Vouchers update

While Democrats spend money on everything in sight they are also trying to throw up more obstacles in the way of poor parents in DC that want to use public money to send their children to private schools. They really and truly are more interested in accomodating special interests such as the teacher's unions than helping the poor and improving education. If it doesn't grow government or help the unions they simply don't care.

Consensus

President Barack Obama spoke of a consensus among economists over the need for massive government intervention to stimulate the economy. Setting aside whether that is correct or not, Greg Mankiw notes that economists do agree on a number of economic issues and provides a list with the amount of consensus:

Here is the list, together with the percentage of economists who agree:

1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
2. Tariffs and import quotas usually reduce general economic welfare. (93%)
3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6. The United States should eliminate agricultural subsidies. (85%)
7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11. A large federal budget deficit has an adverse effect on the economy. (83%)
12. A minimum wage increases unemployment among young and unskilled workers. (79%)
13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

What's interesting is on how many of these items that Democrats tend to fall on the opposite side of economists. Just this week it emerged that New York Democrats are trying to strengthen rent control in violation of #1. Democrats, including President Obama, are regular opponents of free trade agreements that increase economic welfare (#2). Democrats regulary rail against outsourcing (#5) and actually removed language inserted by Sen. Tom Coburn in the stimulus package that would have prohibited spending money on stadiums (#7). Democrats kicked and screamed when President Bush proposed reform of social security but have not offered up any reform ideas of their own (#9). Democrats are also consistent backers of a higher minimum wage in violation of #12.

Why so many people continue to believe that Republicans are a bunch of rubes while Democrats have some monopoly on intelligence is an enduring mystery.

Rent control

Both Greg Mankiw and Megan McArdle both note that New York Democrats are trying to strengthen rent control laws. As McArdle says:

In times like this, it's easy to believe that if you laid all the economists in the world end to end, they still wouldn't reach a conclusion. But here's one of the things that basically everyone, left to right, agrees on: rent control is the surest way to destroy a city's housing stock short of aerial bombing, and one of the major culprits behind New York's painfully low vacancy rate.

This is absolutely correct, with an extreme amount of consensus in existence on the subject. My first semester in grad school my intermediate microeconomics professor gave a lecture about the counterproductive nature of rent control. Even left-wing economic talisman Paul Krugman has called rent control "a textbook case of economic stupidity."

You know, it's stuff like this that just makes you want to scream. It's almost as if the last 50 years never happened for some Democrats. We have all seen the failures of rent control laws -- and Democrats want to strengthen them. We have all seen the success of welfare reform -- and Democrats want to undo it.

What is wrong with these people? And they are the self-styled intelligentsia???

Dems in action

"I'll be back. You can't keep the Democrats out of the White House forever, and when they get in, I'm back on the streets with all my criminal buddies!" -- Sideshow Bob

With the Democrats back in the White House it isn't criminals out on the streets that I worry about, but rather the lack of a road block to keep a lid on the mad house that is Congress. Indeed, the bad news out of Washington continues to come thick and fast. The lunatics really are running the asylum and the Democrats just keep shooting the messenger.

Meanwhile, David Brooks takes aim at the stimulus package, whose flaws become more apparent with every passing day:

In a fateful decision, Democratic leaders merged the temporary stimulus measure with their permanent domestic agenda — including big increases for Pell Grants, alternative energy subsidies and health and entitlement spending. The resulting package is part temporary and part permanent, part timely and part untimely, part targeted and part untargeted.

It’s easy to see why Democrats decided to do this. They could rush through permanent policies they believe in. Plus, they could pay for them with borrowed money. By putting a little of everything in the stimulus package, they avoid the pay-as-you-go rules that might otherwise apply to recurring costs.

I really hope this thing fails. Not as a petty whack against Obama, but because this is a truly atrocious piece of legislation.

We're all Europeans now

The likely election of Barack Obama along with the Democratic Congress heralds the Europeanization of America according to Pete Dupont (similarly, Mark Steyn describes the Obama approach as an EU domestic policy and UN foreign policy). It's kind of hard to argue with him given an agenda set to look something like this:

