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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Just About What I Expected. Former President Obama Speaks. by The Elephant's Child

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Former President Barack Obama received an ethics in government award at the University of Illinois, and took advantage of the occasion to trash Donald Trump, claim that  any recovery that was happening started in his administration, and criticized everything about Trump’s presidency, calling it a “dark period” in American history. Periods of progress in America were frequently followed by periods of resistance to change and a “step back”.

Gosh, I can remember back to Obama’s Inauguration, and an excited young black woman was thrilled that she would not have to worry about paying her bills, because Obama was going to pay them. Many black Americans had not believed that a black man could be elected to the presidency, and were justifiably proud and thrilled that it could happen. Many Americans who did not vote for him, thought that having the first black president was probably a good thing for the country.

Obama helped out our black citizens by giving them welfare and health care, and raising taxes to pay for it. Donald Trump has given them jobs—real, good paying jobs, 201,000 new jobs just in August, as worker wages have surged to a nine year high. The new unemployment rate remained unchanged at 3.9%.

Obama was grateful that President George W. Bush remained quiet during his presidency, and did not criticize him, and promised to stay quiet during the Trump administration, but the horrors of a surging economy and thousands getting off of food stamps was just too much for him.

Over the past few decades the politics of division and resentment and paranoia has unfortunately found a home in the Republican party.

Obama referred to Trump as a “bully” who deserved to be rejected by the American people. Republicans, he said were appealing to “tribe”by trying to divide people by race and gender. Excuse me, Who is trying to divide Americans by race and gender? That theme seems to be coming out of our universities, and last time I looked, they are not havens of Republicans or conservatives.  He even blasted Republicans for “cozying up to the KGB” He pointed to a rise in white-nationalism and racial division, and attacked Republicans for stoking resentment in order to remain in power.

We are Americans, we’re supposed to stand up to bullies, not follow them,” he said. “We’re supposed to stand up to discrimination. And we’re sure as heck supposed to stand up clearly and unequivocally to Nazi sympathizers.

After any president’s tenure in office, everyone tries to sum up what worked, and what didn’t. Any administration will have high points and failures. George W. was wise to refrain from comment in recognition that future historians will evaluate and sum up the job he did, and his present comments won’t help, and could hinder. Good lesson, Obama might take notice.

More than anything, he attempted to take credit for today’s surging economy.  Good luck with that one.

(slightly updated for clarity)



Here Are the Democrats’ Current Talking Points by The Elephant's Child

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They have decided that the situation that gets the most reaction from voters is the “ripped from the arms of their mothers” line about the Border. Chelsea Clinton, now sorta-kinda intimating that she might consider running for office, was in Edinburgh for a Book Fair, I guess pushing a book or books in the “she persisted” thought line. She went on at great length about how truly awful it was of Trump to allow little children at the border to be “ripped from the arms of their mothers.” A really emotional line for female voters, but fact-free.

The second talking point is the absence of any mention of impeachment, which polls very well for Republicans. The public does not like all the talk about impeachment, so the word will not cross the lips of any Democrat.

The third, you have already heard: Trump is an unIndicted co-conspirator.  If you haven’t heard that in the last two days, you haven’t been paying attention. What it means is another matter entirely—which is nothing, nothing at all, but it sounds important.

David Horowitz explained it very well in his book Take No Prisoners. He wrote:

Politics is always a gamble. No one be sure what tactic will succeed, which is why we have to respect each other and keep our coalition strong, even when we disagree.

I said we were not good at politics. Actually we’re pretty terrible at politics. Whenever a Republican and a Democrat square off, it’s Godzilla versus Bambi. They call us racists, sexists, homophobes, and selfish pigs, and we call them….liberals. Who is going to win that argument? They spend their political dollars calling us names and shredding our reputations; we spend our political dollars explaining why the complicated solutions we propose will work and why theirs won’t. But when you are being called a racist, an enemy of women, and a greedy S.O.B., who will listen to your ideas about the budget? Who is going to believe you when all your motives are portrayed as vile?

Yes, they’ve called us names, vile names. The pessimistic view doesn’t stick. Better economic policies are the primary reason the economy has improved since 2016. If pro-growth policies continue, the economy’s strong performance will continue. Republicans are on the march.

U.S. economic performance is the strongest in years. One policy driving this turnaround is the substantially lower corporate-tax rate, which has made the U.S. more competitive with other countries. Regulatory changes—such as the partial rollback of Dodd-Frank and new leadership within the Consumer Financial Protection Bureau—also have proved helpful, particularly for small businesses, which are benefiting from lower record-keeping and compliance costs. Meanwhile, the number of regulatory pages in the Federal Register has been cut by a third since President Obama’s last year in office. That’s a major reason the National Federation of Independent Business reports that more small-business owners are hiring than ever. They’re also increasingly optimistic about the future of the U.S. economy.

As the two hallmarks of recovery are still rising, the economy likely has not reached its new, higher growth path. This means that the U.S. can expect above-normal growth in the coming months, possibly even years.
 …………………………………….Lee Ohanian and Edward C. Prescott



A Few Necessary Words About Capitalism by The Elephant's Child

From Roger Kimball:

Here is the bottom line: Capitalism is the greatest engine for the production of wealth the ingenuity of man has ever invented. Are you interested in helping the poor? Embrace capitalism.  Do you want to help clean up the environment? Embrace capitalism. Are you interested in obliterating the scourge of malnutrition or some ghastly African disease, or illiteracy or [fill in your personal do-good desiderations here] yep, embrace capitalism. The global poverty rate, … has been cut in half in the last 20 years. Think about that. Then think about that. Then think about the sorrowful history of our species up to about 1830. How much progress against widespread — really nearly total poverty had been there from the beginning of time until then — until capitalism started to take off? Not much.

