Inflation Vacation

Inflation Vacation 
Things are more expensive than government statistics say they should be. 

By Amity Shlaes

Pumping gas in San Anselmo, Calif. (Justin Sullivan/Getty Images)

 

Amity Shlaes 

A lot of people who watched Rick Santelli blow upon CNBC the other day thought the same thing: “That guy needs a vacation — and so do I. The world just doesn’t make sense to him, or maybe me, either.” So you head up to the cabin. Maybe it’s the same cabin you rented back in 2000, before your kids. You just want a quiet reality check, a chance to think it all through. You swear you’ll turn off your phone. You and your family need time to remind yourselves how good you have it.

But there’s one nuisance that can interrupt your seven-day idyll just as surely as a blackfly or a mosquito. That nuisance is the price zap.

The first zap comes even before you get in the car. Your daughter wants a haircut so she can feel the sun on her neck. Great. But then she reports she needs $45 for the cut. What? A haircut used to be $20. You fork out, hiding your irritation. You expected haircuts to be high, but not this high.

The next zap comes on the road. A gallon of gas is $4.00, when it was $1.30 back in 2000. You expected gas to be high. But not this high.

The cottage you rented is nice, but the rent is more than you expected. It’s hot in the cabin, and your other daughter wants to see The Fault in Our Stars one more time. So you head over to the theater. The ticket is $10.00, not $5.00, like it was when you went to see Gladiator back in 2000. Your spouse asks you to pick up some coffee. A pound is $5.20, not $3.40, like back in the old days. You expected movies and coffee to be high, but not this high.

Maybe you have a child in camp. They still write real postal letters, so you stop at the post office to send her some stamps. Stamps are 49 cents each, rather than 33 cents, as in the old days. You hope that your daughter can save her stamps and use them next year. You tell the lady you’ll take the “Forevers.”

The lake is blue. You go for a swim with a buddy. You two went to the same state school. You believe in public education, and are wondering if your kids will also go to State. His son is starting as a freshman in your old dorm in just four weeks. Celebrate! But then he lets you know that the cost all in is going to be $38,000 and change. Back in 2000, it was $18,400. And when you went, in 1995, tuition and board were only $16,000. And that’s a state school. You knew the price would be high. But not this high. Private school for your kids? Time to forget about it.

About three days in, you do just what you wanted not to. You snap at your daughter. You take a call from a client. Suddenly those little mosquito bites have you itching all over. You feel like maybe you have to get back to the city.

In other words, you’re beginning to realize that maybe you don’t have it so good. Your pay isn’t high enough to let you ignore these prices. Wage growth overall is slower than it should be; your pay certainly hasn’t doubled since 2000, like the price of the movie ticket.

Have you lost out entirely? Not really. The realtors name a price for your house that’s more than you expected. Too bad you can’t sell right now. Your pension is up, but you have a squishy feeling that money won’t be able to keep up with these prices. The money you have in the Roth IRA is adding up, but it’s clear politicians may zap your stash later by turning the Roth into a taxable vehicle. They’ll probably do that right around when you retire.

You’re on vacation. Other people are water skiing, so you have a few hours to think about this. When you wake up from your sofa snooze, you see there is another way to look at the discomfort you’re experiencing: The price zap is an inflation zap. The reason you thought you could afford this vacation in the first place was that you know a little about money. All the official numbers, especially the Consumer Price Index, say that inflation is reasonable. Economists you respect tell you the wages are low because of “misallocation of resources.” Janet Yellen, the new Fed chairman, says she’s not worried. Maybe she will have a good vacation.

But other numbers suggest that inflation is higher than what the official data suggest. One set, from which some of the price bites above were taken, is here. For a more thorough review of why official numbers err, have a look at the work of John Williams, a consultant who has tracked data over the years.

Boiled down, Williams’s contention is that several alterations in the way we measure inflation have caused distortion. The Consumer Price Index used to be simple: The government measured the same basket of goods every year. If the price went up, the index captured that. Decades ago, authorities pointed out that people substitute a cheaper item when what they originally bought was too expensive. They altered the index to capture substitution. If steak is expensive, you buy chicken. The result of their fiddle is that inflation looks lower than it would otherwise. That’s disappointing. No vacation is a true vacation without a really good tenderloin.

