CO2 as Plant Food ~ The Latest Global Warming Deniers’ Crock

Pour enough salt in the beans and even the starving will turn away from them.

A perfectly reasonable gentleman engaging me in debate over the issue of global warming (See Fomenting Doubt ~ The Tactics and Motivations of Global Warming Deniers plus the post’s comment thread) has suggested that increased levels of carbon dioxide (CO2) in the atmosphere is actually good for the plant kingdom. This idea, the latest “crock” thrown out by global warming deniers to confuse us on the issue, asserts that, since CO2 is food for plants, more of it accelerates the growth of trees and food crops, thus absorbing more carbon fuel emissions through photosynthesis and providing more food for the world’s hungry. If this idea sounds perfectly reasonable to you, as it did to the gentleman sharing it with me, take a moment to watch the following video:

Global warming deniers are increasingly throwing out “viral disinformation” like this.  It’s not about questioning the science of climate change, not really. This is about partisan politics as usual — fear and doubt. Pour enough salt in the beans and even the starving will turn away from them. But fear and doubt are not what our nation needs just now, fear and doubt are not what the world needs. We need to have renewed confidence in the preponderance of scientists warning us that our actions have consequences. We need to have renewed confidence in the preponderance of economists telling us to give the latest round of economic stimulus spending a chance to work. We need to have renewed confidence in our democracy and communicate regularly with our elected representatives. Mostly, we need to stop being distracted by the vocal minority of special interest groups advocating tried and failed policies and start thinking for ourselves.

Please feel free to post a comment, pro or con.

Fomenting Doubt ~ The Tactics and Motivations of Global Warming Deniers

Fomenting doubt about the need to transition to a cleaner, greener environment and to reduce our dependency on foreign oil, whether for political and/or business reasons, is wrong.

News junkie that I am, I was dismayed Friday (June 26th 2009) by all the media attention Michael Jackson’s untimely death the day before was getting. What with all that was and continues to be happening in the world — reaction to the election results in Iran, the saber-rattling of North Korea’s Kim Jung Il, world economic struggles and Congressional actions on important issues like healthcare reform, passage of a $680 billion defense spending bill for next year ignoring specific war fighting requests presented by the Secretary of Defense and endorsed by the White House, and House passage of the Waxman/Markey climate and energy bill by a narrow margin, news agencies were, or so it seemed, taking a holiday.

At ABC’s news website I read where John Stossel’s take on the healthcare debate, scheduled for Friday night’s 20/20 program, would be preempted by a special on Michael Jackson. As John himself might have said, I muttered under my breath, “Give me a break!” then I went to John’s blog to express my opinion about the media playing to the ratings rather than doing the job we need them to do,  keeping citizens informed. Oh for the good old days of Public Broadcasting prior to the age of “infotainment.”

At John’s blog, after posting my condolences, I found a thread of comments to a piece he had written about the International Panel on Climate Change (IPCC) referring to those not yet accepting of the majority view of scientists as “deniers.” John, a well-know skeptic of global warming theory, had attracted some interesting comments containing what I like to call, “disinformation.” I started reading and started responding, doing what I could to counter the attacks on reason. You can read the entire thread if you wish at http://blogs.abcnews.com/johnstossel/2009/06/global-warming.html#comments.

The first comment I responded to was posted by someone named, Ordean Pierce. Mr. Pierce posted:

WHERE WAS AL GORE WHEN THE LAST ICE AGE ENDED, AND THE WORLD WARMED UP? THAT MELTING OF THE ICE MADE OUR LAKES IN MINNESOTA AND THE MISSISSIPPI RIVER. I KNOW WHERE HE WAS, HE WAS INVENTING THE INTERNET.

My response was:  Mr. Pierce, we all know that Al Gore misspoke when he claimed more than justified credit for “inventing” the Internet. He has admitted as much. But this fact negates neither the work of “real” climate scientists nor the important work Mr. Gore has done to heighten world concern about the dangers we face because of climate change. Your comment is a crude appeal to ridicule. This fallacy or faulty logic is when mockery is substituted for evidence in an “argument.” Shame on you.

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The second comment I responded to was made by Monty. Monty posted:

Congress proposes to spend m(b)illions to reduce the man-made CO2 in greenhouse gases.

But 95% of greenhouse gases is water vapor. 4.85% is CO2, but 97% of that comes from trees and vegetation, oceans, and land surfaces. 3% of 4.85% is 0.15%. It is that small component of greenhouse gases that Congress will spend money on.

I responded with: You are correct, Monty, according to Wikipedia, http://en.wikipedia.org/wiki/Greenhouse_gas, water vapor is the most significant greenhouse gas, but it is not as significant as you claim. When ranked by their contributions to the greenhouse effect, the most important gases are:

Water vapor, which contributes 36–72%
Carbon dioxide, which contributes 9–26%
Methane, which contributes 4–9%
Ozone, which contributes 3–7%

The variances are attributable to the significance of these gases’ contributions to the greenhouse effect in different locations of the earth. Obviously, water vapor is not as prevalent in desert areas as it is in tropical areas. I can’t imagine from where you came up with the 95% contribution for water vapor — a little distortion of the real numbers, perhaps. Maybe you can provide us with a reference…

By the way, it is water vapor that comes from the oceans, lakes and rivers, trees and land surfaces, not carbon dioxide. I suggest too that you check your math again.

Atmospheric water vapor, as well as other greenhouse gases, has been shown to be increasing in recent years. However, the increase in water vapor is not the cause of atmospheric temperature increases. This increase is incidental to raising temperatures rather causal.

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Another comment I responded to was by someone identifying himself as, dimsdale. He listed a dozen or more, what he claimed were facts, but without referencing sources to back up any of them. At the end of his comment, he left a single URL hyperlink and signed off as “a proud anti-climatic infidel.” Curious, I clicked on his hyperlink, did a little research, then posted the following comment of my own.

Please, Mr. Dimsdale, admit that the “facts” you present are unsubstantiated and, at best, outdated. The URL you have given us leads to an undated letter from Christopher Monckton, 3rd Viscount of Brenchley, to an unidentified editorialist named Ms. Goodman. Readers should know that “Lord” Monckton is no scientist, although he has indeed waxed loudly and eloquently against those who are. Lord Monckton was a British politician, having run unsuccessfully for a seat in the House of Lords and serving as an advisor to Margaret Thatcher. Prior to this, and subsequently, he was a journalist. His greatest claim to fame has been to champion arguments against “main stream” scientists on what was once a climate change issue. Readers can learn more about him at

http://en.wikipedia.org/wiki/Christopher_Monckton,_3rd_Viscount_Monckton_of_Brenchley

Thank you, sir, but I prefer scientific arguments/discourse made by “real” scientists.

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While I was still reading and responding to disinformation comments posted at this site, Mr. Dimsdale responded to my comment with another of his own. His comment contained segments of publications by eight different professors and scientists in everything from atmospheric chemistry and botany to geophysics and mathematical physics, claiming that he himself had a PhD in neuroscience with minors in oceanography and paleogeology.

My response was: Okay “Dr.” Dimsdale, clearly you were well prepared to respond to my comment with material citing various individual “real” scientists’ claims that the majority view on climate change is wrong. Obviously I walked into a trap. But when I read recent articles published by NASA and NOAA on accelerating levels of carbon dioxide and methane (both greenhouse gases generated by or a consequence of human activities on earth), the IPCC’s climate conclusions seem reasonable and resonate loudly within me.

According to NOAA’s site at http://www.noaanews.noaa.gov/stories2009/20090421_carbon.html, “Researchers measured an additional 16.2 billion tons of carbon dioxide (CO2), a byproduct of fossil fuel burning — and 12.2 million tons of methane in the atmosphere in the year ending December 2008. This increase and the rate of increase are real and alarming despite the global economic downturn, with its decrease in a wide range of activities that depend on fossil fuel use.” This tells me, even though I am not a scientist myself, that we are at or near a dangerous tipping point.

Whom should we believe, sir, the few scientists who are skeptical about the human causes of climate change, which is measurable and has been measured, or the majority of scientists who say that we should be concerned, that we are the cause, and that we should be taking actions to minimize consequences? I choose to trust the majority.

According to Pieter Tans, a scientist with NOAA’s Earth System Research Laboratory in Boulder, CO, “Only by reducing our dependence on fossil fuels and increasing energy production from renewable resources will we start to see improvements and begin to lessen the effects of climate change,” said scientist. “At NOAA we have monitored carbon dioxide emissions and other greenhouses gases for decades and will continue to do so to help assess the situation and advise decision makers.”

I know not why you, sir, are such a vocal critic of the IPCC’s findings and recommendations. Perhaps you fear short run economic consequences of actions necessary to reduce carbon emissions. These consequences are of concern to us all. But fomenting doubt about the need to transition to a cleaner, greener environment and to reduce our dependency on foreign oil for a stronger economy in the long run, whether for political and/or business reasons, if these are what motivate you, is wrong. If even modest predictions about sea level rise are correct, and the icepacks feeding the major rivers of the world do disappear over the next few decades, this might well be mankind’s eleventh hour.

Gee, I hope I wasn’t too harsh.

I invite your comments whether you agree with my persuasions or not.

P.S. Yahoo Answers recently came up with the following “best” answer to the question: Why is it that AGW proponents reference NOAA, NASSA, NAS… and AGW skeptic/deniers reference Michael Savage? http://answers.yahoo.com/question/index?qid=20090605122216AAp1S62. For me, it explains a lot about global warming deniers’ movivations.

