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World Economic Growth is Slowing -- we were published in today's American Thinker
Howard Richman, 11/29/2013

We begin:

When gas prices start declining at the pump, as they have this fall, that sometimes means that the world economy is slowing. When U.S. exports decline, as they did in September, that sometimes means that the world economy is slowing.

The latest indication of a slowing world economy comes from a November 19 report from the OECD (Organization for Economic Cooperation and Development), Europe's leading economic analytical agency that tracks world economic data. It predicts that, by the time growth is calculated for 2013, world economic growth will increase just 2.7%, down from a 3.1% increase last year. There appears to be a consistent trend of declining world economic growth:

To read the rest, go to:

http://www.americanthinker.com/2013/11/world_economic_growth_is_slowing.html

Read more...

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The economic case against Obamacare -- Ray was published in Saturday's Pittsburgh Tribune-Review
Howard Richman, 11/26/2013

He begins:

ObamaCare is a classic case of a misguided and badly implemented government program. It restricts freedom of choice and imposes a series of bad new taxes. While taxes are needed to subsidize those ObamaCare participants who do not pay the full cost of their ObamaCare insurance, the selected taxes violate the accepted principles of taxation in every instance. Moreover, the law mandates coverages that increase the cost to those who do not want those coverages.

Not a single Republican voted for ObamaCare. Obviously, the Democrats, who controlled both houses of the Congress at the time, did not need or even want any Republican support for it. They wanted full credit for it. They're now getting it.

From an economist's point of view, the major defects of the law are:

To read the rest, go to:

http://triblive.com/opinion/featuredcommentary/5100523-74/obamacare-health-insurance#axzz2lfC50PPA

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People's Bank of China announces plans to reduce future currency manipulations
Howard Richman, 11/25/2013

I missed this article which appeared in Bloomberg on November 20:

The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policy makers will rein in dollar purchases that limit the yuan’s appreciation.

“It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting. Neither Yi nor Zhou gave a timeframe for any changes.

China’s foreign-exchange reserves surged $166 billion in the third quarter to a record $3.66 trillion, more than triple those of any other country and bigger than the gross domestic product of Germany, Europe’s largest economy.

 If the People's Bank of China follows through, then the following will happen in the United States:...

 

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World Economic Growth is Slowing
Howard Richman, 11/24/2013

I suspected that world economic growth was slowing when gasoline prices started to decline this fall. My hypothesis has been that short-term changes in world oil prices are largely driven by changes in world-wide demand, not supply. When the world economy is growing, world oil prices tend to rise. When the world economy is slowing, oil prices tend to fall. Thus the price you pay at your local gas station is one of the chief indicators of world economic demand. But falling oil prices could have other causes as well. Perhaps an increase in Iranian oil production, due to the lifting of sanctions, was causing them to fall.

My suspicions of a worldwide demand slowdown were given support by the latest report of United States trade. In September 2013, U.S. exports fell by $3.0 billion, on a seasonally adjusted basis, from $191.9 billion the previous quarter. When worldwide demand declines, demand for U.S. exports tends to decline. But a one-month decline in exports does not a trend make. This decline could have been an aberration.

My suspicions were confirmed by a November 19 report from the OECD, one of the organizations that tracks world economic data. It predicts that, by the time growth is calculated for 2013, world economic growth will increase just 2.7% this year, down from a 3.1% increase last year. There appears to be a consistent trend of declining world economic growth:...

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Obamacare is a Classic Case of Bad Economics From Conception to Implementation
Raymond Richman, 11/18/2013

The Patient Protection and Affordable Healthcare Act of 2010 (commonly called “Obamacare”) is a classic case of a misguided and badly implemented government program from an economic point of view. It restricts freedom of choice and imposes a series of bad new taxes. While taxes are needed to subsidize those Obamare participants who do not pay the full cost of their Obamacare insurance, the selected taxes violate the accepted principles of taxation in every instance. Moreover, the Act mandates coverages that increase the cost to those who do not want those coverages.

Not a single Republican voted for the Act. No wonder since so many provisions violate traditional American values such as financing the abortion of healthy fetuses, the provision of contraceptives, et al., not to speak of the Act’s prohibition of free choice among health insurance plans and health savings plans, and the numerous tax increases to finance the legislation. Obviously, the Democrats who controlled both houses of the Congress at the time did not need or even want any Republican support for it. They wanted full credit for it and are now getting it!  

From an economist’s point of view, the major defects of the law are:

  1. Its discouragement of competition in the health care industry.
  2. The inequitable taxes it imposes to finance the health care system and its disregard of the principles of taxation developed by economists over many decades.
  3. Its numerous fascist-like interventions in private sector decision making.
  4. The fact that it increases the cost of health care now and even more in the future.
  5. Its negative effects on employment particularly in a depressed economy.
  6. Its negative effect upon medical advances, research, and productivity.

Because it prescribes what the insurance policies must cover, consumers have little choice in selecting a plan. As a result, insurance companies cannot compete by offering alternative policies. Consumer freedom of choice is non-existent.

a misguided and badly implemented government program from an economic point of view. It restricts freedom of choice and imposes a series of bad new taxes. While taxes are needed to subsidize those Obamare participants who do not pay the full cost of their Obamacare insurance, the selected taxes violate the accepted principles of taxation in every instance. Moreover, the Act mandates coverages that increase the cost to those who do not want those coverages.