• The U.S. military will withdraw from Iraq quickly and substantially, regardless of conditions on the ground or the obvious consequence of emboldening terrorists there and around the globe.
• Protectionism will become our national trade policy; free trade agreements with other nations will be reduced and limited.
• Income taxes will rise on middle- and upper-income people and businesses, and individuals will pay much higher Social Security taxes, all to carry out the new president's goals of "spreading the wealth around."
• Federal government spending will substantially increase. The new Obama proposals come to more than $300 billion annually, for education, health care, energy, environmental and many other programs, in addition to whatever is needed to meet our economic challenges. Mr. Obama proposes more than a 10% annual spending growth increase, considerably higher than under the first President Bush (6.7%), Bill Clinton (3.3%) or George W. Bush (6.4%).
• Federal regulation of the economy will expand, on everything from financial management companies to electricity generation and personal energy use.
• The power of labor unions will substantially increase, beginning with repeal of secret ballot voting to decide on union representation.
• Free speech will be curtailed through the reimposition of the Fairness Doctrine to limit the conservative talk radio that so irritates the liberal establishment.

I don't think that that Dupont is exagerrating here, this is pretty much all stuff that the Democrats have promised, and we should take them at their word. If you think about it, it's really nothing more than warmed-over European-style social welfare policies. In the minds of many people this is no big deal. "So what if we become more like Europe? What's wrong with Europe?"

Indeed, in the popular mythology that has taken hold among certain Americans a European fate is something to be embraced, not feared. To many it's an idyll. Europe conjures up images of fresh baguettes being cracked open at quaint sidewalk cafes, free health care and efficient public transport. People work less and take more vacation, choosing to instead to pause and smell the roses as they travel down life's path. And to some extent it's true. Life in Europe is hardly to be equated with Dante's seventh circle of hell.

But being European also means less chance of having a job and being poorer:

Source: CIA Factbook

Now, admittedly these statistics aren't perfect. For example, per capita income doesn't mean that everyone earns that amount. A country of 2 people, with one earning $100K per year and the other $0 averages out to a per capita income of $50K. Median is preferable but I can't find the data. Even so, if you subtract $10,000 from the U.S. per capita income it is still richer than every other European country in these graphs. In addition U.S. poverty and income statistics are also skewed by the fact that, unlike France, we've got a third world country along our border -- and I'm not talking about Canada.

This also doesn't take into account cost of living. While some items, such as food, tends to be cheaper in Europe, big ticket items such as cars, housing and electronics tend to be considerably more expensive.

Indeed, when we look at the statistics, which I don't have the time to find at the moment, we usually see that Americans drive more and bigger cars, have more housing space and have in general more stuff. I will be the first to admit that money doesn't guarantee happiness, but it is a lot easier to be happy when you are rich than when you are poor.

Defenders of the European way of life will usually counter with things like the fact that Europeans have universal health care and live longer. Well, I am not convinced that the two items are related. Health care quality is largely a function of how well we treat the sick and injured, and I have little confidence that Europeans and Americans get sick at similar rates. Americans, for example, are more likely to be overweight than Europeans. We're also more likely to get shot and -- being a car-centric society -- involved in automobile accidents I would imagine.

But health care is another debate for another day. Perhaps a useful proxy for health care quality, however, is dentistry. Compare your typical American set of teeth to your typical European. I would venture that the American comes out ahead, and it isn't just because we put flouride in the water.

To summarize, be careful what you wish for America, you might just get it. Remember, there's a reason why so many of your European ancestors left.

Nationalizing your 401k

401(k)s are great investment vehicles that have allowed millions of Americans to build a nestegg for their retirement and get a slice of America's prosperity. So naturally Democrats are looking at getting rid of them and replacing them with a check from the government.

I sometimes get the feeling lately that the barbarians really are at the gates. You better hope and pray the GOP can hold on to 41 seats in the Senate.

Oh dear...

It should be little wonder that they are called tax and spend liberals:

Democratic leaders on Capitol Hill are drawing up plans to toughen oversight of the financial industry and considering introducing another economic-stimulus package in the wake of the government's decision to buy stakes in major U.S. banks.

House Speaker Nancy Pelosi is mulling recommendations from several economists that Congress act on an economic-recovery package that would cost taxpayers $300 billion, according to congressional aides, equivalent to about 2% of the country's gross domestic product.

You know, Japan tried this during the 1990s. They paved over half the country and ended up right back where they started, except with more debt (topping 100% of GDP during the 1990s. The US is currently at around 60% I believe).

Then there is this gem:

The lawmakers are also looking to tighten regulation of financial services, with hedge funds, private-equity funds and exotic financial instruments such as credit-default swaps likely to come under greater federal scrutiny.

Relatively lightly-regulated hedge funds seem to have escaped from the current financial crisis relatively unscathed. Funny that. I guess I have to say it again: deregulation is not the problem. Indeed, the evidence only seems to be mounting.