Blumneconomics XIV: the solution to poverty

Though I'm still waiting for Robyn "Blumñata" Blumner to plug another Western European socialist country, we at least have installment XIV in the Blumneconomics series with her "Poverty is not a character flaw" column from last week.

Blumner got the laughter rolling early:

Sen. Bernie Sanders, a liberal, political independent and all-around good egg, has put together a book of excerpts of letters he's received from Vermonters who are struggling through the recession.

Liberal.  Political independent.  All-around good egg.  Socialist.

Blumner may have decided to omit that label because of the regularity with which comments on her columns tag her with "communist" or "socialist."  So here she is lauding the socialist Bernie Sanders in her column.  Perfect.

And Sanders put together a book!:

In short, blunt paragraphs, the writers tell of how they are falling out of the middle class:

"I can't find a job to save my soul that will pay enough to make a difference," says Sue, who is described as "jobless since April" and "facing foreclosure."

Can't find a job that pays enough to make a difference?  The difference between something and nothing is still something, isn't it?  Or maybe Sue's receiving jobless benefits and won't take a job that "will pay enough to make a difference."  It makes a difference to taxpayers, if that's her situation.

Next!:

"I patch together a full-time job making $12/hour and various painting jobs and still can't afford to get myself out of debt, or make necessary repairs on my home," laments a single mom in her late 40s.

Bummer.  I wonder if marriage has crossed her mind a second (third?  I dunno) time?

Next!:

"I am a 35-year-old man living paycheck to paycheck trying to make ends meet while working at a chain retailer. I feel I am being overworked and underpaid," offers a writer from Middlebury who lives with his parents because he can't afford housing.

We have a winner!  How can a person live "paycheck to paycheck trying to make ends meet" while living with their parents?  Even working only 30 hours per week at minimum wage he's got to be taking home about $600 per month.  A person who can't get by on $600 per month while living with their parents probably has issues with budgeting.

That was all for the poverty parade.  But now comes Blumner's economic nonsense for a few paragraphs:

While Republicans in Congress push to unravel more of America's frayed social safety net, they have no plans to help rock-ribbed, hard-working Americans earn a decent living.

Sure they do.  Do what worked in the past.  Harness the free market and let American ingenuity do the rest.  If that won't work then we have no alternative with a proven history of success.  People who fail to understand that are often called "socialists."

Do conservative politicians think, if you're not rich, you're not working hard enough? No one works harder than a roofer in the Florida sun or a tomato picker. But in the GOP's world, it is as if poverty indicates a character flaw. It's an unconscious bias that metastasizes into contempt for people who are struggling economically.

It isn't that poverty is a character flaw.  It's that poor job skills lead to low-paying jobs in a market economy.  And no economy can fool the market indefinitely.  That's why bubbles burst and the business cycle cycles.  A roofer can make pretty good money because it takes a certain degree of skill.  Tomato pickers don't need much skill.  But the market doesn't reward work simply because it is physically difficult.  If I go dig a ditch that nobody wants there's no need to doubt that the work will prove very difficult.  Dirt is pretty heavy, kind of a like thousands of tiny little rocks.  But I don't get a dime if the work is not valuable to a person or persons.

And that's what liberals and socialists always seem to misunderstand about the free market.  There's no escaping it.  You either work with it or fight against it.  Fighting against it carries a terrible economic history.

Blumner's column follows that misstep off into the mire.  She can't understand why Republican free-market policies favor increased freedom for businesses.  She thinks businesses should give (like charity) jobs to people regardless of profit.  In her mind, salaries given for jobs that do not profit the employer serve as the magic bullet that permits people to "earn a decent living."  These useless jobs pump money into the economy, just like unemployment benefits.  And liberals know that paying unemployment benefits is one of the very best ways to stimulate the economy.

But even liberals, if pressed, seem to realize that paying everyone unemployment benefits would not result in a terrific economy.  The missing component?  Wealth creation.  No, printing more money does not create wealth.  It dilutes wealth and creates yet another market condition that will help some and harm others.

Who creates wealth?  Those who direct businesses into ventures that people find valuable.  The Chevy Volt will serve a great test case.  If people (paying customers) value the Volt enough to buy many of them, then the Volt will create wealth.  If the customers don't show then the investors lose money.

There's a good chance the Volt will fail, because it represents the vision of what some people want the market to be while ignoring what the market is in real life.

They never seem to learn.


Correction 7/21/2012:  Fixed dyslexic take ("IVX") on the Roman numeral representation of 14 in the title and text.

