Monthly Archives: February 2013

China’s Economic Course

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In a nation that’s facing a demographic implosion (a birth rate of around 1.5 against a rate of roughly 2.1 required to maintain current population levels, and an aging population (expected by 2050 (the current generation plus their children) to have four workers in the age band 50-64 for every three aged 15-29, and for every 100 people aged 20-64, 45 over 65), that chronically lives on the edge of famine, and that has a population increasingly aware of what could be compared to what is, the PRC government is not treating its poor or its farmers (22% of whom will be over 65 as early as 2030—the current generation) very well.  And so it’s not treating its society or its economy with any foresight.

For instance:

In December 2010, when [Fu Liang]  says a campaign of harassment drove him off the small plot where he ran a fish farm, the local government paid Mr Fu just nine yuan ($1.45) a square meter for it.

The plot was quickly resold for 640 yuan [$103.11] per square meter to a developer, a national database of land transactions shows.  The developer has built villas that sell for 6,900 yuan [$1,111.67] a square meter.

A markup of a factor of nearly 10 at each stage.  Fu’s 9 yuan meter of fish farm was worth far more than he was paid.  In another sense, it was priceless, since he didn’t want to sell.

Mr Fu now is unemployed, one among tens of thousands of former farmers who inhabit the impoverished fringes of Chengdu, a city in southwestern China.  He has no heart to start another business.  “What’s the point if the government can just destroy it?” he says.

With no sense of irony, the PRC’s new president, Xi Jinping, claims to want strengthen that demographically unstable society and its unstable economy—through property (land) ownership.  After all, as Fu pointed out,

precarious land rights mean little incentive to invest in improving agricultural output, and no asset that can be sold to fund a move to the city.  Low compensation for the millions ousted from their land—coupled with ineligibility for social benefits because they aren’t registered as urban residents—means for many a life of poverty on the edges of the cities.

And no incentive to bring additional children—boys only, mind, in a mandated one child environment, with the bias’ own long-run population sustainability implications—into the world.  And the one-child policy was put in place explicitly to achieve the population reduction about to occur sharply.

Fat chance for any serious change:

“Push forward scientific development and advance social harmony,” proclaims a banner draped across one construction site, parroting a catch phrase of Xi’s predecessor, Hu Jintao.  Mr Fu, surveying a noodle bowl of highway overpasses, said, “A few years ago, this was all farmland.”

Because farmland—the means of feeding the population—stands in the way of progress.  Xi will have a great deal of trouble reversing that, especially with the money to be made converting farmland to urban land.

A Waste of Legislative Energy

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…and a potential First Amendment violation.  Especially in a conservative environment, this is surprising.

The North Carolina House is set to vote on a bill that would

amend the state’s indecent exposure law to expand the legal definition of “private parts” to explicitly include “the nipple, or any portion of the areola, or the female breast.”

And if such exposure were to be deemed

for the purpose of arousing or gratifying sexual desire

the evil miscreant could convicted of a felony and locked away in a North Carolina jail for six months.  “More mundane exposures” (whatever those are) could be guilty of a misdemeanor—and still locked up, now for 30 days.

Of course, it’s hard to discriminate such exposures from political speech, but that apparently doesn’t concern those good legislators.  And a woman’s breast is, perforce, an obscene thing, to be kept hidden away—and state legislators are far better judges of such morality than are the rubes of the villages, towns, and cities who’ve already made their choice on this matter.

Which brings me to the state’s…rationale…for this exercise.

Co-sponsor Rep Rayne Brown, R-Davidson, told members of the House Judiciary Committee on Wednesday that her bill was triggered by topless rallies promoting women’s equity that were held during the last two years in Asheville.

Oop—there’s that tacky free speech thing.

No matter; she added in all seriousness,

There’s some confusion about the law.  I think our state deserves clarity on this issue.

Never mind that there is no confusion.  The police of a town know their town’s ordinances.  They have no need of knowing the differences with another town’s ordinances; they have no jurisdiction over there.

Nor is there any confusion on the part of the state police.  They have no jurisdiction inside the town limits unless they’re enforcing a state law.  Oh, wait—let’s make a state law, and give them jurisdiction.

Early Education

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If the regular public schools aren’t working…does it make sense to layer on another defective education level, except earlier in life?

…

In December, [President Barack] Obama’s own Health and Human Services Department released an evaluation of Head Start, the 47-year-old program for low-income toddlers, and concluded that any cognitive gains disappeared by the third grade.  HHS had sat on the legally mandated study for more than a year.

Part of the reason for the failure of preschool programs, though, is that, after passing out of these programs, the kids go into the same failing school systems as their non-preschool peers.

Progressives and the teachers unions (not necessarily the teachers themselves), though, universally oppose such successful alternatives as charter schools and voucher programs—they reject the competition that would force improvement on the public schools while providing an immediately improved environment for the children.

