December 2, 2005

Column of the Day: Walter Williams on “Dead-End Jobs”

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 6:15 pm

Dr. Williams is a Heritage Foundation Scholar, George Mason University Professor of Economics, and occasional substitute host for Rush Limbaugh.

In his November 30 column, he tells us there’s really no such thing as a dead-end job:

Those who demean so-called dead-end jobs probably aren’t talking about my job. They’re mockingly referring to jobs such as clerks at Wal-Mart, hotel workers, and food handlers and counter clerks at McDonald’s. McJobs is the term applied to these positions. The term has even found its way into Merriam-Webster and the encyclopedia Wikipedia. Putting down so-called dead-end jobs is a destructive insult to honest work.

How dead-end is a McDonald’s job? Jim Glassman, an American Enterprise Institute scholar, wrote an article (link added by BizzyBlog) in the Institute’s June 2005 On The Issues bulletin titled “Even Workers with ‘McJobs’ Deserve Respect.” He listed some well-known former McDonald’s workers. Among them: Andy Card, White House chief of staff; Jeff Bezos, founder and CEO of Amazon.com; Jay Leno, “Tonight Show” host; Carl Lewis, Olympic gold medalist; Joe Kernan, former Indiana governor; and Robert Cornog, retired CEO of Snap-On Tools. According to Glassman, some 1,200 McDonald’s restaurant owners began as crew members, and so did 20 of McDonald’s 50 top worldwide managers. These people and millions of others hardly qualify as dead-enders.

The primary beneficiaries of so-called McJobs are people who enter the workforce with modest or absent work skills in areas such as: being able to show up for work on time, operating a machine, counting change, greeting customers with decorum and courtesy, cooperating with fellow workers and accepting orders from supervisors. Very often the people who need these job skills, which some of us might trivialize, are youngsters who grew up in dysfunctional homes and attended rotten schools. It’s a bottom rung on the economic ladder that provides them an opportunity to move up. For many, the financial component of a low-pay, low-skill job is not nearly as important as what they learn on the job that can make them more valuable workers in the future.

….. As a young person, I worked many jobs from shining shoes and picking blueberries to delivering packages and washing dishes. Today’s tragedy for many a poor youngster is that the opportunities I had for learning the world of work and moving up the economic ladder have either been destroyed through legislation or demeaned by today’s do-gooders.

Voting with Our Feet, Part 6: Losing the Very Rich

Filed under: Economy,Taxes & Government — Tom @ 4:03 pm

Here are three examples that show that rich people vote with their feet in response to high taxes.

Item: California, Freshly Recovered from Disaster, Appears on the Verge of Backsliding

Arnold Schwarzenegger’s lurch to the left after the defeat of his initiatives in November is unmistakable. Too bad that he’s doing it just as the state’s budget has moved from the $25 billion deficit that led to Grey Davis’s ouster to perhaps being in balance in the 2006-2007 fiscal year.

The problem is, a lurch to the left usually involves raising taxes. Before The Terminator goes this route, he might consider the following from OpinionJournal.com’s Political Diary (link not available):

California lost nearly 40,000 millionaires during the Gray Davis era when taxes were on the rise and spending spiraled out of control. Those millionaires accounted for almost $5 billion in revenues every year. Raising taxes, says Mr. Laffer (Arthur Laffer, the father of supply-side economics–Ed.), “would accelerate the exodus of the talent pool and tax base out of the state.”

The $5 billion is about 4% of the state’s $118 billion budget.

Item: Teenage Golf Prodigy May Leave State

Michelle Wie may move from Hawaii because of its extraordinarily high income tax:

Now that Michelle Wie has entered the exclusive world of millionaires, she and her advisers will at some point have to decide whether it makes sense for her to live in Hawaii.

Wie’s bonds with Hawaii are strong; her home, school and family are here, and so are her most zealous fans.

But for purely financial reasons, Hawaii is an unattractive place for wealthy people like Wie to live because of its income tax rate, one of the highest in the nation.

With the teenage golfer recently signing endorsement deals with Nike and Sony said to be worth $10 million a year, accountants and tax attorneys in Hawaii say they expect Wie to eventually move to a state like Nevada or Florida that doesn’t tax income. Those states have become havens for golf professionals.

A move to the Mainland would certainly smooth out the logistics of tournament travel, but leaving Hawaii could also save Wie nearly as much money as she could pick up by winning a major tournament. With its 8.25 percent tax on incomes above $40,000, Hawaii would take $825,000 of Wie’s estimated $10 million, plus a big chunk of her tournament winnings.

