Tidbits Quotations
To Accompany September 15, 2014 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

Some out-of-town protesters went to Ferguson not so much to protest but with intent to be arrested so they could enter the legal lottery. In other words, for them it's a scam to get rich along with their lawyers. Isn't there a moral hazard here for those that hope to be arrested and abused just so they can sue for millions of dollars? Maybe I should rush to the next good street riot with my attorney in tow. The cause of the riot really does not matter!
Bob Jensen
See http://www.newsweek.com/ferguson-slapped-40-million-civil-rights-lawsuit-267452

Destroying ISIS should be 'No. 1 priority '
Elizabeth Warren, Democratic Senator and Possible Presidential Candidate (someday)

Democracy is Wrong for the World and Belgium is a Test Case ---

Here Are 10 Things That Are Right With America --- http://www.businessinsider.com/whats-right-with-america-2014-8?op=1

When Keynesian Theory Morphed Into the Theories of Milton Friedman
"How 'Keynes' Became a Dirty Word," by Noah Smith, Bloomberg View, September 11, 2014 ---

If you use the word "Keynesian" as a synonym for "socialist," "progressive," or "liberal," well my friend, you’re doing it wrong.

If you’ve been involved in Internet arguments about economics, then you must have heard the term "Keynesian" being applied this way. And it seems to make sense. After all, many of the bloggers and writers who describe themselves as "Keynesian" are also of a liberal bent. And more importantly, John Maynard Keynes himself was in favor of some amount of wealth redistribution and government intervention in the economy. So why am I saying it doesn’t make sense to use the word "Keynesian" in this way?

One reason is because this isn’t how academic economists use it. In academia, there is a class of models called "New Keynesian" models that try to describe how monetary policy might affect the economy. But the thing is, despite the name, these models aren’t actually very close to anything Keynes ever conceived. In fact, they’re very close to the ideas of Milton Friedman, who was a rhetorical and political opponent of Keynes. My doctoral adviser, Miles Kimball, actually tried to change the name of the models to "Neomonetarist," to be more faithful to Friedman’s legacy, but no one went along with it, and the "New Keynesian" label stuck.

In fact, many of the people who invented New Keynesian economics were politically conservative, and deeply opposed to wealth redistribution and to government intervention. The New Keynesians included Greg Mankiw and John Taylor, who are among the most prominent conservative economists writing in the popular media today.

OK, so why should you care about the arcane jargon of academia? Well, because there’s a good reason Taylor and Mankiw chose to name their theory after Keynes.

New Keynesian economics says that monetary policy -- and even fiscal policy -- is all about stabilization. It’s about smoothing out the fluctuations in the economy, reducing risk for everyone concerned. When the economy is doing well, raise interest rates to slow things down; when it’s doing badly, lower interest rates to give it a boost.

And that’s it. No wealth redistribution, no regulation, no command economy. Stabilization theory says that you can smooth out the wrinkles of the business cycle without messing with the deep structure of how the economy works. The expectation is that if the government does just that -- just that one small, minor intervention -- then recessions won’t be a big problem, and angry unemployed people won’t demand more lasting government interventions.

In other words, stabilization policy is supposed to guard against socialism. This, in fact, is what Keynes intended. Keynes lived during a time when communism and socialism were considered real, viable alternatives to capitalism. He devised his theories as an alternative to socialism -- a way to save capitalism with the smallest possible intervention.

Now, it is true that stabilization policies do inevitably involve some redistribution. Boosting inflation to fight recessions will benefit those who are in debt -- companies, for example, that borrow to invest, or people with mortgages -- while hurting people living on a fixed income. But the expectation is that this redistribution will be reversed in the good times, when the Federal Reserve hikes interest rates to put on the brakes. Fiscal stimulus is a bit of a different story, since the unemployed reap the benefits while taxpayers pick up the bill. But the point here is that Keynesian policies are fundamentally not about redistribution -- they’re about economic stability.

So why do people think Keynesianism is socialism-lite? It might be the fault of Keynes’s main intellectual opponent, Friedrich Hayek.

Friedrich Hayek tried to argue against Keynes’ theories, but for whatever reason, he lost the debate among economists in the 1930s. But Hayek would have the last laugh, because in his book, "The Road to Serfdom," he attacked Keynes from a very different angle. Instead of saying Keynes’ theories were wrong, Hayek prophesied that Keynesian stabilization policies would lead down the slippery slope to totalitarianism.

Hayek’s warning was dead wrong. Most rich countries tried some form of Keynes’s policies in the 1950s, '60s, and '70s, and while they didn’t always work as advertised, they most definitely did not lead to totalitarianism. Yet somehow Hayek’s meme entered our collective consciousness. On blogs and in the financial media, where politics and economics mix freely, self-described "Austrians" kept using the word "Keynesian" as a political epithet, the way National Review writers or Fox News anchors use the word "liberal."

Continued in article

"Venezuela’s President Lashes Out at Harvard Economist," by Andy Thomason, Chronicle of Higher Education, September 15, 2014 ---

Jensen Comment
It might be interesting for students to analyze piling on debt ala Paul Krugman's Keynesian theories has been such a disaster in Venezuela. Also analyze why these theories have not worked well in reducing unemployment in such nations as Greece and Spain even though there appears to be toilet paper available for sale in Greece and Spain but not Venezuela.


Tax Foundation:  When Canada lowered its corporate income tax rate revenues increased ---

Laffer Curve ---

"Where Are All the Law School Applicants?" by Paul Caron, TaxProf Blog, September 13, 2014 ---

. . .

What is the reason for this dramatic reversal? Conventional wisdom credits two principal factors. First, the legal job market suffered a combined cyclical and structural downturn in 2008. ... The second factor weighing against law school applications is the growing recognition of the burden of student debt. ...

Is this drop in law school enrollment a good or bad thing? One part is arguably good: many young people applied to law school because they had good grades and board scores and wanted to keep their options open, rather than truly thinking through that a legal career was right for them. Now, in contrast, anyone applying to law school has likely given serious thought to the decision.

But the decline is also unfortunate. Unfortunate for the young people who choose not to go to law school, because they are missing what can be incredibly rewarding career. Apart from the studies about the return on investment in a law degree, the career can bring satisfaction and opportunities for growth and career changes that few other paths provide.

Continued in article

Bob Jensen's threads on law schools ---

Mapping the Spread of Drought Across the USA ---

California’s Exceptional Drought Just Keeps Getting Worse
Tom Randall , Bloomberg News, July 31, 2014

Although the current drought in California is really bad, it is not the worst in history for California
 "California hasn't had a drought this bad since at least 1895," by Brand Plummer, Vox, August 15, 2014 ---

"National Geographic’s Warming Warning – 10 Years Later," by  Anthony Watts, Watts Up With That, August 31, 2014 ---

"Setting the Record Straight on Climate Change on Kilimanjaro," by Tim Ward, Huffington Post, June 20, 2014 ---

If you are trying to figure out whether or not the iconic "snows of Kilimanjaro" are disappearing due to Climate Change (as Al Gore famously claimed in An Inconvenient Truth), don't expect to find an easy answer from the media. I searched "climate change Kilimanjaro" in early June. Page one of the results included these media articles:

Why so many conflicting headlines? There are two main reasons. First, the mainstream media tends to follows whatever seems controversial and catastrophic. So the facts often come much lower down in the story than the dramatic headline. If you actually read the articles, the climate scientists quoted inevitably mention the 99.9% consensus among experts: that human caused climate change is occurring. Some scientists are concerned that environmental advocates oversimplify the issue. They claim more that hard science can prove, and that ends up playing into the hands of climate deniers (who are more often than not paid pundits, rather than climate scientists). But when scientists attempt to explain the nuances of the mountain, the media too often gets it wrong and misreports.

For example, Philip Mote. the University of Washington scientist quoted in the Seattle Times article above, "Kilimanjaro not a victim of climate change," is so concerned about the reality of climate change he travels the Northwest to warn of global warming's regional impacts. He just thinks Kilimanjaro is a problematic example.

The second reason is the actual complexity of what is happening on Kilimanjaro. There are many forces driving the climate of East Africa all at once. The media likes to draw a straight arrow between cause and effect. Scientists, on the other hand, spend their time seeking ways to disprove a causal link, and they are very reluctant to make any claims of causality that have not been thoroughly tested. The big problem with measuring Kilimanjaro's climate is the lack of high-altitude data in East Africa. There's no baseline against which to measure changes of temperature and dryness. This makes it hard to establish historical trends.

Ironically, Kilimanjaro's glaciers are now the source of historical climate data. Research teams have drilled ice cores which can be read like tree rings. Bubbles of air trapped in the layers of frozen ice reveal a wealth of data about the climate of Kilimanjaro over the past 11,700 years -- the age of the bottom layers of ice. It's like discovering the geological equivalent of the Dead Sea Scrolls. Sadly, this record is on its way to being erased as the glaciers disappear. In fact, in some places the top layers have begun to melt -- literally wiping the data from the most recent parts of the record.