Blumneconomics XI: the auto industry

Robyn "Blumnata" Blumner of The St. Petersburg Times has a record when it comes to columns that deal with economic issues.

The record is not good.

This week, Blumnata pontificated about the auto industry and rendered her obeisance to Barack Obama, aka "The One." The result does nothing to improve her record.

The column starts with the sad story of an electronics plant in Tampa that is expected to close because Mexicans can do the job more cheaply. Yes it's sad that Richard Neal might lose his job to Mexicans who do it for less. But if U.S. auto makers can't compete with foreign auto makers who utilize cheap labor then the former will continue to lose market share and Neal loses his job anyway.

So immediately we have the expected tip-off that Blumner blindly favors the U.S. worker on the basis of protectionism--one of the strategies that helped hollow out the bottom of the Great Depression.

If jobs — and the creation or retention of 2.5-million of them — is a major plank of an incoming Obama administration, then preventing good manufacturing jobs from leaking to other countries should be front and center.

Look, can't the man just finish his waffle?

Obama truly has his hands full with economic policy. His tax policies promised to tie up capital, so he promptly waffled on them in light of current economic conditions. Obama wants to increase corporate taxes--exactly the sort of thing that makes taking operations overseas more attractive. If he knows what he's doing then he can't make good on certain major planks, and I look forward to Blumner's reaction when the realization hits.

After another paragraph or two of Bush-bashing, Blumner prostrates herself again on the prayer rug:

But Barack Obama isn't so blithe toward this hemorrhaging of decent, middle-class jobs. In his acceptance speech at the Democratic National Convention in Denver, Obama vowed to: "Stop giving tax breaks to companies that ship jobs overseas" and "start giving them to companies that create good jobs right here in America." It was a campaign theme, but there hasn't been much meat on those bones as yet.

I'm not sure how much meat Blumner expects before January. It will take a substantial tax break to keep Detroit's Big Three competitive in the automaking world in addition to loan money unless the companies are allowed to compete on something resembling equal footing with foreign auto makers. I'd expect Blumner to howl in protest about corporate tax breaks or bailout money. Perhaps it's different if Obama does it as opposed to Bush. Perhaps the idea is for the tax breaks to get passed on to auto workers in the form of higher wages (which is in effect a federal subsidy of auto workers).

What I would like to see is a little good old-fashioned American job protection built into these massive bailouts we taxpayers are funding.

There it is in black and white. Blumnata thinks that protectionism is good. While there might be particular instances in which protectionism serves a useful purpose, the general idea of protectionism if flatly stupid during an international recession. It primarily accomplishes a reduction in the benefits nations receive from trade. And it wouldn't surprise me at all if Blumner knew absolutely nothing about the basic economics of guns and butter.

Bottom line: This leftish cheerleader wants policies that will worsen the economy.

And somebody lets her write a column at a major daily newspaper.

But let us return to the blather:

How about a new twist on the Buy American Act? That Depression-era legislation — now loophole ridden — requires that U.S.-produced products get preference when federal funds are expended.

Apparently it never dawned on Blumñata that the legislation occurring during the Great Depression was more than a coincidence. The protectionist policies of the Great Depression were begun under Herbert Hoover (Hawley-Smoot) and generally continued under Franklin Roosevelt. Unemployment never dipped below 14 percent under Roosevelt until World War II.

Talk about viewing the past through rose-colored glasses.

You want taxpayer money? Then don't buy additional parts from a factory built right over the border for the sole purpose of paying workers one-sixth what an American would make.

Yet, when Sen. Sherrod Brown, D-Ohio, pointedly asked the CEOs of the Big Three if they would agree, going forward, not to purchase foreign-made auto supplies at levels any greater than before a rescue, they all refused.

The explanation is simple: They aren't that stupid.

Economic upheavals are times of terrible dislocation, but they also present opportunities. We know what happens when government's sole concern is the protection of capital and its free flow — we're living it. Now the pendulum has to swing back to where labor interests and job protection become part of the policy equation.

Labor Unions enjoyed considerable influence during the Depression years, as did protectionist policies. We don't want the pendulum to swing back to double-digit unemployment, do we?

If The St. Petersburg Times editorial board weren't the ideological equivalent of the Biodome (self-contained and free of outside contamination) then maybe somebody could stop Blumner from wearing her economic ignorance on her sleeve.

Blumneconomics IX: election version

St. Petersburg Times editorial columnist Robyn "Blumñata" Blumner is back again this week peddling socialist Blumneconomics.