Legislating from the Bench ~ Why It’s Not Always Such a Bad Thing

Legislating from the bench is nothing new and all judges and justices do it. Furthermore, when ruling on issues of legal conflict and vagueness, judges do establish policy.

Here we go again, as the Senate undertakes the process to confirm or reject the nomi- nation of Sonia Sotomayor as only the third woman and first Hispanic ever to serve on the Supreme Court, we hear the same old Republican refrain, “We don’t want justices who legislate from the bench.” To my mind, this begs a question. No, not to whether Judge Sotomayor is an activist or even a prejudicial judge. Despite text from her 2001 speech addressing how judges truly do bring individual life experiences to decisions from the bench, her judicial record indicates that her many rulings over 17 years as a district and appeals court judge have been quite moderate. My question is this: do Republicans really reject all activist judges or just activist judges who are not conservative enough?

First of all, let’s define the terms?  In a general sense, an activist is one who believes in bringing about social, political, economic, and/or environmental change for the better. This means that yours truly is an activist. But don’t we all now recognize the need for change and want things changed for the better? So then, are we not all activists? The only difference is, as liberals, conservatives and moderates in between, which changes we want and in what form we want them to take.

By extension, judicial activism is a philosophy suggesting that judges should reach beyond the Constitution to achieve results that are consistent with contemporary conditions and values. The term is most often associated with the concept of liberalism, which includes the belief that a broad interpretation of the Constitution should be made which can then be applied to specific issues. The counterpart to judicial activism is judicial restraint which is advocated by those who believe that democracy will thrive best if judges stick to the letter of the law and refrain from policy debates, deferring to the legislature to clarify legal issues. Under certain conditions, however, judicial restraint is just another form of judicial activism — I call it reverse judicial activism.

Now, I do not have a degree in Constitutional Law, but doesn’t the Constitution compel/permit all three branches of the government to legislate? Yes, I know, Article I, Section 1 of the Constitution says, “All legislative powers herein granted shall be vested in a Congress of the United States…” However, Article III, Section 2 of the Constitution grants to the Supreme Court as follows: “The judicial power shall extend to all cases, in law and equity…” The key and operative word is here is “equity” which, in 18th Century terms, means righting wrongs that the strict letter of the law fails to address. Furthermore, although not specifically enumerated as a judicial power in Article III, “Judicial Review” has been a well established and controlling precedent since the “interest conflicting” dealings of John Marshall in the 1801 case of Marbury vs. Madison.

The Executive Branch legislates too when it establishes commission and agency rules and regulations that bind us just as much as do Congressional bills signed into law by the President — that is, until a subsequent administration overturns said rules and regulations. Consider the merits of cases in Executive reviews (issues involving Social Security, the IRS, military tribunals, and agencies such as the FEC, FDA, FTC, etc.). And does a President not legislate when vetoing a bill? Of course he does.

On the flip side of all this, Congress determines facts and passes “judgments” in Congressional hearings and contempt and impeachment proceedings? So it is true that all three branches have concurrent powers and overlapping checks and balances against the other. Therefore, legislating from the bench is nothing new and all judges and justices do it. Furthermore, when ruling on issues of legal conflict and vagueness, judges do establish policy. And it is altogether appropriate and fitting, in my opinion, that they should do so, assuming a court that is balanced or at least moderate in political persuasion. Judges get the law right — finally, by ultimately getting divisive issues out of the hands of untrust- worthy, disingenuous politicians who want, more than anything else, to be reelected.

Reverse judicial activism is, to my mind, the bigger problem. This is when courts rule not to interpret the law in light of contempo- rary issues and realities. Case in point — the infamous Dred Scott decision of 1857. More recently, reverse activism was demon- strated when the Supreme Court voted last June (2008) to overturn a 32-year old Washington D.C. hand gun law, ruling that it violated the Second Amendment. Obvious to me is that the defense of Washington D.C. does not rely on armed “militias” anymore if in fact it ever did. The U.S. Army, established in 1784, if not adequate to defend the nation’s capital then and when it was invaded by the British during the War of 1812, is surely adequate today.   Therefore, since the premise of the Second Amendment is no longer valid, that a well regulated militia is necessary for the security of a free state, the citizens of Washington D.C. no longer have the need nor the right to bear arms. Come to think of it, Washington D.C. isn’t even a state, so per the “letter of the law,” the Second Amendment should not even apply.

Reverse judicial activism would also be enacted should the recent California Supreme Court decision concerning gay marriage be appealed to the highest court in the land and be upheld by the heavily conservative court despite the Fourteenth Amendment guaranteeing equal treatment under the law and due process for all citizens. With six of the nine current justices being Republican and momentum for gay marriage gaining at the state level, gay rights advocates are not at all anxious for the California Supreme Court’s ruling on Proposition Eight to be appealed.

Feel free to post a comment whether you’re in agreement or not.

The Demise of the Republican Party ~ What Must They Do to Survive?

If Republicans want to survive as a party capable of installing members into positions of power and influence at the national level, they’re going to have to start coming clean with us.

April 30, 2009  ––  My comment posted to CNN’s Cafferty File this afternoon, April 30, 2009, follows. It was in response to the question, “How can the Republican Party improve its image with voters?” It didn’t make the cut to be aired, maybe because I didn’t post it until late this afternoon. But perhaps you’d like to comment in response to it on my blog.

Jack, I’m guessing that the Republican Party has ridden their political pony of lower taxes, smaller government and ridged constitutionalism into the ground. If Republicans want to survive as a party capable of installing members into positions of power and influence at the national level, they’re going to have to start coming clean with us. Americans have been educated by recent events and by the second Great Communicator, Barack Obama, that when principles fail, it’s time to start coming up with new ideas. Unfortunately, Republicans haven’t had a new idea since Ronald Regan.

Most Americans know now that Reganomics is truly Voodoo economics and that conservatives in Congress have been no more fiscally conservative than their liberal counterparts. Once we’re out of the economic mess that Republicans have left us, we’ll be generations paying-off the debt they have saddled us with and salvaging the social safety nets that Americans have come to depend upon.

Clearly, Republicans need to stop the name-calling, they need to distance themselves from Rush Limbaugh, they need to learn to evolve with change, they need respect science, they need to beg forgiveness for causing the current recession or at least making it worse, they need to stop vilifying gays, non-Christians and poor non-whites, and they need to give party leadership over to moderates like Utah’s Governor Jon Huntsman. It wouldn’t hurt either if they were to come up with a new name for their party, something like maybe the Repentance Party.

Please feel free to comment whether you agree or not.

The Conservative Economist vs. the Liberal Economist

We here in the United States have had it pretty doggone good for a long, long time. We’ve been riding the gravy train for decades, borrowing from tomorrow so that we can have it all today…

April 18, 2009 — In the wake of nation-wide “tea parties” on Tax Day this year, another teacher and I had occasion to discuss our different views.  In as much as his political persuasion is strongly conservative and mine is more liberal, I celebrate the fact that we are able to have civil, respectful discussions like this. He, by the way, used to teach advanced macroeconomics at the high school level while I teach the same subject currently.

My colleague said that he thought these protest demonstrations (they were a pretty big deal for conservative voters here in Texas) were entirely appropriate. My position was that they were less about taxing and spending and more about protesting the fact that Democrats have taken control of Washington and are now in a position to push their liberal agenda on a wide range of issues. Based on some of the protest signs I saw in news coverage by the various networks including Fox, I also said that I thought many attended because of the outrage they feel at having an African American in the White House. He disagreed saying that he thought the primary focus of the demonstrations was on the economy and that the right thing to do to combat the recession would be to reduce taxes even more and to tighten governments’ belts: local, state and federal.

I reminded my colleague that this is exactly what government did prior to and during Hoover’s one term as president. This was during the recession that took hold of us in the 1920s, the resession that bloomed into the Great Depression of the 1930s. We have learned from that experience, at least some of us have, that tightening the money supply and reducing government spending only serves to exacerbate the decline of aggregate demand, and it is aggregate demand that drives the economy, not aggregate supply. Supply only follows demand or the anticipation of improved market conditions as businesses  have no motivation to produce goods and services that cannot be sold — hence higher unemployment during recessions. My colleague teaches U.S. History now, by the way.

My colleague countered with the view that raising taxes on people who earn $200,000-plus, which is what he said the president’s tax provisions in the current budget plan will do, will hurt small businesses causing them to have to scale back on production and services.

Hmmm… no one, it seems, enjoys having to pay taxes, but — and I pointed this out to my colleague — the Obama administration and the Congress is not raising taxes this year on people making more than $200,000. Their taxes will not change until after the Bush/Cheney tax cuts expire, and that won’t happen until the end of the year. When it does, their marginal rate will increase by only 2 percent. This year, everyone making less than $200,000 will see their federal taxes decline.

We here in the United States have had it pretty doggone good for a long, long time. We’ve been riding the gravy train for decades, borrowing from tomorrow so that we can have it all today, which has allowed the rich to get ever richer while the earning power for all the rest of us has actually declined. Investment bankers and senior executives of major corporations are laughing all the way to their off-shore, numbered bank accounts. According to the text book from which I teach my high school seniors, because of inflation and the demise of manufacturing in the United States, the minimum wage, as a percent of average manufacturing wages, buys only about 70 percent of what it did in 1968.