So, what do we really know about Kilimanjaro's disappearing glaciers? The most recent research from scientists working on the mountain can be found in a 2009 article in the science journal Nature. Here's what I extracted from that article that is the most reliable and unbiased summary of what is happening on the mountain top.
  1. Kilimanjaro's glaciers are at least 11,700 years old. Over 150 years ago, when the first European visitors documented Kilimanjaro's appearance, the volcano's cone was covered with a thick crust of ice. About 90% of this ice has since vanished. This loss of ice predates the start of human-caused climate change by several decades.
  2. The rate of glacier shrinkage has doubled since the 1970s -- when human caused climate change kicked in. All over the world tropical glaciers are receding, as indeed most are in all latitudes. The fact that these 11,700 glaciers are on their way to completely vanishing within 20 years marks a significant change in East Africa's climate.
  3. Technically, the glaciers are not melting. They are evaporating -- turning directly from ice to vapor through a process known as sublimation. The air is below freezing at the summit, but the sun excites water molecules in a way similar to how dry ice evaporates at room temperature.
  4. Increased dryness may be the key driver of glacier shrinkage. East Africa has been getting less and less moisture, so new snow is not replenishing the glacial ice lost to sublimation. A few seasons of new snow can in fact build back some of the ice, as the Turbo News article reported in 2011). If the drying trend lasts (together with the increased sunlight), the glaciers are still doomed.
  5. Increasing dryness in East Africa (the cause of droughts and famines in Kenya, Ethiopia, and Sudan), may in fact be speeding up due to global climate change, especially by altering air patterns over the Indian Oceans. (This is the hypothesis most the knowledgeable people I have spoken with or read think is the likely cause of Kilimanjaro's dwindling glaciers).

Here is the article of the original findings the Kilimanjaro research team published in the Proceedings of the National Academy of Sciences, November 2009.

Here's a CNN report on the same research.

There is a second driver of local climate change on Kilimanjaro -- deforestation. But according to the most recent research this is only affecting lower elevations. While this is deadly serious -- over a million people depend on the rainfall and rich vegetation on Kilimanjaro's green slopes -- scientists who are studying this effect have not found any evidence this is affecting the glaciers. The glaciers are at an altitude high above the cloud forests where these local changes are being seen and studied. More on that in a future blog post.

Continued in article

MIT's Free Courseware
Global Warming Science

Also see

"Voters do the maths A big win for pension reform in Rhode Island—and a lesson for other states?" The Economist, September 13, 2014 ---

ON HER last evening of campaigning, Gina Raimondo visited retirement homes in Providence. It was apt. Her opponents portray her as the worst enemy of Rhode Island’s pensioners, a chainsaw-wielding agent of Wall Street who will leave the elderly destitute. Her fans praise her for having tried to restore the state’s public-worker pension funds to something resembling solvency. On September 9th voters gave her the benefit of the doubt.

Ms Raimondo (pictured) won the Democratic primary for governor of Rhode Island by a hefty 13 points, with 42% of the vote in a three-way race. She will face Allan Fung, the Republican mayor of the town of Cranston, in the general election in November; the polls (albeit scanty ones) suggest she will win.

Rhode Island is tiny, but this campaign could have national ripples. For those who fret about the holes in state and local pension funds, which are one of America’s worst fiscal problems (see charts), Ms Raimondo has shown that a politician can back painful reform and still win.

As state treasurer, Ms Raimondo pushed a law in 2011 that raised the retirement age for some public-sector workers, suspended cost-of-living adjustments and cut benefits. This reform is being contested in court, but if upheld could save taxpayers $4 billion over two decades—and avert financial calamity.

Public-sector unions hate it. But they split their support between two candidates, and so failed to defeat Ms Raimondo. Many members of private-sector unions, whose taxes foot some of the bill for generous public-sector pensions, supported Ms Raimondo. At 5am on election day, burly builders got up and delivered fliers for her. Scott Duhamel of the painters’ union voices little sympathy for public-sector protests. “We had to make cuts, too,” he says.

Primaries in other states saw voters pick realists and moderates, too. In a Democratic primary in Massachusetts, for instance, Seth Moulton, a charismatic military veteran, ousted John Tierney, a scandal-plagued member of the House of Representatives. Mr Moulton rebuked his opponent for passing only one bill in 18 years. Voters want leaders to lead.

"The unlucky continent:  How Africa’s riches have brought it mainly misery," The Economist, September 4, 2014  ---

The Fortunes of Africa: A 5,000-Year History of Wealth, Greed, and Endeavour. By Martin Meredith. Public Affairs; 784 pages; $35. Simon & Schuster; £25. Buy from Amazon.com, Amazon.co.uk

“DO NOT talk to me of gold…[it] brings more dissension, misfortune and unexpected plagues in its trails than benefits.” So said Paul Kruger, president of the small Boer republic of the Transvaal in 1885 when he was told that gold had been found on the country’s eastern border. Kruger went on: “Every ounce…taken from the bowels of our soil will yet have to be weighed up with rivers of tears.” His prescience was remarkable. Within scarcely a decade his country’s independence had been snuffed out by Britain, which lusted to control the world’s richest gold mines.

This anecdote finds many echoes across the ages and from country to country in a sweeping new history of Africa by Martin Meredith, a historian with an acute eye for detail and a firm grip on the forces that swept the continent. Africa’s profusion of natural wealth—whether gold, ivory or the very bodies of its inhabitants—served not to enrich its peoples but to impoverish and enslave them. Going back to the time of Egypt’s pharaohs, he notes, Africa’s riches have been coveted.

This is a familiar tale for Mr Meredith, a former journalist and a biographer with a deep affinity for Africa. For readers of his earlier book, “The State of Africa”, some bits may feel a touch too familiar, as he revisits old themes. Yet that is a minor quibble to take with a book that addresses one of the main criticisms of his previous work: that it limited itself to telling the story only of Africa’s half-century since independence. Liberated in time, Mr Meredith’s new book explores the horrors suffered by Africans at the hands of its early rulers and traces the forays of Arabs and Europeans into its interior in search of treasure.

Of wealth there was no shortage. In 1324, when King Mansa Musa of Mali stopped in Cairo while making the pilgrimage to Mecca, he distributed so much gold that he destroyed the value of money for at least a decade. His wealth, Mr Meredith contends, was so vast that he was the richest man the world had ever seen. Others made fortunes too, from the great caravans of ivory that snaked their way out of jungles or the boatloads of wild rubber harvested in the Congo, often carried by slaves who were then themselves sold.

Of misery there was more. In 1882 a British mariner watched a huge caravan of slaves toting ivory pass on its way to Zanzibar. Speaking with the headmen in charge, he asked what happened to mothers who became too weak to carry both their children on their backs and the tusks of ivory on their heads. “We spear the child and make her burden lighter,” was the reply. “Ivory first, child afterwards!”

Mr Meredith artfully weaves together exploration, trade and geography in a narrative that is both detailed and arresting. Yet important questions about the economics of the trade are answered only tangentially: for instance, why a pound of ivory was worth 200 times more in Zanzibar than in the inland areas around Lake Tanganyika, where it was gathered. The book’s last chapters race breathlessly through important events of the past few years, including China’s huge investment in Africa and the theft and corruption in Nigeria, without pausing to analyse, explain or conclude. In the end Mr Meredith leaves the reader bursting with a wealth of facts, but hungering for a richer explanation.


"Surprise: IRS 'Loses' Emails of Five More Employees Connected to Targeting Investigation," by Guy Benson, Townhall, September 8, 2014 ---

This admission dropped late Friday in a classic news dump -- the purpose of which is to bury a damaging story over the course of a weekend.  There was zero chance we'd allow this update to the IRS scandal to slip our minds, however. The preposterous and insulting cover-up continues apace, reports the Associated Press:

The IRS says it has lost emails from five more workers who are part of congressional investigations into the treatment of conservative groups that applied for tax exempt status. The tax agency said in June that it could not locate an untold number of emails to and from Lois Lerner, who headed the IRS division that processes applications for tax-exempt status. The revelation set off a new round of investigations and congressional hearings. On Friday, the IRS said it has also lost emails from five other employees related to the probe, including two agents who worked in a Cincinnati office processing applications for tax-exempt status. The agency blamed computer crashes for the lost emails. In a statement, the IRS said it found no evidence that anyone deliberately destroyed evidence.

Continued in article

A Big Oops! When Brian Fallen Dials the Wrong Number:  The Department of Justice is Politically Motivated to Protect the Wrongdoers
"Is Eric Holder Trying to Protect the IRS?" by Seth Mandel, Commentary Magazine, September 10, 2014 ---

A remarkable conversation about the IRS’s illegal targeting of conservative groups took place on Friday in Washington. According to Rep. Darrell Issa’s office, at 5:01 Friday Brian Fallon, a former aide to Chuck Schumer and currently a communications aide to Attorney General Eric Holder, called Issa’s office. By mistake. And it’s quite a mistake.

The purpose of the call, according to a letter Issa wrote to Holder, was to work with the intended recipient of the call to strategically leak damaging information to selected, friendly reporters and to coordinate a damage-control plan. The intended recipient of the call was apparently Rep. Elijah Cummings, the ranking Democrat on the House Oversight Committee who has gotten quite visibly nervous over the extent of the investigation into the IRS abuse–despite his attempts to protect the abusers.

Here’s Jonathan Strong at Breitbart:

The aide, Brian Fallon, is a former senior aide to Sen. Chuck Schumer (D-NY) and a well-known personality on Capitol Hill. The letter describes Fallon as “audibly shaken” when he realizes his request to leak documents to help get ahead of news stories about them was mistakenly made to the very office he was seeking to undermine. Issa believes the call was intended to be made to Democratic Rep. Elijah Cumming’s staff, the ranking member on the oversight panel, the letter said.

According to the letter, Fallon – who is not named in the letter but confirmed he made the call – asked if the aides could release the IRS scandal documents to “selected reporters” to give Fallon an “opportunity to comment publicly on it.”

