Why is there So Much Economic Illiteracy? Paul Krugman Is One Reason

Stanford University economist Thomas Sowell was asked the other day whether the understanding of basic economics has been elevated in political discussions over time. His answer? Economic literacy hasn’t gotten better. It’s gotten worse. --“At one time you had a lot of people who hadn’t had any economics saying foolish things. Now you have well-known economists saying foolish things,” he said.

Read more at Townhall
(Hat tip: KimR) Read More......

Allen Alley: Rainbows and Moonbeams

"Rainbows and Moonbeams"
By Allen Alley
Was it a “Portlandia” script or an Oregonian front page story? The April 17 article on Governor Kitzhaber and Cylvia Hayes, who spent three hours in a class to learn how to construct a happiness index, could have been either one.  This happiness index, promoted by a Portland State University professor, purports to give a more accurate picture of economic health than the value of all goods and services produced, also known as gross domestic product (GDP).

The happiness index or Genuine Progress Indicator (GPI) was promoted at a recent United Nations summit meeting on happiness and originated in that bastion of economic energy, Bhutan.  The Kingdom of Bhutan is a tiny Himalayan country with a GDP per person of $2,600.  Bhutan’s GDP ranks 129th in the world with other economic powerhouses such as Bolivia, Sri Lanka and Mongolia.  In perspective, the U.S. GDP per person is 18 times higher than Bhutan.

Is the Governor really going to model our economy after a third world country?  Are we giving up trying to measure ourselves by the economic measures of successful nations and instead partner with the Bhutanese and the UN to just make up our own happiness index?  Even “Portlandia’s” writers could not have conceived of this plot twist.

A trip to Taiwan in 1982 proved to me that economic prosperity creates happiness and a cleaner environment.  At the time, the streets of Taipei looked like a scene from Blade Runner.  Acid rain literally etched the buildings and stripped the paint off cars and signs.  Swarms of smoke-belching dilapidated scooters were the transportation mode of choice.  It seemed that Taiwan might sink into the ocean under the weight of the detritus of society, and all that would be left would be an oil slick and Styrofoam packing worms.  Then an amazing thing happened.  They became prosperous.  Today the GDP per person of Taipei is second only to Tokyo in Asia and is higher than that of Hong Kong, Singapore and Seoul.  Once they became economically prosperous, they did not want to live in squalor.  They had the community wealth to clean up their environment, and they did. 

Oregon’s economic report card is apparently so stubbornly awful that rather than creating an environment where prosperity can flourish, Governor Kitzhaber is going to change the grading system.  Now our economic F will be waved away, because we try really hard and have nice parks.

Global economic competition is brutal.  There are no bonus points for effort or style.  You either succeed or fail, and lately Oregon has been failing.

Since 1995 Oregonians have been getting poorer relative to other Americans.  We have slipped 10 places in state personal income ranking from 22nd to 32nd.  At the same time our neighbor to the north Washington rose from 16th to 13th.  In 1995 an Oregonian earned $750 less than the average American in personal income, today we are $3,700 behind.  That means the average family of 4 in Oregon is $14,800 a year poorer than the average American family.  So either we have to have significantly higher taxes or settle for inferior schools, roads, and public safety.  We cannot fill potholes with happiness.

Governor Kitzhaber, we need to embrace GDP and rededicate ourselves to creating an environment where it actually increases.  We must maximize access to the assets that make Oregon a potentially great place to build prosperity.  Open and expand our ports.  Use our natural resources.  Go out and actively promote Oregon timber as the greenest building product on earth.  Keep power rates low.  Manage the Columbia River to extract more economic value for Oregon.  Embrace hydro power as the renewable, CO2 free, source of clean energy that it is.  Create an environment where we feel our state is a partner in prosperity, not an impediment.

It’s difficult to attain long-term happiness without some measure of security and prosperity.  Gone are the days when a barter economy could provide all of the goods and services we need.  Besides, much of the capital created in Oregon comes from trade with other states and nations.  Happiness is a result, not a thing that can be traded.  Oregonians cannot pay their mortgage with moonbeams, and even the governor is unlikely to convince the public employee unions to accept rainbows rather than raises.

Here is the link to the op-ed on the Oregonian website. This op-ed was received via email, which also included a link to the ORP donation page. Read More......

F.A. Hayek On "The Great Utopia"

Hayek: There can be no doubt that most of those in the democracies who demand a central direction of all economic activity still believe that socialism and individual freedom can be combined. Yet socialism was early recognized by many thinkers as the gravest threat to freedom.

ZERO HEDGE, 1/28/2012 by Tyler Durden (Germany) - Durden offers the text of F. A. Hayek's chapter, "The Great Utopia," from Hayek's renowned book, The Road to Surfdom. This chapter is definitely worth reading, or rereading, as the case may be. Read More......

