Income mobility – sticky at the top and bottom

Good writeup today in the Wall Street Journal about income equality and mobility. Very detailed data from a 2005 Bush Treasury Department analysis.

The chart tracks households across two year – 1996 and 2005 – to see how much people moved from one quintile to another. It isn’t too surprising to see that there is a lot of stickyness at the top and bottom.

  • At the top end, 61% of workers that were in the top quintile in 1996 were still there in 2005
  • At the low end, 55% of workers that were in the bottom quintile in ’96 were still there in ’05


Source: Wall Street Journal

Apparently the analysis shows that income mobility has declined in recent years. I guess that is bad.

Continue reading Income mobility – sticky at the top and bottom

Keystone XL – Is there a better route for transporting the oil?

Source: Politico

Read this this morning in the Wall Street Journal:

Credit Suisse analyst Ed Westlake puts it this way: “From a transportation perspective, which is more environmentally risky: Shipping crude across the Rocky Mountains to the British Colombia coast, loading the crude onto tankers which sail down the California coast, through the Panama Canal and into the Gulf of Mexico or building a [southern] pipeline to the latest safety specifications?”

Quite so. Continue reading Keystone XL – Is there a better route for transporting the oil?

US jobs data

I came across this blog today by Scott Grannis, a supply side economist who worked in institutional money management and is now apparently retired. It has some great info. Lots of charts – I like charts.

This one about private sector vs. public sector jobs over the past decade or so is especially helpful.

Obama: Job Killer-in-Chief

Geez, yesterday Obama punted on the Keystone XL project that the State Department had approved a couple of months ago after a 2-year review process. I wrote about this before here.

For all his endless rhetoric about creating jobs, it appears there aren’t too many kinds of jobs that Obama actually finds worthy of pushing thru.

From my perspective, he’s stymied or outright blocked job creation in the following sectors:

  • Energy sector in all it’s forms, except green jobs (too dirty)
  • Defense sector (too violent)
  • Aerospace (Boeing action)
  • Medical devices / products (more restrictive FDA)
  • Financial services in it’s many forms (Dodd-Frank, etc.)
  • Telecom sector (killed AT&T / T-Mobile merger)

Continue reading Obama: Job Killer-in-Chief

“Logic of Capitalism” – not

In today’s New York Times business section, they have some photos of Occupy Wall Street protesters. Several are carrying signs. One sign held by an older woman identified by name as an educator from Vermont says this:

Logic of Capitalism
You cannot be rich without making others poor

I think this captures a major difference between Democrats and Republicans.

Dems see the economy as a zero sum game where wealth is limited and one can only get more by causing another to get less. GOP subscribes to the ‘rising tide lifts all boats’ idea. This idea is often ridiculed by the left, but it is clearly the more operative reality.

The economy is not a zero sum game and, in the general case, rich people aren’t getting rich by causing others to be poor. For example, who got poorer as Steve Jobs got richer? Answer: nobody. To the contrary, we all became better off.  How about Bill Gates? Nope, his innovations created jobs for millions. Same for the Google founders.  Same for any wealthy business innovator / creator.

Her argument might apply to certain types of wealthy folks – notably monarchs and dictators who pillage their countries – but these are not the types of people she’s referring to (I don’t think) and, debatably, they aren’t even capitalists.

I would provide a link to the photo cause it is great, but I cannot find in in the online edition.

Crowdfunding might actually go legit

Due to Dad’s lifelong passion for small public offerings, I’ve been watching the evolution of crowdfunding in recent years. Even though it exhibits many of the qualities Dad thought should exist in allowing small investors to participate in small scale funding of businesses, Dad never much responded to the crowdfunding idea. Too newfangled.

crowdfundingToo late now, but possibly he’d have gotten a bit more interested now that it’s getting much wider and more serious consideration. The crowdfunding proposal that’s been at the SEC for a while now has still not been ruled on, but more and more voices are being heard on the topic. It is starting to feel like it is inevitable that some reasonably robust form will get cleared.