Fallon explained to Issa aides that the Justice Department’s Office of Legislative Affairs had not permitted him to release the documents to the public and he wanted to get ahead of the story “before the Majority” – meaning Issa – could share it, according to the letter.

Issa aides – who had placed the call on speakerphone – were “caught off guard by the unusual nature of the call and the odd request” and asked Fallon to “e-mail the material for evaluation.”

“At this point,” Fallon “abruptly placed the call on hold for approximately three minutes.” When Fallon returned to the call, “he was audibly shaken. He immediately stated that there was a ‘change in plans’ and that there would be no effort” by DOJ to release the material early.

In other words, it looks like Holder’s Department of Justice is seeking to help the IRS and the Democrats protecting the IRS. And the only reason the public knows about it is that Holder’s office accidentally called the wrong phone. Oops.

The left’s response to the IRS targeting scandal has morphed over time as more information has come to light. Mostly gone are the truthers who think nothing unethical happened or that this is an aimless witch hunt. It’s now clear to any sentient person that the IRS was indeed engaged in this targeting scheme ahead of a presidential election. Additionally, as I wrote last week, it’s since been revealed that the IRS began destroying evidence once the investigation into the targeting began.

That particular destruction of evidence concerned Lois Lerner, the former official at the center of the scandal, in order to get rid of her email correspondence. The media yawned at the revelation of the destruction of evidence, apparently tiring of this story. So the same day of Fallon’s phone call to Issa’s staff, the IRS admitted it lost the email of “five more workers who figure in the investigation into the alleged targeting of conservative nonprofit groups,” as the Wall Street Journal reported.

The Democratic response to the investigation has thus gone from the eminently silly denial that anything untoward took place to actively trying to thwart the investigation and run interference for the IRS–which, in its targeting scheme, was only following the pronouncements of high-level congressional Democrats, after all. And those Democrats have gotten quite uncomfortable with the investigation. Democratic Sen. Carl Levin has put together a report attacking the inspector general conducting the investigation.

Such interference and/or stonewalling wouldn’t be out of character for this DOJ. As the Washington Examiner reported yesterday, according to the department’s inspector general “Department of Justice senior officials have barred or delayed the inspector general there from gaining access to documents crucial to high-visibility investigations.”

The “nothing to see here” brigade has lost any semblance of credibility. In response, they’d like to make sure there’s actually nothing to see by the time investigators come looking for it.

The IRS Scandal Day 490 ---

"IRS Worker Got $138,000 in Salary to Do "Nothing':  And Union Saved Her Job,"  --- by Paul Bedard, Washington Examiner, September 12, 2014 ---
Also see http://www.thefederalistpapers.org/us/irs-worker-got-paid-138000-to-do-nothing-union-saved-her-job

Underperforming IRS workers are being protected from firing by the National Treasury Employees Union in the tax agency that let workers devote 500,000 hours — worth over $20 million in salary — on labor activities last year, according to internal emails revealed Wednesday.

The House Ways and Means Committee said that emails from former IRS executive Lois Lerner, being probed for her involvement in the agency’s targeting of conservatives, show she vented at being blocked from firing one worker who did “nothing,” yet still received up to $138,136 a year.

The email prompted Rep. Charles Boustany, R-La., the chairman of the oversight committee, to demand answers from IRS Commissioner John Koskinen.

Jensen Comment
I don't know why the above IRS worker "did nothing" or whether she was also AWOL from her office.

I know of a similar case in Maine where a high school teacher was AWOL on and off for more than half an entire year but was prevented by the union from being fired. She was eventually granted paid-leave for a second year before being forced to resign. Purportedly parenting took priority over professional responsibilities. Perhaps she would not have been forced to resign if she worked for the IRS or lived in a more progressive country.

Do you know any tenured professors who do "almost nothing" year in and year out for full-time salaries in higher education?

Parental leaves in Sweden versus the Czech Republic:  Should the USA adopt similar leave policies? ---

Jensen Comment
I wonder if there are limits for parents in those nations who have a new child each year for upwards of ten years.

Our minister has ten children, but did not seek paid leaves?.

Pew Research:  Who Makes Minimum Wages ---

Cool Senator Taxpayer Billing Tricks You Never Knew Existed --- Yeah Right!
"O Audit, Where Art Thou?" by Matt Vespa, Townhall, September 12, 2014 ---

Senator Landrieu is certainly not the worst expense abuser in the U.S. Senate
Sen. Mary Landrieu Ranks 25th in Taxpayer Money Spent on Travel (Shreveport Times) ---

U.S. Congressional Salaries and Expenses ---

Rules That Were Made to be Broken
Baucus Resolution Sets Rules for Senators

Politicians:  Are the only people in the world who CREATE problems and then campaign against them ---

"How much do Canadian Senators spend on travel? Explore two years of expenses," by Stuart A. Thompson and Bill Curry, Globe and Mail, February 13, 2014 ---
Also see http://www.huffingtonpost.ca/jj-mccullough/senate-scandal-duffy-brazeau_b_4151851.html

Electric Car Owners Contribute Nothing or Almost Nothing to Road Repairs While Gasoline and Diesel Fuel Vehicles Foot the Road Repair Bills

"Electric-Car Owners Get Taxed ($64 per year) for Not Paying Gas Taxes," by Alison Vekshin, Bloomberg Businessweek, June 6, 2013 ---

Jensen Comment
Tesla Model S owners now have a trillion mile warranty (of eight years) where all those miles are a free ride to Tesla owners in terms of the road and bridge  depreciation they help cause. This is a wealth transfer that nobody seems to talk about where poor people in old gas guzzlers are paying for the road and bridge repairs enjoyed as a free good by rich Model S owners.

In Virginia electric car owners pay $64 per year for road repairs. Big deal.

Watch Each of the Last Four U.S. Presidents Announce That We're Bombing Iraq ---

New Jersey’s Credit Rating Downgraded for Eighth Time Under Christie:  Gov. Christie Calls the Rating Agencies Bums ---

"The Economic Advantages of an Independent Scotland," by Justin Fox, Harvard Business Review Blog, September 12, 2014 ---

"Why Scotland Wants To Ditch England And Go It Alone," by Tomas Hirst, Business Insider, September 11, 2014 ---

Read more:

"Paul Krugman on Scottish independence: “The risks … are huge” The Times' liberal columnist worries that an independent Scotland may become "Spain without the sunshine" by Elias Isquith, Salon, September 9, 2014 ---

When teens don't fear felony arrests
Three 14 Year-Olds Tied to Vicious Purse Snatching Against Elderly Woman Have 35 Felony Arrests ---
After the 36th conviction they will defiantly commit more felonies knowing that as teens they can get away with most anything except murder.

"The Genocide of Mideastern Christian: s Americans haven't suddenly turned interventionist. They're moved by the Islamic State's particular evil," The Wall Street Journal, September 11, 2014 ---

President Obama would have been rocked the past few months by five things. One is the building criticism from left and right about his high need for relaxation—playing golf while the world burns. Another is that he misread the significance and public power of the beheadings of American journalists. Third, he has been way out of sync with American public opinion on Islamic State, which must be all the more galling because he thought he knew where Americans stood on the use of military force. Fourth, with his poll numbers declining (32% approval for his handling of foreign policy, according to The Wall Street Journal and NBC), it has probably occurred to him that he is damaging not only his own but his party's brand in foreign affairs. (Yes, George W. Bush did the same to his party, but Mr. Obama was supposed to reverse, not follow, that trend.) Fifth, he surely expects he is about to take a pounding from the antiwar left.

Most immediately interesting to me is the apparent change of mind by Americans toward military action in the Mideast. The president's long-reigning assumption is that a war-weary public has grown more isolationist. But, again according to the WSJ/NBC poll, more than 6 in 10 back moving militarily against Islamic State. Politicians and pundits believe that this is due to the gruesome, public and taunting murders of the U.S. journalists—that Americans saw the pictures and freaked out, that their backing of force is merely emotional.

I think they're missing a big aspect of this story.

A year ago the American people spontaneously rose up and told Washington they would not back a bombing foray in Syria that would help the insurgents opposed to Bashar Assad. That public backlash was a surprise not only to the White House but to Republicans in Congress, who were—and I saw them—ashen-faced after the calls flooded their offices. It was such a shock to Washington that officials there still don't talk about it and make believe it didn't happen.

Why was there such a wave of opposition? In part because Americans had no confidence their leaders understood the complications, history and realities of Syria or the Mideast. The previous 12 years had left them distrusting the American foreign-policy establishment. Americans felt the U.S. itself needed more care and attention. By 2013 there was a new depth of disbelief in Mr. Obama's leadership.

But there was another, powerful aspect to the opposition.

Evangelical Christians and conservative Catholics who would normally back strong military action were relatively silent in 2013. Why? I think because they were becoming broadly aware, for the first time, of what was happening to Christians in the Middle East. They were being murdered, tortured, abused for their faith and run out of the region. And for all his crimes and failings, Syria's justly maligned Assad was not attempting to crush his country's Christians. His enemies were—the jihadists, including those who became the Islamic State.

In the year since, the brutality against Middle Eastern Christians, and Islamic State's ferocious anti-Christian agenda, has left many Christians deeply alarmed. Jihadists are de-Christianizing the Mideast, where Christianity began.

An estimated two-thirds of the Christians of Iraq have fled that country since the 2003 U.S. invasion. They are being driven from their villages in northern Iraq. They are terrorized, brutalized, executed. This week an eyewitness in Mosul, which fell to Islamic State in June, told NBC News the jihadists were committing atrocities. In Syria, too, they have executed Christians for refusing to convert.

