Not So Strange Stories

When we wrote about the US Women’s National Soccer team (USWNT) failure in the pay part its lawsuit versus the US Soccer Federation we didn’t include this story from the WSJ from Rachel Bachman because we didn’t think it germane to our points that the USWNT had made a reasonable decision in negotiating its collective bargaining agreement (CBA) and  the judge made the obvious and correct decision.  We now see the WSJ story as part of begging the question journalism.

Rachel is saying the the US Soccer Federation is in trouble because it won the suit brought by the USWNT.  She says:

As the case continues, it also poses an uncomfortable social problem for everyone involved. The players and their legal team successfully rallied the team’s fans—and also its sponsors—behind their cause over the past year. Spectators chanted “Equal pay!” last year after they won their most recent World Cup.

U.S. Soccer, meanwhile, won a key hurdle in court but could continue to suffer in the court of public opinion.

Rachel is certainly doing her best to see that the last paragraph comes to be.  She also writes that the judge “concluded that from 2015-2019, the women were paid more than the men. [Emphasis added]”  They were paid more and they were paid according to the contract they agreed to.  Either the USWNT is badly informed on their own contract or they tried to scam the US Soccer Federation.

Alessandra Malito at Market Watch has a similar approach in an article: Social Security Recipients May Be In For A Rude Awakening Later This Year.  There seems to be good news for seniors and almost everyone as inflation is down but she seems to think it is bad news:

[Cost-of-living adjustment (COLA)] is linked to the consumer-price index, which has suffered lately because of low oil prices. Based on the CPI data between January and April of this year, COLA for next year would be zero, according to Mary Johnson, a Social Security policy analyst for The Senior Citizens League. There are still five months until the administration announces the COLA for 2021, which occurs in October.

The adjustment in 2020 was considered minimal, at 1.6% this year, down from 2.8% in 2019. COLAs have averaged 1.4% over the last decade, down from the average 3% it was between 2000 and 2009.

Now there is some reason to think that big COLAs are good news for seniors as they might be larger than “real” inflation because of substitution effects and such.  The 44th president thought so.  But that is not it.  In the sixth paragraph Alessandra make her point that we should use another index to adjust for inflation:

The problem: Social Security’s cost-of-living adjustment is linked to the consumer-price index for urban workers. There’s another subset of CPI, known as CPI-E, which tracks elderly spending. The difference is primarily in health care and housing. Those expenses, including Medicare premiums and homeowners’ insurance, grow rapidly year over year, but benefit adjustments don’t reflect that growth.

Here is howCPI-E is described:

Opponents of the chained CPI often propose an alternative index for cost-of-living adjustments, the experimental CPI for Americans 62 years of age and older (CPI-E), which BLS has developed as a possible measure of inflation for the elderly subgroup.  [Emphasis added]

It would be fair to say that CPI-E is still a work in progress.  What will Alessandra say when CPI-E is lower than the other index?  And neither option account for substitution effects by consumers so taxpayers might have another opinion.

Alessandra and Rachel are making the same argument.  After the fact this choice is better than the choice at the time for some group.  That group should be allowed to pick that alternative after the fact.  Our title was Not So Strange Stories.  We need to do better in our reporting so they become strange.

Fellow Orphans

As we enter into the endgame of COVID-19 let’s write about something interesting.  Capitalism, and in particular us capitalistic orphans as we find ourselves very interesting, is a great topic.  We use the term capitalistic orphans because there are few of us and we have little influence.  The two fellow orphans are Richard M. Reinsch II at National Affairs and Deirdre Nansan McCloskey at the National Review.  Even amongst us orphans it is hard for our small group to agree.  Deirdre is writing about coercion and COVID-19 while Richard is pointing out the lack of wisdom in industrial policy with particular emphasis on the type proposed on the right by folks like Oren Cass and Josh Hawley.  You should, of course, read them both in their entirety.  You might read Richard twice.