An article today in the NYT gives a good summary of the state of play: “Pennies from Many“. Many good points are offered, including this synopsis of crowdfunding:

“Crowdfunding has the sort of populist, common-sense appeal that resonates with free-market libertarians and champions of the working class. By marrying online social networks with finance, this model offers a more democratic model of finance, in which individuals can directly fund other individuals or businesses that they deem worthy, without going through a bank or Wall Street middleman.”

And apparently, even the Obama adminstration, which in many ways seems intent on tightening the reins on commerce wherever it can, supports it:

“The Obama administration… is supporting crowdfunding…President Obama, as part of his jobs act, advocates an exemption for sums totaling up to $1 million.”

The key issue is how the SEC wants to proceed. They have, for years, enforced very tight restraints on who can invest in what. In my opinion, these restraints are a contributing factor in the concentration of wealth that has risen over the past generation. The SEC, in its efforts to protect regular folks from being ripped off by scams, only allows the wealthy to invest in deals that generate wealth. One can understand why they want to protect people from the downside risk, but as they do so, they also prevent them for participating in the upside gains. Not obvious to me that they’ve struck the right balance.

Even if the SEC approves crowdfunding, it surely won’t fully address the imbalance since the most attractive deals will continue to flow through VCs and i-banks, but still, it would be a step in the right direction.

8.8 Billion Hours Spent Completing Regulatory Paperwork

The Wall Street Journal today reports about an OMB study which indicates that Americans spent 8.8 billion hours filling out federal forms in 2010. This is down from 2009, but apparently due to a more favorable formula for calculating the figures.

Full article here: White House Tallies Hours Spent Filling Out Forms (paywall)

The OMB study indicates that despite supposedly decreasing in the past year, the burden has increased by 19% since 2000.

Various stats are offered:

  • 70M additional hours in 2010 for employers to claim a new credit for hiring more workers
  • 14.5M additional hours for restaurants to display calorie counts on their menus

The SEC also had the biggest year-over-year increase as a result of doubling its estimate of how long it takes to fill out its forms.

If you do some simple math, you can see that 8.8B hours equals roughly 4.5M full-time workers – or 3.8% of the workforce (153.6M workers – 14.0M unemployed, 1,928 applied work hours per person).

Many would argue this isn’t nearly enough, but I suspect the opposite is true – and it is likely to go well higher with ObamaCare, Dodd-Frank, and numerous other regulations in the pipeline.

Regulatory Paperwork Burden
Regulatory Paperwork Burden

Does the US Government spend enough?

As Democrats loudly complain that the Federal government doesn’t spend enough, I got to wondering how our spending compares to other countries. I was thinking of real measures, not abstractions.

I had in mind education and health care where we’re always being told we need to spend more when, in fact, we already have some of the highest spending levels in the world. Did this high spending also apply to government spending?

So I did a quick look for government spending per household or per capita – and it turns out it mostly does apply: we are not spending laggards.

This type of data does not appear to be widely available – it seems a worthwhile, but underdeveloped area of analysis. I found only two different sources, but they each show basically the same thing.

Continue reading Does the US Government spend enough?

It’s all Bush’s fault!

Even 3 years into Obama’s presidency, commentators and commenters are constantly blaming it all on Bush. As we sit here in mid-2011, they make it sound like it has been obvious since Day 1 that Bush left the economy in terrible, terrible shape.

It's all Bush's fault!Seems to me that this is revisionist and largely a response to the reality that Obama’s policies have not worked out very well. As they continue to fail, the left has to blame someone and, surely, it is not going to be Obama. Since they all already hate Bush, he’s an easy target.

I’d raise two points about why this is revisionist:

First, if Democrats knew the economy was so bad when they took office, why did they move so quickly (Stimulus was passed within 3 weeks of Obama’s taking office) from the Stimulus to ObamaCare, Cap and Trade, Dodd-Frank, and other programs.  Surely, none of these could be seen are primarily focused on rescuing the economy or creating jobs. If it was obvious the economy sucked, there is no reason they should have done anything but focused like a laser on additional economic and jobs initiatives.

Continue reading It’s all Bush’s fault!