The Bureau of Labor Statistics or the Fed also argued that the quality of some items (camera, movie) had improved over the years. The technology it took to make X-Men: Days of Future Past is leagues ahead of the technology used for Gladiator. The movie theater itself has better seats. Therefore, the ticket price should be higher. The economists at the BLS say they discount for that: “The hedonic quality adjustment method removes any price differential attributed to change in quality,” they write. But perhaps they use such indexes to hide true price increases.

In any case, you are not feeling especially hedonic. And that takes you back to the reason you needed this vacation in the first place: The rate of change. Some change is good — that’s what modernity is about. But what monetary authorities don’t recognize is that too much change in money’s value, up or down, can be enervating to the average person. An old money that keeps its old value sustains a mood of trust in society. This summer Jerry Jordan, the former president of the Cleveland Fed, penned a blistering notice of the change in central-banking culture on his website, Sound Money Project: “Clearly I was wrong a few years ago when I asserted ‘there were no central bankers or ministers of finance who would publicly argue that the prevailing inflation rate was too low.’ It now seems they all do.”

Go back farther, and you find central bankers who pointedly tolerated no inflation. President Calvin Coolidge put it simply: “Inflation is repudiation.” Today, because of our national “repudiation” — or plain denial — of inflation, we tend to find that kind of trust only among good friends or family — and there only if you all can avoid talking about prices. People begin to doubt themselves when personal inflation experience does not align with official inflation data. Writers trying to describe the German hyperinflation of the 1920s often wrote of the “blow” of seeing currency go to nothing. Such blows were their own dramatic version of those little zaps.

Which takes us back to Rick Santelli. What Santelli is really talking about is getting the Fed back to a point where it cares about inflation. If you study the last part of the video, where the CNBC host gets bullied into silence by Steve Liesman, you’ll see the problem. The price today for talking about inflation is itself too high.

Santelli doesn’t really need a vacation, but he sure deserves one. Then he and maybe some others can return to argue again. It’s time for a real debate on inflation to commence. And knowing that such a debate was out there sure would make it easier to come back to work.

— Amity Shlaes is the author of three national bestsellers, Coolidge, The Forgotten Man, and The Greedy Hand.

http://www.nationalreview.com/article/382859/inflation-vacation-amity-shlaes

How Stupid Happens

How Stupid Happens 
No, PolitiFact did not show that half of Fox News statements are false. 

By Kevin D. Williamson

Bill O'Reilly on the set. (Slaven Vlasic/Getty Images)

 

Kevin D. Williamson 

The headlines were inevitable: “Fact-Checking Site Finds Fox News Only Tells the Truth 18 Percent of the Time,” “Analysis: Over Half of ALL Statements Made On Fox News Are False,” “Fox News wins battle for most-false cable network.” One particularly dim-witted account, written by Jameson Parker, reads: “A new analysis by PunditFact found that of every statement made by a Fox News host or guest, over half of them were flat-out false. What’s more, only a measly 8 percent could be considered completely ‘true.’ In other words, a fancy review of hundreds of hours of video confirmed what many who watch Fox News with any regularity already know: Fox News lies. A lot. Like all the time.”

The “study” from PunditFact (a subdivision of PolitiFact), which is not really a study, says no such thing. You do not have to rely on my word for that: PunditFact itself warns against using its figures “to draw broad conclusions,” e.g. that Fox News lies “like all the time.” (Like, is this like a 1980s Valley-girl movie, or are you just, like, functionally illiterate?) That is because the study is an exercise in drawing nonsensical conclusions from arbitrary data.

The most obvious problem — though certainly not the only problem, not even close — is selection bias: PolitiFact is a readership-driven online publication, and thus it exercises a great deal of discretion about which statements it chooses to evaluate and why. The most obvious factor is that it evaluates only statements that are disputed. Specifically, it evaluates only statements that are disputed and that its editors believe will be of some interest or benefit to its readers.

Fox News is a personalities-driven opinion network with occasional news reports; it is inevitable that its broadcast hours will be more rapidly punctuated by controversial statements than those of, for example, ABC. Unsurprisingly, the opinion-heavy Fox News and MSNBC both have relatively high falsehood scores on the PolitiFact report card, while CNN doesn’t. It’s not as though Michaela Pereira never says anything that might be disputed — she simply never says anything that is interesting, true or false, so nobody cares. Or, as PolitiFact puts it: “We use our news judgment to pick the facts we’re going to check, so we certainly don’t fact-check everything. And we don’t fact-check the five network groups evenly.”