The lack of influence of capitalism seems particularly strange at a time of COVID-19 when it is obvious what what a blunt tool government intervention is and what joy we have lost by restricting capitalism.  Richard gives us the general explanation on why this is true yet makes it hard for folks to accept:

Perfect markets and perfect market competition do not exist, but neither do perfect regulations. The errors made in markets, though, are often rapidly correctable, at least in comparison to wrongheaded government policy. Such corrections in the market come with short-term pain, but state intervention, which spawns a system of winners and losers, tends to harden around special interests whose concentrated benefits are defended tenaciously. This process has been repeatedly documented by public-choice scholars and has led to years of lost growth for countries that pursued robust industrial policies.

To paraphrase Richard, as history demonstrates, capitalism is superior because the imperfections in markets usually self-correct but the imperfections in government policies like industrial policy tend not to exacerbate themselves rather than self-correct.  Socialism is just the virus of industrial policy with a greater infection rate.  Yet we ignore the facts.  Deirdre is on the COVID-19 beat specifically and the nature of government coercion:

Socialism should therefore be called “coercionism.” Sometimes, rarely, what the government coerces us to do is a swell idea, such as coercing parents to inoculate their children against measles. One measles case infects 20 others and the disease is regularly fatal for adults who haven’t had it as children. Ask the Aztecs and the Incas and the Mohicans on that score.

She ought to give The Donald credit for using coercion to stop Chinese from entering the US early.  We are sure Deidre is not surprised by the behavior of the Chinese government.  We hope she likes his federalism approach to reopening the economy.  That happened after her article was published.

Sidebar: The search for “Trump stops Chinese from entering US” is now filled up with “fact checks” of The Donald’s claims on live saved.  It is an astonishing example of the bias of major news organizations.  End Sidebar.

Deirdre reminds us that capitalism is why we are so comfortable:

 The Great Enrichment, 1800 to the present, that factor of 30 in goods and services, was not caused by coercion but by liberty. Its magnitude was further multiplied by the free trade and free migration and free press that [The Donald] and his advisers Peter Navarro and Stephen Miller so disdain.  [Link added]

We are in agreement with Deirdre on her criticism of  The Donald but not sure why she picks only him out.  As Richard says about the left before getting on to the right:

Implementing the Green New Deal’s stated objective of simultaneously eliminating greenhouse-gas emissions and solving economic inequality would result in cultural, political, and economic conditions best described as despotic. Such policies, which have drawn wide support from Democratic presidential candidates this year and from the broader party, would obviously be installed incrementally, forestalling a total capital strike. But they nevertheless entail a striking rejection of free-market capitalism, and represent a remarkable detachment from reality among many leading minds of the American left. [Emphasis added]

The second bold item (despotic) shows that Deidre and Richard are on the same page as orphans.  We love the third bold item because it is exactly right yet ignored by a large portion of the population.  We are less enamored with the first bold item because there is nothing about economic inequality that needs to be solved.

It is the strange story of capitalism and why we refer to ourselves as capitalistic orphans.  We have centuries of data (well, over two is a lot of centuries) to show that capitalism is the solution.  We have just over a century showing us that socialism is not the solution.  Now we have the events relating to COVID-19 to amplify the history.   We deserve a whole capitalism loaf in 2020.  Yet The Frontrunner and the left offer us, at best, the heel.  Like markets, The Donald offers us much more of the loaf.  Like markets, he is far from perfect but he is the best choice we have and us orphans should unite to support The Donald.  We wish it were different but it is not.

