Archive for Economics

What is “Social Justice”?

I’ve come to be very suspicious of the phrase, given those who are so fond of using it, but what does it mean?

Wikipedia?

Social justice is the ability people have to realize their potential in the society where they live.

Realize their potential—you mean like charter schools, where the pupil, not the teacher, and certainly not the teachers union, is paramount?

Ha-ha, very funny:

Chicago Teachers Union president Karen Lewis wants schools to teach social justice, not “consumerism,” she said in a video.

“You want to talk about organizing? You want to talk about social justice?” the Chicago union leader asked. “People always talk about how that there’s no political and values in math, that you can teach math without a place for social justice.”

“Johnny has five pencils and if he spent two cents for the red pencils and eight cents for the green pencils, and he has 47 cents, how many pencils can he buy? We’ve all seen that, right?” Lewis said. ”That’s a very political statement, because it’s all about consumerism — it’s about buying stuff, right?”

Instead, Lewis prefers the approach of one progressive teacher who uses union-approved rhetoric in math problems, instead of the damaging consumerism of two cent pencils.

“Bob Peterson tells them about Jose working in a factory making piecemeal clothes. He uses the same numbers and gets the same answer,” Lewis explained. “Math is political, too.”

Told you it was funny. Apparently being a teacher is political, as well:

Lewis is best known for leading a strike within the ailing Chicago Public Schools system. Lewis’ strike caught national attention, winning 17.6 percent pay increases for Chicago teachers, who then earned on average $71,000-$76,000 per year.

Lewis is currently focusing on fighting potential pension cuts to city teachers. Illinois is facing at least $100 billion in unfunded pension liabilities for public workers.

Don’t give up a penny, Karen. Green pencils don’t grow on trees.

I thought liberals celebrated “consumerism”. That’s what Pelosi and Obama tell us when they celebrate welfare and unemployment benefits. “Folks” have the money to buy pencils, “piecemeal clothing” (thongs?), Big Macs, whatever, thereby employing stationers, seamstresses, and fry cooks—at least until a hike in the minimum wage forces employers to cut back.

As a conservative, I not only approve of but celebrate the opportunity for people to “realize their potential”. But what that has to do with this fat hackette’s (sorry, not really, for the ad hominem attack) nonsense escapes me. The very reason Jose is working in a sweatshop is that he was failed by the Chicago schools. They didn’t teach him English or good communication skills, didn’t teach him that red pencils are just as good as green, and cheaper, didn’t teach him that capitalism is the best system for people to “realize their potential”—but you have to have something to offer, a trade, skill, talent, whatever to sell in the marketplace. Those who do indeed do “realize their potential” and found businesses and whole industries. Those who don’t tend to work at the lower end of those businesses and industries, until Democrat policies ruin the economy, and they get laid off.

In this sense, “social justice” would seem to mean a vicious cycle of liberal nonsense. Which is what I thought.

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What, Really, is the Point?

We barely notice Tom Friedman anymore, much less quote him. The other sages of the Times op-ed page, Kristof, Dowd, et al appear here more rarely still, if at all. The page has shrunk itself to insignificance.

About the only one who anyone notices these days is Paul Krugman. And that’s only because…

Well, have a look:

Yesterday, New York Times columnist and CUNY economics professor Paul Krugman had some very strong words about the position in Republican Congressman Paul Ryan’s new poverty report that American welfare programs discourage work and “actually reduce opportunity, creating a poverty trap.” In fact, after contrasting the Ryan report’s view on poverty traps with some data on inequality and welfare states, Krugman resoundingly concluded that Ryan’s ideas were a total sham:

So the whole poverty trap line is a falsehood wrapped in a fallacy; the alleged facts about incentive effects are mostly wrong, and in any case the entire premise that work effort = social mobility is wrong.

Despite Krugman’s strong conclusions, however, Ryan’s views about US welfare policies and poverty traps are actually pretty mainstream – cited by people across the political spectrum as a big reason to reform state federal poverty programs. In fact, a New York Times columnist and Princeton economics professor expressed these widely-held views on the Old Grey Lady’s pages a mere two months ago:

But our patchwork, uncoordinated system of antipoverty programs does have the effect of penalizing efforts by lower-income households to improve their position: the more they earn, the fewer benefits they can collect. In effect, these households face very high marginal tax rates. A large fraction, in some cases 80 cents or more, of each additional dollar they earn is clawed back by the government.”

Even more, the Ryan report’s “poverty trap” analysis is based on the work of the Urban Institute’s Gene Steuerle’s (see p. 7 of the Ryan report), on whom the very same Princeton professor once wrote:

[I]t’s actually a well-documented fact that effective marginal rates are highest, not on the superrich, but on workers toward the lower end of the scale. Why? Partly because of the payroll tax, but largely because of means-tested benefits that fade out as your income rises. Here’s a recent discussion by Eugene Steuerle…

That professor, if you haven’t already guessed, was none other than Paul Krugman.