Obama's Economic Record Chart

The following FYI chart from FireGate Ministries is useful in assessing President Obama's performance as the end of his 3rd year in office approaches. (Hat tip: Stella Guenther)

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Free or Equal - A personal view by Johan Norberg

Program Summary: "In 1980 economist and Nobel Laureate Milton Friedman inspired market reform in the West and revolutions in the East with his celebrated television series “Free To Choose.” ✧ Thirty years later, in this one-hour documentary, the young Swedish writer, analyst and Cato Foundation Fellow Johan Norberg travels in Friedman’s footsteps to see what has actually happened in the places Friedman’s ideas helped transform. In location after location Norberg examines the contemporary relevance or Friedman’s ideas in the 2011 world of globalization and financial crisis. Central to his examination are the perennial questions concerning power and prosperity, and the trade-offs between individual liberty and income equality." ✧ Watch the 17-minute video preview at Free to Choose Media. Read More......

VDH: Behind the D.C. Slugfest

NATIONAL REVIEW ONLINE/CORNER, Victor Davis Hanson - "Barack Obama will be remembered not so much for being the nation’s first African-American president, or even the man who ordered the killing of Osama bin Laden, or even for his Obamacare, but as the president who grew government the largest, ran up the largest deficits during any presidential tenure, and laid out most candidly and confidently the argument of why the United States is an intrinsically unfair society and how that must be remedied by government."

Read more at the Corner

Also: Astute comment by Robert Hanson Read More......

CPI: The Not So “Cool School” Initiative

CASCADE POLICY INSTITUTE by Michael Bastasch - The Oregon “Cool Schools” Initiative (House Bill 2960) directs the Oregon Department of Energy to provide zero to low-interest loans and grants to school districts for energy efficiency building improvements. Governor John Kitzhaber, the bill’s main proponent, argues that HB 2960 will create healthier, more energy efficient schools and create jobs. However, given the propensity of government to overestimate the benefits of its programs while completely understating the costs, the economic impacts of HB 2960 most likely will yield the opposite results of what Gov. Kitzhaber claims.

Luckily, Oregon has a case study in Washington State... Read more at CPI. Read More......

18 Signs the Collapse of Society is Accelerating

ECONOMIC COLLAPSE, 6/9/2011 (Hat tip: V2A) - As the U.S. economy collapses, the thin veneer of civilization that we all take for granted is going to begin to disappear. In fact, there are already an increasing number of signs that the collapse of society is accelerating. In cities such as Chicago, roving packs of young people are "mob robbing" local businesses, randomly assaulting tourists and shoppers and are even pulling people out of vehicles. This isn't just happening in the "bad areas" anymore. Read more at The Economic Collapse... Read More......

Financial Sense: "Must Read"

Financial Sense, Market Focus: Storm Watch

• CNS News, 6/3/2011 - China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills
  
• Bloomberg, 6/3/2011 - Moody’s May Cut U.S. [AAA Credit Rating] on Debt Limit Concern
  
• Bloomburg, 6/2/2011 - QE2 Failed to Boost U.S. Spending
  
• Financial Sense, 6/1/2011 - After the Dollar: What Comes Next? (Editorial by Peter D. Schiff)
  
• The Big Picture, 5/31/2011 - Its Official: Housing Double Dip is Here. Without artificial government stimulus, Housing is going lower.

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WaPo: Obama abdicates on the budget

WASHINGTON POST, 4/24/2011 by Robert Samuelson (Hat tip: John H. Detweiler) - "If you’ve wondered why it’s so hard to subdue budget deficits, you should consult a new study from the Congressional Budget Office called “Reducing the Deficit: Spending and Revenue Options” (free at www.cbo.gov). You’ll learn from its 240 pages that the deficits definitely can be curbed. The CBO presents 105 policies (it doesn’t endorse them) that would shrink deficits by trillions of dollars over the next decade. You’ll also learn — surprise! — that most choices are political poison. ∴ Suppose we increased the federal gasoline tax by 25 cents a gallon, from 18.4 cents to 43.4 cents. That would raise $291 billion from 2012 to 2021, estimates the CBO. Or we could advance the ages for early and full Social Security benefits; one suggestion is to raise them (now 62 and 66) by two months a year until reaching predetermined targets (say, 64 and 70). The CBO reckons the decade’s savings at about $264 billion. How about slowly moving Medicare’s eligibility age from 65 to 67? The savings: $125 billion. ∴ Are we finished? Nowhere near..." Read more at the Washington Post... Read More......

We Must End Our ‘Addiction to Economic Growth’

Posted at the CORNER by Jonah Goldberg

It's NOT about the children... it's about USING the children. --bc Read More......

