Thursday, July 21, 2011

Marron’s Last Word on the Debt Limit

The very best take on the debt ceiling debate came in the July 18 issue of Christian Science Monitor in a contribution written by Donald Marron, Director of the Urban-Brookings Tax Policy Center. The story is here. Marron points at the obvious—and no one even mentions it. It is that Congress passes all the laws (including those that require expenditures), appropriates all the money, and has the last word on what revenues will be collected. As Marron puts it, summing up the matter:

When Congress decides how much to spend and how much to tax, it is also deciding how much to borrow.
By seeing the debt limit as a separate something—separate from all of the actions that make borrowing necessary by the Executive, an Executive who has sworn faithfully to execute the laws passed by Congress—Congress can pretend that its left hand doesn’t know what its right hand has already done. Thus it can vote for everything it likes—and look good in the eyes of its constituency—and then vote against raising the debt limit—and look good in the eyes of other elements of its constituency.

Thanks for that reminder Donald!

Wednesday, July 20, 2011

Federal Debt and Tax Receipts

I published this chart the first time last February in the earlier version of LaMarotte. I thought it should be shown again on this platform in the context of the current debate about the debt ceiling and whether tax increases should or should not be a part of the discussion surrounding debt levels.


The chief point here is the relatively flat performance of Federal tax receipts since 1944. That flat performance suggests that taxes are not the problem—but the contrast between spending and taxes might be. The blue line, showing debt, tells ... the rest of the story

In addition to the trends, I’ve added some indicators to show when tax receipts hit low points since the Eisenhower years. These came in 1959 under Eisenhower, in 2004 under GW Bush, and under Obama at present.

What this graph shows through the harsh lens of national statistics is the weakening character of our political establishment. World War II produced a very sharp upward climb in tax receipts intended to fund that conflict. In 1934 (not shown) tax revenues were 4.8 percent of GDP. By 1944 they had reached 20.9 percent, never topped since. This 16 point increase in revenues managed to bring the debt down after the war was over. Pause for a deep breath. But then, beginning in 1981, the national debt began a slow but relentless upward climb. It went from 32.5 percent that year to 93.2 percent of GDP by 2010. This 61 point ascent of debt was not, repeat NOT matched by any upward motion of tax receipts. (The source of this graphic is the Office of Management and Budget (here), Tables 2.3 and 7.1.)

My conclusion in February was—and it hasn’t change since—that the nerve of the American political elite has simply failed! It didn’t have the intestinal fortitude to match expenditures by taxation. It asked us to read its lips rather than to feel its guts and biceps. That same failure of nerve—or insight, or responsibility, or will—is manifest now in attempting to solve the debt problem entirely by program cuts without any additional revenues.

Saturday, July 16, 2011

Anarchy Lite

I view the controversy over the debt ceiling as a fake debate. What is now going down is simply a naked clash of power in which the need for a vote to raise the debt ceiling presents a convenient object of focus. I agree with today’s New York Times editorial position, namely that if U.S. debt were dangerously high, interest rates would signal that danger. U.S. debt instruments would not be attracting money unless they offered very high interest rates. But we have no problem selling them. The assets of the United States are there—and real. And interest rates—not only federal but all—are actually ridiculously low. I think we’re earning one percent or less on our personal cash holdings. The banks don’t want to pay for money because they cannot lend it. Nobody wants to act when the ruling element seems to have gone erratic.

The signals—meaning the words I hear repeated and words I never hear—are also wrong. All expenditures on “programs,” especially if these are “entitlements,” are viewed as evil by the Republican forces that control the House. All taxes are evil. Defense expenditures may be “on the table,” but they are never labeled outrageously, monumentally, or obscenely high. I do not hear Republicans screaming about evil “wars of choice”—such as we’re engaged in. I don’t hear loud calls for privatizing defense—although Republicans show plenty of passion in defending the right to bear arms.

The silly idea that now holds a significantly large enough element of the Republican party in its thrall to cause absolute stalemate might be described as Anarchy Lite. Behind it is a very fuzzy notion that society is effectively self-governing without any institutional government at all—except for pieces that the Republicans happen to favor. The military belongs in that domain, and evidently very little else—except perhaps those elements of the state department able to project power overseas to make foreign markets favor U.S. interests beyond our borders. Negative pressure by defunding is laid on all regulatory elements—regulation itself being viewed as evil, but a lesser evil than taxes. The worst category of expenditures is Social Security and Medicare—this despite the fact that we pay earmarked taxes to fund those programs. And the absolute evil is Medicaid, which goes to the poor.

