Tag Archives: economics

Emergency Unemployment Insurance Extension

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The existence of unemployment insurance payments means, especially for the low-skilled, that the change in income for taking a job ranges from slightly negative to slightly positive.  This is what underlies much of the argument against unemployment insurance payments of any duration.

That’s only background to the present situation, though.  There are two more, and more important, considerations surrounding the present push by President Barack Obama and Senate Majority Leader Harry Reid (D, NV) to extend emergency unemployment insurance payments.

One is these Democrats’ refusal to allow job training requirements to be attached to any such emergency unemployment insurance payment extension.  This criterion would cull those who are just using the payments to live on.  See the work requirement attachments and their results during/after the Clinton years.  Seethe work requirement attached to TANF when it replaced AFDC.  But the work training requirement has an additional direct benefit.  The training will help these low-skilled workers get better jobs, not just return, of necessity, to the same type of job.

One is these Democrats’ refusal to pay for this extension with spending cuts anywhere else, but only with continued borrowing: this is an emergency, and “we’ve never paid for emergencies.”  Actually, we do pay for emergencies, if only by borrowing against our children’s and their children’s futures.  Which we’ve already done, to the tune of $17+ trillion.  And this sort of unending wealth redistribution is exactly the sort of thing against which Madison warned us in the 3rd Congress.

Which brings up a third consideration.  This “emergency” has been going on for five years.  The demand to extend emergency unemployment insurance payments in this emergency situation is a clear admission that the economic policies of Obama and his Senate cronies are a dismal failure, even if none of them have the integrity or courage to say so out loud.

Plainly, this is just crassly naked vote pandering and an attempt to distract honest Americans from the disaster of Obamacare and Obama’s failed economic and jobs policies.  And from his failed, retreat-oriented foreign “policies.”

It’s also insulting to honest Americans.

General Insurance Dysfunction

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I’ve written about the failure and the dishonesty of Obamacare on a number of occasions.  However, the failures of insurance coverage aren’t limited to Obamacare.  Here’s an example from my wife’s insurance coverage, an old-style policy that hasn’t (yet) been canceled by Obamacare.

At my wife’s annual physical, last month, she spent over an hour talking with our doctor about mutual concerns, where they agree, where they disagree. (How many doctors will do that, in the first place?  This is one of the reasons I like her for my doctor, too.)

We got the billing statement a couple days ago:

Billed to Insurance = $20.00
Network Discount = $17.00
Applied to Deductible = $0.00
Paid by Plan = $2.70
Paid at Visit = $0.00
Amount you may Owe = $0.30

First, the insurance networks to which she belongs beat her up to a $20/hr rate that she’s allowed to charge (actually, it’s a per visit rate, but this is what this doctor’s integrity works that out to), then forced an 85% discount on top of that onto her.

Where’s insurance industry competition?  Obamacare ain’t it, and yet it’s worse than the insurance régime before.

Minimum Wage as Politics

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Democrats looking to make gains in the 2014 gubernatorial elections are using a possible minimum wage increase as a way to win support among voters….

Democrats across the political spectrum have lobbied for a higher minimum wage this year, after Obama got the ball rolling on the issue by calling for an increase in his February budget speech. Since then, union-organized demonstrations in front of profitable mega-chains such as Wal-Mart and McDonald’s have kept it in the public eye.

Senate Democrats have also pushed for a minimum wage increase going into 2014.  Their proposal would raise the minimum wage by 40%.

Of course there’s union involvement.  Aside from the Democrats being union meal tickets, increasing minimum wages protects union jobs—and so union leaders’ jobs—at the expense of the unemployed, those looking for a first job or for high school or college money, those looking for a second income, and the poor, who would gladly take the lower pay but who are priced out of the labor market by increased minimum wage.

We’ve already seen how that works.

Never mind the racist origin of minimum wage laws, instigated by FDR specifically to stem the tide of southern blacks moving north to take jobs at lower pay than white unions (blacks weren’t allowed in those unions, remember) wanted, and so taking jobs at the expense of those white union members.

Never mind that most of those unemployed and underemployed who will be priced out of the next round of hiring by these elevated minimum wages are the already vastly underemployed and underemployed black and Hispanic teenagers, black and Hispanic moms trying to work a family’s second job.  Regardless of current intent, the disparate impact of minimum wage laws is clear.  Where’s Eric Holder when we need him?