In roughly the past 18 months, all this has broken through in Christian communities, largely by way of Christian media, including Catholic news services and the Baptist press. The story has been all over social media. Pope Francis has denounced what is happening; the Vatican is talking about just-war theory.

Rep. Chris Smith, the New Jersey Republican who chairs the House Foreign Affairs Subcommittee on Global Human Rights, this week called what is happening "a genocide."

"It is a global phenomenon, but dramatically in the Mideast," he said.

I told him I thought the journalists' beheadings had put a public picture on a crisis of which Christians in America have now become aware.

"An emphatic yes, with exclamation points put after it," he replied.

No one—at least not the United Nations or other international bodies, and not the administration—seems to be keeping official records. Mr. Smith suggested that when people don't really want you to know the scale of a problem, they don't gather the numbers. He has pressed both the U.S. government and the U.N. for statistics and specifics—how many Christians have been killed, abused, sent fleeing and from where. "It's all, 'I'll get back to you.' When they do, it's threadbare answers that don't say a whole lot."

The anguish and indignation of American Christians at what is being done, by Islamic State, to their brothers and sisters in faith is surely part of the reason Americans are backing U.S. action against the terror group.

It would surely also be a misreading of the polls to announce the American public is suddenly "interventionist." There is no reason to believe they have any appetite for romantic or aggressive forays into invasions, occupations or nation-building efforts. What they want to do—and they wanted to do it last month—is respond to a group that is unusually evil, even by Middle Eastern standards.

There is also no reason to infer from the polls that Americans hold to the illusion that moving on Islamic State would create new order and peace in the Mideast. Those illusions tend to live more in Washington than on-the-ground America. If Islamic State is hit hard enough, it may be killed, but nothing else will be fixed. The Mideast will continue in brutal chaos, but Islamic State, as Islamic State, will be done or at least damaged, and surely that is worth something. At the very least a message will be sent.

If the president were a more instinctive man, or rather if his natural instincts were more in line with those of your average American clinger, he would have moved quickly, sharply and without undue drama. He would have bombed Islamic State when it was a showy army in the field, its fighters driving stolen armored vehicles down highways in the sand, in their black outfits, with their black flags. They are not terrorists hiding in holes and safe houses. They are not doing Internet showbiz from caves, they are seizing and holding territory. They say they are the caliphate, and they intend to expand. They are killing and abusing many, not only Christians. They are something new and deadly.

My guess is two things are not acceptable to the American people. One is the full-scale commitment of scores of thousands of troops to invade and occupy a country. The other is a diffident, confused, unfocused, unserious campaign.

The American people are not suddenly recommitted to a decadeslong drama. They do want to see bad guys taken out. Their timetable, I suspect, would be "Let's start last month."

Yazidi Girl Tells Of Horrific Ordeal As An ISIS Sex Slave ---

Destroying ISIS should be 'No. 1 priority '
Elizabeth Warren, Democratic Senator and Possible Presidential Candidate (someday)

"The French Government Has Collapsed, And It's Partly Paul Krugman's Fault," by Rob Wile, Business Insider, August 25, 2014 ---

On Monday morning, the French government collapsed. All the ministers have resigned, and President Francois Hollande will have to appoint new ones.

Paul Krugman deserves some of the blame.

The incident that immediately precipitated the resignation of French Prime Minister Manuel Valls' cabinet was an interview given by Arnaud Montebourg, France's economics minister to LeMonde, in which he protested his government's ongoing austerity policies.

As evidence of that policy's failure, Montebourg cited the former Princeton professor and New York Times columnist.

Here's the exchange:

LeMonde: Has Europe, and France too in the past two years, focused too much on budget contraction?

Arnaud Montebourg: That's not my observation, that's the diagnosis of financial institutions across the world, starting with the IMF which, whose director, Christine Lagarde, warned European leaders about an excess of budget consolidation. Paul Krugman, a Nobel laureate, also wrote on Aug. 13, "The nightmare scenario in Europe is not a hypothetical. The news that industrial production has ground to a halt raises the prospect of a new recession in Europe — its primary cause, austerity." These warnings have also been sounded by other leaders of world powers including Barack Obama.

Montebourg's comments were supported by Hollande's education minister, as well as his culture minister. Faced with de facto insubordination Hollande laid off his whole government.

However Despite the noise France's cabinet reshuffle was making Monday morning, it may not amount to much. As Krugman also pointed out, European governments can now do only so much to address severely weak underlying economic fundamentals. Europe's fate mostly now lies in the hands of ECB Chief Mario Draghi, who seems to fully understand the stakes but also faces vocal monetary hawks out of eurozone member countries.

That may include France itself. By accepting his own cabinet's resignation, Hollande is signaling that he will remain committed to his announced budget cuts and corporate tax reductions. Meanwhile multiple reports indicate Montebourg and education minister Benoit Hamon, who also lashed out at Hollande, won't survive into the new coalition. 

Thus, any satisfaction Montebourg ultimately receives may come at the grim price of further economic malaise. 

Read more: http://www.businessinsider.com/paul-krugman-cited-french-economic-minister-in-case-against-austerity-2014-8#ixzz3BayClOMM

Veterans Health Administration is "a huge policy success story, which offers important lessons for future health reform" because, among other things, "it's free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures."
Former Princeton University Economics Professor and Political Activist Paul Krugman

Paul Krugman has butchered numbers when writing about fiscal policy in nations such as France, Estonia, Germany, and the United Kingdom.
Daniel J. Mitchell --- Click Here

"Is Paul Krugman Leaving Princeton In Quiet Disgrace?" by Ralph Benki, Forbes, July 14, 2014 ---

Professor Paul Krugman is leaving PrincetonIs he leaving in disgrace?

Not long, as these things go, before his departure was announced Krugman thoroughly was indicted and publicly eviscerated for intellectual dishonesty by Harvard’s Niall Ferguson in a hard-hitting three-part series in the Huffington Post, beginning here, and with a coda in Project Syndicate, all summarized at Forbes.comFerguson, on Krugman:

Where I come from … we do not fear bullies. We despise them. And we do so because we understand that what motivates their bullying is a deep sense of insecurity. Unfortunately for Krugtron the Invincible, his ultimate nightmare has just become a reality. By applying the methods of the historian – by quoting and contextualizing his own published words – I believe I have now made him what he richly deserves to be: a figure of fun, whose predictions (and proscriptions) no one should ever again take seriously.

Princeton, according to Bloomberg News, acknowledged Krugman’s departure with an extraordinarily tepid comment by a spokesperson. “He’s been a valued member of our faculty and we appreciate his 14 years at Princeton.”

Shortly after Krugman’s departure was announced no less than the revered Paul Volcker, himself a Princeton alum, made a comment — subject unnamed — sounding as if directed at Prof. Krugman.   It sounded like “Don’t let the saloon doors hit you on the way out.  Bub.”

To the Daily Princetonian (later reprised by the Wall Street Journal, Volcker stated with refreshing bluntness:

The responsibility of any central bank is price stability. … They ought to make sure that they are making policies that are convincing to the public and to the markets that they’re not going to tolerate inflation.

This was followed by a show-stopping statement:  “This kind of stuff that you’re being taught at Princeton disturbs me.”

Taught at Princeton by … whom?

Paul Krugman, perhaps?  Krugman, last year, wrote an op-ed for the New York Times entitled  Not Enough Inflation.  It betrayed an extremely louche, at best, attitude toward inflation’s insidious dangers. Smoking gun?

Volcker’s comment, in full context:

The responsibility of the government is to have a stable currency. This kind of stuff that you’re being taught at Princeton disturbs me. Your teachers must be telling you that if you’ve got expected inflation, then everybody adjusts and then it’s OK. Is that what they’re telling you? Where did the question come from?

Is Krugman leaving in disgrace? Krugman really is a disgrace … both to Princeton and to the principle of monetary integrity. Eighteenth century Princeton (then called the College of New Jersey) president John Witherspoon, wrote, in his Essay on Money:

Let us next consider the evil that is done by paper. This is what I would particularly request the reader to pay attention to, as it was what this essay was chiefly intended to show, and what the public seems but little aware of. The evil is this: All paper introduced into circulation, and obtaining credit as gold and silver, adds to the quantity of the medium, and thereby, as has been shown above, increases the price of industry and its fruits.

“Increases the price of industry and its fruits?”  That’s what today is called “inflation.”

Inflation is a bad thing.  Period.  Most of all it cheats working people and those on fixed incomes who Krugman pretends to champion.  Volcker comes down squarely, with Witherspoon, on the side of monetary integrity. Krugman, cloaked in undignified sanctimony, comes down, again and again, on the side of … monetary finagling.

Krugman consistently misrepresents his opponents’ positions, constructs fictive straw men, addresses marginal figures, and ignores inconvenient truths set forward by figures of probity such as the Bank of England and the Bundesbank, thoughtful work such as that by Member of Parliament (with a Cambridge Ph.D. in economic history) Kwasi Kwarteng, and, right here at home, respected thought leaders such as Steve Forbes and Lewis E. Lehrman (with whose Institute this writer has a professional affiliation).

Continued in article

Bob Jensen's threads on professors who plagiarize or otherwise cheat (e.g. create phony data or cherry pick data) ---

Princeton's Nobel Laureate economist and political activist Paul Krugman is sometimes known to cherry pick data or even invent data in order to make a political point ---
Paul Krugman --- http://en.wikipedia.org/wiki/Paul_Krugman
Professor Krugman is now moving to CUNY as an endowed professor of economics.

. . .

