Category Archives: Economics

Finland – Running Out Of Other People’s Money

Posted on August 29, 2013 | Leave a comment

Finland

Finland has run out of other people’s money.

Long held by the European-Socialists as a darling of how things work, Finland is finally succumbing to reality:

(Reuters) – Finland’s government announced a long-term plan to start scaling back its welfare system, one of the most generous in the world, aiming to preserve its triple-A credit rating in the face of a slower economy and aging population.

The inevitability of the reforms is such that surprise can only be allowed for those who are surprised.  With taxes rates that are nearly the highest in the world and benefits that are seen as some of the most generous, it’s no wonder that people feel little reason to work:

Finnish taxes are already among the highest in the world at 44.1 percent of GDP, meaning changes need to come from cutting benefits or encouraging people to work longer.

OECD data shows Finland’s average job participation rate, or the proportion of active workers to the total labor force, was 75 percent last year, lower than a range of 78 to 80 percent among Sweden, Denmark and Norway.

The government’s plan also includes cutting financial benefits for students to encourage them to look for work earlier.

It is also proposing changing childcare leave policies to encourage mothers to return to work sooner.

Under the existing system, parents of children under 3 can take paid leave beyond the initial, parental leave period of 9 months. The planned change would force parents to split the second leave period, drawing mothers back to work sooner but also encouraging more fathers to take leave.

It’ll be fun to watch Finland specifically and the Nordic states in general as they begin to fail under the weight of their systems.

 

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Posted in Economics, Politics: International, Welfare

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Unintended Consequences

Posted on August 28, 2013 | Leave a comment

UPS

I’m sure this is exactly what Obama had in mind when he urged Americans to support him in passing Obamacare:

United Parcel Service Inc. plans to remove thousands of spouses from its medical plan because they are eligible for coverage elsewhere. The Atlanta-based logistics company points to the Affordable Care Act, or Obamacare, as a big reason for the decision, reports Kaiser Health News.

The decision comes as many analysts are downplaying the Affordable Care Act’s effect on companies such as UPS, noting that the move reflects a long-term trend of shrinking corporate medical benefits, Kaiser Health News reports. But UPS repeatedly cites Obamacare to explain the decision, adding fuel to the debate over whether it erodes traditional employer coverage, Kaiser says.

Rising medical costs, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” UPS said in a memo to employees.

This is exactly what Pelosi meant when she mentioned that we should pass this bill so that we can see what’s in it.

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Posted in Economics, Health Care, Politics: North Carolina

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New York Food Stamp Fraud

Posted on August 27, 2013 | Leave a comment

Food Stamp

Two lessons in one story:

 

Last week, The Post revealed how New Yorkers on welfare are buying food with their benefit cards and shipping it in blue barrels to poor relatives in the Caribbean.

But not everyone is giving the taxpayer-funded fare to starving children abroad. The Post last week found two people hawking barrels of American products for a profit on the streets of Santiago.

“It’s a really easy way to make money, and it doesn’t cost me anything,” a seller named Maria-Teresa said Friday.

…

Maria-Teresa said she uses some of the products but vends the rest out of her Santiago home, providing markdowns of $1 to $2 compared to what her buyers would pay in local shops.

“I don’t know how much of a business it is, but I know a lot of people are doing it,” she said.

…

The black-market maven even takes her customers’ requests for hot-ticket items. Her best-sellers include a 19-ounce box of Frosted Flakes, which goes for $6.50 at Dominican supermarkets. She sells it for $2 less — after her sister buys it on sale for $2.99.

But because the sister uses her Electronic Benefit Transfer card, she actually pays nothing — taxpayers foot the $2.99.

Maria-Teresa also offers a 24-ounce Kellogg’s Corn Flakes box for $2, compared to the $4 Dominican counterpart. The Kellogg’s variety costs $2.99 on sale at Western Beef.

A 23-ounce container of powdered Enfamil baby formula goes for $25 in the United States and $19 in Santiago but Maria-Teresa sells it for $15. “People want the best quality for the price, so they buy the formula made in the US,” she said.

The average monthly wage in Dominican Republic is about 7,000 pesos, or just $167, and that’s why the black market has become so profitable, Maria-Teresa said.

So, lesson #1:

The inefficiencies of the government programs are everywhere.

And the 2nd lesson:

Markets in everything.

But, why even bother buying, packing, shipping and then selling fraudulent goods?

