Quantum Meruit

As much information as you deserve

Month: April, 2011

Wall Street

Funny how we’ve stopped seeing the Dow-Jones Industrial Average used as a barometer for the economy. Have you noticed? People aren’t talking about the stock market as much as they used to. It’s probably because they’ve observed, throughout this financial crisis, that what’s good for Wall Street is usually inversely proportional to what’s good for the non-wealthy, non-banker elites; that is, the vast majority of the country. The DJIA remains close to the highest it’s ever been: it closed today at 12,810.54. Meanwhile, unemployment remains close to the highest it’s ever been throughout the financial crisis: 9.2% in March.


Last Life to Live

GOOD provides an interesting discussion of the death of soap operas:

When Zynga–publisher of massively popular Facebook games such as FarmVille and CityVille–arrived on the scene in 2007, both All My Children and One Life to Live were averaging a 1.9 rating among women 25-54. By 2011 the two shows were averaging 1.3 and 1.4 ratings respectively in that key viewer group. The drop is even steeper for other demographics. Meanwhile, by April 2009, Zynga was reaching 40 million monthly active players on Facebook, according to comScore. These days, the game has over 47 million players each month while the more recent hit, CityVille, attracts a staggering 88 million active participants.

Maybe. But even if you’re interacting with FarmVille, the fastest “crops” still take 4 hours to “grow.” Also, paying attention to FarmVille is not something exclusive; you can play FarmVille while doing something else. It seems more likely that more women are just working outside the home. (I don’t know if AdWeek investigated so see if there is a similarly inverse relationship between growth of women in the workplace and loss of soap opera audience.)

The loss of soap operas is, on the one hand, a little sad, because of the nostalgia factor. On the other hand, soap operas were targeted at stay-at-home mothers and wives, which, until recently, were all mothers and wives. It seems like a loss of soap opera audience is good for employment equality, since it’s circumstantial evidence that the soap opera’s primary demographic — the homemaker — is becoming structurally unemployed, which means women are out there in the workplace.*

* Not to demean the occupation of “homemaker,” which is great if that’s what you want to do, but fewer women becoming homemakers means more women in the outside-the-home workplace, which means more bargaining power, more normalcy (i.e., women at work is not a novelty, but a necessity and a fact of life), and hopefully more equal wages for all those women who work outside the home.

Guns and Butter

As Krugman observes, choices must be made. Americans used to be able to live a level of prosperity that was pretty much unthinkable in world history. The guns and butter metaphor is appropriate. Up to, and including, World War II, countries at war have had to be economies at war. During World War II, war became the economy. Corporations, as well as people, were “drafted”; car companies, for example, built tanks. Automobiles were hard to come by.

Lyndon Johnson noted, during the Vietnam War, that we could have both guns and butter; that is, we could operate a war economy and a peacetime economy simultaneously. Because of our collective failure to heed Dwight Eisenhower’s warning about the military-industrial complex, that’s what we’ve been doing for the past forty years.

Returning to Krugman, the problem with Medicare is that we can’t keep throwing any and all medical tests at individual medical problems. Economics is the study of scarcity: when it comes to medicine, however, we act as though there is an unlimited supply of medicine.

This fear of scarcity of medicine is what prompted the whole “death panel” pseudo-scare of 2009: bureaucrats! Telling me what medical care I could get! But what those people who accepted the death panel bromide either would not or could not realize is that medicine is allotted: your private insurance company tells you what it will pay for; if you want an organ transplant, you’ll need the approval of a board whose job it is to select only those candidates for which a new organ has utility in order to allot the scarce resource of organs.

If the United States is to survive, its citizens will need to start making choices. Gone are the days when we can have it all.

Ross Douthat, Just Plain Wrong

Apparently, The New York Times‘ resident conservative, Ross Douthat, thinks that slightly higher taxes are outrageous.

Paul Krugman rightly disagrees.

Douthat corrected himself, saying that $94,900 is the “median income” for a family of four based on a presumption that the median income includes “the estimated value of the median family’s health care plan” and “the employer’s share of payroll taxes.” While Douthat “apologize[s] for the confusion” caused by using the CBO figures in his earlier column, those figures seem to contradict what Douthat said.

Such a number isn’t particularly helpful because, in a column about tax burdens, the value of the health care plan should be excised, since it’s paid for with pre-tax dollars. So, too, should the employer’s share of the payroll taxes. What we’re left with is the family’s disposable income, on which it’s taxed. That’s what we’re really talking about: how much tax burden the “average American family” will shoulder.

Median household income in the United States (where a “household” is two adults and at least two children) in 2005 was $67,019, at least according to the Department of Health and Human Services’ income estimates for the Low Income Home Energy Assistance Program. (The estimate for the current Federal Fiscal Year is $74,985.)

To make matters worse, the CBO report Douthat cited says that “the budget outlook is much bleaker” under an alternative scenario where Medicare payment rates increase, non-Social Security spending drops below historic levels, and “most of the provisions of the 2001 and 2003 tax cuts would be extended.” Under this alternative scenario where the Bush tax cuts are extended, “federal debt would grow much more rapidly than under the extended-baseline scenario” due to “significantly lower revenues and higher outlays.” We’d be in much better fiscal shape if we just did nothing.

Thus far, the Republican budget plan has focused exclusively on spending. In fact, the Ryan plan calls for more tax cuts. As it turns out, that won’t work. You can cut spending, but you also have to raise taxes. Republicans who claim to be deficit hawks can’t have it both ways.

Basically, all the scary things Douthat said (“By 2035, under the C.B.O. projection, payroll and income taxes would claim 25 percent of that family’s paycheck”) were wrong. Instead of an apology, the column should be retracted because the facts underlying the argument were erroneous.

If you want to balance the budget, tax rates will have to increase. And not across the board, either.

Let’s Try This Out

I like Open Salon; don’t get me wrong. I just don’t like its text editor. Also, I think I want a new blogging platform. I think I like WordPress the best. I also hope I can more short-form stuff here instead of long essays. Those take a lot of time to make.