Sunday, February 10, 2008
The Archbishop of Canterubury and Sharia Law
He has shown that the only thing less relevant in Britain than the monarchy is the C of E. Apparently, he said in an interview that the incorporation of some aspects of sharia law into the laws of Britain was "inevitable." I assume he was just trying to be tolerant. At some point you need to stop being tolerant, particularly if you're the head of a Christian church, in a country where the development of laws unlike sharia over the past eight centuries has led to a system that guarantees the rights of minorities, against the majority and against troglodyte elements of their own minority. I think the man is simply daft, and since that evidently doesn't disqualify him from heading his church, it reflects on them as well.
Will the federal economic stimulus work? Ask Oregon.
The feds are planning a huge rebate plan to stimulate the economy. Before counting on it to restore growth, they should consider Oregon's experience. Due to its unique "kicker" program, through which Oregon rebates to taxpayers everything above its estimated revenues whenever that excess is more than 2% for the biennium, the Oregon economy was stimulated late in 2007 by the infusion of some $1.1 billion from the state treasury. In early 2008, we should be seeing the results.
In fact, when the governor first noticed that there was some potential for declining state revenues two weeks ago, he figured it would be in the "low tens of millions" for the biennium. One of the Republican leaders in the state legislature, where Republican support for the kicker is institutionalized, knew why:
Senate Republican Leader Ted Ferrioli of John Day said the $1 billion in “kicker” rebate checks sent out by Oregon late last year probably served as stimulus to the regional economy, offsetting some of the downturn hitting other states.
Two weeks later, the actual revenue forecast that the governor had been hinting at was released and, behold, rather than low tens of millions, it was $183 million. The cash vanished into the pockets of taxpayers with hardly a ripple on the overall economy.
This is roughly what Keynes would have predicted. His point was that when people get nervous, they stop spending. They don't become significantly less nervous when they are given modest amounts of money, so they won't change their spending habits much. If you want stimulus, have the government borrow and spend.
Pretty much nobody is Keynesian these days, although a few claim to be. One economist remarked that ""From an economic stimulus perspective, it will have the short-term effect of increasing spending and there will be the Keynesian multiplier effect." But this isn't a Keynesian multiplier, which results from increased government spending. It's just a multiplier.
The Bush theory has been to never stimulate with spending, only tax reduction. Democrats like the idea of spending, but they ignore the other half of Keynes' strategy, which was to cut back spending when times were good. At the bottom, this is a strategy to make economic gains by consuming without working for the money. It plays well in an election year, but it's lousy economics.
In fact, when the governor first noticed that there was some potential for declining state revenues two weeks ago, he figured it would be in the "low tens of millions" for the biennium. One of the Republican leaders in the state legislature, where Republican support for the kicker is institutionalized, knew why:
Senate Republican Leader Ted Ferrioli of John Day said the $1 billion in “kicker” rebate checks sent out by Oregon late last year probably served as stimulus to the regional economy, offsetting some of the downturn hitting other states.
Two weeks later, the actual revenue forecast that the governor had been hinting at was released and, behold, rather than low tens of millions, it was $183 million. The cash vanished into the pockets of taxpayers with hardly a ripple on the overall economy.
This is roughly what Keynes would have predicted. His point was that when people get nervous, they stop spending. They don't become significantly less nervous when they are given modest amounts of money, so they won't change their spending habits much. If you want stimulus, have the government borrow and spend.
Pretty much nobody is Keynesian these days, although a few claim to be. One economist remarked that ""From an economic stimulus perspective, it will have the short-term effect of increasing spending and there will be the Keynesian multiplier effect." But this isn't a Keynesian multiplier, which results from increased government spending. It's just a multiplier.
The Bush theory has been to never stimulate with spending, only tax reduction. Democrats like the idea of spending, but they ignore the other half of Keynes' strategy, which was to cut back spending when times were good. At the bottom, this is a strategy to make economic gains by consuming without working for the money. It plays well in an election year, but it's lousy economics.
Oregon Budget Crisis -- 2008 meets 2002
Tom Potiowsky, the official Oregon state economist whose "Chinese water torture" method of estimating the declining state revenues six years ago were a staple feature of that crisis, is at it again. Tom is probably a good husband and kind to animals, but his inability to see the big picture meant that the legislature didn't grasp the magnitude of the previous crisis until it was upon them, and that the low-ball estimate of revenues led to a great flushing out of the state's coffers last fall (due to Oregon's kicker law, for those of you from out-of-state). Just as the country was starting to head downhill.
Oregon's economist is required to make public estimates of revenues every couple months or so. As the housing crisis was unfolding, Tom figured late last year that the effect on Oregon would be essentially nothing, despite the large role that forest products plays in the state economy. Now he's estimating that the state will take in $183 million (1.2%)less than expected between now and the end of the biennium on June 30, 2009.