And the food-stamp fraud doesn’t stop there. She said her sister has Bronx grocers ring up bogus $250 transactions with her EBT card.

In exchange, the stores hand her $200 cash and pocket the rest. No goods are exchanged. Instead, Maria-Teresa’s sister sends the money to Santiago — when she’s not spending it on liquor or other nonfood items.

“We do it all the time, and a lot of people do this,” Maria-Teresa said. “It’s a way of laundering money, but it’s easier because it’s free.”

It’s easier, she says, because it’s free.

Indeed.

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Posted in Crime, Economics, Government, Idiots on Parade, Politics: National

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From Poverty To Middle Class

Posted on August 23, 2013 | 10 comments

Middle Class

A conversation on my Facebook feed brought me here today:

In addition to the thousands of local and national programs that aim to help young people avoid these life-altering problems, we should figure out more ways to convince young people that their decisions will greatly influence whether they avoid poverty and enter the middle class. Let politicians, schoolteachers and administrators, community leaders, ministers and parents drill into children the message that in a free society, they enter adulthood with three major responsibilities: at least finish high school, get a full-time job and wait until age 21 to get married and have children.

Our research shows that of American adults who followed these three simple rules, only about 2 percent are in poverty and nearly 75 percent have joined the middle class (defined as earning around $55,000 or more per year).

Three things.  Simple things.  Not hard to do things.

Go to school and finish it.

Get a job.  Any job.

Wait to have children.

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Posted in Economics, Education, Life, Middle Class, Politics: National

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This Is Obama’s Economy

Posted on August 23, 2013 | 18 comments

Barack Obama

The United States is experiencing job growth, to be sure.  But look at the kinds of jobs being created:

(Reuters) – U.S. businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid.

…

Executives at several staffing firms told Reuters that the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.

“Us and other people are hiring part-time because we don’t know what the costs are going to be to hire full-time,” said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, New Jersey. “We are being cautious.”

Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10 percent and 15 percent compared with last year.

Other staffing firms have also noted a shift.

“They have put some of the full-time positions on hold and are hiring part-time employees so they won’t have to pay out the benefits,” said Client Staffing Solutions’ Darin Hovendick. “There is so much uncertainty. It’s really tough to design a budget when you don’t know the final cost involved.”

Watch the word from the Left as they mention “anecdotal”

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Posted in Economics, Economy, Health Care, Politics: National

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Gender Inequality

Posted on August 19, 2013 | 12 comments

Gender Inequality

There has been a ton of talk about the “fact” that women earn less than men in the market place.

Let’s forget that men die more on the job than women.

Let’s forget that men work more hours than women.

Let’s forget that men travel more than women.

Let’s forget all that.

Let’s ask women:

Denied Promotion

When women were asked if they EVER have felt that they have been passed up for promotion because of gender, the answer is “No”.

There is no group o f women that even comes close to even 20% that feel they have been discriminated against based on gender.

Except one:

Denied Promotion.Liberl.Conservative

Yes.

Liberal women feel that they have been denied promotion more than twice the rate that conservative women do.

Why am I not shocked?

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Posted in Economics, Politics: National

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Incentives

Posted on August 12, 2013 | Leave a comment

Money

Life is about the incentive.  For instance:

Philkeram Johnson declared bankruptcy in 2011. VIO.ME’s 70 employees stopped getting paychecks the same year. But they still came to work and continued making glue and tile-cleaning products. For a time, they also received unemployment checks, Mokas says.

“Unemployment benefits finished last September,” he says. “We said, ‘what can we do now? Stay only here and be guards here? We have to eat, we have to do something.’ Because we want to have work.”

Indeed.  Benefits ended some time ago and so now they wonder, “What can we do now?”

Don’t get me wrong, I wish the Greek workers luck.  But I wonder why they didn’t look for this life sooner.

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Posted in Economics, Politics: International

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Laffer’s Curve

Posted on August 8, 2013 | Leave a comment

The Laffer Curve

The Laffer Curve.  It’s the idea that as tax rates rise beyond a certain point, tax revenue declines.  It makes sense at the extremes; a tax of 0% raises zero dollars.  A tax of 100% also raises zero dollars.  No one works for free.

An example of this concept was displayed in Washington DC last month:

Wal-Mart Stores (WMT) no longer plans to build three stores in the nation’s capitol, after the city’s council voted to force large retailers to pay starting wages that are 50% higher than the minimum wage there.

