Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Sunday, February 27, 2011

Sunday Music Blogging - 2/27

How to end it right: Stay together - 
with Pete and Arlo.

H/T to Octopus at The Zone.

Friday, February 25, 2011

Of Rachel, Facts, Shep, and Looking Like a Dude

Don't you think Shep Smith looks like a Dude?

Bottom (Mika*-free) Line:  When you're citing reliable sources, take Politifact off your list.  By some weird ironic happenstance, Politifact is famous for their left-wing bias.  Go figger.

H/T to Squatlo (who probably also looks like a dude.)

*Update:  Who definitely does NOT look like a dude.

Thursday, February 24, 2011

Das Kapital

I could probably get an answer to this question by opening a text book on Economics or Corporate Finance, but I'm contrary and not inclined to do that.  First let's define the term, Capital.   A Google search reveals a long list of definitions, including these:

  • assets available for use in the production of further assets
  • wealth in the form of money or property owned by a person or business and human resources of economic value
Let's narrow the focus a bit, and use capital to mean the cash (and equivalent) assets of a commercial enterprise.

The question then is: What can the enterprise do with it's capital. I see two possibilities: distribution and use.

I)  Distribution
a)  Payment, as salaries, wages, bonuses, etc.
b)  Payment as dividends
c)  Donations - charitable or political
d)  Taxes
e)  Bribes (let's be both complete and realistic)

II)  Uses
a)  Investment - here, narrowly defined as spending on:
     i     Property (for facility use)
     ii    Physical plant
     iii   Equipment
     iv   Employee training
b)  Rent seeking 
     i     Loans
     ii    Interest bearing notes
     iii   Speculative Ventures  (Financial tail chasing)
     iv   Mergers and Acquisitions

c)  Reduce liabilities (H/T to Angry Saver in comments)

d)  Hoarding  (H/T to Stagflationary Mark in comments)

That's all I can come up with.  Help me out here.  Am I on the right track?  What did I miss?

Quotes of the Day from the Party of Lincoln

While at Rude's Place,  I noted this post, from which I will quote liberally - and in fact, progressively.

You lift quotes from RP at your own risk.  This is safe, though, because he was quoting old Honest Abe.

1. "I am glad to know that there is a system of labor where the laborer can strike if he wants to! I would to God that such a system prevailed all over the world." - From a speech on March 5, 1860 in Hartford, Connecticut, regarding a shoemaker's strike (which, believe it or not, involved 20,000 shoemakers who were not, apparently, elves).

2. "Inasmuch as most good things are produced by labor, it follows that all such things of right belong to those whose labor has produced them. But it has so happened, in all ages of the world, that some have labored, and others have without labor enjoyed a large proportion of the fruits. This is wrong, and should not continue. To secure to each laborer the whole product of his labor, or as nearly as possible, is a worthy object of any good government." - From his notes

3. "Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits." - From his 1861 State of the Union address, decrying "the effort to place capital on an equal footing with, if not above, labor in the structure of government."  about tariff policy, scribbled down on December 1, 1847.

One can state with absolute certainty that were Lincoln alive today, he would chose a different party.

The Eyes of a Wanker

You must have seen videos or news clips of the Governor of Wisconsin defending his indefensible positions by piling lies upon lies.  But have you actually paid attention to the man entity itself uttering the misinformation?

His eyes have the vacant look of the undead.

His uninflected, animatronic voice belongs in a robot, not a person.

Clearly, this is someone - or something . . . some sort of being with no soul.  Whether it shriveled Grinch-like inside him or he sold it to the Kochroaches is, at this point irrelevant.  What is vitally important, though, is that those roaches own this Koch sucker to the very depth of his . . . uh -- central processing unit.

Before clicking the following link, understand that is not only rude, but crude, and the image - though apt - goes far beyond being merely disturbing.  You have been warned.  Here is Rude Pundit on The Eyes of a Wanker.

Wednesday, February 23, 2011

Still More Major Shifts, Circa 1980

Over at Illusion of Prosperity, Stagflationary Mark posted a couple of really interesting graphs, bringing up two points.

1) It's great to have people digging into things that never even occurred to me - not only a learning experience, but unexpected help. 

2) Here is more evidence of deliberate behavior that has contributed to the major economic shifts that happened within a few years of 1980.

Here's a look at the ratio of dividends paid to stockholders by corporations to wages paid to the workforce.

The list of uses for corporate capital is pretty short: investment (in a very broad sense) or distribution. Voluntary distribution avenues include wages and dividends.   Since a stark inflection point in 1976, the dividend to wage ratio has tripled.  If you'd rather consider a long average as your launch pad, that value would be under 5%, so the ratio on that basis has more than doubled.    At a detail level, the decline from 1966 to 1976 (coincidentally, most of the peak inflation period) looks significant.  The ratio has faltered a bit recently, during the economic downturn.  Whether this constitutes a turning point or just a rest stop on the way up is yet to be determined.  (For a no-prize contest, see if you can Elliott-wave label the advance.)

For now, I'll leave it to the reader's imagination to decide what this might mean in terms of wealth disparity and the potential for resource misallocation.

Here's a look at the balance imbalance of trade.

I agree that trade is a good thing.  But good things should be done properly, and in the right proportion.  That was the case with the trade balance for many years - up to an inflection point that is a bit later on this graph - 1984 - but no more difficult to discern.  Before then, the trade balance was so close to parity, you'd almost think it might have been planned that way.  Since then, it's been up-up-and-away, with only a pause in the 90's.  This probably resulted from the '91 recession, but the trajectory was slowed - despite NAFTA - for most of the Clinton admistration.  Again, we see a hint of a possible direction change at the end.   We sure do live in interesting times.

While it's possible that the two graphed items are unconnected phenomena, I have tendency to find interconnectedness in everything (when I can get away with it.)  Not necessarily a straight line, but Mark connects the dots like this:

Higher Trade Deficit -> Higher Unemployment -> Downward Wage Pressure

It's at least plausible.  He also found an article relating trade balance to unemployment, with this statement.

We find a 60 to 72% correlation between the balance of a country’s trade and its overall Unemployment Rate. That is, countries with Trade surplus have lower Unemployment Rates while countries with Trade deficits tend to have higher unemployment.

That's pretty impressive correlation, and lends a lot of credence to the idea that we have been exporting jobs - to our detriment.  And it looks like a policy-driven result.

Deadly Force - The First Best Choice From Tripoli to Madison

Regressive + Thug = Rethug.

Rethug = Republican

On Saturday night, Mother Jones staffers tweeted that a source had told them Wisconsin riot police were preparing to clear out demonstrators from the Wisconsin capitol building — something that didn't end up happening.

In response to that post, user JCCentCom tweeted "Use live ammunition." He went on to tweet: "against thugs physically threatening legally-elected state legislators & governor? You're damn right I advocate deadly force."