On the right is a listing of countries’ average taxes paid in 2007 by citizens as a percentage of their GDPs. Notice how the United States is ranked. I found this information on the Internet at Wikipedia. The data came from a publication by the Organization for Cooperation and Economic Development. After Obama’s tax cuts for 95 percent of the population are approved and implemented for 2010, we will probably be paying slightly more than South Africans do. Can you even imagine what Japan’s taxes would be like if they had anything like the defense budget to fund that we have? Further, since Obama’s cuts target the preponderance of citizens who have the highest propensity to consume, our aggregate demand will increase and short-range aggregate supply will respond returning us to full employment — eventually, all of which is text book macroeconomics. So, I told my colleague, I can’t quite understand why Republicans and Libertarians believe that making the Bush/Cheney tax cuts for the super rich permanent would be a good thing for the economy, unless y’all still believe in Say’s Law, i.e., that supply creates its own demand. Trickle-down/supply-side economics has failed us. That is why we are in our current situation. That is why it is time for change, time for us to adopt the bottom-up approach that Obama and all his economic advisors support.

Yeah, but what about the massive government spending in the Democrats’ budget plan for 2010? It’ll generate a 1.2 trillion dollar deficit at projected revenue levels. Yes it will. But where was the conservative base of the Republican Party for the previous eight years? Why weren’t they protesting the spending that exceeded revenues during the Bush/Cheney years, years when we weren’t having a recession, years when we should have been balancing the budget or better yet, paying down the national debt — saving for the next business cycle decline. During the Bush/Cheney years  the national debt grew from $5.66 trillion to $10.62 trillion? So, the only truly conservative president we’ve had in recent years was Bill Clinton.

Yes, once we are out of this recession, it is reasonable to anticipate that tax levels will rise for those who can afford it, especially if reasonable leaders are still in power and if we don’t get control of rising health, energy and education costs. But we’ve a debt to repay to future Americans, my sons and daughters and yours.  We need to be about repaying it — and I for one think that those who can do more should do more.

No, the tea parties were not about taxing and spending — big government vs. small government.  No matter what the demonstration organizers claim, the demonstrations were about a whole host of “social” conservative-value wedge issues, issues like abortion, gay rights, gun control and… sadly, race. Yes, race. The demonstrations were about consolidating elements of the GOP that have been fragmented by the last two elections. The demonstrations were about salvaging the Republican Party in advance of the mid-term elections in 2010. And if some in attendance actually thought they were there about taxing and spending, they were misinformed — misled by the money interests in this country, which are the real base of the Republican Party.

When the Bush/Cheney tax cuts expire in 2010, the rich will still be rich and everybody will be better off with the economy on the mend.

I invite your comments whether pro or con.

The Failure of Another Great Experiment ~ Is America About to Legalize Drugs?

The War on Drugs is very much on Americans’ minds at this time, much like the prohibition against alcoholic beverages was during the Great Depression.

During his on-line town hall meeting on Thursday of this week, President Obama demonstrated his considerable political skills and instincts when he responded to a question about legalizing drugs. He was asked if he thought legalizing drugs would be a good way to deal with the rising violence between drug cartels and law enforcement officers on both sides of nation’s southern border and to grow our economy. Without elaboration, he simply said, “No, I don’t think legalizing drugs is a good way to grow our economy.” Regardless of what he might really think, he definitely knows that this is a highly charged political issue, one better dodged, at least for the time being. But sentiment favoring legalization is growing, especially with reports of Mexican drug cartel violence spilling over into the U.S.

One of my students brought this up in class as her contribution to our discussion of economics in the news recently, and most of the class wanted to share their views on the issue. There was a good level of participation and, for a few moments, everybody wanted to talk at the same time. But I didn’t want to let the discussion sidetrack us from the lesson of the day.  Neither did I want to have the matter put to a vote as we often do with contentious issues.  So I didn’t let the debate go on too long. After all, our school is in the Bible Belt of north central Texas — I would like to be allowed to retire from teaching someday and not be dismissed in the near term for encouraging immorality.

According to a recent on-line CNN news article, Obama had promised to answer the most popular questions as decided by online votes to the administration’s website, whitehouse.gov. More than 3.6 million votes on 104,000 specific questions submitted by almost 93,000 people were registered by the time voting closed earlier in the day.  From these, he only addressed the winning eight, six were written questions displayed on a screen for all to see, two others were video submissions.

Think about it – out of 104,000 questions submitted, a question on legalizing drugs was among the eight most popular. Of course, we don’t know how many times the same or similar questions might have been asked, but I can only imagine that repeated questions were consolidated in the selection process. This means that the War on Drugs and crime associated with the illegal transportation, sale and possession of drugs is very much on Americans’ minds at this time, much like the prohibition against alcoholic beverages was during the Great Depression.

Popular opinion during the Great Depression led to a grassroots movement and the eventual repeal of the 18^th Amendment in 1933.  Why? Well, Americans who wished to imbibe were not deterred by Prohibition; the 18^thAmendment to the Constitution, sometimes called the Great Experiment, merely drove the practice underground. Speakeasies and “hideaways” developed, especially in large cities, where partiers paid inflated prices for illegally imported booze from Canada, Cuba and Mexico. “White lightening” or “bathtub gin” of questionable origins was produced by many as a means of generating income while unemployment was at record levels. Many, including my own grandfather, became deathly ill after drinking some of this stuff, another name for which was “rotgut;” some even died. And border towns like Tijuana and Juarez, expanded and thrived to service our American appetites for illicit goods and services like gambling and prostitution. American dollars flowed from our economy to other nations and the popularity and profitability of all this attracted organized crime. The same exact thing is happening today because of the prohibition of recreational drugs like marijuana and cocaine. Demand on our side of the border is driving the supply up from Mexico and Colombia.

There are excellent arguments both for and against the idea of legalizing drugs in America. Wikipedia has published an excellent article compiling and addressing all the arguments I can think of including the health arguments, the crime, terrorism and social order arguments, the legal arguments, the personal development arguments, the moral and spiritual arguments, and the economic arguments. The site also provides a great number of links to other on-line sources of information and opinion as well as hard-copy publications – studies and books by well-respected thinkers such as Milton Friedman and Stephen B. Duke.

As a teacher of economics, I was most interested in the economic arguments, all of which support legalization. However, I am still very much open to debate on the subject as I can come down on either side of the issue depending on which side of my brain I choose to listen to. Currently, the rational side of my brain is speaking loudest because I believe legalization would: (1) eliminate the incentive for associated criminal activities; (2) save billions in wasted federal, state and local dollars trying to enforce unenforce- able laws; (3) save billions of dollars spent annually to support a large portion of our imprisoned population, thereby releasing these people back into the workforce; (4) facilitate regulations that could make the products consumed safer; (5) prevent the wasteful taking of innocent lives, and; (6) generate a substantial source of tax revenues, especially if things like marijuana were to be taxed at the same level as alcohol and tobacco.

If you’re tired of reading about this but still interested and desirous of some specifics on the economic arguments, there’s a pretty good video on YouTube of a Boston University economics professor, Jeffery Miron, making the economic case for legalization. It’s a bit dated – recorded in 2000, so the numbers he uses would have to be updated, but I have found it to be persuasive. The URL is http://www.youtube.com/watch?v=1Yx9dFVa19o. Another video, a more recent one, is at http://www.youtube.com/watch?v=nLsCC0LZxkY. It is of Milton Friedman, the eminent economist, making a case for legalization, one based not on the economics of the issue but on the morals of the issue. Interesting… an economist arguing from a moral perspective. Hmmmm… could we be witnessing the failure of another Great Experiment?

As always, you are invited to share your views by posting a comment.

Pay for Good Grades in Texas ~ Will It Happen and, If So, Will It Work?

“The king will answer them saying, ‘I tell you with certainty, since you did it for one of the least important of these brothers of mine, you did it for me’.”

Matthew 25:40 (International Standard Version)

I heard on the news the other day that one of our Texas state lawmakers, Joe Deshotel from Beaumont, filed a bill recently that would create a pilot program designed to pay cash to students at low-performing schools for good grades in core subjects. I was not surprised to read in the Ft. Worth Star Telegram that Representative Deshotel is a Democrat.

 According to the article, under Deshotel’s plan, freshmen could earn $50 for each “A,” $35 for each “B,” and $20 for each “C” in English, math, science or social studies. They would get half their money at the end of each grading period and the other half at graduation. They would also receive college and career counseling through the program. Funding would come from $6 billion in federal stimulus money the state is planning to use on education. The article did not include an estimate for the program’s cost – but it did initiate an interesting debate in our household. The issues discussed by my wife and me were: Would such a program work at all? Would it or could it be administered fairly? And what would the long-term effects be? Would students become dependent on near-term rewards, less able to postpone gratification as adults?

I admitted to my wife and I admit to you now that I don’t know the answers. But, as a teacher of economics for senior high students and as a parent of three grown sons, I am keenly aware of the critical need that young people have for near-term incentives. That’s why in the classroom I sometimes reward my students with small treats, Hersey kisses and various other small candies when they are able to answer review questions correctly. They seem to get a kick out of the competition for rewards — it makes it more like a game, and kids love games. If  they offer a second correct answer when nobody else’s hand goes up, I encourage them to share their second treat with another student so that nobody gets left out and so that nobody gets too much sugar. Controversial? Yes, but it really seems to stimulate interest and motivate students to participate.  And after seven years of teaching, no parent has ever objected. Praise may be enough for some, but certainly not enough for all, especially for those in class who are more academically challenged and seldom experience it.

Although my wife and I could have done so, we never offered our boys monetary rewards for good grades. Some of our friends did though and, as I think back about it, their kids always seemed to do well while ours, despite their intelligence and abilities, passed with mediocre grades and sometimes failed.  Hmmm…. we praised them when they did well, sure, and admonished them when they didn’t. But I suspect now that we’d have done far better as parents to give the pay for good grades idea a try. Many parents, especially in this economy, don’t have the means and so, don’t have a choice.