No kidding. Say what you will about Bill O’Reilly, nobody ever made a living out of pretending to be Rachel Maddow. (No, Chris Hayes doesn’t count.)

PolitiFact’s kindergarten-level methodology here is to take the total number of statements it evaluates, tally up the “mostly false,” “false,” and “pants on fire” ratings, and then do a little division. Given the underlying selection issues, this amounts to nothing more than doing meaningless arithmetic on meaningless data. If PunditFact editor Aaron Sharockman spent more than 20 minutes on this so-called research, he should demand a refund from his university. (Given that he has a B.A. in journalism, he should demand a refund on general principles.)

By the same measure, approximately 100 percent of statements made by Paul Krugman evaluated in National Review are 1. mostly false; 2. false; 3. pants-on-fire; or, my own favorite designation, 4. wearing-full-Wayne-Newton-makeup-while-singing-“Danke Schoen”-at-4-a.m.-under-a-bridge-in-Cleveland crazy. But that does not mean that the sum of what comes out of Professor Krugman’s mouth is 99 and 44/100 percent pure B.S., like some Bizarro World version of Ivory Soap — it just means that we mostly tend to take notice of him when he’s wrong. If he says you should try the cheese plate at Il Bambino, give the claim due consideration.

The deeper problem with PunditFact is the bias in how it evaluates statements. Consider two structurally identical questions: In the first, it considered Chris Wallace’s claim that Hillary Clinton had “defended Syria’s President Assad as a possible reformer at the start of that country’s civil war.” That statement, the editors decided, was only half-true, because that was “not expressly her opinion.” Rather, she had said that members of Congress of both parties who had visited Syria had suggested that Assad was a possible reformer. (Never mind that Mrs. Clinton’s claim is itself untrue, a three-Pinocchio offender in the Washington Post’s judgment.)

In the second instance, PunditFact considered a claim from Bill O’Reilly, made during an interview with President Barack Obama, that he had not accused the administration of obscuring the motive behind the Benghazi attack for political reasons. O’Reilly had in fact interviewed people who said that, but he himself had not made that claim. PunditFact nonetheless rates it “mostly false,” because O’Reilly had, in its view, “nurtured suspicion.” Mr. O’Reilly and Mrs. Clinton were engaged in precisely the same rhetorical strategy: the time-honored Washington dodge of using others to suggest indirectly what you think or suspect yourself, e.g. “it’s a serious charge,” “some have said,” “it has been suggested that,” etc. In both cases, the statement was made on Fox News, but Mrs. Clinton gets a pass (“not expressly her opinion”) while Mr. O’Reilly gets labeled a liar — for precisely the same thing. This is what simple bias looks like.

It’s mostly a matter of sympathy — not with different news networks, but with different political figures. When it considered Eric Bolling’s claim that the great majority of new jobs created during the Obama administration have gone to men, PunditFact labeled that a half-truth, too, even though, in its own words, the “numbers are right.” Why? Because “as an attack on Obama, it rings hollow.” Not exactly Karl Popper’s intellectual standards at work.

But the fact is that unsupportable, boneheaded claims such as “over half of ALL” — thanks for that all-caps attack, Einstein von Brainstorm — “statements made on Fox News Are False” will live forever, because people are mostly interested in having their biases confirmed and their values affirmed rather than learning new things about the world and how it works. True, much as I like yelling at people on television, it is pretty hard to feel too bad for Fox News and MSNBC over an exercise in confirmation bias, but this sort of sloppy thinking and malicious manipulation does have the effect of leaving the polity a little dumber than it absolutely has to be. And that is an unforgivable sin.

— Kevin D. Williamson is roving correspondent for National Review.

http://www.nationalreview.com/article/382851/how-stupid-happens-kevin-d-williamson

A BOOK FOR ALL SEASONS

A BOOK FOR ALL SEASONS

 BY SCOTT JOHNSON IN ADMINISTRATIVE STATE, BOOKS, CONSTITUTION,INCOME INEQUALITY, PROGRESSIVES AND PROGRESSIVISM

Thomas Piketty’s Capital in the Twenty-First Century is the book of the season. Published by Harvard University Press, it is a surprise best-seller.

