Tuesday, March 31, 2015

WHY INDIANA'S RELIGIOUS FREEDOM LAW IS DIFFERENT AND PERNICIOUS

Although Governor Mike Pence claimed otherwise, Indiana’s religious freedom law is distinct from most if not all other similar laws in that it governs not only interactions between individuals and the government, but between private parties as well. That’s why the Indiana law, unlike other state laws and the federal Religious Freedom Restoration Act, makes it possible for private businesses to claim a right to discriminate against gay and lesbian citizens or anyone else to whom they might object on religious grounds. And, if the decision by businesses of whom and whom not to serve were a purely private one, the state would have little to say about it. But, such decisions are not purely private. They occur within the marketplace and free markets are not spontaneously occurring things.

Free markets are creations of the state and are perpetually dependent on the state – its laws, courts, police, fire departments and other public services – which are necessary to protect them from forces that, if unrestrained, would turn the peaceful and orderly marketplace into a Hobbesian state nature – a war of all against all. Needless to say, the public services that enable free markets are financed through taxes that are paid by citizens – all citizens. That dependence on compulsory public support gives the citizenry, acting through its agent, the government, the standing and the right to establish conditions that those who wish to engage in commerce must meet in order to enjoy the privilege of operating a business in a safe, well-regulated marketplace.

So, it’s not unreasonable, nor should it be surprising, that citizens who are compelled to pay for the public services that enable businesses to operate should require those businesses to make their goods and services available to all citizens without discrimination on any grounds apart from those that might be prescribed by law. Otherwise, we would be faced with a difficult situation in which some some segments of the population would be compelled to pay taxes to support businesses that refuse to do business with them.

In addition to that basic unfairness and the fact that discrimination is to many of us inherently repulsive, the state has another compelling reason to bar discrimination in private commercial activities. We see all over the world and in some ways in this country as well the price that can be exacted from societies that fragment along religious and ethnic lines. To institutionalize religious discrimination by making it a right, as the Indiana law does, takes a first step down that path by protecting behavior that’s inherently destructive of society as a whole.

That’s why the Indiana law should be modified or repealed.


Monday, March 30, 2015

JOE MANCHIN AND THE ECONOMY OF DOOM: A REALITY CHECK

Since becoming a senator, Joe Manchin's two most noteworthy actions in the area of economic policy have been his championing of the Bowles-Simpson deficit reduction plan and his vote against Janet Yellen when she was nominated to become chair of the Federal Reserve Board. In both cases Manchin was motivated by his belief that deficit spending and the Fed's easy money policies were leading the nation to a fiscal precipice from which, he warned ominously, the nation would tumble into "a credit downgrade, reduced GNP and a devastating spike in inflation".

That was in 2012 in a speech to the Weirton, WV Rotary Club. So, what has happened in the intervening two and a half years during which the Bowles-Simpson plan was dismissed, Yellen was confirmed to lead the Fed, and the policies against which Manchin warned -- a low discount rate, quantitative easing, and deficit spending -- continued?

The latest numbers show that January marked the 34th consecutive month in which inflation has come in below the Fed's target-rate of 2%, the 25th consecutive quarter of GDP growth, and the 60th consecutive month of job growth -- the latter an all-time record.



FACTS CONFOUND CONGRESSMAN MCKINLEY AGAIN

Last year the Obama administration took a number of steps to reduce the emission of greenhouse gases including new rules from the EPA for American industry and an agreement with China. These measures were immediately and furiously condemned by Congressman David McKinley (R - West Virginia) who complained that the rules would cripple economic growth in the US while giving our global competitors, particularly China, a free-pass to continue using low-cost coal to drive their economies.

In an earlier post titled "Congressman McKinley Meets Charlie Chan" I pointed out that the congressman's assumption that China would happily to continue to increase its consumption of coal ignored both economic and political forces that would have exactly the opposite effect. This week that observation was validated by two reports. First, the Economist magazine in a story titled "Coal Mining In The Depths", reported that last year China actually reduced its consumption of coal by almost 2% even though its economy grew by over 7%. Meanwhile, Bloomberg reported that China will close the last of four major coal-fired power plants next year and replace them with electricity fueled by low-cost natural gas in order to reduce Beijing's legendarily high levels of air pollution.

It's probably too much to expect that the events in China will cause Congressman McKinley to alter his views since on the larger issue of man-made climate change he remains resolute in his denials despite an avalanche of data and virtual scientific unanimity. Still, perhaps some of his constituents can be swayed by facts.



Saturday, March 28, 2015

A GLIMMER OF LIGHT IN THE FOG OF ECONOMIC HAPPY TALK

After years of accumulating quantitative evidence, this story by David Gutman in Thursday's Charleston Gazette suggests that West Virginia news outlets are beginning to recognize the state's horrific economic performance during the past decade and the nearly complete failure of the natural gas boom and state economic policies to increase prosperity.