This wooly not-quite-thought has absolutely no support in historical observation, theory, law, tradition, or custom. It is incoherent. It has never ever held sway anywhere—pre-fossil fuels or after. It can only be held by people who have not thought things through and who lack experience of just how bad things can really get unless you do your homework. But there are now millions of people who honestly think that their temporary wealth is a consequence of individual achievement without broad social support—and that those who don’t enjoy their advantages don’t do so because of personal laziness, immorality, and self-indulgence—and therefore can be jettisoned without much consequence beyond raising a few walls around gated communities.

Okay. Perhaps I’m overstating. But what I’m actually doing here is boiling that idea down so that only its nasty essence is left at the bottom of the pan.

It occurs to me that 63 years have passed since, with U.S. leadership (Eleanor Roosevelt having been the chairwoman of the Commission on Human Rights that first drafted it), the Universal Declaration of Human Rights was passed and adopted by the 48 countries with 8 abstentions (the Soviet block). That document represents an articulation of principles broadly held across the globe and only criticized (for not going far enough) by Islamic countries that want to see more emphasis on religion. These principles are never mentioned in the current debate—as “entitlements” are put on the table and the altogether insufficient health care law that managed to pass is damned and double-damned. If we take a generation to be 30 years, two full generations have reached maturity after World War II with no direct memory of it. Indeed, I sincerely doubt that today’s Congress would actually approve that declaration if it had a chance to vote on it again.

The current debate, I would submit, is not a clash between liberals and conservatives—but between two wings of a political establishment that has entirely lost its sense of reality. The Republicans have turned into anarchists and the Democrats have long since lost their only redeeming role—defending the powerless against organized wealth; they’ve become mechanical progressivists feeding at the same trough as the GOP—the corporate campaign contributions table. Campaign contributions are always on the table. It might surprise some readers, but I am a conservative. Meaning? Meaning that I want order and justice for all, not just for wealth—and I don’t worship dead things, like hidden hands. I also lack all interest in that famed vox populi—unless it cries in anguish. The true conservative feels responsible—for other people—and willing to do the necessary things to ensure a functioning and just community.

Tuesday, July 12, 2011

Chains and Baskets

A pound of whole-wheat bread today will run around $1.91; it cost $1.79 a year ago; and in 2001 the same loaf (all numbers are for May and all from the Bureau of Labor Statistics) ran $1.47. The first of those numbers was worth $0.14 in 1929—and would presumably also get you a loaf of bread. Welcome to inflation.

My subject today is how easy it is to track actual prices if you make the effort to collect them regularly, as the Consumer Price Index people do—and how complicated it gets to sum up all these numbers into a single CPI number by means of which we compare our current purchasing power to that of distant years—the marvel that in 1929 fourteen pennies bought us a loaf of bread, but in 2011 it too nearly 14 times more.

The BLS’s metaphor for this is to talk of a market basket of a curious kind. Everything goes into it, not just food and clothing but also such things as housing, medical care, transportation, education, communications, recreation, and everything else that we spend our money on. How exactly does the BLS determine what that shopping basket should contain?

It turns out that the market basket is defined by sampling. It involves 7,000 families who report every quarter on their spending habits. In addition, another 7,000 families maintain detailed diaries recording everything that they spent money on for a two-week period. All told, the shape and meaning of the market basket emerges every two years from 28,000 weekly diaries and 60,000 survey interviews. The diaries kept by these families provide the most important element of information of all, the relative weight that individual products or group of products should have in the determination of a single monthly CPI number. The families, of course, will report on food purchases, and in detail—as well as on their house payments or rents. Suppose food prices went up 5 percent but housing costs by only 1 percent. Which of these expenditures should be viewed as more important. The rules say that the more you spend, the more important that thing is. Therefore food will be less important than housing. Here, for instance, are the weights assigned to eight major categories in two different periods.