Weinstein said only later did he find out that JCCentCom was the Twitter user name for {Jeffrey} Cox, one of more than 140 attorneys in the Indiana Attorney General's Office. Weinstein wrote that Cox has expressed similar contempt for political opponents on his personal blog, Pro Cynic, which has since been disabled.

Weinstein said Mother Jones sent an e-mail to Cox's work address, asking if the Twitter and blog comments were his, and if he could provide context for some of them. According to Weinstein, Cox responded from a personal e-mail address: "For 'context?' Or to silence me? All my comments on twitter & my blog are my own and no one else's. And I can defend them all."

Cox did not respond to an e-mail request for comment Wednesday from msnbc.com.

H/T to the LW.


Tuesday, February 22, 2011

Accidental Keynesians

Mike Kimel posted the following graph (see below) at the Presimatrics Blog (reposted at A.B.) by way of a 2nd order critique of Tyler Cowan's e-book THE GREAT STAGNATION, and first order critique of commentary by Cowan's blogging partner Alex Tabarrok.

The graph shows, instead of a data trace, two types of behavior.  The gray bands indicate times when government policies, whether by design or not, were consistent with a Keynesian economic approach.  The turquoise bands indicate times when government policies were inconsistent with a Keynesian approach.

Let's review what this means.  Here's Mike:

The basic Keynesian idea is this: economic downturns (and meltdowns) can occur and/or be prolonged and worsened when the private sector becomes worried and cuts back. In those circumstances, the government should step in and buy things, lots and lots of things, replacing the shrunken private sector demand. Once the economy picks up again, the government should cut back on its spending and start saving up money, first to pay for its recent spending bout and second to have cash in hand to cover its next necessary spending bout.

Put another way – a government thinking along Keynesian lines will tend to run a deficit when real private sector spending falls below some prior highwater mark. It will run a surplus in years real spending exceeds prior real private sector spending. There may, of course, be exceptions in any given year, but a Keynesian government will generally follow that sort of behavior. A government that runs a deficit when real private sector spending is rising, or runs a surplus when real private sector spending is falling, and behaves this way in general is most definitely not operating under Keynesian principles. 

And here's his graph. (Click to enlarge.)

Remember - gray means Keynesian, turquoise means non-Keynesian.   It's worth emphasizing that this chart says little to nothing about the intent of an administration to follow Keynes, or not.  (Though not following appears to be considerably more deliberate than following - at least since the '70's.*)   It only reflects the actual results, as described in Mike's text above.  For example, I have no reason to believe that Ike was particularly Keynesian, or that Bush Sr. had a short-term economic epiphany in 1991.  Nor, for that matter, that the B. Hoover Obama administration has decided to "step in and buy things, lots and lots of things, replacing the shrunken private sector demand."

But, irrespective of intent, it's results that count - and that is what is being indicated here.

Given all that, let's have another look at the graph, in the context of  THE GREAT STAGNATION, which was Mike's point in presenting it.  What we see is that from the beginning of FDR's administration (in fairness, from the previous year, 1931) until (an arbitrarily selected) 1975 Keynesian policies were followed 34 of 44 years, or 77% of the time.  From 1976 through 2009 (end of the data set) non-Keynesian policies were followed  25 out of 33 years, or 76% of the time.

The symmetry is pretty remarkable, but also pretty misleading.  Pick a different inflection point, and the ratios will skew.  More importantly, one thing this approach does not address is the magnitude of the Keynesian policy.  As the last couple of years have shown, half-hearted and underfunded stimulus might help a bit, but it's not going to get at the core of an aggregate demand shortfall problem.   (And, sadly, plays into the hands of the Keynes denialists like Tabarrok.)  Also, deficits resulting from reduced revenues - whether induced by tax cuts or depressed tax reciepts in a downturn - have little to no stimulative power.  Further, as alluded to above, wandering across the border into Keynesian territory for a single year - as Poppy did in '91 - means nothing.  He was running serial deficits anyway, and the recession incidentally provided the other requirement: that the private sectors cut back.

Mike's point is that "Tabarrok is wrong – wrong that Keynesian economics hasn’t been tried, and wrong that it hasn’t worked. And Cowen, it turns out, is wrong about exactly the same thing in his book."

My point is - hey look - here is another example of something that changed at the end of the post WW II golden age, and led into the Great Stagnation.  The fact that the Keynesian period included the golden age, and the non-Keynesian period defines The Great Stagnation is, of course, a mere coincidence.

Afterthought:  Tabarrak's post (linked above) is sloppy, incoherent, and obviously ideologically motivated.  In all honesty, it strikes me as idiotic bullshit motivated by malicious intent.  Posts by Scott Sumner in comments are - seriously - even worse.  The Krugman derangement syndrome Sumner displays is really quite depressing.   And these guys are highly respected economists.

* Afterthougth 2:  OTOH, the beginning of the New Deal was less Keynesian than a scattershot approach to something - anything - that might help.  Programs like the CCC and WPA were probably motivated more by social than economic considerations.  (I'm speculating here - though I'm sure this answer is available, I don't have time at the moment to go find it.)  At any rate, Keynes' General Theory wasn't published until 1936, and I'm pretty sure the FDR administration did not  have an inside track to Keynes' unpublished thoughts in 1932.

Existential Politics

This is several days old, but extremely important.

Rachel Maddow explains what is really going on in Wisconsin - a Repugnicant attempt to destroy the Democratic party.  Granted - I don't think much of Democrats, but without them we will have bake sales vs billionaires - essentially single party rule.

And that is the party of oligarchs - the Rethug party, in thrall to the Kochroaches  - whose goal is to take us back to feudalism.

If we will allow it.

Monday, February 21, 2011

The Great Stagnation - a (Partial) Critique of a Critique

I just read this review by R.A. Washington of Tyler Cowan's The Great Stagnation - a book that I am not going to be able to put off reading for very much longer, I'm afraid.  What I've gleaned from this type of second order view is that Cowan considers the comparative  low growth of recent decades to be an artifact of having picked all the low hanging technological and economic fruit - thus every bit of advance is a bit harder to attain.  (Typical Elliott 5th wave syndrome, BTW.)  By way of example, Cowan cites a lack of life-changing technological advances.  If you don't agree that technology has plateaued, feel free to call him on your i-Phone or Droid and demur. There's probably a GPS app to help you find his house, if you'd rather do it mano a mano.  I have rather a different view, but that is not the current topic.

Something in Washington's article struck me as being utterly wrong.  Let's have a look.