Friedman vs. Piven

"In this clip from the 1980 Free To Choose, socialist Frances Fox Piven tangles with Milton Friedman and Thomas Sowell. We thought this would be interesting in light of the recent dustup between The New York Times and Fox News (Glenn Beck) on the subject of Piven." --FreeToChooseNetwork Read More......

AT: An Economics Lecture No Student Will Ever Hear

AMERICAN THINKER, 4/14/2010 by Herbert E, Meyer - Good morning. Take your seats, turn off your cell phones, and keep them off for the duration of this lecture. ∴ Today's subject is jobs. As even the dimmest among you are aware, we're in a jobless recovery, which means that economic activity is picking up, but businesses just aren't hiring enough workers to bring down the unemployment rate to an acceptable level. ∴ Between now and the November elections, Republicans will blame Democrats for this mess, and Democrats will say that it's all the Republicans' fault. The decibel level will be excruciating. If you're among those who would rather argue than understand, don't waste your time or my energy; get up now and leave through the side door. But if you really want to understand why we're not creating new jobs fast enough, put aside your politics and let me teach you the one thing about economics you should have learned in high school. Read more at American Thinker...

Herbert E. Meyer served during the Reagan administration as Special Assistant to the Director of Central Intelligence and Vice Chairman of the CIA's National Intelligence Council. He is the author of How to Analyze Information and The Cure for Poverty. Read More......

Moody’s Says U.S. Debt Could Test Triple-A Rating

NEW YORK TIMES, 3/15/2010 by David Jolly and Catherine Rampell - The gold-plated credit rating of the United States — an article of faith across America and, indeed, around the world — may be at risk in coming years as the nation copes with its growing debts. ∴ That sobering assessment, issued Monday by Moody’s Investors Service, provided a reminder that even Aaa-rated United States Treasury bonds, supposedly the safest of safe investments, could be downgraded one day if Washington failed to manage the federal debt. Read more at NYT...

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Research & Commentary: Cap-and-Trade

HEARTLAND INSTITUTE, 10/6/2009 from Peter Fotos, Government Affairs Director - Research & Commentary: President Barack Obama's Cap-and-Trade Plan: The Obama administration, with support from the majority party in Congress, is promoting a carbon emissions cap-and-trade plan that could spell disaster for the nation--especially given the current delicate state of the U.S. economy. Legislation proposed by Reps. Henry Waxman (D-CA) and Edward Markey (D-MA) already has passed the House of Representatives, and Sens. Barbara Boxer (D-CA) and John Kerry (D-MA) have introduced similar legislation in the Senate.

The costs would be staggering. Ben Lieberman, a senior policy analyst with The Heritage Foundation, told Senate staff the Waxman-Markey bill plan would reduce gross domestic product by $9.4 trillion between 2012 and 2035, and the annual cost to American households would average almost $3,000. The National Black Chamber of Commerce released a study concluding Waxman-Markey would cut employment by 1.5 to 3.6 million people.

The European Union has implemented a cap-and-trade program similar to the one proposed by the Obama administration. Since its inception, the program has been plagued by fraud and corruption, emissions have risen more rapidly as a share of GDP than in the United States, manufacturing plants have been forced to shut down for portions of the day, countries with lenient environmental regulations have profited as firms move where it's less expensive to do business, and energy prices for European citizens have increased dramatically.

Studies have found that even a modest U.S. cap-and-trade system to limit carbon emissions to levels established by the Kyoto Protocol (7 percent below 1990 levels) would reduce domestic economic growth by almost 2 percent per year, increase gasoline prices by 53 percent, and raise other energy prices by 86 percent.

The following articles shed light on the environmental and economic consequences of cap-and-trade policies.

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Impact on the Economy of the American Clean Energy and Security Act of 2009
The National Black Chamber of Commerce examines the economic impact of Waxman-Markey.

Waxman-Markey's Effect on Gas Prices in Your State
Study by The Heritage Foundation dealing with cap-and-trade's effect on gas prices.

Cap & Trade: Why It's Tax & Spend
The New York Post says a cap-and-trade bill would impose an average of more than $80 billion in new energy taxes every year. It would turn carbon dioxide into the new tobacco--a "vice" Uncle Sam profits from in the name of combating.

Why Cap-and-Trade Could Backfire
Environmentalists claim capping greenhouse gas emissions and creating a market for emissions trading would reduce carbon dioxide output. But it could achieve the opposite effect.

Cap-and-Trade Would Stifle Economy, Delay Transition to Cleaner Fuels
The George C. Marshall Institute outlines the practical difficulties in implementing a cap-and-trade system, as well as its negative effects.

Britain's Big Polluters Accused of Abusing EU's Carbon Trading Scheme
The London-based Guardian takes a look at corruption that has plagued the European Union's cap-and-trade system.