Krugman's columns have drawn criticism as well as praise. A 2003 article in The Economist[ questioned Krugman's "growing tendency to attribute all the world's ills to George Bush," citing critics who felt that "his relentless partisanship is getting in the way of his argument" and claiming errors of economic and political reasoning in his columns. Daniel Okrent, a former The New York Times ombudsman, in his farewell column, criticized Krugman for what he said was "the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assault.

"The Missing Data in Krugman’s German Austerity Narrative" Daniel J. Mitchell, Townhall, February 25, 2014 ---

There’s an ongoing debate about Keynesian economics, stimulus spending, and various versions of fiscal austerity, and regular readers know I do everything possible to explain that you can promote added prosperity by reducing the burden of government spending.

. . .

But here’s the problem with his article. We know from the (misleading) examples above (not quoted here)  that he’s complained about supposed austerity in places such as the United Kingdom and France, so one would think that the German government must have been more profligate with the public purse.

After all, Krugman wrote they haven’t “imposed a lot of [austerity] on themselves.”

So I followed the advice in Krugman’s “public service announcement.” I didn’t just repeat what people have said. I dug into the data to see what happened to government spending in various nations.

And I know you’ll be shocked to see that Krugman was wrong. The Germans have been more frugal (at least in the sense of increasing spending at the slowest rate) than nations that supposedly are guilty of “spending cuts.”

"The criminalisation of American business:  Companies must be punished when they do wrong, but the legal system has become an extortion racket," The Economist, August 30, 2014 ---

WHO runs the world’s most lucrative shakedown operation? The Sicilian mafia? The People’s Liberation Army in China? The kleptocracy in the Kremlin? If you are a big business, all these are less grasping than America’s regulatory system. The formula is simple: find a large company that may (or may not) have done something wrong; threaten its managers with commercial ruin, preferably with criminal charges; force them to use their shareholders’ money to pay an enormous fine to drop the charges in a secret settlement (so nobody can check the details). Then repeat with another large company.

The amounts are mind-boggling. So far this year, Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs and other banks have coughed up close to $50 billion for supposedly misleading investors in mortgage-backed bonds. BNP Paribas is paying $9 billion over breaches of American sanctions against Sudan and Iran. Credit Suisse, UBS, Barclays and others have settled for billions more, over various accusations. And that is just the financial institutions. Add BP’s $13 billion in settlements since the Deepwater Horizon oil spill, Toyota’s $1.2 billion settlement over alleged faults in some cars, and many more.

In many cases, the companies deserved some form of punishment: BNP Paribas disgustingly abetted genocide, American banks fleeced customers with toxic investments and BP despoiled the Gulf of Mexico. But justice should not be based on extortion behind closed doors. The increasing criminalisation of corporate behaviour in America is bad for the rule of law and for capitalism (see article).

No soul, no body? No problem

Until just over a century ago, the idea that a company could be a criminal was alien to American law. The prevailing assumption was, as Edward Thurlow, an 18th-century Lord Chancellor of England, had put it, that corporations had neither bodies to be punished nor souls to be condemned, and thus were incapable of being “guilty”. But a case against a railway in 1909, for disobeying price controls, established the principle that companies were responsible for their employees’ actions, and America now has several hundred thousand rules that carry some form of criminal penalty. Meanwhile, ever since the 1960s, civil “class-action suits” have taught managers the wisdom of seeking rapid, discreet settlements to avoid long, expensive and embarrassing trials.

The drawbacks of America’s civil tort system are well known. What is new is the way that regulators and prosecutors are in effect conducting closed-door trials. For all the talk of public-spiritedness, the agencies that pocket the fines have become profit centres: Rhode Island’s bureaucrats have been on a spending spree courtesy of a $500m payout by Google, while New York’s governor and attorney-general have squabbled over a $613m settlement from JPMorgan. And their power far exceeds that of trial lawyers. Not only are regulators in effect judge and jury as well as plaintiff in the cases they bring; they can also use the threat of the criminal law.

Financial firms rarely survive being indicted on criminal charges. Few want to go the way of Drexel Burnham Lambert or E.F. Hutton. For their managers, the threat of personal criminal charges is career-ending ruin. Unsurprisingly, it is easier to empty their shareholders’ wallets. To anyone who asks, “Surely these big firms wouldn’t pay out if they knew they were innocent?”, the answer is: oddly enough, they might.

Perhaps the most destructive part of it all is the secrecy and opacity. The public never finds out the full facts of the case, nor discovers which specific people—with souls and bodies—were to blame. Since the cases never go to court, precedent is not established, so it is unclear what exactly is illegal. That enables future shakedowns, but hurts the rule of law and imposes enormous costs. Nor is it clear how the regulatory booty is being carved up. Andrew Cuomo, the governor of New York, who is up for re-election, reportedly intervened to increase the state coffers’ share of BNP’s settlement by $1 billion, threatening to wield his powers to withdraw the French bank’s licence to operate on Wall Street. Why a state government should get any share at all of a French firm’s fine for defying the federal government’s foreign policy is not clear.

I’ll see you in court—in another life

The best thing would be for at least some of these cases to go to proper trial: then a few of the facts would spill out. That is hardly in the interests of the regulators or their managerial prey, but shareholders at least should push for that. Two senators, Elizabeth Warren and Tom Coburn, have put forward a bill to make the terms of such settlements public, which would be a start. Prosecutors and regulators should also be required to publish the reasons why, given the gravity of their initial accusations, they did not take the matter all the way to court.

In the longer term, two changes are needed to the legal system. The first is a much clearer division between the civil and criminal law when it comes to companies. Most cases of corporate malfeasance are to do with money and belong in civil courts. If in the course of those cases it emerges that individual managers have broken the criminal law, they can be charged.

Continued in article

"DOJ To Give Money From Bank Of America Settlement To Liberal Activist Groups," Yahoo News, August 22, 2014 ---

The groups benefitting from the lawsuit, according to Investor’s Business Daily, are the National Council of La Raza, Operation Hope, National Community Reinvestment Coalition, and Neighborhood Assistance Corporation of America. The money also went to “delinquent borrowers” in Chicago, Oakland, Detroit, Philadelphia, and other major “Democrat strongholds.”

“This is a wealth redistribution scheme disguised as a lawsuit,” Tom Fitton, president of Judicial Watch, told The Daily Caller. “And who benefits from the distribution? Interest groups the administration relies on, outside interest groups, allies and politicians in communities trying to benefit as well.”

Fitton noted that these liberal groups are basically what’s left of the Association of Community Organization for Reform Now (ACORN) network, and that President Barack Obama has ties to ACORN.

“You have La Raza that’s getting money, their former head is at the White House in a top position whose funding from the Census has gone up immensely under the Obama administration,” Fitton said.

La Raza, Operation Hope, National Community Reinvestment Coalition, and Neighborhood Assistance Corporation of America have all intimidated banks to give loans to minorities, even if they can’t afford to pay them back.

This is part of an ongoing scheme in which the DOJ puts the money it has gotten from bank settlementsin a slush fund and then funneled the money to liberal groups. Judicial Watch points out that liberal groups — many of which are the same ones benefiting from this lawsuit — also received money from multi-billion settlements from JP Morgan Chase and Citibank, as well as a $335 million settlement from Countrywide Financial Corporation.

“What we need is an honest Justice Department run by people who make a commitment to the rule of law rather using their power to extort and benefit more government and their political allies.” Fitton said. “This is no better than Tammany Hall.”

Jensen Comment

It cost Bank of America $17 billion to do a favor for 2007 Treasury Secretary Hank Paulson who was stuck with the dastardly Countrywide Financial and all its poisoned mortgages. Until then BofA had no poisoned mortgages and really did not want to acquire Countrywide's mess.
According to Ken Lewis Secretary Paulson committed extortion by threatening the job of Ken Lewis who was then CEO of BofA. All the criminal activity was done at Countrywide before it was acquired by BofA. The same can be said of Merrill Lynch that was also forced on BofA with arm twisting, although Merrill Lynch was more involved in the poisoned CDO rackets.
Then the government's DOJ in 2014 turned around and sued BoA for Countrywide's misdeeds so  the DOJ could support its liberal causes in the name of "justice." It cost BofA $17 billion to do a favor for the ungrateful government.
And the beat goes on so to speak.
It's hard to feel sorry for the bailed out banks, but in fairness BofA did not need to be bailed out until the government forced it to acquire Countrywide and Merrill Lynch. Most of the other big banks, however, needed bailing out with almost a trillion in government loans.

"Welcome to the new capitalism," by Star Parker, Townhall, May 4, 2009 --- http://townhall.com/columnists/StarParker/2009/05/04/welcome_to_the_new_capitalism 

Frank recently praised Bank of America chairman (now ex-chairman) Ken Lewis for acting in "the public interest" for caving in to bribes and threats from former Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke regarding B of A's takeover of Merrill Lynch.

Lewis wanted to back out the deal last year when he discovered the massive scope of Merrill's losses. But Paulson and Bernanke decided that Merrill shouldn't fail, so they bribed Lewis with $20 billion of taxpayer funds, instructed him to conceal the agreement from his shareholders, and told him his job would be on the line if he didn't play ball -- which he did.

These sordid details have come to light in an investigation being conducted by New York State Attorney General Andrew Cuomo.

So if such behavior is what Barney Frank calls economic patriotism, what might constitute subversive behavior?

When Congress moved last year to politically engineer changes in terms of existing mortgages in the name of bailing out distressed homeowners, Bill Frey, who manages a fund that holds mortgage-backed securities, protested.

Frey told the New York Times, "Any investor in mortgage-backed securities has a right to insist that their contract be enforced."

