How's It Going With The High Tax, High Spend, High Debt Model

Just checking around to see what I can find in the way of the latest data on how it's going with the high tax, high spend, high debt model of how to run a government.

Europe certainly qualifies for that category.  At ZeroHedge today, there is a collection of discouraging recent economic statistics from Europe.  Some of the most relevant:

• The unemployment rate in the eurozone has now risen to 11.8% – a brand new all-time high.
• The unemployment rate in Greece is now 26%.   A year ago it was only 18.9%. The unemployment rate in Spain has risen to 26.6%.
  

• .The unemployment rate for workers under the age of 25 in Italy is 37.1%; in Spain, 56.5%; in Greece, 57.6%.
  

Back in the U.S., Brian Barry at Bloomberg News reports on the contrast of the economic conditions of the blue and red states:


[L]eaders of both parties . . . should also think about the path of state finances. The prospects should unnerve Democrats, in particular: The 26 states that Obama carried in November tended overwhelmingly to have lower credit ratings than the 24 where he lost.   The most obvious examples are California and Illinois, two big states that are deep-blue politically and deep in the red fiscally.

Aside from credit ratings, how are the blue states doing versus the red states in economic performance?


Checking in on Illinois, we find that efforts to get some control over the worst-funded pension system in the country are going nowhere:.  Again, from Bloomberg News:

Illinois lawmakers missed another chance to restructure the worst-funded state retirement system in the nation, officially ending their 2012 session yesterday without acting on measures to shore up pensions.  In failing to deal with a $97 billion unfunded liability that rises by $17 million each day, Illinois risks more downgrades from bond-rating companies, which have urged the state to stem the ballooning deficits.

Meanwhile, down in low tax (and no income tax) Texas, the New York Times on January 8 finds that their big problem is how to deal with a suddenly emerging $8.8 billion budget surplus:

A boom in revenues from sales taxes as well as taxes from oil and natural gas production have given Texas a budget surplus that the state comptroller has estimated at $8.8 billion.

As for California, it's too early to see how the big income tax increases are going to affect things.  My prediction:  badly.

The Climate Campaign Becomes Ever More Bizarre

Yesterday our official weather and climate bureaucrats, NCDC, came out with a big press release:  NCDC Announces Warmest Year on Record for Contiguous U.S.!!!!!!!  OK, the exclamation points are mine, but you can sense the excitement in their words.  Finally, the definitive proof of global warming!  (By the way, for those who don't know, NCDC is the National Climatic Data Center, a part of NOAA, the National Oceanic and Atmospheric Administration, which is in turn part of the Commerce Department.)

The story was immediately picked up by the press and given full play.  In the print edition of today's New York Times, it's three of the six columns in the middle of the front page at the top, complete with a big color map.  Headline:  Not Even Close: 2012 Was Hottest Ever in U.S.  Note that the word "contiguous" got disappeared from that headline.  Not good, New York Times.  (They did get the word "contiguous" back into the text of the story.)  In the print Wall Street Journal, there's a squib on page 1 followed by a full article on page A4.

It certainly sounds like something significant on its face.  Why am I just a suspicious guy?  That word "contiguous," so conveniently omitted in the New York Times headline, just catches my eye.  Could they really have left out Alaska and Hawaii?  Now Hawaii is kind of small, only 10,000 or so square miles, or well less than 1% of U.S. land area.  But Alaska is 663,300 square miles -- that's about 17.5% of the total U.S. land area, plenty to swing the result.  These people are climate campaigners.  They would not have omitted Alaska if including Alaska would lead to the same result.  The Manhattan Contrarian smells a rat.

So what went on temperature-wise in Alaska in 2012?   A little Google search promptly turns up this article from the January 3, 2013 Alaska Dispatch:   Brrrrrrrr!  Last year coldest in three decades for Anchorage.  And you probably thought it was going to be warm but just not a record.  Nope, coldest in thirty years.

But that's just Anchorage.  How about the rest of Alaska?  Well, in the Alaska Dispatch of December 23, 2012 we have this article:   Forget global warming, Alaska is headed for an ice age.  Excerpt:

In the first decade since 2000, the 49th state cooled 2.4 degrees Fahrenheit

That's a "large value for a decade," the Alaska Climate Research Center at the University of Alaska Fairbanks said in "The First Decade of the New Century: A Cooling Trend for Most of Alaska."

