For-Profit And Public College Enrollees Have Same Post College Earnings Gains

from "The Labor Market Returns to a For-Profit College Education"
NBER Working Paper No. w18343 by Stephanie Riegg Cellini, George Washington University, School Of Public Policy And Public Administration and Latika Chaudhary, Claremont Colleges, Scripps College:

We find that students who enroll in associate’s degree programs in for-profit colleges experience earnings gains between 6 and 8 percent, although a 95 percent confidence interval suggests a range from -2.7 to 17.6 percent. These gains cannot be shown to be different from those of students in public community colleges. Students who complete associate’s degrees in for-profit institutions earn around 22 percent, or 11 percent per year, and we find some evidence that this figure is higher than the returns experienced by public sector graduates. Our findings suggest that degree completion is an important determinant of for-profit quality and student success. [Emphasis added.]

Economic Growth Lowers Poverty More Than Government Aid To Poor Families: Predicted Poverty Rates From Economic Growth Suggest Government Aid Increases Poverty: Suggests Government Aid Increases Income Inequality

From John Goodman's Health Policy Blog, "Do You Care More than Paul Krugman Cares?" by John Goodman

At a conference at the Vatican I attended some years ago, Nobel laureate Gary Becker gave the opening speech. I found what he said quite remarkable:

The greatest beneficiaries of capitalism are those at the bottom of the income ladder. That’s why I favor capitalism. Were that not the case, I would not be in favor of capitalism. Milton Friedman feels the same way.

***Some years back the Council of Economic Advisers (CEA) calculated a "predicted poverty rate" based on economic growth alone. In other words, economic growth by itself lifts people out of poverty, even if nothing else is happening. The CEA results suggest that if there had never been a welfare state (no Aid to Families with Dependent Children, no food stamps, no Medicaid, etc.) the poverty rate would actually be lower today than it actually is! This adds to a wealth of evidence that the welfare state is subsidizing poverty, not eliminating it.

If government aid to individuals increases poverty over the rate predicted from economic growth as the CEA study suggests, then re-distributive income policies (government aid) also increase income inequality. It could be that the more the government tries to balance income inequality by redistributing income, the more income inequality the government creates.

Taxing The Itemized Deductions Of Top 20 Percent Pays For Romney's Tax Plan Without A Middle Class Tax Increase

From "Martin Feldstein: Romney's Tax Plan Can Raise Revenue: IRS data show that limiting deductions for high earners would more than cover the dollars lost by reducing income-tax rates 20% across the board" by Martin Feldstein:

The IRS data show that taxpayers with adjusted gross incomes over $100,000 (the top 21% of all taxpayers) made itemized deductions totaling $636 billion in 2009. Those high-income taxpayers paid marginal tax rates of 25% to 35%, with most $200,000-plus earners paying marginal rates of 33% or 35%.

And what do we get when we apply a 30% marginal tax rate to the $636 billion in itemized deductions? Extra revenue of $191 billion—more than enough to offset the revenue losses from the individual income tax cuts proposed by Gov. Romney.

Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan, is a professor at Harvard and a member of The Wall Street Journal's board of contributors. He advises the Romney campaign.

If Congress And The President Were All Only Democrats, Medicare As We Know It Will Still End

From TownHall.com, "Entitlement Reforms" by Thomas Sowell:

If there were not a single Republican, or none who got elected to any office, arithmetic would still end "Medicare as we know it," for the simple reason that the money in the till is not enough to keep paying for it. The same is true of Social Security.

The same has been true of welfare state programs in European countries that are currently struggling with both financial crises and riots in the streets from people who feel betrayed by their governments. They have in fact been betrayed by their politicians, who have promised them things that there was not enough money to pay for. That is the basic problem in the United States as well.

GDP Per Capita Not Expected To Return To Its Pre-Recession 2007 Peak Until Later Half Of 2013

From The Wall Street Journal Blog Overheard, "America’s Per Capita Punishment" by Justin Lahart:

GDP per capita is still 1.9% below its 2007 high mark. Assume that Wall Street economists’ GDP forecasts and Census Bureau population projections are in the right ballpark, and GDP per capita doesn’t look like it will surpass its old peak until the third quarter of 2013.

Source: The Wall Street Journal

Normal-Weight Pot-Bellied People Have Higher Risk Of Death Than Obese

From Bloomberg, "Fat -Bellied People At Higher Death Risk Than Obese" by Allison Connolly:

Normal-weight people with fat bellies have a higher risk of death than the obese, according to data presented at the European Society of Cardiology conference in Munich today.

People with a normal body mass index, or BMI, and “central obesity” as defined by a high waist-to-hip ratio had the greatest risk of cardiovascular-related death and the highest death risk overall, researchers said today in a statement. The risk of cardiovascular death was 2.75 times higher and the risk of death from all causes was 2.08 times higher compared with subjects with normal BMI and a normal waist-to-hip ratio.

Obesity And Metabolic Syndrome Linked To Gut Bacteria

From University of Maryland Medical Center News Releases, "University Of Maryland Researchers Identify Gut Bacteria Associated With Obesity And Metabolic Syndrome: Additional Research To Study Impact Of Medicine, Diet And Lifestyle Changes:"

Researchers at the University of Maryland School of Medicine have identified 26 species of bacteria in the human gut microbiota that appear to be linked to obesity and related metabolic complications. These include insulin resistance, high blood sugar levels, increased blood pressure and high cholesterol, known collectively as "the metabolic syndrome," which significantly increases an individual’s risk of developing diabetes, cardiovascular disease and stroke.