That could be called mailing it in, but he isn’t even licking the stamp. To have an intellectual debate, you need an intellect. This discussion is a waste of time. Krugman evidently did as much to earn his Nobel Prize in Economics as Barack Obama did for his in Peace.

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Spike Lee, Meet Louise Day Hicks

Ms. Hicks was the very public face of the Boston busing kerfuffle.

She and Spike Lee could have quite a chat about the evils of integration:

“I grew up here in New York. It’s changed,” Lee said at Brooklyn’s Pratt Institute, an art, design, and architecture school. “And why does it take an influx of white New Yorkers in the South Bronx, in Harlem, in Bed Stuy, in Crown Heights for the facilities to get better? The garbage wasn’t picked up every mother******* day when I was living in 165 Washington Park. … The police weren’t around. When you see white mothers pushing their babies in strollers, three o’clock in the morning on 125th Street, that must tell you something.”

Mitchell Moss, a professor of urban policy and planning at New York University’s Wagner School of Public Service, said the city has witnessed an enormous recovery since 2001, and the greatest change has been felt in Brooklyn, which has drawn newcomers because of its housing, access to Manhattan and improved safety.

“Cities don’t stand still, and the cities that stand still are Detroit,” Moss said. “So if Spike Lee wants to see a place where there is no gentrification, he’ll also find a place where there are no investments. Obviously, he’s someone who knows how to make a movie but doesn’t know anything about cities.”

He added: “Brooklyn has become more attractive to more people. Of course, that means some people are going to have to find other places to live, but that’s the magic of New York. We create new places. Today, Bushwick, which was an area that people were afraid to go to, now has some of the best restaurants in the city.”

“Let me just kill you right now,” Lee, the “Do The Right Thing” director, told D.K. Smith, a Brooklyn homeowner and tech start-up director, at the speech when Smith brought up the subject of the “other side” of gentrification.

And then he launched his lengthy tirade.

Smith told Lee on Tuesday that he didn’t dispute his point that services in the neighborhoods had changed after the new people — most of whom are white — moved in.

“Whoa, whoa, whoa…” said Lee. “Let me kill you some more.”
“Can I talk about something?” Smith said.

“Not yet. Then comes the mother******’ Christopher Columbus Syndrome. You can’t discover this! We been here,” he said to applause from the audience.

He gave the examples of people playing drums in Mount Morris Park, a tradition he said lasted 40 years until the new residents complained.

And then there was the one that literally hit home. Lee said his father, “a great jazz musician,” bought a brownstone 46 years ago.

“And the mother******’ people moved in last year and called the cops on my father. He’s not — he doesn’t even play electric bass. It’s acoustic. We bought the mother******’ house in 1968, and now you call the cops? In 2013?

Point of clarification, Spike. They call the police at two in the morning.

And are you complaining about the increased security and waste management?

Smith couldn’t get a word in during Lee’s speech Tuesday night. But the next day he said he was glad the filmmaker got people talking about the issue.

But Smith said there was a definite lack of balance in Lee’s rant.

“I’m black, and America is America,” he said. “I don’t need to moan and groan about it all the time.”

“I’m personally tired of moaning and groaning about being black,” he said. “Here’s a case where it has its advantages — for the first time tens of thousands, if not hundreds of thousands, of blacks can participate in American wealth creation. My God, that’s what this country is all about.”

Referring to reports that Lee’s 9,000-square-foot mansion on Manhattan’s Upper East Side is on the market for $32 million, Smith said: “Spike is a causative factor in gentrification. If Spike moves to a swamp … that land next door goes up immediately.”

Spike Lee is the living embodiment of “what this country is all about.” A film school grad with smarts and ambition, he made a film, She’s Gotta Have It, that launched him to international stardom. Deservedly—he’s a great filmmaker. I don’t begrudge him a single dollar he’s earned, a single square foot of his “mansion”, a single front row seat at Knicks games. But it’s not just black people buying tickets to see his movies. I was among the “influx of white New Yorkers” who not only went to see his movies, but moved to a “marginal” neighborhood (for the neighborhood as much as the rent, more Dominican than African American). Curiously, the public services did not improve upon our arrival.

Many of the neighborhoods that were predominantly African American in Spike Lee’s youth bore strikingly different ethnic identities in the decades before. Immigrant Jews and Italians lived in Harlem as newcomers (which was named by the original Dutch settlers); before that:

Harlem was “a synonym for elegant living through a good part of the nineteenth century.”

Many people share Lee’s lament and frustration. I live in a town many lifers can no longer afford to live in—due in part to mother******’ newcomers like me bidding up house prices. I guess that makes me a serial gentrifier. (I did the same thing when I lived in London—only Americans and Arabs can afford to live in some neighborhoods.)

But the best refutation of Lee comes from the academic we quoted above: “Cities don’t stand still, and the cities that stand still are Detroit.”