At the time of its publication earlier this year it neatly fit Obama’s theme of the moment on income inequality. Readers seem to have abandoned the book at page 26, as Obama seems to have abandoned the theme of income inequality.

As the title of his book suggests, Piketty updates Marx for postmoderns. He smooths off the rough edges, promoting the peaceful expropriation of wealth via the state in the name of equality. Neither the legitimacy of Piketty’s object nor the virtue of material equality is ever questioned. See Jonah Goldberg’s invaluable and entertaining Commentary essay “Piketty’s big book of Marxiness.”

The American understanding has differed from Piketty’s French-fried Marxism. Drawing on what Publius referred to as discoveries and improvements in “the new science of politics,” the Founders created a frame of government designed to limit the powers of the government by the system of checks and balances with which we are all familiar, at least by reputation. The powers of the government were limited in the interest of liberty.

To limit the powers of government necessarily meant to limit the power of a democratic majority. The Founders meant to restrain the power of a democratic majority; they feared the tyranny of the majority. They viewed unconstrained majorities as the bane of liberty. Up through their time, history had shown all known democracies to be “incompatible with personal security or the rights of property.” They formulated the Constitution to protect the rights of citizens against the tyranny of the majority. Publius put it this way in Federalist 10:

The instability, injustice, and confusion introduced into the public councils, have, in truth, been the mortal diseases under which popular [i.e., democratic] governments have everywhere perished; as they continue to be the favorite and fruitful topics from which the adversaries to liberty derive their most specious declamations.

The Founders had in mind the kind of man who presents himself as a tribune of the people — somebody who talks this way to impressionable young men and women graduating from college. Someone, i.e., like Barack Obama.

The Progressive era unfortunately removed the structural constraints on tyrannical action. The Progressive project has made great strides in removing the constitutional barriers protecting our rights to life, liberty and property against against the tyranny of the majority and the administrative state. We need to deepen our understanding of the task of restoration before us. Enter Philip Hamburger.

This is a provisional unscientific postscript to my series of posts on Philip Hamburger’s Is Administrative Law Unlawful?. Hamburger is the un-Piketty. He demonstrates the regressive nature of the Progressive project. He explains and vindicates the original project of the Constitution in erecting barriers to the exercise of absolute power. By contrast with Piketty, he has given us, not a book of the season, but a book for all seasons.

http://www.powerlineblog.com/archives/2014/07/a-book-for-all-seasons.php

THE FRUITS OF OBAMA’S ARROGANCE OF IMPOTENCE

THE FRUITS OF OBAMA’S ARROGANCE OF IMPOTENCE

BY PAUL MIRENGOFF IN OBAMA ADMINISTRATION, OBAMA FOREIGN POLICY

Fred Hiatt of the Washington Post argues that it’s time for President Obama to select a new “team of rivals” to assist him.

I don’t buy the argument that the administration’s woes have anything to do with personnel other than Obama himself. The “team of rivals” theme was never more than PR. Nor, in my opinion, has there been a significant diminution of talent in top level positions other than Secretary of Defense.

But Hiatt does a nice job of giving voice to mainstream disenchantment with Obama, and provides an impressive (though hardly exhaustive) catalogue of mainstream grievances:

The administration was surprised when Russian President Vladimir Putin swallowed Crimea. It was caught flat-footed by the crumbling of Iraq and emergence of an al-Qaeda state. Now the region is “a cradle of violent extremism,” Obama’s attorney general said last week. But the president is uncertain how to respond.

Increasingly friends and foes around the world seem comfortable disrespecting the United States . In Egypt, a court sentenced journalists to prison hours after Secretary of State John F. Kerry left Cairo expressing confidence in the government’s commitment to democracy. U.S. ally Bahrain, home to the Navy’s 5th Fleet, expelled an assistant secretary of state. Days after Obama visited the Philippines to support rule of law in the South China Sea, China towed a massive oil rig into waters claimed by Vietnam and, Vietnamese officials said, intentionally rammed two of their ships.

This paragraph seems particularly telling. Obama’s isn’t the first administration to suffer from intelligence failures, and the U.S. will always have policy disagreements with foreign governments, including allies.

