Saturday, October 31, 2015

New NASA Study Says Antarctic Ice Is Increasing Not Decreasing: Antarctica Is Adding Enough Ice To Outweigh Losses

From "NASA study: Mass gains of Antarctic Ice Sheet greater than losses" on ScienceBlog:
A new NASA study says that an increase in Antarctic snow accumulation that began 10,000 years ago is currently adding enough ice to the continent to outweigh the increased losses from its thinning glaciers.

The research challenges the conclusions of other studies, including the Intergovernmental Panel on Climate Change’s (IPCC) 2013 report, which says that Antarctica is overall losing land ice.

According to the new analysis of satellite data, the Antarctic ice sheet showed a net gain of 112 billion tons of ice a year from 1992 to 2001. That net gain slowed to 82 billion tons of ice per year between 2003 and 2008.

Friday, October 30, 2015

A Beneficent Top 1 Percent: Just 1.4 Percent Of Federal Estate Tax Filers Leave $10.6 Billion To Charity, 58 Percent Of Charitable Bequests

From The Wall Street Journal, Real Time Economics, "When the Superrich Die, Here’s What’s in Their Wallets" by Richard Rubin and Josh Zumbrun:
The richest people pass on smaller shares of their estates to their heirs–and it’s not just because of more of their wealth is subject to taxation. They tend to have bigger debts and make bigger charitable contributions. Charities collected $18.4 billion from bequests from the returns filed in 2014, with 58 percent of that coming from just 1.4 percent of estate tax returns.
Source: The Wall Street Journal

Wednesday, October 28, 2015

About Two-Thirds Of 4th and 8th Grade Public School Students Cannot Read: How Can Anyone Continue To Support Public Schools And Teacher Unions

From The Washington Post, "U.S. student performance slips on national test" by Emma Brown:
The 2015 scores [on the National Assessment of Educational Progress (NAEP) tests] show that 64 percent of fourth-graders and 66 percent of eighth-graders are not considered proficient in reading. In math, 60 percent of fourth-graders and 67 percent of eighth-graders are not considered proficient.

Tuesday, October 27, 2015

Fed's Low Interest Rate Policy Decreased The Value Of Investing In Risky Growth Opportunities

My comment to The Wall Street Journal, Opinion, Commentary, "The Fed Has Hurt Business Investment: QE is partly to blame for record share buybacks and meager capital spending." by Michael Spence and Kevin Warsh:
Investors know that the most valuable and the most risky business opportunities are those with growth potential. Growth potential creates competition and uncertainty with the potential for huge rewards to investors and the economy.

Low interest rates increase the value of existing and mature investments with limited growth potential. Low interest rates can turn a new opportunity's negative net present value (time valued payback) to positive and increase investment in marginal business opportunities without growth potential.

Real (call) Options are a good way place a value on the uncertain future growth potential of capital investments. Low interest rates decrease the value of call options. A lower value for Real Options and growth decreases investment in growth opportunities.

Net (w/o existing capital replacement) Business Investment is low. The Fed's low interest rates decreased the value of investing in risky growth business opportunities and stunted the growth of the US economy.
Also, see my April 23, 2015, blog post, "Disinvestment: Declining US Business Domestic Investment In Excess Of Depreciation."

Friday, October 23, 2015

Less Than 10 Percent Of US Adults Use Marijuana In A Past Year

From The National Institute of Health, "Prevalence of Marijuana Use Among U.S. Adults Doubles Over Past Decade: Surveys show 9.5 percent of Americans use marijuana; 30 percent of users meet criteria for a disorder:"
The percentage of Americans who reported using marijuana in the past year more than doubled between 2001-2002 and 2012-2013, and the increase in marijuana use disorder during that time was nearly as large. Past year marijuana use rose from 4.1 percent to 9.5 percent of the U.S. adult population, while the prevalence of marijuana use disorder rose from 1.5 percent to 2.9 percent, according to national surveys conducted by the National Institute on Alcohol Abuse and Alcoholism (NIAAA), part of the National Institutes of Health.
The marked increase in marijuana use and marijuana use disorder shown in the study is a significant change from prior results. Earlier NIAAA research found that marijuana use remained stable at about 4 percent of the U.S. population between 1991-1992 and 2001-2002, while abuse and dependence rose from 1.2 percent to 1.5 percent.

