Capital Commerce
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One Way To Reduce Healthcare Costs From Obesity
Continue reading… 4 CommentsUPDATED 09/01/2009: Well as anyone who has read this has noticed, I misinterpreted this study pretty badly. The study actually found that higher wages had the REVERSE effect than that I suggested: they encourage grazing because their time becomes more valuable, and they don't dedicate time to actual eating.
Obesity has become almost more of an economic issue than a health issue in recent years, as policymakers propose various taxes, labelling regulations and bans on trans fats. Many of these policies are sold as partial solutions to the explosion of healthcare costs. But a new economics paper suggests that simply making people richer is a powerful way to promote healthier eating habits and create a drop in BMI (body-mass index a common measure of obesity.)
A problem boosting obesity among Americans is "grazing." These are the midnight snacks, extra trips to the cookie jar and linners (that's the extra meal between lunch and dinner) that we're all guilty of. How do you reduce grazing? Daniel Hamermesh of the University of Texas found that higher wages meant less grazing. Here's why:
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Has The Stimulus Created Great Places To Find Jobs?
Continue reading… 1 CommentI've been thinking more about Liz's list of the 10 Best Places To Find A Job, which is really about the cities in America where employment has been steadiest. I think an issue to look at in regards to this list more relevant than taxes (which I tackled yesterday) is the stimulus. Obama's stimulus package was supposed to shore up employment. So I thought it would be interesting to see if these cities with steady employment can thank the stimulus for their well-being.
So we need to look at where the money is going. ProPublica has a handy ranking of stimulus recipients by state and county. Across all 50 states (plus DC), the average per capita stimulus spending is $432.22.
I looked at the 10 counties where Liz's 10 cities are located. How much per capital stimulus spending are they getting? Here's what I found:
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Taxes And The Best Places To Find A Job
Continue reading… 2 CommentsI was looking at my colleague Liz Wolgemuth's list of the best places to find a job. This got me thinking—what role have taxes played determining which places have had steady employment? Depending on your ideology, you might have one of two predictions: First, places with high taxes might have better public infrastructure and programs to provide jobs and stymie job losses. Second, you might think that high taxes will impede recovery, while areas with lower taxes get a competitive advantage that attracts jobs.
As we've seen before, when regions of the country have problems (or avoid problems), people often look to ideologically-polarizing policies like tax rates for answers.
But if one examines the tax burdens in the ten states in which Liz's employment-steady cities are located, we see just how little local policies like taxation matter.
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Maybe Cash For Clunkers Helped The Economy After All?
Continue reading… 13 CommentsHas cash-for-clunkers stimulated the economy? I argued that it's too early to tell because all we know is that there have been car sales. But Daniel Gross at Slate makes the case that the evidence is in, and cash-for-clunkers gets a pretty good return as stimulus:
If we use Taylor's estimate, about 250,000 extra cars were purchased (40 percent of 625,000). And if each cost $29,000, those sales generated about $7.3 billion in revenue in the space of a few weeks. That's a pretty good return on $2.6 billion in government spending. Let's be more conservative. Say only 20 percent of the clunker traders were extra demand, and the cars they bought cost $25,000 each. That's still an extra $3.125 billion in sales for dealers.
Gross compares that return to an estimated $1.9 billion return in new retail spending from $3 billion in tax rebates.
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Are Earmarks Always Pork Barrel?
Continue reading… 2 CommentsThe New York Times Economix blog had a modest defense of earmarks last week. Catherine Rampell argued that if you look at this list of the recipients of earmarks, you'll find that the biggest beneficiaries are institutions of higher education—not the "pork" and "waste" we usually associate with earmarks.
But is that jump to conclusion accurate? Are earmarks to benefit higher education really devoid of waste?
I looked at the details of some of the top earmarks to colleges and universities from that list. I was actually surprised by how much of the money went to research honest-to-goodness public goods problems that might be difficult for the private sector to replicate, such as forensic sciences or extreme weather protection.
Then there's stuff like this:
- $800,000 to the University of South Alabama for oyster rehabilitation
- $1 million to North Carolina State University for textile research
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Obama Wants More Bernanke
Continue reading… 1 CommentPresident Obama has announced today that he will nominate Ben Bernanke for a second term. That news surely has disappointed critics of both Bernanke and Alan Greenspan—critics who want a Fed chairman more skeptical of free markets. But, in terms of avoiding a future financial crisis, how much would taking the Fed in a different direction even matter? Read my previous thoughts here.
