High Tax Rates and Real Per Capita GDP

Peter Diamond, Professor Emeritus at MIT, and Emmanuel Saez, Professor of Economics at UC Berkeley, recently published an opinion in the Wall Street Journal on 23 April that serves to back up the call of the Democratic Socialist Party for increased tax rates on the rich.  They claim that high tax rates will not slow growth.  Let us examine some of their claims.

They note that when the top tax rates in the U.S. were high, 70% and above, from 1950 to 1980, the growth of GDP averaged 2.23% a year.  Between 1980 and 2010, GDP growth averaged only 1.68% a year, though the highest tax bracket rates were relatively low.  To evaluate the implications of these facts for the effect of a high tax rate, we need to ask if this is a controlled experiment with the highest tax rates the only important variable.

The answer is no.  In 1950, most of the world owed the U.S. huge amounts of money due to WWII.  Western Europe, Japan, and China were trying to rebuild following their devastation in WWII.  American exports and our investments overseas were making Americans tons of money, especially given that we were ourselves finally leaping forward from a base that had been much lowered by the Great Depression.  American men had returned from the war eager to make a better life than they had known in the Great Depression and the war.  Americans were healthier, better fed, and better housed than any other major nation's people in the world.  What is more, while Eisenhower did not drop the top tax brackets while trying to pay down the WWII debt, he did stop much of the socialist interference with the economy that had come to dominate it under FDR and Truman.  In comparison, the United Kingdom and France had turned heavily to socialist policies that retarded their economic growth.  Germany perhaps less so, but Germany had been especially destroyed, divided, and was hurt by British and French takings as reparations.  Germany and the United Kingdom had also lost much of a generation of men.

By 1980, the many nations so damaged by WWII as Germany, Japan, and the UK had been, had managed to become more capable of competing in the world economy with the U.S., simply because they had largely rebuilt.  In some cases, because of the massive rebuilding, their plant and equipment were actually newer than that of many companies in the U.S.  A new generation of workers was also now at a productively mature age in these countries, as well.  The playing field was once again more even.  So, how did the competition compare based on the respective upper tax bracket rates in these countries?

Diamond and Saez choose to make the comparison from 1970 to 2010, instead of from 1980 to 2010, despite having noted already that the high tax rates in the U.S. were not lowered until after Reagan became President in 1981.  Actually, the lowering was a couple years later than that, but it sure was not near 1970.  The same was approximately true in the United Kingdom, since Margaret Thatcher took over in 1979 and soon after lowered the British highest tax rates.  The 1970s in the U.S. were also a mess because of Nixon's Price Freeze and the policies of Jimmy Carter and the Federal Reserve that led to investment killing high inflation rates.  Before Thatcher, Great Britain was the socialist Sick Man of Europe, with many nationalized industries and rampant labor unions.

So, Diamond and Saez point out that from 1970 to 2010, real GDP in the U.S. increased at an average rate of 1.80% a year and it increased a bit faster in the previously lethargic U.K. at 2.03% a year.  In comparison, the high tax rate in France yielded an average growth rate of 1.72% a year and in Germany a rate of 1.89% a year.  Not much difference.  Of course, they fail to point out the other extraneous factors than high tax brackets that wipe out most of any advantage that lower tax rates might have had in part of their extended period.  Throwing in the lost decade of the 1970s in the U.S. and the U.K. hides the effect of each country's lowered upper tax brackets later.  This is really of the nature of a dirty trick.  It is partisan politics on the part of Diamond and Saez.

