Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Dale’s Observations For 2010-07-30

Hey! Those aren't just turn signals on that Buell 1190. That looks like a license plate holder! More mystery! #

Eric Buell Racing has leaked a picture of their 1190RR race bike. But the bike appears to have turn signals & radiator fans. Mystery! :-) #

Human Events jumps the shark with their "Obama is a Muslim" article. #

Center for Public Integrity: Haphazard Firefighting Might Have Sunk BP Oil Rig, caused spill. #

Youtube will now allow videos to run for 15 minutes, instead of 10. Woot! #

CHP says it will step up traffic enforcement against motorcyclists for speeding, etc. IOW, they're looking for me. #

The University of Michigan index on consumer sentiment dropped to 67.8 from 76.0 in June. #RecoverySummer #

Economic growth slowed to 2.4% rate in second quarter. And consumer spending was only up 1.6%. #RecoverySummer #

People who live in glass houses…

When you accuse someone of stupidity, it’s probably wise to avoid saying something stupid yourself while doing so.  Sadly, E.J. Dionne fails to avoid that trap.

Our discussion of the economic stimulus is another symptom of political irrationality. It’s entirely true that the $787 billion recovery package passed last year was not big enough to keep unemployment from rising to over 9 percent.

But this is not actually an argument against the stimulus. On the contrary, studies showing that the stimulus created or saved up to 3 million jobs are very hard to refute. It’s much easier to pretend that all this money was wasted, although the evidence is overwhelming that we should have stimulated more.

Very hard to refute?  That’s nonsense on stilts.  Mr. Dionne may be so smart that rays of light emanate from his brow, but the paragraph above is an extraordinarily foolish position.

First, any statement of any jobs “created or saved” requires that we perform the impossible task of modeling how the economy would have performed in an alternate universe where a different policy mix was applied. We literally have no idea–nor any way to construct a testable hypothesis–that models how the economy would have reacted in the absence of the stimulus.  Even the Congressional Budget Office, while rather supinely delivering a report that ostensibly supported the administrations claims about job creation, was careful to note:

…it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.

Second, the methodology was extremely suspect.  In making its predictions of post-stimulus recovery, the administration simply plugged in an assumption about the multiplier effect of government spending.  They assumed that X amount in spending would result in Y% increase in aggregate demand, resulting in Z jobs.  What the CBO did in checking up on that prediction, was to plug essentially the same assumptions into their model, which, unsurprisingly, “confirmed” the predictions. Even the CBO seemed a bit embarrassed about that.

But the CBO, to its credit, has been fairly forthcoming about its methods and their limitations. In response to a question at a speech earlier this month, CBO director Doug Elmendorf laid out the CBO’s methodology pretty clearly, describing the his office’s frequent, legally-required stimulus reports as “repeating the same exercises we [aleady] did rather than an independent check on it.” CBO tweaks its models on the input side, he says—adjusting, for example, how much money the government has spent. But the results the CBO reports—like the job creation figures—are simply a function of the inputs it records, not real-world counts.

Following up, the questioner asks for clarification: “If the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis, right?” Elmendorf’s response? “That’s right. That’s right.”

In other words, the CBO’s regular, legally-mandated reports, are estimates based on an economic model that doesn’t actually take inputs from the real world. They simply take the same estimates the administration used to create their predictions, then apply them to the monthly spending report, coming up with a number of jobs “created or saved” that is, unspurprisingly, exactly what the administration predicted.

Please note: this has no actual relationship to the number of real-world jobs that exist.  The only thing the CBO reports prove–by its own admission–is that it is possible to replicate the administration’s predictions by  duplicating the assumptions.

So, not only is it untrue, as Mr Dionne asserts, that “studies showing that the stimulus created or saved up to 3 million jobs are very hard to refute,” the CBO director explicitly refutes that notion by agreeing that “[i]f the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis.”

But, let us say, arguendo, that Mr. Dionne is right, and the $787 billion did, in fact, create 3 million new jobs.  The price tag then, comes to $262,333.33 for each job created. That seems like a relatively steep price.

