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Friday, October 28, 2011

Bette Midler on politics

'I haven't left my house in days.
I watch the news channels incessantly.
All the news stories are about the election; all the commercials are for
Viagra and Cialis. Election, erection, election, erection -- either way it's
about getting screwed!' -- Bette Midler.

Income inequality re-examined

7 reasons why Obama is wrong on income inequalityBy James Pethokoukis
October 26, 2011, 6:04 pm

As if ordered up directly by the Obama White House and Occupy Wall Street, the Congressional Budget Office has produced a timely report looking at income inequality. The CBO found that between between 1979 and 2007, average real after-tax household income grew by 275 percent for the top 1 percent of households, 65 percent for the next 19 percent, just under 40 percent for the next 60 percent, and 18 percent for the bottom 20 percent.

[]Blogger Derek Thompson of, always worth reading, draws this conclusion from the CBO study:
This is complicated stuff, and I’d be lying to you if I said I understood all of it. But let’s all agree about square one. Income inequality is not a myth, so what do we think we should do about it? If we can’t agree on the question, we’ll never find an answer.
Like Obama and OWS, Thompson is worried. I am far less so. Here’s why:

1. Liberals frequently claim the average American family has been losing ground for the past three decades­or at least since Ronald Reagan took the presidential oath in January 1981. (As if the 1970s with its sky-high Misery Index was a great economic time.) The CBO refutes this. Its data show real median after-tax household income (half of all households have income below the median, and half have income above it) grew by 35 percent over the past three decades.

Indeed, look at this chart from Jim Sullivan of Notre Dame and and Bruce Meyer of the University of Chicago (via recent presentation at AEI):


2. The CBO fails to factor in that American households in the top income quintile have, on average, almost five times more family members working than the lowest quintile. ( Analysis by AEI blogger Mark Perry.) Those folks are also far more likely, as Perry notes, than lower-income households to be well-educated, married, and working full-time in their prime earning years. Perry also notes that “individuals are not stuck forever in a single income quintile but instead move up and down the income quintiles over their lifetimes.” (Indeed, a Treasury study on income mobility found that starting in 1996, half of taxpayers who started in the bottom 20 percent had moved to a higher income group by 2005.)

3. Price indexes for the poor rise more slowly than for the rich, causing most empirical measures of inequality to overstate the growth of real income of the rich vs. the poor.

4. Apples-and-oranges kinds of issues­such a differences in household size and inflation indexes­has led highly respected Northwestern University professor Robert Gordon to conclude that the “rise in American inequality has been exaggerated both in magnitude and timing.”

5. The Minneapolis Federal Reserve concluded­after taking into account household size and differing price indexes­median household income for most household types increased by 44 percent to 62 percent from 1976 to 2006. In addition, its research shows that median hourly wages (including fringe benefits) rose by 28 percent from 1975 to 2005.

6. As technological change accelerates and becomes more pervasive, the market will reward workers with more education and skills. As CBO notes: “Numerous researchers have concluded that, on balance, the technological changes of the past several decades­and perhaps the entire past century­increased employers’ demand for workers with higher skills and more education. That increase, along with a smaller increase in  the supply of workers with higher skills and more education, generated substantial gains in the relative wages of  more-educated worker. In the past decades, inequality has been going up everywhere.” It is a global phenomenon.

7. And why did the top 1 percent do particularly well? One potential  explanation from CBO:  ”The compensation of ‘superstars’ (such as actors, athletes, and musicians) may be especially  sensitive to technological changes. Unique characteristics of that labor market mean that technical innovations,  such as cheap mass media, have made it possible for entertainers to reach much wider audiences. That increased exposure, in turn, has led to a manyfold  increase in income for such people.” The CBO also mentioned ”changes in the governance and structure of executive compensation, increases in firms’ size and complexity, and the increasing scale of financial-sector activities” as possibilities.

