In a recent NBC interview, President Obama blamed ATMs for taking away bank tellers’ jobs, and computerized airline check-in kiosks for eliminating aviation jobs. Communications Coordinator Lee Doren points out that innovation doesn’t affect the number of jobs so much as the types of jobs. Accomplishing more while using less labor is actually the key to prosperity. People looking for an explanation for today’s high unemployment need to look elsewhere.
Comments Off on CEI Podcast for June 15, 2011: Do ATMs Kill Jobs?
Posted in CEI Podcast, Economics
Tagged atms, basic economics, cafe hayek, causes of unemployment, Don Boudreaux, econ 101, economic fallacies, Economics, jobs, jonah goldberg, lee doren, luddites, obama, obama atm, president obama, unemployment
“I have decided to repeat George Bush’s mistakes.”
Posted in International
Tagged foreign policy, libya, libya speech, middle east, obama, president obama
President Obama has caused a stir recently by declaring that the Chamber of Commerce, which is running ads critical of his policies, is funded with foreign money.
It’s a weak criticism. And not just because the amount of foreign money involved is trivial. Or because labor unions and other political groups across the spectrum also accept small amounts of foreign money.
President Obama seems to be saying that people are smart enough to know whether or not a candidate or a political party is bamboozling them in their campaign ads. But people suddenly lose their wits when an outside group, or – gasp! – someone from another country does the exact same thing. That kind of cognitive dissonance must be difficult to live with.
Because arguments against foreign money in politics are so weak, people who use those arguments are either ill-informed or lying.
Lying is much more likely in this case. If your own arguments are weak, a common tactic is to distract your audience and hope they don’t notice. It works more often than not. Here, President Obama is taking advantage of the fact that almost all people suffer from anti-foreign bias. Not racism. Anti-foreign bias. They’re different. And pandering to that bias can be extremely useful politically.
Why does such a cheap tactic work? It’s because anti-foreign bias is in our DNA. Our hunter-gatherer ancestors lived in small bands. Anybody outside that band was a very real threat to steal food, clothing, or potential mates. So people learned to be wary of outsiders. It was good for one’s life expectancy.
As tribes became villages, towns, cities, and now nations, the number of people we consider insiders has grown. And we treat outsiders much better than we used to. Trade is more common than war in most places. But most people are still instinctively leery of outsiders. It is our nature.
That’s why it’s disappointing to see President Obama so cynically play that card. Clearly he and the Chamber of Commerce prefer different policies. It would be nice to see the President engage the Chamber at a higher level than the ad hominem.
Comments Off on Foreign Money Is Not the Problem
Posted in Elections, Free Speech, Political Animals
Tagged ad hominem, ads, anti-foreign bias, barack obama, campaigns, chamber, chamber of commerce, foreign money, obama, president obama, thinkprogress
The House passed a budget enforcement resolution yesterday. It sets 2011’s discretionary spending $7 billion below what President Obama has requested.
Next year’s discretionary spending target is $1.12 trillion for next year. The $7 billion difference represents savings of 0.625 percent. Barely a rounding error. If total spending (including mandatory and defense spending) ends up at $3.5 trillion next year, the savings becomes 0.2 percent.
Of course, 2010 discretionary spending was $1.39 trillion. 2011 spending will very likely end up much closer to that than the targeted $1.12 trillion. The appropriations process is not kind to non-binding resolutions, however well-intentioned. Especially when the resolution “doesn’t detail how Congress should reach that [deficit reduction] goal.”
Congress lacks the will to cut $270 billion of spending. The interests benefitting from that spending will scream bloody murder the second their programs are put on the chopping block. In an election year when incumbents are more fearful than usual, no politician worth his salt wants to cause an uproar.
Congress need not worry too much, though. Even in anti-incumbent years, re-election are almost always above 90 percent. The vast majority of congressional turnover happens through retirement, running for other office, or death.
The pattern is holding this year, so far. The University of Virginia’s Larry Sabato recently pointed out that 5 incumbents have lost their state primary elections this year, while 240 were re-nominated. That’s a 98 percent success rate. There will be a few more casualties, especially in the November general elections.
Most members are safe. They can, and should, rock the boat by cutting unnecessary spending. If anything, the most aggressive cutters might become folk heroes like Chris Christie in New Jersey. They just don’t have the guts.
I will be more than happy if Congress proves me wrong. We’ll find out over the next few months.
Comments Off on Making a Difference – A Very Small Difference
Posted in Economics, Elections, Political Animals, Spending
Tagged budget enforcement resolution, chris christie, congress, deficits, election 2010, incumbents, larry sabato, nonbinding resolution, obama, president obama, Public Choice, spending, spending cuts, trillions, university of virginia
March 31 was Cesar Chavez Day. It has been celebrated in California for some time. A few other states also recognize the holiday. But this year, for the first time, it was a national holiday.