 

 

On Wisconsin

Well, we in Wisconsin are lucky that we are in flyover country and that there is an epidemic going on so the stupidity of our state is not front page news.  Dan McLaughlin at NRO is mostly discussing the legal issues but he starts with:

The U.S. Supreme Court tonight issued an order setting the rules for tomorrow’s elections in Wisconsin. There is absolutely no justification for holding an election right now in the midst of a pandemic, …

Dan is exactly right: There is no justification for an election today.  On March 12 (well it was reported on March 12) our Governor, The Suit, declared a public health emergency for COVID-19.  Five days later The Suit closed almost everything in the Badger state:

[The Suit] has ordered a statewide ban on all gatherings of more than 10 people as of 5 p.m. Tuesday [3/17], and closed all bars and restaurants, except for delivery and pickup orders.

As it happens that is exactly three weeks before today’s election.  We don’t know if The Suit forgot about the election because he isn’t on the ballot or what.  Anyways:

Long lines have been seen in cities like Milwaukee, which has only five polling places open, and social distancing is a concern. [Emphasis added]

The city of Milwaukee has a population of just under 600,000 people.  The usual number of polling stations is 180.  As the bold shows there are five today.  We checked to see that five is the correct number.  It also says that polling stations will close at 8 PM.  That could make the election even more interesting.   We tip our hat to the brave folks that worked at those polling stations.

And, of course, the mediablamed the GOP:

Wisconsin Democrats wanted to extend absentee voting and even postpone the election altogether, but Republicans successfully blocked both in court. As a result, Democratic turnout is likely to be depressed because of the virus and the deadlines for absentee voting. A crucial seat on the State Supreme Court is on the ballot.

And when did The Suit try to extend absentee voting?  Monday.  That is yesterday in case you are not keeping track.  So The Suit forgot and then tried to do something illegal late.  When you elect The Suit all you get is a suit.  The Donald has lots of shortcomings but his decision to stop travel from China is one of the best that a president has made recently.  The Suit shows the other side of decision making.

 

An Old Problem

Ask Amy received a letter from a person who described himself as a conservative intellectual in Berkeley CA.  He is having problems at dinner parties as:

When I tell them that I’m fairly conservative, they just don’t get it. They freely disparage “right-wing hillbillies” and say that all conservatives are “evil people.”

We are not surprised but it seems that Amy is.  She says that the friends of the conservative are just reacting to The Donald:

My take on the phenomenon you describe is that one unexpected and unfortunate consequence of our president’s personal and public comportment is that it seems to have inspired a parallel mindset in the opposition.

Sidebar: There has been much discussion about Republicans and conservatives.  It is clear who are Republicans but conservatives are harder to identify.  As we see it, The Donald is not a conservative.  Thus there is nothing parallel about it.  End Sidebar.

Of course, the mindset of the opposition has been like that for decades.  As it happens, on the same day over at InstaPundit, Ed Driscoll posted a cover of Time magazine from the 1990-something that has a drawing of Newt Gingrich breaking Tiny Tim’s crutch and it says: “Uncle Scrooge [that’s Newt, the guy that revived the economy after the Clinton disaster of 1993-4] ‘Tis the season to bash the poor.  But is Newt Gingrich’s America really that heartless?” To understand the significance of this you should remember that Time was a really important publication in those days.  This Wikipedia entry gives a few details on Time’s circulation.  Here is a quote from The Atlantic:

[Time] kept on growing after that. At its zenith [roughly around the Newt cover] the brand could reach more than 20 million people around the world each week. Time practically defined what it meant to be mass media.

Time now is just a shadow of what it was twenty plus years ago.   Bad behavior towards conservatives and Republicans is not new.  If you are a conservative or a Republican and you haven’t been called a Nazi then people must think that you aren’t important. Remember Mitt in 2012?  Amy ends with this:

Surely anyone worthy of being called a “liberal” should defend your right to speak your own mind, and should maintain an attitude of open-minded curiosity about people who think differently than they do.

We think that everyone should defend the right to speak and be curious about what folks on the other side of the aisle think.  The right is far from perfect on these counts but Amy is going to have a hard time finding leftists she can call  liberals out there.

 

Technically True?