These weights come from those diaries. The 2005 values were applied in 2008 and subsequent years. The 2007-2008 values were applied in 2010 and subsequently. Here we note that some categories “lost” and others “gained” weight. Food lost some of its weight, therefore increases in food prices were reflected less and increases in recreational expenditures (the biggest upward change in weight) reflected more of their changes in the CPIs that used this kind of weighting. In other words, that loaf of bread at $1.91 reflected its 6.7 percent increase in price only partially. Only 14.91 percent of it (thus .999) actually managed to become part of the CPI.

Now, mind you, these are weights for aggregates. Transportation, for example, includes new vehicles, airline fares, gasoline, and auto insurance. Transportation dropped in “weight” in these two periods. Why? One would have to see the details. Did people buy fewer cars? Travel less by air? Did that more than match increases in gasoline prices? The devil is in the details. The basket contains more than 200 items—tangible like food and intangible like insurance payments. Each of these items has its own weight, and it is the aggregation of them that produces the category weights. Further, these are the weights used for Urban Wage Earners, and other categories are also collected separately and the later merged. Therefore things get complicated.

The actual job of obtaining the prices associated with the items in the basket is accomplished by in actual pricing-surveys conducted by the BLS itself.

Yesterday I mentioned a special deflationary index, the chained-dollar index used by the Bureau of Economic Analysis to express the value of Gross Domestic Product in constant dollars. It differs from the CPI in using the average of two successive periods (quarters, in this case), combining their weights and price increases, to give results for the current period. Of these two, lets call them a and b for the index to be used in Quarter A, b will be combined with c and averaged to produce the next chained index in Quarter B.

Chained, ah, baskets seem to be a little more representative of real change than just baskets with their weights changed every now and then, say at two-year intervals, rather than quarterly, with two quarters’ results averaged or smoothed out.

Seven thousand people keeping diaries in the midst of life’s hurly-burly. Then mountainous computer work and 60,000 interviews just to define the basket. Finally, after the actual price survey, comes the precious number or its chained cousin. But by the time the number hits the news, it has the sound of Gospel.

Monday, July 11, 2011

The Economy as a Bio-Phenomenon

Karl Smith on Modeled Behavior here comments on the long term growth trend of the economy and presents a graphic showing GDP since 1929. His comments, which note that GDP appears to ignore human fiddling, arose in reaction to some comments by columnist (and economist) Paul Krugman (link)—who emphasizes that long term trends are very hard to influence but short term interventions do have effects.

I thought I’d play with the same numbers. Smith’s graphic is in logarithmic form and delimits the maximum and minimum boundaries. His chart also shows the recessions beginning with the one that kicked in in January 1920—but without GDP data. These differences cause both the Depression and World War II to be more prominently visible than they are on mine—but he uses the same data; those Smith shows came from here; I used this table.  Here is my graphic:


To match Smith’s presentation, my graphic, in ordinary scale, features an exponential curve fit to the data, which is identical to a straight line on a log scale. On Smith’s graph, GDP does indeed form an almost straight line. The benefit of my approach is that divergences from trend are much easier to see.

In a word, GDP data closely match exponential growth—when rendered inflation-free by using BEA’s method of calculating constant dollars, the chained-dollar approach. In nature we see exponential growth in the biological sphere; it’s also called geometrical growth. Thus we might call economies bio-phenomena.

Over too many decades of working with data by now, I’ve discovered a truth. In collective matters, demography is fate. Time and time again I discovered that what I thought were new developments, divergences, or novelties in society or economics, these could all, with some work, be reduced to underlying changes in demography. The interventions by humanity’s organized bodies (read government) are almost always too feeble really to interfere with anything much. The interventions have to be major, as in great wars or falling prey to the temptations of huge bubbles. I remember laughing when, in the years leading up to the dot com bust people seriously proposed that fundamental economic laws were now being transcended…

Worth nothing in this version of the graphic (although also visible in Smith’s, but more difficult to see) is that the GDP traced its path above the exponential curve except for the Great Depression and the evidently harsh recession of 1981-1982—until, in the wake of the 1990-1991 recession, it has been consistently below that curve since and—beginning in 1999—diverging from it in a marked way.

The tail end of this graphic, its last decade or so, is food for thought, isn’t it? Is something unnatural happening out there? Our distance from the curve is growing, the finger is pointing in another direction. Has our economy detached itself from the biosphere somehow? And faltering because the sap no longer flows?

