American Elephants


The Mysteries of the Butterfield Paradox by The Elephant's Child

First published in January 2013, but it seems time to do it again. Nancy Pelosi has made it clear that as soon as the Democrats get back in power, they will immediately raise taxes back to where they should be, because she is quite sure that Trump’s despicable tax cuts went only to the very rich. If you cut the taxes of someone very rich by 2%, the amount of  money saved will be larger than the amount of the 2% cut for someone who pays a small amount of taxes because they don’t earn very much.

Democrats simply do not seem to understand simple economic facts, or basic math for that matter, which is why their big ideas never, never work. Franklin Roosevelt did not save us from the Great Depression, and winning the war may have had more to do with the fact that George Marshall was his chief-of-staff throughout the war, and made it a policy never to laugh at FDR’s jokes. Yes, the Marshall who was responsible for the Marshall Plan.

Obama is making a round of speeches to rouse up the Democrats to vote as many times as they can in the mid-terms, to take back the House. He’s quite sure that his economic programs are what has brought on the current boom, and he is furious that the ignorant Donald Trump is simply taking credit for what were his (Obama’s) excellent actions. Here’s how things really work:
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Have  you heard of the Butterfield Fallacy?  It is rooted in ideological prejudice, and well known to conservative commentators.  Fox Butterfield was a reporter for the New York Times  “whose crime stories served as the archetype for his eponymous fallacy.”

“It has become a comforting story for five straight years, crime has been falling, led by a drop in murder,” Butterfield wrote in 1997. “So why is the number of inmates in prisons and jails around the nation still going up?’  He repeated the trope in 2003: “The nation’s prison population grew 2.6 percent last year, the largest increase since 1999, according to a study by the Justice Department. The jump came despite a small decline in serious crime in 2002.” And in 2004: “The number of inmates in state and federal prisons rose 2.1 percent last year, even as violent crime and property crime fell, according to a study by the Justice Department released yesterday.”

The Butterfield Fallacy consists of misidentifying as a paradox, that which is a simple cause-and-effect relationship. You put more bad guys behind bars, and crime goes down. The typical New York Times reporter disapproves of sending people to prison because, among other reasons, they think it is racially discriminatory. “In 2004 almost 10 percent of American black men ages 25 to 29 were in prison” and, it diverts tax money from what should be higher priorities.  In 1997, “already California and Florida spend more to incarcerate people than to educate their college age populations.” Here, Reynolds Law comes into play:

The government decides to try to increase the middle class by subsidizing things that middle class people have: If middle-class people go to college and own homes, then surely if more people go to college and own homes, we’ll have more middle-class people. But homeownership and college aren’t causes of middle-class status, they’re markers for possessing the kinds of traits — self-discipline, the ability to defer gratification, etc. — that let you enter, and stay, in the middle class. Subsidizing the markers doesn’t produce the traits; if anything, it undermines them.

New York Times business reporter Reed Abelson wrote yesterday with bewilderment that insurance premiums are rising sharply as ObamaCare’s insurance regulations begin to take effect:

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Yuval Levin wrote of Ableson’s surprise that health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers. Ableson was bewildered at the Butterfield Fallacy. as Levin wrote under the perfect title “Even Though.” Some people think this might have something to do with ObamaCare’s basically outlawing actual insurance and replacing it with an economically  incoherent substitute. The article also notes with surprise that businesses that now have to have their prices approved by regulators have adopted a  peculiar practice by which they first propose higher prices than they expect to end up with and then work down toward their costs. Levin adds “sources say that supply and demand may be related in ways that influence prices, but this remain unconfirmed.”

When health care bureaucrats reduce the price that will be paid to providers for their services, oddly enough, the cost of insurance will go up.

James Taranto noted another example from the Associated Press:

A bluefin tuna sold for a record $1.76 million at a Tokyo auction Saturday, nearly three times the previous high set last year–even as environmentalists warn that stocks of the majestic, speedy fish are being depleted worldwide amid strong demand for sushi.

The reporter, Malcolm Foster, was too caught up in environmental sentimentalism to notice that this is basic supply and demand at work. When the supply of something is low, prices go up.  Imagine that.

Addendum: John Hinderaker reported at Powerline, that “just this morning the Labor Department announced more great news:”

American wages unexpectedly…

Unexpectedly!

…climbed in August by the most since the recession ended in 2009 and hiring rose by more than forecast, keeping the Federal Reserve on track to lift interest rates this month and making another hike in December more likely.

Average hourly earnings for private workers increased 2.9 percent from a year earlier, a Labor Department report showed Friday, exceeding all estimates in a Bloomberg survey and the median projection for 2.7 percent. Nonfarm payrolls rose 201,000 from the prior month, topping the median forecast for 190,000 jobs.

When the economy is booming, unemployment reaches new lows, companies are having trouble finding qualified employees, they may have to offer a little more money, and offer more to their own employees to keep them from applying elsewhere you naturally get an increase in average hourly earnings. Basic!, But not for Democrats who don’t understand basic economics. Mr. Hinderaker was just back from trying to explain to the Joint economic Committee on the Tax Cuts and Jobs Act on Minnesota’s economy.


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