But overt acts of blatant disrespect are another matter. They represent the fruits of the unique combination of arrogance and fecklessness that characterizes Obama’s approach to the world.

Hiatt isn’t finished:

Obama visited Berlin in 2008, promising to build bridges between continents that had “drifted apart” in the Bush era. Now Germans are furious at the United States for spying on them. Burma, which Obama recently claimed as a foreign-policy success, last week sentenced four journalists to 10 years of hard labor, one of many signs that reform there has stalled or worse. China barred a U.S. scholar from visiting and rounded up dissidents immediately before last week’s U.S.-China strategic and economic dialogue. Israel and Hamas are drifting toward war after Obama’s second failed effort to broker a peace accord.

The picture isn’t much different on the home front:

[T]he administration seems equally taken aback by the thousands of Central American children flooding across the Southwest border. It sends mixed signals on whether it wants to change the asylum law in response. In the most elementary sort of staffing snafu, the president found himself needlessly on the defensive during a trip to Texas because he refused to visit the border.

Meanwhile the White House message varies by the day. Growing economic inequality, which last December Obama said “challenges the very essence of who we are as a people,” now is rarely mentioned. There seems to be no strategy to propel objectives the White House had set forth as fundamental: immigration reform, trade deals with Asia and Europe, investment in education and infrastructure.

Mainstream critiques like Hiatt’s miss the extent to which Obama has been effective in advancing certain of his leftist agenda items — e.g., retreat from the Middle East, de facto amnesty for large numbers of illegal immigrants. That’s probably because these critics don’t agree that Obama has a hard-left agenda.

But Hiatt’s critique is solid nonetheless. And more and more it is becoming the “rough draft” of the history of the Obama’s second term.

http://www.powerlineblog.com/archives/2014/07/the-fruits-of-obamas-arrogance-of-impotence.php

THE FRUITS OF OBAMA’S ARROGANCE OF IMPOTENCE

THE FRUITS OF OBAMA’S ARROGANCE OF IMPOTENCE

PAUL MIRENGOFF IN OBAMA ADMINISTRATION, OBAMA FOREIGN POLICY

Fred Hiatt of the Washington Post argues that it’s time for President Obama to select a new “team of rivals” to assist him.

I don’t buy the argument that the administration’s woes have anything to do with personnel other than Obama himself. The “team of rivals” theme was never more than PR. Nor, in my opinion, has there been a significant diminution of talent in top level positions other than Secretary of Defense.

But Hiatt does a nice job of giving voice to mainstream disenchantment with Obama, and provides an impressive (though hardly exhaustive) catalogue of mainstream grievances:

The administration was surprised when Russian President Vladimir Putin swallowed Crimea. It was caught flat-footed by the crumbling of Iraq and emergence of an al-Qaeda state. Now the region is “a cradle of violent extremism,” Obama’s attorney general said last week. But the president is uncertain how to respond.

Increasingly friends and foes around the world seem comfortable disrespecting the United States . In Egypt, a court sentenced journalists to prison hours after Secretary of State John F. Kerry left Cairo expressing confidence in the government’s commitment to democracy. U.S. ally Bahrain, home to the Navy’s 5th Fleet, expelled an assistant secretary of state. Days after Obama visited the Philippines to support rule of law in the South China Sea, China towed a massive oil rig into waters claimed by Vietnam and, Vietnamese officials said, intentionally rammed two of their ships.

This paragraph seems particularly telling. Obama’s isn’t the first administration to suffer from intelligence failures, and the U.S. will always have policy disagreements with foreign governments, including allies.

But overt acts of blatant disrespect are another matter. They represent the fruits of the unique combination of arrogance and fecklessness that characterizes Obama’s approach to the world.

Hiatt isn’t finished:

Obama visited Berlin in 2008, promising to build bridges between continents that had “drifted apart” in the Bush era. Now Germans are furious at the United States for spying on them. Burma, which Obama recently claimed as a foreign-policy success, last week sentenced four journalists to 10 years of hard labor, one of many signs that reform there has stalled or worse. China barred a U.S. scholar from visiting and rounded up dissidents immediately before last week’s U.S.-China strategic and economic dialogue. Israel and Hamas are drifting toward war after Obama’s second failed effort to broker a peace accord.