Sunday, July 10, 2011

“Shadow” Unemployment

In yesterday’s post I summarized how the Bureau of Labor Statistics defines unemployment. To repeat that definition, someone is considered unemployed—and, importantly, therefore also counted as a member of the civilian labor force—if he or she is out of a job, seeking work, and available to work. Here the meaning of “seeking work” is important. The individuals has to have made an effort to get a job within the last four weeks. Note that this definition does not include “is receiving unemployment benefits now”; the individual may or may not be receiving benefits.

The definition of the labor force is Labor Force = those working plus those officially unemployed.

Very well. The BLS also tallies other categories of people the bureau defines as “Not in the Labor Force, Want a Job Now.” That’s a curious definition, isn’t it? What does it mean? It is the count of all those people who (1) are not working, (2) want to work, (3) are available for work, but (4) have not sought employment in the last four weeks. Using annual averages and seasonally unadjusted raw counts, in 2010 the officially unemployed were 14.825 million and the Want-to-Work but Not-in-Labor-Force were 6.059 million. That’s a lot of people. In 2011, using a 6-month rather than a 12-month average, the same numbers were 14.101 and 6.621 million. Put another way, instead 14 million people seeking jobs this years (so far), actually nearly 21 million people want to work. In 2011, thus far, the official unemployment rate is 9.2 percent. But if we add the shadow unemployed to the labor force as well, and then calculate the shadow unemployment rate, it stands at 13.5 percent.

Those 6.6 million Want-to-Workers break down into three categories. (1) Those who are not discouraged, (2) those who are discouraged—and it is because of discouragement that they did not seek a job in the last four weeks—and finally (3) those whom BLS labels “marginally attached to the labor force.” BLS defines such people as those who did not seek employment because of interfering tasks or conditions: school or family responsibilities, ill health, or transportation problems. The biggest category is the first, those who Want to Work but are not discouraged, 4.068 million, next are the “Marginals,” 1.598 million, and the smallest category is the Discouraged, 955,000. Herewith a graphic presenting all of these categories, including the officially unemployed, for the period 2001 through 2011 (6 months).


Looking at this chart I note that throughout this period the shadow unemployment is present, in good times as well as in bad. Source of the data is this BLS facility and others tables reachable from there. The number of those Officially Unemployed has grown at a rate of 7.6 percent a year, the number of Want-to-Workers in the shadow by 3.7 percent. Within this last broad group, those not discouraged grew 2 percent a year, those discouraged by a whopping 11.5 percent, and those viewed as on the margin at 5.4 percent a year. The discouraged are a visibly larger portion of total in the graphic in the last three years.

Through the 2001-2008 period, the difference between the official and the shadow unemployment rate was right around 3.2 percent. In 2001 the official rate was 4.7 percent, the shadow rate 7.9 percent. Beginning in 2009, the difference rose to 3.8, in 2010 to 3.9, and in 2011 to 4.3 percent. In that last year, the official rate was 9.2 and the shadow rate 13.5 percent. The shadow rate is calculated by defining the civilian labor force as made up of all those employed, all those officially unemployed, and all those who want to work but are excluded from the official definition of the unemployed.

As a general rule of thumb, therefore, we can mentally adjust the official rate by adding about 3 percentage points to it. And in dreary times like the current, it’s best to add 4 points to the official rate to stay in sympathy with those in the total population who want to participate in the so-called American dream—but cannot.

Saturday, July 9, 2011

The Measurement of Unemployment

The unemployment figures published by the Bureau of Labor Statistics are often under attack for understating real unemployment. Why? People know that the BLS uses Unemployment Insurance (UI) data to determine who is unemployed. Thus people who have filed for UI or are receiving unemployment insurance payments are the unemployed. But what about people who never file or whose insurance has run out? Well the answer is that the BLS does use UI data—but it is not the only source of its information. The current figure, putting the unemployment rate at 9.2 percent in June 2011 comes for the hard counts (the UI databases maintained in every state) and from the soft counts derived from the Current Population Survey (CPS).

The CPS is conducted monthly and is based on a sample of around 60,000 households. These represent, using BLS’ own numbers, about 110,000 individuals—which contrasts favorably with the usual opinion poll sample of around 2,000 individuals. Like poll samples the 60,000 households are also selected very carefully to be representative of the nation as a whole. Each month a quarter of the sample is changed to keep it varied and representative. Thus, we might say, the CPS is a “super poll,” much larger than the usual, and therefore, from a statistical viewpoint, a pretty good indicator. Surveying every household, monthly—as these are surveyed one every 10 years in the census years ending in zero—would cost too much.