James Pethokoukis has discussed this much more meaningful comparison of real GDP growth from 1981 to 2010.  Examine the graph of real GDP per capita for each nation below:

During the 1982 recession, the real per capita GDP in the U.S. was about $4,000 dollars greater than that in France and Germany.  It was about $7,000 more than that in the U.K.  In 2010, the U.K. had surpassed France.  From 2002 to 2008, the U.K. had been equal to Germany in per capita real GDP, but did fall back as the result of the financial failures that hit the larger financial industry in the U.K. compared to that in Germany.  The U.K. had also tried too much stimulus spending, as had the U.S. in response to the Great Socialist Recession of 2008-2012.  It seems likely on the basis of this much more valid comparison that the lower upper tax rates of the U.S. and the U.K. did have a salutary effect on real per capita GDP.  Indeed, Pethokoukis offers comparisons of the U.S., Australia, Canada, Britain, France, Germany, Italy, and Switzerland. Those countries with high upper tax brackets compared to the U.S. and the U.K. fell back in per capita GDP.  In both the U.S. and the U.K. there was also a relative decrease in regulations and an increase in privatization, so some other effects are also contributing.

Diamond and Saez also make claims that tax revenues do not take a hit unless the top tax rate is greater than the 50 to 70% range.  They believe that a man will work just as hard when 50 to 70% of his time is taken from him as he will when 35% of his time is stolen.  So they advocate a hike in the highest tax brackets and also in capital gains and dividend tax rates.  When GE employs 1600 professional workers to evade taxes set at a rate of 35%, one has to wonder how Diamond and Saez can convince themselves of such nonsense.  It may be that people work almost as many hours under high tax rates, but it is clear that many of the hours they work are then devoted to avoiding those high tax rates!  They believe the government can and will invest the money of the rich better than the rich would.

They make assertions that some public investments such as education, infrastructure, and research have high rates of return.  Yet, in fact there is no correlation of added education expenditures, either at the federal or the local levels, with knowledge in our children in the government-run school systems.  Infrastructure may be necessary, but it is common for infrastructure spending to have very long payback times, such as 50 years in many cases.  This is not a high rate of return.  Government research is a mixed bag.  Much of it is a waste and some is good.  The nearly $100 billion spent on climate research in the last couple of decades has very little to show for itself.  Research money spent by industry has a much better track record.  Before claiming that government spending constitutes a wise investment, we need to ask how wisely the private sector would have spent the same money.

I suppose we will always have to expect that Progressive Elitists will back the idea that government spends money wisely, but not many Americans really agree with that.  Admittedly, there seem to be many Americans who think government wastes their money, but would not be wasting the money of the wealthy.  I am sure they are not thinking that government actually invests the money of the wealthy better.  They are only thinking that they do not much care whether the government invests someone else' money well or not as long as they get a freebee or two out of it.  That is the unbecoming thinking of a freeloader.

Democracy Fails, Americans Too Politically Ignorant

A Pew Research Center poll conducted from 29 March to 1 April 2012 found that the knowledge of Americans about the Republican and Democratic Parties was abysmal.  Overall, on the following issues of party policies or preferences, in which the correct answer is given in parentheses, it was found that:

To clarify one of the questions, the Democrats are more likely to favor a path to citizenship for illegal aliens.

Overall, Americans rate a C- on identifying the more conservative party, a D on recognizing the Democrats as being more in favor of raising taxes on the rich, of expanding freedoms and privileges for gay people, and in favor of providing citizenship to illegal aliens.  They earned a D- on recognizing the Republicans as being more in favor of abortion restrictions and of oil drilling in the Arctic Refuge.  They earned an F in recognizing the Democrats as more in favor of defense spending cuts and the Republicans as generally more in favor of reducing the size and scope of government.  It is very clear that when Americans vote in an election for one party or another or for a candidate from one party or another, they have a very inadequate knowledge of what they are doing.

The poll also asked Americans if they could identify the party each of the following politicians is or was associated with:  Nancy Pelosi, Franklin Roosevelt, Abraham Lincoln, Ronald Reagan, Bill Clinton, John F. Kennedy, and John Boehner.  They also asked which party was represented by a donkey and which was indicated by GOP.  There were a total of 17 questions.  Republicans answered a woeful 12.6 correctly (74%, grade of C), but Democrats answered even more woefully with only 11.4 correct answers (67%, grade of D).  Independents are apparently independent of the parties because they have so little knowledge that they cannot even choose a party.  They were correct only 10.7 times out of 17 (63%, grade of D).