Friday, October 16, 2015

What Socialists and High Tax Progressives Forget About Capitalism

Capitalism is nothing more than private ownership with a profit motive. Economic profits exist only after all costs are paid. Material, labor, and equipment costs, plus debt cost (interest and principal) and a fair return on invested monies must be paid regularly or a company will cease to exist. If there are no profits, then there is insufficient money to pay back completely the costs of material, labor, equipment, and debt and equity investment. Without profits, workers do not get fully paid; material and equipment suppliers do not get fully paid; lenders and investors do not get paid.

A company that cannot regularly pay back its costs will cease to exist. Workers will not work for free or partial wages. Suppliers will not supply it. Lenders will not lend to it and investors will not invest in it.

Capitalism enables business to be self-sustaining. It enables a company to pay back all its ongoing costs. Capitalism is a sustainable economic system. The companies that are not self-sustaining are removed and replaced with sustainable companies.

Not-for-profits and governments are not financially self-sustaining. They are not economically sustainable systems. Left on their own, they would cease to have funds and government printed money would be worthless. They always are in need of more outside funding. Not-for-profits are always planning fund raising campaigns to pay off expenses they have already incurred or will incur in the coming year. Governments are always looking for ways to increase fees and taxes and to rollover debt to pay for government employee salaries, government programs and the military. Governments and not-for-profits are dependent on a vibrant capitalistic system to create wealth and companies with profits. Without a dynamic fully functioning capitalistic system, governments will quickly run out of funds to tax and redistribute.

Not-for-profits and governments need a replenishable source of funds. Capitalism is the only economic system that can regularly generate a sustainable source of profit and wealth.

Taxes and income and wealth redistributions do not create income, profits or wealth.

Government interference through laws, regulation and taxes creates structural rigidities and additional expenses for businesses. In general, government reduces businesses ability to generate wealth and profits and adapt to changing business environments.

A government that increases business costs through restrictive laws and regulations and harshly taxes business and wealth will find itself unable to accomplish for its populace the very things it thought its laws, regulations and taxes would allow it to do. It will diminish its very source of sustainability. It will find that its source of funding is no longer as reliable and plentiful as it once was. It will find it cannot do what it set out to do through law, regulation and tax.

Monday, October 12, 2015

Prisoners Against Minimum Wage For Prison Work

From The Wall Street Journal, Opinion Commentary, "My Prison Job Wasn’t About the Money: Protesting low pay will drive out companies and deprive inmates of valuable, life-affirming experience." by Chandra Bozelko:
The clamor over low inmate pay neglects one essential fact, one that is central to the current preoccupation with justice reform: Inmate work programs are the best known way to rehabilitate prisoners. Honest work elevates people regardless of what they are paid. Work humanizes inmates; employed inmates seem less like caged animals. While they paid me less than two dollars a day, my supervisors valued me as a person and an employee, at a time when no one else did, including myself.

This is why, even with the low wages, inmates who work in a prison are statistically more likely to find jobs quickly upon release and keep those jobs longer—which, in turn, lowers recidivism rates. According to a March study by the Manhattan Institute, "rapid attachment" to employment reduces recidivism by released offenders by another 20%. Getting and keeping a job requires more than just vocational training; an ex-offender needs to get along in the workplace, too, and that’s what prison work assignments teach.
But those calling for a minimum wage for inmates who work are ignoring the likely consequences. A minimum wage for inmates would stop jobs for inmates. If governments and private companies were forced to pay inmates more, prison jobs would be outsourced to the free world because they can observe and supervise minimum-wage employees there but they can’t see a “justice-involved” worker behind bars. It is the low wages that induce companies to establish so called “factories behind fences” and create prison jobs where they didn’t already exist.