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Whither Joe The Plumber?
Continue reading… 3 CommentsHere's one good job to have in a recession: conservative economic populist. I don't know how many people remember the strange phenomenon of "Joe the Plumber" from a year ago, but I can never forget him. A post I wrote partially defending Joe Wurzelbacher (but not agreeing with his political opinions) garnered me lots of angry comments on my old blog.
But among conservative activists, Wurzelbacher's 15 minutes are far from up. Dave Weigel, reporting from the RightOnline conference in Pittsburgh, has a tidbit about just how lucrative it still is to be Joe the Plumber.
But the activists found some unity listening to Joe Wurzelbacher, still a sought-after conservative speaker who can charge as much as $10,000 for eight-minute speeches, 11 months after he argued about tax rates with then-Sen. Barack Obama (D-Ill.) during a campaign stop in Ohio. He was welcomed, and mobbed for photos, as the first American to get the kind of full-bore smear campaign that was now directed at “Tea Party” activists and Flip camera-wielding conservatives going to town halls to tell congressmen that they were shredding the Constitution. “Let’s try to make this an American movement,” said Wurzelbacher, “not a Republican movement, not a Democrat movement. You guys are empowering Americans again. Don’t forget that.”
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How Recessions Can Help
Continue reading… 0 CommentsRecessions usually mean more creation of start-up businesses. When people get laid off, they often use their unemployment as an opportunity to start the business they always dreamed about—or, because the job market is so bad, they have no choice but to become entrepreneurs.
But more businesses doesn't necessarily mean better businesses. A Kauffman Foundation study found that more of the businesses being started last year are businesses with lower-income-potential—think more grocery stores rather than more software firms.
But this article in yesterday's New York Times gives the other side of the story. Sometimes recessions not only create entrepreneurs, but strengthen them:
But research on what is known as post-traumatic growth has found that some people become more resilient when faced with adversity, says Shawn Achor, a Harvard researcher. Creativity surges, he says, as they adapt to a new situation. “Their brain is actually learning at a faster pace than when they are not challenged,” Mr. Achor says. “As a result of this, some individuals, the accidental entrepreneurs, they are the ones who in the midst of crisis actually respond with growth.”
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Did Cash For Clunkers Work?
Continue reading… 8 CommentsAt Slate's Big Money, Matthew DeBord declares that cash-for-clunkers (and the broader auto bailout) is victorious:
The U.S. industrial economy is moving again. Workers are going back to work. Consumers are able to buy large and expensive forms of personal transportation, into which they will put gasoline provided by giant international oil companies. Loans are being made. Money is changing hands. In the real economy, not the elite casino located in Bubbleville, aka Lower Manhattan.
...Maybe what’s good for General Motors, and the rest of the U.S. auto industry, is still good for the United States.
But wait a minute—the fact that money is exchanging hands does not immediately lead to the conclusion that these programs are good for the economy.
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The Betting Odds On The Public Option
Continue reading… 3 CommentsThe big political question on everyone's minds around the country, but especially in Washington, is "Is the public option dead?" A cursory read of newspaper headlines might suggest that it is indeed dead, but others say not much has changed and the administration is still pursuing it.
Amidst all this speculation, I thought it would be interesting to see what people predict when they actually put their money on the table. So I checked Intrade's prediction market on the question of "Will a federal government-run health insurance plan be approved in the U.S.?" The result is that Intrade users have put the odds at under 35 percent currently. That's fallen from a peak of 51.5 percent when Intrade opened that particular market in June.
But it hasn't been a straight fall since then. Actually, just a few days ago, the market hit its low, below 20 percent. It has since rebounded back into the 30s, and almost back to the level it was last week. That development gives some ammunition to those who argue that the administration's recent waffling on just how much it will pursue the public option really hasn't changed much. Obama has never been dead-set on a public option.
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Does The Kindle Show The Decline Of American Innovation?
Continue reading… 4 CommentsThat's the interesting suggestion of a new paper from Harvard Business professors Gary Pisano and Willy Shih. They argue that the willingness of American companies to outsource the manufacturing of consumer electronics to other countries—especially those in Asia—has led to an innovation problem:
What those companies have been ceding is the country’s industrial commons—that is, the collective operational capabilities that underpin new product and process development in the U.S. industrial sector. As a result, America has lost not only the ability to develop and manufacture high-tech products like televisions, memory chips, and laptops but also the expertise to produce emerging hot products like the Kindle e-reader, high-end servers, solar panels, and the batteries that will power the next generation of automobiles.