Questionnaires are built carefully to determine if the individuals interviewed meet the technical definition of “unemployed”—but without ever asking the person if he or she is unemployed. This is done so that arbitrary definitions of unemployment, whether in the minds of the person questioned or the interviewer, distort results. People interviewed are then, later, classified by status using their answer to questions.

The technical definition of someone unemployed, put briefly, is a person who is jobless, is looking for work, and is available to work. The interviews are also structured in such a way that individuals who are jobless and available for work but have stopped looking for work can also be identified and counted. These are the shadow-unemployed, those who’ve given up looking. The numbers we sometimes see for this cohort also come from the CPS and also have an objective basis based on a structured sample.

The CPS data, being a sample, can, however, be extrapolated to the population as a whole—using the same methods pollsters use to tell us what we, Americans, thing based on talking to 2,000 people. The 9.2 percent number from the BLS, therefore is a pretty good number. It approximates the actual number of people who are looking for work and available. That number, added to those countably employed, also produces the estimate of the civilian labor force.

The CPS actually produces six different categories on unemployed persons, labeled U-1 through U-6. Here they are:
  • U-1: Persons unemployed 15 weeks or longer, as a percent of the civilian labor force
  • U-2: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force
  • U-3: Total unemployed persons, as a percent of the civilian labor force (the official unemployment rate)
  • U-4: Total unemployed persons plus discouraged workers, as a percent of the civilian labor force plus discouraged workers
  • U-5: Total unemployed persons, plus discouraged workers, plus all other “marginally attached” workers, as a percent of the civilian labor force plus all “marginally attached” workers
  • U-6: Total unemployed persons, plus all “marginally attached” workers, plus all persons employed part time for economic reasons, as a percent of the civilian labor force plus all “marginally attached” workers.
Data I found for May 2008 at the same place where these definitions appear (link) show the following unemployment rates:

This shows that the maximum unemployed rate may be nearly double the official rate. These data are regularly published but not publicized. The government is in conflict with itself. It wants to project optimism but does not wish to publicize bad news in too loud a voice. Soon I will show what these numbers look like over time.

Jobs by Sector, April-May 2011

Herewith the details of the employment change May to June 2011 by major sectors of the economy:



The patterns here roughly mirror those of last month. Changes in most of the sectors are minimal, the one exception being Leisure and Hospitality. That sector reflects, to some extent, anyway, travel to the United States by tourists from other countries. It is interesting to note that Construction shows a loss in employment, signaling that housing has not resumed its growth. The other is the loss of employment in the Finance Sector. I recall reading, just recently, that Wall Street had started laying off employees. The big loss in jobs is, once more, in Government, 39,000 jobs. Worth noting here is that last month’s report showed a loss in this sector of 29,000—but that the June numbers revised last month’s report so that the April to May change turns out actually have been a loss of 48,000 government jobs.

The Government sector losses can be further allocated. Federal losses accounted for 35.9 percent, state losses for 17.9, local education for 32.3 percent, and non-education at the local level for the rest.

The old-fashioned notion is that government is the employer of last resort. Not so these days. The data were obtained from this facility offered by the Bureau of Labor Statistics.

Friday, July 8, 2011

Does the Constitution Forbid Default?

A little blue copy of the Constitution is always on my desk, courtesy of the American Civil Liberties Union. Therefore, getting a hat tip from the Huffington Post here, I looked up the 14th Amendment of the Constitution. It says, Section 4:

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
Some hold that this amendment in effect makes debt ceilings unconstitutional. Here is a good example of the deeper problems that underlie the concept of “a government of laws, and not of men.”† Those rather loose words of the amendment were written by men. What exactly does “shall not be questioned” mean? And what is the meaning of that qualifier, “authorized by law”? In turn it will take men to decide whether this amendment applies to our current situation.

In any case, an interesting wrinkle. It appears to provide the President with plenty to lean on if Congress does not extend the debt limit.
--------------------
†Words by John Adams in Novanglus; or, A History of the Dispute with America, From Its Origin, in 1754, to the Present Time. To be sure, Adams was attributing the concept to Aristotle, Livy, and James Harrington (a seventeenth century political theorist).