Cap-and-Trade: A Bad Tradeoff for the Economy and Company Earnings
The Free Enterprise Education Institute summarizes the costs and problems inherent in a cap-and-trade system, especially the harm it would do to economic growth.

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Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other environment topics, visit The Heartland Institute's Web site and PolicyBot, Heartland's free online research database.

If you have any questions about this issue or The Heartland Institute, you may contact me at 312/377-4000 or pfotos@heartland.org.

Peter Fotos, Director - Government Affairs
Heartland Institute Read More......

Imagine There's No Countries

CNSNews.com (via Patriot Post email), 9/28/2009 by Rich Galen, Political Analyst - "Interesting that many of us thought the election of Barack Obama might signal the end of American Independence as we surrendered sovereignty to the United Nations. Imagine my surprise, then, to find that Obama has decided to give up American power to a group that doesn't even officially exist: The Group of 20, which is shorthanded to the G-20. In an example of governmental inflation at its most dangerous, the G-20 was originally the G-6, then Canada was allowed to sit at the grownups table and it became the G-7. When the Soviet Union returned to being good old Russia, they were invited in and it became the G-8. The G-20 is supposed to be a meeting of the finance ministers and central bankers of the 20 largest economies. But these G-X meetings have now become summits. The meeting in Pittsburgh last week, included a significant number of the heads of states who had been in New York a few days earlier for the opening of the UN and who decided to make the trek along the Pennsylvania Turnpike to spend a day or two in the Steel City. ... Obama knows he can never cede sovereignty to the UN, but he may be able to get away with the G-20 as the international Board of Directors dealing with everything from banking regs to global warming to human rights to labor law to ... whatever. Obama knows America -- even Air America -- would never sit still for letting the United Nations make decisions for us. ... However, sharing sovereignty with the 20 largest economies on the planet is a potentially saleable deal as long as Obama doesn't say 'We are sharing sovereignty with the 20 largest economies on the planet.' You say things like, 'We are establishing new rules for international banking which will avoid the problems of last September.' One of those new rules will be an international reserve currency which does not have 'UNITED STATES OF AMERICA' printed anywhere on it. ... And we've been wasting our time worrying about Obama's relationship with ACORN." Read More......

IBD: A Debt The Founders Wouldn't Believe

INVESTORS BUSINESS DAILY/EDITORIALS, 6/26/2009 by Sen. Judd Gregg - In a 1789 letter to James Madison, Thomas Jefferson wrote: "The earth belongs to each of these generations, during its course, fully, and in their own right. The 2d. generation receives it clear of the debts and encumbrances of the 1st. The 3d of the 2d. and so on. For if the 1st. could charge it with a debt, then the earth would belong to the dead and not the living generation. Then no generation can contract debts greater than may be paid during the course of its own existence." ∴ What would Thomas Jefferson think today, as the Obama administration puts this generation on a path to drive the debt sky-high, effectively leaving our children and grandchildren to foot the bill? Read more at IBD... Read More......

The Money Quote

"A billion here and a billion there. Pretty soon we're talking about real money." --Senator Everett Dirksen (R-IL), 1896-1969

Senator Dirksen was instrumental in writing and passing the landmark Civil Rights Act of 1964 and the Open Housing Act of 1968. Read More......

Jihad Comes to Wall Street

National Review, April 3, 2008, by Alex Alexiev

"Sharia finance" does exactly what it promises, financing the spread of sharia — and terror.

If you’ve seen Geert Wilders’s film Fitna, you may not have noticed a single headline amongst all the bombings, beheadings, and earnest expressions of Islam’s eventual world domination: Halal-fund: investments for Muslims. But the investment vehicles referenced are an essential part of radical Islam’s efforts to insinuate itself into Western societies in order to destroy them from within. And Wall Street, barely out of the woods from its disastrous run-in with sub-prime mortgages — and having lost one of its historic investment houses, Bear Stearns, in the process — is now chasing the very kind of “sharia finance” against which Wilders's movie warns, a business line that may eventually wind up being even more calamitous than the subprime-mortgage fiasco. Continued...

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Europe’s Reagan Revolution

The Global Guru, 2007 Archives, Nicholas Vardy wrote,

A specter is haunting Europe -- the specter of the Reagan revolution. Europe -- both Old and New -- has felt the aftershocks of the Reagan revolution more than even its greatest supporters could have ever predicted. While anti-Americanism has reached fever pitch as never before, the economic policies of European governments are increasingly echoing those of the man most universally despised in Europe. Thirty years after the launch of Margaret Thatcher's free market revolution, even socialist Sweden is starting to abandon its much vaunted Nordic model. France's surrender to Reagan was uncharacteristically late. Yet there is little doubt that the election last Sunday of Nicolas Sarkozy as French president is yet another nail in the coffin of the European welfare state. Continued at the Global Guru...

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