The cluelessness oozes out right away.

The young woman who cuts my hair, a wonderfully smart and self-possessed 20-something who chose hair styling over a Ph.D. she once pursued, told me recently that she had to enter an experimental clinical trial to get the chemotherapy she needs. There is no social safety net for people like her.

"I feel like my government doesn't care about my life," she said.

That's right. It doesn't.

And every time you hear Sen. John McCain or Gov. Sarah Palin talk sneeringly about Sen. Barack Obama wanting to be "Redistributionist-in-Chief," know that what they are really saying is that government shouldn't care.

Blumner just doesn't get it, and she may well admit as much if asked.

A government that cares would want the best result from health care in terms of the overall society. Let's say that "Anna" needs a treatment that costs $200 trilion. Unless "Anna" has some special value to society beyond that of other persons, the government would be completely irresponsible to pay for her health care requirement. Society would be better off not paying for "Anna" to have her expensive medical care. Yes, of course the cost is unrealistic, but I chose the amount to drive home the point. The same type of value disparities exist in any system.

And here is the important point: Conservatives prefer for individuals to make the determination as to whether individuals get medical care. The government can only care if individuals care, since the government is made up of individuals. Moreover, the Constitution does not enumerate a role for the federal government in drawing from the pockets of some to pay for the medical care of others. Our society has a history of addressing such issues through private charity, whether by individuals or groups. Conservatives believe that this system serves the society better. Those with no argument against the good of society will tend to cast conservatives as favoring an uncaring government--a fallacious emotional appeal.

The "spreading the wealth" drumbeat is McCain's last-ditch effort to win the presidency. The boo-line is supposed to suggest that Obama's plan to tax America's wealthiest citizens at pre-Bush-tax-cut rates is socialistic and confiscatory.

Is it accurate or not? Barack Obama explicitly wants to focus taxation on the top 5 percent of wage earners, in addition to promising corporate tax increases. Many wage earners will receive a bigger tax refund than they pay in taxes, via the Earned Income Credit.

McCain is counting on the American people not being smart enough to make the next deductive step in reasoning, which is that a government that refuses to tax substantial wealth has three choices: It can tax the nonwealthy to make up the difference. It can slash spending and abandon promises made to citizens, such as providing national security, maintaining programs like Medicare and veterans benefits, keeping the national parks open, etc. Or it can borrow the money it needs from other countries and rack up debts until our nation starts looking like a bad long-term investment to the rest of the world — this would be the George W. Bush model.

Blumner's false trilemma (providing three solutions as though they exhaust the possibilities when in reality they do not) stems either from overt dishonesty or something along the lines of economic ignorance.

First, the government under McCain would not refuse to tax substantial wealth. It would simply attempt to keep taxes on wealth (such as capital gains taxes) from hindering the struggling economy. Investment stimulates economic growth, and free market investment has a far better record of real-world success than investment planned by the government.

Second, taxing the non-wealthy probably can't make up the difference. The wealthiest five percent already pay about 60 percent of federal income tax revenues. That number probably wouldn't change much under McCain. But it would probably grow substantially under Obama, to the detriment of the economy. Obama tacitly admits it.

Third, slashing spending does not necessitate breaking promises unless one stretches the definition of a promise to the point of finding a duty for the government to bankrupt itself. The government cannot endure the projected growth of entitlement spending (Social Security, Medicare). If the growth of such spending is not slowed then the economy must pay the price. And that is the true dilemma. If taxes go up, the economy suffers. When taxes go down, the economy improves. Taxation can be described in basic form as a brake on the economy.

But McCain claims that he will eliminate the nation's soaring budget deficits by the end of his first term, and that he won't raise taxes on the middle class beyond taxing the value of their health insurance, which means gutting government is his only course.

Cutting government spending is necessary regardless, because the economy can't keep up with government spending as things stand. Closing down on the brake (increasing taxes) will result in less economic activity (such as job loss) and accordingly decrease revenue to the government. With less revenue, the government will feel more pressure to increase taxation, which can turn into a death spiral. Bankruptcy. Growing the economy increases revenue to the government since economic activity triggers existing taxes such as sales and income taxes (whether or not a net increase takes place with a tax cut should remain an open question).

It is a good question as to how McCain would balance the budget in four years. Some promises of the government, such as ethanol subsidies, probably cause a net harm and as such should be eliminated. Obama, of course, suffers the same budget problem--only worse. His policy promises to both increase spending and shrink the economy. That is, more promises, and a bigger share of the GDP required to meet them.

