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Tim Taylor summarizes the data from the Center for Responsive Politics:

Total spending for the 2014 Congressional races looks like it will come in at about $4 billion, quite similar to the amount spent in 2012 and 2010. In the context of a high-income country with a population of nearly 320 million, this is not a large amount. As I point out in my Principles of Economics textbook (which I naturally recommend for its combination of high quality and moderate price), “For example, consumers in the U.S. economy spend about $2 billion per year on toothpaste. In 2012, Procter and Gamble spent $4.8 billion on advertising, and General Motors spent $3.1 billion. Americans spend about $22 billion per year on pet food—three times as much as was spent on the 2012 election.” As another comparison, Americans spend about $8 billion each year celebrating Halloween.  With the US government making decisions that involve $3.5-$4 trillion in spending and taxes, not to mention the nonmonetary effects of other laws regulatory rulings, people are going to allocate resources to try to affect those outcomes.

I recommend clicking through to some of the charts. On the snarky side, you may want to focus on this one:

As the list shows, these biggest organizational donors tend to lean to the Democrats. Koch Industries, which seems to get considerable public attention, is 17th in these rankings.

I wonder if the kids who crashed the ASSA meeetings condemned the non-Mankiws of the wold? Did they scream at Picketty for taking money from Big Left donors? Of course, I am not asking for equal treatment, I happen to not think Picketty or Krugman or people of the left take money from evil interests and then research and write according to their puppet masters. If anything, the arrow goes in the other direction. In any case, there is lots of interesting data in the post.

For those of you who like supply and demand and basic economics – does the lack of dollars in American politics give you reason to be happy, sad or otherwise?

A new paper on the labor market impacts of cap and trade for NOx (a good program, by the way):

Who Loses Under Power Plant Cap-and-Trade Programs? by Mark Curtis

This paper tests how a major cap-and-trade program, known as the NOx Budget Trading Program (NBP), impacted labor markets in the regions
where it was implemented.  The cap-and-trade program dramatically decreased levels of NOx emissions and added substantial costs to
energy producers.  Using a triple-differences approach that takes advantage of the geographic and time variation of the program as well
as variation in industry energy-intensity levels, I examine how employment dynamics changed in manufacturing industries whose
production process requires high levels of energy.  After accounting for a variety of flexible state, county and industry trends, I find
that employment in the manufacturing sector dropped by 1.3% as a result of the NBP.  Young workers experienced the largest employment
declines and earnings of newly hired workers fell after the regulation began.  Employment declines are shown to have occurred
primarily through decreased hiring rates rather than increased separation rates, thus mitigating the impact on incumbent workers.

Arnold Kling finishes a preamble to a review of a popular book in Political Science:

Instead, I think this reflects the ease with which someone on the left can obtain high status in academia, and the corresponding difficulty for those on the right. If you’re on the right, you have to demonstrate awareness of important left-wing academic ideas, or you will be will be widely denounced as an ignoramus. But the converse is not true. I would bet that I am the first person to dare to suggest that Katznelson suffers from ignorance.

I am not sure the left-right dichotomy is precisely right, I think the dichotomy is correlating with something else. Here is the full piece.

Happy New Year

Happy New Year everyone. I think the world would be a nicer place if we all took a moment to have a drink with one another, we all took a moment to share a meal with one another, and of course we all decided to trade with one another.

This cartoon hit my desk the other day:


Ask almost anyone to define “capitalism” to you and you will inevitably get a blank stare. If you try and push the question I suspect you’ll get people answering something like the way people are asked to identify “porn” … they can’t, but they know it when they see it. Except, of course, with capitalism, no one sees it and it certainly is not thrust upon anyone. You may call me guilty for not defining capitalism for you here or for my students, and maybe I will in due time explain why. It might be better to define capitalism by defining what it is not, or by defining its opposite, for your reference. And you should consider that it is not at all correct to define capitalism by searching for synonyms that you either like or dislike – such as democracy, anarchy, crony-ism, slavery. It is none of those things. And it is not sufficient to define capitalism by illustrating several features of capitalism – for they are likely neither necessary nor sufficient identifications. For example, under capitalism, we are very likely to see free labor markets, product markets and capital markets, but it is not at all the case that capitalism does not or cannot “exist” under much more regulated versions of (at least two) of those markets. Similarly, while you may be inclined to suggest that capitalism equals small government, again that is not at all a definition or a requirement. Capitalism can and has existed alongside with governments of many shapes, configurations and sizes.