I find the example of the Kindle strange. The Kindle may not be manufactured in the U.S. But it certainly was designed here—by Lab126 in Silicon Valley. That would seem to suggest that outsourcing manufacturing while insourcing the intellectual know-how go hand-in-hand. American companies like Amazon or Lab126 don't need to physically manufacture the Kindle to reap benefits.
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The Anti-Greenspan
Continue reading… 1 CommentI've recently been thinking out loud: If Greenspan couldn't run the Fed without making critical mistakes, who could? Yesterday at Real Clear Markets, Dani Rodrik of Harvard provided at least some answer. He says the next Fed chairman must not be like Greenspan and believe that "what is good for Wall Street is good for Main Street." Here's an example of the kind of belief he thinks the next chairman must reject:
Financial innovation is a great engine of productivity growth and economic well-being. Again, no. Imagine that we had asked five years ago for examples of really useful kinds of financial innovation. We would have heard about a long list of mortgage-related instruments, which supposedly made financing available to home buyers who would not have been able to purchase homes otherwise. We now know where that led us. The truth lies closer to Paul Volcker's view that for most people the automated teller machine (ATM) has brought bigger benefits than any financially-engineered bond.
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The Struggles Of American Manufacturing To Adapt
Continue reading… 3 CommentsAs the Big Three contract and drive many of their suppliers into bankruptcy, businesses in Michigan and elsewhere aren't giving up—they're trying to adapt. I've linked to stories about entrepreneurs doing just that. The Washington Post today has a good story today about how one company has found adaptation to be quite difficult. Read the whole thing, but here's an excerpt from the story about this Michigan company, Dowding Industries, that is shifting from making auto parts for the Big Three to making wind turbines.
But they're finding that nothing takes the wind out of a new idea like the worst recession in decades. Deals with several banks and venture capitalists have not worked out.
"We're grateful to have something to run at all," Skip said. "The wind stuff is pretty dead. We'd prefer to have the wind stuff, but we'll take what we can get."
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Do We Need Obamacare To Cover The Uninsured?
Continue reading… 4 CommentsAmidst the emotions and furor in these town hall meetings on healthcare, might there actually be some worthwhile, substantive discussions about how to reform the system? I haven't found any, but I can extrapolate from this moment in Obama's town-hall meeting in New Hampshire. The Journal reports:
...Mr. Obama tried to emphasize one issue, a prohibition in the legislation on insurance companies denying coverage to Americans with pre-existing medical conditions. He was introduced by Lori Hitchcock, a 52-year-old single mother who has been unable to purchase health insurance since she was diagnosed in 2003 with the Hepatitis C virus, which can give rise to the same disease that took the life of her husband.
"I am the face of the uninsured. I am uninsurable. I have a pre-existing condition," an emotional Ms. Hitchcock said.
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Immigration Reform On The Backburner
Continue reading… 7 CommentsThe big political news today is that the president won't be doing anything with immigration reform until early next year at the earliest.
It's interesting that immigration is the issue that can wait, while the administration has sold infrastructure spending, auto company bailouts, healthcare reform, and many other issues as emergencies where action is needed either immediately or close to immediate, lest the economy tank.
Not to dismiss any of those issues, but immigration seems to be highly underrated as a tool for dealing with economic misery. Many economists believe that immigration is the best anti-poverty program governments have ever devised. And we know that immigrants disproportionately start businesses that create new jobs.
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Why Obama Will Have To Break Promises
Continue reading… 3 CommentsClive Crook writes in the FT today about why, despite campaign promises to the contrary, Obama will have to raise taxes on the middle-class at some point:
So the administration’s options are limited. The fiscal gap is so big that closing it will be literally impossible without either broadening the extremely narrow base of the current income tax, or raising other taxes on the middle class, or both.
Crook goes on to say, however, that Obama probably won't make any big changes before reelection. Expect him to look for "smaller, less conspicuous ways" to get more revenue in the interim. One of those ways might be forcing businesses to switch to FIFO accounting. I wrote a longer post on that issue here.