McCain promises to be the next Social Darwinist-in-Chief. He would manacle government, ensuring that it does not have the revenues to make the lives of my hair stylist, the local waitress and yes, even most plumbers, better and more secure. McCain's plan is to put an exclamation point on the "Ownership Society" a.k.a. the "You're On Your Own Society" launched by Bush and his neoconservative backers, where your life is valued by the size of your bank account.

I don't know whether Robyn Blumner has engaged in significant self-sacrifice to help others less fortunate. I know I have, and as such I know that conservatives like me value preserving the freedom for individuals and groups of individuals to choose those who will benefit from their charity and good will. The "You're On Your Own Society" is Blumner's scare tactic. You're on your own if you don't have either money or a supporting social network of some kind. Making the supporting social network universal in a given nation encourages the free rider problem and as such is bad for society. Our government should encourage a healthy society by discouraging the free rider problem.

For what it's worth, I can't find any instance online of Robyn Blumner acknowledging a free rider problem.

McCain's demonization of Obama's comments to "spread the wealth around" also says that he would rather win than lead. It attempts to deceive people into thinking that government can run on pixie dust.

"(D)emonization"? At least Blumner knows hyperbole. McCain knows that the American people do not like socialism. Thus it makes good sense to point out those policies from Obama that run against the grain for Americans. That's what makes it an election issue. It is hardly "demonization." Obama, in fact, is the one disingenuously playing up populism. He promises big things to the 95 percent at the expense of the 5 percent (who are already paying 60 percent of federal income taxes). And though Obama has admitted that soaking the rich will take a toll on the economy, he has downplayed that drawback of his economic plan while promising lower taxes on the middle class and a better economy. That plan runs on a considerable supply of pixie dust.

Redistributing wealth is what all nations do to one degree or another. In fact, there is no other way to describe the recent $700-billion rescue of the nation's financial sector. Here, with McCain's support, we have redistributed wealth upwards from average Americans to the institutions that employ a big chunk of the nation's multimillionaires.

Again, Blumner's writing seems to present us with a dilemma. Is she that ignorant, or is she lying?

You can call a trip to the 7-Eleven to buy a Slurpee and a hot dog a case of redistributing wealth, if you like. But obviously, until Blumner attempts the sidetrack, we were talking about government efforts designed specifically to average out incomes and prosperity. Progressive taxation is one facet of aim. Government largesse (as with Welfare and the EIC) is another.

The government's support of credit markets benefits all, for the consumers at the bottom of the economic ladder suffer the ill effects of nonexistent credit as much as anyone. Doing the bailout at the bottom of the ladder would not fix the credit market. Funds at that level would be too widely dispersed to allow for bulk lending.

It sounds nice to want to give money to families in foreclosure, but it would not fix the financial market problem that affects the economy of the entire world. And, as already noted, it was already the rich who paid most of the taxes that are being used (supposedly) to bail out the rich. Blumner creates the impression that the lower 95 percent somehow subsidize government benefits received by the top five percent. It's a bit like me complaining that my $x paid to the local government went to help fix a culvert near the rich man's property. It might as well have gone to replace a traffic light along the route I drive to work--but of course government funds don't work like that. It's all more or less in one big indistiguishable pot, and the rich guy probably paid far more in taxes than I did. He paid for the culvert and then some.

I'm not saying that the bailout wasn't necessary, just that if McCain wants to rail against redistribution, this is a much more appealing target. Obama wants to spread the wealth by retiring those Bush tax cuts that benefited the wealthy in order to pay for reforms to the nation's pockmarked health insurance system.

Can Blumner be that uninformed? Obama wants to do far more than that. He need not act to retire the Bush tax cuts. They have a sunset provision. Obama specifically wants to increase the capital gains tax to levels not seen since the early Reagan administration (held over from previous administrations) and start applying the payroll tax to income over $250,000. And his spending plans carry a gigantic price tag. They are not merely a set of health care reforms, as Blumner appears to suggest.

So let's see, which is more deserving of McCain's puffed-up fury: saving the jobs of investment bankers who brought ruin upon themselves due to unbridled greed, or protecting the health of America's uninsured children?

Blumner appears to favor false dilemmas. She already admits that she is not opposed to the "bailout" (hopefully because she recognizes the broad benefits). Why are uninsured children the other side of the coin? Who knows? The private sector has the ability to tend to uninsured children who experience health problems.