My bottom line: a) income inequality has increased somewhat in recent decades, but not exploded; b) that increase is natural given technology and globalization; c) incomes could have risen faster with a better educated workforce (that also didn’t have to compete with an influx of workers from Asia), but did O.K.; d) we need to boost education to keep up with advancing technology and productivity; e) the past decade was one of slow growth followed by a nasty recession. No argument there. Looking forward, America will need a pro-growth tax system, smarter regulation and far better human capital(helped by higher teacher pay in exchange for eliminating tenure, more skilled immigration, etc.). That way, incomes won’t just be more equal, they’ll be growing.

Big Brother is Listening To Phone Calls And Reading Text Messages

Description: E-mailDescription: PrintDescription: PDF
A Commentary by J. D. Longstreet

On November 9th, 2011 Americans will get an up close and personal demonstration of the new powers the US government has given itself over America’s broadcast services. There will be a complete take over of the nation’s air waves, both television and radio - plus -- cable television systems, wireless cable systems, satellite digital audio radio service (SDARS) providers, and direct broadcast satellite (DBS) providers.
Description: Big_Brother_WatchingThe power to do this is now in the hands of the President. Only he has the authority to do this. (SOURCE) <>

On November 9th there will be a test of how effectively the system will work whenever the President decides he must speak to the American people reference an emergency that threatens the nation.

Who exactly, decides when there is a national emergency? I would expect it to be the President himself.
I am a 30-year veteran of the broadcast business (retired) and this sends chills up and down my spine. I have visions of Big Brother taking control of the nation’s broadcast systems any time the President feels the need.
But that is not the worst of my concerns.

There is no such thing as “privacy” in America any longer. The moment I press “send” on my e-mail, the government scans it. Every time I make a phone call, whether on my land line, or my cell phone, the government monitors it. If I send a fax on an instant message, the government scans the wording of the fax. If and when I send a text message, the government reads it, too. UNBELIEVABLE, right? Believe it.

The Echelon Network | The Five Eyes

This is a combined project referred to as “Echelon” (or The Echelon Network - sometimes called “The Five Eyes.”) involving the US, the UK, Australia, Canada, and New Zealand, with listening posts that span the globe. Every phone call, e-mail, text message, wire, fax, instant message, computer, and even satellite phone calls is/are intercepted 24-hours a day, seven days a week, fifty-two weeks a year. Listening posts are located in Canada, New Zealand, Australia, Japan, Taiwan, Cyprus, Hungary, Pakistan, India, Oman, Kenya, and, yes, in Israel. And - there may well be others, and there probably are.

Ollie North has said the only kind of message communication not intercepted by the government is - smoke signals! (Page 400 of “The Jericho Sanctions” by Ollie North.)

When you consider all this, then the TV show “Person of Interest” is not so far fetched - now, is it?

“The system has been reported in a number of public sources. Its capabilities and political implications were investigated by a committee of the European Parliament during 2000 and 2001 with a report published in 2001, and by author James Bamford in his books on the National Security Agency of the United States.

Intelligence monitoring of people in the area covered by the AUSCANZUKUS security agreement has caused concern. Some critics claim the system is being used not only to search for terrorist plots, drug dealers' plans, and political and diplomatic intelligence but also for large-scale commercial theft, international economic espionage, and invasion of privacy.

In 2001 the Temporary Committee on the ECHELON Interception System recommended to the European Parliament that citizens of member states routinely use cryptography in their communications to protect their privacy, because economic espionage with ECHELON has been conducted by the US intelligence.” (SOURCE) <>

NOW, do you wonder why Americans stand close and whisper in public places, in 2011, yet mindlessly say anything to anyone online, or on a telephone or by text message?

Call me old fashioned, if you will, but it ticks me off to know that the government has the power to do this. By the time you read this, the government’s interception center has already read it!

Does this not concern Americans, Brits, Canadians, Aussies, and New Zealanders??? And PLEASE don’t give me the song and dance about protecting us from terrorists. Terrorists know about Echelon and use “runners” to deliver their messages - live human beings and word of mouth.