Contracts? Private property? That's the old capitalism.

Frank fired off a letter to Frey saying he was "outraged...that you are actively opposing our efforts to achieve diminution in foreclosures by voluntary efforts." Frank then clarified his idea of "voluntary" by summoning Frey to testify in Washington, noting that "if this cannot be arranged on a voluntary basis, then we will pursue further steps."

The House has passed legislation, which is now in the Senate, containing Frank's idea of "diminution in foreclosures by voluntary efforts." It amounts to -- what a surprise -- taxpayer funded bribes to abrogate existing mortgage contracts and provisions for legal protection for doing so.

Frey and others managing funds for investors holding billions in mortgage-backed securities are fighting back. We're not talking Bernie Madoff here. We're talking about funds that have invested in these securities on behalf of pension funds and 401Ks.

Financial institutions -- banks like B of A and Wells Fargo -- originate mortgages and then sell them off to be sliced and diced up into bonds that individual investors can purchase. This financial innovation has been a boon for providing capital and liquidity to our mortgage markets.

The originating bank, however, stays in the picture to service the loan, collecting and processing the payments. Contractual agreements exist between the bank and the bondholders that this will be done in good faith, according to the terms of the original mortgage.

For a host of reasons, mostly massive government meddling and social engineering, the mortgage market exploded and thus, we've got homeowners who can't make payments.

The House passed bill proposes to bail these folks out by paying banks servicing the mortgages $1000 for each one they re-finance, cutting interest rates and payments. Those who actually own the loans -- the bondholders -- are left out to pasture. And, the bill protects servicing banks from lawsuits to which they would normally be exposed for breaking their contracts.

So taxpayers will subsidize banks to refinance the bad loans they originated but no longer own, homeowners who borrowed beyond their means get bailed out, and investors -- the bondholders -- are left to bear the costs. On top of this, many of these same banks originated second mortgages on these same homes. The second mortgages, which the banks still own, bear even higher interest rates because they are allegedly more risky. Yet, they will be left secure and undisturbed.

Aside from the costs that our society will bear as law and contracts no longer have meaning, Frey rightly points out that it all will just make future mortgage borrowing more expensive. Who will take risks to lend when politicians can change contracts at the drop of a hat?

Welcome to the new capitalism. Where politicians rule, irresponsible behavior is rewarded, and theft is legal.

"Busting Bank of America:  A case study in how to spread systemic financial risk," The Wall Street Journal, April 27, 2009 --- http://online.wsj.com/article/SB124078909572557575.html

The cavalier use of brute government force has become routine, but the emerging story of how Hank Paulson and Ben Bernanke forced CEO Ken Lewis to blow up Bank of America is still shocking. It's a case study in the ways that panicky regulators have so often botched the bailout and made the financial crisis worse.

In the name of containing "systemic risk," our regulators spread it. In order to keep Mr. Lewis quiet, they all but ordered him to deceive his own shareholders. And in the name of restoring financial confidence, they have so mistreated Bank of America that bank executives everywhere have concluded that neither Treasury nor the Federal Reserve can be trusted.

Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal.

Mr. Paulson told Mr. Lewis that the government would provide cash from the Troubled Asset Relief Program (TARP) to help BofA swallow Merrill. But since the government didn't want to reveal this new federal investment until after the merger closed, Messrs. Paulson and Bernanke rejected Mr. Lewis's request to get their commitment in writing.

"We do not want a disclosable event," Mr. Lewis says Mr. Paulson told him. "We do not want a public disclosure." Imagine what would happen to a CEO who said that.

After getting the approval of his board, Mr. Lewis executed the Paulson-Bernanke order without informing his shareholders of the material events taking place at Merrill. The merger closed on January 1. But investors and taxpayers had to wait weeks to learn that the government had invested another $20 billion plus loan portfolio insurance in BofA, and that Merrill had lost a staggering $15 billion in the last three months of 2008.

This was the second time in three months that Washington had forced Bank of America to take federal money. In his testimony to the New York AG's office, Mr. Lewis noted that an earlier TARP investment in his bank had a "dilutive effect" on existing shareholders and was not requested by BofA. "We had not sought any funds. We were taking 15 [billion dollars] at the request of Hank [Paulson] and others," Mr. Lewis testified.

But it is the Merrill deal that raises the most troubling questions. Evaluating the policy of Messrs. Bernanke and Paulson on their own terms, this transaction fundamentally increased systemic risk. In order to save a Wall Street brokerage, the feds spread the risk to one of the country's largest deposit-taking banks. If they were convinced that Merrill had to be saved, then they should have made the public case for it. And the first obligation of due diligence is to make sure that their Merrill "rescuer" of choice -- BofA -- had the capacity to bear the losses. Instead they transplanted the Merrill risk to BofA shareholders, the bank's depositors and the taxpayers who ensure those deposits. And then they had to bail out BofA too.

Messrs. Bernanke and Paulson also undermined the transparency that is a vital source of investor confidence. Disclosure is not a luxury to be enjoyed only when markets are rising. It is the foundation of the American regulatory system and a reason investors have long sought to keep their money within U.S. borders. Could either man have believed that their actions wouldn't eventually come to light, with all of the repercussions for their bank rescue plans?

Mr. Paulson told Mr. Cuomo's investigators that he also kept former SEC Chairman Christopher Cox out of the loop while forcing BofA to rescue Merrill. Mr. Cox wasn't the only one. Mr. Paulson and Mr. Bernanke both sit on the Financial Stability Oversight Board, comprised of federal regulators who oversee TARP. Two days after Mr. Lewis told the dynamic duo that Merrill's losses were exploding and that he was looking for a way out, Mr. Bernanke chaired and Mr. Paulson attended a meeting of this board. Minutes of the meeting show no mention of BofA or Merrill.

At the next meeting on January 8, a week after the merger had closed, the minutes again make no mention of either regulator telling their colleagues that they had committed tens of billions of dollars. Yet the minutes helpfully note that among the topics discussed were "coordination, transparency and oversight."

Meeting minutes suggest Messrs. Bernanke and Paulson finally informed fellow board members at 4:30 p.m. on January 15, after news outlets had already reported a pending new taxpayer investment in BofA. What exactly did Mr. Bernanke and Mr. Paulson tell their colleagues about their plans for TARP prior to January 15?

Let's hope they treated their government colleagues better than they've treated Ken Lewis, whom they hung out to dry. After making him an offer he could hardly refuse, they've let him endure a public flogging from shareholders and the press, lengthy discussions with prosecutors, plus new hiring and compensation rules that limit his bank's ability to compete.

No wonder no banker in his right mind trusts the Fed or Treasury, and no wonder nobody but Pimco and other Treasury favorites is eager to invest in the TALF, the PPIP, or any of the other programs that require trusting the government as a business partner.

The political class has spent the last few months blaming bankers for everything that has gone wrong in the financial system, and no doubt many banks have earned public scorn. But Washington has been complicit every step of the way, from the Fed's easy money to the nurturing of Fannie Mae and Freddie Mac, and since last autumn with regulatory and Congressional panic that is making financial repair that much harder. The men who nearly ruined Bank of America have some explaining to do.

Jensen Comment

It is interesting to compare the song Ken Lewis was singing before the purchase of Merrill Lynch versus the song he's now singing about "his" burdening BofA with the billions of Merrill Lynch's toxic investments. You can watch and hear him literally brag that BofA was in stronger shape than all the other large U.S. banks because it sold most of its sub-prime mortgages to other buyers (like Fannie, Freddie, and Merrill Lynch) rather than to retain BofA ownership of such poison. Note his bragging in an interview on CBS Sixty Minutes on October 19, 2009.

I watched the show on October 19, 2008, in a CBS Sixty Minutes TV module, when Leslie Stahl interviewed the CEO of Bank of America, Ken Lewis. Mr. Lewis was charming and forceful when he bragged heavily that BofA was much stronger than the other failing banks and was only accepting some Bailout money as a “patriotic duty.” He said BofA really had no need for Bailout cash since his truly giant international bank was in such strong shape even after the subprime scandal first made the news.

Belatedly, Ken Lewis is claiming that the U.S. Treasury Department and Federal Reserve teamed up against him and forced him to take on the billions of Merrill Lynch's poison. If this was indeed the case, it would've been a great opportunity for Mr. Lewis to make a public stand against the near-ruination of BofA. Think of what a hero he would've become in the eyes of BofA shareholders and if he would've drawn a line and dared Paulson to fire him for refusing to BofA shareholders to gulp down Merrill Lynch poison.

My guess is that Paulson would've instead sweetened the deal by having the government dilute Merrill Lynch poison such as by making BofA liable for 15% of Merrill Lynch's subprime and CDO losses.

After the purchasing Merrill Lynch, the sour grapes cry baby Ken Lewis does not come across as having CEO quality and guts!

Bob Jensen's threads on all this bank bailout stupidity are at http://www.trinity.edu/rjensen/2008Bailout.htm#BailoutStupidity


Water --- http://en.wikipedia.org/wiki/Water

I envision a Disney cartoon with Mickey Mouse and Donald Duck tugging on hydrogen and oxygen atoms to tear them away from their covalent bonds.

"Hydrogen production breakthrough could herald cheap green energy," PhysOrg, September 12, 2014 ---

"Germany and Canada Are Building Water Splitters to Store Renewable Energy:  Improving technology is making electrolysis a viable way to store excess renewable energy," by Kevin Bullis, MIT Technology Review, August 27, 2014 ---

Maybe the Japanese were right all along to place their bets on fuel cell vehicles
"Scientists develop a water splitter that runs on an ordinary AAA battery," PhysOrg, August 22, 2014 ---

Jensen Comment
In theory fuel cells may eventually replace big electric power plants and those ugly transmission lines vulnerable to wind and ice.