One might argue that there are some inadequacies in the questions, but anyone reasonably knowledgeable about the political issues and who stands for what, would know all of these answers.  It is interesting that Republicans were less inclined to identify themselves as wanting to restrict access to abortions than the Democrats were.  They were also less likely to identify the Democrats as wanting citizenship for illegal aliens and reducing military spending than were the Democrats.  The only politician the Democrats could better identify with a party than could Republicans was John Boehner, the Republican Speaker of the House!  Republicans were much better at identifying the more historical politicians, Roosevelt and Lincoln, with a party than were Democrats.  This indicates a greater historical knowledge among Republicans.

One of the reasons we are given for a government-run school system is that every future citizen must have enough knowledge to vote in a democracy.  Well, the poll shows that the school system has failed utterly in this.  The age group from 18 - 29 was only able to answer 10.1 questions out of 17 correctly (59%, an F grade), while the next older group of 30 - 49 was able to answer 10.9 right (64%, a D).  The 50 - 64 age group inched up to 11.5 correct, and those 65 and over, despite memory loss, knew 11.9.  The longer one is out of government-run schools, the more one knows about politics.  The one bright area for the youngest age group was knowing the answers related to what are considered the politically correct social issues.  Only 43% could identify Pelosi with her party, only 43% could do the same for FDR, and only 43% could so identify Boehner.  48% knew Lincoln was a Republican.  Of course a random guesser would be right 50% of the time.

There are some interesting lessons in this data for the Republican Party.  Most Americans believe that the federal government is too big and too involved in their lives.  This means there are many Americans who are not Republicans who believe this.  Yet only 51% of the Independents identified the Republicans as the party more in favor of reducing the size and scope of the federal government.  Perhaps the Republicans have assumed this was obvious and have not sufficiently publicized this policy stance.  Only 46% of Democrats could identify the Republicans as generally wanting smaller government.  With so many Americans unhappy with a domineering government, there are surely even some Democrats who want smaller government.  We know there are some who oppose ObamaCare, for instance.  Only 44% of the 18 - 29 age group saw the Republicans as the party of smaller government and the age group of 30 - 49 was a low 53% as well.  This is a message the Republicans, surprisingly, need to drum home.

With political ignorance so dominant among Americans, it is hardly any wonder that our increasingly unlimited democracy coupled with unlimited government is failing so badly.  The People are generally dissatisfied and believe the country is going in the wrong direction.  As I have noted many times, they do not understand what is going on and they have an entirely inadequate knowledge of history, economics, and civics.  They see a huge government involved in far too many activities for them to follow and be current on.  They see that special interests who can make the time to be informed and to develop close political ties to the politicians have more influence over the government than they do.  They understand that the government is commonly not acting in their best interest, yet they cannot even identify the party that wants a less unlimited government.

This process of ever more befuddling government has been building for over 100 years now and most of the people are simply turned off on political issues.  Because of this, democracy has become hollow and useless as a value, yet it is a great danger.  This is a very predictable result of big, unlimited government.  The last shreds of our republic, turned meaninglessly democratic, will disintegrate unless the People come to demand that government be constitutionally limited once again.  It is certain that a grade D citizenry cannot halt the inexorable pressures of a federal government determined to rule without limits.  We are doomed to living under tyranny, unless the People decide to study and raise their grades.  It this is to come about, it is essential that we turn to private sector education for all age groups, but especially for the young so that we will not have a grade F 18 - 29 age citizen group.

Obama Helps One Industry Grow

Yes, there is one industry that Obama has helped to grow.  Of course, given his strongly anti-business ideology, this is unexpected.  How could any industry escape his effort to damage commerce and business in America?  Well, it is precisely because he wants to harm this industry, but has not yet had the political power to do so, that this industry is growing quite significantly.  Many fear Obama will interfere with the sales of this industry if he is re-elected.  The industry in question is the gun industry.  Many in that industry say Obama should be named "Gun Salesman of the Year."