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Media Bailout Idea Gaining Momentum
Continue reading… 1 CommentI've been thinking a lot recently about the subject of a media bailout. It's something that has been discussed for a little while now, but support for the idea seems to be building all the time. Ezra Klein recently came right out and wrote that newspapers should get public funding. He points to the BBC and NPR as examples that a government that supports the media doesn't necessarily mean a media that supports the government.
Many people wouldn't find too comforting the examples of the BBC and NPR as the paragons of government-supported media. Far from being obvious signs that public media is unbiased, these are two of the most controversial sources out there. Conservatives have long demonized NPR as an echo chamber for latte-sipping liberals. The BBC gets beat up on both sides--Thatcherites complained it campaigned against their PM, and left-wing British politician George Galloway called it the Bush & Blair Corporation. Now anti-EU activists call it the Brussels Broadcasting Corporation.
The point is not to argue about whether or not these accusations of bias are correct. The point is it seems to go against our ideas of free expression to force taxpayers to support viewpoints with which they often strongly disagree. In fact, I think the BBC and NPR are no more biased than countless other mainstream news sources. Bias is inevitable. But that's all the more reason why we should be careful before we give that bias the public stamp of approval.
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Would Universal Healthcare Promote Business Growth?
Continue reading… 5 CommentsWe know that many small-business owners struggle with rising healthcare costs. One way to relieve this burden is to shift the responsibility of health insurance away from employers to another party—such as the government. Jeff Cornwall makes the point, however, that such a move would create new costs for businesses:
...there is no such thing as free healthcare. Socialized healthcare is going to cost money. We will need to raise this money as a country through either increasing taxes or borrowing more money. If we increase taxes that will decrease your income as an entrepreneur. If we run up the federal deficit even further to pay for healthcare, we will at some point very soon stoke the flames of inflation. That will squeeze your operating profits as a small business owner. Entrepreneurs get hit hardest during inflation due to their lack of market power -- their costs go up faster than they can increase prices.
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Obama In Indiana: Pork-Free At Last?
Continue reading… 3 CommentsHere's Obama on his stimulus plan in his speech yesterday in Wakarusa, Indiana:
But before we can rebuild our economy for tomorrow, we have to rescue it today. Now, that's why we passed a Recovery Act less than one month after I took office –- and we did so without any of the earmarks or pork-barrel spending that's so common in Washington, D.C.
Then, a little later in his speech, he unveils his plan for $2.4 billion in grants to develop electric cars. Where will that money go? Surely not to the pork recipients he ignored with the stimulus, right?
Indiana is the second largest recipient of grant funding, and it's a perfect example of what this will mean. You've got Purdue University, Notre Dame, Indiana University, and Ivy Tech, and they're all going to be receiving grant funding to develop degree and training programs for electric vehicles. That's number one. (Applause.) We've got EnerDel, a small business in Indianapolis that will develop batteries for hybrid and electric vehicles. You've got Allison Transmission in Indianapolis, Delphi in Kokomo, Remy in Pendleton, and Magna located in Muncie, all who will help develop electric-drive components for commercial and passenger vehicles.
And right here in Elkhart County, Navistar –- which has taken over two Monaco Coach manufacturing facilities -– will receive a $39 million grant to build 400 advanced battery electric trucks -- (applause) -- with a range of a hundred miles, like the trucks here today. (Applause.)
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Pethokoukis: 'Ron Paul's Dumb Plan'
Continue reading… 51 CommentsSince I've given Ron Paul a platform to speak the merits of auditing the Fed, I think it's only fair for me to link to former Cap Com blogger Jimmy P's article on why he thinks Paul's bill could damage the economy. Here's one of the key points:
Even if the result of the Fed bill is only more aggressive congressional questioning and criticism, financial markets might well fear the bank would start taking congressional wishes into account when making policy.
“If the markets and foreign investors perceive it that way,” says economist Michael Feroli of JPMorgan, “it could immediately push up borrowing costs even if the audits are only a symbolic increasing of congressional oversight of monetary policy.”
I'm going to stay agnostic on the issue of whether or not Paul's bill is a good idea. But here's my question to opponents of the bill like Jimmy P: Almost everyone recognizes that the Fed was a major contributor to the current financial crisis, because, as Jim writes, it kept interest rates down for too long. So without taking an anti-Fed approach a la Ron Paul, how could similar Fed mistakes be prevented in the future? If Greenspan could make such big mistakes, is there anyone who could possibly be "better"?