Employment: Update June 2011

We are now a year-and-a-half into the recovery from the 2008-2009 recession. In that recession we lost 8.66 million jobs. In the 2010-2011 period, we’ve regained 1.7 million jobs, 19.6 percent, thus less than a fifth. At the end of May we had recovered 19.9 percent of the jobs. Revisions in May estimates caused actual gains to be revised downward. The situation is summed up in the following graphic:

Now for the by now familiar chart of month-to-month changes. Here it is:


According to the Bureau of Labor Statistics press release, we gained 18,000 jobs in June. What that number hides is the following. Last month BLS reported a gain of 54,000 for May, but as is clearly visible from the graphic, this month BLS has revised that number downward to a gain of only 10,000 jobs. The net result of this change is that we actually lost 26,000 jobs since the last report, thus the 44,000 jobs that disappeared in the revision less the 18,000 jobs gained.

Now in all fairness to the BLS, there are always changes of this sort, month to month, sometimes increases, sometimes decreases. If the changes have an energetic thrust—thus if we’re losing jobs hand over fist as we did in 2008-2009, or gaining jobs rapidly as in March, April and May of 2010, the adjustments, as preliminary data are refined, don’t produce reversals. But right now our economy is barely moving. We should be gaining upward of 200,000 to 300,000 jobs a month if we were “back to normal.” We’re not. Whether this signals some basic change in our economic arrangements—or whether it’s caused by a wait-and-see attitude on the part both of industry and the consumer—remains to be seen. As a minimum, the wait-and-see applies. Public confidence was genuinely shaken in the last recession—much more so than is usual in reaction to the recurring slow-downs of an ever-cyclic economy. A basic change would mean the institutionalization of new behavior, both in production and in consumption—a movement in the direction of minimalism. They minimize employment—and we minimize consumption. If that is what we’re really seeing, these results may be good news, not bad.

Thursday, July 7, 2011

Oikonomia

Sometimes it’s useful to recall the roots of our God-words. Underneath the word economy are two Greek words; oikos means house and nemein to manage. The Greek word for steward, or manager, was oikonomos, and the activity engaged in was oikonomia. The Latin script did not have the letter K; Romans used C instead. They took the word over and spelled it oeconomia. Getting to us, the word went through French first, where it lost the leading O, acquired an accent aigu, and had its IA ending transformed into an IE: ├ęconomie. We dropped the accent and transformed the IE into y. But the word still means household management.

But how does a simple phrase, indicating an activity that we engage in every day—taking out the garbage, filling up the car, calling the plumber, making the beds, cooking the meals—an activity fundamental to orderly and comfortable daily life, become a God-word? By expansion. At the level where it still works—or if it doesn’t we make changes promptly—one person is responsible, the steward. When we expand the thing, strange things happen. Economists are by definition not the people who run the economy—but those who write about it. The people said to be responsible for it, like the Federal Executive, have virtually nothing to do with it and only engage in ritual gestures, like priests everywhere do. We’re supposed to think, indeed believe, that they are in intimate contact with the Ineffable, but they are just doing mumbo jumbo. Oikonomia, the god, is worshipped, his difficult-to-read pronouncements are discernible, vaguely, by means of a vast semi-mathematical activity itself obscure to actual view except for glimpses of people, on Nightly Business Report, who frantically jump up and down gesturing with hands filled with little pieces of paper. We call this mystery the Dow. He, the god, he has a hand—but only one—and it is hidden. His will, of course, is omni-omni-omni. We suffer it meekly and curse the priests to whom he will not listen—campaigning all the time to replace them with those with more sacred charisma. Oh, great Oikonomia. Only a few, miserable mystics seem to understand—but they’re despised—that you are only housekeeping, which we engage in so that, all in order, we can do what humans are meant to do.

Tuesday, July 5, 2011

Take Five for Budget Sanity

This post for those who suspect that our representatives are losing their marbles in the latest fight over the U.S. debt ceiling. In that context I got to wondering: Just how big is government as measured against the Gross Domestic Product? The answer turns out to be that it was 20.5 percent in 2010, thus in round numbers, a fifth of all economic activity. But how much has it grown? It must have grown fantastically when you listen to our representatives. Must it not? Well, folks, in the last sixty-two years government, as a percent of GDP, has grown a whole, monstrous four-tenth of one percent. In 1951, government was 20.1 percent of GDP. Now lets look at that—and then some detail beneath it.


