07 May 2015

Another Look at Growth

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Real-GDP

Scott Grannis calculates just how much economic growth we’ve lost, for some unknown reason, over the course of the last six years.

Real GDP growth in the first quarter was weaker than expected (0.2% vs. 1.0%), but it wasn’t much of a surprise. It’s now been almost six years that the economy has managed only meager growth—about 2 ¼% per year on average. As a result, by my calculations, real GDP is a little over 10% below its long-term trend potential. That’s more than $2 trillion in lost income every year, and it’s getting worse. …

The chart above compares the level of real GDP to a long-term trend growth rate of 3.1%. This confirms once again that we are stuck in the slowest recovery ever. It’s my belief that the persistence of slow growth is largely the result of bad policies, though demographics likely plays a part too. Corporate profits have been very strong, but business investment has been very weak. Without new investment and risk-taking, we are not going to see a pickup in productivity which is, at the end of the day, what drives stronger growth and higher living standards. Investment has been weak probably because marginal tax rates and regulatory burdens have increased significantly in the past six years. In a sense, and expansion of government has suffocated the private sector.

Things are not going to change much for the better until policies become more pro-growth.

Whether the persistence of relatively weak growth is a reason for the Fed to continue to keep short-term interest rates extraordinarily low is one of the key questions of our time. I don’t see how low interest rates stimulate investment or enhance productivity. Only private initiatives can do that.

On the bright side, if policies do become more favorable, there is tremendous upside potential to look forward to. Closing the GDP gap would be nothing short of exhilarating.

07 May 2015

Calculating the Impact of Dodd-Frank on Economic Growth

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DoddFrank2

Douglas Holtz-Eakin attempts to calculate the impact of the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) on the growth of the economy.

What did Dodd-Frank do to the effective tax rate on banks? Consider, first, the burden of complying with the new regulations. The American Action Forum’s analysis of the Federal Register indicates that the cumulative burden (including the market value of paperwork hours for compliance) is roughly $14.8 billion annually. Notice that after-tax income in the presence of the burden is:

[rL – C – Burden](1-tB)

where r is interest on loans (L), C is the cost of acquiring funds and other operations, and tB is the tax rate on banks. Suppose that instead of a burden, the same after-tax income was generated by simply raising the tax rate to t’. Then, by definition:

[rL – C – Burden](1-tB) = [rL – C](1-t’)

[which] can be re-arranged to yield:

t’ = tB + (1-tB)[Burden/(rL-C)]

To put some empirical meat on [this], the Federal Deposit Insurance Corporation’s (FDIC) Quarterly Banking Profile (QBP) provides information on taxes ($67.5 billion) and net income ($151.2 billion) that permit one to compute an initial tax rate of 31 percent. Using the AAF burden data and (11) yields an increase to 37.8 percent from compliance burdens.

A similar approach can be used to transform the roughly 2 percentage point rise in the leverage ratio of the banking sector (from 7.5 to 9.5 percent) from 2008 to 2014 into a rise in the effective tax rate. The banking sector responded to Dodd-Frank by holding more equity capital, thus require it to have greater earnings to meet the market rate of return – the same impact as raising taxes. In this case, the higher leverage ratio translates into a further increase in the effective tax rate to 40.3 percent, for a total rise of 9.2 percent.

Collecting results, the impact on economic growth is a decline in the per capital growth rate of 0.059 percentage points annually. Is this a big deal? Consider lowering the growth rate in the Congressional Budget Office baseline projections by exactly this amount between 2016 and 2025. The lower rate of economic growth translates into a total loss of $895 billion in GDP or $3,346 for every member of the working age (16 and older) population over those 10 years.

07 May 2015

Coercive Egalitarianism, 50 Years Later

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NorthMainLinen
Main Street in my 1950s Hometown

Zman listens to David Brooks bloviating about the Baltimore rioting at the Times, and marvels at how much money and liberty was wasted on the effort to make the American underclass equal, how futile it all seems and just how much has been destroyed in the process.

As the Boomers begin falling into the abyss, they have to look around and wonder if it was worth it. If you were born in 1950, for example, you grew up in America that is vastly different than today. It’s one your grandchildren will never enjoy. The trillions spent knocking down what you inherited could maybe have been spent more wisely. …

Put another way, the organic ways in which society managed the unproductive classes were blasted to bits by a bunch of people convinced they knew better than the dozens of generations that came before them. The proposed replacement for those ways have utterly failed, meaning everything guys like Brooks grew up believing was nonsense after all. Meathead is learning that Archie was mostly right.