Happily, we know more or less precisely how many people are employed in the country, and how the size of the labor force has changed. We know this, because the Bureau of Labor Statistics releases those figures on a monthly basis, and they are publicly available at the BLS web site.  If we assume March 2009 to be the first month of the stimulus, we see that there were a total of 140,854,000 Americans over the age of 16 employed, including farm employment.  As of Jun, 2010, there were 139,119,000 Americans working. That tells me that there are 1,735,000 fewer Americans working today, than there were when the stimulus was passed.  If we exclude agriculture, and look at only non-farm payrolls, we see that there were 132,070,000 people employed in March, 2009, vice 130,470,00 in June, 2010.  Again, that’s a net loss of 1,600,000 payroll jobs.

I’m not seeing any net job creation there.

In at least one sense, though, Mr. Dionne is quite right.  Since the administration’s claims of 3 million jobs “created or saved” is empirically disprovable, they can tout them as much as they’d like, even in the face of 1.6 million jobs actually disappearing under the stimulus.  After all, they can always say, “There would have been 3 million fewer jobs if we hadn’t acted.  And if you don’t believe me, prove me wrong!”  It is, after all, so comforting to be able to take refuge in an unfalsifiable hypothesis.

Dale’s Observations For 2010-07-29

World’s fairs are designed for people from homogeneous cultures who are still impressed by electricity and foreigners. #

FINALLY! Harley-Davidson provides an OEM stereo kit for their customers who don't ride huge touring bikes. #

Amazon unveils 3rd-generation Kindle e-book reader, now with wi-fi! #

Mortgage Rates Fall Again; 30-Year Fixed At 4.54%. #RecoverySummer #

Jobless claims for the week at 457k, down 11k. Underlying rate is essentially unchanged. #RecoverySummer #

Dale’s Observations For 2010-07-28

The Fed's Beige Book report on economic activity disappoints investors, economists. #RecoverySummer #

And yes, I said VAT. A national sales tax like the Fair Tax is a non-starter. No high rate sales tax has ever worked, anywhere in the world. #

The Chicago boys and Bruce Bartlett-finally!-have accepted my long-held position of scrapping the income tax for a VAT. #

Panasonic Launching 'World's First' Consumer 3D Camcorder, which can shoot in 3D or HD. #

Durable-goods orders fell by 1.0% in June to a seasonally adjusted $190.5 billion. #RecoverySummer #

What Would Happen if the Bush Tax Cuts Expire? #

U.S. cities and counties will have to cut hundreds of thousands of jobs. | They say that like its a bad thing. #

Once again, Massachusetts does its bit to ignore the bits of the Constitution liberals don't like. #

Dale’s Observations For 2010-07-27

Raising taxes in the middle of a recession is stupid. Both Hoover and FDR did it, with disastrous results. Cut spending, don't raise taxes. #

RT @MelissaTweets @ScottBrownMA: The blatantly partisan 'Disclosure' Bill was defeated. | Woot! #

RT @dmataconis @DavidCornDC @NewtGingrich: Odds of a Newt 2012 bid at 97%. | Odds of a Newt 2012 win at 0%. #

Heh. The new Harley-Davidson Street Glide will have an integrated stereo w/ 8gb iPod nano. Nothing says "outlaw biker" like an iPod nano. #

Victory announced their 2011 motorcycles. All of them will sport the big 106ci, 92+HP, V-Twin, and a newly designed 6-speed transmission. #

Harley-Davidson says it has 32 models of motorcycle this year. But it's really 4 models of motorcycle with 32 trim packages. #

Harley-Davidson introduces its 2011 models. #

Obama: Reducing influence over elections should be non-partisan. Dems made it partisan by exempting unions. #

Quarterly economic forecast takes a turn for the worse #RecoverySummer #

Consumer confidence drops for second straight month, according to the Conference Board. #RecoverySummer #

Victory's 2011 motorcycles will all have the 106ci Big Twin. 97HP and 116 ft-lbs or torque. Not bad at all for V-Twin cruiser. #

Oliver Stone’s Take on History

Oliver Stone has long been known to have an…unorthodox view of history.  But in an Interview for the Times of London, he may have gone a bit too far.  Sadly, the original link is behind the Times’ firewall, but Stone, who’s working on a 10-part historical documentary for Showtime called “Secret History of America”, was a gold mine of quotes. It seems his documentary has a…refreshingly different interpretation of history.