PS: It’s not Lee’s first offense:

Ted Nugent apologized. Now it’s Spike Lee’s turn.

Lee sided with Minister Louis Farrakhan when the leader of the Nation of Islam accused President George W. Bush’s administration of intentionally blowing up levees during Hurricane Katrina. “It’s not far-fetched,” Lee said, “And also I would like to say it’s not necessarily blow it up. But, the residents of that ward, they believe it, there was a Hurricane Betsy in ’65, the same that happened where a choice had to be made, one neighborhood got to save another neighborhood and flood another ‘hood, flood another neighborhood … ” Far-fetched? “Presidents have been assassinated,” Lee said, “So why is that so far-fetched? … Do you think that election in 2000 was fair? You don’t think that was rigged? If they can rig an election, they can do anything!”

No apology from Lee for accusing Bush of mass murder?

This brings us to Lee and the Trayvon Martin case.

In Chicago, Obama’s hometown, murders in 2012 topped 500. 2013 saw a “low” murder total of 421 — the equivalent of a Sandy Hook every three weeks. Most of the killers and the killed are black. Worse, only about one-fourth of these cases are “cleared,” where a suspect has been identified and arrested. Nationwide, the No. 1 preventable cause of death among young black males is not accidents — as it is with whites — it is homicide, almost always committed by another black person.

But when a black is killed by a non-black, even where the shooter could reasonably claim self-defense, out comes Lee’s agenda. To Lee, the killing of Martin, a 17-year-old black teen, by non-black George Zimmerman was a referendum on how America’s criminal justice treats black victims. Incensed that authorities had not yet arrested and charged Zimmerman, Lee tweeted what he thought was the home address of Zimmerman’s parents. Wrong address. Lee did apologize for this one, later paying a financial settlement to the owners of the “wrong” home.

Lee also once publicly stated his opposition to “interracial couples.” About a year after he released “Jungle Fever,” a film about a black-white couple, Lee said: “I give interracial couples a look. Daggers. They get uncomfortable when they see me on the street.” This might have been news to Obama’s parents.

Lee, a gun control proponent, seems okay with the use of a firearm — depending upon the target. He once verbally threatened NRA head Charlton Heston. Lee said somebody should “shoot him with a .44-caliber Bulldog.”

No president ever held a fundraiser in Ted Nugent’s mansion. Lee, on the other hand, has a close relationship with Obama. Will Lee apologize for calling Lott a “card-carrying member of the Klan,” for urging the assassination of the president of the NRA or for affirming accusations against George W. Bush of mass murder?

Nugent apologized. Now it’s Spike’s turn.

Add one more to the list.

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Simple Truths

The Fed has pumped so much money into the economy, yet the economy is still… the economy.

What gives?

In her first Congressional appearance as Chairman of the Federal Reserve, Janet Yellen cheered Wall Street with her promise to continue the easy-money policies of predecessor Ben Bernanke. But Judy Shelton warns in our pages that “when the low-grade fever of perpetual inflation becomes a full-blown economic malady—when the next financial bubble bursts with horrible consequences for the real economy—average Americans will pay the biggest price.”

While Ms. Yellen’s Senate testimony today is likely to attract more media attention, we’d say this week’s most important speech from the Federal Reserve system came last night in Texas. Before a gathering of financial executives, Dallas Fed President Richard Fisher quantified how much money the central bank has been pumping into the economy. Mr. Fisher said that total reserves of depository institutions “have ballooned from a precrisis level of $43 billion to $2.5 trillion.” He added that “the amount of money lying fallow in the banking system is 60 times greater now than it was at year-end 2007. One is hard pressed to argue that there is insufficient money available for businesses to put people back to work.”

“It is my firm belief,” he continued, ” that the fault in our economy lies not in monetary policy but in a feckless federal government that simply cannot get its fiscal and regulatory policy geared so as to encourage business to take the copious amount of money we at the Fed have created and put it to work creating jobs and growing our economy. Fiscal policy is not only ‘not an ally of U.S. growth,’ it is its enemy. If the fiscal and regulatory authorities that you elect and put into office to craft taxes, spending and regulations do not focus their efforts on providing incentives for businesses to expand job-creating capital investment rather than bicker with each other for partisan purposes, our economy will continue to fall short and the middle-income worker will continue being victimized, no matter how much money the Fed prints.”

Game. Set. Match.

This is why I don’t believe the US is a completely lost cause; why our best days are behind us. Federal government policy is completely at odds with “providing incentives for businesses to expand job-creating capital investment” or “creating jobs and growing our economy”. This administration wouldn’t know how to grow the economy if you held a gun to its head (metaphorically speaking, of course). Candidate Obama didn’t want to create wealth, he told Joe the Plumber, he wanted to spread it.

