Coyote Blog

When we gave government money targeted at single women with kids we got, incredibly, more single women with kids.  And when we give people money only when they are unemployed, we are going to get more unemployed.  The economics of this are pretty bullet-proof.  We may choose to do so because we have a humanitarian desire to cushion hardship, but we should accept that when we reduce the hardship of being unemployed, and actually give people money for not working, we are going to get more people unemployed for longer periods.

Apparently, Nancy Pelosi lives in a different world (no surprise there) there supply and demand curves slope the opposite direction.

Talking to reporters, the House speaker was defending a jobless benefits extension against those who say it gives recipients little incentive to work. By her reasoning, those checks are helping give somebody a job. "It injects demand into the economy," Pelosi said, arguing that when families have money to spend it keeps the economy churning. "It creates jobs faster than almost any other initiative you can name."

Pelosi said the aid has the "double benefit" of helping those who lost their jobs and acting as a "job creator" on the side.

I am rapidly approaching the point where I am ready to throw out the whole of macroeconomics as unprovable and unproductive, serving the purpose of allowing statists to do whatever they hell they want to do with some fig leaf from some goofball macro-economics theory  (and if the necessary theory is not  on the books, Paul Krugman, formerly a real economist, will be more than happy to whomp one up for his buddies on the Left.)

It used to be that it took something like 5-6 years to develop a new vehicle from scratch.  Apparently, though, GM has accelerated this to 6 months, as Nancy Pelosi is taking personal credit for the recently released GM vehicles.

House Speaker Nancy Pelosi and top Obama administration officials defended last year's federal bailout of automakers on Monday, pointing to new vehicles at the Detroit auto show as a sign of the industry's rebirth. ...

"We've seen ideas turned into policy turned into product," Pelosi said.

Pelosi and company fawned over cars like the Volt, expected to be a money-loser from the get-go, while ignoring the trucks and larger family cars where GM actually makes money.  Bob Lutz steps up to take on the Orren Boyle mantle:

GM vice chairman Bob Lutz said Sunday that Washington's interest in the auto industry was welcome after being ignored by U.S. lawmakers for decades while other nation's backed their carmakers.

He said he had always thought the U.S. "was the only car-producing nation in the world where the administration and the politicians ... didn't know about American car companies, didn't care about American car companies - none of the politicians drove American cars."

"It's like we were the stepchild of the American industry and the American economy," Lutz said.

This is hilarious - few other industries have been the subject of more government bailouts and protection and subsidies than the auto companies.  Remember all those DOE and DOT grants?  Remember Chrysler bailout #1?  Remember the tariffs and import quotas?  But wait, it gets even more barf-inducing:

"Unfortunately it took the financial failure of the American automobile industry to make the whole country aware of the importance of the American automobile industry," Lutz said at a Society of Automotive

Analysts event.

See, its all of our fault they went bankrupt, not their crappy management, crappy designs, and crappy labor agreements.  All our fault.  I feel so terrible.

Well, it looks as if the "stumulus" bill has passed, and its all over except for the conference committees (which will likely comprimise the House and Senate bills by adding a $100 billion or so).

There is just no way there can be a Keynesian muliplier above 1 for such spending.  Even if someone could show me a theoretical example crafted for a particular economic situation with the best of all governments, there is simply no way this real-world government is going to spend the money that well.   500 geniuses with perfect incentives couldn't do it, and certainly the folks in Congress are not geniuses and have far less-than-perfect incentives.

So you ask, will we get any stimulative effect?  I would answer:  Just one.  Obama and Congress will now shut the hell up trying to panic everyone into battening down the hatches for the worst economy in history, and folks can get a bit of breathing space to look around them and see that business opportunity is still there.  This is $800 billion in hush money, a bribe we are paying Obama and Pelosi in the form of passing a lot of their pent up leftish wish list, in return for them taking some ownership interest in real economic health.