Tuesday, October 6, 2015

Only 28 Percent Of The Unemployed Receive Government Benefit Payments: Down From 67 Percent In 2010

From The Wall Street Journal, Real Time Economics, "Less Than a Third of Unemployed Americans Get Benefit Checks" by Eric Morath:
Source: The Wall Street Journal

Those receiving government payments last month represented less than 28% of all unemployed Americans, according to an analysis of Labor Department data. That figure is down from 31% a year earlier. And it’s well below the 67% who received the assistance in September 2010, when emergency federal programs extended benefits beyond the 26 weeks granted in most states, to as long as 99 weeks.
When benefits expire, unemployed workers frequently face two likely outcomes: They accept lower-paying work or they drop out of the labor force. Both choices were common among those who lost benefits in North Carolina in 2013.

Those who drop out might have found that it makes financial sense to retire, return to school, stay at home to care for children or older adults, or seek out other forms of government assistance. Each of those choices could remove a person from the labor force. The labor-force participation rate has been trending at the lowest levels since the 1970s.

Monday, October 5, 2015

World Poverty At Record Low

From BloombergBusiness, "Extreme Poverty in the World Is About to Hit a Record Low: We're one step closer to eradicating extreme poverty by 2030" by Andrew Mayeda:
Source: BloombergBusiness

Almost half of the world’s extreme poor live in sub-Saharan Africa, according to the 2015 projection. That's up from about 15 percent in 1990. By contrast, there have been dramatic declines in poverty in East and South Asia over the same period as China and India emerged as economic powers.

“In the areas where there are large numbers of people living in extreme poverty, extreme poverty has deepened and become more embedded,” said Kim.

In addition to the new projection, the World Bank raised its definition of extreme poverty to income of $1.90 per day, from $1.25. The new poverty line adjusts for inflation using 2011 prices that account for purchasing power as a baseline.

Saturday, October 3, 2015

Past Banking Runs, Crises And Failures Were Not Stopped By Stricter Mortgage Lending And Higher Bank Equity

My comment posted to The Wall Street Journal, Opinion Commentary, "How Not to Prevent the Next Financial Meltdown: Dodd-Frank’s safeguards against chaos are based on a misdiagnosis of what led to the 2008 crisis." by Edward P Lazear:
100 years ago national banks and some state banks were prevented from making mortgage loans. Banks that could make mortgages required a buyer to put 50 percent down and to payoff the mortgage in 3-5 years. Bank crises occurred anyway.

The older, more stringent lending requirements did not stop bank runs, bank failures, or, in the 1930s, mortgage defaults and foreclosures. Tough mortgage lending decreases the availability of mortgages and limits home purchases.

Increasing the number of loans requires increasing available bank funding through equity or debt.

Many publicly traded banks regularly trade below book value, which means a bank cannot earn enough in its business to attract and compensate equity owners for the risk, and limits its ability to issue equity. To increase the equity ratio, banks usually shrink loan assets. More debt is easier.

Without FDIC, TBTF [Too Big To Fail], GSEs [GNMA, FNMA, etc.], or securitization, many in the middle class would not get mortgages because banks could not get funding for home loans.

Thursday, October 1, 2015

Women Make Different Work Choices Than Men: My Comment To Wall Street Journal Wage Gap Myth Commentary

My comment to The Wall Street Journal Opinion Commentary, "The ‘Wage Gap’ Myth That Won’t Die: You have to ignore many variables to think women are paid less than men. California is happy to try." by Sarah Ketterer:
For years, federal and state laws have prohibited gender wage discrimination within a company. These wage laws are enforceable by the government and private lawsuits. Despite claims that a substantial number of women in the workforce are paid about 20 percent less than men, there are few, if any, private or government wage discrimination legal actions and most find the company did not discriminate. Why aren't women suing in huge numbers and why do the few who sue lose, if the discrimination is real?

Within most companies, there is no gender wage discrimination. The statistic only appears when one compares wages across different companies and industries. The gap statistic cited excludes the value of benefits, workers' experience and work environments. Companies are different. Higher paid work with higher work injury rates, frequent unscheduled overtime, overnight travel, fewer days off and lower benefit value attract fewer women than men.

Women choose work differently than men.