The world’s largest retailer also said it will consider its options related to three other Washington, D.C., stores that are still under construction.

D.C., a wildly successful example of a city that lifts its poor and most fragile citizens out of poverty:

/sarcasm

has once again created a law that really proves who is waging a “war on the poor.”

It isn’t the conservative whole embraces the free market that “hates” the poor, no.  Rather, it’s the intellectual liberal that “hates” the poor.  How else to describe the mentality of a people who vote to force job creators out of the market?

You’ll probably never get rich at Wal-Mart, but a job there is better than not a job anywhere.

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Posted in Economics, Economy, Government, Politics: State, States Behaving Badly

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Watch How They Defend ‘Em

Posted on August 7, 2013 | 6 comments

Fan and Fred

In a move so surprising I had to check THREE times that I wasn’t reading The Onion.  Obama is proposing to kaput Fanny and Freddie:

(Reuters) – President Barack Obama will propose overhauling the U.S. mortgage finance system in a speech on Tuesday, weighing in on a tangled and polarizing problem that was central to the devastating financial crisis in 2007-2009 and that continues to slow the economic recovery, the White House said.

Just another big government program in the waiting, right?  Hardly:

Obama will propose eliminating mortgage finance entities Fannie Mae and Freddie Mac over time, replacing them with a system in which the private market buys home loans from lenders and repackages them as securities for investors, senior administration officials said.

Huh?

Obama is suggesting that we demolish the government agencies and replace them with private market systems?  But I thought that the practice of repackaging mortgages was immoral and the root of all evil?

The mortgage securitization process is deemed essential to the smooth flow of capital to housing markets and the availability of credit.

What has happened?  I thought that it was evil Wall Street that brought down fire and brimstone upon us all?  It was Wall Street bankers that took mortgages, packaged them and the resold them.  Right?

The two enterprises don’t directly make loans, but buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors.

But how much influence do they really have?

Fannie and Freddie currently own or guarantee half of all U.S. mortgages and back nearly 90 percent of new ones.

Blink.  Blink.

Holy shit that’s a lot of loans.

It’s long overdue, to be sure, that Fannie and Freddie are shut down and the government stop its subsidizing of loans to folks who have no hope of paying them back.  For me, this just reinforces the fact that the government policies and agencies were the primary driving force behind the housing collapse.

Now, to see who may or may not be right, watch who approves of this approach and watch who does not approve of it.  The first democrat that defends Fannie and Freddie is the first to be guilty of those policies I have been criticizing this whole time.  And the first republican who opposes the President is the most guilty of simply opposing every idea he has.

 

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Posted in Economics, Politics: National

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More Thinking On IQ

Posted on August 6, 2013 | 4 comments

IQ

I was in conversation with a friend the other day when IQ came up.  And I used my road construction worker /Harvard grad example again.  Which got me to thinking.

Is there anyone alive right now that really believes the mean intelligence of 1,000 road construction workers is anywhere near the mean intelligence of 1,000 Harvard law graduates?

With that being true, we have to accept that given a random mate selection process that filters on intelligence, the children of the Harvard Law grads would have higher levels of intelligence than the children of the construction workers.  EXCEPT the gap would be smaller.  With a similar random mate selection occurring in the second generation, the grandchildren of the Harvard Law grads would be much more equal to the grandchildren of the construction workers.

Which means that it is okay to say that one group of people has elevated levels of intelligence without implying that another group is somehow genetically limited in their ability to attain those same levels.

It very well may be true that immigrants to America are less intelligent than the domestic population.  This shouldn’t be controversial.

Moving away from the immigration debate, consider what happens to the first and then second generation Harvard Law grads vs construction worker if mate selection is NOT randomized.  That is, we filter ourselves via homogamy.

Now the Harvard Law graduates are not marrying random mates, rather, they are marrying people much like themselves.  Almost certainly a college graduate and likely a member of the same social class.  And if the same phenomenon is occurring at the lower range of intelligence, the opposite expected results will take place – perhaps with consequences that are startling.

Poverty tracks with lower cognitive ability.  Likewise, lower cognitive ability predicts more children sooner with more of those children being illegitimate, which further drives poverty and risk.

I’m not sure what it all means, but it’s a rather scary proposition.

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Posted in Economics, Life, Politics: National

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