Corporate Tax Inversions:  The Beautiful and the Ugly

From the CFO Journal's Morning Ledger on August 27, 2015

More corporate finance divisions are looking into the details of what an inversion would actually do for their tax bill, even if their companies ultimately aren’t willing to take the plunge and decamp for a foreign country, CFOJ’s Emily Chasan reports. A foreign domicile often will mean a lower overall tax rate, but a thorough analysis must also factor the cost of moving some management overseas, reorganizing the company, the sustainability of a move and its political consequences.

And the political consequences, though at this point mostly limited to accusations of unpatriotic behavior, could become more serious if legislators make good on their threats. The Treasury Department is currently reviewing its options for limiting the tax benefits of an inversion. And since Burger King Worldwide Inc. announced its intention to relocate to Canada through a merger with Tim Hortons Inc., the iconic burger chain has come under direct criticism from lawmakers. Sen. Dick Durbin (D., Ill.) said, “I’m disappointed in Burger King’s decision to renounce their American citizenship” and added that “with every new corporate inversion, the tax burden increases on the rest of us to pay what these corporations won’t.” The companies say the deal is not about taxes, but about growth (more on that below).

But the Burger King deal highlights what chief financial officers are learning in their investigations of inversion deals: that the tax benefits are not so straightforward, and often lurk in the details. Writing for Heard on the Street, John Carney notes that Canada offers a generous tax break for profits from countries with which it has a tax treaty. These get counted as “exempt surplus,” which isn’t taxed at all by Canada. And in some of Burger King’s fastest-growing markets, a Canadian domicile would also give it the benefit of “tax sparing”—a system that credits companies even for taxes that aren’t actually paid as part of a complex incentive to invest in developing countries.


"Microsoft Has Nearly $93 Billion In Overseas Cash, And It's Reduced Its Tax Bill By Almost $30 Billion," by Julie Bort, Business Insider, August 23, 2014 ---

Whopper Deal --- Burger King Headquarters May Move to Canada:  There are tax savings in addition to a purchase of Canada's Tim Horton's Inc.
From the CFO Journal's Morning Ledger on August 25, 2015

The inversion wave that overtook the pharmaceutical and drug retail industries continues to spread, and now one of America’s most storied hamburger chains is looking to decamp for a lower-tax domicile to the north.

Burger King Worldwide Inc. is in talks to buy Canadian coffee-and-doughnut chain Tim Hortons Inc. in a tax inversion that would shift the hamburger seller’s base to Canada. Canada’s federal corporate tax rate was lowered to 15% in 2012.

And despite the saber-rattling from American lawmakers who fear that such moves will drain U.S. tax coffers, Burger King is planning to make the move without the protection of a provision that would let it walk away from the deal even if the tax benefits are taken away through new legislation. That may suggest that American big business perceives the U.S. government as unwilling, or incapable, of making any serious moves to restrain inversions.

"One Way to Fix the Corporate Tax: Repeal It," by by N. Gregory Mankiw (Harvard), The New York Times, August 23, 2014 ---

“Some people are calling these companies ‘corporate deserters.’ ”

That is what President Obama said last month about the recent wave of tax inversions sweeping across corporate America, and he did not disagree with the description. But are our nation’s business leaders really so unpatriotic?

A tax inversion occurs when an American company merges with a foreign one and, in the process, reincorporates abroad. Such mergers have many motives, but often one of them is to take advantage of the more favorable tax treatment offered by some other nations.

Such tax inversions mean less money for the United States Treasury. As a result, the rest of us end up either paying higher taxes to support the government or enjoying fewer government services. So the president has good reason to be concerned. Continue reading the main story Related Coverage

Walgreen on Wednesday said it would take over the British pharmacy retailer Alliance Boots but would not, after all, move its headquarters overseas to save on taxes. Tax Reform: Inverting the Debate Over Corporate InversionsAUG. 6, 2014

Yet demonizing the companies and their executives is the wrong response. A corporate chief who arranges a merger that increases the company’s after-tax profit is doing his or her job. To forgo that opportunity would be failing to act as a responsible fiduciary for shareholders.

Of course, we all have a responsibility to pay what we owe in taxes. But no one has a responsibility to pay more.

The great 20th-century jurist Learned Hand — who, by the way, has one of the best names in legal history — expressed the principle this way: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes.”

If tax inversions are a problem, as arguably they are, the blame lies not with business leaders who are doing their best to do their jobs, but rather with the lawmakers who have failed to do the same. The writers of the tax code have given us a system that is deeply flawed in many ways, especially as it applies to businesses.

The most obvious problem is that the corporate tax rate in the United States is about twice the average rate in Europe. National tax systems differ along many dimensions, making international comparisons difficult and controversial. Yet simply cutting the rate to be more in line with norms abroad would do a lot to stop inversions.

A more subtle problem is that the United States has a form of corporate tax that differs from that of most nations and doesn’t make much sense in the modern global economy.

A main feature of the modern multinational corporation is that it is, truly, multinational. It has employees, customers and shareholders around the world. Its place of legal domicile is almost irrelevant. A good tax system would focus more on the economic fundamentals and less on the legal determination of a company’s headquarters.

Most nations recognize this principle by adopting a territorial corporate tax. They tax economic activity that occurs within their borders and exclude from taxation income earned abroad. (That foreign-source income, however, is usually taxed by the nation where it is earned.) Six of the Group of 7 nations have territorial tax systems.

Continued in article

Burger King's "Tax Free" Inversion
"Buffett's 'Burger Tim' Inversion Adds Tax Bonus For Shareholders," by Robert W. Wood, Forbes, August 29, 2014 ---

You have to hand it to Warren Buffettthe 83-year old billionaire who has largely managed to avoid flack for doing a deal that seems to contradict his “raise my taxes” mantra. Mr. Buffett is nothing if not savvy. Sure, Burger King is going Canadian, an ideal way for a company to reduce U.S. taxes on foreign income. Admittedly, there were outcries from customers and shareholders who want the classic burger to stay here. A Whopper on a donut bun?

But it appears that Mr. Buffett and Burger King may have struck a unique balance that hits a kind of sweet spot. The companies may not integrate, and besides, each investor seems to have been told ‘to have it your way.’ As noted in whopper reason shareholders should hate inversions, most inversions aren’t attractive to long-term shareholders who face a big tax hit. An inversion is a taxable swap to the IRS.

Tax bills when you don’t receive cash are especially painful. And that’s where this deal is a kind of mashup, part inversion, part something else. The Burger King deal is quite unusual in bending over backwards to keep Burger King shareholders from getting the usual inversion tax hit. But can everyone have it their way?

One of Burger King’s main owners is Brazilian private-equity firm 3G Capital Management. Mr. Buffett seems to like working with them, as he did when it bought H.J. Heinz Co. The Burger King deal appears not to have been born as an inversion, but it morphed into one and that altered the tax treatment for American shareholders including Berkshire-Hathaway.

Yet Burger King shareholders, including 3G Capital, will not automatically owe taxes on their capital gains if they play their cards right. In most inversions, shareholders are treated as selling their shares so will owe U.S. taxes, even if they don’t actually cash out. Say you bought stock for $10 that is now worth $110. You swap your old shares for shares worth $110. Sounds OK, but not if you receive no cash and receive a tax bill from the IRS for 23.8% on your paper gain.

But this inversion with bonus fries let’s shareholders choose to receive either common stock in the combined company or units in a newly formed Ontario limited partnership, or a combination of the two. As Warren Buffett funds global donut-burger behemoth, it’s not clear if there are enough units to cover everyone.

It does appear that choosing partnership units should let shareholders defer taxes on their paper gains until they sell the units or convert them into common stock. They are supposed to be able to do that a year after the deal closes. It also looks as though hanging on to the units until death could eliminate the tax entirely. But if everyone wants the partnership units, I’m not sure what happens. Still, you have to hand it to BK for creative ways to avoid the U.S. anti-inversion penalty.

3G Capital is presumably in the driver’s seat, and it apparently intends to take all partnership units for its stake. That stake is huge, worth over $7.5 billion. And since the value has more than doubled in the last two years, those billions in gains would otherwise be taxed. It makes you wonder whether the deal got its unusual tax structure to benefit 3G Capital or the little guy.

Continued in article


Beware:  2013-14 AAUP Faculty Salary Survey ---

Jensen Comments

America's Disappearing Jobs ---

Jensen Comment
The highest rate of decline in is "fallers" who cut down trees for paper, lumber, and energy uses. For a few days I watched lumberjacks at work cutting down a few acres of timber across from our cottage. I don't think the lumberjacks even owned a chain saw or an axe. They moved in about $3 million worth of logging machinery, including the cutting machine that downs the trees and the chipping machine that swallows up whole trees (sometimes three or four or more trees at a time) and fills an 18-wheel truck with wood chips in about 40 minutes on average. The trees themselves are untouched by the lumberjacks running the big machinery. The wood chips were hauled off to a power plant in nearby Whitefield, NH.

You can see my photographs of this logging operation at

From the CFO Journal's Morning Ledger on August 28, 2014

Currency spat strands Venezuela fliers ---

With Venezuela holding back on releasing $3.8 billion in airline-ticket revenue because of strict currency controls, Delta Air Lines Inc., American Airlines and other airlines have slashed service to Venezuela by half since January. The flights that are left are too expensive for many Venezuelans to afford, with economy-class tickets to New York easily topping $3,000, six times the price of a year ago.


