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Article Artículo

George Will Is Badly Confused on Economic Issues, Again

Fortunately for Mr. Will, he works for Jeff Bezos, a man who accumulated $32 billion (more than 40 percent of the annual food stamp budget) by assisting people in evading state and local sales taxes. (Under most state laws, people are obligated to pay sales tax on items they buy over the Internet, however enforcement is essentially zero. The amount of tax that Amazon customers have avoided as a result of purchasing over the web is at least an order of magnitude greater than Amazon's profits since it inception.) Given his background, Bezos would probably not be concerned that Will misrepresents facts to readers.

Will starts by complaining that President Obama's proposal to raise the minimum wage would "do very little for very few." Since the Congressional Budget Office just calculated that the proposed wage hike would directly or indirectly raise the wages of 25 million workers, Will must be giving new meaning to "very few."  He then goes on to complain about the farm subsidies in the new agriculture bill, referring to the "geyser of subsidies" in  "the $956 billion farm legislation." Whatever the merits of the subsidies, they come to less than 10 percent of the total cost of the $956 billion figure highlighted by Will.

Will next complains about the increase in spending on food stamps, telling readers:

"Between 2000, when 17?million received food stamps, and 2006, food stamp spending doubled, even though unemployment averaged just 5.1?percent ." While some of this rise was attributable to increased outreach to eligible families, the employment picture had deteriorated sharply from 2000 to 2006, with the employment to population ratio dropping by 1.5 percentage points. This corresponds to 3.4 million fewer people working. (It's not clear what information Will thinks he is providing by giving the average unemployment rate for the period. If we are looking at changes, it is the endpoints that matter.) Also, food prices rose by 16 percent over this period, which explains a substantial portion of the increase in spending. (Will's source shows that the 2000 level of beneficiaries was a low-point driven by the strong economy of the late 1990s. The number of beneficiaries in 2006 was still below the number in 1995.)

We then get this great invention from Will:

"We spend $1 trillion annually on federal welfare programs, decades after Daniel Patrick Moynihan said that if one-third of the money for poverty programs was given directly to the poor, there would be no poor."

Dean Baker / March 16, 2014

Article Artículo

Latin America and the Caribbean

Venezuela

World

Venezuela: Who You Gonna Believe, the New York Times or Your Lying Eyes?

Today’s report from the New York Times trashes the government for “combative tactics” and “cracking down” on protesters, but if you watch the accompanying video, all you see are protesters attacking police, and the police – without venturing forward, defending themselves with water cannon and tear gas.

One can criticize the decision of the government to block the march from going to hostile territory, but given the continuous presence of violent elements among the protestors, and that Venezuela is a country with a very high homicide rate and many armed civilians, it could have been the prudent thing to do. The government also believes, with some justification, that these protests seek to provoke violence in order to de-legitimize the government. Their stated goal is to overthrow the democratically elected government, and given that the vast majority of the country is against the protests, this really is their only chance of getting anywhere. And the government also knows that the media (both national private and international) will generally blame them for any violence.

In the United States, and especially here in Washington DC, you have to get a permit for marches like this, and they are often denied or re-routed; and if you try to defy this the police will generally beat you and throw you in jail. And these are actually peaceful protests here.

As for the violence so far associated with the protests since they started on Feburary 12, the statistics show that more people have died at the hands of protesters than security forces:

Of the 29 people killed (full details here),

-- 3 appear to be protesters allegedly killed by security forces; 1 other was killed by security forces but it's not clear if he was a protester.

-- 5 appear to be protesters allegedly killed by civilians (the opposition always alleges that these civilians are somehow taking orders from the government, but there has not been any evidence linking the government to any killings by armed civilians; and in a country where there are on average more than 65 homicides per day, it is most likely that these armed civilians are acting on their own).

-- 11 civilians appear to have died at the hands of protestors: four of them shot, and the rest killed by various barricades or other obstructions (e.g. motorcyclist beheaded by wire allegedly strung by protesters).

CEPR / March 16, 2014

Article Artículo

Brazil

Latin America and the Caribbean

Venezuela

World

Lula Sends Letter of Support to Maduro

Lula da Silva, the former president of Brazil, released a statement in support of Venezuelan president Nicolás Maduro on the occasion of the one year anniversary of the death of Hugo Chávez. In the letter, Lula discusses Chávez’s legacy in the region, saying that he fought for “a more just and sovereign Latin America,” and expresses his confidence in Maduro as a leader who is defending the principles of Venezuelan democracy. Of course, Lula’s message comes at a time when tensions are high in Venezuela as segments of the opposition wrestle for power after having lost two major elections in 2013.

Below is a translation, you can read the original in Spanish here.

Luiz Inácio Lula da Silva

Ex President of the Federative Republic of Brazil to His Excellency

President Nicolás Maduro Moros

Sao Paulo, 5 March 2014

To my friend President Nicolás Maduro:

I am writing to you on this sad date for the Bolivarian Republic of Venezuela to offer my vows of respect and sorrow over the death, one year ago, of the unforgettable and beloved friend, Hugo Chávez Frías.

CEPR and Stephan Lefebvre / March 15, 2014

Article Artículo

California and Texas: How Many Jobs Were Created on Bill Gates’ Estate?

If it’s not immediately apparent how the rate of job creation on Bill Gates’ estate is relevant to the pace of job growth in California and Texas then you have to think about the issues more carefully. In recent weeks, many proponents of low taxes have been touting the faster pace of job growth in low tax Texas compared with high tax California as proof of the economic superiority of the low tax model.

There is little doubt that Texas has seen faster job growth in recent decades. Since the business cycle peak in 1981 employment has grown by 56.0 percent in California, compared to 77.9 percent in Texas. If our only measure of economic success is job creation, there is no doubt that Texas wins the prize, but it is a bit more complicated.

First there is the issue of oil, which is important but by no means the only factor explaining differences in growth. By using 1981 as a base year, we are comparing a near peak oil price with another period of high prices. But Texas’ growth pattern does look a bit like an OPEC country. If we take the low oil price year of 2000 as the end point, California wins the job growth prize 48.6 percent to 47.1 percent. So clearly the price of oil (and gas) plays a big part in the economic performance of Texas.

However there is another very important factor in the story, building restrictions. In general, California imposes relatively tight restrictions on building, whereas regulations in Texas are considerably more lax. The result is that, relative to the size of its population, much more housing has been built in Texas over the last three decades than in California. And this has meant that housing is considerably cheaper in Texas than in California.

Just to take a couple of examples, according to the Department of Housing and Urban Development, the fair market rent for a two-bedroom apartment in Los Angeles County is $1,398 a month. In Harris County, which includes Houston, it’s just $926 a month. The fair market rent for a two-bedroom apartment in Santa Clara County, which includes San Jose, is $1,649 a month. It was just $894 in Dallas County in 2010, the most recent year available.

CEPR / March 13, 2014