 There are pay-for-grades programs in place in Chicago, Baltimore, New York, Tucson, and Washington D.C. – I remember reading about Mayor Bloomberg initiating a pilot program with his own money a couple of years ago for kids from poor families in underperforming schools in New York. I’d be interested to know just how it and like-programs in other cities have been working — I haven’t heard, nor have I found conclusive study results. I’ve searched the Internet for answers finding studies and arguments both pro and con. The studies, however, all seem to have been planned and conducted to confirm biases already held.

According to an August 2008 USA TODAY article, a Harvard economist, Roland Fryer, who serves as the New York City Schools’ chief equality officer, came up with the idea two years ago while trying to figure out how to make school “tangible” for disadvantaged kids, kids who have few successful role models. “I just thought that giving them some short-term incentives to do what’s in their long-term best interests would be a good way to go. The two-year old New York City experiment pays students monthly to do their best on skills tests, and it has been making a difference. “While teachers talk about success,” Mr. Fryer said, “it’s not enough to tell a kid that, in the long term, hard work will pay off. We’re asking them to look down a path that they have probably never seen anyone go down … and then to have the wisdom and the fortitude to wait for their reward.”

Barry Schwartz, a professor of psychology at Swarthmore College according to and article in the AP Texas News, cronical.com, has said, “There is no strong research to show the incentives work, and some research shows such incentives can lead students to underperform,” said Barry Schwartz, who has spoken out against paying students for grades. “The downside to this is being ignored by those who support it,” he said, “which is that once kids become accustomed to this, they become dependent. They’ll want someone walking behind them the rest of their lives with an M&M to make sure they are rewarded for everything they do.”

So, okay, the pay-for-grades idea may be dumb. On the other hand, it might just be brilliant. Put five economists, or educators for that matter, in a room and they’ll come up with six different answers to a problem.

Spending our education stimulus money on higher teachers’ salaries won’t make much difference, I don’t think, at least in the near-term. Teach as hard as you can and as good as you can, the student who isn’t motivated to learn is still going to drop out. And sprucing up facilities with a fresh coat of paint or buying more computers won’t do much toward motivating the marginal students, the ones we’re losing in Texas by the groves. That’s where the real problem is. It isn’t with the middle class students whose families would pull them out of our public schools if only they were just a little bit more well-to-do. So please don’t anybody suggest the money should go to vouchers. Therefore, I think we ought to give the congressman’s proposal a fair try. It just feels like the Christian thing to do. His plan, after all, according to the Ft. Worth Star Telegram article, is a pilot program only, intended for high school freshman in underperforming schools so that we can gauge the worthiness of the idea. “If it does help cut down the dropout rate, which is unacceptably high in Texas,” said Deshotel, “then we can look at expanding it.”

Despite my reasoning, my guess is that the Republican-led congress in Austin won’t spend much time debating this.

Wha’da y’all think? I invite your comments, regardless of your politics.

The Swimming Pool Analogy ~ More Viral Disinformation

“Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks which will have to be nationalized and the State will take the road which will eventually lead to communism.”

Das Kapital — Karl Marx, 1867

March 8, 2009 — My students and I discuss economically relevant news items at the beginning of each of my classes. I challenge them to claim their share of daily-assignment A’s, two for each student per grading period, for staying informed. Lately, however, it seems as though everything in the news is economically relevant — so this isn’t much of a challenge, except for the fact that most come prepared with the same most news-worthy items each day. Whoever gets their hand up first wins.

One story that everyone seemed to miss last week was that Russia’s Ambassador to the United States, Sergey Ivanovich Kislyak, predicted that our economy will fail completely during 2010. I shared this with my students from whom I was pleased to note that none seemed overly concerned about the ambassador’s opinion. After all, Russia, we all know, still isn’t overly fond of us, jealous perhaps – their own recent experiment with capitalism having all but failed following their financial crisis in 1998. Entrepreneurism, political corruption and crime rushed into the economic vacuum left behind by the failure of the Soviet Union’s command economy.

Offering something for discussion not gleaned from the legitimate media, thus avoiding the competiton for her daily assignment A, one of my advanced placement students brought a copy of the following to class, a much circulated email message, subject: “THIS SAYS IT ALL.” I read the message to my class including Karl Marx’s nineteenth century prediction about the future of capitalism, which seems to be hauntingly applicable to our current crisis.

  ~~~~~~~~~~~~~~

 Shortly after class, an economics student approaches his economics professor and says, “I don’t understand this stimulus bill.  Can you explain it to me?”

The professor replied, “I don’t have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I’ll be glad to explain it to you.” The student agreed.

At the agreed-upon time, the student showed at the professor’s house.  The professor stated that the weekend project involved his backyard pool.

They both went out back to the pool, and the professor handed the student a bucket.  Demonstrating with his own bucket, the professor said, “First, go over to the deep end, and fill your bucket with as much water as you can.” The student did as he was instructed.

The professor then continued, “Follow me over to the shallow end, and then dump all the water from your bucket into it.” The student was naturally confused, but did as he was told.

The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.

The confused student asked, “Excuse me, but why are we doing this?”

The professor matter-of-factly stated that he was trying to make the shallow end much deeper.

The student didn’t think the economics professor was serious, but figured that he would find out the real story soon enough.

However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad.  The student finally replied, “All we’re doing is wasting valuable time and effort on unproductive pursuits.  Even worse, when this process is all over, everything will be at the same level it was before, so all you’ll really have accomplished is the destruction of what could have been truly productive action!”

The professor put down his bucket and replied with a smile, “Congratulations.  You now understand the stimulus bill.”

~~~~~~~~~~~~~

After reading this to the class, I asked my students what they thought of it. Nobody offered an opinion, not at first. But I was patient, giving them a chance to think about it. Finally, one brave young fellow raised his hand and offered this, “I think the explanation is too simple… so simple that the author must think everybody else is stupid.”

Another student said, “Yes, and if economics was that simple we’d all be getting A’s.” In response to this, most of the class started laughing including me.

“Remember, class,” I said, “the John Maynard Keynes quote: ‘Economics is an easy subject at which few excel’.”

Then, the student who had brought the email to class sheepishly asked why the story’s professor was so wrong using a swimming pool as a metaphor for our economy.

“Unlike the professor in the story,” I said, “I will take the time and at least try to explain. Yes, this lesson on the Economic Recovery and Investment Act of 2009 is flawed on many levels.

First, our economy is not at all like a fluid swimming pool. Wealth does not flow freely from the deep end to the shallow. Wealth tends to flow from the shallow end to the deep where much of it tends to stay. At the beginning of the Bush/Cheney years, 80 percent of the water [wealth] in this nation belonged to 20 percent of its citizens, or just 20 percent of the pool. Now nearly 90 percent of it is in the deep end with much of it cashed away in U.S. Treasury Bonds, foreign numbered bank accounts and other investments that impede circulation. This is because the rich have a much lower propensity to consume and a higher propensity to save. Recall our lessons on the aggregate expenditures model. And, be not confused, saving is not the same thing as investing (http://www.finweb.com/financial-planning/finances-savings/saving-vs-investing.html), which is what many monetarist/supply-side economists would have us all believe. By the way, there aren’t very many serious supply-side economists left.

Second, we don’t have a private backyard pool any more. Our nation’s pool is connected to those in the back yards of all other nations.

Third, and there is little controversy over this among most economists now, government spending under the law will not be wasteful/unproductive activity. Infrastructure projects that this country badly needs done will get done. This will make us more efficient and reduce future costs (true investment)… plus, wages paid to get this work done will be spent and money spent eventually becomes someone else’s income — over and over again. Much of it will save state and federal governments’ unemployment and health care costs.

Finally, much of the water moved (government spending) will be used to nurture education and do research on alternative energy sources making us even more efficient and competitive in the future.

Viral disinformation like this swimming pool analogy making the rounds lately, I think, are poor attempts by those who oppose the current administration’s efforts to deal with the recession. They raise doubts and promote fear for political purposes and, as such, are disingenuous. It’s sad because what we need just now in the private sector is a sense of unity and confidence. But informed individuals, or at least those who have open inquisitive minds, won’t be suckered-in by simplistic appeals like this. We know that the world is not flat, and we know that laissez faire  economics is anarchy. An economy without structure and rules is like a jungle wherein only the fittest survive.  I must admit, however, the Karl Marx quote, does come pretty close to explaining what has happened to us owing to deregulation of the financial sector. Let’s all hope his forecast isn’t correct too. If foreigners decide to stop lending us money, it could come to that, heaven forbid!”

Please feel free to respond to this posting below with a comment, whether or not you agree.

Capitalism and Socialism ~ Both Evil Extremes of Economic Theory?

I watched with jaw agape Sunday morning, February 15, 2009, as one of the most conservative legislators still serving in the U.S. Senate, Senator Lindsey Graham of South Carolina, said that he is open to discussing the nationalization of large U.S. banks. He said this on This Week with George Stephanopoulos!

Who would have thought such a thing could be possible as little as just a year ago? This is socialism! Right… or is it?

Things must really be bad because this isn’t just some hare-brained idea coming from a single wacky politician who doesn’t know his right from his left (pun indented), it was the subject of debate in Business Week’s February 2d publication, Nationalize Broken U.S. Banks.

Having grown-up during the Cold War, I was taught by all those around me, my grandparents, my teachers and other adults, that socialism is bad and that capitalism is good. Our great enemy of the time, the Soviet Union, they told me, was a godless nation led by ruthless ideologues bent on spreading their radial beliefs throughout the world, by force if necessary. Their economic system was the most extreme manifestation of socialism, communism.