Belmont Club/PJ Media ^ | 8/27/2014 | Richard Fernandez
...Betrayal was in the news again today, when Britain was rocked by allegations that the entire English town of Rotherham had for years been in the grip of an “Asian” gang which raped or kidnapped or abused some 1,400 mostly white underaged girls. The town authorities apparently knew as did the police, but they suppressed the facts out of the fear of being called ‘racist’ and more probably, the physical menaces of these ‘Asians’. The ‘Asians’ were of course Pakistani Muslims....The British public are momentarily outraged, but the Rotherham officials, including the official in charge of child welfare, aren’t too...

"Big Data and Chicago's Traffic-cam Scandal:  The danger is microscopic regulation that we invite via the democratic process," The Wall Street Journal, August 29, 2014 ---

Big data techniques are new in the world. It will take time to know how to feel about them and whether and how they should be legally corralled. For sheer inanity, though, there's no beating a recent White House report quivering about the alleged menace of "digital redlining," or the use of big-data marketing tactics in ways that supposedly disadvantage minority groups.

This alarm rests on an extravagant misunderstanding. Redlining was a crude method banks used to avoid losses in bad neighborhoods even at the cost of missing some profitable transactions—exactly the inefficiency big data is meant to improve upon. Failing to lure an eligible customer into a sale, after all, is hardly the goal of any business.

The real danger of the new technologies lies elsewhere, which the White House slightly touches upon in some of its fretting about police surveillance. The danger is microscopic regulation of our daily activities that we will invite on ourselves through the democratic process.

Soon it may be impossible to leave our homes without our movements being tracked by traffic and security cameras able to read license plates, identify faces and pull up data about any individual, from social media postings to credit reports.

Private businesses are just starting to use these techniques to monitor shoppers in front of shelves of goodies. Towns and cities have already embraced such techniques as revenue grabs, encouraged by private contractors peddling automated traffic cameras.

Witness a festering Chicago scandal. This month came federal indictments of a former city bureaucrat, an outside consultant, and the former CEO of Redflex Traffic Systems, the company that operated the city's traffic cameras until last year.

When politicians are doing something inherently sleazy, sleaze percolates in all directions. The Chicago Tribune, which did yeoman's work exposing the bribery scandal, also found a pattern of implausible ticket spikes at dozens of intersections, apparently caused by the operator temporarily changing parameters for things like a rolling right on red to boost revenues.

The new company brought in to run the cameras further found that many yellow lights were set below the city and federal minimum of three seconds. Now a judge says hundreds of citizens may be due refunds. By the way, a longer yellow is the recommended solution for accident-prone intersections. A shorter yellow rings up more tickets.

Chicago is the country's premier operator of red-light cameras, generating $500 million in the past decade. Mayor Rahm Emanuel's former congressional campaign manager was even hired by Redflex to create a nonprofit to propagandize around the country for more such cameras.

It appears to be working. Well after the Chicago program became controversial, polls in Chicago continued to find what they've found elsewhere: a complicity of attitudes between certain voter groups and revenue-hungry jurisdictions. Senior citizens are especially supportive of cameras, even when understanding that local officials are motivated by money rather than safety. "Anything to make people slow down" is a quote repeatedly seen in local news reporting.

An aging society constantly taught by government and media to be fearful and dependent is one likely source of political license for more such aggressions against personal autonomy, but not the only source.

Where is the taxpaying voter who will object when government wants to monitor the caloric intake, smoking and exercise habits of those on the government health-care dole?

How about a future administration that quietly tweaks its algorithms to market abortion services to members of the opposition party and prenatal care to its own voters? That sounds fanciful (and is) but everything government does, it does politically.

"Nudge," a favorite Obama slogan for government encouraging citizens to do what government thinks is best for them, becomes "confine within strictures" in a future world where so much of our behavior can potentially be monitored. What exactly is this "privacy" that we so worry about if not the preservation of the possibility of anonymity in most of what we do in order to remain truly in possession of ourselves?



Taxpayers who received health insurance from Obamacare need to file Form 1095-A with their tax returns in 2014 and every year thereafter.

Tax professionals who are unaware of the new form is called a 1095-A that "lists who in each household has health coverage and how much the government paid each month to subsidize their premiums. Nearly 5 million people have gotten subsidies through HealthCare.gov" ---

. . .

Funneling subsidies through the income-tax system was once seen as a political plus for Obama and the law's supporters. It allowed the White House to claim that the Affordable Care Act is "the largest tax cut for health care in American history." But it also promises to make an already complicated tax system more difficult for many consumers.

Supporters of the law are also concerned about a related issue: People who got too big a subsidy for health care in 2014 will have to pay it back next year. And docking refunds will be the first way the IRS seeks repayment.

That can happen if someone's income for 2014 ends up being higher than estimated when he or she first applied for health insurance. Unless such people promptly reported the change to their health insurance marketplace, they will owe money.

"If someone wound up having more overtime than they projected, or they received a bonus for good work, these are the kind of changes that have an impact on subsidies," said Ron Pollack, executive director of the advocacy group Families USA.

Since the whole system is brand-new, experts are predicting that millions will end up having to repay money.

"The Myth of ObamaCare's Affordability:  The law's perverse incentives will have the nation working fewer hours, and working those hours less productively," by Casey B. Mulligan, The Wall Street Journal, September 8, 2014 ---

Whether the Affordable Care Act lives up to its name depends on how, or whether, you consider its consequences for the wider economy.

Millions of people pay a significant portion of their income for health insurance so they and their families can get good health care when they need it. The magnitude of their sacrifices demonstrates the importance that people ascribe to health care.

The Affordable Care Act attempts to help low- and middle-income families avoid some of the tough sacrifices that would be necessary to purchase health insurance without assistance. But no program can change the fundamental reality that society itself has to make sacrifices in order to deliver health care to more people. Workers and therefore production have to be taken away from other industries to beef up health care, or the workforce itself has to get bigger, or somehow people have to work more productively.

Although the ACA helps specific populations by giving them a bigger slice of the economic pie, the law diminishes the pie itself. It reduces the amount that Americans work, and it makes their work less productive. This slows growth in both personal income and gross domestic product.

In further expanding the frontiers of redistribution, the ACA reduces the benefits of employment for both employers and employees. Employers that don't provide health insurance are either subject to large penalties based on the number and types of employees that they have, or are threatened with enormous penalties when they get the opportunity to expand their business. About a quarter of the nation's employees, more than 35 million men and women, currently work for employers that don't offer health insurance. These tend to be small and midsize businesses with employees who already make less than the average American worker. The result of penalizing businesses for hiring and expanding is going to be less hiring and expanding.

Another sixth of the nation's employees—almost 25 million people—are in a full-time position that makes them ineligible for the law's new and generous assistance with health-insurance premiums and cost sharing. They are ineligible for subsidies simply because they are working full time and thereby eligible for their employers' coverage. Because the only ways for them to get the new assistance is to move to part-time status, find an employer that doesn't offer coverage, or stop working, we can expect millions of workers to make one or more of those adjustments.

Most people wouldn't give up working merely to qualify for a few thousand dollars in assistance. But it is a mistake to assume that nobody is affected by subsidies, because there are people who aren't particularly happy with working, planning to leave their job anyway, or otherwise on the fence between working and not working. A new subsidy is enough to push them over the edge or to get them to stop working sooner than they would have otherwise.

The law has effects that extend well beyond the employment rate and the average length of the workweek. People, businesses and entire sectors will jockey to reduce their new tax burdens or enhance their subsidies. Their adjustments to the new incentives will make our economy less productive and stifle wage growth, even among workers who have no direct contact with the law's penalties and subsidies.

The "29er" phenomenon is a good example of how the law harms productivity. Because ACA's "employer mandate" requires firms with 50 or more full-time workers to offer health plans to employees who work more than 30 hours a week, many employers and employees have adopted 29-hour work schedules. This is not the most productive way to arrange the workplace, but it allows employers to avoid the mandate and its penalties and helps the employees qualify for individual assistance.

All of this, and much more, exacerbates the societal problem that the economy cannot expand its health sector without giving up something else of value. A complex law like the ACA has a few provisions that encourage work, such as counting unemployment income against eligibility for health assistance. But the bulk of the law overwhelms them. The ACA as a whole will have the nation working fewer hours, and working those hours less productively.

I estimate that the ACA's long-term impact will include about 3% less weekly employment, 3% fewer aggregate work hours, 2% less GDP and 2% less labor income. These effects will be visible and obvious by 2017, if not before. The employment and hours estimates are based on the combined amount of the law's new taxes and disincentives and on historical research on the aggregate effects of each dollar of taxation. The GDP and income estimates reflect lower amounts of labor as well as the law's effects on the productivity of each hour of labor.

By the end of this decade, nearly 20 million additional Americans will have health insurance as a consequence of the law. But the ultimate economywide cost of their enrollments will be at least double what it would have been if these people had enrolled without government carrots and sticks; that is, if they had decided it was worth spending their own money on health insurance. In effect, people who aren't receiving assistance through the ACA are paying twice for the law: once as the total economic pie gets smaller and again as they receive a smaller piece.

The Affordable Care Act is weakening the economy. And for the large number of families and individuals who continue to pay for their own health care, health care is now less affordable.

Mr. Mulligan is a professor of economics at the University of Chicago and the author of the new e-book "Side Effects: The Economic Consequences of the Health Reform" (JMJ Economics, 2014).


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Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

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