Stationary Bandit

The multiplier is unity

At least in the US from 1939 through 2008 says Valerie Ramey.  If you exclude the Second World War, Ramey finds the government spending multiplier to be between 0.6 and 0.8.  The findings make sense because after all purchasing power does not emerge from thin air.  Government spending based on deficits comes from future purchasing power.  And if the spending is done unwisely, then you get less than unity.  (HT: Angus)

And these guys are making public policy

Senator Max Baucus made a strange claim.

Chairman Max Baucus, D-Mont., himself admitted that "This probably sounds a little crazy to some people that we are voting on something before we have seen legislative language." Indeed.

Baucus' excuse - that it would take his committee staff two weeks to post the bill online – sounds a little crazy too. Finance Committee members are the only ones who vote based on the "plain English" version of a bill, not the legally-binding language.

So let me get this straight. Senator Baucus is informed enough about the intricacies of health care reforms both in the long- and short-run but he and his staff are incapable of posting a bill online even though they posting news on the Senator's webpage.

Gitmo, Michigan

This is a unique stimulus proposal.

The Obama administration is mulling plans to move all 229 detainees at Guantanamo Bay to a Michigan prison near the shores of Lake Huron.

The reason, of course, is to save some jobs as the current prison is scheduled to close soon. Rather than adopt reforms to improve the investment climate (which would greatly help the private sector, the state government prefers to receive more federal tax money (which helps the public sector). How this is going to have any noticeable impact on the dire situation in Michigan, I have no idea. But then again, I have no evidence that the governor and the legislature are that concerned about the long-run.

A Thought from Edmund Burke

From "Thoughts and Details on Scarcity'":

To provide for us in our necessities is not in the power of Government. It would be a vain presumption in statesmen to think they can do it. The people maintain them, and not they the people. It is in the power of Government to prevent much evil; it can do very little positive good in this, or perhaps in any thing else.

Are there any Burkeans in modern US politics?

Why is this not bigger news?

Justice Ginsberg stated that:

Frankly I had thought that at the time Roe was decided, there was concern about population growth and particularly growth in populations that we don’t want to have too many of. So that Roe was going to be then set up for Medicaid funding for abortion.

I am not surprised by this.  Eugenics and Progressive era politics were closely aligned.  I guess the relationship still persists although not as strongly.

When a crisis occurs...

Public sector employees show how much they care about the less fortunate.  Felix Salmon reports on who receives cash and who gets IOUS in CA.  No surprise here.  (HT: Craig Newmark)

UNC is in the Final Four...

President Obama's pick for the NCAA winner generated some controversy.  I say time spent picking the Final Four is time not spent "fixing" the economy.  The NYSE has only been open for less than two hours and the Administration's latest "fix" is not resonating well.

Measuring Saved Jobs

Greg Mankiw points out what should be obvious:

The expression "create or save," which has been used regularly by the President and his economic team, is an act of political genius. You can measure how many jobs are created between two points in time. But there is no way to measure how many jobs are saved. Even if things get much, much worse, the President can say that there would have been 4 million fewer jobs without the stimulus.

Genius indeed!  Define success in such a way so as to ensure it occurs.  Then the President can take the credit and campaign for more of the same in 2012.  Is this really the new type of politics people voted for?

Trouble for Democratic South Africa?

Thabo Mbeki resigned awhile back because of corruption.  Now a new study from Harvard School of Public Health argues that Mbeki is responsible for more thaan 330,000 deaths because of his decision to make antiretroviral (ARV) treatments illegal.  This is more evidence that the Mbeki government has undermined the legitimacy of the relatively new democratic government (let us not forget about Mbeki's position regarding Mugabe).  Crime and corruption remains high, the prevalence of HIV/AIDS is nearly the highest in the world and a number of reforms remain to be done. 

The upcoming election will represent a major moment in South African history.  If Mbeki's party loses, will they give up power and try to regain power the next election?  Or will they ignore the election results and establish a one-party state?  The latter seems unlikely but the transition to a stable democracy requires the transition of power between rival parties.  South Africa has not yet accomplished this.

Mandate for Change?

Interpreting the meaning of election results is difficult.  Voters weigh multiples issues that do not aggregate well.  Sometimes they vote for a candidate because they prefer her policies and sometimes they vote for a candidate because they dislike the other candidate.  Best I can tell, the only consistently valid interpretation is that candidate X received more votes than candidate Y.  Nothing more, nothing less.

 

Obama received more votes than McCain.  But does this imply a mandate for change as suggested here? I do not know but I doubt it.  Consider the following. Assume there are approximately 220 million voting age adults in the US.  Obama received approximately 62 million votes.  Therefore, only 28% of the electorate voted for Obama.  72% of the electorate did not support Obama.  Furthermore, how many people voted for Obama because they associated McCain with Bush? That is, how many people were indifferent to Obama but wanted to punish Republicans.  Any number greater than 0 reduces support for Obama’s proposed change.  Of course, some people who support Obama did not vote because they expected Obama to win so they allocated their time to something else.  But is this 32% of the citizenry so as to push his support to 50%?  I doubt it.