But I really like the book, and I like the trains of thought it suggests. For instance, his views on educational low-hanging fruit suggest that the rich world is likely to reap far bigger benefits from growth in developing countries than from improvements in domestic education and research. While America tries to wring additional innovative capacity out of an already well educated population, the developing world is home to billions of people, including hordes of potential geniuses and innovators, living in poverty and ignorance. Getting their economies rich enough to move people into classrooms and laboratories is far more likely to yield growth-boosting innovations than trying to get a marginal college grad to get a PhD. Mr Obama's State of the Union theme was precisely wrong, in other words; America needs to focus on helping the rest of the world catch up as fast as possible. Meanwhile, looser immigration rules in America would also provide a big boost to American growth potential.

The idea here is that all the smart people in America already go to college, and increasing enrollment will just dilute the gene pool.  On the other hand, third world countries have education-deprived populations, and improving conditions in those places will enable their best and brightest to do great things.  Therefore, they can gain more in the way of opportunities for technological breakthroughs from eduction than we can.

This strikes me as being 1) wrong; 2) wrong; and 3) wrong.

First off, there is a new crop of college entrants every year.  What possible difference can it make that last year's smart people are already in school?  Now, there is some possibility that lowering entry standards might dumb down the curriculum a bit, but I seriously doubt that the marginal students will be taking nuclear physics or molecular biology anyway.  Far more likely is the possibility that short sighted austerity policies will reduce education and research opportunities for the truly gifted.  But that is rather a different story.

Second, better educating the populations of backward countries ought to have many benefits.  But what reason is there to expect that higher levels of innovation, vis-a-vis the U.S. or any other first world country, would be among them?  Lets just set aside Bill Gates, for example, and accept the idea that a more educated population, world-wide, will increase the chances for innovation.  Probabilistically, that makes sense.  And more innovation might occur in countries with large, educated populations.  But that is probabilistic, as well, and has absolutely nothing to do with either Cowan's thesis or Washington's take on it.

Third, there is an inherent tension - perhaps even a conflict - between progress at home and progress abroad.  Our economic partners are also our economic competitors.  What's good for China might in some way be good for the U.S., but it's inherently a whole lot better for China.  Helping the rest of the world catch up is high-minded, and in some ways moral.  But it is not without risk.

A bit off the main topic topic, but I can't let the last sentence of the Washington quote go by unchallenged.  Employment has stagnated in this country for a decade, with the last three recessions being essentially jobless.  The recent Great Recession was the worst of all, and might or might not be finished.  A vexing question now is - have we moved into a different economic realm with a new normal level of permanent high unemployment?  It's important to realize that high unemployment is not regional or limited to specific industries.  It is effecting most areas of the country, and all industries.

We are in an economic environment that most of us have never before experienced.  Only octogenarians were alive during the great depression, and they were small children at the time.  But again we now have, along with high unemployment, a liquidity trap at the 0-interest bound, near deflation, and a serious aggregate demand shortfall.  Looser immigration policies will have the short run effect of further increased competition for a limited number of jobs.  Currently, applicants outnumber openings by about 5 to 1.  Bringing in more immigrants - irrespective of education and skill  levels, will simply drive down wage levels at a time when greater wage flexibility may actually make things worse.

Washington's thinking is not just trite and by the book, it is sloppy and unrealistic.   This is the kind of thing that makes me think the whole edifice of Economics is a house of cards.

Change Notice

I don't know if you've noticed, but almost any economic measure you can think of made a significant change in momentum or direction within a few years of 1980.

Here is a list of what I've looked at so far.

The breakdown of federal tax receipt sources among individuals, corporations, and FICA.

Growth rate of Social Security collections and year end total assets.

Rate of year-over year change in total U.S. payroll.

Growth in real disposable income per capita.

Decoupling of GDP/family from median family income.

Decoupling of flexible and sticky inflation rates.

Productivity growth.
Growth rate of non-defense related government spending - both federal and state and local.

Yield on 10-Year Treasury Notes.

Relative growth rates of GDP and public debt.

Stock Market evaluation.

Correlation between deficits and inflation evaporates.

GDP growth plain or per capita.

Update:  This post will be updated as new, relevant information is dicovered.

Things found in other places:

Krugman On the NeoKeynesian - Neoclassical split.

Mark on wages and trade.

Mike Kimel on Accidental Keynesians.

Krugman on Debt/GDP

Wisconsin Law Enforcement Association Turns on Gov. Wanker

The Daily Kos reports that Tracy Fuller, the Executive Board President of the Wisconsin Law Enforcement Association, said this on the Association's web page: "I SPECIFICALLY REGRET THE ENDORSEMENT OF THE WISCONSIN TROOPER’S ASSOCIATION  FOR GOVERNOR SCOTT WALKER," along with quite a bit more in that vein.  I cannot verify that this is on the Association web page.  However, there is a member's only forum that I can't access, which could include these statements.

However, I was able to find this in a note (not dated) titled -

To - WLEA memebers
 From  - WLEA Executive Board (Message 1)

On Friday, February 11, Governor Walker announced his plan to radically reshape Wisconsin’s public employee laws. The proposed bill, which the Governor refers to as a Budget Repair bill, goes far beyond that. One could argue that the doctor diagnosed a sprained knee, and the Governor’s solution is to amputate both legs. After all, if you get chop the knees off, you won’t have to worry about spraining them again. Of course, the treatment seems a little radical as a solution.

Statutes describe what is supposed to happen when a state employee union contract isn’t approved. 111.91(1) … If the legislature does not adopt without change that portion of the tentative agreement introduced by the joint committee on employment relations, the tentative agreement shall be returned to the parties for renegotiation.

Governor Elect Walker got his way in December when the legislature failed to approve the tentative agreements. The proper procedure would have been to reopen negotiations. However, no negotiations happened with any unions. Governor Walker was quoted in the Milwaukee Journal Sentinel after the budget repair bill was introduced by saying, "I don't have anything to negotiate," Walker said. "We are broke in this state. We have been broke for years. People have ignored that for years, and it's about time somebody stood up and told the truth. The truth is: We don't have money to offer. We don't have finances to offer. This is what we have to offer."http://www.jsonline.com/news/statepolitics/115911379.html

As employees, we all know that there is more to negotiations than just economics. Under current law, wages, hours of work and other conditions of employment are subjects of negotiation. The Budget Repair Bill won’t just require state employees to pay more for insurance. It would abolish all bargaining other than wages, and those wages would be capped at the consumer price index.

The new administration never attempted to start discussions with the WLEA Bargaining Team or any other bargaining unit. They just dropped the bomb on all of the public employee unions.

This bill carves out an exemption for “public safety workers”, but if we are honest, those exemptions will be limited. Once the draconian changes are implemented on the rest of the public employees, it’s only a matter of time until they catch the public safety workers too.

This bill has some provisions that make no sense, unless the basic intent is to bust unions. One provision makes it illegal for public employers to collect dues for labor organizations. The employer can take deductions for the United Way, or other organizations, but they are prohibited from collecting union dues.

