Meanwhile, Across The Pond....

On economics blogs this week, the big news has been the latest World Economic Outlook published by the International Monetary Fund (IMF). The heart of the report:

"The main finding, based on data for 28 economies, is that the multipliers used in generating growth forecasts have been systematically too low since the start of the Great Recession, by 0.4 to 1.2, depending on the forecast source and the specifics of the estimation approach. Informal evidence suggests that the multipliers implicitly used to generate these forecasts are about 0.5. So actual multipliers may be higher, in the range of 0.9 to 1.7."

Multipliers? What's that about?

It is a dispute as old as the formal study of economics. Say and certain classical economists contended that government spending will have no effect on the economy as a whole. Government spending will "crowd out" private spending. There is  thus no "multiplier" from government fiscal measures that will improve the economy. In the long run the economy will fix itself.

"In the long run," economist John Maynard Keyenes quipped, "we will all be dead."

In recent years, the dispute has manifested itself in arguments over how big the multiplier is. Some have said, if it exists, the multiplier effect is very small. Not long ago the IMF official position was to that effect.

The new report says, in effect, "we were wrong."

Why is this important? Because the position of the IMF and that of some other powerful commentators has been that countries must reduce debt, even when their economies are experiencing little or no growth. The new insight: contractionary policies contract economies.

Duh.

Economist Kate McKenzie explains here. Australian economist Bill Mitchell explains here. Mitchell summarizes:

"1. The IMF is incompetent not because its staff are stupid but because the staff use the wrong models and operate in a make-believe world.
2. The world economy is enduring on-going stagnation because there is not enough spending.
3. Monetary policy – whether it being normal interest rate management or the aytpical operations such as quantitative easing – will not resolve a situation where the non-government sector is intent on not spending and the government is intent of pursuing fiscal austerity. The obsession that the policy watchers have with “what is the central bank going to do” is revealing but a waste of time.
4. Fiscal policy activism is desperately required and most nations should introduce new stimulus programs, targetted at direct job creation, to kick-start spending in their economies and provide some optimism to the private sector. This will also allow national income growth to occur, which, in turn, underpins the current desire of households and firms to reduce their precarious levels of debt (following the neo-liberal-inspired credit binge)."

Bottom line: now is not  the time to obsess over deficits and balanced budgets. Now is the time to put idle productive capacity to use by government spending.

I have said this before, but of course no one is paying any attention to me. Maybe some will listen to the IMF.

The core issue: "Who benefits and who pays?"

Related process: "blame the victim."

Chorus of the wealthy and the powerful: "There is nothing the government can do to fix the economy and it's all the president's fault."

Go figure.

Kissinger On China

Walter Pincus has a very good article in today's Washington Post summarizing former Secretary of State Henry Kissinger's observations on China.

Those of us who took Kissinger's seminar on national security policy at Harvard referred to him as "Henry the K." A few days after Richard Nixon won the presidential election and announced that Kissinger would be his national security adviser, seminar students arrived to find television video equipment crowding the classroom. "Pay no attention to the cameras," Kissinger advised his class, "it's good for my megalomania."

He was joking.

The seminar might have been titled "prominent guest of the week," because Professor Kissinger invited prominent academic and government figures to speak at his seminar. One week it might be Robert McNamara. The next week might be Tom Schilling. Then the sequence of prominent guests would be interrupted by one or two lectures given by Professor Kissinger himself. Those lectures were always the most focused and informative of all.

I didn't always view Kissinger's observations on European affairs as especially wise. Nor was I overly impressed with his views on the Soviet Union.

Based on Pincus' article, however, I view Kissinger as expressing great wisdom about China. In a talk at the Woodrow Wilson Center, Kissinger related discussions with each Chinese leader from Mao Tse Tung [I know the spelling has changed], including with the most probable new leader, Xi Jinping. Kissinger believes Xi Jinping will seek such enormous internal changes that “it’s unlikely that in 10 years the next generation will come into office with exactly the same institutions that exist today.

“This is one reason why I do not believe that great foreign adventures or confrontations with the United States can be on their agenda,” Kissinger said. But because Xi faces the need to make difficult domestic changes, he may be more assertive in responding to foreign critics, he added.

“What we must not demand or expect is that they will follow the mechanisms with which we are more familiar. It will be a Chinese version . . . and it will not be achieved without some domestic difficulties.”

Wise remarks.

How Good Is Economic Data?

Good discussion today by economist Mark Thoma on the issue of the usefulness of data. For the most part, any data released by government agencies, especially those like the Bureau of Labor Statistics, the Census Bureau and others who are in the business of collecting and publishing data, can be trusted as being the best there is. All sorts of private users, businesses, etc. rely on this data. No private entity has the resources to collect and publish such information.