Read the whole thing.

They’ve devoted the last 50 years to improving the condition of the black underclass, now they’re beginning the project of making being Gay equal, too.

Hat tip to Vanderleun.

07 May 2015

Garland, Texas Shootings

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TexasArtShow

07 May 2015

Muslim Logic

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MuslimLogic

07 May 2015

Hate Speech and the Left

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HateSpeech1

“It’s free speech if the left hates the target.
It’s hate speech if the left favors the target.

That’s really all they mean. They have no principle of free speech that they support independent of a group identity. Thus:

Criticizing Christianity is free speech
Criticizing Islam is hate speech
Burning an American Flag is free speech
Burning a Gay Pride Flag is hate speech

It’s not the nature of the criticism, it’s only the favor of the target. You can’t argue the legitimacy or severity of the attack. That’s irrelevant. It’s all determined up front by who the target is.

So burning the American Flag is free speech. If you retort that it’s hateful to Americans they’ll say that they are complaining about the system and not the people.
If you burn the Gay Pride (rainbow) flag it’s hate speech. If you retort that you are only complaining about the system of the gay activist elite and their heavy handed tactics, and not gay people, the left will simply dismiss that as a lame excuse to hide your hatred.

Christ in Urine is free speech.
Flushing a Koran is hate speech.

It’s not the act or type of speech. The distinction free speech or hate speech is just determined by whether the left favors the target. That all. Then they make up indignant rationales to justify their position.

If they hate the target, then it’s free speech to criticize them and censorship to stop the criticism… If they love the target then It’s hate speech to criticize them and an act of protection to stop the criticism.”

–- Jeffrey Varasano

06 May 2015

Is Having a Good Family an Unfair Advantage?

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AdamSwift
Adam Swift

Joe Gelonesi, at ABC (Australia), talks with two sophisters who are “investigating the problem.”

So many disputes in our liberal democratic society hinge on the tension between inequality and fairness: between groups, between sexes, between individuals, and increasingly between families.

The power of the family to tilt equality hasn’t gone unnoticed, and academics and public commentators have been blowing the whistle for some time. Now, philosophers Adam Swift and Harry Brighouse have felt compelled to conduct a cool reassessment.

Swift in particular has been conflicted for some time over the curious situation that arises when a parent wants to do the best for her child but in the process makes the playing field for others even more lopsided.
Swift and Brighouse needed to sort out those activities that contribute to unnecessary inequality from those that don’t.

Swift and Brighouse grudgingly concede that we probably shouldn’t simply abolish the Family. Private school, on the other hand…

What we realised we needed was a way of thinking about what it was we wanted to allow parents to do for their children, and what it was that we didn’t need to allow parents to do for their children, if allowing those activities would create unfairnesses for other people’s children’.

The test they devised was based on what they term ‘familial relationship goods’; those unique and identifiable things that arise within the family unit and contribute to the flourishing of family members.

For Swift, there’s one particular choice that fails the test.

    ‘Private schooling cannot be justified by appeal to these familial relationship goods,’ he says. ‘It’s just not the case that in order for a family to realise these intimate, loving, authoritative, affectionate, love-based relationships you need to be able to send your child to an elite private school.’

In contrast, reading stories at bedtime, argues Swift, gives rise to acceptable familial relationship goods, even though this also bestows advantage.

‘The evidence shows that the difference between those who get bedtime stories and those who don’t—the difference in their life chances—is bigger than the difference between those who get elite private schooling and those that don’t,’ he says.

This devilish twist of evidence surely leads to a further conclusion—that perhaps in the interests of levelling the playing field, bedtime stories should also be restricted. In Swift’s mind this is where the evaluation of familial relationship goods goes up a notch.

‘You have to allow parents to engage in bedtime stories activities, in fact we encourage them because those are the kinds of interactions between parents and children that do indeed foster and produce these [desired] familial relationship goods.’

Swift makes it clear that although both elite schooling and bedtime stories might both skew the family game, restricting the former would not interfere with the creation of the special loving bond that families give rise to. Taking the books away is another story.