Well, I was cynical about Obama giving up executive power, as politicians generally have a different view of runaway government power once that power is in their hands.  But some good stuff has come out already:

• Obama rescinded Bush's 2001 executive order allowing former presidents, vice presidents, and their heirs to claim executive privilege in determining which of their records get released to the public. Even better, he's requiring the signature of both his White House counsel and the attorney general before he can classify a document under executive privilege.
• Issued a memorandum to all executive agencies asking them to come up with a new plan for open government and complying with FOIA requests. He is also instructing three top officials, including the U.S. attorney general, to come up with a new policy on open government. The new policy would replace the existing policy, infamously set by a 2001 memo from John Ashcroft that instructed federal agencies to essentially to take every measure they can to refuse FOIA requests.
• Put a freeze on the salaries of top White House aides.
• Suspended the military trials at Gitmo, and is expected to issue an order closing Gitmo as soon as today.

That's a really good start.  I am now more optimistic that we might actually get some rollbacks of government power vis a vis FISA and the Patriot Act.  The Fourth Amendment took a serious beating since 9/11, and hopefully it is not too late to roll back the precedents set over the last 7 years.

Of course, all of these activities are reductions of executive power in areas in policy areas Obama wants to undo actions by GWB.  The real test will be to see his approach to executive power in areas where he wants to go past GWB.  A good example is carbon dioxide regulation, where it has been suggested Obama should take the issue out of Congress's hands and establish a regulatory regime by executive fiat.

While we are on wish lists, I have often told my Republican friends that a fault of Bush's that did not get enough press was his apparent lack of willingness to provide adult supervision to Congress.  Congress needs to be shamed occasionally to stay on task and not drift off into feeding fests at the trough, and only the President can really do this.  Bush did not have the desire to face down a Republican Congress, and probably had lost all his credibility by the time he faced a Democratic Congress.  Harry Reid and Nancy Pelosi will take a lot of baby-sitting to avoid veering off into their worst behaviors, and it will be interesting to see if Obama will do so.  I think it is in his interest to do so.  Already, the ridiculous stimulus bill Pelosi has crafted threatens to embarrass him.  If I were Obama, I would be furious.  He expends his early political capital for a stimulus bill, and gets a total porked-up lobbyist's-fantasy from the House.

I predicted it here.  Now see it here:

House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit's Big Three automakers."We may need to make a statement of confidence in our auto industry," Pelosi told NPR this afternoon. "We're not saving those companies, we're saving an industry. We're saving an industrial technological and manufacturing base... It's about jobs in America."

I wrote why its better to let GM fail.

So what if GM dies?  Letting the GM's of the world die is one of the best possible things we can do for our economy and the wealth of our nation.  Assuming GM's DNA has a less than one multiplier, then releasing GM's assets from GM's control actually increases value.  Talented engineers, after some admittedly painful personal dislocation, find jobs designing things people want and value.  Their output has more value, which in the long run helps everyone, including themselves.

The alternative to not letting GM die is, well, Europe (and Japan).  A LOT of Europe's productive assets are locked up in a few very large corporations with close ties to the state which are not allowed to fail, which are subsidized, protected from competition, etc.  In conjunction with European laws that limit labor mobility, protecting corporate dinosaurs has locked all of Europe's most productive human and physical assets into organizations with DNA multipliers less than one.

Pelosi held a meeting Monday with Democratic leaders to consider a request from Detroit's Big Three automakers for another $25 billion in "bridge financing" to help them survive a huge downturn in auto industry.

...you equate the government choosing not to provide a service with that service being banned.  Michael Cannon quotes our Speaker of the House:

House Speaker Nancy Pelosi's understanding of government's role in a
liberal democracy (and of the veto power) may be worse than I thought. A reporter sends a transcript of a press conference that Pelosi held yesterday, where she made the following remarks:

Oh, [President Bush] used the veto pen to veto the stem
cell research bill.  That was a major disappointment. . . . I remember
that veto very well because he was saying, "I forbid science to proceed
to improve the health of the American people."

Regarding Bush's threatened veto of the Democrats' expansion of the State Children's Health Insurance Program:

The President is saying, "I forbid 10 million children
in America to have health care." You know from your Latin that is what
"veto" means.

Pelosi should know that there is a difference between the government not funding something and forbidding it.