Our economic system, capitalism, prevailed in that epic struggle of right vs. wrong when the Berlin Wall came tumbling down and the “Evil Empire” collapsed in 1985. For much of the world, this victory of one ideology over another seemed to resolve any debate over which system is best. The former Soviet republics all rushed to establish “free enterprise” in varying degrees but with dubious success. Over the past 20 years of transition to capitalism in these now “free” nation-states, according to Professor James Petras in a Global Research Internet posting (Capitalism versus Socialism: The Great Debate Revisited), most basic industries, those that were formally controlled by the state, have been taken over by European- and U.S.-lead multi-national corporations and by mafia billionaires. In Poland, the former Gdansk Shipyard, point of origin of the Solidarity Trade Union, is now a museum and over 20 percent of the country’s work force is unemployed. Another 30 percent, according to Financial Times (February 21/22, 2004), was employed at the date of this publication in marginal, low-paid jobs including prostitution, contraband, drugs, flea markets and street vending. In other former Soviet republics, things have been even worse. Bulgaria, Rumania and Latvia, according to the CIA World Fact Book, all are struggling with high unemployment, high rates of inflation, corruption and crime.

In our own country, with government regulation and oversight of industries, everything from aviation to banking and finance to peanut production, reduced substantially over the past thirty years, beginning with Reagan’s two terms (Clinton did nothing to reverse the deregulation trend while he was President although he did restore a more progressive tax code and constrained government spending), we’ve witnessed the disparity between the haves and have-nots grow dramatically; the rich have gotten richer while the poor have gotten poorer.

At the beginning of the Reagan era, the richest twenty percent of Americans held nearly eighty percent of our nation’s wealth. Today, they are estimated to hold over ninety percent with over forty percent concentrated within the top one percent. That leaves just twenty percent for the rest of us.

Even as the current recession was beginning, and please don’t try to convince me that the Bush Administration was caught unaware, with the subprime mortgage debacle gaining attention in the press, unemployment starting to creep upward, and the price of gasoline soaring to over $4.00 per gallon for regular unleaded in much of the country, the biggest corporations in America like Exxon/ Mobile and Wal-Mart were posting record profits. Top executives of failing banks and the auto industry were still making millions. So our economics textbooks are right, capitalism guarantees nothing with respect to economic equity — quite the opposite. Capitalism, when unconstrained, guarantees systematic exploitation of the world’s resources and the vast majority of humanity by the privileged few.

Freedom is good, yes, but too much freedom is anarchy — and in anarchy, only the strong and well-connected survive.

My granddaughter, a heretofore valued employee as manager of the bakery department for a large retail outlet firm’s store in Utah, a right-to-work state, has been given notice. After seven years of working for the firm, steadily advancing in responsibility and salary, she’s now making too much money what with sales down and profits declining for the store during the current recession. Management wants to consolidate her department with another under a new manager to whom they can pay less. But to do so, they first had to make up an excuse to fire her. Otherwise they would have had to move her at her current salary to a different job. So, they are claiming that the employees under her are suddenly complaining about her management style and erratic behavior. They say that she’s too emotional, having recently given birth to her first child and being diagnosed with post-partum depression. Is this fair? No, I don’t think so. But being in a right-to-work state, they’ll probably get away with it, at least in the near-term. We are encouraging our granddaughter to file a claim against them through the state’s Equal Employment Opportunity Commission. Should this fail, and I anticipate it will, we will stand behind her and subsidize her efforts to claim compensation under the American’s with Disabilities Act.

My reason for sharing this story is to illustrate the fact that corporations, by and large, have no conscience. All they really care about is meeting shareholders’ expectations for growth and profitability. When aggregate demand declines, businesses scale back production and services, so unemployment rises. This is why giving businesses tax breaks during times of recession does nothing to stimulate the economy.

Seen on a continuum of practice among economic systems in the world today, capitalism and socialism are not either/or options. No system can claim to be pure; ours, since the Great Depression, has never been more than a limited free-enterprise economy. Therefore, capitalism and socialism, to my mind, are both outmoded ideologies — both proven to be vulnerable to human nature — corruptible and failed in extreme or near-extreme practices.  

If we nationalize banks or extend a helping hand to the poor by making health care affordable and available to all, if we guarantee a quality education to all our young, and/or if we permit the government to negotiate drug prices for Medicare recipients with the pharmaceutical industry, are we stepping out on the proverbial slippery slope? If we say that we are, are we not guilty of the pitfall to objective thinking called the post hoc fallacy? On the other hand, if we refuse to consider changes in our economic system, changes that could advance “social” and “economic” goals alike — goals like improving our nation’s health, making sure the next generation is competitive in the global economy, protecting the environment, and advancing economic equity, what does this say about us as a people?

By our behavior in recent years and by our media messages, movies, television programming and Internet content, is it not understandable that others, especially the Islamic world, see us as being a godless nation led by ruthless ideologues bent on spreading our radial beliefs throughout the world, by force if necessary? Hmmm… that sounds familiar.

Okay, so say that we do move our political and economic systems more toward the middle of the social/economic continuum by divesting the mega corporations of their stranglehold on prices and wages. Say we reconsider whether it was wise to allow the merger of Exxon and Mobile for example and that we restore regulation to the financial sector. Say that we begin holding the captains of industry responsible for decisions that prove harmful to the people as a whole. Say that we implement public oversight of corporations accepting tax-player bailouts and that we give relief to the poor, whether working or unemployed by no fault of their own. Say that we allow governments to “make work…” create jobs through public works projects that make meaningful and lasting improve- ments to our infrastructure. What then? Will we have, as the world’s best example of what capitalism can accomplish, compro- mised our ideals, or will we have merely stopped deluding ourselves? The top twenty percent of Americans would probably not like it. The top one percent surely wouldn’t. But are we are not still a democracy?

Please feel free to post a comment, whether or not you agree.

A Nobel Prize Winner’s Recession Solution

Obviously, individuals, even individual industries, acting as we do in “rational” self-interest, are incapable of effective measures to correct the overall situation.

My students are asking, “Are we going to have another Great Depression, Mr. Garry?” When they do, I try to reassure them. Things are bad, yes, and they’re likely to get worse before they get better. However, thanks to measures taken by the government during the 1930s, things like unemployment compensation, Social Security and Medicare, and empowerment of the Federal Reserve to regulate banking and the nation’s money supply, it’s hardly conceivable that we will ever have to go through things anywhere near as bad as they were during the Great Depression. But with unemployment and foreclosures skyrocketing, the stock market in the ditch and headed farther downstream, and consumer confidence at its lowest level since the early ’50s, economists and economic commentators (not exactly the same) are already beginning to call our current situation the “Great Recession.”

So, what are we — our government — to do about it? Obviously, individuals, even individual industries, acting as we do in “rational” self-interest, are incapable of effective measures to correct the overall situation. In fact, as we take individual measures to conserve, we are actually making the aggregate situation worse.  So government must act — it cannot just leave things alone and expect recovery in the , as President-elect and very soon now, our 44th President has been doing, paying less attention to what voters are saying and more attention to what the preponderance of noted economists saying — economists like Nobel Prize winner and professor of Economics and International Affairs at Princeton University Paul Krugman. Supply-side economists are very much in the minority these days, by the way. Perhaps you’ve noticed.

No, perhaps it’s not a good time to be raising taxes — on anybody. But neither is it a good time to be trying to balance the budget. It is a good time, however, for each of us to be doing more for our fellow man.

At the following link is a report on an interview with Professor Krugman published by ABC News. I found it to be both an enlightening and comforting read.  ABC News: Nobel Prize Winner’s Recession Solution

Comments are welcome, whether you agree or disagree.

What Should Be Done About the U.S. Auto Industry?

Warren Buffet and I are in total agreement that bankruptcy would be a wasteful, totally inefficient way to force the imposition of a new business model on U.S. automakers.

The plight of U.S. Auto manufacturers, General Motors, Ford and Chrysler, and inaction by Congress to date on the industry’s collective request for a loan of $25 billion to stay afloat during these economic hard times has been a topic of discussion in my economics classes lately. My students have offered various opinions on what should be done, but almost all agree that something should be done. After all, they point out; billions have already been given to the financial sector to little or no avail. They ask, isn’t the manufacturing sector worth saving too?

My students seem to sense that failure to act and to act soon, letting this other linchpin of our domestic economy fail altogether, would be reckless and would, at a minimum, add insult to injury to the economy. In my own opinion, Congress should act and do so soon. Abandoning General Motors, Ford and Chrysler at this critical time would seal their fate — bankruptcy — which would give foreign automakers already in this country just the opening they need to permanently dominate the “world” market for automobiles. In addition, it would cost America millions of jobs. The unemployment these workers would draw following the industry’s demise could easily cost the government more than the $25 billion for which the automakers are initially asking.

So… it’s a pay-me-now or pay-me-later situation, right? But, how should Congress act, and what kind of package can the Democratic leadership in the House put together that would have sufficient minority support in the Senate to avoid an almost certain veto from President Bush? Can the automakers hold-on until after Obama’s Inauguration on January 20^th 2009? Maybe, just barely.

One of my personal heroes, an important economic advisor to the Obama Transition Team, is Warren Buffett. Buffett, if you don’t already know, is a legendary American investor, businessman, and philanthropist. He is the largest shareholder and CEO of Berkshire Hathaway and was ranked by Forbes during the first half of 2008 as the richest man in the world with an estimated net worth of $62.0 billion. Often called the “Oracle of Omaha”, Buffett is noted for his adherence to a value investing philosophy and for personal frugality despite his immense wealth. Buffett is also a notable philanthropist. In 2006, he announced a plan to give away his fortune to charity, with 83% of it going to the Bill & Melinda Gates Foundation. In 2007, he was listed among Time‘s 100 Most Influential People in The World. So, what would Buffet suggest?