One reason for the confusion is that people are prone to straw-manning ideas they do not like. Straw-manning is not the quite right term here, for it happens in both directions and in different forms. But here’s the point – if someone does not like corruption, and they see that in a world where there is corruption there also happens to be capitalism, then they are prone to arguing a weak-form argument against capitalism, “when we have capitalism, the forces of corruption are really unleased.” In some cases, you see a stronger form argument, and one I believe people are prone to because of mental substitutions, “capitalism IS corruption!” That latter of course is as silly as arguing that Wintercow IS a hockey stick.

For now, I do not wish to get into the psychology of anticapitalist beliefts, rather I’d like to take a more inquisitive tone. There seems to me to be a common perception that “capitalism is awful” or that it at a minimum has led to a state of the world that is undesirable. How  do I know this? I read hundreds and hundreds of student essays each year – the sentiment is spelled right out for me, and this is true even though students regularly try to blow smoke up my butt thinking that if they write something like, “capitalism is, like, um, so, awesome …” that this secures them an automatic A. What this really secures for them is a heavily marked-up paper with a poor grade that they never bother to pick up, yet complain about nonetheless – but I digress.

If there is a common thread among the serious intellectual arguments for why capitalism is awful, it really would (and does) focus on what changes have been wrought by capitalism (again even this line of questioning is awkward given that no one “installed” capitalism and chose it from among a panoply of options). To do this one would want to compare the world before anything like capitalism seemed to be happening to the world most of us live in today. And to make that comparison meaningful you’d have to first zero in on what changes, exactly, were caused BY capitalism itself. Remember a zillion things have happened under capitalism. For example, the rotation of the Earth has slowed each and every year since capitalism “started” … no serious person is going to argue that capitalism caused the Earth to slow down. My sense is that there are at least three basic observations made by people worried about capitalism, and each seems to be derived from a different (and perhaps unknowable) counterfactual and which I think change depending on the time period people focus on.

First, did capitalism CREATE NEW negative forces and features in the world that DID NOT EXIST PRIOR to capitalism?

Second, while there were clearly bad things going on in the world before capitalism, did the emergence of capitalism perpetuate or exacerbate the bad things that were going on?

Third, is capitalism awful because it is not awesome enough? In other words even though the world is unquestionably richer, people are living longer, material comforts are higher, and this is true for even the poorest people in the world, capitalism itself did not undo the world’s existing evil and perhaps it highlights, starkly, the evils from our past?

There are many other arguments of course that are not nearly as straightforward or logical, and we can ask similar questions about the various forms of government that are out there. Without answering the above three questions, I suggest that most people who are talking or arguing about capitalism are not asking those questions, and virtually no one is honestly answering them.

He knows a lot more about chemicals than I do … I thought you’d enjoy reading his perusal of what’s in the fracking cocktail. I WILL add that the one that everyone gets worked up about is benzene. I will also add that released methane is not harmful to humans only to global warming. There is a team of scientists driving around PA right now detecting methane concentrations across the state and then using radio-isotopes to identify the likely sources of those emissions. Finally, remember that fracking has always been intended to be banned, it’s just the justification for banning it from time to time must change. I myself am almost surely exposing my children to more danger than any fracking site by (1) choosing to drive a fuel efficient Mazda 3 and (2) buying a home that sits about 150 yards from a major highway – I am SURE the truck emissions alone make the air quality at my home worse than what happens at a fracking site. But I digress:

From the Newsday article: (http://www.newsday.com/opinion/andrew-cuomo-makes-the-right-call-on-fracking-lane-filler-1.9724052)

“Seriously, it’s difficult to picture my grandkids in the year 2064 saying, “Man, I sure am glad they decided to shoot millions of gallons of water and nasty chemicals the drilling companies refused to identify into the earth 50 years ago to extract natural gas.””

Does the author know that fracking was introduced in the late 40’s and “massive” fracking started in the late 60’s? These are things I know and I haven’t dug too far into the fracking issue. The author doesn’t need his grandkids, he can have a 50-year opinion on it himself. It doesn’t seem to be too informed of an opinion, however.