How does that repair the budget?

Another provision requires the WERC to conduct a representation election by December 1st each year, to determine if the employees still want the union to represent them. The WERC has to bill the union for the cost of the election. Currently, if a group petitions the WERC to do an election, the WERC covers the cost. Right now, the members have the right to request an election if the majority of the members want to change or eliminate representation. Why create unnecessarily processes?

Does that help repair the budget?

In partisan elections, a good estimate is that approximately 35% of the voters will vote for democrats, and 35% will vote for republicans. The remaining 30%, the independents, sway the elections. This election just got done, but public employees are already looking ahead. In 2012, the even numbered Senate seats will be up for election, along with all the representatives. In 2010, the independent voters, many of whom are government employees, voted overwhelmingly for Republicans.

Republican Senators Robert Cowles (R-2), Alberta Darling (R-8), Sheila Harsdorf (R-10), Luther Olsen (R-14),Randy Hopper (R-18), Glenn Grothman (R-20), Mary Lazich (R-28), and Dan Kapanke (R-32) are all Republicans who are up for re-election next fall. In addition, Senate Republican Majority Leader Scott Fitzgerald(R-13), Senators Dale Schultz (R-17), Mike Ellis (R-19) and Van Wanggaard (R-21) are all elected by districts that have a high concentration of public employees. Public employees also have families who vote, so that is a substantial bloc of voters.

The Senate is currently 19-14 Republican. Three senators need to support changes to the Governor’s recommended proposal to eliminate some of the worst provisions of this bill.

In the meantime, you should be writing to your legislators, both Democrats and Republicans, to let them know that you are opposed to this bill. Their email addresses are their sen.lastname@legis.wisconsin.govThis E-mail address is being protected from spam bots, you need JavaScript enabled to view it . You may also send to their staff members.

.   .   .   

The legislature’s calendar is to vote on this proposal this week, with a target of having it to the Governor by Friday, so you don’t have any time to waste.  Get writing now like your job depends on it, because it does!

The Law Enforcement Association now realizes, alas, all too late what a horrible blunder it is to vote for any Rethug, any time, anywhere.

Why?  Because the Rethug plan, in thrall to the Kochroaches, is to take us back to feudalism.

If we will allow it.

Krugman on Wisconsin

Have I ever mentioned that I love it when Krugman agrees with me?

Here he is On Wisconsin, from this morning's NYT Op-Ed. (emphasis added):

Why bust the unions? As I said, it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state’s budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there’s not much room for further pay squeezes. 

So it’s not about the budget; it’s about the power.

In principle, every American citizen has an equal say in our political process. In practice, of course, some of us are more equal than others. Billionaires can field armies of lobbyists; they can finance think tanks that put the desired spin on policy issues; they can funnel cash to politicians with sympathetic views (as the Koch brothers did in the case of Mr. Walker). On paper, we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate.

Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.

You don’t have to love unions, you don’t have to believe that their policy positions are always right, to recognize that they’re among the few influential players in our political system representing the interests of middle- and working-class Americans, as opposed to the wealthy. Indeed, if America has become more oligarchic and less democratic over the last 30 years — which it has — that’s to an important extent due to the decline of private-sector unions.

And now Mr. Walker and his backers are trying to get rid of public-sector unions, too.
There’s a bitter irony here. The fiscal crisis in Wisconsin, as in other states, was largely caused by the increasing power of America’s oligarchy. After all, it was superwealthy players, not the general public, who pushed for financial deregulation and thereby set the stage for the economic crisis of 2008-9, a crisis whose aftermath is the main reason for the current budget crunch. And now the political right is trying to exploit that very crisis, using it to remove one of the few remaining checks on oligarchic influence.

So will the attack on unions succeed? I don’t know. But anyone who cares about retaining government of the people by the people should hope that it doesn’t. 

Why?  Because the Rethug plan, in thrall to the Kochroaches, is to take us back to feudalism.

If we will allow it.

Sunday, February 20, 2011

Federal Government Tax Reciepts

I'll start off with the H/T's, to Jerry Critter who asked a probing question in comments,  to ifthethunderdontgetya, in Comments at SoBe, who linked to Thers at Whiskey Fire, who linked to an actual NEWS ITEM at the Guardian UK, because you can't get real news coverage from the corporate controlled (the importance of this will soon become clear!) U.S Media.

Now, back to regularly scheduled programming - focused on Federal Tax Receipts.  Where do you think they come from?  I'll just give it away:  Personal Income Taxes, Corporate Income Taxes and FICA (the payroll tax: you know that hyper-regressive flat tax - nominally for Social Security and Medicare - with a ceiling, and from which there are no exemptions nor deductions.Note: Other sources of income - excise taxes, and other miscellaneous revenues are not included in this analysis, and are excluded form the totals.

OK.  That was easy.  This one is not.  How much of Federal Taxes do you think comes from each source?

Oooh.  Toughie.  I suspect you will be surprised.  I sure was   The White House Office of Management and Budget is a Storehouse of useful information - including the answer to this vexing question.

Here is a graph showing the log of tax receipts from these sources, since 1934.  Individual Taxes in Blue, FICA in Yellow, and Corporate in Red.   This is on a log scale.  The upside: constant growth presents a straight line.  The downside: differences on that scale are really hard to assimilate.

What we can see here is that there was a time in the late 30's when receipts from corporate taxes and personal taxes were about equal.  It was even a 3-way near-tie with FICA for a couple of years. After that, corporate taxes steadily declined for decades as a portion of the total.    (The spike down in the data between 1976 and 1977 is due to a separately tabulated calendar quarter in the tables.)

Here's  a close up of the last couple decades, on a linear scale.

Imagine what the size of the deficit would be without FICA!  Ponder the meaning of these lines at a time when corporate profits are at record highs, and unemployment levels are at record highs!

Now, lets look at the data in a totally different way, to put all this in perspective.  Here, each source is presented as a percentage of the total Federal Tax Receipts.

Can't tell you exactly what I might have expected, but it sure as hell wasn't this.   Pick your inflection point - either '77 or '84 will do.  Since 1977, the percentage of the total paid by corporations has wobbled around a bit, but averaged 11% of the total.   The percentage coming from personal income tax has been 50%.  Obviously, the amount contributed by FICA is 39%.  Let's have a look at trends since 1977. 

The corporate tax trend is basically flat at 11%. The contribution from individual taxes is actually at a slight decline.  Meanwhile the trend for contribution from FICA has steadily increased for well over 30 years!

Are you as shocked as I am?

Here, to put the perspective in perspective, is a look at total receipts, on a log scale. 