‘We could prevent elite private schooling without any real hit to healthy family relationships, whereas if we say that you can’t read bedtime stories to your kids because it’s not fair that some kids get them and others don’t, then that would be too big a hit at the core of family life.’

So should parents snuggling up for one last story before lights out be even a little concerned about the advantage they might be conferring?

    ‘I don’t think parents reading their children bedtime stories should constantly have in their minds the way that they are unfairly disadvantaging other people’s children, but I think they should have that thought occasionally,’ quips Swift.

Read the whole thing.

brighouse
Harry Brighouse

06 May 2015

Welcome to Texas

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WelcometoTexas

06 May 2015

Donald Trump’s Hair Found Crawling in the Amazon

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trump-on-leaf

GrindTV:

No, Donald Trump doesn’t put his hair on a big leaf when he goes to bed. This crazy, hairpiece-looking clump of yellow fluff is actually a rare caterpillar that only looks like Donald Trump’s hair.

And for that reason, this flannel moth caterpillar photographed in the Amazon has been nicknamed the Donald Trump Caterpillar.

It was spotted and photographed recently by Phil Torres of Posada Amazonas Rainforest Expeditions while leading a photography tour in a Peru rainforest. He posted the photo online and immediately people began commenting about how it looks like Donald Trump’s hair.

“We didn’t see the resemblance when we first saw the caterpillar, but looking at the photo, it’s certainly similar to his hair,” Torres told the UK Daily Mail. “It was pretty funny, people went mad for the photo comparing it to his toupee.”

Interestingly, and coincidentally, approaching the Donald Trump Caterpillar (scientific name: Megalopyge opercularis) can be very dangerous, particularly if you come in contact with the business end of its yellow mane.

“If you touch that thing, it would seriously hurt,” Torres, a field biologist, told the UK Daily Mail. “It has these little hairs that can poke into your skin and release a venom.”

Megalopyge opercularis

06 May 2015

Vivaldi: Summer, From the Four Seasons

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Trondheim Soloists. Artistic Director: Øyvind Gimse. Soloist Mari Silje Samuelsen.

Via Ratak Monodosico.

06 May 2015

Redrawing the US Map

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USMap

1:35 video

05 May 2015

“The Binks Awakens”

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Jar Jar Binks apparently does not appear in The Force Awakens.

But Murdock Motion used software to add one of the most hated characters in cinematic history into the trailer of the highly anticipated new Star Wars film. It’s a great reminder to fans of the horror that could have been.

Hat tip to Chico Kidd.

05 May 2015

Some People Prefer Old Cars

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1992_toyota_land-cruiser
1992 Toyota Land Cruiser. The paint on ours is a little rougher, and I’ve mounted a 1920s Alvis Hare hood ornament on it.

Sam Smith, in Wired, explains why many enthusiasts are collecting old pieces of crap, instead of buying new cars.

[A]s far as I can tell, this affliction is rooted in what we’ve lost. Call it simplicity or purity, maybe even character, born not of wear or time, but of freedom of design. And an obsession with the fundamental quirks that give a car personality. Things like floor-hinged pedals, gated shifters, or doors whose latches feel deeply mechanical, like the cocking of a gun. And if you drive a lot of new cars, you realize that stuff is growing rarer by the minute.

It is a byproduct of progress. On paper, a new BMW M3 is superior to any before it. The modern car accelerates harder, stops quicker, and is quieter and more comfortable than an M3 built in the 1990s. Any engineer will point to it as a less compromised product. But compromise is character. The older car is simpler and smaller. It was built to less aggressive crash standards, so it has thinner pillars and weighs less. You can see out of it easily, and the lack of weight helps the car give you feedback, so it’s more fun to drive at legal speed. The new one feels like a city bus by comparison.

Modern can be better, but it isn’t necessarily.

This isn’t a unique opinion, and these aren’t new arguments. Twenty years ago, people were looking to the vehicles of decades prior and bemoaning the increase in weight and complexity. In the late 1800s, the first automobiles were viewed as atrocities, far less civilized and romantic than horses. Rose-tinting the past while moving forward is human nature.

But looking back still has value. Many analysts, for example, now believe that the recent boom in classic-car values is due to the arc of new-vehicle development. Take the current Porsche 911 GT3: a fantastic car, but complex by the standards of even ten years ago. The electrically assisted power steering is distant. The car’s newly elongated wheelbase improves stability and ride, but at the expense of a cozy cabin and compact footprint. It’s also available only with an automatic transmission—a piece of equipment that takes an engaging job out of the driver’s hands.