New York Times Article: http://www.nytimes.com/2014/12/18/opinion/gov-cuomo-makes-sense-on-fracking.html

“Acting health commissioner, Dr. Howard Zucker, told a meeting of the governor’s cabinet that “the science isn’t there” to say definitively whether hydraulic fracturing is safe or not. But judging from the overall weight of evidence, Dr. Zucker advised against going forward. “Would I live in a community with (hydraulic fracturing) based on the facts that I have now?” he said at one point. “Would I let my child play in a school field nearby?” After looking at the questions raised in numerous reports, he said, “my answer is no.” Mr. Cuomo found Mr. Zucker’s personal response particularly impressive.”

The science isn’t settled, but lets ban it because I don’t want my kids near it. So he didn’t give a reason for the ban other than saying, “I don’t know”. I’m fine with him saying “I don’t know” but I don’t take that as a reason for an outright ban. This is what comes from the preeminent expert on fracking in NY State?

Anyway, I’ll grant him his argument. So perusing wikipedia and here are the common additives to fracking fluid* (my additions are in parenthesis at the end of each):

Acids—hydrochloric acid or acetic acid is used in the pre-fracturing stage for cleaning the perforations and initiating fissure in the near-wellbore rock.(Hydrochloric acid is used in disinfectants and cleaning toilet bowls because it dissolves the rust. Acetic acid is the major component of vinegar and gives it it’s smell.)

Sodium chloride (salt)—delays breakdown of gel polymer chains.(I don’t think you need my input on this one).

Polyacrylamide and other friction reducers decrease turbulence in fluid flow and pipe friction, thus allowing the pumps to pump at a higher rate without having greater pressure on the surface.(I didn’t know this one! But I did find out is used to manufacture soft contact lenses)

Ethylene glycol—prevents formation of scale deposits in the pipe. (Used in your typical antifreeze. Slowly being replaced by polyethylene glycol and others because ethylene glycol is toxic. But remember, toxicity depends on dose.)

Borate salts—used for maintaining fluid viscosity during the temperature increase. (This is Borax!)

Sodium and potassium carbonates—used for maintaining effectiveness of crosslinkers.(I hope you don’t wash your clothes!)

Glutaraldehyde—used as disinfectant of the water (bacteria elimination) (Used to disinfect medical equipment. Disinfecting medical equipment is a a higher class of disinfectants, deemed safer. Don’t use bleach to disinfectant your scalpel.)

Guar gum and other water-soluble gelling agents—increases viscosity of the fracturing fluid to deliver proppant into the formation more efficiently.(Don’t brush your teeth either!)

Citric acid—used for corrosion prevention. (Watch out for soda! They may actually be a good idea, but that’s up to you. Also used in a ton of household cleaners, shampoos, handsoaps.)

Isopropanol—increases the viscosity of the fracture fluid.(Have you sanitized your hands? Yeah, you have directly put this on you.)

There are tons of other uses besides just the ones there, but I think it would be a nice start to ban all those activities. I can’t have my kids in a house or a school or a car until we “know”! Also for reference, any disinfectant is directly approved by the EPA and any hand sanitizer has to comply with FDA monographs.

*Yes, I know there are plenty of other chemicals used in fracking fluid, but I’ve never heard any fracking activist explain which ones they are actually talking about and why they are bad. They usually just scream about “CHEMICALS” in a general, terrified tone. The farthest I’ve seen them go on a knowledge level is saying “known carcinogens”. I will grant them that, however, I can call coffee (classified as 2b in the IARC monographs) a carcinogen. So again, what are we talking about?

That headline is not even made up, or not really. Remembering of course that what I am about to critique is an opinion piece, here are some gems. The following comes from a WSJ OpEd from the CEO at YouTube (and an employee of Google).

But support for motherhood shouldn’t be a matter of luck; it should be a matter of course. Paid maternity leave is good for mothers, families and business. America should have the good sense to join nearly every other country in providing it.