Now the government has given the Office of the President the right to simply turn off your radio and TV reception just so you and I can listen to the President of the US warn us of a national emergency, which, most likely, the regular TV and cable networks have already told us about!

As an American citizen, I feel violated. I used to have a right to privacy. No longer. Right along with a huge chunk of our freedom and liberty, privacy has been flushed down Big Brother’s toilet and into the “government septic tank.”
Come to think of it, every few years you have to clean our your septic tank. Seems to me, America’s national septic tank, in Washington, needs cleaning out!

J. D. Longstreet is a conservative Southern American (A native sandlapper and an adopted Tar Heel) with a deep passion for the history, heritage, and culture of the southern states of America. At the same time he is a deeply loyal American believing strongly in "America First".· He is a thirty-year veteran of the broadcasting business, as an "in the field" and "on-air" news reporter (contributing to radio, TV, and newspapers) and a conservative broadcast commentator.
Longstreet is a veteran of the US Army and US Army Reserve. He is a member of the American Legion and the Sons of Confederate Veterans.· A lifelong Christian, Longstreet subscribes to "old Lutheranism" to express and exercise his faith.
Articles by J.D. Longstreet are posted at: "INSIGHT on Freedom",· "Hurricane Alley... by Longstreet",· "The Carolina Post" and numerous other conservative websites around the web.·

Downsize DC on Obamanomics

The following is presented as an educational service of the Downsize DC Foundation. It contains startling facts that refute economic claims made by left-statists such as President Obama and Paul Krugman. If you read it you will learn . . .
  • How current economic numbers completely refute President Obama, Nobel Prize winning economist Paul Krugman, and John Maynard Keynes
  • How left-statists cherry pick the evidence in order to deceive the American people
  • What we really need to do to restore private investment and hiring
High profile left-statists have made much of a recent survey from the National Federation of Independent Businesses. The survey lists the primary concerns of small business owners.Here are the top three . . .
  • Poor sales – 25%
  • Regulation – 19%
  • Taxes – 18%
People like Paul Krugman, point to the "poor sales" number as evidence that the economy is hampered by a lack of consumer demand. They assert that increased spending by politicians is needed to compensate for this, as proposed by the economic theories of John Maynard Keynes (pronounced Kines). But the following chart contradicts this theory (HT: Mark Perry, Carpe Diem blog):
The actual numbers on consumer spending instantly refute the Keynesian economic proposals favored by President Obama and Paul Krugman. There is no lack of "consumer demand." Instead, consumer spending is at an all-time high. Why then do so many small business owners list "poor sales" as their chief concern?
Could it be because they need more sales in order to pay the increased burdens imposed upon them by The State? After all, 19% of business owners identify regulation as their biggest problem, and 18% name taxes. This means that a whopping 37% of the businesses surveyed cite one state-imposed cost or another as their main difficulty.
A perception that the burden of The State is increasing could easily lead someone to feel that sales are "poor," even when consumer spending is at an all-time high.
Meanwhile, Professor Mark Perry has provided us with another chart showing us where the economy's real problem lies. Spending by consumers and politicians booms, but private investment lags.