Sales of guns were up from $19 billion in 2008 to $31 billion in 2011.  This is a 63% increase.  Jobs in the industry are up 30%.  Federal taxes paid by the industry are up 66% in that 3 year period to $2.5 billion.  How cool it is that an industry can actually thrive on Obama's ire!

Actually, this industry is seeing a renewal of constitutional protection of Second Amendment rights to own a firearm.  While it is generally the case that Obama and other Progressive Elitists want to interfere with the individual right to own and bear arms, the Federal Courts are finally standing up for the Second Amendment.

Updating Obama's Failed Green Energy Company Subsidy Program

Back on 6 March 2012, I discussed the topic Government Directed Green Energy Spending Hurts Economy.  I can add a few failed green energy companies funded with grants and loans and/or whose energy use was mandated by the Obama government to the list I provided then.  Some companies that had been reported to be bankrupt had not actually gone bankrupt, so I have made some corrections on that issue.  I have added some further information about government loans, grants, tax credits, and subsidies.  It has been noted that the owners of these companies are most commonly major campaign contributors to Obama and that the practice of company executives receiving bonuses or pay increases shortly before the companies go bankrupt is distressingly common.  Examples of the bonus/pay increases include Solyndra Solar, Beacon Power, A123 Systems, and Ener1.

In numerous cases, government funding has disappeared in a whirlpool of company bankruptcies and very poor investment results.  Among the problem companies are:

Solar:

• Solyndra Solar, $535 million DOE loan, bankrupt
• Evergreen Solar, $5.3 million loan, bankrupt
• Spectra Watt, bankrupt
• Energy Conversion Devices and United Solar Ovonic or UniSolar, bankrupt
• Amonix, laid off employees, losing money, stock held by Warren Buffet
• SunPower, stock price has fallen greatly
• Abound Solar, laid off nearly half of employees, Fitch rated highly speculative investment, DOE loaned it $400 million
• NRG Energy, solar, wind, electric vehicle, stock price less than half of 2008 price, $1.2 billion DOE loan.
• First Solar, stock price less than 10% of 2008 high, fallen badly since early 2011, DOE loans of $5.35 billion, cutting 2,000 workers, closing plant near Berlin, Germany, lost $39.5 million in 2011, Germany and Italy cut subsidies for major on-grid utility scale solar installations.
• Bright Source, withdrew IPO

Battery and Electric Vehicle:

• Mountain Plaza Inc., truck stop electrification, bankrupt, $10 million loan from state of Wisconsin under Recovery Act
• A123 Systems, batteries, $300 million from Recovery Act, $135 million from state of CA, verge of bankruptcy
• EnerDel and Ener1, Lithium ion batteries, $118.5 million of DOE grant, bankrupt
• Beacon Power, energy storage, $43 million DOE loan, bankrupt
• Fisker Automotive, electric vehicles, made only 40 cars two years late in Finland, only 40 mile range, $7500 tax credit with vehicle purchase
• Tesla Motors, electric vehicles, DOE loans of $465 million, $7500 tax credit with car purchase
• GM Chevy Volt, suspended production, layoffs, failure to meet production goals, $7500 tax credit with purchase
• Bright Automotive, hybrid fleet trucks, bankrupt, claimed DOE told them they were close to winning $450 million loan for 3 years, counted on Obama pledge to have 1 million electric vehicles on the road by 2015

Geothermal

• Nevada Geothermal Power, Harry Reid favorite, $98.5 million DOE loan, $66 million in grants, struggling, auditor says “significant doubt about the company’s ability to continue as a going concern.”

Storage of Corn for Ethanol:

• Olsen's Crop Service and Olsen's Mills Acquisition Co. (bankrupt, $10 million loan)

In consequence of Obama's efforts to bankrupt coal-fired electric power plants and perhaps due to the falling price of natural gas, AES Eastern Energy LP filed for bankruptcy.  AES Eastern Energy owned six coal-fired power plants in New York.