For instance, why do Americans think about the Holocaust so much?

The Jewish domination of the media. There’s a major lobby in the United States. They are hard workers. They stay on top of every comment, the most powerful lobby in Washington. Israel has fucked up United States foreign policy for years.

Hmm.  Well, what about Herr Hitler, modern history’s bad guy?

“Hitler is an easy scapegoat throughout history and it’s been used cheaply.”
“We can’t judge people as only ‘bad’ or ‘good.’ ”
“[Hitler] is the product of a series of actions. It’s cause and effect. People in America don’t know the connection between WWI and WWII.”
“Hitler was a Frankenstein, (but) there was also a Dr Frankenstein.”
“German industrialists, the Americans and the British. He had a lot of support.”
“He’s the product of a series of actions. It’s cause and effect … People in America don’t know the connection between World War I and World War II.”
“We’re going to educate our minds and liberalize them and broaden them. We want to move beyond opinions … Go into the funding of the Nazi party. How many American corporations were involved, from GM through IBM. Hitler is just a man who could have easily been assassinated.”
“Hitler did far more damage to the Russians than the Jewish people, 25 or 30 [million killed].”

And, of course, we can’t leave out the Big Mustache, the Man of Steel himself, Josef Stalin:

Stalin has a complete other story. Not to paint him as a hero, but to tell a more factual representation. He fought the German war machine more than any person.

I think the best comment about this comes not from a political pundit, but from Tyler Durden:

It would be like if someone made a documentary about pandas, and it claimed that pandas invented movable type, were immortal, and could shoot fireballs from their paws. It’s that level of wrong.

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Dale’s Observations For 2010-07-26

RT @dmataconis: ObamaCare Doesn’t Justify Secession | Given the tone of that article, one wonders what would. #

RT @dmataconis: Re: Political Discourse? | Was the 'net causing riots, demonstrations, and domestic terrorism in '68? #

RT @MelissaTweets @La_Shawn: Re: Oliver Stone, Hitler: | How do these people even pretend to moral seriousness? #

RT @MelissaTweets @La_Shawn: Re: Oliver Stone, Hitler: | If only we knew more about the CONTEXT of Nazism. And Stalin. #

RT @ewerickson: The reviews at for uranium are priceless. | Those reviews are hilarious. #

Geithner defends allowing the Bush tax cuts to expire. This is the same policy mix that extended the Great Depression. #

New home sales increased 23.6% to an annual rate of 330,000..
the second lowest on record since 1963. #RecoverySummer #

Observations: The Qando Podcast for 25 Jul 10

In this podcast, Bruce and Dale discuss the dissatisfaction about President Obama’s competence, the oil spill, and the American stranded in Egypt.

The direct link to the podcast can be found here.


The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.

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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Dale’s Observations For 2010-07-22

Scotland to Senate Lockerbie inquiry: Drop dead. #

Bernanke Says Extending Bush Tax Cuts Would Maintain Stimulus. #

Huh. They never mentioned this possibility in the whale watching tour brochure. #

For those who are interested, I do a lot of writing about motorcycling. I have interests outside of politics/economics. #

With the unemployment benefits, we will have spent more on stimulus than on the Iraq and Afghanistan wars combined. #

The index of U.S. leading indicators
fell 0.2 percent in June, the second decline in three months. #RecoverySummer #

Existing home sales fell–yes, unexpectedly–by 5.1% in June. #RecoverySummer #

Initial unemployment claims rose unexpectedly-we really need to talk about these expectations-to 464k. #RecoverySummer #

This journolist stuff is fabulous. I guess EVERYBODY gets all tough and manly on message boards. #

Eric Alterman, author of "What Liberal Media?": "Let’s just throw Ledeen…through a plate glass window." Thanks, @ezraklein! #