The cooling is widespread -- holding true for 19 of the 20 National Weather Service stations sprinkled from one corner of Alaska to the other, the paper notes. It's most significant in Western Alaska, where King Salmon on the Alaska Peninsula saw temperatures drop most sharply, a significant 4.5 degrees for the decade, the report says.

Sure enough, it's the whole state.  And would this swing the result for the United States?  Of course it would.  Now getting an average temperature for something like the United States is not a straightforward exercise (do you weight different stations differently depending on how far apart they are?) but I think we can be absolutely certain that if NCDC got the same result including Alaska then it would have included Alaska.

And what that means is that you can't trust a single word that NCDC or NOAA say on the subject of climate.  They are selectively cherry-picking data to convince you that they have a dramatic result when in fact they have nothing and are just propagandizing for more Federal dollars for themselves.

And how about the New York Times?  I'm sorry, but I can't forgive leaving out the word "contiguous" in the headline, and I can't forgive not mentioning the Alaska result in the story.  Was the omission of Alaska a mistake based on ignorance, or was it intentional?  If the first, it would show that the New York Times reporter knows nothing about his subject and is unable to ask the most obvious questions.  No, this is Justin Gillis, lead guy on the climate beat at the Times and a committed climate campaigner.  Thus, we are left with the conclusion that the article is just a deliberate attempt to propagandize and deceive the readership.

And by the way, the highly accurate satellite temperature data for the entire world are also available.  These data only exist for the 33 years from 1979 to 2012, but at least we can get an indication whether 2012 is somehow out of line.  Here are the data from UAH.   OK, 2012 is in about the top third, but well down from the peak in 1998.  No dramatic story there.

The Total Corruption of the American Geophysical Union

The AGU is one of those big professional societies of scientists, with tens of thousands of members in the fields of earth and space science.  They hosted their annual convention in early December in San Francisco.  Prominent climate blogger Steve McIntyre attended, but only wrote a post on January 5 on his return from a trip to Asia.  His report:  none other than Peter Gleick was a featured speaker at the convention.  Seems almost impossible, but McIntyre took photographs and has posted them at his site, climateaudit.org.

Do you know who Gleick is?  Until February 2012 he was head of the AGU's Task Force on Scientific Ethics.  That's when he was caught forging and then widely publicizing a fake document created to smear a small conservative think tank that had put on conferences featuring appearances by climate sceptics.  I use the term "forging" carefully:  I think that the evidence, summarized below with links for more detail, is sufficient at this point that the term can and should be used as to Gleick.  Yet Gleick seems not to have lost any of his stature among his peers.

Going back to February 2012, besides his role at the AGU, Gleick was also head of something called the Pacific Institute in California, an environmental organization specializing in water issues, and something of a climate campaigner, including regular articles at Forbes magazine.  On February 14, 2012 a then-anonymous individual e-mailed to several climate sites some documents said to have come from the Heartland Institute purporting to show that Heartland's climate sceptic efforts were at least in part funded by the Kochs and that Heartland knew that its sceptical efforts were "anti-climate."  The documents were made public by DeSmogBlog and the Guardian.  In rapid succession over the next several days: (1) Heartland admitted the authenticity of all of the documents except one, which it labeled as a forgery.  The one in question happened to contain all of the information that was damaging to Heartland.  (2) Gleick confessed that he was the source of the documents and that he had stolen the authentic ones by calling a Heartland staffer and pretending to be a board member.  In his confession Gleick stated that his phishing exercise had been motivated by the receipt "in the mail" "at the beginning of 2012" of the strategy memo that Heartland had labeled as fake.  (3) Numerous bloggers, including Steven Mosher and Roger Pielke, Jr. demanded that Gleick answer the question of whether he had forged the fake document.  As far as I have been able to determine, he has never answered that question. 

Within a day of Gleick's confession, blogger Megan McArdle, then with the Atlantic, had put together a series of damning observations and questions based on the documents and Gleick's confession that made it impossible to believe that the fake document had any source but Gleick's own forgery:

We know two things about the memo:

1.  It must have been written by someone who had access to the information in the leaked documents, because it uses precise figures and frequent paraphrases.

2.  It was probably not written by anyone who had intimate familiarity with Heartland's operations, because it made clear errors about the Koch donations--the amount, and the implied purpose.  It also hashed the figures for a sizable program, and may have made other errors that I haven't identified.  