School Choice Lowers Truancy And Improves Test Scores

From NBER WORKING PAPER SERIES, "The Effect of School Choice on Intrinsic Motivation and Academic Outcomes" by Justine S. Hastings, Christopher A. Neilson and Seth D. Zimmerman, Working Paper 18324:

ABSTRACT
Using data on student outcomes and school choice lotteries from a low-income urban school district, we examine how school choice can affect student outcomes through increased motivation and personal effort as well as through improved school and peer inputs. First we use unique daily data on individual-level student absences and suspensions to show that lottery winners have significantly lower truancies after they learn about lottery outcomes but before they enroll in their new schools. The effects are largest for male students entering high school, whose truancy rates decline by 21% in the months after winning the lottery. We then examine the impact attending a chosen school has on student test score outcomes. We find substantial test score gains from attending a charter school and some evidence that choosing and attending a high value-added magnet school improves test scores as well. Our results contribute to current evidence that school choice programs can effectively raise test scores of participants. Our findings suggest that this may occur both through an immediate effect on student behavior and through the benefit of attending a higher-performing school. [Emphasis added.]

Tax Increase Expectations Depress The Economy Much More Than Government Spending Cuts; Anticipated Tax Increases Decrease Private Investment Unlike Spending Cuts: Government Spending Cuts Raise Business Confidence: Tax Increases Likely To Create Deep Recessions

From "The output effect of fiscal consolidations" by Alberto Alesina, Carlo Favero and Francesco Giavazzi, August 2012, [HT: Greg Mankiw]:

Do sharp reductions of deficits and government debts (labeled "fiscal adjustments") cause large output losses? This question is at the forefront of the policy debate, given that many OECD countries sooner or later will have to reduce their public debts. The answer which this paper provides is that it matters crucially how the consolidation occurs. Fiscal adjustments based upon spending cuts are much less costly in terms of output losses than taxbased ones. In particular, spending-based adjustments have been associated with mild and short-lived recessions, in many cases with no recession at all. Instead, tax-based adjustments have been followed but prolonged and deep recessions. The difference is remarkable in its size and cannot be explained by different monetary policies during the two type of adjustments.***We find that the heterogeneity in the effects of the two types of fiscal adjustment (tax-based and spending-based) is mainly due to the response of private investment, rather than that to consumption growth. Interestingly, the responses of business and consumers’ confidence to different types of fiscal adjustment show the same asymmetry as investment and consumption: business confidence (unlike consumer confidence) picks up immediately after expenditure-based adjustments.***we study the response of output (and of the other variables of interest) to multi-period fiscal consolidation plans –that is sequences of tax increases and spending cuts, announced in some year and then implemented or revised in subsequent years.***although slightly different across countries–yield a strong common message: tax-based plans induce prolonged and deep recessions, while spending-based plans are associated with very mild and short-lived recessions, in some cases with no recession at all.

The study looked at announcements of government plans to cut spending and raise taxes, similar to those proposed by Obama and future tax increases similar to those included in Obama's health care law.

The paper is consistent with other high quality research in this area, including research by Obama's adviser Chrisitne Romer, former Chair of the Council of Economic Advisers in the Obama administration. See her recent paper: Romer C. and D. H. Romer (2010), “The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks”, American Economic Review, 100(3), 763—801. Her paper found that public announcements of proposed tax increases in the Congressional Record and newspapers had a negative effect on economic output prior to their legislative enactment.

55-64 Years Old Suffered Biggest Income Loss, Almost 10 Percent, Since Recovery Began In 2009

From The New York Times Economix Blog, "Big Income Losses for Those Near Retirement" by Catherine Rampell:

The typical household income for people age 55 to 64 years old is almost 10 percent less in today’s dollars than it was when the recovery officially began three years ago, according to a new report from Sentier Research, a data analysis company that specializes in demographic and income data.
***Across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. As of June, the median household income for all Americans was $50,964, or 4.8 percent lower than its level three years earlier, when the inflation-adjusted median income was $53,508.
***

Sources: Sentier Research estimated annual household income derived from the monthly Current Population Survey conducted by the Census Bureau.

Source: The New York Times 

US Producitvity Chart, 1947-2011

From The Bureau Of Labor Statistics:

Productivity change in the nonfarm business sector, 1947-2011

Source: Bureau Of Labor Statistics

Antibiotics Linked To Weight Gain

From CBC News, "Infants given antibiotics could become overweight kids:"

Researchers from New York University studied more than 10,000 children and found that those given antibiotics before six months of age on average weighed more for their height than children who weren't given antibiotics.***"We typically consider obesity an epidemic grounded in unhealthy diet and exercise, yet increasingly studies suggest it's more complicated, said Dr. Trasande, leader of study.

"Microbes in our intestines may play critical roles in how we absorb calories, and exposure to antibiotics, especially early in life, may kill off healthy bacteria that influence how we absorb nutrients into our bodies and would otherwise keep us lean."

According to the researchers farmers have known of the relation between antibiotics and weight gain for years, often using antibiotics to produce heavier cows.

"... this carefully conducted study suggests that antibiotics influence weight gain in humans, and especially children too," said Jan Blustein, professor of health policy at the NYU Wagner School of Public Service.

CBO Warns Of Major Recession From Taxmageddon

From The Washington Post, "CBO warns of significant recession if Congress doesn’t act to avoid fiscal cliff" by Lori Montgomery:

The nation would be plunged into a significant recession during the first half of next year if Congress fails to avert nearly $500 billion in tax hikes and spending cuts set to hit in January, congressional budget analysts said Wednesday.