If giving 4 months of paid maternity leave is so obviously good for employees AND employers what is preventing potential employees from negotiating for that with their firms? And what is preventing firms from offering these profit enhancing, turnover reducing, morale boosting, incentives to their employees? Surely the President of a company, a large company, a powerful company that hosts all manner of economics videos could offer some insights as to what factors make it hard for this mutually agreeable outcome to emerge. Are the payroll tax laws such that firms paying for paid leave are not willing to make those kinds of payments as compared to offering even greater piles of tax favored health insurance? It’s not just bad economics to assume that huge piles of cash are just lying on tables, it is not really reasonable opining to just say, “the government should do it … because … ”

In an article about the awesome benefits for firms and workers from paid maternity leave we see:

Paid maternity leave is also good for business. After California instituted paid medical leave, a survey in 2011 by the Center for Economic and Policy Research found that 91% of employers said the policy either boosted profits or had no effect. They also noted improved productivity, higher morale and reduced turnover.

Now for starters – had this article been about the benefits of eliminating the minimum wage and the opinion writer said something to the effect of, “a survey by the Cato Institute found …” you can be SURE as sh!t that “Cato Institute” would have been preceded with, “libertarian leaning” or “conservative leaning” … how about CEPR? Those of you who know their work know what they are all about. Second – a survey? If I survey all of my students about whether they did their readings last night, 90% of them would say yes. I’ll leave it to my more enterprising readers to actually go into the peer-reviewed literature to tell us what economists who have done actual studies on paid leave have found. I don’t doubt that they’ve found positive results, the point rather is that when you are relying on surveys from an advocacy group dedicated to supporting ideas like this, it’s not really anything folks can learn anything from. Imagine reading a paper by …. oh, you get the point.

That last point is one we’ve seen at Google. When we increased paid maternity leave to 18 from 12 weeks in 2007, the rate at which new moms left Google fell by 50%. (We also increased paternity leave to 12 weeks from seven, as we know that also has a positive effect on families and our business.) Mothers were able to take the time they needed to bond with their babies and return to their jobs feeling confident and ready. And it’s much better for Google’s bottom line—to avoid costly turnover, and to retain the valued expertise, skills and perspective of our employees who are mothers.

Let’s ask two rhetorical questions perhaps. First, does the expansion of this policy come with ANY unintended side effects? Did it, perhaps increase the propensity of families to choose to work there in the first place or increase the likelihood of families having children? I actually would think this would be a happy outcome, but things like this would be nice to know. More important … 50% of what? Were there 10 moms who used to leave google per year and now that number is down to 5? Was it 1,000 now down to 500? Was it 2 per year down to 1? Doesn’t such a thing matter? We are all about sciency-good analytics aren’t we? What is the annual variance in defections and how does this 50% number fall within those ranges? Just askin’

Finally, I think this is quite the doozy:

According to a survey released in May by the United Nations’ International Labor Organization, the U.S. is the only country in the developed world that doesn’t offer government-mandated paid maternity leave. Every other developed country offers paid maternity leave benefits through social-security programs, so businesses don’t have to shoulder the entire cost. Paid maternity leave isn’t just a First World perk—the U.S. is one of only two countries of the 185 surveyed that does not offer it. The other is Papua New Guinea.

We’ve covered Progressive Cargo Cultism here before, but here is more evidence. “Super awesome enlightened countries have paid maternity leave, so mandating here would also make us super awesome and enlightened.”  What’s the damn obsession with “what everyone else is going?” Those games are fun to play, I don’t think people really want to go down that path seriously. It’s really a poor argumentative tactic, especially for one printed in the WSJ or other reputable source. If that’s the quality of argument we are seeing in some of the best outlets, one can only imagine what is happening in the back alleys of Tumblr and Facebook and other places. But of course that’s not the deepest of our troubles. The deepest trouble is that Ms. Wojcicki seems to me to be, well, you give it a name. The US government doesn’t force employers to offer 18 weeks of paid maternity leave … and only PAPUA NEW GUINEA is in the same boat. Which can only mean one thing: “THEY are awful” and since they are awful and don’t offer paid maternity leave, we are just as awful as them. You can go where you want with that. If it’s not some blatant “-ism” then I don’t know what is.

There is a reason I’ve committed to withdrawing, this sort of nonsense is it.