Did someone else gain access to the documents, write up a fake memo, and then snail mail that memo to Dr. Gleick?  Why didn't they just send him everything?

If an insider was the source of the memo, as some have speculated, why did it get basic facts wrong? (I have heard a few suggestions that this was an incredibly elaborate sting by Heartland.  If so, they deserve a prominent place in the supervillain Hall of Fame.)

Why did the initial email to the climate bloggers claim that Heartland was the source of all the documents, when he couldn't possibly have known for sure that this was where the climate strategy memo came from?

Why was this mailed only to Gleick?

Plus, of course, Gleick has never denied that he forged the document.

Well, Gleick was suspended as head of the Pacific Institute.  Oh, but by June 2012 he was back in charge, with no investigation or explanation.  Gleick did disappear promptly from the AGU Task Force on Scientific Integrity, replaced by Linda Gunderson.  At the December 2012 AGU convention in San Francisco, McIntyre asked Gunderson if the Task Force had thought to conduct any investigation of its former chair as to whether he had committed a major forgery intended to smear a professional rival. 

Gundersen said that the Task Force had not considered the Gleick affair at all. It had done no investigation of Gleick’s conduct whatever. She said that Gleick wasn’t her responsibility and refused to be drawn into commenting on the affair in any way.

And of course, by December 2012, Gleick was back at the AGU convention as honored guest speaker, with no apology and no explanation. 

Meanwhile, in 2011 the AGU established a Climate Communication Prize, intended, according to its president's statement, "to raise the visibility of climate change as a critical issue facing the world . . . ."  This year's winner is former NCAR climate scientist Jeffrey Kiehl, who has since gone off into Jungian psychology.  Here are a few of his statements on climate from his web site:

The planet has been warming for the past few decades. . . . These changes are having serious effects on life on Earth. Science tells us that the majority of this warming is due to increases in the greenhouse gas, carbon dioxide. The measured increased in this gas is due to humans burning fossil fuels, i.e. coal and oil. . . .  Projections are that over fifty percent of species may be lost by the end of this century. . . . These are very dire predictions that can cause a sense of despair and hopelessness in us.

Are wild predictions that "over fifty percent of species may by lost by the end of this century" what passes for science at the AGU? 

And also AGU, is there any reason why any member of the public should trust anything you say or do?

Will There Be Any Real Spending Cuts?

So the so-called "fiscal cliff" deal postponed the discussion of spending cuts for the Federal government for two months.  In the next negotiation, will there be any real spending cuts?

I'm certainly not counting on it.  Check out the article by Robert Samuelson in today's Washington Post:  If We Can't Kill Farm Subsidies, What Can We Kill?  Excellent question.  According to Samuelson's data, the current level of Federal farm subsidies is running around $10 billion to $15 billion per year -- less than half a percent of Federal expenditures.  Farm income hit records in 2011 and 2012.  The theoretical justifications for the farm subsidies (e.g., save the family farm, protect small businesses against volatility higher than that of other businesses)  are thoroughly obsolete.

Of course, what farm subsidies are is a great source of graft -- work for lobbyists and resulting campaign contributions.  Check out the "Agriculture" section of Senator Chuck "Worst Senator Ever" Schumer's web site:  item after item of the giveaways Chuck has been able to get for the few thousand remaining New York farmers.  How does he even get away with this representing one of the most heavily urbanized of states?  The answer is that not a single one of his urban constituents has ever even read this part of his web site.   

My bet is that the Republicans won't even make a play to deal with the farm subsidies.  And if they won't deal with that, what will they deal with?   At this point all we can do is hope for a financial crisis to extricate us from this folly.

Keeping The Poor Poor, New York City Edition

If you are a believer in the official Manhattan orthodoxy, you regularly congratulate yourself that your high taxes pay for lots of help for the poor.   But if you actually look at the policies our politicians have adopted, you will notice multiple examples of policies and programs that have the clear effect of obstructing the ability of poor people to advance and of thereby keeping them poor.  Let's take three of the most obvious examples.

Education

It's no secret that New York City public schools badly fail those who need them the most, namely the poor and minority kids.  In the face of this ongoing failure, the public school teachers' union, the United Federation of Teachers, essentially takes the position that no teacher can ever be fired and that all teachers, no matter how bad, are entitled to a lifetime sinecure even as they let the poor kids continue to fail.  The Manhattan orthodoxy unquestioningly looks at unionism as a good thing.  Is it really a good thing when the union is undermining the futures of poor kids?