….. About 2.5 percent of Hawaii taxpayers earn more than $200,000 a year, but they contributed about 20 percent of the $956 million in income tax collected by the state in 2002.

Item: Controversy over European Tax Haven Spills onto the Playing Field

The tiny European country of Monaco is so desirable as a place for professional soccer players to live that the tiny country’s own team may be near becoming a European power in the sport. And their competitors are furious (the article is from the spring and I don’t know how the dispute involved got settled):

Monaco has revived club soccer in France with surprise victories over Real Madrid and Chelsea this season, and annoyed French competitors in the process.

Monaco, which faces Chelsea tomorrow for a place in the final of Europe’s elite Champions League, has “an unfair advantage” over clubs in France because of its tax laws, said Jean-Michel Aulas, 55-year-old president of Olympique Lyonnais. Lyon lost in the quarterfinals. Because non-French people don’t pay income tax there, Monaco spends less than half as much as Lyon to pay a player $1 million net a year.

As Monaco chases a first European title and prize money of 10 million Swiss francs ($7.8 million) plus broadcasting revenue, opponents such as Aulas and Marseille President Christophe Bouchet are threatening the 80-year-old club’s existence. The French league should eject Monaco unless it pays an entrance fee “to even things up,” Aulas said.

….. The soccer team can afford to hire stars such as striker Fernando Morientes, on loan to Monaco from record nine-time European champion Real Madrid, because of tax breaks, say rival presidents. He earned about 3 million euros ($3.6 million) last year at Madrid. Morientes, 28, is the tournament’s top scorer this season with eight goals.

Monaco has to pay $1.5 million for a foreign player to pocket $1 million, French sports daily L’Equipe reported. Svara declined to comment. For the player to get the same in France, where social charges are 20 percent higher and the top marginal tax rate is 48 percent, clubs need to shell out $4 million.

Instead of complaining, the “French competitors” might ask themselves why their government is allowed to take 75% of anyone’s earnings.
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Previous “vote with our feet” posts:
- Part 1: What Thanksgiving Is Partially About
- Part 2: It’s the Taxes, Stupid
- Part 3: Walking Away from Academic Excellence
- Part 4: Leaving Cincinnati (and Other Ohio Cities)
- Part 5: Willisms Looks at State Migration Patterns

John Murtha’s Christmas Present to Jean Schmidt

Filed under: OH-02 US House — Tom @ 1:44 pm

Murtha

UPDATE: Major John at Miserable Donuts (HT Instapundit) skewers Murtha: “Unmitigated crap ….. (and) he knows better.” Major John also usefully recounts a history of the military’s recovery from 1970s neglect through today’s fighting force.

UPDATE 2: Mark Steyn, in his Sunday Chicago Sun-Times column: “I the reaction to Murtha’s remarks by my military readers is anything to go by, he ought to be grateful they’re still bogged down in Iraq and not in the congressional parking lot.”
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Dec. 3: Wizbang Weekend Carnival participant.

Bizzy’s AM Coffee Biz-Econ Links of the Day (120205): 43% of the Country Believes We’re in a Recession!

NOTE: Moved “AM Coffee” post to the top for few hours (pre-lunch coffee?) because of the importance of the topic.
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“Grouches” like BizzyBlog, Larry Kudlow, Neil Cavuto, and Investors Business Daily are not the only ones lamenting the awful coverage of the consistently growing economy.

In an OpinionJournal.com column, Brian Wesbury, chief investment strategist with Claymore Advisors LLC, joins the chorus of the frustrated (requires free registration), and, at the end, reminds us why the economy in reality has done well in the past few years (bolds are mine; links to the page supporting the 36% and 43% “we’re in a recession” figures added by BizzyBlog):

Pouting Pundits of Pessimism
Every bit of good economic news gives them reason for despair

During a quarter century of analyzing and forecasting the economy, I have never seen anything like this. No matter what happens, no matter what data are released, no matter which way markets move, a pall of pessimism hangs over the economy.

It is amazing. Everything is negative. When bond yields rise, it is considered bad for the housing market and the consumer. But if bond yields fall and the yield curve narrows toward inversion, that is bad too, because an inverted yield curve could signal a recession.