How can this be? Why aren't investors rushing to take advantage of the surge in consumer spending? Isn't it possible that businesses are failing to expand and hire because ofUNCERTAINTY about the future costs of things like Obamacare, the new Dodd-Frank financial regulations, and other statist schemes that have either been passed or proposed? This suggestion certainly fits the available facts.
It seems to me that left-statists are guilty of massive special pleading. They want us to be concerned about uncertainty, but only when it comes to consumers, NOT when it comes to investors. They also want us to trust the policy descriptions of John Maynard Keynes, but ONLY when it suits their desire to expand The State, NOT when Keynes's proposals would argue against what the politicians are doing. Here's what Keynes really advocated . . .
  • Politicians should accumulate surpluses during good times in order to fund stimulus spending during bad times
  • Stimulus spending should NOT be funded through borrowing, because doing that robs capital from private investment and is therefore self-defeating
  • Stimulus spending needs to be self-liquidating – it needs to pay for itself!
  • Investor confidence is just as important as consumer confidence
But all of this is the exact opposite of what the statists do in Keynes's name.
Left and right statists in Congress have all favored deficits in good times, and the left-statists in particular want to run even larger deficits during bad times. This is not what Keynes proposed. The left-statists cherry-pick Keynes's arguments to fit their needs.
The left-statists in Congress have also failed to focus their "stimulus spending" on projects that will pay for themselves, preferring to use the money to bailout favored constituencies instead, such as government employee unions. This is the exact opposite of what Keynes proposed.
But, worst of all, the left-statists continue to tell us that more statist spending is needed to compensate for low consumer demand, even though consumer spending has completely recovered. Is it too much to suggest that the people who do this, like Paul Krugman and President Obama, are hypocrites and liars?
We think it's time to start undoing this conspiracy of deceit, in which the establishment news media is also heavily complicit. The media has failed to tell Americans about the data and facts presented in this message, so we must step in to correct their error. Here's the truth . . .
  • Consumer spending has completely recovered
  • But private investment lags because of the uncertainty caused by statist policies
  • This means that the statists in Washington need to start doing LESS, NOT MORE.
Please educate the public about the facts that demonstrate these claims . . .
  • Share this message with everyone you know
  • Ask your friends to share it with others too
  • And ask them to consider joining Downsize DC, by starting a free subscription to our email newsletter. They can do that here:
When all the powers that be lie, it's up to you to tell the truth, and spread it far and wide.
Perry Willis
Vice President
Downsize DC Foundation
The Downsizer-Dispatch is the official email newsletter of, Inc. & theDownsize DC Foundation.
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October 28, 2011
Contact: Jim Tobin (773) 354-2076 | Christina Tobin (312) 427-5128
CHICAGO--Christina Tobin, Vice President of the taxpayer watchdog group, Taxpayers United of America (TUA), and President of Free and Equal Elections, will appear on FOX NEWS CHANNEL'S Fox and Friends, this Saturday, the morning of October 29th at 6:30 a.m. CDT.  She will discuss the public pension conundrum in Illinois, and how to fix it.
Tobin travels extensively nationally, addressing public pension issues in the United States.  She believes that a comprehensive approach to electoral reform is best, that the pension problems are solvable, and once solved, will contribute greatly to fixing the myriad States’ budget crises.