In a recent interview with FoxBusiness, Buffet said, “I would drive a deal like I would drive myself if I were buying a business.  And I think, I would say there’s plan A or plan B.  And if you don’t want to do it this way, you know, then… take bankruptcy. I would make the CEOs buy in.  I would say, you know, the United States government is willing to put in X dollars, but we’re going to have you put in a certain percentage of your net worth right along with us. We’ll give you more upside, but you’re going to lose if we lose.”

I like that approach, making the industry’s executives buy-in, but rather than allowing them the choice of taking bankruptcy, which they just might do rather than risk their personal fortunes, I would propose a middle road. How about buying them out? Yes, rescuing the industry by partially nationalizing it, actually buying into the business as Buffet alluded to in his interview, at least temporarily. Sound un-American? Smack of socialism? Yes, but desperate situations call for desperate measures. The U.S. Treasury has already established a president for this by recently purchasing stock in the beleaguered insurance giant AIG.

Warren Buffet and I are in total agreement that bankruptcy is a wasteful, totally inefficient way to force the imposition of a new business model on U.S. automakers. But I think it is impractical to expect industry executives to put their personal nets worth into the companies they currently run. They all know, as many in Congress seem to know, that their money, and ours if given in a no-strings-attached bailout, will be used up in no time supporting liabilities on existing union contracts and on retired employees’ pensions. Who knows how long the current recession will last and how long it will be before Americans start spending again? So, unless their companies do go through bankruptcy, is there any option left to us other than nationalization?

With representatives of President Elect Obama’s Car Czar, Professor Daniel Tarullo of Georgetown University, temporarily providing direction and oversight on the industry’s Boards of Directors and with the United Autoworkers’ (UAW) union cooperating fully (perhaps the only way to avoid bankruptcy and collapse of the union altogether), a more practical way to save the industry might be possible. A pay system based on company performance from the top down would have to be implemented with union contracts renegotiated in the process. Everyone, in fact, would have to sacrifice with base salaries and benefits set to the same levels as those offered by Toyota and Honda with quarterly or year-end bonuses paid only if the companies do well. This way, everyone involved would be motivated to save company money and to be more productive and more innovative. This way the playing field would be leveled giving U.S. manufacturers an equal chance to compete in the new international marketplace and, this way, the government might just get the taxpayers’ money back someday.

I invite your comments regardless of your views.

Red States & Blue States vs. The United States

All states are diverse in political persuasion, at least to some degree. However, because of our winner-take-all electoral system, pundits like to talk about states being either red or blue.

With the election less than two weeks away now and the polls all indicating that many of the states that went for Bush over Kerry in 2004 are likely to go for Obama over McCain this time around, I think it’s well worth keeping in-mind that the populations of all states are diverse in political persuasion, at least to some degree. However, because of our winner-take-all electoral system, pundits like to talk about states being either red or blue. The truth, however, is that all states turn various shades of purple when one squints a little bit and looks at voting by district.

 

It is my most sincere hope that, when this election is over and the GOP, a consortium of right-wing, angry fringe groups, is left in shambles having to redefine itself before the next election, the politics of division will be set aside in favor of national unity born out of reason, common goals, and diplomacy. Now, I don’t know who originally authored the following — somebody from California no doubt. I hope whoever it is won’t mind that I have included it in this posting. It came to me by e-mail from a dear friend who leans in the same directions I do, politically, morally and spiritually. So, whether it serves to justify your beliefs or challenge them, what follows will hopefully make you laugh — per chance to think as well.

Dear Red States:
If you manage to steal this election too we’ve decided we’re leaving.  We intend to form our own country, and we’re taking the other Blue States with us. In case you aren’t aware, that includes California, Hawaii, Oregon, Washington, Minnesota, Wisconsin, Michigan, Illinois and the entire Northeast. We believe this split will be beneficial to the nation, and especially to the people of the new country of New California.

To sum up briefly: You get Texas, Oklahoma and all the slave states. We get stem cell research and the best beaches. We get the Statue of Liberty. You get Dollywood. We get Intel and Microsoft. You get WorldCom. We get Harvard. You get Ole’ Miss. We get 85% of America’s venture capital and entrepreneurs. You get Alabama. We get two-thirds of the tax revenue, you get to make the red states pay their fair share. Since our aggregate divorce rate is 22% lower than the Christian Coalition’s, we get a bunch of happy families. You get a bunch of single moms.

Please be aware that Nuevo California will be pro-choice and anti-war, and we’re going to want all our citizens back from Iraq at once. If you need people to fight, ask your evangelicals. They have kids they’re apparently willing to send to their deaths for no purpose, and they don’t care if you don’t show pictures of their children’s caskets coming home. We do wish you success in Iraq, and hope that the WMDs turn up some day, but we’re not willing to spend more of our resources in Bush’s Quagmire.

With the Blue States in hand, we will have firm control of 80% of the country’s fresh water, more than 90% of the pineapple and lettuce, 92% of the nation’s fresh fruit, 95% of America’s quality wines, 90% of all cheese, 90% of the high tech industry, 95% of the corn and soybeans (thanks Iowa!), most of the U.S. low-sulfur coal, all living redwoods, sequoias and condors, all the Ivy and Seven Sister schools plus Stanford, Cal Tech and MIT.

With the Red States, on the other hand, you will have to cope with 88% of all obese Americans (and their projected health care costs), 92% of all U.S. mosquitoes, nearly 100% of the tornadoes, 90% of the hurricanes, 99% of all Southern Baptists, virtually 100% of all televangelists, Rush Limbaugh, Bob Jones University, Clemson and the University of Georgia.  We get Hollywood and Yosemite, thank you.

Additionally, 38% of those in the Red states believe Jonah was actually swallowed by a whale, 62% believe life is sacred unless we’re discussing the war, the death penalty or gun laws, 44% say that evolution is only a theory, 53% that Saddam was involved in 9/11 and 61% believe they are people with higher morals than we lefties.

Peace out,
–Blue States

I invite your comments, whether pro or con

PS ~ If things turn-out as current polling suggests, we’ll not only have the best surfing, but most of the good skiing too!

Big Government vs. Small Government ~ Which is Best?

The political right in the United States today, represented by the Republican party and some Libertarian and Independent candidates, often refer to their opposition, mostly Democrats, as being Big Government, tax-and-spend Liberals.

October 19, 2008  —  With the whole nation anxious about the economy, it’s certainly an interesting time to be teaching economics.  As it turned out, we covered Aggregate Expenditures and Aggregate Demand and Supply in my high school Advanced Placement Macroeconomics class last week, just when our two finalists in the 2008 race for the White House were sharing details about their different plans for the economy.  I showed my students a replay of selected exchanges between Senators McCain and Obama as they defended their different plans during the final Presidential debate. As my students watched with a better basis for understanding how the different plans might work, I could almost see the light bulbs going on over their heads – some tinted red, some tinted blue. Afterward, there was some vigorous discussion in class on the issue of redistributing income — “spreading the wealth around,” as Senator McCain had put it during the debate. He was referring to what he characterized as being the Big Government, tax-and-spend plans proposed by Senator Obama. Obama, according to Senator McCain, had used the spreading-the-wealth phrase as he responded to a question from the now-famous Joe the Plumber (Joe Wurzelbacher) just days before the debate.

The political right in the United States today, represented by the Republican party and some Libertarian and Independent candidates, often refer to their opposition, mostly Democrats, as being Big Government, tax-and-spend Liberals. They use these terms to describe a government that has grown excessively large, corrupt and inefficient, or a government that is inappropriately involved in certain areas of public policy where the advocates of Small Government and Laissez-faire economic policies believe government should not go. In this, I personally think the pot is calling the kettle black owing to the growth in the size of govern- ment and deficit spending during the Reagan and both Bush administrations. But I resisted sharing this opinion with my students.

According to Wikipedia, Big Government is a pejorative term that can mean any number of different bureaucratic criticisms such as:  government program goals that could be accomplished by smaller, more nimble organizations; federalized programs that are tradit- ionally implemented at the state level; governments becoming involved in programs that seek to accomplish things normally done by the private sector; programs that are likely to increase significantly in cost over time; programs that are resistant to reform; large bureaucracies lacking in accountability; limited checks and balances on power; inadequate or inconsistent metrics to verify to efficacy, and; programs that return limited benefits to tax payers. Common examples of Big Government are unfunded or underfunded federal mandates (No Child Left Behind is one such mandate that immediately comes to this teacher’s mind).

Liberal commentators and some Democrats and Independents often counter the criticisms of Big Government with criticisms of “big business”, casting it and elected officials who court it with special legislative and regulatory favors in return for campaign contributions, as an alliance against the public’s interest. Other special-interest bigs include: “big labor”, “big oil”, “big tobacco”, “big pharma”, and other big Political Action Committees (PACS). Those who argue that Big Government is not the problem, that corrupt government and inefficient government programs are, believe that government governs best when it believes in itself and when it governs in the “public” interest rather than in the “special” interest. Big Government, they say, can get things done, partic- ularly in the field of large public works like:  the Tennessee Valley Authority (TVA), our Interstate Highway system, the Panama Canal, the Erie Canal, the New Orleans port facilities and levee system, Hoover Dam, the Golden Gate and San Francisco Bay bridges, the Chesapeake Bay Tunnel-Bridge, and Alaska’s infamous “bridge to nowhere.”