The massive round of New Year’s belt-tightening — known as the fiscal cliff or Taxmageddon — would disrupt recent economic progress, push the unemployment rate back up to 9.1 percent by the end of 2013 and produce economic conditions “that will probably be considered a recession,” the nonpartisan Congressional Budget Office said.

Deregulation Of Railroad Freight Shipment Prices Lowered Shipment Costs, Increased The Use Of Western Low Sulfur Coal In The Eastern US And Substantially Lowered SO2 Emissions Prior To Clean Air Mandates

The Interstate Commerce Commission, a US regulatory body, had legal power to set railroad and truck freight rates. Among its goals, the Commission was authorized to set shipment rates that were fair and to prevent rate discrimination based on long or short hauls. The effect was to keep freight rates artificially high.

Although, the cheapest to mine coal also had the lowest sulfur content, it was in Montana and Wyoming. The major electrical plant users of coal were on the East Coast and the east side of the Mississippi River. The high railroad freight rates set by the ICC made it economically unattractive for Eastern power plants to use low sulfur coal from the West.

The deregulation of freight railroad shipment rates in the late 1970s and early 1980s, allowed competitive pricing and significantly lowered freight shipment rates. The lowered rates allowed Eastern power plants to obtain low sulfur economically and to use it. The coal powered electrical plants use of the low sulfur coal substantially lowered the SO2 emissions into the air years before the government mandated SO2 emissions program went into effect.

From NBER Working Paper Series, "The SO2 Allowance Trading System: The Ironic History Of A Grand Policy Experiment" by Richard Schmalensee and Robert Stavins, Working Paper 18306:

The three major coal deposits in the United States are located in the Powder River Basin (PRB), the Illinois Basin and Central Appalachia. Of these, PRB coal [in southeast Montana and northeast Wyoming] is cheapest to mine and has the lowest sulfur content, though considerable low-sulfur coal was also produced in the East, particularly after the acid rain program took effect. Hence, absent the use of any abatement technology, switching from high-sulfur eastern coal to low-sulfur coal, particularly PRB coal, reduces power plant SO2 emissions per unit of electricity generation.

The majority of coal-fired power plants in the United States are located along or east of the Mississippi River, making PRB the most distant option for major sources of demand. As freight prices fell with deregulation, liberalization gave freight carriers flexibility and incentive to contract with eastern utilities, and these same utilities developed low-cost ways to modify their boilers (which were designed to burn bituminous coal) to burn sub-bituminous PRB coal (Ellerman et al 2000, pp. 243-45). The average sulfur content of coal burned at electric generating units began to fall. In fact, SO2 emissions at units covered by the allowance-trading program were actually falling from 1985 to 1993, before the acid rain program took effect (Ellerman and Montero 1998). The main source of this decline was the increased use of PRB coal, with average rail rates of shipping PRB coal to Midwest generators falling by over 50 percent from 1979 to 1993 (Gerking and Hamilton 2008). [Emphasis added.]

Over The Last 10 Years, The US Public's Favorable Opinion Of The Federal Government Has Gone From 66 Percent To 33 Percent

From Pew Research Center, "33% - Few Americans Have a Favorable Opinion of the Federal Government:"

Just a third of Americans have a favorable opinion of the federal government, the lowest positive rating in 15 years. Yet 61% regard their local governments favorably and 52% have a positive view of their state governments -- making the gap between favorable ratings of the federal government and state and local governments wider than ever.

Ten years ago, roughly two-thirds of Americans offered favorable assessments of all three levels of government: federal, state and local.

Likely Voters Fear New Health Care Law More Than Ryan’s Medicare Reform

From Rasmussen Reports, "47% Fear Health Care Law More Than Ryan’s Medicare Reform Plan:"

The latest Rasmussen Reports national telephone survey finds that when it comes to the future of Medicare, 47% of Likely U.S. Voters are scared more of the health care law than of Ryan’s proposal. Forty-one percent (41%) are more scared of what Ryan has proposed. Twelve percent (12%) are undecided.

Hispanics Are The Largest Minority Group In US Colleges: Record 16.5 Percent Of Enrollment

From Pew Research Center "Now Largest Minority Group on Four-Year College Campuses: Hispanic Student Enrollments Reach New Highs in 2011" by Richard Fry and Mark Hugo Lopez:

For the first time, the number of 18- to 24-year-old Hispanics enrolled in college exceeded 2 million and reached a record 16.5% share of all college enrollments. 2 Hispanics are the largest minority group on the nation’s college campuses, a milestone first achieved last year.

Brown Retakes Lead Over Warren In MA US Senate Race On Intrade

The Intrade prices on Tuesday, August 21, 2012, show the Republican incumbent Scott Brown leading the Democrat challenger Elizabeth Warren for the Massachusetts US Senate seat.

Brown's Intrade price is 54.0 percent.

Warren's Intrade price is 52.2 percent.

It is a very close US Senate race with either side capable of winning the election.

On An Inflation Adjusted Basis, Apple's Market Capitalization Is About 26 Percent Below Microsoft's Maximum Market Capitalization

Apple's stock market capitalization, as of the close of the NYSE on Monday, August 20, 2012, is $624 Billion. It is higher than Microsoft's maximum valuation of $619 billion on Dec. 30, 1999. On an inflation adjusted basis, the Microsoft capitalization of $619 billion at the beginning of the year 2000 is equivalent to around $845 billion today. In real terms, Microsoft's maximum market capitalization is about 35 percent higher than Apple's maximum capitalization to date. Equivalently, Apple's maximum capitalization to date is about 26 percent lower than Microsoft's maximum in real terms.