Oil prices are down.  Bloomberg finds an unusual cloud in this silver lining: “The fight against climate change may suffer a setback as fossil fuels become more competitive versus renewable energy.”

Sidebar: Yes, we should have a link but this came up on our phone and we are writing on our computer.  Yes we should have better technical skills and we probably could find it but we have a handball game shortly.  End Sidebar.

Saying fossil fuels, really oil and natural gas, is more competitive is liking saying Liverpool would be more competitive in the Premiership if they signed Messi.  They currently lead the Premiership by what we expect is a record 25 points.  Currently taxpayers support rich folks buying fancy electric cars.  Alternative energy is generally not competitive and often not reliable.  So what Bloomberg said might be technically true but a more honest way of saying it is that renewable energy will be even less competitive with these prices.

It would be an especially good time to implement a modest carbon tax, eliminate the gas tax, and eliminate subsidies to renewable/alternative energy.  That way instead of the government trying to guess what “alternative energy” would work we could let the market do it.

In The Event Of The Bernie

It looks less likely that The Bernie will be nominated by the Democrats but history, some of it very recent, reminds us that political fortunes change rapidly and unexpectedly.  We generally agree with Ramesh Ponnuru and his discussion of that possibility.  Yes, you should read it all if you haven’t.  Of course, generally agree means that we will have a dissent and addition.   Ramesh predicts that if The Bernie was elected president he wouldn’t get to enact his wish list but:

That doesn’t mean the U.S. would be Venezuela, or even Denmark, by the start of 2022. But it is reasonable to expect that government policy 10 or 20 years from now would be considerably more socialistic than it would be if [The Donald] were re-elected — or if Mr. Biden were elected. [Emphasis added.]

Our dissent is Ramesh’s comparison of the US and Denmark.  The US is Denmark give or take.  The 2019 Heritage ranking of economic freedom has the US at 12th at 76.8 and Denmark 14th at 76.7.  In 2018, Denmark was more economically free than the US.  Now it is possible that Ramesh doesn’t think much of the Heritage rankings (although we know of no other) and has his reasons for thinking that Denmark is less economically free.  Looking at the detail of the Heritage rankings we see that relative to Denmark the US ranks lower on fiscal health and better on government spending, i.e., we spend less.  But, as we show in bold, Ramesh is talking about socialism which should equate to economic freedom rather than just spending.

Our addition is that nominating The Bernie might be enough to tip the scales in the future.  In 1964 the GOP nominated a conservative, Barry Goldwater.  LBJ mollywaumpted Barry and the whole GOP:

Johnson’s landslide victory coincided with the defeat of many conservative Republican Congressmen. The subsequent 89th Congress would pass major legislation such as the Social Security Amendments of 1965 and the Voting Rights Act.

Wikipedia is exactly right when it says in the next sentence:

The long-term realignment of conservatives to the Republican Party continued, culminating in the 1980 presidential victory of Ronald Reagan.

Then in the next election, 1984, Reagan delivered a similar shellacking to the Democrats.  We not saying that nominating The Bernie leads to the socialist equivalent of Ronald Reagan but every conservative should be concerned about that possibility.  So we are mostly glad that the Democrats have closed ranks to stop The Bernie from being nominated.  We hope they are successful.  We are only mostly glad because the Democrats includes the press and we would like to see fair reporting.  The Frontrunner does make some strange statements.  This list is from last year.

We would like to see The Frontrunner, The Bernie, and The Donald all get similar treatment from the press.  It won’t happen.  We don’t want The Bernie nominated or elected president.  We hope that will happen.  Ramesh is right that it would be likely to have a negative impact on our freedom.

Folks Need To Read More

One of our alumni magazines came recently.  It is from the University of Wisconsin.  Although the whole system is the University of Wisconsin the campus at Madison likes to be the unmodified version.  On the cover it says, “Despite The Bleak Environmental News” and then at the start of the article the sub headline says, “It has been 50 years since the first Earth Day, but everything we read says things [in the environment] are getting worse ….”  Then it goes on to extoll the virtues of the Nelson Institute of Environmental Studies.