The trigger for this realization is the US Census Bureau's most recent data release, which shows that West Virginia is losing population faster than any other state and, significantly, the decline is happening even in the northern panhandle and in north-central parts of the state where the natural gas boom is concentrated. Gutman's article quotes Ted Boettner of the West Virginia Center on Budget and Policy and West Virginia University economist, Christaldi, who point out that natural gas drilling is a capital-intensive, but not employment-intensive, industry and that many of the workers appear to be residents of other states. They might as well have added that expected indirect and induced economic impacts of the natural gas boom have been vastly watered down by unexpectedly low natural gas prices, which reduce royalties and, therefore, dollars being injected into West Virginia's economy and by the state's chronic problem of out-of-state ownership of resources which causes a significant share of royalties and capital gains to flow elsewhere.

In short, the decision by West Virginia policymakers to adopt an economic strategy that imagines the coal and natural gas industries along with corporate tax cuts to be the engines of economic growth was wildly misguided. So, as the rest of the country has seen a nearly 6% growth in the number of jobs over the last three years, West Virginia has experienced a decline in the absolute number of jobs in the state and an even greater decline in the number of those jobs that are held by West Virginians -- a figure that is now at its lowest point since 1995.

It was in January 2011 that newly appointed West Virginia Governor Earl Ray Tomblin in his first State of The State speech took stock of West Virginia's balanced state budget, improvements in the state's business climate (read "corporate tax cuts"), and building momentum in the natural gas industry and proclaimed the state poised for "unprecedented growth in jobs and prosperity". Four years later the state budget is chronically deficit-ridden and the tax breaks and fracking boom have failed to produce increases in jobs or prosperity, yet as recently as this week Secretary of Commerce Keith Burdette continued to argue that West Virginia's energy industries combined with improvements in the state's business climate can raise us out of our economic torpor if . . . if . . . the state can educate and train a qualified workforce.

Too bad for Mr. Burdette and worse for the state that West Virginia's budget deficits, which were brought about by the aforementioned tax policies, are causing the state to cut investment in education and training just when he says we need more of both as we assuredly do. However, to lay the blame for West Virginia's economic failings entirely at the feet of an underqualified workforce ignores the obvious failings of the policies that got us to this point and, frankly, the need to reverse them. That's why articles such as Gutman's are vital and with any luck will soon begin to appear regularly in newspapers throughout the state.

Tuesday, March 17, 2015

NUMBER OF WEST VIRGINIANS WITH JOBS HITS ANOTHER LOW

Workforce West Virginia's monthly update shows that another 2,800 West Virginians lost their jobs last month bringing total job losses in the past year to 14,400 and 19,500 since January of 2014. It is the 13th consecutive month of declines in the number of working West Virginians, which at 726,100 now stands at its lowest point since December of 1995. Meanwhile, the state's unemployment rate rose from 5.9% to 6.1%.

Almost 52,000 jobs have been lost since the state hit its peak employment figure of 778,000 in April of 2008.

(Click on the image to enlarge or go to the Workforce West Virginia web site.)

Monday, March 16, 2015

HOOPIES VS. MASTERS OF THE UNIVERSE

In 2014, 167,880 Wall Street security industry employees received $28.5 Billion in bonuses. Between Q3 2013 and Q2 1014, the last year for which data is complete, all 1,852,000 West Virginians had total wages of $28.4 Billion.

(In Millions of Dollars)

(NOTE: Thanks to Antipode for pointing out in a comment that can be seen below that in the original published version of this post I mistakenly wrote that the $28.4 Billion figure for West Virginians is for "income" in 2013. The figure is for "total wages" and covers the last four completed quarters for which data is available -- Q3 2013 through Q2 2014. The original data for West Virginia can be found at http://www.workforcewv.org/lmi/Employment_N_Wages/EnW.html. Sorry for the mistake.)

Sunday, March 15, 2015

IT'S NOW RENEWABLES VS. NATURAL GAS. COAL IS DEAD.

An interesting piece from Slate Moneybox on the iminent demise of coal. And it's not coincidental that the symbolism is starting to catch up with the economics.

For years proponents of renewable energies have anticipated the achievement of price-parity with coal as a break-out point. But, as that moment approaches its significance is diminished because, although coal remains the nation's largest source of electricity generation, it is in decline, its dominance is being broken by low-price natural gas. That change in the competitive landscape will probably slow the uptake of renewables and create a new "tipping point", the old one having evaporated.

Meanwhile, coal, now a terminal patient, will become less and less a part of the conversation.
 
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