Ban On Grocery Store Plastic Bags Increases Foodborne Illnesses And Deaths

PercTV, "Foodborne Illness & Plastic Bag Bans" on YouTube:



[HT: Division Of Labour]

Augusta National Admits Its First Women: About Time

From The Wall Street Journal, "Augusta National Invites Two Women to Join" By Betsy McKay And Timothy W. Martin:

The Augusta National Golf Club, home of The Masters tournament, said Monday it had admitted female members for the first time, following years of criticism both public and private over its stubbornly-held policy of admitting only men as members.

Former U.S. Secretary of State Condoleezza Rice and South Carolina investment banker Darla Moore were both invited and accepted membership, golf's most prominent club said in a statement. The club's next season opens in October.

The step breaks with the 79-year-old private club's practice of admitting only men, who make up a veritable who's who of corporate America.

Amazon Is A Threat to Google

From Business Insider, "Forget Apple, Forget Facebook: Here's The One Company That Actually Terrifies Google Execs" by Nicholas Carlson:

Google's real rival, and real competition to watch over the next few years is Amazon.

Google is a search company, but the searches that it actually makes money from are the searches people do before they are about to buy something online. These commercial searches make up about 20 percent of total Google searches. Those searches are where the ads are.

What Googlers worry about in private is a growing trend among consumers to skip Google altogether, and to just go ahead and search for the product they would like to buy on Amazon.com, or, on mobile in an Amazon app.

20 Year Low For US Energy CO2 Emissions

From Carpe Diem, "Thanks to Market Forces, Technology, and Private Sector Activity, C02 Emissions Drop to 20-Year Low" by Mark Perry:

Source: Mark Perry, Carpe Diem

Slow Economic Growth For Next Year Along With A Slight Increase of Recession Predicted From Treasury Yield Curve: Federal Reserve Bank of Cleveland

US Treasury yield curve predicts slow economic growth over the coming year of 0.6 percent and a slight increase in the chance of a recession next year to 11.9 percent.

From Federal Reserve Bank of Cleveland, "Yield Curve and Predicted GDP Growth, July 2012" by Joseph G. Haubrich and Patricia Waiwood, August 2, 2012:

Covering June 23, 2012–July 27, 2012

	July	June	May
3-month Treasury bill rate (percent)	0.10	0.09	0.09
10-year Treasury bond rate (percent)	1.47	1.64	1.74
Yield curve slope (basis points)	137	155	165
Prediction for GDP growth (percent)	0.6	0.6	0.7
Probability of recession in 1 year (percent)	11.7	9.7	8.7

***The Yield Curve as a Predictor of Economic Growth
The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth. The rule of thumb is that an inverted yield curve (short rates above long rates) indicates a recession in about a year, and yield curve inversions have preceded each of the last seven recessions (as defined by the NBER). One of the recessions predicted by the yield curve was the most recent one. The yield curve inverted in August 2006, a bit more than a year before the current recession started in December 2007. There have been two notable false positives: an inversion in late 1966 and a very flat curve in late 1998.

More generally, a flat curve indicates weak growth, and conversely, a steep curve indicates strong growth. One measure of slope, the spread between ten-year Treasury bonds and three-month Treasury bills, bears out this relation, particularly when real GDP growth is lagged a year to line up growth with the spread that predicts it.

States And Large Metro Areas With Highest Yearly Job Growth, June 2011 Vs June 2012

From Arizona State University, W P Carey School of Business, knowecon, "Grand Canyon State Ranks Among Top 5 in Job Growth" by Lee McPheters:

The monthly [year over year job growth] rankings are compiled by the W. P. Carey School of Business, based on analysis of data released by the U. S. Bureau of Labor Statistics. The June rankings were computed from data available July 20, 2012. Figures are not seasonally adjusted.

State Job Growth in June 2012 vs. June 2011
Rank	State	Percent Change
1	North Dakota	6.6
2	Utah	2.6
3	Louisiana	2.5
3	Oklahoma	2.5
5	Arizona	2.4
6	Texas	2.2
7	Idaho	2.1
8	Kentucky	2.0
8	Ohio	2.0
10	California	1.9
10	Washington	1.9
	United States	1.3
Source: W.P. Carey School of Business, Arizona State University, derived from U. S. Bureau of Labor Statistics

***Houston Leads Major Metro Areas

Among the nation’s largest metropolitan areas (more than one million workers), jobs grew most rapidly in the Houston region (3.3 percent) over-the-year in June, followed by the Phoenix and Seattle metro areas (tied at 2.7 percent).

Large Metro Area Job Growth in June
Rank	Metro Area	Percent Change
1	Houston	3.3
2	Phoenix	2.7
2	Seattle	2.7
4	San Francisco	2.6
5	Boston	2.2
5	Cincinnati	2.2
5	Denver	2.2
5	Detroit	2.2
9	Portland	2.1
9	Tampa	2.1
	United States	1.3
Source: W.P. Carey School of Business, Arizona State University, derived from U. S. Bureau of Labor Statistics

Stock With Short Selling Restrictions Perform Worse Than Stocks Without Short Selling Restrictions

From The Federal Reserve Bank Of New York, "Market Declines: What Is Accomplished by Banning Short-Selling?" by Robert Battalio, Hamid Mehran, and Paul Schultz, Current Issues In Economics And Finance, Volume 18, Number 5, 2012,:

In 2008, U.S. regulators banned the short-selling of financial stocks, fearing that the practice was helping to drive the steep drop in stock prices during the crisis. However, a new look at the effects of such restrictions challenges the notion that short sales exacerbate market downturns in this way. The 2008 ban on short sales failed to slow the decline in the price of financial stocks; in fact, prices fell markedly over the two weeks in which the ban was in effect and stabilized once it was lifted. Similarly, following the downgrade of the U.S. sovereign credit rating in 2011—another notable period of market stress—stocks subject to short-selling restrictions performed worse than stocks free of such restraints. [Emphasis added.]