So, which is best, Big Government or Small Government? My Libertarian son has argued that the only legitimate role for Big Government is defense, that if government at the federal level would just “butt-out”, individual states would be better off handling law enforcement, infrastructure, education, etc., by themselves. He also argues that the federal income tax is unfair, that it punishes those who are most successful by taking a larger share of their Personal Income (PI) and redistributing it to those who are less successful in Robin Hood fashion. Most Republicans, so it seems, are likewise persuaded. So, okay, let’s look at the Big vs. Small Government issue from the standpoint of taxing and spending.

First, I assume that all who are still reading this believe in utilitarianism, those who, like Star Trek’s Mr. Spock character, believe that “the good of the many outweighs the good of the few, or the one.” If you don’t believe this, then you are probably a Social Darwinist and won’t much be convinced with any argument for an economic system that, like a tide when it rises “lifts all boats.”

Second, some basic review on the Keynesian Aggregate Expenditures model…

We know from empirical data that the more societies produce, the more they consume. It is also true that the more they produce, the more they save. Saving, unlike investing, is simply the opposite of consuming, spending delayed. But it is consuming that drives our economy. Of all the factors considered in calculating Gross Domes- tic Product (GDP) using the expenditures method, consumption, gross investment, government spending, and net export (GDP = C + I_g + G + X_n), fully two-thirds is estimated to be from consump- tion. And what is true for society as a whole, is also true for households… the more “disposable” income (DI) a household has, the more it will consume or spend and the more it will save. However, the propensity or tendency to consume is higher for those with lower incomes; these households spend more and, in many cases, all of what they make. In fact, most even consume or spend more than they make, whether by borrowing, called dissaving, or by obtaining money, goods and/or services from welfare and other benevolences… TINSTAAFL (There Is No Such Thing As A Free Lunch).

Notwithstanding the source, dissaving creates a burden on households (the interest paid to service the debt plus the lost opportunity to consume). Dissaving by society as a whole creates a burden as well. Fully fourteen percent of our national budget goes to service debt currently, and ten to fifteen percent of this is paid to foreign holders of this debt, primarily Japan and China. The propensity to save, or tendency to delay consumption (the storing up of wealth) is higher for those with higher incomes – DAHHH, and much higher for the super rich. So, the more income a household has, the greater the propensity to save and the lower the propensity to consume. These are called “marginal” propensities, or the change in consumption divided by the change in income and the change in saving divided by the change in income. Added together, marginal consumption and marginal saving always equals one (1), assuming a closed economy… one without leakage such as we have as a result of our trade deficit and interest paid to foreign holders of debt obligations.

The fraction, or percentage, of total consumption divided by total income is called the Average Propensity to Consume (APC). The fraction, or percentage of total saving divided by total income is called the Average Propensity to Save (APS). For argument-sake, let’s say the APC for the United States is 0.75 and the APS is 0.25 – close enough for purposes of illustration.

Third, understanding multiplier effects…

Consumption, government spending, investment and taxation all have multiplier effects. By this it is meant that a portion of one household’s disposable income (DI), in the case of the consumption multiplier, becomes a portion of another household’s income. Likewise, government spending and investment, or the purchase of capital (although not as direct and unadulterated as consump- tion and government spending), becomes others’ incomes. In the case of consumption, 0.75 percent of DI is spent over and over again, assuming each household’s MPC is also society’s APC, until the original amount is depleted by successive reductions. An APC of 0.75 has a multiplier of four (one divided by 0.25), which means a dollar spent increases aggregate expenditures, or GDP, four dollars. All multipliers are positive, at the national level, adding to domestic output or GDP, except for the taxation multiplier, which is negative. However, since taxation reduces both consumption and savings, the effect has less weight than does government spending affecting output. Domestic government spending, like consumption, but unlike investment and foreign exchange, has a direct and unadulterated effect on aggregate expenditures.

Assume $20 billion of taxes on income where all else is equal (ceteris paribus). Applying the taxation multiplier, four (4), which is negative, to $15 billion ($5 billion of the 20 being reduced from saving, which doesn’t help the economy in the near term), output or GDP is diminished by $60 billion (15 X 4 = 60).   However, assuming a balanced budget, that same $20 billion now becomes available for the government to spend, and since government never saves (hasn’t at least since the end of the Clinton administration), that $20 billion is all multiplied by four (4)… a plus four (4). Therefore, GDP grows by $80 billion, a net difference of a plus $20 billion. So taxing and spending actually helps the economy as a whole. This is what Senator Obama was trying to convey to Joe the Plumber when he used the phrase, “…spread the wealth around.”

Government spending raises the tide, a metaphor for the economy, which lifts all boats. Tax cuts too are good; they help the economy since people have more DI (personal income after taxes). But this assumes a balanced budget. When government spends more than it takes in, especially when this spending is done overseas, the tide is lowered taking all boats with it. That, at least in-part, is what has happened to our economy over the past four years.

Now, not to sound elitist or anything, but I would expect a magna cum laude Harvard law school graduate to understand this, whereas a Naval Academy officer graduating fifth from the bottom of his class, or a student who attended six colleges in five years before finally completing her baccalaureate in communications-journalism with a GPA that she has not seen fit to make public might not, much less Joe the Plumber. As Mr. Spock would say, “The logic is sound.” But, whether one follows the logic and/or accepts it, it seems to me that a true Christian would have to admit the concept is Biblical.

I invite your comment, pro or con.

Interdependent Behavior ~ Why Gas Prices Are Still So High

“Teach a parrot how to say the terms, ‘Demand and Supply,’ and he’ll think he’s an economist.”

Thomas Carlyle

October 4, 2008  —  I had just started introducing the subject of the day’s lesson to my high school economics students when I noticed one of our vice principals standing just inside the classroom entrance – there for what reason I did not know. I caught his eye, anticipating that he needed to see one of my students for something. But when he said nothing, I decided that he was just stopping by to observe. Accordingly, I continued with my introduction.

“Mr. Garry?” one of my brighter students asked, raising her hand for a question.

“Yes, Tra’Nisha?”

“With the price of oil down now to around a hundred dollars a barrel, why are gas prices still so high? I thought you told us last week that when the price of production inputs fall, producers will produce more.”

“Thank you for the question, Tra’Nisha,” I said. “It’s a good one, but recall all that I said… that producers will normally produce more when the price of production inputs fall. The Law of Supply, you see, is not infallible. It’s not a hard-and-fast law. The reason for this is that markets are not all alike. In markets with less than sufficient supplier competition, Adam Smith’s invisible hand is hindered; it doesn’t work like it should.

“Less than sufficient supplier competition?  I don’t get it,” said Tra’Nisha;” there are lots of different gas stations.”

“Yes, Tra’Nisha… but most of these are independent retailers. They buy their gas and other petroleum products from one of the few big oil companies still doing business in the United States – Exxon/Mobile, Chevron/Texaco, Conoco/Philips, Dutch Royal Shell and British Petroleum, all of which have vertically aligned business models. They control all aspects of production, from resource exploration, drilling and recovery, to transportation, to refining and finally, to distribution. It is these, the wholesalers, more so than the retailers, who set the price. The retailers just add-on to wholesale prices what they need add so as to make a small profit and still be competitive in their communities. The big profits are retained farther “upstream” by the majors, and they, few as there are anymore, are able to control wholesale prices with interdependent behavior by controlling supply. This interdepen- dent behavior is called collusion. We’ll get into this more in a later lesson on competition and market structure. But when only a few large businesses dominate an industry like petro-chemical, it’s called an oligopoly.

“So what is the problem, Mr. Garry?” this from the vice principal who was still standing just inside the doorway. “Is it a supply problem?”

“No, sir, I don’t think it’s a supply problem. I think it’s a greed problem.” At this, he smiled, then walked out leaving me to further explain what I meant by this to my students. So much for what I had come prepared to teach…

Last Spring, when oil was trading on the International market near $140 per barrel, I told my economics students that the only way to bring down the price of gas at the pump would be for Americans to reduce our demand for the product – drive less, buy smaller more fuel-efficient cars, etc.  Most economists were saying the same thing, and Americans did just that. Demand today is way down now. In its weekly inventory report, the Energy Department’s Energy Information Administration said that gasoline demand fell by 6.4 million barrels to 202.8 million barrels for the week that ended August 8^th.  This is nearly three times more than the 2.2 million barrel drop that analysts had expected. In response to this drop in demand, oil companies have cut way back on production, shutting down refineries. And who can blame them? Why should they produce something in amounts that exceed the quantity demanded?

But, if Big Oil acted fairly and responsibly, and market forces worked like they are suppose to, not even considering the above mentioned decline in demand, gasoline prices should be lower. With oil’s price down from a high of $147 in July to less than $100 in mid-September, a 32 percent decrease, gas prices should have dropped by the same amount — right? So, let’s see… the national average price for regular unleaded in July was near $4.00. Today it’s something like $3.55. Therefore, the price of regular unleaded has dropped just 11 percent. Hmmm… perhaps our decline in demand actually worked to consumers’ disadvantage. Accordingly, I told my students that, even though I teach this stuff, I’m very much like Thomas Carlyle’s parrot. I just think I’m an economist. And that’s why economics is called, the dismal science. We do a pretty good job of explaining what’s already happened, but we’re not so good at predicting the future.

Another student asked, “How are they able to control supply so easily, Mr. Garry?”