What this chart shows, courtesy of Table 1.1.5. of the Bureau of Economic Analysis, the keeper of these number, that the small increase in total government expenditures as percent of GDP came from state and local government. It went from 6.8 percent of GDP in 1951 to 12.2 percent in 2010, an increase of 5.4 percent in this period. At the same time, federal government declined from 13.3 to 8.3 percent of GDP, a loss of share of 5 percent. The difference between these sectors, that 0.4 percent, is the only increase. Just to show it, I’ve also charted a sub-component of the federal, the national defense component. It grew within the federal budget by 1 percent in this period. The overall decline in federal expenditures, therefore, has been due to shrinking expenditures on domestic programs.

I remember the 1950s pretty well. What I don’t remember is the hysteria surrounding budgets then. I conclude that the current madness has nothing to do with job creation, efficiency, or the government growing oppressively huge. Based on these numbers, its basically the same size it was in 1951. Money has shifted to the state and local level, away from the federal, except defense.

What is this clash all about? It is a curious upheaval by a portion of the population against anything that represents collective effort. It takes the form of refusing to pay taxes. This disease first attacked the national government. Now it has spread to attack the state and local—so that we are roused from sleep by headlines telling us of bankrupt Minnesotas.

The people are aroused—but they are also a little confused. The fetid airs of failing capitalism are finally reaching the people—and they mistakenly believe that the evil odors they smell arise from those who’re trying to keep the roads paved, children in school, sewage treated, and food and drugs inspected. It’s not like that, Mr. and Mrs. America. Look at the chart. Lots of things are wrong, but it’s not government going for broke. It’s only going—broke, that is—because we refuse to pay the bills while expecting the services to keep on coming. Think again. Think again.

Friday, July 1, 2011

Before Twitter, Flicker

Children are said to have short attention spans, but I’ve seen quite small children intensely concentrating on a single thing for extended periods of times. They do so if what they are doing actually holds their attention. I’ve seen them, for example, intensely observing a big bug lying on its back and moving its feet. I’ve seen such things hold their attention for an hour—and then lead to all kinds of related, you might almost call them scientific, activities. I’ve watched them carefully taking things apart with tweezers or painting intricate designs on an egg. Brigitte was a Montessori teacher in the Long Ago. I’m sure that she will back me when I say that in the ideal education of the quite young child, the right materials will produce intense and perfectly voluntary concentration.

Just yesterday I sat at a beach and watched sparrows and seagulls on the sand. They behaved just like children do. Stimuli attracted their attention; they responded at once; but they also showed strong concentration when the right circumstances held them to the task.

The notion of short attention span no doubt arose because children don’t behave artificially, meaning the way adults wish them to behave. And this has produced—and I making a leap here—the endless flicker on television. Some pop-psych great must have pronounced that to hold people’s interest, and especially children’s, you must constantly move things to rivet their attention.

Last Wednesday I watched the PBS Newshour. Toward the tail of it came a program by Miles O’Brian titled “How Making Stuff Helps Make Science More Appealing to Kids.” Up to that point the programming had been normal, but inside this feature segment—and perhaps because it was intended in part for kids—a new editorial mode of presentation suddenly introduced much more rapid cuts between the images. They started changing rapidly, half-a-second or more frequently, presumably to signal “fun” to the viewer. And Science is fun, don’t you know. Why, if we don’t flicker, they might (horrors) click off and go read some literature.

Advertising has gone the same route—flickering to the viewer by way of arresting the rational functions and holding more easily reached emotions. Amusingly enough, if the ads are intended for the elderly, the flicker stops. And the most pleasing ads want to sell me anti-depression drugs. These almost crawl. Only the side-effects, which invariable at some point promise me death in extreme cases, are murmured rapidly, softly, and almost beneath apprehension while the depressed person looks out over lovely, unmoving, flickerless landscapes and almost, but not quite, smiles. The smiles will only come after the purchase.

Before Twitter we already had Flicker. And we have it because its easier to sell to animals than people. I’ve watched many a bird yesterday rabidly rushing at a bit of rubber or dark bit of sand only to spit it out again. But they, at least, were smart enough to spit.