On that, and that alone, he has kept his promise. But if the dry rot hasn’t penetrated too deep, the house divided may still be saved. Put another way, if my faith is in capitalism, that faith has not been shaken. What we have had lately is crony socialism, quite a different thing.

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A New Fave

My blogging favorites are well known: Mark Steyn, Caroline Glick, James Taranto, among a select few others. But you know who’s popped up on my radar screen, based on talent alone?

Kevin D. Williamson:

The Left is at war with economic reality. The intellectual poverty of the Left — which is also a moral poverty — is evident in the fact that its leaders are much more intensely interested in incomes at the top than those at the bottom. Examples are not difficult to come by: Senator Elizabeth Warren is visibly agitated by Jamie Dimon’s recent raise, the AFL-CIO maintains a website dedicated to executive compensation, Barack Obama avows that “at a certain point, you’ve made enough money,” et cetera ad nauseam. The entire rhetoric of inequality is simply an excuse to rage about incomes at the top, a generation’s worth of progressive shenanigans having failed to do much about those at the bottom.

It is the case that incomes at the top have gone up while those in the middle and at the bottom have stagnated or declined in real terms. It is not the case that incomes at the top have gone up because those in the middle and at the bottom have stagnated or declined, nor is it the case that incomes in the middle and at the bottom have stagnated or declined because incomes at the top have gone up. There is a relationship between the two phenomena, but it is not the relationship that progressives imagine it to be.

The Starbucks-vandalism faction of the Left likes to rail against globalization, but to do so is like railing against the fact that it is cold in the winter. Winter is an important part of the natural cycle, but it can be unpleasant — even deadly. It is something that must be prepared for, and instead of Ned Stark to warn us that winter is coming, we had Lyndon Johnson, a vicious and corrupt man who presided over the building of a vicious and corrupt welfare state. There are things we should have done to prepare for the future that is now our present, reforming the education system and our labor practices, among other things. (GM went bankrupt paying its workers half of what their German counterparts make: the worst of both worlds.) But we did not do those things. We can rail against the tyranny of winter, or we can start gathering firewood.

LBJ: “vicious and corrupt”. So he was, and so is his legacy. My elision leaves out some of his corroboration, but it’s there. Williamson nay not have Mark Steyn’s mercurial wit, but he’s a beautiful writer in his own right. And as prophetic as Jeremiah.

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Mayor for Life

For the sake of accuracy, I should have written “Mayor Serving Life”. But I stand by the title: Detroit is still suffering from Con-Man Kilpatrick, and will for a long time to come:

Detroit leaders are suing to invalidate several Wall Street deals that allowed the city to borrow more than $1.4 billion in 2005 for its underfunded pension plans, arguing that the agreements were illegal and shouldn’t be repaid.

In a lawsuit filed in U.S. Bankruptcy Court in Detroit, city lawyers said the deals reached under a former mayor, Kwame Kilpatrick, led the city to borrow more than the state’s debt limit, resulting “in the creation of city debt that was not authorized” by state law. Michigan cities, with few exceptions, can’t borrow more than 10% of the value of the “real and personal property” within their borders.

The pension borrowing deals go back to 2005, when the city had fallen nearly $1.7 billion behind in payments to the retirement funds that distribute benefits to more than 20,000 of the city’s retirees. Facing lawsuits from the retirement funds, Detroit officials turned to Wall Street bankers for a fix.

Detroit once had so much to recommend it: three great sports teams (the Lions being the lone—and perennially losing—exception); a second-tier symphony orchestra (that’s a huge compliment, actually: after the Big Five, Detroit’s was among the next best); a similarly esteemed art museum. Now, it’s a remaindered city. People poke among its glorious ruins looking for a deal or a steal.

The suit said that the deals were done “at the prompting of investment banks that would profit handsomely from the transaction,” but it didn’t name the city’s financial advisers. Mr. Kilpatrick, who is in prison on federal corruption charges, also wasn’t a target of Friday’s suit.

Capitalism doesn’t have a conscience—that’s its most redeeming feature. A locomotive doesn’t have a conscience either, but would you rather have Mother Teresa pull your train or a diesel? So, of course Wall Street would leap at the chance to make a buck—and “help” the hard-wroking, entitled retirees of the Motor City.

Snort!

They just needed the hard-working, earnest public servants of the city to act as responsible stewards of the ship of state.

Guffaw!

This sounds like the same Catch-22 that the banks were forced into. Accused of “red-lining” (sorry for any unpleasant reminder, Mr. President) certain underprivileged neighborhoods, banks were forced to give mortgages to financially dodgy applicants. When they borrowers couldn’t pay, even after repeated restructuring, the banks took a hit for “predatory lending”.

Government sounds like a great idea until you’ve been governed by it.

PS: What did I just write about a remaindered city?

It was late Friday afternoon before Labor Day weekend when Fernando Palazuelo reached the head of the line at the tax collection window of the treasurer’s office in Wayne County, Mich.