If housing data weaken, as they did on Monday when existing home sales fell, well that is a sign of a bursting housing bubble. If housing data strengthen, as they did on Tuesday when new home sales rose, that is negative because the Fed may raise rates further. If foreigners buy our bonds, we are not saving for ourselves. If foreigners do not buy our bonds, interest rates could rise. If wages go up, inflation is coming. If wages go down, the economy is in trouble.

This onslaught of negative thinking is clearly having an impact. During the 2004 presidential campaign, when attacks on the economy were in full force, 36% of Americans thought we were in recession. One year later, even though unemployment has fallen from 5.5% to 5%, and real GDP has expanded by 3.7%, the number who think a recession is underway has climbed to 43% (page down halfway at link for both stats–Ed.).

….. Sharp declines in consumer confidence and rising oil prices were supposed to hurt retail sales; but holiday shopping is strong. Many fear that China is stealing our jobs, but new reports suggest that U.S. manufacturers are so strong that a shortage of skilled production workers has developed. And since the Fed started hiking interest rates 16 months ago, 3.5 million new jobs and $750 billion in additional personal income have been created. Stocks are also up, which according to pundits was unlikely as long as the Fed was hiking rates.

….. One key reason the U.S. economy has outperformed other industrialized nations, and exceeded its long-run average growth rate during the past two years, is the tax cut of 2003. By reducing taxes on investment, the U.S. boosted growth, which in turn created new jobs that replace those that are lost as the old economy dies. Ireland is also a beautiful example of the power of tax cuts to boost growth and lift living standards.

Economic growth is the only true shock absorber for an economy in transition. To minimize the pain of technological globalization and address the anxiety that these forces are creating, free-market policies must be followed. While tremendous pressures are building to increase government involvement in the economy, it is important that the U.S. stay the course that brought it out of recession.

I was skeptical about the ability of the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media) to influence actual economic results until I read and sourced Wesbury’s paragraph about how many people think we’re in a recession.

Other key findings in the American Research Group data (based on “1,100 completed telephone interviews among a random sample of all adults age 18 and older living in telephone households in the continental United States”) show just how much the views of those surveyed differ from reality:

  • After 10 quarters of 3%-plus GDP growth with low inflation and 5% unemployment, “A total of 35% of Americans rate the national economy as excellent, very good, or good and 63% rate it as bad, very bad, or terrible.”
  • In the near-total absence of data that would indicate that there is trouble ahead, “A total of 13% of Americans say that the national economy is getting better, 36% say it is staying the same, and 50% say the national economy is getting worse.”
  • This one’s more judgmental, but with no compelling evidence of economic storms on the one-year horizon, “A total of 17% of Americans say they believe the national economy will be better a year from now, 20% say it will be the same, 61% say it will be worse, and 2% are undecided.”

I really have to wonder how much better the economy would be if such a large plurality didn’t have beliefs that clearly differ from reality–after all, at least some of those clearly under the spell of what Dr. Sanity calls “Command Hallucinations” must be acting on those beliefs.

The “in recession” finding alone is the best evidence I’ve seen yet that the WORMs have had a negative impact on the economy that in a just world they would be held accountable for. Perhaps they are, as New Media continues to flourish, and the WORMs continue to lose readers and viewers. In light of the above, all I can say is “Faster, please.”

And I finally understand (a bit) why some allegedly conservative politicians in Washington who should know better are considering a tax increase (known in some circles as “repealing the Bush tax cuts”). Please, ladies and gentlemen–ignore the polls, vote the reality. Remove the expiration dates on the current tax structure.
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UPDATE: Add the 215,000 net new jobs in October to the good news list, along with “objective” AP reporterette Jennifer Loven’s snarky aside: ” Bush, faced with the lowest approval ratings of his presidency….”

UPDATE 2: Willisms has a lot more on the jobs report and the growing economy.

“Wonderland” Columnist Channels Dr. Sanity in His Advice to Bush

Daniel Henninger doesn’t know this, but in analyzing the president’s relative unpopularity despite objectively impressive success, he’s acknowledging the impact of the “Command Hallucinations” of the WORMs (Worn-Out Reactionary Media, know to most as The Mainstream Media) recognized by Dr. Sanity back in October.

First, Dr. Sanity (originally about the economy, but just as valid as it relates to the War in Iraq):

The American public is hearing voices. And like auditory hallucinations experienced by psychiatric patients, these voices whisper continual doom and gloom. They tell (Americans) that everything is bad bad bad.

These voices are persistant and continual. They are unrelenting. They are often frightening. And like the command hallucinations that torment many of my patients, they are completely and totally untrue. You are bad. Life isn’t worth living. They are trying to hurt you. Don’t try, it’s not worth it.