Since the magazine brought up 50 years, we were alive 50 years ago.  The environment in the US is much better now.  There were birds walking on one of the local rivers.  We discussed with our friends if a human could do it but nobody wanted to test the hypothesis.  We didn’t live in an urban area so we only had to deal with small numbers of vehicles but some of them were able amazing amounts of pollution.  We saw the episode of the Crown (here are some pix of The Crown and Wikipedia on the 1952 London smog) where the smog came to London while Churchill was prime minister.  We have been to London and things are much better there too.

If you want to talk about climate change, here are some graphs on CO2 emissions in the US.  There is much good news to be found.  Another dose of good news would be to look at the then global warming predictions of bad news from a decade or two ago that haven’t come true.  As the title says, you might need to read more and part of that is to find these things yourself.  Well, here are some visuals.

On the other hand, we have been to a number of Chinese cities with really serious pollution problems. We are sure the Chinese are not alone in environmental problems to solve.  Even capitalistic countries have opportunities for improvement.

As with many issues, it would be nice to have a serious discussion about environmental issues.  Instead, our experience tells us that the environment is much better than it was and when news reports hype extreme predictions our experience tells us are always false.  The headlines in the alumni magazine made us disinterested in the article itself.  To try and start a serious discussion we will again suggest a modest carbon tax that replaces the gas tax.

 

Cartoonish Cartoons

David Horsey of the Seattle Times has a cartoon and an article with the title that in Seattle that political positions are  all relative.  We would agree that in Seattle that only left wing positions are of political interest. The last Republican mayor left office in 1969.   In David’s cartoon at the cite above there are four degrees of left-of-center with the leftist (degree four) barking at the liberal (degree two) running for Seattle City Council for being a right wing shill for patriarchal fascist capitalism.  We’re not sure how you can be fascist and capitalistic but that is a matter for another day.

In our local paper the cartoon is redone.  The  liberal is now a Biden supporter with the same barking but a new title that losing perspective loses elections.   The original cartoon is silly to have eight categories for the right and four for the left when there are essentially no right wing candidates in Seattle.  In the USA as a whole there are right wing candidates but there is still no reason to put fascists on the right and no reason to have twice as many right wing categories including “Nuts.”  The editors should have left it at four and four.

Keep Reading

It is the silly season.  We haven’t written much because the news is about the Congressional Democrats’ kerfuffle with The Donald and the self-refuting proposals from Democrat hopefuls like a wealth tax or ending fracking.  We are not interested in the former and foolishness of the latter is obvious.  We will remind you about that foolishness from time to time but it seems unworthy of our talents to dwell on it.

One great piece of advice we we got from a tax professor was: keep reading.  He was applying it to tax research but it is a good general rule and applies to our scribbling here.  We have been looking for something interesting and the headline in the local paper said [Local Congress Critter (LLC)] Votes For [The Donald].  We were intrigued.  The LLC is as reliable as Democrats come.  He also doesn’t clean off his exercise equipment at the local gym.  We suspect the Congressional gym has folks to do that.  Anyways, we turned over the fold and there was the word Inquiry.  Yes, the local paper put a front page headline that a Democrat was voting with the Democrats!  As the story notes the LLC did vote for the inquiry into Clinton a decade ago so there is some mild evidence that it is possible for him to be nonpartisan.

The interesting part of the story was on the second page.  A Democrat from across the river said: … [A]n impeachment proceeding is pointless without bipartisan support and would only divide the country further [the newspaper did not use quotes so we didn’t either].  His name is Collin Peterson and he is one of the few surviving Blue Dog Democrats.  We didn’t know there were any left.  Wikipedia tell us about them:

The Blue Dog Coalition “advocates for fiscal responsibility, a strong national defense and bipartisan consensus rather than conflict with Republicans”. It acts as a check on legislation that its members perceive to be too far to the right or to the left on the political spectrum.