He had traveled 3,700 miles from Lima, Peru, to make a simple request. “I am interested in buying the Packard plant,” he said. “And I want to speak to the man in charge.”

A few minutes later, he was ushered in to see Raymond Wojtowicz, the 84-year-old county treasurer responsible for tens of thousands of foreclosed properties in the bankrupt city of Detroit.

And with that, Mr. Palazuelo, a developer of broken-down buildings from Europe to South America, was on his way to buying the biggest, most iconic eyesore in this city — the abandoned Packard Motor Car plant.

I’ve been to Peru, and love it. Mean it. Seriously. But if you’re such a wreck that even Peruvians are buying your ruins, you are past saving.

PPS: I’m serious about loving Peru. It’s more than Machu Picchu: there are Incan ruins all over the country. It’s got Andean peaks and Amazon rain forests; sandy beaches and rugged hiking; first world dining and third world subsistence. And now it owns the old Packard plant!

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OMG, America is So Sexist, Racist, Etc., Even the American Dream is Sexist, Racist, Etc!

Turns out the secret to wealth and success is love, marriage, and hard work.

The bastards! (Okay, you can skip love.)

Rich America is working America: Wealthy households contain on average more than four times as many full-time workers as do poor households, and, surprisingly, inherited wealth constitutes a smaller share of their assets than it does for middle-class and poor households. They live modestly relative to their means and for the most part do not work on Wall Street or as corporate executives. The caricature of the rich American as a child of privilege who inherited a fortune and spends his days shuttling between mansions in a private jet is largely a product of the imagination of such would-be class warriors as Elizabeth Warren and Robert Reich, neither of whom lives in Section 8 housing, or even downwind of it.

For the hated “1 percent,” inherited wealth accounts for about 15 percent of holdings. Contrary to the story the Left likes to tell about economic inequality in the United States, those numbers have gone down over recent decades — by almost half for the wealthiest Americans. Meanwhile, inherited money makes up 43 percent of the wealth of the lowest income group and 31 percent for the second-lowest. In case our would-be class warriors are having trouble running the numbers here, that means that inherited money on net reduces wealth inequality in the United States (measured as a ratio) rather than exacerbating it; eliminating inherited wealth would have approximately twice as much of a negative effect on modest households as on wealthy ones.

So, go ahead! Hammer them, Lieawatha!

There is a reason that money earned from work accounts for a relatively large share of the holdings of rich Americans: They work more — a lot more.

There is, to be sure, such a thing as the working poor, but the most salient characteristic of poor households is the lack of full-time workers in them. For the bottom income group, there is an average of 0.42 earners per household, with 68.2 percent of householders not working at all, as opposed to 1.97 earners per household and only 13.3 percent not working for the highest income group. The answer to poverty turns out to be “get a job,” after all.

Not surprisingly, 78.4 percent of those highest-income families were married couples, as opposed to 17 percent for the lowest-income group. What this all means in brief is that the highest-income families are composed almost exclusively of two-earner households, the overwhelming majority of them married couples. Those who are inclined to see public policy mainly through green eyeshades may sniff at the social conservatives and their quaint worries about marriage, but there is a very strong connection between how we conduct our family lives and our economic outcomes.

This is not an invitation to moral crowing about the virtues of the rich — okay, maybe it is. The country would in fact be far better off if more people lived the way the top 20 percent do: married, working their butts off, saving and investing their money, and living within their means. (In his research for The Millionaire Next Door, Thomas J. Stanley found that the most popular make of automobile among the wealthy was not Ferrari or Mercedes but Ford, and that the most common Ford model owned by a millionaire was the F-150 pickup truck.)

You know what’s funnier than the secret of wealth turning out to be Leave it to Beaver (with Mrs. Cleaver running a successful catering business, employing Eddie Haskell as a delivery driver)? It’s no secret!

This guy crunched the numbers, but who doesn’t know this intuitively? Two incomes, stable homes, kids learning the value of education—it sounds like the Obamas. And they’re stinking rich! (Relax, it’s just an expression.)

If class warriors like Fauxcahantas really wanted to help the middle class, she’d… she’d do nothing. Most government programs for the poor have led to more poverty. The successful household model—two working parents—has only gotten further out of reach for the poorer among us. God help us if Liberals get their talons into the rest of us. We’ll be skinning each other’s dogs and cats for food. Or living in Detroit.

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You Say Beachcomb, I Say Titcomb, Let’s Call the Whole Thing Off

President Obama wants those 1.3 million Americans who lost their (re-re-re-) extended unemployment benefits yesterday that he is thinking of them. In fact, he boycotted the golf course in protest.

Unless it was just blisters:

How President Barack Obama spent day eight of his holiday vacation in Hawaii on Saturday:

— HEALTH CARE UPDATE: White House officials said Saturday that the president received an update from his health care team late Friday night on the implementation of his signature federal health care overhaul.