6/12/2004



The Trump Administration is Reforming Medicare with Competition and Common Sense. by The Elephant's Child

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President Trump has approved a new medicare rule to reduce prescription drug prices through competition. U.S. Health and Human Services Secretary Alex Azar explained to reporters on Saturday. Few people know that America leads the world in encouraging doctors and patients to use low-cost, high-value generic drugs. More than four-fifths of all prescriptions in the U.S. are for unbranded, off-patent generic drugs that cost less than a typical bottle of mineral water. A tremendous help for people with ordinary medical issues like high blood pressure, early-stage diabetes, and high cholesterol.

The cost problem is the high cost of branded, on-patent prescription drugs. Pharmaceutical companies take advantage of their market power to charge unreasonably high prices unrelated to the true clinical and economic value of the underlying medicine. The way Medicare — with four different insurance programs with different premiums and copays—covers different kinds of prescription drugs. Medicare Part A covers hospital stays, including the drugs administered there. Medicare Part B, covers drugs administers in doctors” offices such as intravenous infusion. Medicare C, “Medicare Advantage”, is a new, popular, privately-administered Medicare program that covers the same services and Parts A and B. The Bush administration created a 4th Medicare program to cover retail prescription drugs from your pharmacy.

Part D has done a great job of helping competition among private insurers and drug companies to bring lower prices, and the program has come in way under budget. A novelty in U.S. history. However Medicare’s design puts a ceiling on competition because it prevents competition among retail drugs and those administered in doctors offices and hospitals.

A number of expensive drugs for rheumatoid arthritis are administered in doctors offices under Medicare Part B. Doctors get a 6% commission on the average selling price of prescription drugs they administer in their offices, which means a big incentive for doctors to steer patients to these drugs. A new generation of treatments for rheumatoid arthritis are oral drugs financed through Medicare Part D. Because the different Medicare programs operate separately, seniors don’t get the benefit from competition between the new oral drugs and the older drugs covered by Part B.

The new rule allows Medicare Advantage plans to use “step therapy” under which seniors might start with an oral drug paid for by Part D, if it’s of equal clinical value but lower cost, and then step to a more expensive injectable drug if the first medicine fails to work. Insurers would be required to return at least half of the savings to seniors, possibly in the form of those Visa gift cards often sold in grocery stores and pharmacies.

This gives Medicare Advantage plans the tools to get a better deal for patients. Competition works. This is free market capitalism at its best.

There are two short books that I recommend highly, by Philip K. Howard: The Death of Common Sense and The Lost Art of Drawing the Line. He explains how government rule books (law) dictate results that never make sense. Government, with the best of intentions, hands out new legal rights that screw up something else. Intending to be fair, in the name of individual rights, Americans end up losing much of their freedom. Brilliant books that help in understanding why free market capitalism brings prosperity that simply eludes the control freaks of the world.



Life Without Oil Is Not As Simple As You May Think by The Elephant's Child

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Alexandria Ocasia-Cortez, True Believer, Truly Scary. by The Elephant's Child

DNC Chairman Tom Perez suggests that Alexandria Ocasia-Cortez is the exciting new face of the Democrat Party. Her mother said she’s really excited about running and wants to be President some day. She is indeed, the poster-child for the failure of American Universities. She graduated from Boston University’s College of Arts & Sciences with a BA in economics and international relations. She was 4th in her class, but seems not to have learned any economics whatsoever. But she is a member of the Democratic Socialist Party and was an organizer for Bernie Sanders.

Reading up a little on her, it would be a mistake to fail to take her seriously. She has been a political activist, and had a lot of support from Hispanic organizations. She lied about being from the Bronx which she left at age 5 for a wealthier enclave. Her father was an architect, but he died intestate from lung cancer. She worked two jobs, as a waitress and a bartender, which shows determination and hard work.

She said attending the Standing Rock Sioux protests about the pipeline running near their reservation was a defining moment for her. The tribe was ostensibly afraid the pipeline would contaminate their water supply (highly unlikely). The pipeline did not cross reservation land, nor affect any reservation property, but they worked with Earthjustice against fossil fuels and loved the national attention. The final bill for their protests came to about $43 million. And the debris and mess left by the protesters took up over 20 dumpster loads. I wrote about that protest several times.

Ocasia-Cortez supports progressive policies like Medicare for All, a job guarantee, tuition-free universities and public schools, and said that “for the cost of the GOP’s tax bill, we could forgive ALL the student loan debt in the United States. She favors single-payer healthcare as “a human right.” She says a single government insurer should ensure that every American has insurance—while reducing costs overall. Uh huh. Of course she wants to abolish ICE, calling it “a product of the Bush-era Patriot Act suite of legislation enforcement that takes on more of a paramilitary tone every single day.Just two days before the primary election, she attended a protest at an ICE child detention center in Tomillo, Texas, and supports a “path to citizenship” for all immigrants who entered the United States. She told CNN that she would support the impeachment of President Trump, saying that “I think that, you know, we have the grounds to do it, citing Trump’s violations of the Emoluments Clause.

Other than that she is a self-described hardliner on climate issues, and wants us to transition by 2015 to an electrical grid running on 100% renewable energy production and end the use of fossil fuels. She also calls for a “Green New Deal” in the U.S.

Sigh. I was an English major, but I did learn that the federal government has no money of its own. And if you stack all of our billionaires together, they still don’t have enough money to abolish our taxes and give us all that free stuff. 4th in her class! And she favors guaranteed jobs, that is— federally subsidized jobs, a truly interesting proposal. Good grief, the federal government can’t even do job training.  See James Pethokoukis writing at AEI.

She is out there campaigning hard and promising all sorts of free stuff for the American people, and if everyone has a job and is forced to work, well then, there you are.




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