Which smacks more of the "evils" of socialized government: taking part ownership in a raft of banks, essentially partially nationalizing the banking sector, or creating an affordable public health insurance program as an alternative for Americans who don't get health coverage at work?

The latter, since buying a share in a bank does not require any government regulation or redistribution of wealth. If the shares do well, then nobody in particular loses. The creation of "an affordable public health insurance program" means that somebody is being forced to share the risk of others, creating a climate for "free rider" abuse by preventing control of costs by controlling risk.

Apparently Blumner doesn't see it that way. I wonder why? Too bad she offers no cogent argument, for that might have explained things.

There was a time when McCain cared about responsible government. In 2001, speaking on the Bush tax cuts, McCain said: "I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us." But that was when he was a redistributionist. Now he's just a desperate candidate in search of a winning strategy. Let's hope he hasn't found one.

On the contrary, let's hope he has found a winning strategy. McCain reversed on the Bush tax cuts because of the state of the economy. Obama's policies figure to make the economy worse (perhaps much worse) while McCain's should help.

Blumneconomics VIII: Let's copy the economy of Spain

From the title of this week's piece from Robyn "Blumñata" Blumner, I thought I might get the week off by ignoring another human interest editorial.

Old World of Spain can teach us how to live

She's tricky. Her column morphs from a travel log into a woe-is-the-American-economy screed in short order.

My new Spanish relatives-in-law regaled me with stories of their health care system, where no one has to worry about bankrupting themselves to receive top-flight treatment.

The new relatives probably heard through the grapevine that Blumñata would eat up stories like that.

The majority of the Spanish population thinks the health system needs to be changed. The problems cited relate mostly to long wait times to get health-care. Nevertheless, over the last 15 years, the proportion of people who have very negative views about the health system has decreased by half.

("Public trust in the Spanish health-care system")

The Spanish system has public and private health side-by-side, by the way. It is not a national single-payer plan, but the public system has the traditional problems of third-party payment.

More good stuff:

Yet even with such attractive national and cultural priorities for its workers and citizens — ones that undoubtedly have the side effect of tamping down worker productivity and wealth accumulation — Spain's currency, the euro, is trouncing our dollar.

In November 2000, the euro was worth about 84 cents. Now, it takes around $1.58 to buy a euro. For me that meant getting punched in the wallet at every meal and hotel.

You want a small plate of pasta for lunch? That will be a reasonable 12 euros — that is if you get paid in euros — or a pricey $19.

It's horrible being an American, isn't it? But hold it for a moment. What's the average salary in glorious Spain?

According to a report published yesterday by the Inland Revenue Office in Spain about the Spanish labor market and pensions, men earn salaries which are on average 30 percent higher than those of women. The average annual salary of men in 2004 was 17,964 euros, compared to 12,464 for women - a difference of 5,500 euros per year.
(euroresidentes.com)

Hmmm. Doesn't sound all that impressive. How about a comparison?

(W)e found that the Bureau of Labor Statistics reports the average annual wages in the U.S. as $36,764 for 2002.
(ask.yahoo.com)

Even if the Euro was worth $2 the average Spanish salary would be less than the average salary in the U.S. (the U.S. salary numbers were from 2004). Despite Blumner's whining she would probably have less to spend if she held her job in Spain as opposed to St. Petersburg, FL. So much for the advantage of being paid in Euros.

Blumner spends a paragraph or two wringing her hands about the weakening dollar. Apparently she wants to make more than her Spanish counterpart and have her dollar go further. She cites economists who associate the weakening dollar with the U.S. trade deficit. No doubt that's true to a point, but the weakening dollar is also an inevitable result of the global economy. We get to have a dollar that is worth a zillion Bolivian pesos essentially because things are rotten in Bolivia compared to the United States. As conditions elsewhere improve (which is what ought to happen as a result of the benefits of trade) the dollar will lose its relative value. Yes, that's bad in a way but it's also good in a way.

I do get a kick out of seeing Blumner come out implicitly in favor of American exceptionalism in the midst of extolling Spain, of course. Yes we must always make more than those in other countries! That sounds fair!

There may also be a psychological aspect to our current fix. Note that the dollar's decline has been concomitant with the fall of America's international stature.

Why bet on the growth and stability of a nation that is a spendthrift debtor, hubristic bully and unapologetic torturer if there are reasonable alternatives like the European Union?

More of that patented brain-dead economic analysis. As noted above, the decline of the dollar is pretty much inevitable in a global economy that isn't rigged to keep Americans as the top dogs. And while that certainly doesn't mean that we need to speed the process artificially, it at least leads to Blumner's latter point(s).