I've placed a couple of best fine lines, a blue one through the entire data set, and a red one through the period 1958 to 2000, which seems a little more regular than the entire set.  At the far end, we had the Great Depression and WW II.  At the near end we had Bush tax cuts, Bush wars, an the ensuing Great Recession. Surprisingly, the red line has a slightly lower slope than the blue line.  Not surprisingly, total receipts have been close to flat for the last decade, as the Bush tax policies have succeeded in starving the government.

General observations:

1)  During the post WW II golden age, the corporate contribution to total tax receipts, though continually declining, was typically far greater than during The Great Stagnation - the period since roughly 1980.
2)  The FICA contribution to the total, despite a break point to a lower slope circa. 1980, has grown steadily since WWII.  It is now virtually tied with personal income tax for the biggest contribution chunk.
3) Since the turn of the century, tax cuts and a stagnating economy have caused a huge gap in tax receipts.  Grover Norquist's plan to destroy government by starvation is working like a charm - at the Federal, State, and local levels.
4) Not shown here, but obvious if you think about it or look for the data, is the decline the growth in government spending, at all levels - for everything except defense - since 1980.

If, like Norquist, you want life without government, take a look a Somalia.  Or dig out A Distant Mirror by Barbara Tuchman and see what life in Europe was like in the 14th Century - a time when society deteriorated, there was little or no effective government, and roving bands of thugs terrorized peasants, kings, and even the Pope.

Because the Rethug plan, in thrall to the Kochroaches, is to take us back to feudalism.

If we will allow it.

Sunday Music Blogging - 2/20 - On Wisconsin!

On Wisconsin, On Wisconsin, fight on for her fame.
Fight, fellows, fight, fight, fight, we'll win this game.

On Wisconsin, On Wisconsin, stand up Badgers sing.
"Forward" is our driving spirit, loyal voices ring.
On Wisconsin, On Wisconsin, raise her glowing flame.
Stand, fellows, let us now salute her name. 


Update:  And a H/T to the L/W

Update 2: And a H/T to Octopus  for this from the Wisconsin AFL-CIO.

Three heavy hitters rule. You’ve heard of one of them, Rupert Murdoch. The other two, the brothers David and Charles Koch, are even richer, with a combined wealth exceeded only by that of Bill Gates and Warren Buffett among Americans. But even those carrying the Kochs’ banner may not know who these brothers are.

Their self-interested and at times radical agendas, like Murdoch’s, go well beyond, and sometimes counter to, the interests of those who serve as spear carriers in the political pageants hawked on Fox News. The country will be in for quite a ride should these potentates gain power, and given the recession-battered electorate’s unchecked anger and the Obama White House’s unfocused political strategy, they might.

All three tycoons are the latest incarnation of what the historian Kim Phillips-Fein labeled “Invisible Hands” in her prescient 2009 book of that title: those corporate players who have financed the far right ever since the du Pont brothers spawned the American Liberty League in 1934 to bring down F.D.R. You can draw a straight line from the Liberty League’s crusade against the New Deal “socialism” of Social Security, the Securities and Exchange Commission and child labor laws to the John Birch Society-Barry Goldwater assault on J.F.K. and Medicare to the Koch-Murdoch-backed juggernaut against our “socialist” president. 

.   .   .

When David Koch ran to the right of Reagan as vice president on the 1980 Libertarian ticket (it polled 1 percent), his campaign called for the abolition not just of Social Security, federal regulatory agencies and welfare but also of the F.B.I., the C.I.A., and public schools — in other words, any government enterprise that would either inhibit his business profits or increase his taxes. He hasn’t changed.

Friday, February 18, 2011

A look at Tennessee

The situation in Wisconsin is not a single unconnected event.  It is part of a concerted effort by Repugnicants nationwide to bust unions.

An editorial in the Memphis, Tennessee Commercial Appeal this morning talks about HB 103, which would strip teachers of the right to organize. 

Gov. Bill Haslam seems to have a genuine interest in improving public education in Tennessee. 

At least his ideas, which emerged this week with the release of his legislative package, are related to the task. 

The same can't be said for proposals put forward by the General Assembly's Republican majority, which can fairly be compared to corporal punishment -- except teachers are getting the swats. 

.   .   .

Haslam has a strong hand to play in the legislature with both chambers in the hands of his party. His proposals stand in contrast to ideas that were floated earlier in the week by members of the GOP legislative majority.

Taking away teachers' right to collective bargaining, kicking them off the state employees pension board and the like have the distinct aroma of vengeance against a teachers' union that refused last fall to contribute as much money to Republican campaign coffers as it was giving to Democrats.

Lawmakers in search of credibility would do well to follow the governor's lead.

 I'm trying to find out if anything is happening with this bill.  No luck so far.

The Big Lie in Wisconsin

 Update: This afternoon the Wisconsin employees unions agreed to accept Gov Wanker's demands on pay and benefits, but not give in on the right to organize.   He turned them down flat, refused to consider their offer, and was both heavy-handed and dictatorial.  What this did, though, was unmask his lies.  Clearly, as I state below, this is not about the money.  It has never been about the money.  It is about destroying first, the unions in Wisconsin, then the unions nation-wide, and - ultimately - the entire middle class. Be afraid.  Be VERY afraid.  Sooner or later, they are coming for you!

You probably know by now that the Democratic members of the Wisconsin State Senate have fled the state so that there will not be a quorum present to vote on legislation backed by newly-elected Rethug governor Scott Walker.  This legislation pretends to address a budget disaster that Walker manufactured - but is really designed to deprive the State's workers of collective bargaining rights. As noted in the link above, similar action is on the docket in Ohio, another working class state that made the huge mistake of electing a Repugnicant governor in the most recent election.

Here are the facts about Wisconsin.

1) There was no budget shortfall until Walker took office.  The State Fiscal Bureau project a surplus of $121 million in a report dated January 30, 2011.

2) Walker wiped out this surplus with the following actions -
- $25 million for an "economic development fund" that has a $75 balance due to lack of job creation.  Essentially this is money down a black hole.
- $48 million for private health care savings accounts -as implemented in Wisconsin, this favorite Rethug love-child is simply a tax-dodge for the well-off.
- $67 million for a tax-shift plan to benefit "job creators," but at levels too low to spur hiring.

The bottom line is evident to anyone who cares to pay attention not to the spin but to the budget figures: Walker is manufacturing a fiscal “crisis” in order to achieve political goals.

Walker is not addressing a fiscal crisis.

He is not serving Wisconsin.

He is serving his own interest and those of the lobbyists who represent his campaign contributors.

3) Walker's plan to strip state workers of their collective bargaining rights specifically excluded the police and fire fighters unions, which had supported his candidacy.  This is a blatant ploy to pay back those unions for their support, and to play divide-and-conquer among the state's employees.  To their credit, the police and firemen have joined the teachers and other state workers in their protest against the governor's union busting tatics.

