Education: basic economics.

The findings reported in the article below only reinforce my view that education is the single most important factor in moving any society forward, and we are lacking. When it comes to Economics, most people don’t understand the basics – at all. In a society where young people are supposed to be better educated lack a real understanding of how the system works, we have a problem.

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Article: Millennials’ Political Views Don’t Make Any Sense

That’s not a harsh assessment. It’s just a fair description.

Millennial politics is simple, really. Young people support big government, unless it costs any more money. They’re for smaller government, unless budget cuts scratch a program they’ve heard of. They’d like Washington to fix everything, just so long as it doesn’t run anything. That’s all from a new Reason Foundation poll surveying 2,000 young adults between the ages of 18 and 29. Millennials’ political views are, at best, in a stage of constant metamorphosis and, at worst, “totally incoherent,” as Dylan Matthews puts it. It’s not just the Reason Foundation. In March, Pew came out with a similar survey of Millennial attitudes that offered another smorgasbord of paradoxes:

    • Millennials hate the political parties more than everyone else, but they have the highest opinion of Congress.
    • Young people are the most likely to be single parents and the least likely to approve of single parenthood.
    • Young people voted overwhelmingly for Obama when he promised universal health care, but they oppose his universal health care law as much as the rest of the country … even though they still pledge high support for universal health care. (Like other groups, but more so: They seem allergic to the term Obamacare.)

1. Millennials are more liberal than the rest of the country, particularly on social issues, but they get more economically conservative when they make more money.


Richer Millennials on Redistribution: No, Thanks

Reason Foundation

2. Millennials don’t know what they’re talking about when it comes to economics.

Young people lean way left on issues like gay marriage, pot, and immigration. On abortion and gun control, they swim closer to the rest of the electorate. But on economics, they’re all over the map. You get the sense, reading the Reason Foundation and Pew studies, that a savvy pollster could trick a young person into supporting basically any economic policy in the world with the right combination of triggers. Conservative and liberal partisans can cherry-pick this survey to paint Millennials as whatever ideology they want. To wit:

  • On spending: Conservatives can say: 65 percent of Millennials would like to cut spending. Liberals can say: 62 percent would like to spend more on infrastructure and jobs.
  • On taxes: Conservatives can say: 58 percent of Millennials want to cut taxes overall. Liberals can say: 66 percent want to raise taxes on the wealthy.
  • On government’s role in our lives: Conservatives can say: 66 percent of Millennials say that “when something is funded by the government, it is usually inefficient and wasteful.” Liberals can say: More than two-thirds think the government should guarantee food, shelter, and a living wage.
  • On government size: Conservatives can say: 57 percent want smaller government with fewer services (if you mention the magic word “taxes”). Liberals can say: 54 percent want larger government with more services (if you don’t mention “taxes”).
Overall, Millennials offer the murky impression of a generation that doesn’t really understand basic economics. To be fair, neither do most Americans. Or many economists, perhaps. Or most journalists. Economics is hard.

Socialism or Capitalism?

Reason Foundation

Source: originally published by Derek Thompson at The Atlantic.

IMF: the importance of being boring.

The role of the IMF, how it’s perceived, and who it is influenced by.

The International Monetary Fund is an immensely useful organization, able to deliver substantial amounts of financial and technical assistance at short notice to almost any place in the world. It also has the great advantage of almost always being perceived as incredibly boring.

Unfortunately for the IMF, it now needs a slightly higher public profile to convince the US Congress to agree to some important reforms. […]

In the realm of international economics, being perceived as boring confers power to the extent that it allows major decisions to be made without a great deal of external scrutiny. […]

Of course, in countries receiving assistance – such as Greece in the last few years – the IMF excites great passion. But in the halls of the US Congress, few people pay any attention.

In the highly charged partisan atmosphere of Washington, DC, this is without question almost always an advantage. Imagine if the disbursement of all assistance to countries in trouble required Congressional approval, let alone spending from the US budget. Nothing good would ever happen – and certainly not for the US.

The IMF is founded on the premise that it represents cooperation between all of the countries of the world. The reality is that it stands for and operationalizes US power, in cooperation with America’s closest allies.

The US does not dictate what happens at the IMF, but it does have a disproportionate influence. […] One major goal in recent decades has been to shift representation at the IMF somewhat away from Europe and toward the world’s emerging markets. […]

Original post: Project Syndicate.

Milton Friedman on Social Security, Bill Cliton, the FED, and more.

Video

“The citizen of the US who is compelled by law to devote something like 10% of his income to the purchase of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his personal freedom.”
– Milton Friedman, Capitalism and Freedom.

While some points are taken a little too far, it is always incredible to listen to Milton Friedman speak.

Food stamps.

Food stamps have grown to become the second most expensive federal welfare program, behind only Medicaid. In recent years, enrollment in the Supplemental Nutrition Assistance Program (SNAP), the U.S. government food stamp program, has increased dramatically, rising from 26 million in 2007 to almost 47 million in 2012. That is one in seven U.S. residents receiving benefits in an average month.

As Henry Olsen at the National Review puts it, “food stamps cost too much, have grown too quickly, encourage government dependency, and discourage work”.

A rise in the participation rate and costs of such welfare programs is expected to rise during economic downturns, which a number of studies cite as proof of the programs effectiveness. Temporary changes in policy in the American Recovery and Reinvestment Act of 2009 increased aid during the downturn, in efforts to help stimulate the economy. What this argument fails to address is the significant portion of growth attributed to increasing fraud and abuse of the system. Food stamps and other in-kind transfer payments encourage idleness. The Government Accountability Office reports that despite great progress, “the amount of SNAP benefits paid in error is substantial, totaling about $2.2 billion in 2009.”

There are other more efficient programs to help provide assistance that are more effective and encourage employment.

As economist Milton Friedman stated, “nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own.” The conventional economic thought is that cash transfers are more effective at helping the poor than in-kind gifts, such as food stamps and housing vouchers. We enjoy spending our earnings in whichever way we see fit; surely welfare recipients would also like that freedom. It gives us the choice to spend on what best fits our needs. In Free to Choose by Milton and Rose Friedman, the economists argue for “replacing the ragbag of specific programs with a single comprehensive program of income supplements in cash.”

By primarily giving cash transfers, it gives people the ability to choose what they want instead of giving them what a particular group thinks they ought to want. It creates a more efficient welfare system that provides more freedom and better incentives for welfare recipients.

Sources: Congressional Budget Office, National Review, The Government Accountability Office, Free to Choose, by Milton Friedman and Rose Friedman.

Government data services down.

I made an attempt to visit the Bureau of Economic Analysis website this morning (a heavily cited and used government data site) and found this message:

“Due to the lapse in government funding, http://www.bea.gov will be unavailable until further notice.”

Other government websites that track the economy and job market are either  shut down or have posted notices that they won’t be updating their numbers during the shutdown. The labor market monthly numbers produced by the Bureau of Labor Statistics we would expect to see this Friday can’t produce the report under shutdown staffing levels, regardless of having the data previously collected.

I guess we will have to wait until all Federal services are back up in order to access the damage this shutdown is having on the economy. Interesting.