The inevitable has become reality: New York State has banned fracking. Makes this sort of thing rather laughable, now doesn’t it? What can I really say? The epidemiology is not there to support “fracking” as being particularly dangerous. The environmental research is not there to support the idea that it is particularly harmful. Remember, good economics and environmental policy asks, “as compared to what?” Now I see several points here once you realize this question is important:

  1. How does fracking rank, in terms of absolute risks, in terms of things that threaten water in New York? I have asked this question for years and no one gives a clear answer, not least the fractivists themselves.
  2. EVEN IF methane leaks from wells and neutralizes any CO2 benefits we get from using gas, are not the reductions in particulate emissions we get from burning gas worth A LOT LOT LOT more than the potential benefits or costs to global warming from burning gas? Indeed, not too long ago some famous economist made the argument, a persuasive one, that the NET impact of coal on the US is negative. In other words, it’s not that coal produces negative externalities, it’s that the negative external costs are larger than the social gains created by the fuel itself. I am sure Alex Epstein would disagree.
  3. I think the fractivists find themselves in all kinds of twisty pretzels if in fact they support the ban on anything grounded in reason and rational argument. They support the ban, plain and simple, because, well, because the 99%. They support the ban because social justice. They support the ban for … symbolic reasons. We know this has to be true. Why? If global warming is the greatest threat to mankind and we believe in the Precautionary Principle, then we should be going nuts to do anything to reduce our reliance on coal. And empirically gas has been able to replace coal over the last 7 years.
  4. What is most interesting about fractivist arguments is that “gas doesn’t generate much in the way of economic benefits.” What if I decide to agree with that argument? I think it opens up a whole host of really exciting possibilities. Consider this: the minimum wage doesn’t produce too much in the way of economic benefits, so it should be banned! Or how about this, there is no evidence that “green jobs” and alternative energies have done anything to the economy and plenty of reason to believe they have hurt it – so let’s ban those. Or how about this: since people believe that natural gas can’t really displace too much existing energy, it should be banned. Then, I am all for the argument, and it is true, that NO RENEWABLES have been demonstrated to take any fossil fuel energy offline. Since renewables can’t reduce fossil fuel use, they should be banned. Or how about the small economic benefits to gas? Well, you know, almost any industry provides very small benefits on its own. Let’s ban the local bakery businesses: after all, they contribute to global warming and produce only a very small measurable economic benefit. Or how about we ban organic farming? The farms don’t really employ many people, they increase land under cultivation, and given the high costs of the food produced not only do they not do very much for the economy, they are techniques that are out of reach for the neediest people. Or how about this? We shouldn’t permit recreational fishing in New York. That activity has a small impact on the economy and of course threatens the health of lakes and related ecosystems.
  5. The US shale boom was deemed to be too small to have any meaningful impact on global markets.
  6. I’m happy with the ban, I really am. Now I don’t need to stare at the No Fracking signs and watch the protests all the time. My question is, what will the fractivists turn their attention to next? I will give enthusiastically support the consistent ones that show me the real risks fracking imposes to water, air, soil, climate and human health and then go one by one protesting and banning ANYTHING that is worse than fracking.

New York State: open for business!  And in other news, more central planning – but when it’s sponsored by a university it’s all good – the smart people know what they’re doing.

Of course, he did not go far enough on Cuba, but that’s like getting angry at … well, you find an apt analogy.

I am ready for an “opponent” of mine to say, “but then you just approved an Executive Order and aren’t you really against overreaeches of power?” You DO have a point. But this is him undoing a bad law. You might also say the same about immigration. Allowing people to interact seems to me a REDUCTION in power.

“They” said it, not me. I have a somewhat more nuanced take, but I’m here to report the news, that’s all:

Carroll, Thomas, Djeto Assane, and Jared Busker. “Why it Pays to Major in Economics.” The Journal of Economic Education 45, no. 3 (2014): 251-261.

Abstract: In this article, the authors use a large, recent, and accessible data set to examine the effect of economics major on individual earnings. They find a significant positive earnings gain for economics majors relative to other majors, and this advantage increases with the level of education. Their findings are consistent with Black, Sanders, and Taylor (2003), documenting that about two-thirds of the bachelor’s degree premium for economics majors can be attributed to the type of job economics majors perform, and about one-third is a premium that economics majors earn over other workers within the same job.

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