Archive for the Category Misc.

 
 

National Review Online

National Review asked me to write a piece based on one of my inequality posts. Because I had relied heavily on research by Kevin Erdmann, I asked him to co-author the piece with me. It was just posted here. Kevin gave me a much better sense of how our public policies discriminate against renters.

A modest proposal

Some civil liberties types are whining about this issue:

It isn’t illegal to withdraw money from the bank, nor to compensate someone in recognition of past harms, nor to be the victim of a blackmail scheme. So why should it be a crime to hide those actions from the U.S. government? The alarming aspect of this case is the fact that an American is ultimately being prosecuted for the crime of evading federal government surveillance.

That has implications for all of us.

By way of background, financial institutions are required to report all transactions of $10,000 or more to the federal government. This is meant to make it harder to commit racketeering, tax fraud, drug crimes, and other serious offenses. Hastert began paying off the person he allegedly wronged years before by withdrawing large amounts of cash. But once he realized that this was generating activity reports, he allegedly started making more withdrawals, each one less than $10,000, to avoid drawing attention to the fact that he was paying someone for his silence.

Again, the payments weren’t illegal. But as it turns out, structuring financial transactions “to evade currency transaction reporting requirements” is a violation of federal law.

To see why that is unjust, it helps to set aside Hastert’s case and consider a more sympathetic figure. Imagine that a documentary filmmaker like Laura Poitras, whose films are critical of government surveillance, is buying a used video camera for $12,000. Vaguely knowing that a report to the federal government is generated for withdrawals of $10,000 or more, she thinks to herself, “What with my films criticizing NSA surveillance, I don’t want to invite any extra scrutiny—out of an abundance of caution, or maybe even paranoia, I’m gonna take out $9,000 today and $3,000 tomorrow. The last thing I need is to give someone a pretext to hassle me.”*

That would be illegal, even though in this hypothetical she has committed no crime and is motivated, like many people, by a simple aversion to being monitored.

I don’t much like the $10,000 reporting requirement: as I see it, behavior that lots of people engage in every day for perfectly legal reasons shouldn’t trigger surveillance. And it is certainly perverse to set a threshold for government scrutiny, only to make it a criminal offense to purposely avoid triggering that threshold.

Au contraire, the government needs to do much more of this.  For instance, we know that speeding laws are an excellent way to stop illegal activity near the Mexican border. Cops can pull over suspicious looking cars, and check for evidence of drug smuggling, or illegal aliens.

There’s just one problem.  Many smugglers will “structure” their speed to avoid detection by the police.  No red-blooded Texan is going to drive 55 mph on a highway. Remember that the goal of speed limit laws it to allow the police to pull over anyone they wish to.  But what if someone evades the intent of these laws by driving 54 mph?

I suggest allowing police to pull over anyone who seems to be obeying the law for suspicious reasons.  For instance, it should be a crime to structure your speed at just under the speed limit in an area where people traditionally drive much faster than the speed limit.

Some civil libertarians will inevitably complain that you’d then be breaking the law whether you speed or not.  That’s right, but how else are we going to catch the bad guys?

PS.  Thank God for the New York Times.  They have reported that presidential candidate Marco Rubio has been pulled over 4 times in the past 18 years for traffic violations, including not coming to a complete stop at a stop sign.  And to think that he was being seriously considered as a contender for the White House.

Sarcasm aside, this does raise a serious issue.  I’m very concerned about drivers who come to a total, complete, unequivocal stop at stop signs.  We all know that no normal person actually comes to complete stops at stop signs unless they are terrified of being ticketed by the police.  But why would they be so frightened of the police?  What do they have to hide? Which leads me to a second modest proposal . . .

Australia’s Great Stagnation

It looks like the Great Stagnation has hit even Australia.  In an earlier post I pointed out that Australian NGDP rose at a 6.5% rate from 1996:2 to 2006:2.  Then we had the Global Financial Crisis, and Australian NGDP growth slowed to . . . er . . . it stayed at 6.5% from 2006:2 to 2012:2.  No tight money and no recession in Australia.

In the 11 quarters since 2012:2, NGDP growth in Australia has slowed to a 2.5% rate. Why?  And yet still no recession.  Why not?