But users must understand how the data is collected and aggregated to understand what it means. There is an old saying that "figures don't lie, but liars figure." It is probably more accurate in the case of government data to say that "figures don't lie, but liars can manipulate the meaning of the figures, so be sure what they mean." That isn't nearly as entertaining as the first version.

Payroll Data Update

The latest report from the Bureau of Labor Statistics seems to show a genuine improvement in the labor market. It has been a long time coming, and the improvement is still weak. But it seems to finally be self-sustaining.




Over the past year, according to the employer survey, the United States has added about 150,000 jobs a month. That exceeds monthly population growth by about 60,000, but isn't enough to make a major improvement in the employment to population ratio.

The big headline when BLS released the report was that unemployment was reduced to 7.8%. Personally, I think a better number to follow is the employment/population ratio. That number is slightly better recently, but also isn't rising fast enough.



This ratio also has problems. Recently economist Paul Krugman published a slightly modified employment-population ratio, modified to reflect demographic structure of the population. As Krugman describes it: "I’ve divided the population into three age groups, 16-24, 25-54, and 55 plus, for which employment-population ratios are available in the BLS databases. (Scroll down and use the one-screen data search). I’ve then taken a weighted average of these ratios, where the weights are the 2007 shares of each group in the civilian non institutional population. And here’s what you get:"



A bit better picture, but not a terrific recovery.

I have doubted that the FED's most recent Quantitative Easing or Twist or whatever it is now being called would do much. Apparently I was wrong and QE is having a positive effect. Just not very strong.

I'd still prefer a fiscal "kick in the pants," but that won't happen until after the election, if at all.

Absentee Ballots

Facts about absentee ballots:
1. Absentee ballots arrive at the Board of Elections  in a sealed envelope that protects vote secrecy;
2. Starting October 16, the County Board of Elections reviews ballot envelopes each week to verify voter's eligibility - envelopes remain unopened, stored securely;
3. Absentee meetings are open to public - at 2:00 each Tuesday until and including November 6;
4. Absentee envelopes are opened by the Board of Elections during a public meeting Tue. November 6 and counted by scanning the paper ballots;
5. Absentee vote count is not released to public until polls close;
6. Absentee ballots and One-Stop votes are counted before counting votes cast election day;
7. Anyone wanting to observe the process should attend the noticed absentee meetings each Tuesday at 2:00 pm October 16 through November 6.

Replacement Candidates And Write-Ins For November

There seems to be a bit of confusion or uncertainty about this year's general election ballot. The problems: write-ins and replacement candidates in partisan elections.

Normally, for partisan elections in November, the ballot lists the nominees of each of the approved political parties of North Carolina: Democratic, Libertarian and Republican. Those nominees are determined by the outcome of the party primaries held last May 8 for contested nominations. For contests where a candidate filed for a party but had no primary opponent, that candidate becomes his party's nominee.

Note that the party is the nominating entity. Unaffiliated voters are allowed to vote in a party's primary only if that party's State Executive Committee so provides by resolution delivered to the State Board of Elections by December 1 of the year prior to the primary election. In recent years, both Democratic and Republican parties have allowed unaffiliated voters to participate in their primary elections.

Winners of primary elections or uncontested filers will have their names printed on the general election ballot for partisan contests. Unaffiliated candidates can also be added to the ballot by petition (2% of voters for Governor in most recent election for statewide office, or 4% for district or county offices.) These candidates must be registered voters, but need not be registered as unaffiliated - they just aren't the official candidate of their party.

Just to make it interesting, it is also possible to qualify as a write-in candidate for the general election by petition. That takes 500, 250 or 100 petition signatures depending on the contest. When a person qualifies as a write-in candidate, a write-in line is added to the ballot, but only write-ins for the approved candidate will be counted.

There will also be a write-in line for every contest in a non-partisan election.

What if, after the primary,  a candidate dies, withdraws or becomes ineligible? In that case, the designated Committee of the Candidate's party appoints a replacement. If practical, the Board of Elections with jurisdiction over the ballot item will reprint the ballot. If that board determines it is impractical to reprint the ballot, then the original candidate's name remains on the ballot and all votes cast for the original candidate are counted for the replacement candidate.

This is all spelled out in North Carolina General Statutes.

This year, we have write-in lines for President and Governor. We also have one candidate who has withdrawn and whose party has appointed a replacement. Every vote for the withdrawn candidate will count as a vote for the replacement candidate.

This might or might not be the way it was where you come from, but it's that way in North Carolina.

Town Of Oriental Response To Appeal

Oriental Street Closing Appeal

Today I received in the mail the Town of Oriental's response to my appeal of the Town's closing of Avenue A and Request for Declaratory Judgment.

No big surprises.