Such improvements would, for instance, include compensating teachers for their performance—the quality of the students passing out of their classes—rather than simply for being on the job for the requisite length of time.  In the end, this impacts teachers unions more than it does the teachers themselves; see for instance the New York City resistance to such an evaluation régime—it’s union leadership and their pocket politicians on the city council, not the teachers, that are objecting.

Is there evidence that any preschool success could be potentiated by charter/voucher programs rather than allowed to peter out as happens in existing public schools?  Not yet.  Progressive blockage remains too successful for these alternatives to be widespread and the needed research conducted.

Education, in the end, is a local prerogative, a local obligation, with standards set by and to meet local needs, even if “local” is much broader than it used to be.  This is how our educational system was designed.

The failure of the Federal programs with which the Feds have been interfering in our educational system (potentiated by union intransigence) is another reason for keeping the matter local, with the central government butting out.

Return of Taxation without Representation

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As John Smith writes at BIZPAC Review,

Aggressive prosecuting [of regulation violations] is the newest form of taxation, a money tree for government.

This is only part of the problem, though (eliding the legitimacy of the regulations).  The regulations themselves exist as a form of taxation in the fees they require, and the regulations and their fee structures are enacted by appointed, functionally anonymous bureaucrats, not by our elected representatives.

Regulatory costs extant prior to Obamacare, combined with Obamacare’s regulatory fees, will cost Americans in the aggregate $1.8 trillion per year just to comply.  HHS’ regulatory requirements alone cost $184 billion/year.  A couple of others picked at random:

Environmental Protection Agency: $353 billion per year Department of Transportation: $64 billion per year Federal Communications Commission: $142 billion per year

Much of these costs, to be sure, are costs of compliance, and not payments to the Federal government.  But much of these costs are.  Think about the uses you, or private enterprise, have for that money if it were left in your pockets and cash registers.

Look also at the “negotiated” settlements between the SEC and its victim banks.  One example: in 2011 the SEC browbeat Citibank into a $285 million settlement (the money would have come to the government, not to reimbursement of any putative victims) over its involvement in mortgage debt securitization and sale (the practice of which has never been found to be criminal or otherwise illegal).  The deal the SEC forced Citi to take was so egregious that US District Judge Jed Rakoff, who had to approve the deal for it to take effect, rejected it out of hand, ruling that

the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest.

Rakoff founded his ruling in his rejection of a long-standing technique the SEC had been using to…cajole…such settlements: allowing its victims to say they didn’t do the deed, but they’ll pay up anyway.  Absent guilt, what’s the basis of the penalty?  Rakoff didn’t think there was any.  He’s just one judge, taking on one Federal agency, though.  And the SEC isn’t done demanding collections without guilt.

 

H/t The Spirit of Enterprise

Fact Checking the Fact Checker

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The AP has a series of “fact checks” on President Barack Obama’s Tuesday State of the Union claims.  Here’s one of particular interest to me.

OBAMA: “After years of grueling recession, our businesses have created over 6 million new jobs.”
THE FACTS: That’s in the ballpark, as far as it goes.  But Obama starts his count not when he took office, but from the point in his first term when job losses were the highest.  In doing so, he ignores the 5 million or so jobs that were lost on his watch, up to that point.
Private sector jobs have grown by 6.1 million since February 2010.  But since he became president, the gain is a more modest 1.9 million.
And when losses in public sector employment are added to the mix, his overall jobs record is a gain of 1.2 million.

As the checker says, that’s true enough “as far as it goes.”  I wrote just last fall about what our jobs numbers should have been had certain events come to pass as Obama promised they would under his policies.

He promised in 2009 a 5.5% unemployment rate by now.  How many new jobs would have been created had we actually reached his promised number?  In December 2009…the civilian labor force was 153,059,000, of which 137,792,000 Americans were employed, a 10% unemployment rate….

In September 2012…the civilian labor force was larger, at 155,063,000….  There were some 142,974,000 Americans actually employed—that increase of 5,000,000 of which Obama is so proud.

However, a 5.5% unemployment rate corresponds, if my 1st grade arithmetic serves me well, to 94.5% of the civilian labor force actually employed: 146,535,000 Americans.  …there are some 3,561,000 Americans that should be employed but aren’t—because Obama’s proudly proclaimed policies have come up short, and we aren’t anywhere near 5.5% unemployment.

Let’s look at this another way.  ….  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office….  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by [2011].

There’s more to it (and the links there) even than that, though.  Under Obama’s policies, our labor force participation rate has been shrinking rapidly as Americans despair of getting a job and quit looking, with its own impact on Obama’s jobs claims [emphasis in the original].

The labor force participation rate fell to 63.6% from 63.8% in October [2012].  If it had just held steady since then, the unemployment rate would be back over 8%.  Indeed, if the LFP rate was just where it was in November 2011, the unemployment rate would be 8.3%.  Some 542,000 Americans left the labor force just last month.

and

The number of long-term unemployed remains at a sky-high 40.1%, the same as in August.

The following graph tells the tale.