The trouble is that nobody knew it at the time.
On April 2, the White House filed a Presidential Document declaring the holiday. It ran in the April 5 Federal Register, five days after the fact.
You’d think this would have been announced in advance. But Chavez remains a controversial figure. And the gesture will be seen by President Obama’s adversaries as yet more evidence of his capture by labor interests.
The president could rebut those charges directly. Instead he actively avoided confrontation, which is one way of admitting guilt.
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Posted in Political Animals
Tagged cesar chavez, cesar chavez day, labor, obama, president obama, unions
The Senate just passed an $18 billion spending bill. Since the House already passed it, the legislation is now headed to President Obama’s desk to await his signature and become law.
The hope is that the spending will create jobs. If you’re reading this blog, then you probably know enough about economics to know that isn’t what will actually happen. Remember: anything that Washington giveth, it must first taketh away from somewhere else. It’s a zero-sum game. All those new jobs that politicians will be touting for the cameras will have come at the expense of other jobs elsewhere. On net, they’re not creating a thing.
Take the payroll tax break for small businesses that’s in the bill. Yes, those small businesses benefit. Maybe the money they save will even be used to hire more workers. That’s easy enough to see. But that money had to come from somewhere. That is harder to see. Too hard for the Senate to see, at the very least.
The reason is this: the government is foregoing some payroll tax revenue. But since it isn’t cutting spending to match, it has to borrow more. And there’s only so much investment capital to go around. Because Washington is borrowing more, less is left over for private investment opportunities. At the very least, companies will have to offer investors higher interest rates to lure them away from government bonds.
That makes getting loans more expensive. And when something gets more expensive, there tends to be less of it. Because of today’s bill, about $18 billion less capital will be available for the private sector to create jobs.
The legislation the Senate passed today is no jobs bill, at least on net. It is a spending bill. It doesn’t create jobs, it only redirects them.
Comments Off on Senate Passes $18,000,000,000 Spending Bill: Will it Create Jobs?
Posted in Economics, Spending, Stimulus
Tagged barack obama, billions, creating jobs, Economics, jobs, jobs bill, jobs saved or created, obama, overspending, president barack obama, president obama, profligate spending, senate, spending, Stimulus, unemployment, us senate
George Will has a good column today. He does a wonderful job contrasting Hayek’s philosophy of humility before complexity with the early 20th-century progressive mindset of planning and scientistic design. The framework applies surprisingly well to today’s health care debate, with President Obama playing the role of Woodrow Wilson. Very thought-provoking.
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Posted in Economics, Health Care, Philosophy, Political Animals
Tagged barack obama, george will, hayek, Health Care, health care debate, health care reform, humility, obama, president obama, progressive, progressivism, uncertainty, woodrow wilson
Sen. Richard Shelby, who placed holds on over 70 of President Obama’s nominees, has lifted all but three of them. Politico reports:
A spokesman for the senator said Monday that with attention brought to these two concerns, the political maneuver had “accomplished” its goal and was no longer necessary.
Translation: “We were getting too much bad publicity.”
The three holds that Sen. Shelby is keeping in place have directly to do with the Alabama-based pork projects that he believes will make him look good to the Alabama voters he will be facing in November. So, in a way, nothing has changed.
This brings up a legitimate question: can earmarking abuse sometimes be an agent for smaller government?
Few, if any, of President Obama’s appointees will work to decrease the size and scope of government. Now that their path is cleared, they will probably do net harm to taxpayers. This is the nature of government workers, whether Republican or Democratic.
Sen. Shelby’s motive for blocking them is despicable: stealing from taxpayers to improve his re-election prospects. But one wonders if those same taxpayers would have been better off if Sen. Shelby had stuck to his guns.
Posted in Earmarks, Economics, Elections, Political Animals, Public Choice
Tagged alabama, alabama senate 2010, Earmarks, election 2010, holds, limited government, obama, obama nomination holds, obama nominee holds, pork, president obama, Public Choice, richard chelby, sen. richard shelby, sen. shelby, senator chelby, senator richard shelby, shelby
Meant to post this earlier. Here’s last night’s live-blog of the State of the Union:
8:46 Welcome to CEI’s live-blog of the 2010 State of the Union address. President Obama will be touching on all kinds of issues tonight. And I’ll have something to say about them all. But I’ll be paying special attention to what he has to say about regulation and spending. Keep refreshing this post every few minutes for fresh commentary.
8:54 Important people are filing in. Pundits are bloviating. Welcome to Washington.
8:58 Here comes the cabinet.
9:00 Peter Orszag and Christina Romer are there. Romer has done some excellent research on the Great Depression, by the way. Any monetarists out there would find much to like about what she has to say about monetary policy vs. fiscal policy.
9:06 The President enters. Much applause.