The picture isn’t much different on the home front:

[T]he administration seems equally taken aback by the thousands of Central American children flooding across the Southwest border. It sends mixed signals on whether it wants to change the asylum law in response. In the most elementary sort of staffing snafu, the president found himself needlessly on the defensive during a trip to Texas because he refused to visit the border.

Meanwhile the White House message varies by the day. Growing economic inequality, which last December Obama said “challenges the very essence of who we are as a people,” now is rarely mentioned. There seems to be no strategy to propel objectives the White House had set forth as fundamental: immigration reform, trade deals with Asia and Europe, investment in education and infrastructure.

Mainstream critiques like Hiatt’s miss the extent to which Obama has been effective in advancing certain of his leftist agenda items — e.g., retreat from the Middle East, de facto amnesty for large numbers of illegal immigrants. That’s probably because these critics don’t agree that Obama has a hard-left agenda.

But Hiatt’s critique is solid nonetheless. And more and more it is becoming the “rough draft” of the history of the Obama’s second term.

http://www.powerlineblog.com/archives/2014/07/the-fruits-of-obamas-arrogance-of-impotence.php

TODAY’S CLIMATE EMBARRASSMENT

TODAY’S CLIMATE EMBARRASSMENT

BY STEVEN HAYWARD IN CLIMATE

It’s really hard to settle on the latest embarrassment for the climatistas (or “Thermageddonites”—hat tip to Lord Monckton).

On the technical side, there’s an interesting article by a team of Indian scientists in the current Journal of Geophysical Research about climate models and their ability to predict future precipitation amounts on a regional basis.  This is important because it bears on the claim, repeated almost daily, that climate change will bring more less take your pick precipitation to your neighborhood  or some far-away nation take your pick in the decades to come.  Although the abstract of this study is written in the usual jargon, I think you can make out the relevant conclusion easily enough:

Extreme precipitation events over India have resulted in loss of human lives and damaged infrastructures, food crops, and lifelines. The inability of climate models to credibly project precipitation extremes in India has not been helpful to longer-term hazards resilience policy. However, there have been claims that finer-resolution and regional climate models may improve projections. The claims are examined as hypotheses by comparing models with observations from 1951–2005. This paper evaluates the reliability of the latest generation of global climate models (GCMs), CMIP5, specifically a subset of the better performing CMIP5 models (called “BEST-GCM”). The relative value of finer-resolution regional climate models (RCMs) is examined by comparing CORDEX South Asia RCMs (“CORDEX-RCMs”) versus the GCMs used by those RCMs to provide boundary conditions, or the host GCMs (“HOST-GCMs”). Ensemble mean of BEST-GCMs performed better for most of the extreme precipitation indices than the CORDEX-RCMs or their HOST-GCMs. Weaker performance shown by ensemble mean of CORDEX-RCMs is largely associated with their high intermodel variation. The CORDEX-RCMs occasionally exhibited slightly superior skills compared to BEST-GCMs, on the whole RCMs failed to significantly outperform GCMs.Observed trends in the extremes were not adequately captured by any of the model ensembles, while neither the GCMs nor the RCMs were determined to be adequate to inform hydrologic design.  [Emphasis added.]

One sentence translation: the computer climate models are still crap.

But I think the winner of today’s climate embarrassment has to be this story:

Will Warmer Climate Mean More Kidney Stones?

Add another possible woe to the growing list of consequences of climate change: Kidney stones.

A new study of American cities suggests that rising temperatures may increase the number of people who develop the painful urinary obstructions.

“These findings point to potential public health effects associated with global climate change,” study leader Dr. Gregory Tasian, a pediatric urologist and epidemiologist at The Children’s Hospital ofPhiladelphia, said in a hospital news release.

Turns out the threat of increased kidney stones was already on The Warmlist, though their link seems to have gone dead.  But it least it’s a comfort to know they’re recycling climate problems.

Climate change: is there anything it can’t do?  Apparently no.

http://www.powerlineblog.com/archives/2014/07/todays-climate-embarrassment-4.php

Don's Tuesday Column

THE WAY I SEE IT   by Don Polson  Red Bluff Daily News   7/29/2014

Jefferson critics; right’s rise

It was with some bemusement that I read (prior to finding ourselves camped where there is no Internet—really, none!) online letters and columns over the votes by residents and supervisors in favor of the State of Jefferson declaration (I support it). I would only point out that (as of July 17) the opponents’ letters tended to pile up attitude, insults, derision and a general loose use of supposed facts. Before the vote in June, opponents knew they had the short end of the public opinion stick, mostly couldn’t bother themselves to take in the numerous informational meetings, and thereafter resorted to nearly hysterical doom-and-gloom mongering when they weren’t denigrating the character of Jefferson supporters. The other 3 columnists have all been opposed, and predictably fail to reflect the predominant political leanings of Tehama County’s voters.