The Undoing Of The Myth Of US Inequality And Hopefully Definitively This Time

From The Grumpy Economist, "The mismeasure of inequality" by John Cochrane:

Kip Hagopian and Lee Ohanian have a wonderful new policy review titled "the mismeasurement of inequality." Calmly, and with careful grounding in facts and review of research, it destroys most of the current liberal myths about the amount of inequality and its importance. The promise:

We will show that much of what has been reported about income inequality is misleading, factually incorrect, or of little or no consequence to our economic well-being. We will also show that middle-class incomes are not stagnating; in fact, middle-class incomes have risen significantly over the 29 years covered by the cbo study. Lastly, we will address assertions that the rich are not paying their “fair share” of taxes

"Address" should be "destroy", but they're being careful.

Read Cochrane's entire post for an worthwhile summary of Hagopian and Ohanian's paper on the myth of US inequality.

Majority Of Voters Think Obama Gets Better Press Treatment Than Romney

From Rasmussen Reports, "51% Expect Most Reporters To Help Obama; 9% Predict Most Will Help Romney:"

Most voters think President Obama has gotten better treatment from the media than Mitt Romney has, and they expect that biased coverage to continue. A new Rasmussen Reports national telephone survey finds that 59% of Likely U.S. Voters believe Obama has received the best treatment from the media so far. Just 18% think his Republican challenger has been treated better. Twenty-three percent (23%) aren’t sure.

Over 400 Economists, Including 5 Nobel Laureates In Economics, Endorse Romney's Economic Plan Over Obama's Policies

From "ECONOMISTS FOR ROMNEY: Economists Supporting Mitt Romney for President:"

We enthusiastically endorse Governor Mitt Romney’s economic plan to create jobs and restore economic growth while returning America to its tradition of economic freedom. The plan is based on proven principles: a more contained and less intrusive federal government, a greater reliance on the private sector, a broad expansion of opportunity without government favors for special interests, and respect for the rule of law including the decision-making authority of states and localities.***In stark contrast, President Obama has failed to advance policies that promote economic and job growth, focusing instead on increasing the size and scope of the federal government, which increases the debt, requires large tax increases, and burdens business with many new financial and health care regulations. The result is an anemic economic recovery and high unemployment. His future plans are to double down on the failed policies, which will only prolong slow growth and high unemployment.***In sum, Governor Romney’s economic plan is far superior for creating economic growth and jobs than the actions and interventions President Obama has taken or plans to take in the future. This November, voters will make a fundamental choice between differing visions of America’s economic future. [Over 400 economists' names follow in the original statement.]

The five Nobel Laureates are Gary Becker, Robert Lucas, Robert Mundell, Edward Prescott, and Myron Scholes.

White Paper Of Romney's Tax Reform

Romney Tax Reform White Paper

[HT: Greg Mankiw]

Intrade Shares Favor Obama In 2012 Election Before And After Romney Picks Ryan For VP

Past 60 days of Intrade share prices for the 2012 US presidential election continue to show favorable odds for Obama winning over Romney. The pick of Ryan as the Republican VP did not have a major impact on the 2012 US presidential election share prices on the Intrade markets.

Intrade Prices, From Jan 14 to Aug 13, For 2012 Republican Presidential Win

Source: Intrade
Prices For 2012 Republican Presidential Win

Intrade Prices, From Jan 14 to Aug 13, For 2012 Democrat Presidential Win

Source: Intrade
Prices For 2012 Democrat Presidential Win

Cheap, Plentiful US Shale Gas And Oil Reindustrializing America And Adding 3.6 Million Jobs, 3 Percent GDP Increase

From Bloomberg, "America’s Energy Seen Adding 3.6 Million Jobs Along With 3% GDP" by Asjylyn Loder:

U.S. energy supplies have been transformed in less than a decade, driven by advances in technology, and the economic implications are only beginning to be understood. U.S. natural gas production will expand to a record this year and oil output swelled in July to its highest point since 1999. Citigroup Inc. (C) estimated in a March report that a “reindustrialization” of America could add as many as 3.6 million jobs by 2020 and increase the gross domestic product by as much as 3 percent.

Narrow Gains

So far, the economic benefits have been confined to states such as Louisiana, Texas and North Dakota, while the national jobless rate has stayed above 8 percent for 42 straight months in the wake of the worst recession in seven decades.***there are signs the economic gains have begun to expand beyond the oil and gas fields and that the promise of abundant, low-cost fuels will give a competitive edge to industries from steel, aluminum and automobiles to fertilizers and chemicals.

Intrade Shares For Paul Ryan As Romney's VP Jump 334 Percent Night Before Republican VP Announcement

From Intrade: Paul Ryan to be Republican VP nominee in 2012:

Last prediction was: $9.50 / share
Today's Change: +$7.31 (+333.8%)

Previous close price: $2.19 / share ≈ 21.9%
Open price: $2.39 / share ≈ 23.9%
Session low: $2.07 / share ≈ 20.7% Today's lowest price
Session high: $9.60 / share ≈ 96.0% Today's highest price
Today's volume: 20,138 shares
Last trade time: 06:17 AM, GMT

Almost All Likely Voters Think Government Should Not Prohibit Businesses Based On Political Views

From Rasmussen Reports, "87% Oppose Letting Government Officials Play Politics In the Marketplace" Thursday, August 09, 2012:

Eighty-seven percent (87%) of Likely U.S. Voters say government officials should not be allowed to prohibit a business from opening if they disagree with the political views of the business owner. A new Rasmussen Reports national telephone survey finds that only three percent (3%) think government officials should have the power to stop businesses because they disagree politically with the owners.