Pelosi Wants Constitutional Amendment to Deprive Persons of Freedom of Speech

The ex-Speaker of the House of Representatives when it was controlled by the Democrat Socialist Party prior to the 2010 election, wants to deprive some people who are associated with one another in a certain way of their freedom of speech.  The association she wishes to use as a means of muzzling speech takes the form of a corporation.  She and many other Progressive Elitists were incensed when the Supreme Court ruled against such a deprivation of freedom of speech in the Bipartisan Campaign Reform Act (BCRA) of 2002, often called the McCain-Feingold Act.  The case was called Citizens United v. FEC, which I earlier discussed here.

There is a completely irrelevant claim that a corporation is not a person, therefore it can be muzzled.  This ignores the very obvious fact that individuals actually do the speaking.  It ignores the fact that the speaker has voluntarily chosen an association with a set of other individuals in order to pursue values and goals of his own choosing in the private sector.  The particular association is a legal entity which offers some protections of the assets of the individuals who own and manage the legal entity.  The mere fact that they seek these legal protections should not deprive them of the right to speak freely.

It is important to be aware of the fact that the corporation form of association may apply to a giant or a micro business.  It may apply to a think tank or to a charitable organization.  The association of people pursuing common goals in the private sector as a corporation does not imply that these goals are either moral or immoral, and it does not imply that government has any legitimate purpose in promoting or thwarting the goals of the individuals using their freedom of association in the private sector to cooperate closely with others in the association organization called a corporation.

Because government all too often tries to interfere with the rights of individuals in voluntary associations in the private sector, the organization of individuals may have a very dire need to protect their common interests from the government.  This means that there are very important joint efforts the associated individuals will want to take to influence the outcome of an election.  They have as much right to do so as members of a bridge club or book club do.  They have as much right as those in a business organized as a LLC or a LLLLP.  They have as much right as those in a business organized as a partnership.  They have as much a right to freedom of speech as do members of a church or of a family.  As the Supreme Court very wisely pointed out, the fact that an individual has exercised his freedom of association should not deprive him of his freedom of speech.  There is no case in which the exercise of one freedom should deprive us of our other freedoms.

Some people want to deprive the persons involved in a corporation's activities of their freedom of speech because they see some corporations as very powerful.  They fear that this power will badly influence government policies.  Of course, they ignore the fact that if the government were as limited in power as is mandated by the Constitution, then there would be little reason for the people in a corporation to fear the government and little reason for them to make the effort to try to control or influence the policies of the government.  Any problems that do result from big corporations using their money to influence elections are the result of excessive and illegitimate government.

Of course, Nancy Pelosi is an advocate of unlimited government.  She is most eager to deprive people associated in corporations of their ability to protect themselves simply by speaking up.  She wants the government to be able to rob such of the corporations as are wealthy of their property and income.  She wants to keep small corporations from becoming large ones.  She and other Progressive Elitists want them disarmed completely so that labor unions who have lost the interest of private sector workers can once again with government help increase their private sector membership far above its recent anemic percentage.  Of course these unions are expected to pay a pretty penny to the Democrat Socialist Party election coffers and provide huge numbers of free workers during the campaign.  The constitutional amendment Pelosi is backing is designed to disarm everyone who is in an association with others in the form of a corporation.

The bigger government gets, the less willing it is to brook opposition to its power.  The danger is not from people associated in corporations, which operate in the private sector.  It is from government, which demands a monopoly on the use of force and would like to have a monopoly on the use of speech as well.  The sword is not enough.  Government also wants control of the pen.

The Medieval Warm Period and the Little Ice Age Were Worldwide

The catastrophic anthropogenic global warming alarmists have consistently downplayed both the Medieval Warm Period and the Little Ice Age.  They have tried to reduce the warmth of the former and reduce the coldness of the latter.  They have claimed that these events were limited to Europe or to the Northern Hemisphere.  There has actually been a plethora of evidence that these were worldwide events as is discussed in Ian Plimer's book Heaven and Earth, but most of the evidence was obtained in the Northern Hemisphere as discussed in my earlier post.  A very interesting new study has shown that both events took place in the Antarctic Peninsula as well.

