Health Care and Choice

Shortly before the passage of new health care bill the Washington Post reported a stinging, sustained broadside against health insurance rate increases by President Obama. A health insurance industry spokesman was quoted as saying “All health plans are in the same situation in trying to deal with the steadily increasing costs in the delivery system, which are not sustainable.” In other words the health insurance industry is only responding to cost increases beyond its control.To the individuals and families who pay the premiums for insurance, their...

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Replacement Jobs for Manufacturing

America’s high unemployment rate will come down as total spending picks up and the economy recovers. Some of the unemployment is the result of the recession but some is the result of long term trends. Many know that manufacturing jobs have a downward trend with jobs off 5.4 million since 2000. When the economy comes back manufacturing jobs will not recover much if at all. Other jobs in service industries will replace the jobs lost in manufacturing, but the new jobs we are taking are different from the jobs we are losing. The 20 year evolution of...

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Banks and Favors

The new credit card rules will make it difficult for banks and credit card processors to be tricksters, which is my word for their erratic and arbitrary fees and penalties. Despite the hostile opinions toward banks reported in the popular media they continue to have their way in financial matters.Take the student loan program where Congress decides that banks will get special favors to make student loans in the student loan program. Starting the early 1990s, college financial offices have been able to choose between a direct government loan and...

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Unemployment

The President and the Congress continue to worry about unemployment and with good reason. The recent unemployment rate had to drop to reach 9.6 percent. Seasonally adjusted unemployment rings in at 14.9 million. However, if we look at labor force and employment trends of the Bureau of Labor Statistics Current Population Survey back to 2000, the employment situation looks even worse. The civilian labor force drifts upward but at a lower rate than population growth. The adult population keeps growing at annual rates around 1.2 percent while the...

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Maryland and Virginia

First published in the Washington Herald TelegraphJobs and the Plight of the Maryland and Virginia GovernorsBoth of the incumbent governors in Virginia, and Maryland have staked their political plans and reputation on creating more jobs. In Virginia, Governor Robert McConnell has pledged to make jobs his top priority while in Maryland Governor Martin O’Malley is defending his record and priorities on jobs. Given the well published need for jobs their promises are easy to understand, but let’s weigh the prospects for success.Virginia reached its...

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Value and Work

Sometimes I hear people say something like “The wealthy worked hard for that money, and free markets determined what they do is of such high value.” Such statements raise a question for economists. Can value be measured to show that wages reflect individual productive value? It is an old question that goes back into the 19th century when British and European philosophers and economists applied science reasoning to the craft industries of the day: wheelwrights, blacksmiths, shoemakers and so on. These economic philosophers suggested that if a shoemaker...

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Student Aid and Tuition

The Education Trust, a nonprofit advocacy group, recently released a report and statements titled “Opportunity Adrift” that criticizes the financial aid practices of public universities. The report used data from 2003 to 2007.The report accused public research universities of increasing the amount of aid to students whose parents make at least $115,000 a year by 28 percent, to $361.4 million. Also it reported that public colleges routinely award as much in financial aid to students whose parents make more than $80,000 a year as to those whose parents...

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The Big Short

Michael Lewis, The Big Short: Inside the Doomsday Machine, (New York, NY: W.W. Norton & Co. 2010), 266 pages, $27.95 The Big Short tells the story of the 2008 financial crash by following a small cast of characters who saw it coming. In a brief prologue, titled Poltergeist, Lewis recounts his experience on Wall Street in the 1980’s by summarizing the period as a time when a great nation lost its financial mind. He told that story in his first book on Wall Street, Liar’s Poker, published in 1989. That book is still relevant and makes a good...

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Jobs and Deficits

I clipped a news article way back on August 11, 2005 when the Associated Press reported President Bush’s comments on a new transportation-spending bill. “President Bush calls the massive $286.4 billion transportation spending bill he signed into law Wednesday a job creator.” The article goes on to describe the bill that will pay for 6,000 favored projects in the districts of nearly every member of Congress. Even though the legislation is $30 billion more than the President recommended he is quoted as “proud to sign it.” Remember too that 2005 was...

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Can They Do That?