Spendthrift debtor? Not in relative terms, yet, but give the Democratic Congress time to expand on already crippling entitlement spending and then maybe we can talk.

Hubristic bully? Yeah, you do bet on the hubristic bully if you expect a good return on your investment. If the hubris is not reasonably in proportion to ability, then you hedge your bets. And you don't bet on ability in the lack of self-confidence, either. When the more athletic fighter is a soft coward then think about betting on the other guy. Wasn't Blumner one of those who was sure the hubristic bully would inevitably lose in Iraq? Did you lose your shirt on that bet, Blumner?

"(U)napologetic torturer." Apparently eyes are closed to the global war on terrorism as well as to the aggressive surveillance methods the Europeans have sometimes used in recent times. If the European Union does not aggressively stand up to Islamo-nazi terrorism then bet on the terrorists.

Note to Blumner: Facts are stubborn things.

And one more thing about the grand Spanish economy. Try an unemployment rate of about 10 percent.

clipped from bp2.blogger.com

If Bush had led the United States to a 10 percent unemployment rate we might expect Blumner to call for a revolution. That isn't the only weakness to the economic picture in Spain, by the way.

Failed again by our savior

Robyn "Blumñata" Blumner of The St. Petersburg Times graces us with yet another editorial sermon this week.

She starts out with a hellfire & brimstone bang:

Once again the taxpayer comes to the rescue of investors.

She's fueled again by her outrage that the supposedly sensible socialism of redistributing wealth from the rich to the poor is being turned on its head by the federal bailout of lenders. It's as though she doesn't realize that the investors are, generally speaking, the taxpayers.

clipped from www.ntu.org

Percentiles Ranked by AGI	AGI Threshold on Percentiles	Percentage of Federal Personal Income Tax Paid
Top 1%	$364,657	39.38
Top 5%	$145,283	59.67
Top 10%	$103,912	70.30
Top 25%	$62,068	85.99
Top 50%	$30,881	96.93
Bottom 50%	<$30,881	3.07
Note: AGI is Adjusted Gross Income Source: Internal Revenue Service

This isn't Blumner's point, however. This is just one of those nuggets of disinformation we are regularly fed by newspapers as the background for the latest news and opinion.

Her real point concerns the plight of low wage earners, in particular the way nobody looks out for them.

A scathing review of the way workers' complaints have been mishandled and ignored by the Wage and Hour Division of the Labor Department has just been issued by the Government Accountability Office — Congress' investigative arm. The two reports (first and second) released Tuesday highlight the way the division has failed to follow through on valid complaints, particularly for low-wage workers, leaving some cheated out of thousands of dollars in earned wages.

Blumner, who regards the powerful federal government as pretty much the best thing about the United States (see here and here), puts herself in an odd position with this column. The bad guy in this tale of woe is the federal government. And credit to Blumner for not trying to pin the fault on George W. Bush this time, which must have been a terrific temptation for her. The GAO reports make clear that the trend easily encompasses the previous administration.

And what is that trend? Quite simply, a decreasingly vigorous attempt at enforcing labor laws, though in the first report cited, at least, a big part of the problem with the government agency in question (the Wage and Hour Division of the Department of Labor) is its shifting criteria for its own success.

The extent to which WHD’s activities have improved FLSA compliance is unknown because WHD frequently changes both how it measures and how it reports on its performance. When agencies provide trend data in their performance reports, decision makers can compare current and past progress in meeting long-term goals. While WHD’s long-term goals and strategies generally remained the same from 1997 to 2007, WHD often changed how it measured its progress, keeping about 90 percent of its measures for 2 years or less.

So the government is doing a horrible job. Our supposed savior doesn't give a flip.

Predictably, Blumñata uses her bully pulpit to condemn the government's sin of not having enough government employees to stem the tide of private sector evil. If we would just hire enough deacons (at a comfortable living wage, no doubt) to ensure that employers were properly obeying laws that tend to hurt overall employment and discourage workers who want to work overtime from having that opportunity then the entire congregation would be happy.

Perhaps they'll have to be encouraged to give more when the plate is passed. But Blumner would see that as a good thing.

What she isn't likely to notice is that fact that what she called the "best" thing about our country back in March has failed us yet again. And I've got news for her. It's a pattern. Blumner was right when she wrote that the market by its nature is uncaring. When she begins to realize that the same is true of government then she'll begin to have a clue as to what she's talking about.

Good people make the difference in either case, but the free market has no built in hindrance from the demons of bureaucracy.