There is a current battle going on, where Mayor Bloomberg is attempting to implement a somewhat rigorous teacher evaluation system, and the teachers' union is putting up epic resistance.  Within the last two days, the union has launched a television ad campaign accusing Bloomberg of "going after teachers, instead of helping them improve our schools."  The "going after teachers" is code for seeking to have some of the worst teachers discharged.   The union believes that the public will back it despite its unbelievable history of failure in educating the kids.

If kids basically learned on their own and all the teachers had to do was show up, then maybe it wouldn't really matter.  But we all know that good teachers make a huge difference.  Of course no evaluation system is perfect, and mistakes will be made.  But we're dealing here with a trade-off between teachers' desire for a lifetime job without accountability, and the future of poor kids who need to learn the skills to get ahead in life.    I sure know where I stand in that trade-off.

UPDATE:  The New York Post has an excellent editorial on this very subject this morning (January 7), entitled "The Schoolyard Bully" (referring to UFT President Michael Mulgrew).  The Post describes the UFT's ad campaign as "designed to paint Bloomberg as a bully while deflecting attention from the fact that no teacher is too stupid, lazy or incompetent for the UFT to protect."  Also, this quote from Mayor Bloomberg:  "Nobody has a right to ruin our kids' lives."  As readers here know, I have my differences with Mayor Bloomberg, but not on that.

Public Housing

When New York City and State embarked on their massive program in the 1940s and '50s to clear slums and replace them with public housing, nobody gave much consideration to how the situation would look sixty or seventy years later.  Well, here we are.  In New York City, we have about 170,000 of housing units in the low income "projects," housing some 500,000 people, or about 6% of the population.  When they were built, the projects were brutal, but at least the apartments in them were nicer than the slums they replaced.   The New York orthodoxy thinks the projects are a good idea, and are helping the poor.  In fact, Mayor Bloomberg continues to build more low income housing, although on a far smaller scale than in the mid-twentieth century heyday.

Trouble is, the incentives were all wrong.  If you live in the projects, there's no point to trying to improve your lot in life -- they'll just throw you out, and you'll lose your subsidized rent.  Also no point in fixing up your apartment  -- the improvements will just belong to the government.   Of course, the projects have gradually deteriorated.  Today they need all kinds of work, and nobody knows where the money is coming from.  Certainly not from the way-below-market rents.   Most everybody in the projects is poor or close to it, and the perverse incentives strongly discourage making any effort  to change that situation. 

Meanwhile, many of these projects are right in the middle of some of the priciest real estate in the country.  There are low income projects in the Chelsea neighborhood, just half a mile from where I live, a neighborhood where an ordinary two-bedroom apartment goes for $1 million and up.   And there are lots more projects on the Lower East Side. That neighborhood was formerly one of the worst slums but now is gradually being taken over by young "hipsters" -- except for the projects, which are just warehouses for the poor to stay poor.

There is a huge need for an exit strategy to enable the projects to improve and the poor inhabitants to better their lives.  The obvious strategy is:  give the apartments to the residents.  Suddenly those apartments will go from being completely valueless to being worth amounts comparable to the other apartments in these neighborhoods.  In the case of many Manhattan apartments, that will mean an average of around $1 million per apartment.  The "poor" inhabitants will immediately be rich.

The Manhattan orthodoxy hates this idea.  Adopting such a program would pose a  challenge to the value of continuing to build "affordable" housing, and would threaten to turn a dependent population into an independent population.  What could be worse?  For me, I just don't understand why they think it is a good thing to keep the poor poor.

Fracking

If you are rich like, say, Yoko Ono, it doesn't make a lot of difference to you whether your monthly electric or heating bill is $100 or $300.  (Yoko, the head of Artists Against Fracking, undoubtedly already has a bill that is a lot higher than that.)  But cheap energy means a lot to a low income person.  Needless to say, the official Manhattan orthodoxy is that the cheapest available form of energy must be blocked at all costs.  