Nevertheless, Danny Kanner, Democratic Governors Association Communications Director had this to say:

The defining issue in every single one of these races is who is fighting for the middle class.

Yeah.  Never mind any of those poor, who’d like to get a job and work their way into the middle class.  Typical Progressive, playing politics, and with that play, ignoring the least among us.

The Evils of Fracking

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It seems that fracking, that heinous technology used for getting hard-to-reach natural gas and oil out of the very deep underground, far from polluting our water, saves it, especially where natural gas-based electricity generating plants are concerned.  According to a University of Texas study published in Environmental Research Letters,

Even though exploration for natural gas through hydraulic fracturing requires significant water consumption in Texas, the new consumption is easily offset by the overall water efficiencies of shifting electricity generation from coal to natural gas.  The researchers estimate that water saved by shifting a power plant from coal to natural gas is 25 to 50 times as great as the amount of water used in hydraulic fracturing to extract the natural gas.

Natural gas-fired power plants use about two-thirds less water than coal-fired plants to cool the generators.  The switch to natural gas-based electricity generation, made commercially feasible by fracking, thus reduces water use by the plants significantly.  Aside from reducing water consumption in and of itself, and reducing costs for producers and consumers of electricity, this yields another, longer-term outcome.  Senior Research Scientist at UT’s Bureau of Economic Geology, said,

The bottom line is that hydraulic fracturing, by boosting natural gas production and moving the state from water-intensive coal technologies, makes our electric power system more drought resilient.

Bad fracking.  Bad.

A Thought on Income Inequality

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Income inequality has become a popular Progressive trope with which to demonize Republicans, Conservatives, and the United States generally over our alleged insensitivity to the plight of our poor.  Notwithstanding the immorality of capping whatever it is we use for income in order to take from the better off and give those takings to the poorer off, there are practical failures in this meme, as well.

One source of information that clarifies this matter comes from Stanford University’s Hoover Institution in the form of a paper by Kip Hagopian and Lee Ohanian, titled The Mismeasure of Inequality.  Following are some highlights from that paper; RTWT.

…the Census Bureau, which uses what it calls “money income” in its measurement of income inequality.  Money income, which is the definition of income typically used in public references to inequality, consists of cash income only, does not subtract taxes, and excludes the value of noncash transfer payments (such as nutritional assistance, Medicare, Medicaid, and public housing), as well as many other components of income.  In addition to transfer payments, which are a substantial portion of income at the low end of the income scale, some of the other missing components of income are: employer-provided fringe benefits (primarily retirement benefits and health insurance, which can amount to as much as 30 percent of income), capital gains, imputed rent from owner-occupied housing, and increases in the value of home equity

And

Based on this more relevant definition [which included all those exclusions], income inequality declined 1.8 percent during the sixteen-year period between 1993 and 2009….

But even using the Gini coefficient, a popular “measure” of income inequality—which uses only money income as its measure—income inequality in the US only grew by 10% over the last nearly 30 years.

But it also turns out that income isn’t the only way to measure what’s intended with “money income” or “total income,” nor is it necessarily even the best measure.

…almost singular focus on income as a measure of economic well-being, when there is a clear consensus among economists that the best measure of living standards over the long term is not income, but consumption.  Focusing on consumption rather than income provides a very different picture of inequality.  … [A]ccording to the BLS [Bureau of Labor Statistics], during the fifteen-year period between 1986 and 2001, consumption inequality went down slightly; from a Gini of .283 to a Gini of .280.

Consumer Expenditure Surveys say much the same thing: consumption is relatively equal across incomes.  Even at that,

[C]urrent methodologies measure only market consumption rather than total consumption, which is the sum of both market (purchased) and nonmarket (home-produced) goods.  This is important because lower-income households consume a disproportionate amount of goods produced in the home (what economists call “home production”), including home-cooked meals, household-provided child care, and household home improvements and maintenance. Economists have estimated that home production is around one-third of GDP, yet this form of consumption is not counted in the total when measuring consumption inequality.

And none of this addresses the dynamic nature of income and consumption, what’s called economic mobility, or the ability of folks to move (or down) the economic ladder.  Here, we are wanting: upward economic mobility requires, among other things, job availability and, for homeowning job hunters, the ability to sell their homes pursuant to a job-related relocation.