (rejecting the argument that plaintiffs’ home-grown marijuana was “entirely separated from the market”); Wickard, 317 U.S. at 127, 128 (home-grown wheat “competes with wheat in commerce” and “may forestall resort to the market”); Heart of Atlanta Motel v. United States, 379 U.S. 241 (1964) (Commerce Clause allows Congress to regulate decisions not to engage in transactions with persons with whom plaintiff did not wish to deal).

The logical extensions of this ruling, if it were to stand, are obvious.  For instance, since everyone inevitably dies, Congress can require you to purchase life insurance, or a pre-paid funeral services.  Similarly, we all eat, wear clothes, etc.

Essentially, this decision gives power the Congress to regulate practically any area of human necessity.

Here’s something I’ve been re-reading a lot, lately:

Prudence, indeed, will dictate that governments long established should not be changed for light and transient causes; and accordingly all experience hath shown that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same object evinces a design to reduce them under absolute despotism, it is their right, it is their duty, to throw off such government, and to provide new guards for their future security.

Blogrolling Says “Goodbye”

If you use Google Chrome, you may have noticed a horrific security warning that the Blogrolling RPC script is running malware. As of today, you’ll notice that the warning no longer appears. We’ve used Blogrolling for years to generate the links for the Bear Flag League and Old Dominion Blog Alliance. Those Blogrolling links have now been removed.

Tucows, the owner of Blogrolling, has also noticed these problems. Sadly, they’ve decided that it would cost too much to fix the malware and security problems. As a result, Blogrolling will be shut down completely. This is sad, because Blogrolling was really the first useful link aggregator for managing blogrolls. Now, it seems the march of technology has passed it by. I don’t know how blog alliance links will be managed in its absence.

If you are a blogger, and you use Blogrolling, you should be formulating your plans for how you are going to replace it.