So Laughable, Naive And Sad: UN Tries To Lower Greenhouse Gases And Uses Incentives That Instead Increases Production Of Obscure Gas With Huge Global Warming Impact

The UN, with the best of intentions, offers a bounty for the reduction of the release of greenhouse gases based on their comparative relative global warming impact compared to carbon dioxide. The production of an air conditioning coolant gas produces a waste product gas with 11,000 times the global warming impact and payment of carbon dioxide. The UN is surprised that gas manufacturers have ramped up production of the coolant and toxic waste gas to the maximum UN payout limit. If the UN stops paying, the gas manufacturers will likely release the extremely environmentally harmful gas into the atmosphere. As economists and organizational design experts know, but apparently not the UN, incentives, especially monetary ones, matter and change behavior. The negative outcome is predictable from the start and should not have caught the UN off guard.

From The New York Times, "Carbon Credits Gone Awry Raise Output of Harmful Gas" By Elisabeth Rosenthal and Andrew W Lehren:

When the United Nations wanted to help slow climate change, it established what seemed a sensible system.

Industrial gases were rated based on their power to warm the atmosphere. The more dangerous the gas, the more that manufacturers in developing nations would be compensated as they reduced their emissions.***They quickly figured out that they could earn one carbon credit by eliminating one ton of carbon dioxide, but could earn more than 11,000 credits by simply destroying a ton of an obscure waste gas normally released in the manufacturing of a widely used coolant gas.***That incentive has driven plants in the developing world not only to increase production of the coolant gas but also to keep it high — a huge problem because the coolant itself contributes to global warming and depletes the ozone layer.

Half The Aerosols Affecting North America Climate Change Are From Foreign Countries: 94 Percent Is Dust From Foreign Countries And Only 6 Percent Is Industrial Emissions From Foreign Countries: Curbing Industrial Emissions Alone Is Not Enough

From "N. American air suffers from foreign dust" on ScienceBlog:

Roughly half the aerosols that affect air quality and climate change in North America may be coming from other continents, including Asia, Africa and Europe,....

Atmospheric particles can travel thousands of miles downwind and impact the environment in other regions, found lead researcher Hongbin Yu of the University of Maryland, and his team in a report published in the August 3, 2012 issue of the journal Science. This could offset emission controls in North America and suggests there are more factors affecting domestic pollution than the Environmental Protection Agency has accounted for.

"People have been concerned about how an emerging Asian economy and increased manmade pollution will influence North American air quality and climate, but we found that dust makes large contributions here," explained Yu, an associate research scientist in UMD’s Earth System Science Interdisciplinary Center (ESSIC). "So we cannot just focus on pollution. We need to consider dust."***Most of the pollution migrating into the North American atmosphere is not industrial emissions but dust from Asia, Africa, and the Middle East, Yu found. Out of the total annual accumulation of foreign aerosols, 87.5 percent is dust from across the Pacific, 6.25 percent is comprised of combustion aerosols from the same region and 6.25 percent is Saharan dust from across the Atlantic.***UMD climate scientist Antonio (Tony) Busalacchi, who is chairman of the Joint Scientific Committee for the World Climate Research Programme and chairman of the Board on Atmospheric Sciences and Climate of the U.S. National Academy of Sciences/National Research Council, says one of the most interesting points Yu and his coauthors make in their study is that even a reduction of industrial emissions by the emerging economies of Asia could be overwhelmed by an increase in dust emissions due to changes in meteorological conditions and potential desertification. [Emphasis added.]

CBO Presentation On Income And Wealth, 1979 - 2009 Trends

Slides from CBO Presentation to NBER Conference On Research In Income And Wealth,"Trends in The Distribution of Household Income, 1979–2009:"

The CBO presentation looks at the effects by quintiles of labor and market incomes, taxes and government transfers:

Trends in the Distribution of Household Income, 1979-2009 from Congressional Budget Office

Obese Diabetics Have A Lower Overall Death Rate Than Normal Weight Diabetics

From "Thinner Diabetics Face Higher Death Rate" on ScienceBlog:

American adults of a normal weight with new-onset diabetes die at a higher rate than overweight/obese adults with the same disease, according to a new Northwestern Medicine study.

The study, to be published in the Aug. 7 issue of JAMA, found that normal-weight participants experienced both significantly higher total and non-cardiovascular mortality than overweight/obese participants.

Soon Your Name And Photo Will Appear On A Starbucks Cashier's Screen When You Enter

From The New York Times, "Starbucks and Square to Team Up" by Claire Cain Miller:

Starbucks has offered its own mobile payment app since last year and processes more than a million mobile payments a week. Customers will continue to be able to use it, but they will also be able to use Pay With Square, Square’s cellphone app, which eliminates even having to take the phone out of your pocket or sign a receipt.

At first, Starbucks customers will need to show the merchant a bar code on their phones. But when Starbucks uses Square’s full GPS technology, the customer’s phone will automatically notify the store that the customer has entered, and the customer’s name and photo will pop up on the cashier’s screen. The customer will give the merchant his or her name, Starbucks will match the photo and the payment will be complete. [Emphasis added.]