State tax revenues in Oregon are overwhelmingly dependent on income taxes, which in turn are quite volatile. Property taxes are quite stable, sales taxes fairly stable, but income taxes depend on growth in a more leveraged fashion. The current estimate seems in line with the national consensus drop in estimates of GDP. Since income tax receipts are going to be much more volatile than that, this projection is probably still optimistic.
Here's my prediction. In six months, the estimate will be for a 3% fall in the 2007-2009 biennium. There will be some modest belt-tightening but tax receipts had a good head of steam at the outset and the shortfall will be manageable in this biennium.
I don't know when the estimate for 2009-2011 will be first released, but I'm going to guess it will be 5% below what the legislature had pencilled in at the end of the last session. The state's reserves, having been rebuilt modestly since the last recession, will have been wiped out by the shortfall in 2007-2009, and the legislature will again have the job of making serious cuts in services.
Of course, I'm the same guy who said the Republicans would have a contested convention in Minneapolis. I haven't given up hope, but it's a lot less likely than it was two weeks ago. So maybe I'm wrong again.
Oregon's economist is required to make public estimates of revenues every couple months or so. As the housing crisis was unfolding, Tom figured late last year that the effect on Oregon would be essentially nothing, despite the large role that forest products plays in the state economy. Now he's estimating that the state will take in $183 million (1.2%)less than expected between now and the end of the biennium on June 30, 2009.
State tax revenues in Oregon are overwhelmingly dependent on income taxes, which in turn are quite volatile. Property taxes are quite stable, sales taxes fairly stable, but income taxes depend on growth in a more leveraged fashion. The current estimate seems in line with the national consensus drop in estimates of GDP. Since income tax receipts are going to be much more volatile than that, this projection is probably still optimistic.
Here's my prediction. In six months, the estimate will be for a 3% fall in the 2007-2009 biennium. There will be some modest belt-tightening but tax receipts had a good head of steam at the outset and the shortfall will be manageable in this biennium.
I don't know when the estimate for 2009-2011 will be first released, but I'm going to guess it will be 5% below what the legislature had pencilled in at the end of the last session. The state's reserves, having been rebuilt modestly since the last recession, will have been wiped out by the shortfall in 2007-2009, and the legislature will again have the job of making serious cuts in services.
Of course, I'm the same guy who said the Republicans would have a contested convention in Minneapolis. I haven't given up hope, but it's a lot less likely than it was two weeks ago. So maybe I'm wrong again.
McCain's Premature Celebration
The news of the death of the Republican nominating process, which has dwindled from four serious candidates plus Ron Paul to two serious candidates plus Ron Paul, may have been premature. After being anointed the nominee-apparent with the withdrawal of Mitt Romney, John McCain now needs to note that he subsequently lost two primaries to Mike Huckabee. This can't be good.
McCain has not been reaching 50% in primaries; in fact, apart from 48% in his home state of Arizona, the 42% in California seems to be about his high point, though I haven't seen a chart of all of them. This is not exactly a dominating performance.
In the end, McCain needs to get more than half the votes in primaries with only one other candidate, and he hasn't been doing that. Until now, voting for Romney meant voting for Romney. Now voting for Romney may mean casting your ballot for Huckabee and keeping the thing open. There's no way Huckabee is going to get the nomination, but if he can get enough to stall McCain, remember that Romney did not withdraw. He "suspended" his campaign.
At this point, the best hope for a convention battle seems to be on the Democratic side, however. Obama and Clinton are coming so close to splitting the elected delegates that the super delegates may have the final say. That would be fun to watch.
I notice Chelsea Clinton popping up from time to time. In many parts of the world, the principal progeny of the leaders would be primed for eventual succession to the mantle of leadership. That's how it would be done in India or Pakistan. Or Massachusetts.
McCain has not been reaching 50% in primaries; in fact, apart from 48% in his home state of Arizona, the 42% in California seems to be about his high point, though I haven't seen a chart of all of them. This is not exactly a dominating performance.
In the end, McCain needs to get more than half the votes in primaries with only one other candidate, and he hasn't been doing that. Until now, voting for Romney meant voting for Romney. Now voting for Romney may mean casting your ballot for Huckabee and keeping the thing open. There's no way Huckabee is going to get the nomination, but if he can get enough to stall McCain, remember that Romney did not withdraw. He "suspended" his campaign.
At this point, the best hope for a convention battle seems to be on the Democratic side, however. Obama and Clinton are coming so close to splitting the elected delegates that the super delegates may have the final say. That would be fun to watch.
I notice Chelsea Clinton popping up from time to time. In many parts of the world, the principal progeny of the leaders would be primed for eventual succession to the mantle of leadership. That's how it would be done in India or Pakistan. Or Massachusetts.
Subscribe to:
Posts (Atom)