Previous GT3s were deeply involving to drive and only available with manuals. When the new car was announced, older examples—even relatively recent models—saw a noticeable increase in value.

What have we gained? Everyone knows that restrictive legislation killed the grossly unsafe or heavily polluting car. That is inarguably good. As is the glut of durable, crashable and recyclable vehicles filling showrooms. We are living in something of a golden age of automobiles—more performance and relative fuel economy than ever before. And while new cars still break, statistically, they’re more reliable and efficient than at any point in history. The inevitable march toward perfection has given us direct-injected, turbocharged engines with fantastic performance and wonderful fuel economy, dual-clutch transmissions that deliver shifts in the blink of an eye, and electric cars virtually free of excuses.

Part of this is simply time. Computer-controlled engines have been common for over 30 years. Crash safety has been a science for longer than NASA’s Apollo program existed. Even the simple rubber tire is over a century old. Those are just three pieces of a complex machine, but cumulatively speaking, each has received more development hours than the Manhattan Project. Given similar time and engineering attention, anything would evolve to be good.

But if humanity is an assemblage of flaws, we’re slowly engineering the human out of the automobile. And the more new cars I drive, the more I find myself drawn to the “bad” old ones.

We bought the faster, most loaded 3-series BMW a few years back. The bloody thing actually came without a spare tire. BMW was cooperating with Big Brother and saving energy. The driver, you see, was supposed to not need a spare anyway, because BMW thoughtfully provided original equipment run-flat tires.

Those tires, mind you, were noisy and had an extremely bad grip on wet roads and dirt roads, and wore out after 10,000 miles, and cost a fortune to replace (I bought non-run-flat replacements), but you’re supposed to be happy that you’re saving the planet.

The car is fast as hell, but it has a lousy first gear. You really have to crank the revs up, or you will stall out. BMW included a new sort of turn signal switch as well. Move it left or right, and you don’t get a positive setting. You get a mushy sort of feel, and it blinks a few times and then goes back to off. You have to move it again to get it completely on. This, too, is supposed to be an improvement.

The radio, of course, was designed by some 13-year-old Oriental. You poke your finger at various illuminated bits, all of which do multiple things potentially.

What really torched me off was going out to check the oil, and finding that this car was built without a dipstick. The owner is intended to rely on his computer, the same computer (which if the battery ever get a little low) warns him emphatically that the car is dying and will momentarily blow up, the same computer which issues constantly all sorts of emoji symbols telling you that a bulb is out somewhere or your tire pressure is under 25 lbs.

My reaction was to swear a great oath that I’ll never buy a new BMW again. But, really, I don’t like being told what to do, and I’m coming to the conclusion that I may never buy a new car, period, again.

In the good old days, before we were born, a chap could go to Morris Garages in Oxford, England, and tell the nice men what sort of car he wanted: what kind of engine, supercharged or not, what kind of body style, what color, and he could specify all the little conveniences and accessories he desired. “I’ll have Brooklands windscreens, please!”

Today, federal cabinet departments conspire with enormous car manufacturing corporations to make all our decisions for us, for our own good.

Who would voluntarily pay several thousand dollars to put explosive airbags all over his car, knowing that there is an inevitable hazard that one of them might go off and knowing that one of those infernal devices might injure you or kill a kid? Possibly some mental defective living in California, but not you or me. But we have no choice. Some bureaucratic committee in Washington decided for us, and we get to pay. Next, we will be getting a grand or so worth of rear video camera and backing-up-to-park assistance.

And, that’s why a decent new car today costs $40,000-$50,000. My father used to go out, circa 1960, and get a shiny new car for $2000.

Karen had an unfortunate encounter with an oak tree atop the Blue Ridge, trying to come home in a howling blizzard a few years ago, and she totalled our SUV. I thought about it and bought an ancient (1992) Toyota Land Cruiser off of Ebay for $4000. That Land Cruiser was precisely what Sam Smith would describe as “a piece of crap.” Just about everything that could be wrong with a car was wrong with it, except for the body and the engine which were both just fine. Naturally, I had to drop a few more thousand into it immediately, but it runs, and it is spectacular at lumbering its way through mud and snow. I’m basically planning to keep it forever.

05 May 2015

New Password

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Password

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