When voters overwhelmingly (57%) favored the Jefferson declaration (if Obama’s 53% constituted a “mandate” then Tehama County’s 57% qualifies as “overwhelming,” in my opinion), the opponents took to belittling and explaining away the numbers. There’s nothing to explain—our voters usually split heavily for Republicans and for issues like traditional marriage. The public employee/union sector is a primary source of votes for Democrats, gay marriage, tax increases and so on, so it can be assumed that the anti-Jefferson votes were stoked by those reliable Democratic voters opposed to upsetting the union-dominated political establishment dictated by Sacramento.

Del Norte County’s vote against the State of Jefferson is likewise easily explained by the large numbers of state workers in the Pelican Bay correctional facility. All of these groups know that if there are no state employee unions, the salaries, benefits and wages for public employees and public construction will reflect local market rates, not Sacramento’s bloated costs. They think the private sector taxpayers should just shut up and pay up for excessive compensation.

I knew that the Supervisors would have to summon the courage to vote in the face of the Democrat-dominated government and union sector—a tail seeking to wag the dog of local opinion. Congratulations, Supervisors, for a unanimous stand for our rightful need to control more of our own affairs. Naysayers, there are rural-dominant states, run by Republicans, that have better economies, lower unemployment, more folks providing for themselves and less dependency on “guv’mint” handouts. I guess the ideologically blinded will not see what they don’t wish to see.

Upon reading “The Rise of the Right” by William A. Rusher (1983), I found that many things haven’t changed. The subtitle, “An eye-opening, behind-the-scenes history of the conservative movement by one of its leading and most outspoken founders,” may seem irrelevant today; it did, in one respect, describe some of what we have witnessed over the Jefferson movement. When conservative thinkers, intellectuals and writers began to formulate beliefs, convictions and narratives in the late 1940s, culminating in publications and engagement with the prevailing liberal orthodoxy in the 1950s, derision, dismissal and name-calling were the left’s response—the same reaction they gave the Tea Party and the State of Jefferson.

Efforts then and now to strangle conservative movements in the cradle fell short for the simple reason that Americans self-identify as conservatives by 35 to 40 percent, compared to, at most, 20 percent for liberals. When presented with articulate conservative arguments and solutions, most voters will support such advocates. Absent same, those voters will stay home (2012 presidential election) or be taken in by verbally glib, personally glittering, even demagogue-like candidates (Obama in 2008 and 2012).

Most readers either appeared on the scene long after the 50s and 60s, or were, like Barbara and me, children knowing only that parents supported someone named Barry Goldwater but not much else. Because of the landslide defeat (Senator Goldwater won a handful of states and about 40 percent of the vote), Democrats gloated; the Eastern establishment Republicans— who had consistently nominated losers like Wilkie and Dewey and preferred the Rockefeller name to all others—took smug satisfaction in conservatism’s supposed repudiation (many even voted for Democrat Johnson).

Hence, eastern Republicans favored (squishy Republican) Nixon over Reagan, giving America the Nixon impeachment/resignation and Carter’s miserable tenure. So how did voters rise up in their conservative numbers to give Reagan two landslide victories? First, Americans had already voted by 57 percent (total of Nixon/Wallace votes) to repudiate the liberal Democrat McGovern. However, from the “Draft Goldwater” movement to the organizing and contributors that put Goldwater on the ticket, the conservative cause had made tremendous strides. Just before the assassination of President Kennedy, Time magazine looked at Kennedy’s fading allure and the strong polling for Goldwater and concluded it could go to the conservative Republican.

Rusher summarized the reasons for Johnson’s win: 1) sympathy for the deceased Kennedy carried over into a reluctance to change parties in “mid-stream”; 2) Johnson’s rural, southern image undercut the contrast that had been Goldwater’s strong suite against the eastern liberal Kennedy; 3) While some of Goldwater’s personae and statements were used mercilessly by the news media and Democrats to paint a caricature of him, that didn’t prove that conservatism was Goldwater’s undoing. The right was rising through it all.