9:06 While waiting for the applause to die down, I’ll add that Romer thinks that monetary policy is what drives business cycles. Fiscal policy, such as stimulus spending, has little effect. I largely agree.
9:10 Speaker Pelosi introduces the President. Much applause. Many “thank yous.”
9:11 It begins.
9:11 He refers to the Constitution. Heh.
9:12 American exceptionalism. Neocons cheering somewhere, no doubt.
9:13 He inherited a bad situation. True enough. We must act? Not so much. The recession is largely a creation of over-active monetary and regulatory policy. Not a lack of policy.
9:14 First reference to “the children.”
9:15 He has said both “hope” and “change” already. Campaign 2012 has begun.
9:17 First standing ovation.
9:18 A government that matches our decency? Public choice theory is unknown on Capitol Hill, apparently.
9:18 He hates the bailout. Good! Why did he go through with it, then?
9:18 It was necessary. Unemployment would have doubled. Hyperbole. Now banks know they can continue taking stupid risks and get bailed out for it.
9:19 touts his fee on big banks that received bailouts.
9:20 20 tax cuts. Net tax cuts. While spending goes through the moon. Tax cuts are great, but spending cuts are more important. A tax cut now is a tax increase later if spending isn’t cut to match. An increase. Not a decrease. An increase.
9:22 Many jobs created. Touting the stimulus. Which takes money out of the economy, wastes some of it on bureaucracy, then puts it back into the economy. First instance of the broken window fallacy.
9:23 Anecdotes, people helped by stimulus spending. He sees what is seen. But not what is unseen. Those jobs, and that money, came from somewhere else. Each job created is one lost elsewhere.
9:25 Jobs, jobs, jobs. Bryan Caplan’s make-work bias lives.
9:25 Business creates jobs. Government can help. But only by taking money from somewhere else, and hurting businesses elsewhere. No net effect.
9:26 $30 billion transfer from “Wall Street” to “small businesses.”
9:27 small business tax credit. Eliminate capital gains tax on small businesses. Nice, but tax code simplification would be better. Lobbyists will be all over this one.
9:28 Infrastructure!
9:28 Rail! It’s the 19th century all over again.
9:29 Clean energy. Higher energy bills for all!
9:29 Keep jobs in America! Efficiency be damned! USA! USA! USA!
9:30 Jobs bill, ASAP. But full employment requires…
9:31 still waiting…
9:32 still waiting… the virtues of China’s economy…
9:33 financial reform! For starters. But don’t punish banks. Prevent recklessness. Good. Prevent dumb risks. House has already passed some reform. But lobbyists are all over.
9:34 And they will be as long as Washington is doling out money.
9:34 Plank 2: Innovation and science. More clean energy. More nuclear power. More offshore oil. More biofuels and clean coal. Comprehensive clean energy bil. Cap-and-trade light?
9:36 Consensus on global warming. Jeers from the crowd. Acknowledges doubts, touts clean energy again.
9:37 Plank 3 – trade. More exports! Double them in 5 years = 2 million jobs. National export initiative. Trade, of course, has almost zero effect on the number of jobs. It only affects the kinds of jobs. Also take measures to decrease imports. Renegotiate Doha. Is this a new protectionism?
9:40 4th plank – education. Only reward success. Not failure. Nice. Of course, that would mean less federal involvement in education, not more. Washington has no idea how to educate kids hundreds or thousands of miles away.
9:41 End taxpayer subsidy to banks for college loans. Substitute a tax credit and increase Pell grants. Forgive student loans after 20 years. Why bother paying back, then? This will bode well for future deficits.
9:43 Social Security fix – lend more to homeowners. Yeesh.
9:43 Health care!
9:44 Acknowledges unpopularity.
9:44 Anecdotes!
9:45 Blames insurance industry for regulatory failures. Emphasis on preventive care; no empirical research is cited for obvious reasons.
9:46 We can save money by spending money.
9:46 Reduce deficit by $1 trillion over 20 years. Last year and this year alone will incur nearly $3 trillion in deficits.
9:47 Temperatures cooling? Oh wait, he’s talking about health care.
9:48 Open to other proposals. Not bloody likely.
9:48 Pass a health care bill, any health care bill.
9:49 Spending.
9:50 Blames Bush for the deficit. Rightly so! Where’s he going with this, though?
9:51 Adding debt was the right thing to do. No mention of “the children” who will ultimately pay for it.
9:51 freeze certain types of discretionary spending for three years. This excludes most spending.
9:52. Save $20 billion this year. Or less than one percent of total spending.
9:53 Bi-partisan fiscal commission. Not exactly the Gramm Commission. Good idea, but beware the execution. Wayne Crews and I have done some research on this.
9:54 Pay-Go budget keeps spending in line. The data say otherwise.
9:54 Oh, the freeze won’t take effect until next year. The crowd laughs.