Not a single Republican voted for the Act. No wonder since so many provisions violate traditional  American values. such as financing the abortion of healthy fetuses, the provision of contraceptives, et al., not to speak of the Act’s prohibition of free choice among health insurance plans and health savings plans, and the numerous tax increases to finance the legislation. Obviously, the Democrats who controlled both houses of the Congress at the time did not need or even want any Republican support for it. They wanted full credit for it and are now getting it.  

From an economist’s point of view, the major defects of the law are:

  1. Its discouragement of competition in the health care industry.
  2. The inequitable taxes it imposes to finance the health care system and its disregard of the principles of taxation developed by economists over many decades.
  3. Its numerous fascist-like interventions in private sector decision making.
  4. The fact that it increases the cost of health care now and even more in the future.
  5. Its negative effects on employment particularly in a depressed economy.
  6. Its negative effect upon medical advances, research, and productivity.

Because it prescribes what the insurance policies must cover, consumers have little choice in selecting a plan. As a result, insurance companies cannot compete by offering alternative policies. Consumer freedom of choice is non-existent.

Some of the taxes it imposes are the following, together with some comments:...

Read more...

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Chrysler's CNG fuel tank breakthrough
Howard Richman, 11/13/2013

Chrysler announced this week that it has invented a CNG (Compressed Natural Gas) fuel tank that could revolutionize CNG-vehicle design. Here is a selection from a November 12 Automotive News article about their announcement:

Chrysler Group says it has developed a tank to store compressed natural gas that mimics human lungs and will allow the cheaper fuel source to more easily be used in automobiles....

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The US Did Not Create 205,000 New Jobs in October, 2013 -- Jobs Fell by 499,000
Raymond Richman, 11/12/2013

As we have been pointing out for several months, the data with respect to employment and unemployment published by the BLS needs to be read carefully before accepting the summaries, the news reports, and television reporting. We prefer to ignore the seasonally adjusted weekly data because as economists we see no need to seasonally adjust weekly data. If the data is seasonally adjusted, the actual data should be reported and an explanation why the trend, if any, may not be relied on because of seasonal factors could be mentioned in a footnote. Another example of the misuse of seasonal data appeared last week.

The Bureau of Labor Statistics reported that in October, 2013, 205,000 new non-agricultural jobs were created, according to a survey of employers. We were surprised by the figure since the four weekly reports made during the month indicated that more than a 1.2 million new claims for unemployment insurance were filed in October. Checking Table 1 of the monthly report corroborated what the BLS reported.

But what is one to make of Table 8, which contains both unadjusted and adjusted data from the household survey. Not seasonally adjusted non-agricultural employment decreased 499,000 and seasonally adjusted non-ag employment decreased even more by 667,000....

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Excellent NY Times Op-Ed on the Trade Deficit
Jesse Richman, 11/10/2013

Recently the New York Times published an excellent op-ed about the trade deficit.  The piece is by Jared Bernstein and Dean Baker.   They conclude:

"If we continue to run large, persistent trade deficits, we have no good choices. We can offset that exported demand with either bubbles or budget deficits. Or we can go austere and slog along with unacceptably high levels of unemployment and weak growth.

"But if we shift our focus from reducing the budget deficit to the trade deficit, we could make a big difference, not just in the national accounts, but in the lives of people for whom that unfavorable math has meant hardship for far too long."

The entire piece is worth a read...

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Reading the Tea Leaves in Virginia
Jesse Richman, 11/7/2013

Last night the votes were counted in Virginia's state-wide elections for Governor, Lt. Governor, and Attorney General along with all members of the House of Delegates.  The results defy the strong interpretations partisans of all stripes and on all sides would like to read into them. The electorate, in the end, fits no one's ideological box, and serves no party's crusade....

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Stop the Growth of Government Which Leads to Socialism Which Leads to Fascism
Raymond Richman, 11/2/2013

It is no accident that Hitler and Mussolini were socialists before they organized their National Socialist (NAZI) and Fascist parties. It is the inherent tendency of socialists to become authoritarian. It is no accident that Stalin, when the Kulaks refused to give up their crops, confiscated their farms, murdered millions of them, and exiled all the remaining to Siberia. They believe that the end justifies the means. It does but it does not justify illegal means like murder, threats of financial and bodily harm, and blackmail. Pres. Obama has now been shown to be persecuting his perceived enemies as evidenced by the IRS discrimination against conservative groups, the blatant lies that under Obamacare individuals and businesses could keep the health care policies if they wanted to, the selective prosecution of banks -- J. P. Morgan but not Goldman Sachs an Obama favorite, and now threatening Bank of America. He has also been charged with urging insurance companies not to criticize Obamacare under the implied threat that they would suffer consequences.   

The federal and state government impose huge taxes on cigarettes because they have been shown to be health threatening as if the danger associated with smoking were not enough. The hypocrisy is self-evident; the government could ban cigarette smoking as it has with marijuana and cocaine but it would lose all the money it extracts from taxes on cigarettes. ...

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]