The president said officials should prioritize consumer flexibility and minimizing disruptions for people switching plans, the White House said.

— GYM: Obama went for his usual morning workout at Marine Corps Base Hawaii in Kaneohe. As he returned to his vacation home, demonstrators waved signs representing various causes outside a blocked-off street leading to his neighborhood.

— NORTH SHORE BBQ: The first family joined longtime Obama friend Bobby Titcomb for an afternoon barbecue at Titcomb’s home in Waialua, an historic sugarcane plantation town on Oahu’s north shore.

Did Bobby invite any of his “special friends” to provide entertainment? Sorry, just wondering.

Besides, that’s all forgotten now:

The friend of President Obama who got busted in a Prostitution sting has gotten the crime removed from his record.

Bobby Titcomb got arrested back in April during an undercover police sting in Kakaako.

The 49-year-old pleaded no contest to a misdemeanor charge.

But the Prosecutors office says because he stayed out of trouble for six months, the conviction has been expunged.

Just like Auntie Zeituni’s and Uncle Omar’s repeated violations (not to mention Bill Ayers’)! What a coincidence! The president knows a lot of lucky people.

PS: Sorry, 1.3 million Americans, didn’t mean to forget you. You can go back to work now:

New York Times:

Economists expect that the end of the emergency jobless benefits will, surprisingly, lead to a sharp drop in the unemployment rate, by as much as 0.5 percentage points.

Surprising to whom? By my back-of-the-envelope calculations, more than half of the 1.3 million victims of this ObamEconomy would be working again if we just stopped paying them not to work.

Whose the Scrooge now?

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Jobbed

After 4 1/2 years of “recovery”, we’ve finally had a decent jobs report. You’d think the Democrats would hoot and holler in exaltation.

You’d think wrong:

House-Senate negotiators are close to a modest budget accord to avoid another government shutdown, but suddenly the White House is introducing a last-minute demand. Five years into an economic recovery that President Obama often hails as miraculous, he wants to extend unemployment benefits one more time.

That would add some $25 billion to the deficit with no compensating economic benefit. The Administration claims that every $1 of jobless benefits creates $1.80 in economic growth, based on the notorious “multiplier” in Keynesian economic models. This is the theory that you can increase employment by paying more people not to work, and that you can take money out of the private economy by taxes or borrowing without cost. If that theory worked, the government should pay everyone not to work.

Alan Krueger, President Obama’s former chief economist, coauthored a 2008 study reviewing the amount of time that unemployed individuals in different states and countries spent looking for a new job and found, among other things, that “job search is inversely related to the generosity of unemployment benefits.” Other studies have found that laid-off workers ineligible for unemployment benefits spend more time looking for a new job than those who get checks.

Right-wing fascist.

Just like this guy:

“Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect. . . . In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker’s incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of ‘Eurosclerosis,’ the persistent high unemployment that affects a number of European countries.”–”Macroeconomics” by Paul Krugman and Robin Wells, second edition, 2009

Like raising the minimum wage, unemployment benefits depress employment. But good political luck with that point of view. Democrats will trade jobs for votes every day—and twice on election day.

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Good Jobs at Good Wages

0-for-2.

We’ve let the “rosy” economic numbers marinate for a few days. Kind of like the old joke the punchline of which is “coffee break’s over, everyone back on your heads!”

Coffee break’s over:

But here’s your trouble:

1. There are still 1.1 million fewer employed Americans today than right before the recession started, despite a potential labor force that’s 14 million larger. And there are 3.6 million fewer full-time workers than back in 2007.

2. The employment rate, the share of Americans with a job, is 58.6% — exactly where it was in November 2009.

3. If the labor force participation rate were where it was a year ago, the jobless rate would be 7.9%, not 7% (and 11.3% if the LFPR were at prerecession levels, though closer to 9% if demographics-adjusted).

4. More than 4 million Americans remain out of work for 27 weeks or longer.

5. Overall, according to the Hamilton Project Jobs Gap calculator, it will take another five years to return to 2007 employment levels even at the improved job creation pace of the past four months.

The Left isn’t very happy, either:

That’s because so many of the new jobs that get created in the U.S. today are lousy and don’t offer a real path into the middle class.

So, for example, retail and restaurant jobs again grew rapidly last month, with some 40,000 new positions created in these sectors. But as we all know — and as Demos has documented — many of these jobs pay barely over poverty wages and don’t come with benefits. Transportation and warehousing were other bright spots in job growth, with 30,000 new jobs in those areas last month. So it’s a shame that warehouse work is so poorly paid these days, with Amazon and other big shippers creating a new kind of sweatshop.

If you want to get a clear look at the jobs America’s economy produces, one of the best places to go is the Social Security Administration, which tracks earnings by all workers. Their most recent data shows that 53 percent of Americans workers earn less than $30,000 a year. Forty percent of American workers earn less than $20,000 a year.