In response, I reminded my class about our lessons on demand and supply elasticity, which is a measure of how responsive demand and supply are to changes in price levels. Demand for gasoline is very “inelastic,” or less susceptible to price changes. This is because we depend on it, there are no adequate substitutes for it, we can’t delay our purchases of it (when our tanks are dry we’ve got to buy), and it takes up a considerable amount of our disposable incomes. The elasticity of supply for gasoline, on the other hand, is very elastic. This is because producers, with the excess refining capacity they have today, can respond quite rapidly to market forces. When the price they have to pay for crude increases, they pay whatever they must, then just pass the additional cost on down-stream where the consumer ultimately makes up the difference. When demand for their product falls, they close refineries and lay-off employees so as to protect profits and take care of their shareholders. To do otherwise, they would be giving money away, and for-profit corporations hate to give money away.

This situation is illustrated in the demand/supply graph for gasoline at the right (hypo- thetical), wherein the demand curve (in blue), representing all possible prices and corresponding quantities demanded at each price, is relatively steep and down-sloping. This shows an indirect relationship between price and quantity, the Law of Demand (the lower the price the more people are willing and able to buy). But responsiveness to changes in price, either up or down, is small. On the other hand, the supply curve (in red), representing all possible prices and corresponding quantities supplied at each price, is relatively shallow and up-sloping. This shows a direct relationship between price and quantity on the supply side, the Law of Supply (the higher the price, the more producers would normally be willing to supply). But, unlike in the case of demand, respon- siveness to price changes for the supply of gasoline is relatively large, which means it is elastic, at least in the short-run. Notwithstanding, because oil companies can and, in my opionion, do act in collusion, they are able to rapidly adjust to market forces and control market supply. Therefore, prices can be controlled. In the example illustrated, demand and supply have both declined; the demand and supply curves both shifting to the left in equal amounts. Markets both before and after the shifts are at equilibrium where demand and supply curves intersect. So now one can readily see that, had the price of oil not declined in recent months (ceteris paribus), we could actually be paying more per gallon for gasoline as a result of our reduced demand for it.

So, my student was right to ask her question.  Congress has asked the major oil companies’ CEOs the same thing over and over again in recent years. The answer they always get from industry leaders, however, is this: “We don’t set gasoline prices, the market does.” But the market isn’t operating today on a level playing field, and Congress knows it isn’t. It’s slanted in Big Oil’s favor, and it’s government’s fault, in the name of FREE trade, for having allowed the oil industry to organize itself so efficiently. This is why Big Oil is able to generate the huge profits we’ve been hearing about lately, profits that are at the expense of every other aspect of our economy. They have done this through a series of many mergers over the years, mergers that administrations, both Republican and Democrat, have allowed even though Treasury Department economic analysts have advised against it. Why? Well, I don’t know, I just think I’m an economist. But, as a free thinker, I’m pretty sure the answer can be found at the end of the money trail.

It is time for change — the right kind of change — change that we can believe in, which does not, in my opinion, include giving Big Oil more freedom to control prices and drag down the rest of our economy. Tax breaks for Big Oil will not lead to greater supply and lowering prices for consumers. Tax breaks for Big Oil will simply lead to higher profits for Big Oil.

I invite your comments, both pro and con.

Americans’ Political Persuasions ~ Based More on Myth than Fact

Like flies attracted to garbage, it seems that we Americans have less time for the real issues and for digging out the facts than we have for listening to unsubstantiated claims and political slogans… 

September 13, 2008  —  The latest hullabaloo over Barack Obama’s use of the “lipstick on a pig” phrase during a recent campaign speech is clear evidence to me that Americans are less interested in facts and issues and more impressed with myth and even outright lies told by the party of their particular persuasion.

Com’on, folks… Obama wasn’t alluding to Governor Sarah Palin and the pit-bull joke she made at the Republican national convention. Her’s was a great speech that resonated with millions of like-thinking voters and helped to give a significant “bounce” in the polls for the Republican ticket this year. There’s no denying that. But, if you listened to Obama’s speech, you would know that he was talking about Senator McCain’s proposed economic policy when he uttered this common phrase. He wasn’t talking about Governor Palin.  This same phrase, by the way, was used by Senator McCain no less than three different times in his campaign earlier this year when speaking about Senator Clinton’s proposals for a national health care program.

Like flies attracted to garbage, it seems that we Americans have less time for the real issues and for digging out the facts than we have for listening to unsubstantiated claims and political slogans like No Child Left Behind, Straight Talk Express, and Change Is Coming. Gee, that one sounds familiar.

Many of us, it seems to me, care more about wedge-issues like gun control, immigration, abortion, or the gender, race or religion of a candidate than we do about larger the issues like the economy and national security. We support whichever party claims to champion our heart-felt causes, usually the same party our parents have supported, then we believe unfailingly in whatever other claims our parties make. According to the Pew Research Center, social status and religious backgrounds influence American political persuasions more than reason.

I don’t often read articles in the ContinUUm, a magazine that my alma mater, the University of Utah, sends to me every month hoping that I will contribute to their Alumni Fund. But the most recent edition had some interesting articles in it about the state of our nation’s health care system. Thumbing through the pages one morning this week while sipping my first cup of coffee, one particular article just jumped out and grabbed me. It was written by a fellow alumnus, Carl R. Summers. Carl, who graduated ten years after me, is a scientist today working as a researcher with the Defense and Veterans Traumatic Brain Injury Center at Walter Reed Hospital. But his article wasn’t about brain injuries. It was about political myths. His hobby being statistics, he decided that a scientific look at real numbers might help to substantiate or debunk some of our two major parties’ basic claims… Interesting. Very interesting indeed.

You can find more on the actual numbers that Carl crunched and the methodologies he used on-line in a series of articles he has published at OutsidersDC (www.outsidersdc.com).

We are told that the Republican Party is the party of business and small government, lower taxes and reduced government regulation. The Democratic Party, we are reminded over and over  again by Republican Party politicians and right-wing pundits like Rush Limbaugh, is the party of big government, high taxes, big give-away spending, and bleeding-heart, wasteful social programs for the down and out. Right? Well, if this is true, would it not follow then that the nation’s growth in output of goods and services, the real (adjusted for inflation) Gross Domestic Product (GDP) would be higher year after successive year during Republican rather than Democratic administrations? Wouldn’t it also follow that average taxes paid would be lower during Republican administrations and in years that Congress was controlled by the Republican Party? After all, Congress, not the President, has the most to say about taxes and spending. Shouldn’t we also expect less government spending by conservative lawmakers?  In as much as every Republican administration since Reagan has embraced some form of the “trickle-down,” supply-side economic theory in formulating tax policies, shouldn’t everybody be better-off with more after-tax income to spend and shouldn’t there be more and better jobs?

Asking himself these questions, Carl looked at readily available data and scientifically compared the performance of Republicans and Democrats occupying the White House every year since 1950. He also looked at records on taxing and spending when each party had control of the Senate and House of Representatives. What he found was surprising, even to me, a “fiscal” conservative and teacher of economics.  He discovered that the average real increase in GDP for Republicans was 2.8 percent per year. The average increase for Democrats was 4.4 percent. So, despite claims to the contrary, business performed 57 percent better on average under Democratic administrations than under Republican administrations.

What about unemployment?  Remember, Democrats are supposed to be the party of the working class. Carl discovered that the average unemployment rate under Republican administrations has been 6.1 percent. That’s what the Bureau of Labor Statistics is currently reporting. Under Democratic administrations, the average was 5.1 percent. So, the Democratic claim is substantiated.

Carl asked himself — If the trickle-down theory has any validity, if lowering business taxes, capital gains, and individual income taxes on the wealthiest of Americans encourages investment and creates jobs (a rising tide lifting all boats), then shouldn’t this raise the value of corporations? Shouldn’t this be reflected by gains in broad stock indexes like the Dow Jones Industrial Average (DJIA) and the Standard and Poor’s 500? To answer this issue, he looked at respected business data over the years and concluded that the average change, or increase in stock prices grew 7.4 percent during Republican administrations. Not too shabby, you say?  Well, stock prices grew 10.4 during Democratic administrations. Furthermore, he noted that during Democratic years, the Dow showed relatively small, somewhat consistent ups and downs, what economists call normal business cycles.  During Republican years, the Dow was, in his words, “… like a roller coaster ride with large, unpredictable peaks and valleys.”

On the issue of which party favors low taxes and which party favors high, Carl normalized “federal receipt” data by comparing it over the years as a percentage of real GDP. He did this to compen- sate for variations in the economy like inflation, population growth and tax policies. What he found out was that when Republicans were in the White House, government taxed at the rate of 18.9 percent of real GDP while, when Democrats were in the White House, government taxed at 19.1 percent. Yes, Democratic administrations did tax at a slightly higher rate, but the two-tenths of one percent difference, he says, is statistically too close to call. But remember, it is Congress, more so than the President, that controls our nation’s purse strings. In the years that Republicans controlled the Senate, government collected 18.5 of real GDP compared to 17.7 percent when Democrats ruled. In the House of Representatives, when Republicans ruled, government collected 18.7 compared to the same 17.7 percent when Democrats were in control.  This difference is statistically relevant and it means that, after all these years of Republican claims about Democrats raising taxes, the reality is that taxes are almost exactly the same regardless of the President’s party, but they are actually higher when Republicans have control of the House and/or Senate.

Ok, you say, but what about spending? Well, treating expenditures the same way he did revenues, as a percent of our nation’s real GDP, Carl discovered that Republican administrations spent 20.2 percent while Democratic administrations spent significantly less, 19.2. This is a 5.2 percent difference, folks!

So, now you know. Based on fact rather than myth, the real tax-and-spend party has been… well, its mascot, like Pinocchio, has a prominent proboscis.

I invite your comments, pro or con.