Economic Analysis Of Romney Tax Plan Shows 6.8 Million Additional Jobs Created And Higher GDP Growth

From "The Economic Effects Of The Romney Tax Plan" by John W. Diamond, Ph.D., Edward A. and Hermena Hancock Kelly Fellow in Public Finance, James A. Baker III Institute for Public Policy, Rice University:

Executive Summary

There is widespread recognition that the U.S. income tax is a complex, highly inefficient, and costly way of raising revenues to finance government expenditures. In this paper, I analyze a rough sketch of the Romney Tax Plan—a rate-reducing, base-broadening tax reform. The simulations show that such a base-broadening, rate-reducing reform would have significant positive economic effects on the U.S. economy, including increases in investment, the capital stock, employment, and real wages. These gains are in addition to increases in GDP, investment, consumption, and employment that will occur as the U.S. economy continues to recover from the recent recession and as the population grows. Specifically, I find that the reform would, if passed immediately, increase GDP relative to baseline by 5.4 percentage points over the next decade, while creating 6.8 million jobs.

The paper's author states:

Versions of the model have been used in analyses of tax reforms by the U.S. Department of the Treasury (President’s Advisory Panel on Federal Tax Reform 2005), the Congressional Joint Committee on Taxation (Joint Committee on Taxation 2003), and in a number of other recent tax policy studies (Diamond and Zodrow 2007, 2008; Diamond and Viard 2008; Carroll, Cline, Diamond, Neubig, and Zodrow 2010; and Zodrow and Diamond, forthcoming).

[HT: Greg Mankiw]

More Income Equality, Less Inequality, When Value Of Employer And Public Health Benefits Included In Income

From Brookings, "With Health Care Costs, the U.S. Is a Huge Outlier" by Gary Burtless:

Nearly all the widely reported estimates of the trend in median income, for example, omit the additions in health care consumption that are paid through employer and public health plans. The omission tends to produce an overstatement in common estimates of the growth in U.S. income inequality.***The Congressional Budget Office (CBO) recently published income distribution statistics that include the value of health benefits. Those statistics show faster income gains and a smaller increase in inequality than earlier estimates. For example, the Census Bureau's estimates of cash incomes show that average incomes in the bottom one-fifth of households only increased 7% between 1979 and 2009 compared with an increase of 13% in the middle one-fifth of households. In contrast, the CBO's estimates imply that the gross incomes (including health benefits) of these households increased much faster. In the bottom one-fifth of households, the CBO estimates show real income gains of 35%; in the middle one-fifth of households, estimated gross incomes climbed 21%. If we focus on after-tax income gains, the percentage increases in income were even larger.***the inclusion of health benefits makes a big difference. For the average U.S. household, gross income excluding health benefits increased 35% between 1979 and 2009. In comparison, estimated health benefits per person increased 205%. Counting health benefits has a bigger impact on estimated income gains in the middle and at the bottom of the income distribution than it does at the top. That's because health benefits are a bigger proportion of total income for households in the middle and at the bottom of the distribution than they are for households at the top.***the new estimates suggest that income gains in the bottom 80% of the distribution have been more egalitarian than widely believed. [Emphasis added.]

OECD Countries With Largest Growth In Government Stimulus Spending Had Slowest GDP Growth: Arthur Laffer

From The Wall Street Journal, "Arthur Laffer: The Real 'Stimulus' Record: In country after country, increased government spending acted more like a depressant than a stimulant." by Arthur Laffer:

Source: The Wall Street Journal

Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.

The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).***Often as not, the qualification for receiving stimulus funds is the absence of work or income—such as banks and companies that fail, solar energy companies that can't make it on their own, unemployment benefits and the like. Quite simply, government taxing people more who work and then giving more money to people who don't work is a surefire recipe for less work, less output and more unemployment.***Well, the truth is that government spending does come with debits. For every additional government dollar spent there is an additional private dollar taken. All the stimulus to the spending recipients is matched on a dollar-for-dollar basis every minute of every day by a depressant placed on the people who pay for these transfers. Or as a student of the dismal science might say, the total income effects of additional government spending always sum to zero.

Meanwhile, what economists call the substitution or price effects of stimulus spending are negative for all parties. In other words, the transfer recipient has found a way to get paid without working, which makes not working more attractive, and the transfer payer gets paid less for working, again lowering incentives to work. [Emphasis added.]

ARPANET, Government Control And Censorship, DOD Funding Restrictions And The FCC Hindered And Delayed The Internet: Without ARPANET The US Might Have Had The Internet Sooner

From Foundation For Economic Education, November 1, 1998, "Does the Internet Prove the Need for Government Investment? The Real Internet Grew out of a Spontaneous Ordering Process" by Andrew P. Morriss:

Why Was There No “Private ARPANET”?

Government activity generally “crowds out” private activity by absorbing resources that could be used elsewhere. Computer networking is no exception. Not only did the government directly seize resources through taxation and lock up knowledge in classified documents, it also lured many of the best computer scientists to work on its projects, slowing private-sector activity.

Private networks were attempted, but they failed. Setting up a network required permission from the Federal Communications Commission, and existing communications companies like Western Union fought the creation of new networks. Even when a private packet-switching network, Telenet, began operation, “many millions in legal expenses” were required to fight the regulatory battle prompted by RCA, ITT, AT&T, and Western Union. This kept Telenet from making profits for years.11 Regulatory barriers to entry, not a lack of entrepreneurial activity, slowed the efforts to build private networks.