9:55 Says Bush cut regulations. Actually, he passed more than 30,000. See CEI’s Ten Thousand Commandments study for the exact numbers.
9;56 Deficit of trust in Washington, not just dollars. There’s a reason for that, you know. Two of them are the Republican and Democratic parties.
9:57 Excluded lobbyists from policymaking jobs. That isn’t actually true.
9:58 Doesn’t like the Citizens United decision. Or the First Amendment, for that matter. Wants a new campaign finance regulation bill. Presumably so it can be struck down on First Amendment grounds like the last ones.
9:59 I’m liking what he has to say on earmarks. Good luck to you, sir.
10:00 “can’t wage a perpetual campaign.” Tell that to Organizing for America.
10:01 Partisan politics get in the way of doing things. He’s right. And that’s exactly why I like gridlock.
10:02 Hey Republicans, no filibusters, please.
10:03 Will be talking more to the other side of the aisle.
10:03 National security!
10:04 Hope again. I haven’t been keeping track, but that’s at least 3.
10:05 Start getting out of Afghanistan in mid-2011. Good!
10:06 Out of Iraq by August. Good! Foreign aid to Iraq. Bad for Iraq!
10:07 Pork for veterans. Taking a page right out of the Gracchi playbook.
10:08 Nuclear deproliferation. I applaud the sentiment, but prohibition doesn’t work. Good luck to you, sir.
10:11 Would love to hear what Bill Easterly has to say about all the government-to-government transfer programs he’s touting.
10:12 Haiti. I completely agree with the ends. But the effectiveness of the means needs to be questioned.
10:13 Hate crimes. Thought crimes?
10:14 Let gays in the military. Nice! About bloody time.
10:14 Immigration. He has a positive view of immigration. Let’s hope that means much-needed liberalization. The more immigrants, the better. Those who are illegal, make them legal. It is the right thing to do. Obama says this is bi-partisan. I wish he was right.
10:16 Decries cynicism. There’s a reason for all that, you know.
10:19 Anecdote!
10:19 Another anecdote!
10:19 A third!
10:20 A fourth!
10:20 “I don’t quit!” Reminds me of Brett Favre’s advice to a startled referee: take two weeks off, then quit.”
10:21 End of speech.
10:26 Here comes Bob McDonnell’s Republican response. Get ready to be disappointed!
10:30 Thank yous and much applause.
10:31 Jobs. Jobs for all! Good end. The means?
10:31 So far, indistinguishable from Obama.
10:32 Calls for less taxation, regulation, etc. Quotes Jefferson. Says government is trying to do too much. Now he sounds different.
10:33 Likes Obama’s spending freeze. Says it’s small. Not often one hears a politician calls a spending non-increase anything other than draconian.
10:34 Likes bipartisanship. I like gridlock. Boo!
10:34 Likes the Shadegg health insurance reform. And medical malpractice reform. No specifics, though.
10:35 Energy. More of everything! Why isn;t anyone saying, “let the market decide?” Why must government, no matter the party, pick winners and losers?
10:36 Government energy policy can create jobs. Oh, wait, that costs money and jobs from elsewhere. Broken window fallacy again.
10:37 Education. Likes merit pay and school choice. Nothing about reducing federal involvement in this state and local issue.
10:38 Wars abroad. Daughter served abroad. Laudable. But nothing to do with the merits of nation-building.
10:39 Doesn’t like giving due process to the underwear bomber. Well, he’s probably guilty. Let’s find that out for sure and then punish him accordingly, then! What’s to be gained from denying due process?
10:40 I’m liking his rhetoric about taxes, spending, and regulation. But I’ll believe it when I see it. Which is probably never.
10:41 Haiti. Less than a paragraph.
10:42 Big role for government in creating opportunity.
10:43 One more call for bipartisanship, and a big sop to the Religious Right. An utterly conventional speech. If you thought liberals and conservatives have fundamental philosophical differences, think again. Two sides of the same coin.
10:44 That’s all for tonight. CEI scholars will have more in-depth analysis for you tomorrow. Thanks for reading!
Comments Off on State of the Union Live-Blog
Posted in Bailouts, Business Cycles, Earmarks, Economics, education, Elections, Health Care, Political Animals, regulation, Science, Security Theater, Spending, Stimulus, Taxation, Trade
Tagged change, Health Care, hope, live-blog, obama, president obama, sotu, spending, state of the union, taxes
Gene Healy’s latest column begins: “This Thursday, Barack Obama will swing by Oslo to pick up the Nobel Peace Prize — just over a week after he announced that he’d escalate the war in Afghanistan. Awkward.”
Comments Off on The Lede Says it All
Posted in Immigration
Tagged afghanistan, barack obama, nobel peace prize, obama, oslo, peace prize, president barack obama, president obama
Inertia Wins! 