It is very rare for such voices to say anything at all positive. They have a specific goal–and that goal is the distortion of reality.

So why do patients believe them? Especially the one’s that are bizarre and so obviously out of touch with any known reality?

….. It is a triumph of false perceptions over reality. It is testimony to how profoundly and fundamentally people trust their perceptual faculties and let their peceptions rule, even when those perception come in conflict with common sense, truth, or reality.

We, the American people have come to have a similar trust in the voices of the MSM. Over the years, they have almost become an additional perceptual faculty that we rely on–simply because life has become too complicated and overwhelming, that the use of our ordinary senses is insufficient in the modern world.

In other words, we rely on the media in the same way we rely on our own senses to provide us with the information necessary to make decisions and judgements in the real world.

The MSM has become those evil voices inside our head.

Now here’s Henninger:

One of the great mysteries of public life has been the absence of an organized Bush effort to defend the war.

….. Running a 4.3% quarter in the face of Katrina is shout-from-the-rooftop news, but for this administration it’s just another tree falling in the forest.

This is the Alfred E. Neuman, “What, me worry?” school of public relations. It doesn’t seem quite appropriate for a major war.

I don’t think the Bushies are numb to seeing their public standing dissed and downgraded. I think they’ve concluded this is a game that’s rigged against them, something over which they have little control. Other presidencies–Nixon, Johnson–obsessed over their bad press. LBJ by legend watched the evening news about Vietnam simultaneously on three TVs, a ticket to neurosis and night sweats.

In contrast, the Bush media model has been to ignore the polls, skip the spin and govern for results. Mr. Bush’s bet is that history will judge Iraq a success; the odds now suggest he’s right. And if one believes in markets, as Mr. Bush largely does, sustained 4% growth is a better day’s work than, like his predecessor, trying to govern to the polls.

For this White House, the mainstream media’s spin is like bad weather–uncontrollable. The polls, like the bad-weather blahs, don’t matter. But clinical depression does matter and the polls now reflect clinical depression. Even the president’s conservative base can’t snap out of it. Consider the reality standing before a movement conservative: Sen. Joe Lieberman’s essay on this page earlier in the week argued compellingly that Iraq is much better than imagined. The economic growth numbers validate tax-cut theory, and they’re getting pinch-me-if-it’s-real justices in John Roberts and Sam Alito. And they’re depressed!

A visit to our editorial offices this week by about 40 conservative think-tank leaders revealed almost universal gloom and even distrust of the president–primarily over years of pig-out spending. Not one of them uttered the word “Iraq.”

When positive reality becomes irrelevant, you’ve got the blues. Or perhaps we have discovered a new form of brainwashing.

The Bush administration has underestimated the changed nature of modern media. The mainstream media alone is not the problem. All these political subjects–the war, immigration–get discussed at length, all the time, on talk shows and across the great expanses of the Web wilderness. In this new environment, the emotional content has become stronger and even more important than the facts, such as they are. The facts have been demoted. What’s more, the language, the very vocabulary of all these conversations, has been ramped way up. Shrillness has monetary value now, and it has political value. If this were traditional spin, as the White House assumes, it wouldn’t matter. But in our time the spin has become a vortex.

The leading exploiter of this phenomenon is Abu Musab al-Zarqawi.
Despite the comparatively minimal numbers killed, his suicide bombers and car bombs have dispirited even normally clear-eyed supporters of the war effort and its purpose. Conservative columnists go from support for Iraq to advocating withdrawal and back to support depending on mood swings. Iraq has become simply “the violence.” But if “the violence” has displaced the rest of reality, then the Bush model of ignoring the spin isn’t viable. The result is John Murtha.

By not seeing that the spin is now a vortex, the White House let it suck down the president’s support to a level that threatens his ability to govern.

The Bush “let ‘em rant” strategy might work–10 years from now. Unfortunately, the influence of the WORMs is very powerful, especially on the 86% of the public who essentially get their news and information when they just happen to hear or see it. Until New Media becomes so pervasive that it routinely reaches that 86%, the WORMs will be a force that must be reckoned with, and aggressively.

Positivity: Couple Supports Troops with Banana Bread

Filed under: Positivity — Tom @ 6:07 am

Though the story is a bit dated, I’m fairly certain the baking hasn’t stopped. I would call what the Davises are doing a magnificent obsession:

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