Zunli Lu of Syracuse University and a host of colleagues from Oxford University, Bangor University, the University of Bristol, the University of Leeds, the Diamond Light Source, Houston University, and Rice University have published An ikaite record of late Holocene climate at the Antarctic Peninsula in Earth and Planetary Science Letters.  Ikaite crystals are a form of calcium carbonate or limestone and only form under cold conditions.  They melt at room temperature.  The oxygen isotope concentration in the crystals can be measured and provides a history of the temperature when the crystals were formed.  Lu and his colleagues were able to find and date ikaite crystals from the Antarctic Peninsula and construct the temperature record.  They found that both the Medieval Warm Period and the Little Ice Age occurred in the Antarctic.

This is important because it says that the recent worldwide warming is not unprecedented and it is not necessary to believe that only man's emissions of carbon dioxide can explain that unprecedented warming.  Atmospheric carbon dioxide concentrations were not as high at the time of the Medieval Warm Period and are not needed to explain it.  In addition, the Little Ice Age ended as the Industrial Revolution got into gear.  The increase of carbon dioxide since then is at least substantially due to the worldwide warming of the oceans, which have immense quantities of dissolved carbon dioxide and solid carbonates in them.  It is known that the warming ocean waters evolve carbon dioxide and those waters have certainly been warming since the end of the Little Ice Age.  It is a matter of major consequence therefor that both the Medieval Warm Period and the Little Ice Age appear to have been worldwide events.

Coal-Fired Power Plants Produce Insignificant Mercury

Back in December, I wrote about the absurdity of the EPA claim that coal-fired power plants produced significant mercury which necessitated drastic reductions at any cost.  I was then puzzled that the EPA did not produce maps of the mercury concentrations that would show the mercury was found in higher concentrations downwind of coal-fired power plants.  It turns out that maps of the concentrations of mercury do exist and can be examined.  The National Atmospheric Deposition Program produces annual maps of the mercury concentrations across the USA here.  Note that the mercury high concentration areas changed somewhat between 2009 and 2010, but coal-fired power plants do not have giant chicken legs to rise up and walk to a new location.  But, the highest mercury concentrations are in the Southern Rocky Mountains and in the plains states just to the west of those southern Rocky Mountains.

The hottest areas for mercury are the states of Nevada, Arizona, New Mexico, Utah, Colorado, Kansas, Nebraska, South Dakota and other states near them.  Florida is a bit warm also.  So one would conclude that most of our coal-fired power plants are in southern California and the Southwest in general.  I do not know how one would explain the high concentrations in Florida.  But let us look at where the coal-fired power plants are then.

Of course, as you already knew, most of them are in the eastern half of the United States.  There are only a few dinky coal-fired power plants in southern California and most of those in Arizona are in northeastern Arizona.  There is a large concentration of coal-fired power plants in the Ohio River Valley and no lack of them in Mississippi, Georgia, South Carolina, North Carolina, Virginia, Maryland, and Pennsylvania.  Despite this huge concentration of coal-fired power plants, the East Coast Mid-Atlantic states are relatively green, which means they have lower mercury concentrations than the western part of the USA.  Being downwind of a coal-fired power plant does not appear to be anything like as important a factor as natural geographic sources of mercury are.  The mercury concentration maps give no hint of a mercury plume to the east of a power plant or even to the east of a concentration of large coal-fired power plants.  We should see such a plume due to the prevailing wind direction.

Update: I noted in my earlier post referred to above that coal-fired power plants produce about 41 to 48 tons of mercury a year. That post observed that forest fires in the US were estimated to release about 48 tons of mercury a year. Most of the big forest fires occur in the West, especially in many areas consistent with high concentrations in this map due to dry climates and low population densities drawing fewer fire-fighters. If these were the only sources of mercury, then the distribution of mercury across the US would still not differ much East to West since the forest fires of the West would be balanced by the higher concentration of coal-fired power plants in the East.