Income Inequality in America: Is It Rising and Is It Bad

Income Inequality in America: Is It Rising and Is It BadBy Clark S. Judge: managing director, White House Writers Group; chairman, Pacific Research Institute

For anyone following the media just now, it is hard to get through a week without hearing about income inequality in America. In case you missed it, it’s gone up in the last few decades and this, we are told, is a bad thing. On both accounts, I wonder.

The recent flurry of interests follows the publication of Capital in the 21st Century, by French economist Thomas Piketty. After laying out his data, Picketty calls for a cure of, yes, higher taxes and a variety of familiar left-wing policy elixirs. Paul Krugman loves him.

Maybe Mr. Krugman shouldn’t have chortled so quickly. A couple of years ago a team of economists led by Richard Burkhauser of Cornell University pretty much demolished Piketty’s work on the stagnation of American middle class income (summary here, http://bit.ly/1kUxp7c; interview and academic paper here, http://bit.ly/1q9HLIk). They used far more comprehensive income data than had Picketty, adjusting it for the full range of taxes as they changed over time. They added in the value of non-cash benefits and transformations in household composition. Results? Picketty was flat out wrong. The median American had not stagnated between1979 and 2007, despite Picketty’s insistence otherwise. It had, in fact, increased by 36.9%. U.S. income inequality was little changed from 1993.

But whether it has grown or not, is the income inequality we in fact have a bad thing?

In June, James Bullard, president of the Federal Reserve Bank of St. Louis, a research powerhouse in the Federal Reserve System, addressed this question at the Council of Foreign Relations (http://bit.ly/1sdW1zu).

Bullard used what is called a life-cycle analysis of incomes. All of us – or at least most of us – are minimally productive in our early years, gain in productivity as we age, peak in our 50s and become steadily less productive until our final years. According to the St. Louis Fed’s analysis as told by Bullard, that normal cycle of life accounts for three quarters of the income disparities in the U.S.

By almost universal agreement among American economists, most of the remaining disparity has to do with education. Higher education makes for higher earning, and the value of good degrees has gone up significantly over time. I say good degrees to allow for the apparent degradation of aspects of higher education in recent years, which is another matter for another column.

Does anything else explain U.S. income disparities? Let me suggest a couple.

The first has to do with how people report their income, which is really about how they adjust to tax laws. Some years ago (this is a true story) a multiply married Hollywood mogul bought his new wife a home on New York’s Upper East Side. Among the women’s friends, the purchase was taken to indicate the power of her charms over him. Homes for prior wives had been rented or belonged to the studio. But it turned out that he bought the new property not long after the Reagan tax cuts went into effect. In other words, once tax rates dropped, he stopped concealing his compensation as non-table business expenses (like a Fifth Avenue apartment) and started taking it as ordinary taxable income, from which he bought that residence. This shift likely accounts for a fair amount of the remaining growth (after the life cycle and education effects) in upper income earnings between the 1950s and 60s on one hand and the 1980s through today.

Another part of the change likely has to do with how those incomes are made.

For beginning in the 1970s and growing explosively from the 1980s until the tax and regulatory hikes of the Obama years, new business creation and growth have been the engines of the American economy. But while entrepreneurs may make significant income in good years, they are more likely to lose significant amounts in bad ones, as when their ventures fail or they face new business challenges. If you were building a regression analysis of their collective earnings, you would see growing volatility over the decades, what is called a high beta.

Here is my concern. It is a value judgment. For a variety of reasons, not all of them economic, I feel that having low barriers to entrepreneurship is a good thing for a free society. Much of the attack on American income inequality looks to me like a cover for attacking the nation’s entrepreneurial flowering, with anti-entrepreneurial potions like Picketty’s always following. Such critics see no difference between the rock solid earnings of a civil servant or a tenured professor and those of a young man or woman rolling the dice on a high tech start-up.

So here is my question. To the extent that increases in high incomes are a result of increases variation in time of life productivity, education, the candor with which incomes are reported and increases in American entrepreneurship, isn’t that a good thing?

http://www.hughhewitt.com/income-inequality-america-rising-bad-clark-s-judge/#more-24065