I’m not quite sure.  One factor is the slowdown in global commodity markets. Australian RGDP growth has been a respectable 2.4% rate over those 11 quarters.  So I wonder if it’s falling prices of commodity exports that are holding down GDP inflation. (Which has average a bit over 0.1%.)  Further support for this idea comes from the Australian CPI, which has averaged about 2.3% inflation, right in the government’s 2% to 3% target range.  Although GDP inflation often runs a bit below CPI inflation, that’s a huge gap.  Could it be falling iron and coal prices?

For these reasons I occasionally suggest that total compensation might be a better metric for a commodity-intensive economy.  Unfortunately the Australian data doesn’t seem to support my theory, with total compensation only rising about 2%/year since 2012:2. So I’m perplexed.

Mystery one: Why is RGDP holding up when NGDP is so weak?  (That might be falling commodity prices.)

Mystery two: Why have they avoided recession with such weak growth in total comp?

Let’s compare Australian unemployment with Canadian unemployment.  First Australia:

Screen Shot 2015-06-04 at 11.57.35 AMThen Canada:

Screen Shot 2015-06-04 at 11.59.15 AMSurprisingly similar.  Canada had a recession in 2008-09, and Australia just barely avoided one.  Why?  In Australia’s case they were helped by two factors.  They were in an overheated boom in early 2008, so the modest rise in unemployment just brought the rate back to “normal.”  And second, they have the highest trend rate of growth among the developed (white) nations, due to high immigration.  So they only had one negative quarter.  But as you can see, unemployment in Australia during 2008-09 rose only a bit less than in Canada.

More recently, Australia’s followed the European trend of higher unemployment since 2012, while Canada has followed the US downward trend.  Canada has had 3.0% NGDP growth, a bit more than Australia.  Factor in Canada’s slower population growth, and that largely explains the better jobs numbers.  On the other hand, Canada’s only had 2% RGDP growth since 2012:2, even less than Australia.  Both countries are presumably experiencing wage moderation.  And both countries have seen especially weak NGDP growth in the last year (presumably due to weak commodity export prices) with RGDP outperforming NGDP.

The outlook for Australia is reasonably good, as long as the central bank keeps CPI inflation in the 2% to 3% range.  In the past 6 months it’s fallen below that range, and they need to ease monetary policy a bit.  The unusually wide gap between CPI inflation and GDP inflation should narrow over time, which means faster NGDP growth as long as they keep CPI inflation in the 2% to 3% range.  But the days of 6.5% NGDP growth are over—Australia’s also in a Great Stagnation.

My prediction is that 4.3% NGDP growth is Australia’s new normal, 2.5% real and 1.8% GDP inflation.  CPI inflation will average just over 2%.

HT:  Stephen Kirchner

When did the left jump the shark?

Was it when they started talking about helicopter drops? Or perhaps the point where the LA labor unions asked to be exempted from the new minimum wage law?  Maybe, but I vote for this gem from The Guardian, which (believe it or not) is actually considered one of the UK’s respectable newspapers:

Landlords are allowed to deduct a wide range of expenses, on top of mortgage interest costs, before they have to pay tax on their rental income. These allowable expenses include the cost of insurance, maintenance and repairs, utility bills, cleaning and gardening, and legal fees. Ordinary homeowners are not entitled to similar privileges.

Tim Worstall and Britmouse beat me to it.

People sometimes ask me why I consider The Economist to be the best newspaper. Here’s one reason—can you even imagine a paragraph that idiotic in The Economist?

PS.  Full disclosure; I’m one of those “privileged” landlords.

The perfect villain

Poor Dennis Hastert.  He picked the wrong country to get born into.

1.  He picked a Puritan state in a Puritan country with a higher age of consent than any European country, save Ireland, Cyprus and Turkey.

Screen Shot 2015-05-31 at 9.39.44 AM

2.  He picked a country where (according to Politico) the GOP cares so little for the lives of blacks and gays that it won’t lift a finger to stop a needle/HIV epidemic until it starts hitting Red State voters.

3.  He picked a country where the Dems think it’s a crime to frequently withdraw $5000 in cash from your own bank account, and use the cash for perfectly legal activities.

4.  He picked a country where voters have so much faith in law enforcement that they make it a crime to lie to police, even to cover up an embarrassing personal scandal.

5.  He picked a country where people are obsessed over any sex where there is a “power imbalance.”

PS.  Attention commenters; I’m offering no editorial comment, just describing things as they are.  If you don’t like the post, don’t blame me, change America.