Lewis Maltby, Can They Do that? Retaking our Fundamental Rights in the Workplace (New York: Portfolio, Penguin Group (USA) Inc., 2009) 248 pages, plus 6 short appendix.Lewis Maltby writes in the preface of his book that “Learning how to run a productive, profitable company without violating employees’ human rights became the focus of my life.” The focus of his life took shape after law school, a period as a criminal defense lawyer, board member of the Pennsylvania ACLU, followed by corporate lawyer for a new company and then Head of the Department...

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The Estate Tax

Some national politicians continue to support abolishing the estate tax, a tax on the value of assets at death before ownership is transferred to heirs. The Estate tax has been subject to similar pressures and changes as the federal income tax. Up to 1981 estate tax rates up to 70 percent were applied to the entire value of an estate with only a $50,000 exemption.Since the early 1980’s Congress has repeatedly reduced the number of estates subject to the estate tax, mostly by raising the exemption. By 2001 the exemption was $1 million and the top...

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Financial Reform

More than a year after the 2008 financial collapse Senate Banking Chair Christopher Dodd of Connecticut made a formal release of a proposed financial reform bill. Senator Dodd directed his Banking Committee staff to up load an Acrobat summary of the bill, which is 12 pages and titled “Restoring American Financial Stability.” The bill intends to create three new independent agencies: the Consumer Financial Protection Agency, the Agency for Financial Stability, the Financial Institutions Regulatory Administration.It intends to create a new Office...

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Jobs and Surplus

The caption in the Washington Post reads “Obama calls for White House summit on job creation.” [WP 11/13/09] The article reports the summit will be an attempt to signal his concern about the growing ranks of the unemployed and to focus on longer term strategies to improve the job market. It is a worthy goal but reducing the unemployment rate and the number of unemployed is not the same as creating more jobs. That is because a majority of Americans live in families that make job decisions that depend on their spouse and the circumstance of other...

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Skills and Wages

I have heard people say that the director, the general manager, the CEO, or the boss should make more money, have a higher salary, than the people he or she manages. It may not be a universal thought but in America high wages carry prestige, which many agree brings authority.Economists commonly reject any idea that a wage depends on prestige or confers authority. In the economists tool chest wages depend on productivity. High productivity means high wages and vice versa. Take doctors where productivity equals important skills that can only be...

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Do it Yourself and Taxation

One of the seldom discussed advantages of owning a home compared to renting an apartment is the do-it-yourself opportunities it allows. Homeowners can pick a few, or many, of the maintenance and repair chores to do themselves. Where renters pay rent it must cover the full cost of commercial maintenance and repair; homeowners can provide untaxed labor that reduces their need for cash flow and income. I am unaware that Congress or the state legislatures consider the do-it-yourself effects of their policies and taxes. Mostly they do the opposite...

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Public Debt and Private Debt

The United States Treasury will lose borrowing authority when the national debt reaches the legislated ceiling passed by Congress. Treasury Secretary Geithner will have to ask for an increase, which the Congress will grant, but he is bracing for the usual politics. Many in Congress use the opportunity to make government debt their number one worry in order to attach conditions eliminating programs they don’t support.It is common for them to make comparisons between Government debt and personal debt. “My constituents pay their debts and keep their...

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Transportation and Free Enterprise

Shortly after taking office President Obama announced plans for government spending that calls for “billions of dollars to rebuild roads and bridges, modernize public schools, and construct wind farms and other alternative sources of energy.”He didn’t say much about railroads but it is common to ignore the differences between America’s highways and railroads. With highways everyone has equal access. Anyone can start a trucking company and be ready to haul freight and pay fuel taxes by using Federal highways and the interstate highway system. The...

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Retail Costs and Manufacturing

The decline of the American Textile industry is well documented. In 1990 there were 928 thousand working in just the apparel industry; by 2008 it was down to 198 thousand. The decline is more than double the jobs lost in the automobile industry. Most of us see our clothes marked "Made in China" or some far eastern country. In the debate over free trade economists have offered excuses for the made in China label. They said textiles and the cut and sew clothing industry are labor intensive and American labor is too expensive to compete with the Chinese....

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