Founded in 1976, TUA is one of the largest taxpayer organizations in America.
407 S. Dearborn, Suite 1170
Chicago, Illinois 60605
312-427-5128 (o) | 312-427-5139 (f) |

Thursday, October 27, 2011

Iceland's Recovery

Iceland Loses Its Banks, Finds Its Wealth

Ultima Thule learns that small is beautiful.

The most important question about Iceland these days (after “How come Iceland is green and Greenland is icy?”) is what we can learn from its economic recovery. In 2008, the tiny island nation in the North Atlantic became a byword for both boom-time excess and recessionary disaster. After inflating its financial service sector with a pile of foreign-currency debt and risky combinations of short-term debt instruments with long-term loans, Iceland, which is not a member of the European Union, endured one of the most unpleasant recessions in recent memory.
The country’s three largest banks, whose totalassets were 11 times larger than Iceland’s GDP, proved too big to fail and then too big to rescue, bankrupting the central bank that took them over and leaving foreign creditors empty-handed. Inflation in the import-heavy economy reached 18 percent, while the stock market plunged by 90 percent. Between 2007 and 2009, according to the World Bank, GDP dropped by 40 percent. The Icelandic króna turned into a pariah currency, and even the country’s durable fishing and aluminum businesses were crippled by heavy leverage. 
A collapse of this size needs a villain, and it will surprise nobody to learn that libertarians, who exert an iron grip on political and economic practice throughout the world, took the blame. In a 2008 story forFortune, Peter Gumble blamed deregulation and putatively free market reforms for destroying the banking system. New York Times economic poetaster Paul Krugman said the small nation had been “hijacked by a combination of free-market ideology and crony capitalism.” Huffington Post columnist Iris Erlingsdottir blamed the late Milton Friedman (who had once praised 10th-century Iceland’s approach to government) for failing to “take into account the predictably irrational character of human nature,” and concluded, “It is time for the grownups to take over again.”
As always, we had to look to the legendary Icelandic songstress Björk for real wisdom. In a London Times essay blasting the country’s ruling conservatives, Björk lamented the way the boom/bust cycle had wiped out small entrepreneurs as big money pursued an oversupply of aluminum smelters—which was not an excrescence of the free market but a product of public industrial policy. Former Reykjavik mayor and Prime Minister Davíð Oddsson did indeed pepper his tenure as head of Iceland’s centralbank with free market rhetoric. But that’s about as far as it went. In their new study of the crisis, Deep Freeze: Iceland’s Economic Collapse, economists Philipp Bagus and David Howden illustrate how thoroughly Iceland’s financial boom combined a Scandinavian nanny state—which consumes 41.1 percent of GDP and features unemployment insurance that provides three years of benefits—with the worst practices of boom-happy central bankers and government agencies everywhere.
For every government-driven bad improvement you can find in the west, you’ll find boom-era Iceland taking it to the next level. Where the U.S. Federal Reserve’s promise to backstop financial institutions was merely implicit, the Central Bank of Iceland in 2001 gave an explicit guarantee to big banks, making it inevitable that they would become bloated with risky and ultimately toxic assets. Our own government-sponsored—and as of 2008, government-owned—entities Fannie Mae and Freddie Mac made a hash of responsible lending by buying mortgages in the secondary market (and as we now know, lying about the poor quality of debt on their books). But Iceland’s government-run Housing Financing Fund managed to do even worse, lending directly to borrowers and competing with private lenders on both interest rates and loan quality. By mid-decade 90 percent of Icelandic households had government loans, and no-money-down home purchases were as common in Iceland as they were in Florida. 
When the predictable emergency hit, neither the government nor the private financial institutions had cash to redeem the large number of foreign-denominated loans. While the International Monetary Fund eventually cobbled together a small bailout package, for the most part Iceland was alone. U.K. Prime Minister Gordon Brown invoked anti-terrorism legislation against the charter member of NATO, trying to force Icelandic banks to repay British lenders. Russia promised a bailout but failed to deliver. The E.U. was, and remains, too preoccupied with its own profligate states to give attention to remote Iceland.
This international neglect turned out to be Iceland’s saving grace. The  crisis ended almost as quickly as it had begun. The Organization for Economic Co-operation and Development expects Iceland’s economy to grow by 2 percent this year and next. That’s not enough to replace the post-2007 loss, but it’s more than enough to return to the pre-boom trend line, and it’s much stronger than the performance of Portugal, Italy, Ireland, Greece, and Spain, affectionately know as the PIIGS economies. Iceland’s long-term interest rate, a not-inconsiderable 8 percent, compares well with a rate of over 13 percent for Greece, which is astounding when you consider that Iceland endured a default that Greece, in name at least, has so far avoided. The difference in unemployment—5.8 percent for Iceland against 16 percent for Greece—is even more striking. Iceland expects to have a balanced budget in 2013.
Paul Krugman naturally draws the wrong conclusion, contending that Iceland saved itself through rapid inflation and capital controls. This is like saying the March tsunami gave the people of Tohoku a nice chance to go swimming: Iceland’s central bank tried desperately to control the króna’s collapse before giving up. Nevertheless, Erlingsdottir is right: The “grownups”—a center-left coalition led by Social Democrat Johanna Sigurdardottir—are back in charge and have done their best to double down on the bad policies of the past, including reducing fish quotas when local fishermen most need to be producing and selling. The government is also, in the face of strong popular opposition, moving toward E.U. membership, which has worked out so beautifully for other troubled European economies.
So what’s causing the recovery? The plain-sight answer is the one nobody will consider. Iceland is coming back specifically because its banks went out of business. That happened in spite of strenuous public efforts, but the removal of the tiny nation’s colossally bloated financial sector turns out not to have eliminated all that much value. 
It bears repeating that banks are not creators of wealth. They are places where you store the surplus value generated by productive enterprise. In very narrow circumstances that surplus value can be loaned out at a profit, but a financial sector is the icing, not the cake. This should be common sense, but apparently it is wisdom so rare it can only be learned in countries small and remote enough to avoid the deadly medicine of the global financial markets. 
Tim Cavanaugh is a senior editor at reason.