Sadly there are not many of them and only one other showed Collin’s courage and voted against the waste of time in the partisan attack on The Donald.  As we see it, partisanship is driving out nonpartisanship in Congress.  We wish we had a solution to reverse it.

Bad Evidence Leads To Wrong Conclusion

We have some longer or deeper things we are trying to work on but folks keep writing foolish things that need to be dealt with.  In this case it is Jeff Spross at The Week.  The Week appears to be a serious publication with, one would think, editors. How, then, did Jeff’s “How The Democrats Can Raise Taxes Without Technically Raising Taxes” end up on The Week?  We don’t know.

Jeff sets up the article by discussing that the The Donald’s administration decided not to index capital gains for inflation.  Then he says:

But Democrats — or anyone, really — should take a hint from Trump’s decision. It’s not just that capital gains shouldn’t be indexed to inflation; income taxes shouldn’t be either.

Doing away with that indexing would raise plenty of new revenue for the government. But more fundamentally, it would fix a basic misunderstanding about good macroeconomic policy.  [Emphasis added]

Jeff is serious.  And he is seriously wrong.

Sidebar One: Jeff has no comment on the standard deduction which is also currently adjusted for inflation.  End Sidebar One.

It doesn’t seem to us that “You are paying more taxes but we didn’t really raise your taxes” is much of a rallying cry for any party.  The more serious problem is Jeff’s understanding inflation.  Here is Milton Friedman explaining that inflation is a monetary phenomenon.  In the United States, Milton tells us, inflation is made in Washington DC.

Sidebar Two: If you want you can now discuss the extent to which the Federal Reserve, which controls the money supply and hence inflation is independent within the government.  You can come back to that discussion later as it might take a really long time.  End Sidebar Two.

Jeff doesn’t agree with Milton. Jeff thinks inflation is caused by supply-demand problems.   Jeff says that we need higher taxes as a brake on an overheated economy:

Here’s the problem with that logic: If your economy is experiencing high inflation, like what we went through in 1980, then it needs to slow down. Mainstream macroeconomics assumes that high inflation is evidence of an overheating economy: too much demand chasing too little supply. In which case, to cool inflation off, money needs to be taken out of the economy. And taxes are one tool for doing just that.  [Emphasis added]

There is a big problem with Jeff’s example.  We checked the economic data for 1980 at The Balance.com where they have unemployment at year end, GDP growth, and inflation by year on one page.   It was really easy to find and somebody at The Week should have checked.   At the end of 1980 the unemployment rate was 7.2 percent, GDP growth was negative signaling a recession, and inflation was 12.5 percent.  So Jeff’s example contradicts his theory.  Rather than the economy being overheated it was in recession.  How about Venezuela?  Nope.  Zimbabwe?  Nope and you can even use the same cite for that and more.

Few people have been more exactly wrong than Jeff when he says that indexing income tax brackets is pro-inflation:

By contrast, brackets that are indexed to rise with the price level are essentially pro-inflation. As the inflation rate increases, the rate at which the bracket thresholds rise increases as well. That’s a fiscal stimulus added to the economy right when it’s already running too hot. In fact, Russel Long, a Democratic senator from Louisiana at the time, made this exact point, arguing indexing would “make inflation worse by pumping more money into circulation at a time inflation is at its worst.” [Emphasis added}

Inflation is at best independent of real economic growth.  What makes Jeff so wrong is that the government (see Sidebar Two above) controls inflation.  To have the government benefit from inflation by increasing receipts from bracket creep is a really bad incentive for folks who want to avoid inflation.  Hint: that should be almost everyone.  Indexing brackets is strongly anti-inflation because the folks that control inflation, the government, have fewer incentives to inflate.  It is really important that inflation indexing for brackets and standard deductions stay.  It is also really important to check the data that you rely on.