There currently is under construction beneath the Hudson River a new natural gas pipeline to bring "fracked" gas into the city from Pennsylvania.  The pipeline enters Manhattan at about Gansevoort Street, just a few blocks from where I live, and promptly connects into the existing underground gas distribution system.  A few weeks ago I went to a neighborhood forum sponsored by a group making a last ditch effort to get a court to block the final piece of the pipeline.  Clearly everyone at the forum except for yours truly was unalterably opposed to the pipeline, to fracking, and to natural gas.  There was lots of talk about how dangerous natural gas is, and how it can explode.  I believe I was the only person at the forum who knew that there are already natural gas pipelines under essentially every street in Manhattan, and that the majority of the buildings are already heated by the natural gas.

Meanwhile, as Pennsylvania enjoys a new energy boom from its discoveries of natural gas, right across the border in New York we have a multi-year moratorium in effect.  The gas is beneath a part of the state called the Southern Tier, an extremely economically depressed area.  People there are desperate for jobs.  Does the right-thinking Manhattanite care?  Not that I can notice.  Here is our Assemblywoman Deborah Glick channeling proper Manhattan thinking in opposition to "fracked" natural gas:  "An ancillary result of the use of natural gas is the release of methane into the atmosphere when it is burned. The release of methane is only exacerbated if the gas is obtained through hydrofracking."  She doesn't even know that methane and natural gas are the same thing, let alone that most of the buildings in Manhattan are already heated by natural gas.  But she is totally willing to throw the poor aside to pursue the environmentalist climate campaign.

So when the Manhattanite claims compassion for the poor, I don't think so.  Whether they understand it or not, their program has the effect of keeping the poor poor.  

The Minimum Wage: Why Not Go All The Way?

The lead editorial in the print edition of today's New York Times advocates (for the umpteenth time) for an increase in the Federal minimum wage.  

Will Congress finally raise the federal minimum wage this year? It would be the least that lawmakers could do.

Although the editorial gives the level of the current Federal minimum wage as $7.25 per hour, it nowhere says what the new appropriate level should be.  Is it $8?  How about $10, or even $20?

If you follow the minimum wage debate, you will know that there are two sides, which argue inconsistent economic theories.  Those favoring increases believe that the government can order employers to pay higher wages, and they will do so without adverse consequences (such as hiring fewer workers).  The New York Times is firmly in this camp.  "It would be the least lawmakers could do."    In other words, it's just a pure gift from Congress to the low income people.  No adverse consequences, or even potential adverse consequences, are mentioned in the editorial.  The Times can't even think of any reason why this is not a good idea.  

Those opposing increases argue that they cause a decrease in demand for low wage workers.  Some workers get a slightly higher wage, while others end up unemployed.   Causing higher rates of unemployment among hard-to-employ kids, particularly members of minority groups, is not something to be taken lightly.

Which is it?  Although the New York Times declines even to mention any potential negative effects of an increase in the minimum wage, I don't think they believe there are none.  If there were no adverse consequences to raising the minimum wage, then why is the minimum wage under $10 per hour?  Why not $100 per hour, or $1000 per hour?  The $1000 per hour level sounds good to me.  At around 2000 hours of work per year, that would come to $2 million.  Even I could live on that, here in high cost Manhattan.  Why wouldn't that be "the least that lawmakers could do"?

Of course, even the New York Times would recognize that at a $1000 per hour minimum wage, all of their employees except the top couple of executives would be illegal, and they couldn't hire the staff to get out a paper.  Clearly that wouldn't work.  So at $1000 per hour the minimum wage is destructive, but according to the Times, at levels under $10 per hour it has no adverse consequences at all.  Then there must be some level at which the crossover from free money to destructiveness occurs.  Where is that crossover:   $11?  $15?  $20?  $100?  Of course they don't address this question, and I don't think they even have a theory to address it.   If you agree that a minimum wage is destructive at $1000 per hour, and you can't specify a point of crossover, don't you have to agree that the minimum wage is destructive at all levels?

One way that an increase in the minimum wage could be non-destructive would be if there was full employment, or even a labor shortage, among young people.  Of course, if there were a labor shortage among young people, wouldn't their wages be moving up on their own without a minimum wage at all?  Anyway, how's it going with youth employment?  According to this article from Reuters, reporting on a study from the Annie E. Casey Foundation,

Americans aged 16 to 24 are increasingly leaving school and unable to find a job, causing the largest youth unemployment rate since World War II.

Hmmm.  Another possibility is that the minimum wage is already too high.