Blumneconomics VII

This week The St. Petersburg Times' own editorial pinata, Robyn Blumner, swings into action to decry the actions of employers who hire undocumented workers.

This review of Blumner's column warrants the "Blumneconomics" label because it illustrates yet again how little Blumner appears to understand about economics.

I'll spell out that obvious economic principle and then explain how Blumner blunders in her analysis.

Expanding the supply of labor will decrease the price for labor (wages). The United States, of course, has an artificial wage floor, called the minimum wage. The minimum wage, along with overtime laws, helps ensure that fewer workers will find employment (higher prices for labor cut demand for labor).

Now heeeeeeere's Blumner:

Agriprocessors, the nation's largest kosher meatpacking plant, is at the center of page after page of sickening accusations. These are contained in an affidavit for a search warrant filed by a federal agent with U.S. Immigration and Customs Enforcement (ICE).

• Undocumented workers from Guatemala and Mexico were paid as little as $5 per hour — below minimum wage.

• A supervisor made a side business of selling the workers used vehicles, sometimes threatening them with loss of their job if they didn't purchase one.

• A supervisor duct-taped the eyes of an employee, who was then hit with a meat hook. The employee declined to report the incident for fear of being fired.

First, note that Blumner fails to acknowledge that the workers came here to work for less than minimum wage. Unless they were kidnapped from Guatemala or held near the plant against their wills then they have little complaint. They appear to have chosen their situation, even if it is the lesser of two evils.

Second, note that the employee who was hit with a meat hook wanted to keep a job where his supervisor duct-taped his eyelids and after which he was hit with a meat hook. It is apparent in each of Blumner's bullet points that the workers wanted the jobs they had.

The two observations above, combined with U.S. law, creates a conundrum that Blumner likewise fails to acknowledge: If the company follows the law then the undocumented workers receive no income. In addition, if the company reports the illegals then the law calls for deportation. Worser of two evils, here we come.

So, it seems that Blumner's unstated prescription involves paying the undocumented workers (yes, feel free to substitute "illegals" if you disdain the euphemism) no less than the minimum wage of legal U.S. residents. And if she does not advocate ignoring the law, then Blumner also (silently) advocates either a guest worker program or some sort of relaxed stance on immigration.

And what is the result of such a policy, unacknowledged by Blumneconomics?

Answer: A bigger work force with almost certainly fewer skills with a resulting increase in unemployment (greater labor supply combined with the wage floor). High unemployment along with the (enforced) wage floor results in less demand for work--the draw for immigrant workers decreases--unless of course the immigrant workers are entitled to unemployment, welfare or Social Security benefits.

How is this a good thing for the United States? How is it a good thing for Mexico?

Blumner apparently doesn't have a clue. For her, this is all about the evils of big business:

Federal agents have also arrested two low-level supervisors, including one who is alleged to have charged workers $200 for new documents so they could continue working at the plant.

This is a start, but the arrests need to continue up the chain to the plant's top managers and owners.

And after the plant's top managers and owners are either in jail or fined heavily ... who is supposed to run the plant? If the plant closes then what will the former employees do for work? Perhaps the Federal Government Employment Fairy will fly to the rescue?

Blumneconomics VI

That piñata of The St. Petersburg Times, Robyn Blumner, is back swinging from the twine with her vulnerable underbelly exposed.

Democratic shill that she is, Blumner is once again extolling Democratic economic policies, this time by repeating the thesis of liberal economist Larry Bartels of Princeton. Bartels, as Blumner tells it, says that Democratic presidents cause real income to rise for working folks.

Blumner doesn't bother telling you that Bartel's thesis is widely questioned, even by another of her liberal economist heros, Paul Krugman. And why should she tell you? Her purpose in writing isn't to help you learn about economics. She doesn't know a lick about economics anyway, so there's not much she could tell you in the first place.

So what does this all mean?

Inflation is good for the poor in the short run, since many poor are debtors. But inflation is bad for the poor in the long run. Just ask anyone who lived through the New Zealand inflation of the 1970s.

So Bartels could have entitled his key graph: "Democratic Presidents live for the short run and we need a Republican President every now and then."

(Marginal Revolution)

Put another way, Democrats pander to their key constituencies, and the associated policies do have short-run effects on working wages. Alex Tabarrok at Marginal Revolution, in a different post, tells of a business cycle theory that has long been invoked to explain the numbers.

Blumneconomics V

Robyn Blumner, that pinata of The St. Petersburg Times, allowed her demon of demagoguery full rein this week.