So what is the likely cause of the high mercury concentrations that are observed in the Southern Rockies and in the plains states to the west, especially the northwest, of them?  In comparison to these puny sources of mercury, volcanoes, subsea vents, and geysers are thought to produce 9 to 10K tons of mercury a year. The areas of high mercury concentrations do not correlate very well with the newer and more active volcanoes of the Pacific Northwest in the US, however. But, it turns out that they correlate well with the old volcanoes of the Rocky Mountains shown in white in the map here and shown below:

It is well-known to geologists that the southern Rocky Mountains are much richer in minerals and precious metals than the northern Rockies because volcanoes and rising magma played a much greater role in their formation.  I expect the high mercury concentration areas are due to the erosion of mercury mineral deposits, commonly cinnabar, in these old volcanoes and from their environs. The mercury released by forest fires is clear evidence that there is substantial mercury in the ground in the West already distributed about. The Rockies have been eroding for a very long time now and mercury is distributed over long distances from these old volcanoes by winds and eastward flowing rivers. The rivers flow into the Mississippi, so none of the mercury they transport goes east of the Mississippi River.  This is my best guess about the source in any case. Update End.

Once again we see that the EPA does not use rational science to govern its actions, even when those actions will have drastic negative consequences for the economy and put many people out of jobs.  Hauling coal by train to power plants, operating the power plants, and extracting coal from the ground all provide many hard-working Americans with jobs.  We also have huge coal reserves, which it makes more sense to burn to create electricity than it does to use natural gas which is better for making plastics and other products.  Of course, now natural gas is inexpensive and it is being used to generate electricity.  I am happy to leave how it will be used to the free market, but I do not want the EPA under the guidance of the ever-foolish Obama pushing and shoving the free market to influence such decisions.

The Ever-Vanishing Jobs Recovery

Once more the wisp of a hint of a jobs recovery from the never-ending Great Socialist Recession has vanished as mist before our eyes in the early hours of the morning.  Obama and the socialist Senate have once again succeeded with their anti-business rhetoric, past law-creation, and present regulatory harassment to push investors into inactivity.  Rationally these investors will not invest and create jobs in the private sector to a degree that will allow Americans to once again proudly earn a living because they cannot reasonably see profits under the present regime in Washington.

Let us examine the consequences of the March employment numbers from the Bureau of Labor Statistics.  They are summarized in the following table, which uses the non-seasonally adjusted numbers:

Now the unemployment rate is not very meaningful in a recession in stasis, as I point out almost every month, due to many who would like to work giving up in despair or going back to school or into training in hopes of later having a chance for a job.  Some do continue to search for a job, but have simply given up on those methods which make them visible to the BLS.  It is more meaningful to examine the number for the percentage of the employed as a part of the total non-institutional civilian working age population. 

In March 2012, the employed were 58.29% of the working age population.  This compares to 58.14% in March 2011.  So in the last year of so-called recovery we advanced the percentage of employed by 0.15%!  There is not much to show for the last year there.  How does the March 2012 case compare with March 2010?  In March 2010, the percentage of workers to the working age population was 58.18%, so in two years of "recovery" the percentage of the employed increased by ....... 0.11%!!!!  Is this recovery underwhelming, or what?  It would appear that John Galt is on strike.  We have returned to the stasis of the caveman's era.

Assuming that as large a fraction of the population would like to be working today as did in January 2000 when good jobs were plentiful, we can calculate the number of missing jobs.  The updated plot of the number of missing jobs is given below:

There is nothing exceptional about March and its comparison with the two previous Marches.  The same is true for Februaries or for Januaries or any other month over the last two years.  There has been no improvement in the jobs situation at all.  All the talk about new jobs being created has fallaciously attempted to misdirect the listener from the fact that the jobs created have only been enough to keep pace with population growth, but not enough to rehire the millions of Americans who lost jobs in the deepest part of the recession.  The media has largely been a propaganda tool.  We still have 22.321 million jobs missing in our economy!  Without a major change in the November 2012 election, this situation will continue.  We will have settled into the chronic unemployment rates of many of the socialist European countries into which Obama set out to transform the USA.