Let me stop and repeat that statistic: 40 percent of all U.S. workers earn less than $20k a year.

One solution to this situation is to create an economy and education system that generates more good jobs for a work force with better skills. Another solution is to raise wages for low-skilled jobs, which is what the recent wave of labor strikes has been all about.

The U.S. has to pursue both solutions, and others, if we want to create a decent society.

Five years into ObamAmerica, and they’re still bitching about what a terrible people we are. They may be right, but for the wrong reasons. What they seem to hate is a result of Obama, not in spite of Obama. (Fox Butterfield, is that you?)

Rather than blame Amazon for providing the only jobs going, why not be grateful? Exactly how much should “warehouse work” pay? Amazon can run a website, sell a product (thousands of them), deliver them as promised—soon, by drone, within hours. Can government do anything like that? Amazon’s Jeff Bezos even saved the beloved organ of the Washington establishment, the Washington Post. Explain to me how he’s the villain?

“One solution to this situation is to create an economy and education system that generates more good jobs for a work force with better skills.”

D’oh! Why didn’t we think of that?

If by those ingenious suggestions they mean letting the private sector find its way toward profit, and letting families choose the best schools for their kids, I’m on board. But the left doesn’t trust the private, the individual. It’s all about the collective to them. Which is why we are where we are.

Fox Butterfield, is that you?

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Distract-a-Palooza!

Step right up, ladies and gentleman, and watch the Amazing Hussein make one-sixth of the American economy disappear! Now you see ObamaCare…

Now you don’t!

The growing gap between rich and poor Americans is threatening the ideals the country was founded upon, President Barack Obama said in remarks Wednesday that appeared to signal a leftward turn in his economic agenda.

Making sure that the U.S. economy works for every working American is “the defining challenge of our time,” Obama said in a speech at the Center for American Progress, a liberal think tank. He later said the “dangerous and growing” income and opportunity gap is jeopardizing the notion that if people work hard, they can get ahead.

Thank the lord we have a new president to reverse this “dangerous and growing” calamity! Oh wait. Isn’t it amazing how The Amazing Hussein can summon the wraith of George Bush to obscure the myriad failures of his regime? Amazing.

To combat the chasm between haves and have-nots, Obama called for a hike in the federal minimum wage, saying an increase is a good step for families and the economy as a whole.

Democrats on Capitol Hill have pushed for an increase in the federal minimum wage, which currently stands at $7.25 an hour. A proposal would boost it to about $10, and the White House has said Obama supports such a measure.

That extra $20 a day will make millionaires of every American. Porterhouse for all! Moet for the house!

I used to oppose knee-jerk hikes in the minimum wage (after supporting them). But now I’m back on board. Sure, there’s a direct link between minimum wage hikes and unemployment—stretched business owners can’t just “make it rain”, tossing cash in the air like confetti—but I’m tired of leftist weenies like the namesake of Obamacare getting all the joy out of grandstanding on the issue.

Take your $10 an hour and shove it up your backside! Give me a Grant or give me death!

I recall a great moment on Rush Limbaugh this summer: [I necessarily edited this to add coherence to the caller's point.]

CALLER: This is Sean in San Diego, and I believe those workers at McDonald’s and Burger King deserve some more money. The shareholders are getting rich. I watch every day on MarketWatch, and the CEO is getting rich. They’re making their profits. They can afford to pair their workers a bit more money. They’re not asking for much. They haven’t had a raise in 25 years.

RUSH: Really? In 1988, people at McDonald’s were making $7.25 an hour?

CALLER: I’m not exactly sure of that, but –

RUSH: Well, that would be important.

CALLER: They’re not being paid fairly, Rush.

RUSH: Why can’t they [get a job that does pay]?

CALLER: Probably no other jobs out there in this bad economy.

RUSH: Why? Why aren’t there any jobs out there?

CALLER: The Democrats have destroyed this economy. We all know that.

RUSH: Okay. Well, the minimum wage, by the way, back 25 years ago was $3.35 an hour, just to get the number out there. It was not what they’re making today. I’ll get the inflation calculator out and take a look at it. They’re asking for double their current wages. Sean, why doesn’t the McDonald’s franchise just pay it? You know, why not just give them more money?

CALLER: Oh, that’s simple. Greed.

RUSH: Greed? Or is it competition?

CALLER: Why should they if they don’t have to and nobody’s making them? Government sets the minimum wage, and they don’t want to do it.

RUSH: Well, okay. Let’s take a look McDonald’s, and let’s say the McDonald’s gives their employees a raise. Let’s just say $10 dollars an hour. Would that be enough?

CALLER: No. I don’t think so.

RUSH: Okay.

RUSH: How about this? How about McDonald’s raises everybody to $20 an hour? Would that be enough? Would that be okay?

CALLER: I think that would probably help a lot of people.

RUSH: What about $25 an hour?

CALLER: Managers should probably get at least that. They probably already do.