4) One lie you might hear is that state workers are overpaid, or have overly generous benefit packages.  Menzie Chinn presents the facts.  Any way you slice it, public sector employees (except for those with less than a high school education, who make slightly more) in Wisconsin make less than their private sector counterparts.

5) Wisconsin state employees, as retirees, receive very modest pensions, and their pension plan is getting badly screwed by the fund mangers.   David Cay Johnston of Tax.com explains it to Dylan Ratigan:

You know, the pensions they want to go after, they’re not very big in Wisconsin. I just calculated the numbers. The average Wisconsin state employee gets $24,500 a year. That’s not a very big pension. The state pension plan, 15% of the money going into it each year is being paid out to Wall Street to manage the money. That’s a really huge high percentage to pay out to Wall Street to manage the money. And what I think is going on here is this is the state as we began where public employee unions were first by law allowed, and if this governor can break these unions then you’re going to see this happen all across the country and further drive down wages. And if you can drive down wages in the public sector, it means private employers can drive down wages in the private sector.

Jack Norman, research director at the Institute for Wisconsin Future -- a public interest think tank -- sums it up this way.

Walker was not forced into a budget repair bill by circumstances beyond his control.   He wanted a budget repair bill and forced it by pushing through tax cuts... so he could rush through these other changes.   . . . The state of Wisconsin has not reached the point at which austerity measures are needed.

The Cap Times editorial linked and quoted above put it this way.

To the extent that there is an imbalance -- Walker claims there is a $137 million deficit -- it is not because of a drop in revenues or increases in the cost of state employee contracts, benefits or pensions. It is because Walker and his allies pushed through $140 million in new spending for special-interest groups in January. If the Legislature were simply to rescind Walker’s new spending schemes -- or delay their implementation until they are offset by fresh revenues -- the “crisis” would not exist.

In summary, Governor Wanker's plan achieves or attempts the following:

1) A budget crisis manufactured by more than $100 million in give-aways to corporations, lobbyists and special interest groups.
2) Shifting the tax burden from the haves to the have-nots - a consistent Rethug theme since Reagan.
3) The destruction of collective bargaining - a consistent Rethug theme since Reagan.

My hat is off to the Democratic senators who fled the state, the demonstrators who refuse to take this lying down, and Ed Shultz who started reporting about this on Monday, when nobody else was paying attention.

Ed has been calling Rethug policies an assault on the middle class for years - and he's right.  It has been clear for decades that Rethugs want to roll back the New Deal.  State Rep. Mark Pocan, D-Madison, as quoted in the Cap Times editorial takes it farther:

In one fell swoop, Gov. Walker is trying to institute a sweeping radical and dangerous notion that will return Wisconsin to the days when land barons and railroad tycoons controlled the political elites in Madison.

Polan sees the Rethug plan as going back 100 years or more to the gilded age of robber barons.  But even that is not taking it far enough.  Rethugs have been at war with education for over 50 years.  They do not want a population educated beyond the ability to do simple repetitive labor tasks.  They certainly do not want a population who understands civics and democracy, and is able to rise up the way the union workers of Wisconsin have risen up.

The Rethug plan is to roll back not only the New Deal, but the U.S. Constitution, and The Enlightenment, on which it is based.  The key phrase, from the Preamble to The Declaration of Independence, is  "We hold these truths to be self-evident, that all men are created equal . . ."  Everybody knows these words - an astoundingly radical statement at the time - but how often do we really reflect on their meaning?  What is clear to me is that people who call themselves "conservative" do not believe, and have never believed that these words carry any truth whatsoever.   They believe in a society structured and ruled by class.  This is not me talking - it is directly from Burke, via Kirk, in The Conservative Mind.

A class based society is profoundly at variance with everything the United States professes to stand for.  But this is the goal of the Rethugs and thier rich, regressive backers - the Koch brothers, and others of their ilk.

Make no mistake, this assault on unions, along with the Rethug assault on Social Security is part of a master plan to reform society into a modern version of feudalism, where trans-national mega-corporations with no loyalty to anything nor anybody, have and control all the wealth, while you and I are reduced to abject povery, and our children and grandchildren become their serfs.

This country is not broke, as I heard Sir Boner of Orange state the other night.  This is a rich country with enormous and growing  wealth disparity.  The plan is working -  it's been working for over 30 years - and the end game is total control of all wealth by a tiny minority, while the rest of us struggle at the edge of starvation.

This is the true road to serfdom, and it is playing out before our very eyes. 

If we will allow it.

Wednesday, February 16, 2011

Understanding Social Security

I understand it. Kevin Drum understands it.  Rethugs refuse to understand it.  How about you?


The weird thing about this is that Social Security isn't even hard to understand. Taxes go in, benefits go out. Unlike healthcare, which involves extremely difficult questions of technological advancement and the specter of rationing, Social Security is just arithmetic. The chart on the right tells you everything you need to know: Right now, Social Security costs about 4.5% of GDP. That's going to increase as the baby boomer generation retires, and then in 2030 it steadies out forever at around 6% of GDP.

That's it. That's the story. Our choices are equally simple. If, about ten years from now, we slowly increase payroll taxes by 1.5% of GDP, Social Security will be able to pay out its current promised benefits for the rest of the century. Conversely, if we keep payroll taxes where they are today, benefits will have to be cut to 75% of their promised level by around 2040 or so. And if we do something in the middle, then taxes will go up, say, 1% of GDP and benefits will drop to about 92% of their promised level. But one way or another, at some level between 75% and 100% of what we've promised, Social Security benefits will always be there.

Go to the link to see his chart.

Another possibility (my favorite) is to remove the payment cap.  Currently, SS Premiums are collected on the first $106,800 earned in salaries and wages.  Take off the cap.  Apply the pay-in rate to all earned income, and then to unearned income like interest, dividends and capital gains, if that's what it takes.

Part of the Rethug disinformation campaign is to make you believe that we are broke.  We are not broke.  We simply have a very skewed distribution of wealth in a very rich country, and a strong instinct among the greedy rich to skew it even further.  It's the middle class that is going broke.

Now that the Rethug party and the tea party are both wholly-owned subsidiaries of Koch industries, the goal is transparent.  The actual .extent of their avarice is not always apparent, though, and can be difficult to comprehend.  I've wondered for a long time if their goal was 12th Century style feudalism or more modern version as in a So. American style banana republic.  Either way, it's a stark have vs have not divide.

Thom Hatrmann says the Rethugs want to roll back the New Deal.  A caller suggested they want to go beyond F.D. Roosevelt to roll back the progressivism of Teddy Roosevelt.  I say they want to roll back the enlightenment and return the world to feudalism.