Despite these obstacles, a private network among universities, USENET, sprang up. It resembled today’s Internet much more than ARPANET did. USENET developed because the Defense Department limited ARPANET to a relatively small number of sites. People at other sites wanted a network too, and USENET quickly surpassed ARPANET in usefulness because it lacked the restrictions DOD money imposed on ARPANET. (USENET still exists; it is a collection of newsgroups devoted to every subject imaginable.)

ARPANET Was Not the Internet

***

Its constant and rapid growth: There are hundreds of thousands, if not millions, of connections on the Internet depending on how one defines “connection.” ARPANET, in contrast, grew slowly. In 1969 there were just four host computers connected. By January 1976 there were just 63. ARPANET’s limited scope was due to its restriction to sites with DOD funding.

Its freedom with respect to content: It is nearly impossible to control how individuals use the Internet. Because it was built with government funds, ARPANET users faced a number of restrictions on their use of the network. Commercial use, for example, was banned. Even one of the most popular uses, newsgroups, quickly ran into censorship problems. Although the first newsgroups concerned primarily technical issues about the network, users quickly began to establish groups concerning other subjects of interest. When several users proposed a newsgroup dealing with recreational drugs, those in control of the network rejected it as too controversial. (Drugs weren’t the only subject that was rejected; a proposal for a newsgroup called “gourmand” was also turned down because the creator refused to change the name to “recipes.”)

***Unlike the mythical Internet that sprang forth from the ARPANET, the real Internet grew out of a spontaneous ordering process of the interactions of millions of individual users. The uses we make of the Internet were unimaginable to the researchers and scientists who created the networking protocols and hardware advances we rely on today. Far from being the result of the government’s “strategic” investment in the original Defense Department networks, today’s Internet developed at most accidentally from and often in spite of those investments. The explosive growth in commerce, for example, became possible only when the government’s ban on commercial use of the networks it financed was lifted.

Moreover, the “strategic” nature of the early investment in networking is a myth. No one consciously created the Internet. While an international network of networks undoubtedly would look different today had ARPANET never existed, there is also little doubt that packet-switching and e-mail would have evolved anyway. Dedicated, motivated people with a need to communicate—for commercial and noncommercial purposes—would have surely seen to it.

[HT: John Stossel via Warren Smith via Mark Perry]

US Government Will Run Health Insurance Exchanges In Half Of The 50 States: US Turns To Canadian Company, CGI Group, To Provide IT Services

The US government, contrary to to its initial expectations of 50 state run health insurance exchanges, is finding that it will have to operate the ObamaCare mandated health insurance exchanges in about 25 states.

The US has decided to contract with a Canadian IT consulting company, CGI Group, whose stock shares are primarily traded and listed on the Toronto Stock Exchange, for information technology services for 5 years and almost a $100 million.

From The New York Times, "U.S. Officials Brace for Huge Task of Operating Health Exchanges" by Robert Pear:

When Congress passed legislation to expand coverage two years ago, Mr. Obama and lawmakers assumed that every state would set up its own exchange, a place where people could shop for insurance and get subsidies to help defray the cost.***“We realize that not all states will be ready to establish these exchanges by 2014, so we are setting up a federally facilitated exchange in those states,” said Michael Hash, the top federal insurance regulator. “We are on track to go live in October 2013, which is the beginning of the first open season for the individual and small group markets.”***Federal and state officials and health policy experts expect that the federal government will run the exchanges in about half of the 50 states — a huge undertaking, given the diversity of local insurance markets.***Federal officials have turned to the American subsidiary of a Canadian company, the CGI Group, to provide information technology services to the federal exchanges under a contract that could be worth $93.7 million over five years.

All Personnel, Even Janitors, Earn More In A Medical Setting: Average Medical Wages Grew 18 Percent From 2005 To 2011

From The Dallas Morning News, "Eli Lehrer: Your doctor makes too much money" by Eli Lehrer:

A physician practicing in a primary care setting, according to the Bureau of Labor Statistics, earned an average of just over $200,000 in 2010, while specialists averaged over $355,000, the highest of any professional category tracked. By comparison, lawyers average just over $110,000, airline pilots about $92,000, and chartered actuaries — who calculate risk for insurance companies and must pass complex exams longer and arguably more difficult than the medical boards — about $150,000.***Registered nurses and dental hygienists, who need only associate degrees, earn about $70,000 a year. This is about as much as degreed computer programmers. And it’s significantly more than high school teachers and forensic scientists, who need master’s degrees but earn less than $60,000 on average.

Wage disparities exist at all levels of the health care industry. Even nonmedical professionals like janitors tend to earn more in health care settings than those working elsewhere. An extensive report from the Brookings Institution sums up the evidence: "Health care pays higher-than-average wages regardless of workers’ skills and demographic characteristics."***Between 2005 and 2011, as overall average wages barely kept pace with inflation (with rising health costs making real take-home pay flat for many workers), average medical wages grew a healthy 18 percent, rising from just over $62,000 to almost $73,000. The American Hospital Association estimates that two-thirds of medical costs are attributable to wages and benefits.

Raising The Compulsory School Attendance Age Will Not Increase HS Graduation Rates

From "Compulsory School Attendance: What Research Says and What It Means for State Policy" by Grover J. "Russ" Whitehurst and Sarah Whitfield:

• Raising the CSA [compulsory school attendance] age does little to address the root causes of high dropout rates and is unlikely to produce increases in high school graduation rates that will be noticeable to state policymakers and taxpayers.


• There is no consistent relationship between the leniency in the laws governing the CSA age and rates of school attendance.