Congress is Disrespected, but Incumbents Almost Always Re-elected

The Cato Institute is having a forum called Citizens v. The Ruling Elite.  I am copying the announcement I just received below.  Please read the text on Congress, how much it is disrespected by the American people, and yet how often the incumbent incompetent Congressman is re-elected.  Then I will show you my new Congressional District Map as supporting evidence of how carefully we are controlled by the political party dominant in our home state.

Citizens v. the Ruling Elite

featuring
Mark Meckler
Co-founder, Tea Party Patriots

Eric O’Keefe
Co-Chairman, Campaign for Primary Accountability

Geoff Pallay
Special Projects Director, Ballotpedia

moderated by
John Samples
Director, Center for Representative Government, Cato Institute

Only 12 percent of Americans now approve of the job Congress is doing. Despite that, incumbents are overwhelmingly re-elected. Eighty-six percent of them survived the 2010 elections for the House of Representatives. That’s not much of a surprise when you consider that 80 percent of House districts are safe for one of the two major parties and 62 percent of incumbents face no primary challenge at all. No wonder many Americans feel those who “represent” them in Washington don’t really represent them at all. A new organization, the Campaign for Primary Accountability, is trying to level the playing field and to restore real representation by making incumbents more accountable to citizens. Its efforts have won praise across the political spectrum and condemnation from fans of the status quo. But it is not alone. Mark Meckler, a founder of the Tea Party Patriots, is launching a new effort to change American elections for the better. Please join us to hear these leaders talk about their continuing struggle to take back America.

Friday, April 20, 2012
Noon
(Luncheon to follow)

F. A. Hayek Auditorium • Cato Institute
1000 Massachusetts Ave., N.W., Washington, D.C. 20001



I was until recently in the highly gerrymandered 4th Congressional District in Maryland, once known as the Free State. This district consistently elected whichever highly socialist black candidate won the Democrat primary. For years this has been Donna Edwards, a member of the Democrat Socialist Caucus in the House of Representatives. I am now in District 3 which is represented by John Sarbanes of Towson, a town north of Baltimore. I live in the northeastern part of Montgomery County.  The District 3 map after the 2000 Census re-districting was as shown below:

Clearly the people in this district were lumped together because of their similarity of interests and because it would be very easy for their Congressman to gather them together in town hall forums to learn about their concerns with government. OK, yes, I am being sarcastic. Clearly the interests of the people were of no concern and that is indicated by the boundaries of this district. The 2010 Census lead to a re-districting plan and Congressional District 3, in which Democrat John Sarbanes, of the infamous Sarbanes-Oxley accounting burden law, is running for re-election now has a very different look. This is because the Democrats believe they can challenge and remove the 20-year Republican Congressman Bartlett of the 6th Congressional District in Western Maryland with the new 6th District. The new District 3 that I am in looks like this:

This is a district composed of fragments of Montgomery County, Anne Arundel County, Howard County, Baltimore City County, Baltimore County, and Carroll County. There is no complete county in the district. Most of the Montgomery and Howard County citizens along U.S. 29 are federal employees. Large numbers of state employees live in and near Annapolis in this district. A fraction of the district citizens would have a special interest in issues relating to the Chesapeake Bay, but many would not. Substantial areas are very rural. This district is not only designed to take high population density Democrat areas and combine them with many rural areas with many Republicans in them, but it is also a classic case of divide and conquer. Any of many special interest groups that might become angry at John Sarbanes or another Representative is perfectly incapable of preventing his re-election due their fragmentation between the 8 Congressional districts in Maryland.


I challenge anyone to present me with a Congressional district in which they live that can rival mine as the very symbol of gerrymandered excess! If the people ever want to have a chance to control Congress, they will have to insist that their states use algorithms for forming Congressional districts that make the districts reasonably compact, honor local government boundaries such as county lines, and make it more likely that people with similar concerns will be in the same district. The divide and conquer issue is a very rational concern which ought to be addressed.  This is government dividing and conquering the People!