UPDATE:  Karl Smith weighs in, with  trichotillomania and associated emesis.

Sunday, February 13, 2011

Crossword Puzzle Blogging

I'm not going to post Crossword blogging here anymore.  In fact, I've already quit.  Those items are now directly posted at the Crossword Corner.  Here is my most recent entry.

Sunday Music Blogging - 2/13

BT posted Steve Earle's "Rich Man's War" which prompted this mini-rant from me.

Steve hits it out of the park with the very first sentence.

Rich men love high unemployment for a variety of reasons - this is only one of them.

I've come to believe that the moneyed elite always and everywhere seeks to reduce the rest of the population to the subsistence level - whether by serfdom, slavery, share cropping, the company sto'e, or simple elimination of economic opportunity, as we are experiencing now. And they want every god-damned penny you have, too - hence the attacks on and lies about social security - an issue I've blogged about recently.

The company Sto'e:


The Structure of Unemployment

There are those who would have us believe that the current high unemployment is structural.  What that means in econospeak is that either the skill sets of applicants don't match the requirements of the available jobs, or, in a more expansive interpretation, that the jobs and suitable applicants are geographically separated.

Geography first.  Here is an recent interactive map of unemployment, by county, nation wide.  What you'll find is that in places where people outnumber cows and deer, unemployment is unacceptably high.  In a swatch through the center of the country, running from North Texas, through Oklahoma, Kansas, Nebraska and the Dakotas - mostly "tractor country" per the map's float-over cursor - unemployment is quite low.  

So - no,  geographical displacement from the jobs does not seem to be a big factor.

What about a mismatch between skills and job opportunities?  If that were the case, some sectors would have high unemployment while others would have very low unemployment, and many unfilled positions.  Is that the case?

It's pretty hard to make a case for structural unemployment when the unemployment rate has doubled (or more) across a wide array of industries.

As Krugman puts it:

See the structural shift? Neither do I. As others have noted, basically unemployment doubled for every industry, every occupation, every state. Where are the sectors/occupations/regions gaining jobs? Nowhere to be found. There’s nothing structural about it.

'Nuff said.

(I grabbed the chart from Krugman's blog.)

2/16 UPDATE:  Delong looks at the employment side.

A Parable For Our Times

A boy named Bart has a paper route.  He doesn't want to spend his earnings now, but save them for later in life, so he can stop pitching papers some day.  His dad, Homer, offers to hold the income in trust, and puts the money in the same drawer with his spending cash.  It's in an envelope marked "Bart's future." 

But Homer is a bit careless, One day he gets thirsty and notices that the beer fund drawer is empty - except for Bart's envelope.  Homer takes the cash, and slips in an IOU, then goes to Moe's for a few cold ones.  With the passage of time, Bart naively keeps turning the money over to Homer, whose thirst is unquenchable - so the IOU's build up.

Suddenly one day, Homer has a cup of tea and realizes that he has built up quite a debt to Bart, and doesn't know how he'll be able to pay it back, pay the mortgage, and keep drinking, all at the same time.  So he says: "Bart, you are part of my budget problem.  It is unreasonable of you to expect to get all of your money back. In fact, you're a bit of a leach to expect it. I have a problem with finances, and we must all share the pain.  You wanted your money when you were 18.  Now you have to wait until you're 21.  And I'll probably only give you 80 cents on the dollar.

"Meanwhile, keep turning over your earnings.  I'm thirsty." 

This is how Social Security is related to the Federal Treasury, and this is how paying SS benefits affects the Federal budget.  


The Social Security Trust Fund

In another part of the Universe, I was directed to this publication from the CBO, dated 2002.

I find this document to be confusing, and I wonder what it's point is.  Here is the opening section, set off in a box in the original.

By law, the Social Security program is treated as an "off-budget" entity, and its financial figures are displayed separately from the rest of the budget. The separate display, along with the use of trust funds as an accounting device, is a means of distinguishing the program's finances from those of other government activities. However, the distinction can be confusing when it leads people to think of Social Security as an independent financial entity. Social Security is a federal program, and as such, all of its taxes are received by and its outlays dispensed from the U.S. Treasury. 

Focusing on an accumulating balance in the Social Security trust funds can also be misleading. The only economically significant way that the government has a surplus is if there is a unified budget surplus--when total receipts are greater than total outlays. Although separate taxes are collected for Social Security, the money left over after benefits are paid is used to fund other government programs or to pay down the debt held by the public. Moreover, in the future, those separate tax receipts will become insufficient to maintain the program once the post-World War II baby-boom generation begins drawing federal entitlement benefits. Social Security and other entitlement programs will then be dependent on the federal government to cover their costs--at the same time that the government must pay for its many other functions. 

Regardless of how any federal program is financed and accounted for--and whether it is presented as on- or off-budget--a full understanding of the government's looming fiscal strains and the potential economic impact of its fiscal condition requires that all government functions be considered together. It is the federal government's total claims on the nation's resources that affect the economy—not the individual components that make up those claims.

Wednesday, February 9, 2011

Child Prisoners

Is anybody else bothered by the the trend toward privatizing the prison system?

If you're not, you should be.  Any legal system is teetering on the edge abuse, anyway - that's just the nature of life.  Sorry.  But when you privatize any aspect of the criminal justice system, you remove any chance for a check or balance on raw profiteering.

Here is an example of a judge taking pay from private prison owners to sentence children.   When the judge has a direct economic incentive to sentence, do you suppose there is ANY chance for justice?  Do you think guilt or innocence even is a factor?

The payments to the judges included $140,000 in cash stuffed into FedEx boxes, prosecutors said. The judges were charged with laundering some of the money, buying a luxury condominium in Florida in 2004. In 2006, Mr. Powell began instructing his employees to withdraw amounts of less than $10,000, to avoid suspicion, prosecutors said.

Mr. Ciavarella faces a maximum of life in prison if convicted of all 39 counts against him. But the fact that he is on trial at all feels like a triumph to Hillary Transue, whom he sentenced to three months for a spoof Web page mocking an assistant principal at her high school in 2007.

Think about this.  The judge gets rich, the prison owners get rich, the children get incarcerated - often with no legal council - ergo, no due process.  Of course, due process - like any other form of regulation -would only get in the way of profiteering.  This  is a horrible example of victimizing the most vulnerable and helpless people in society - for direct monetary gain.  

These kids end up with prison records.  Is there a better way to trap someone in poverty forever?

This is no better than - and, in fact, not much different from outright slavery.

As horrible as this is - can you conceive of any other possible outcome resulting from the existence of private, FOR-PROFIT prisons?

Corporations and Regressives want to take us back to the 13th century.  And it's working.

H/T to LGM .

Sunday, February 6, 2011

Quote of the Day

I think the First Amendment is probably the most important thing that you have in this country. And I'm always horrified at the cavalier way that you (Americans) treat it.