Wednesday, October 26, 2011

The Imperial City

Washington's Parasite Economy

Life is good in the capital of crony capitalism.

Editor's Note: This column is reprinted with permission of the Washington Examiner. Click here to read it at that site.
In the wake of Apple CEO Steve Jobs's death—and in the midst of the ongoing "Occupy Wall Street" protests—came an ominous report from Bloomberg News last week:
"Beltway Earnings Make U.S. Capital Richer Than Silicon Valley." According to the latest Census figures, Washington, D.C. is now the wealthiest metropolitan area in the United States.
That's good news for local property values, but I can't say it fills me with hometown pride. After all, Silicon Valley's wealth was earned—just rewards voluntarily given for producing innovations that have dramatically improved our lives.
In contrast, D.C.'s prosperity reflects a parasite economy that battens on wealth created by others. We live in a vast, metastasizing tick of a city, swollen on the lifeblood it drains from the body politic. This is one race the home team deserved to lose.
As former Slate reporter Jack Shafer once put it, "Washington doesn't make anything except scandals." But its "regulatory powers, its executive orders, its judicial decisions, its ability to conjure money out of thin air, and its budget-making authority," give D.C. the ability to dictate "who can do business and how."
This city's wealth is largely based on what public choice economists call "rent-seeking," using the political process to rig the game in one's favor—through subsidies, tariffs, regulatory advantages, and other benefits unavailable via free and fair competition.
"The rent-seeking is too damn high!" economist Alex Tabarrok quipped upon reading the Bloomberg report. True enough: spending on lobbyists set another record last year, at $3.5 billion, according to the Center for Responsive Politics.
Other factors that allowed Washington to edge out San Jose, according to Bloomberg, include "federal employees whose compensation averages more than $126,000," the burgeoning Military/Homeland-Security Industrial Complex, "the nation's greatest concentration of lawyers," and a glut of federal dollars that's kept regional unemployment three points lower than the national average.
Indeed, as The Wall Street Journal reported last year, the District and neighboring congressional districts in Maryland and Virginia soaked up over $3.7 billion of President Obama's stimulus package—almost $2,000 per resident, "nearly three times the national average."
To the extent the "Occupy" protests aimed at Wall Street and K Street have a common theme, it's concern about economic inequality. Given the Occupiers' complaints about "Crony Capitalism," though, this doesn't look like simple leftist resentment of the productive. But this "We are the 99 percent" business is far too pat.
As my former colleague Will Wilkinson argued in a 2009 Cato Institute Study entitled “Thinking Clearly about Economic Inequality," "at best, income inequality is a distraction." Wealth disparities are not, by themselves, some sort of automatic indicator of injustice.
Unequal wealth can be a just result of free and fair exchange, where talented Americans reap rewards from providing goods and services their fellow citizens greatly value—as in the case of Steve Jobs—in which case, there's no injustice to remedy.
Or it can be the result of "predation by political elites," in which case, it's the predation that should be tackled directly, Wilkinson argues, so "the fire is the problem, not the alarm."
That the hometown of the political class has passed the home of the creative class in wealth and influence is genuine cause for alarm. Washington, D.C. is the capital of Crony Capitalism—and it's only growing richer. That inequality is worth worrying about.
Gene Healy is a vice president at the Cato Institute and author of The Cult of the Presidency: America's Dangerous Devotion to Executive Power (Cato 2008). He is a columnist at the Washington Examiner, where a version of this article originally appeared. Click here to read it at that site.