RUSH: Okay, then what about $30 an hour?

CALLER: If that’s the fair market rate.

RUSH: Well, no, that’s what $7.25 is.

CALLER: I don’t believe that.

RUSH: Yeah, that’s why it’s $7.25. It’s the fair market rate. It’s $7.25 not because it’s temporary. That’s the fair market rate. Let’s pay ‘em $50 an hour, how about that?

CALLER: $15 an hour.

RUSH: No, $50.

CALLER: $50?

RUSH: Five-oh, $50 an hour. How about that?

CALLER: Yeah. That should be the new fair market rate.

RUSH: Right on. Right? Well, let’s keep going, how about $75 an hour, let’s pay ‘em $75 an hour.

CALLER: Where you going with this?

Finally! It took how long for Sean from San Diego to get Rush’s point?

Except he doesn’t!

RUSH: Well, I want to know whether you agree with $75. I’m not going anywhere with it. If $50 is good, $60 would be better, right?

CALLER: Well, yeah.

RUSH: What about $75 an hour?

CALLER: Where you going with this, though? I don’t understand.

Coulda fooled me. But Rush is kinder than I am:

RUSH: Sean? Sean, one thing. I’m not trying to trick you. I’m not playing a trick on you here. Please don’t misunderstand. I’m not taking you anywhere. I don’t want you misunderstand.

The point, Sean, is that you just said that $7.25 isn’t the market price, and it is. That $7.25 an hour is what it requires for McDonald’s to be fully staffed. There are people who will work for that, and therefore that sets the wage scale. Now, $10 would be better.

Yeah, you can keep raising it, but at some point, everybody who believes in a minimum wage will say, “No, wait a minute. That’s too much,” and at that point, you have demonstrated that that there’s no market relationship. You’re just talking emotion. You’re just talking “fairness.” You’re just talking being nice, and that’s not how the market works. People aren’t paid a wage because they’re being nice to, or because it’s fair. In the market, the market rules. You can control it all you want, you could add arbitrary numbers on it all you want, and all you’re doing is delaying the inevitable.

The market will always win and will always rule, because it is the market.

The Amazing Hussein now stands naked before us, and considerably less well-endowed than Piers Morgan thinks he is.

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What Do You Call Obamanomics?

Dang! I just gave it away!

I call it Obamanomics:

By conventional wisdom, the Great Recession is long over. “Recession” connotes shrinking output. “Expansion” signifies the opposite. That’s how the National Bureau of Economic Research, a group of academic economists, defines business cycles. Following this logic, the bureau determined the economy stopped contracting in mid-2009. Yet, most Americans — 53 percent, says a recent National Journal/Allstate survey — think we’re still in recession, by which they doubtlessly mean “bad times.”

Who is to say they’re wrong? After all, the unemployment rate has exceeded 7?percent for almost five years, despite the withdrawal of millions of discouraged workers from the labor force. Moreover, public attitudes have become deeply pessimistic in ways apparently unprecedented since World War II. In past recessions, more than half of Americans believed their incomes would grow in the next year. Not this time. The share expecting gains collapsed to less than 45 percent after 2008 and is still below half, finds a study by Federal Reserve economist Claudia Sahm. The despondency, she writes, may signal a permanent shift in consumer psychology that undermines recovery.

Something’s changed, but our economic vocabulary hasn’t kept up.

Loyal Bloodthirstani citizens know when the “recession” “ended”: June 2009. America has swelled by over 10 million new citizens—greater than the combined populations New York City and Philadelphia—who have never known recession.

What they have known, to their dissatisfaction, is Obamanomics. Or, if you prefer:

In a recent lecture, former Treasury secretary Lawrence Summers evoked secular stagnation — a “chronic and systemic” economic sluggishness, he said. Krugman, Martin Wolf, the Financial Times’ chief economic commentator, and others also embrace the theme. There is an “investment dearth,” Wolf recently wrote. Low interest rates suggest that there are “more savings searching for productive investments than there [are] productive investments.”

Why? Unlike Hansen, today’s stagnationists haven’t identified causes. The problem might not be a dearth of investments so much as a surplus of risk aversion. For that, candidates abound: the traumatic impact of the Great Recession on confidence; a backlash against globalization, reduced cross-border investments by multinational firms; uncertain government policies; aging societies burdened by diminishing innovation and costly welfare states.

Whatever the cause, we are in unfamiliar territory.

Come on, guys, use your eggheads! What’s the consistent, singular factor over this entire period?

Talk about driving the nation into a ditch! Government nationalization of whole industries (mortgages, student loans, health care); tax uncertainty (renew or repeal Bush tax rates); random and pointless market intervention (Cash for Clunkers); hostility toward business leaders; demonizing the rich—if you’re not risk averse, you’re not paying attention.

It doesn’t matter what you call it, Obama owns it. That’s why I choose to call it Obamanomics. That’s what it is.

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