American Elephants

You Don’t Help a Spendaholic by Giving Him More Money! by The Elephant's Child

President Barack Obama was in New York on Thursday, addressing Democrat donors. According to CNS News, Obama said:

Deficits are not the only thing that could mortgage America’s future, President Barack Obama told Democratic donors in New York on Thursday. He stressed that if government does not spend money in certain areas, it would be mortgaging the country’s future.

“I’m not going to sacrifice investments in education. I’m not going to make scholarships harder to get and more expensive for young people,” Obama said to a cheering crowd. “I’m not going to sacrifice the safety of our highways or our airports. I’m not going to sacrifice clean air and clean water. I’m not going to sacrifice clean energy at a time when we need to free ourselves from dependence on foreign oil, and folks are getting killed at the pump.”

In other words, damn the torpedoes, full speed ahead.  Our Presidential spendaholic wants to keep right on spending on all the things that haven’t worked, aren’t working, and will not work.

— Austan Goolsbee, the chairman of the Council of Economic Advisers, said that a slowdown in government spending was mostly responsible for the only 1.8 percent growth in gross domestic product between January  and March, down from 3.1 in the fourth quarter of 2010. Goolsbee said in an interview on Bloomberg television:

It was an expected slowdown. The biggest driver was a reduction in government spending at the federal level, a big negative from defense spending.

Nobody likes a growth slowdown.  We’ve got to have faster growth, but 2011 and 2012 are still looking fairly positive.

Financial Times reports that “Doubts have been cast over the strength of the U.S. economic recovery after output grew at an annualized rate of only 1.8 percent in the first quarter. A surge in oil prices held back consumption growth while public spending fell at every tier of the U.S. government.”

At this stage of a recovery, growth often rebounds by between 4 and 5 per cent. Expansion of less than 2 per cent will not create enough jobs to keep up with population growth and cut the US unemployment rate of 8.8 per cent.

The dollar fell further on release of the growth numbers as investors judged that weak growth would cause US interest rates to stay lower for longer.

Initial claims for unemployment insurance climbed to 429,000.  Bad news all around.

The Wall Street Journal was unenthusiastic:

For three long years, the U.S. has been undertaking an experiment in economic policy. Could record levels of government spending, waves of new regulation and political credit allocation, and unprecedented monetary stimulus re-ignite growth? The results have been rolling in, and they represent what increasingly looks like an historic mistake that deserves to be called the Keynesian growth discount.The latest evidence is yesterday’s disappointing report of 1.8% in first quarter GDP. At this stage of recovery after a deep recession, the economy is typically growing by 4% or more as consumer confidence returns and businesses accelerate investment as their profits revive. Yet in this recovery consumers are still cautious and business investment remains weak.

Our spendaholic president has engaged in the greatest spending binge since World War II.  He did everything that the Keynesian rule book said politicians should dump into the economy: $168 billion in one-time tax rebates, then $814 billion in spending over 2009-2010, cash for clunkers, an $8,000 home buyer tax credit, the Detroit auto bailouts, billions for green jobs, a payroll tax cut for 2011, and near-zero interest rates for 28 months and Ben Bernanke’s ‘quantitative easing’. And growth is 1.8%.

Deficits this year are estimated to hit $1.65 trillion.  How many more trillions does the Keynesian rule book call for?

A Washington Post/Pew poll conducted April 21-25 asked respondents whether they think the federal budget deficit is a major problem that must be addressed now, when the economy improves, or not much of a problem.
A major problem that must be addressed now — 81%
When the economy improves —14%
Not much of a problem — 1%

The Quote of the Week! by The Elephant's Child
April 30, 2011, 5:15 pm
Filed under: Conservatism, Humor, Politics | Tags: , ,

Senator Rand Paul (R-KY) went to New Hampshire this last week, and called for proof of Donald Trump’s Republican registration.   Really funny in the context of Trump’s calls for Obama to release his birth certificate.  Paul said:

I’ve come to New Hampshire today because I’m very concerned.  I want to see the original long-form certificate of Donald Trump’s Republican registration.

Embarrassingly, there is less evidence that Trump is a long time Republican than there is that Barack Obama was born in Hawaii.  Perhaps this will be the end of the silly ‘birther’ theme.  Trump, on the other hand was a registered Democrat as recently as 2009.

Apparently now, Trump is in a desperate search for Obama’s grades.  We have slaughter in Syria, both Trump and Obama are uninterested. Libya is a mess that Obama can’t manage to be concerned about.  Obama has suggested that the unsettled Arab countries should pump more oil to reduce our cost of gas, and Trump is concerned about Obama’s grades many years ago when he was in college?

I guess some people admire Trump because he is “taking on” Obama. I don’t get it. I’d like to see the long form of his Republican registration too.

The Rich, The Poor, And Inequality. A Fresh Look. by The Elephant's Child
April 30, 2011, 4:44 pm
Filed under: Capitalism, Freedom | Tags: , ,

This graph, posted by economist Veronique de Rugy,  takes a minute or two to understand, but there’s a lot of information here, and it’s worth your time.  The graph shows inequality within a country— in the context of inequality around the world.

The horizontal line at the bottom shows the population of each country divided into  20 equal-sized income groups, ranked by their household per-capita income.  This is divided into 5 clusters (or ventiles) each of 5 percentiles, similar to the way we  customarily divide people in this country from ‘poor’ to ‘rich.’  So the entire population of a country is divided, by income, into 20 equal parts.

The household income numbers are all converted into international dollars adjusted for equal purchasing power, since the cost of goods varies from country to country.  In other words the chart adjusts for the cost of living in different countries, so we are looking at consistent living standards worldwide.

The vertical axis shows where any given ventile from any country falls when compared to the entire population of the world.

Trace the line for Brazil, a country with extreme income inequality.  The poorest 5 percent of Brazilians are as poor as anyone in the entire world,while at the other end of the Brazil line are some of the world’s richest people.  This one country spans the entire range of world income.

See how the entire line for the United States falls in the top portion of the chart?  The entire country is relatively rich.  Americas poorest people are still richer than most of the world.

Compare with the line for India.  India’s poorest correspond with the 4th poorest percentile worldwide, and India’s richest are in the 68th percentile, about where America’s poorest are, as a group.  The bottom chunk of Americans, some of whom make as much as $6,700, amounts to a good standard of living in India where about a quarter of the population lives on $1 a day.

When it comes to income inequality, in America, there is relatively not all that much  of it.  For most people in the world, where you are born makes all the difference.

What do the poor most need? They need to stop being poor.  And how can that be done on a mass scale excpt by an economy that creates more wealth?  Yet the political left has long had a remarkable lack of interest in how wealth is created.  As far as they are concerned, wealth exists “somehow” and the only interesting question is how to re-distribute it.
(Thomas Sowell)

The very fact that economists sweat over statistics purporting to demonstrate economic inequality in America proves that there is, relatively speaking, not much of it.
(Irving Kristol)

The chart comes from Catherine Rampell of Economix.

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