-   Neil Gaiman

A Different Look at Social Security

All the talk you might hear about Social Security financial problems and federal budget busting is lies and drivel - aka, BULL SHIT.  Let's have a look at SS funding for a different reason.

Here is some detail on the SS premium withheld from pay, from Money Zine.

Generally, FICA taxes are collected at a rate of 7.65% on gross earnings - earnings before any deductions. The breakdown of FICA is 6.2% for Social Security (Old-Age, Survivors, and Disability Insurance or OASDI) and 1.45% for Medicare.  The following table shows the FICA limits for 2005 through 2011:

2011 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65% (see note below)
  • Social Security Limit = $106,800 
  • Maximum Social Security Contribution = $6,621.60 (employer) / $4485.60 (employee)
Note:  In 2011, the FICA tax rate for employees was lowered to 5.65%.  The employer tax rate remained unchanged, while the Social Security rate for employees was lowered to 4.20%.

2010 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65%
  • Social Security Limit = $106,800
  • Maximum Social Security Contribution = $6,621.60

2009 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65%
  • Social Security Limit = $106,800
  • Maximum Social Security Contribution = $6,621.60

2008 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65%
  • Social Security Limit = $102,000
  • Maximum Social Security Contribution = $6,324.00

2007 FICA Tax and Social Security Limits

  • * FICA Tax Rate = 7.65%
  • Social Security Limit = $97,500
  • Maximum Social Security Contribution = $6,045.00

2006 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65%
  • Social Security Earnings Limit = $94,200
  • Maximum Social Security Contribution = $5,840.40

2005 FICA Tax and Social Security Limits

  • FICA Tax Rate = 7.65%
  • Social Security Earnings Limit = $90,000
  • Maximum Social Security Contribution = $5,580.00

 At first, I wasn't going to pull such a long quote, but the information illustrates how the funding base increased through 2009, leveled, and now has been cut.  Many economists are enthused by the extra $2146 this will put into the pocket of whoever is making $106,800, and up - proportionally less for those who make less.  Again, I call BULL SHIT!  This will cause underfunding of the SS trust, and give ammo to those who claim SS is unsound and want to blow it up.  Big, big mistake.  It would have been far, far better to increase the dole in some other way for those at the low economic end of the spectrum.  But that is not anybody's goal these days.

Here is a look at total FICA collections per year from 1957 on.  The hook at the end is rather disturbing.  (Vide supra.)  Other than that, it's an exponential looking line, and those are hard for the human eye and brain to suss - at least for this aging, bifocal-laden human.  Let's try a log scale.

I'll over-state the obvious again, since it's central to my main point: a log scale presents a steady rate of growth as a straight line.  What we have here is clearly two different realms, with two different growth rates.  Each realm has a best-fit straight line superimposed.  Raising the amount collected per earner in the most recent years has not even maintained the slower growth rate of recent decades.  I picked a break point of 1984.  Your eyes might wiggle it around a bit differently, but that is a second order detail, at best.

Here is a close-up of recent history.

It's no surprise that the Clinton era was above trend, and the W regime pretty much defines the trend since Reagan.  Receipts for '08-9 are not just below trend, but flat, due to the recession.  In 2010 we have only actual decline in the data set.

What does this tell you about the state of the American worker?  Remember, the collection base went up every year through '09.

Here's a look at what a program in trouble - and then not -  looks like.  The plot is log of Total Fund Assets at the end of the year.

It looks as if the fund - for whatever reason - was not on a sound actuarial basis through the 60's and 70's - despite robust growth in collections.  During the Reagan administration, this was addressed, and the fund has grown every year since - even through 2010, with receipts stagnating.

Slower year over year growth in receipts since 1984 saved the program.  It will take someone with more knowledge than I have to explain that conundrum.

But my main point is that - at least through 2010 - total FICA receipts are an indirect indication of how the American worker is faring.  It's clear that since around 1984, he hasn't been faring very well.

Data through '09.
Data for '10.

The Great Schism

I've decided to separate photo and poetry memes and some other types of light-hearted endeavors off into a different blog.

If you come here for heavy-handed politic rants, economic speculation or snark, you might not notice the change.

If you're after the other stuff, it will be linked up where it's always been, and you can get to it from there.

If you're a friend who prefers to come in the front door, write and I'll give you the new address.  I am not enabling RSS feeds for the new location.  Nor do I want to have it available to anyone who happens to stumble by.  Alas, there are wolves and dragons out there.

Saturday, February 5, 2011

Total Payroll Change

A big H/T to Stagflationary Mark at Illusion of Prosperity, my newest thought-food emporium.

Mark illustrates the change history of total payroll in the U.S. and that made me want to do the same thing.  Here's a look at year over year percent change, monthly data, from FRED.

A few things jump out at me.

1)  We are approaching the top of a long term downward sloping trend channel.  That can't be good - unless we're about to break out and start a new trend.  Let me know ASAP if you have any reason to believe that is about to happen.

2)   During the 1950 to 1980 golden age, the peak-to-peak trend was level.

3)  Something changed (uh-oh) around 1980.  Here, I've placed the inflection point where the two trend lines meet, at April, 1978.  You may prefer the next peak at May, 1984.  Those are the only reasonable choices

Let's zero in on the recent years.

As we approach the trend line, the slope is faltering.  I wonder if we'll get there?

Here's a look at momentum, simple-mindedly conceived as month to month rate of change in this data.

There is is, slouching toward Zero.  Minimum was October, '08, Maximum was a year ago, February, '10.  Do you see any reason for optimism here?

No extra charge bonus (you always get your money's worth here): Civilian Employment/Population Ratio, also from FRED, and U6 Unemployment, as tracked at Portal 7.  More nutritious brain snacks, if you hunger for knowledge.

Six Word Saturday

A jobless recovery is NO recovery.

Why isn't the President a Democrat?

Seriously. U6 has been above 16% for the greatest part of two full years, and what we get from Obama is TAX BREAKS. Defects the largest ever, and what we get from Obama is TAX BREAKS.


Friday, February 4, 2011

What the Hell?!? Friday -- Where's My Prosperity? Edition - Pt.. 2

And the quote of the day:

Economics and Politics are that rare set of twins, where BOTH are evil.
-- JzB

What the Hell?!? Friday -- Where's My Prosperity? Edition

Over at AB, spencer presents the employment data.  Read it and weep.

Notable quote:

This is the third consecutive jobless recovery and the payroll gains have been very weak in all three.

To Jerry's point in comments to my previous post, this is a partial explanation of stagnating real disposable income per capita.  The growth rate of the pie is anemic, while the slices for you and me grow even more slowly.

Update:  More from CR.  The graphs tell a very dismal story