In an editorial titled "Robyn Blumner: Socialism bails out a big bank," Blumner offers her analysis of one of the proposed fixes of the subprime mortgage problem. The federal reserve loans to troubled banks, she says, represent socialism.

I understand that economic disaster may have ensued had Bear Stearns simply been allowed to go bankrupt and had the machers in the investment world been left trying to pawn their collateralized securities for what they could get. But what a sweet gig it is to be a member of the master-of-the-universe class. First, you are awash in money created by risk-laden investments that disregard all warning signs; meanwhile, the rest of working America lives with stagnating wages even as the economy expands. Then, when all those investments collapse, you are considered too big to fail and the government swoops in to keep you afloat.

Socialized risk is what this is called. Heads they win, tails we lose.

So. Even though Blumner supposedly understands that the loans helping to maintain Bear Stearns' solvency may be averting economic disaster for us all, somehow "heads" simply means "they win" while "tails" simply means "we lose." Can Blumner justify the claim? Hopefully she will at least identify which aspect of the coin corresponds to which outcome of the scenario.

Hmmm. No such luck. But at least there's ample brain-dead analysis.

What I can't get out of my head is the way we've been suckered again into believing the malarkey sold by Milton Friedman, Ronald Reagan, Alan Greenspan and a long list of conservative think tanks, that the market is our savior. It is so convenient to make government the bad guy, the one who interferes with everyone's pot of gold, and make open markets the answer to what ails, as Reagan did so often. But the historical reality is that the free market has a dark side that causes social displacement and instability, and by its nature it is an uncaring thing.

The subprime mess has its origins in government regulation, though it would probably kill Blumner to admit it even if she was aware of it. Under President Clinton, the government made moves encouraging high-risk loans. It was justified at the time as a salve to supposedly racist lending patterns. Lower income (many black) people had trouble securing loans. President Clinton wanted to make home ownership easier. As part of being the "first black president," I suppose.

There is a problem with high risk loans.

They are risky.

So here we have those "greedy" banks. At first they're greedy because they won't share the benefits of home loans with the high risk borrowers including the poor. Then they're greedy because they will share the benefits of home loans with high risk borrowers and the poor.

So we know they're definitely greedy, at least if we share Blumner's starting assumptions.

Blumner paints right over the truth with her broad brush. No doubt some loans were made based on selling a bad financial product to a consumer who was misled. But the problem is shared by consumer "greed"--the desire to have a home that one can barely (if that) afford, which makes the consumer more apt to accept a risky loan arrangement.

The Clinton administration was right there encouraging risky loans. But the problem stemmed from the free market?

The market is not the best part of America. Not even close. Our government is the best part — or at least it used to be before the current gang took over.

Blumner should submit the above in a competition for a "Progressive Pledge of Allegiance."

America's greatness comes from its ideas and its people. The greatness of the government stems from the early recognition of what should be forbidden to the government (the right to infringe on unalienable rights, among other things). Blumner's claim simply points up a blindness to history as well as a blinding bias in favor of her own political views.

So after the government's done rescuing Wall Street, the rest of us could use some kind attention too.

"I understand that economic disaster may have ensued had Bear Stearns simply been allowed to go bankrupt ..." No, you don't, Ms. Blumner. Or else you would have recognized that "the rest of us" get attention via the loans to Bear Stearns. Heads we all win a bit more than we lose, tails we all lose a bit more than we win.

Blumner would have my vote as the worst editorialist on the planet. But maybe I'm just not sufficiently aware of her competition.

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Obama and economics

Captain Ed Morrissey, posting from his new digs over at Hot Air, highlights a story on Sen. Obama's economic rhetoric and offers his own trenchant commentary.

Many people have compared Obama to Ronald Reagan in his ability to promise “morning in America,” but they have focused only on the most superficial part of the Reagan revolution. Reagan didn’t cast himself as the agent of hope, but appealed to the hope within Americans that they could lift up the country, and not the other way around. He focused on the hope of the individual as the true agent of change, and not the despair of the collective that required government intervention.

The rhetoric has given us nothing really new. It has the same populist ring to it that we have heard since before collectivism got entirely discredited in the latter 20th century. It’s simplistic calls to soak the rich and redistribute the wealth, to impose economic isolationism, and to prey on the fears of the working class by casting globalization as an unmitigated evil.

(Be sure to read the rest at Hot Air)

I've got to admit that "Obamanomics" has a nicer ring to it than "Blumneconomics."

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