The Race So Far

With a family history in the theater and years spent in the theater, I have a quirk. Actually, I have many but the one I’m talking about here I describe as always seeing the personality of the actor coming across the footlights to me. The upshot of this, as you might expect, is that there are certain very troubled performers that I find quite painful to watch. That’s my reaction to the recent set of close-in pleas to the camera being made by Rahm Emanuel in his bid for re-election.

Here’s how Alex Isenstadt at Politico sees things:

Recent polling shows the race between Emanuel and his unknown and underfunded rival, Jesus “Chuy” Garcia, has closed to within single digits. With local and national progressive groups lining up behind Garcia and promising to pour cash into the effort to deny Emanuel a second term, the mayor is suddenly scratching and clawing for his political existence.

“In Chicago, politics is a contact sport, and it looks like we’re going to have one of those full-contact battles,” said Bill Daley, a former White House chief of staff whose father and brother each served as Chicago mayor for more than 20 years.
Emanuel — once thought to be a shoo-in in the April 7 runoff — plans to launch an ad campaign in the coming days intended to discredit Garcia and cast him as a do-nothing pol who’s accomplished little during his two decades in public service, according to sources close to the mayor. The commercials will also present the mayor, who’s come under fire for closing underperforming schools in hardscrabble neighborhoods and for hiking taxes to close the city’s budget deficit, as someone who is willing to make tough decisions even if they aren’t popular.

I have no doubt that the mayor will come across as sincere in these ads. There’s a certain shall we say personality type that always comes across as sincere. Will smearing his opponent be an effective strategy? Or will it depress the turnout of both his supporters as well as his opponents below the 25% I would think will turn out for the run-off? Is running on his record an effective strategy for the mayor? Or will it remind people of why they don’t like him?


What About the Rest?

I agree with two of the assertions made by John B. Taylor in his recent Wall Street Journal op-ed. First, that the Obama Administration has been satisfied with far too litte:

For years I and many others have argued that a return to the principles of economic freedom would convert this not-so-great recovery into a great one. But Washington has not seriously considered pro-growth policy—no tax reform to lower tax rates and spur hiring, no regulatory reform to scale back costly regulations, no new free-trade agreements, no entitlement reform to stop the debt explosion, and at best only a hint at monetary normalization to reduce uncertainty.

One reason: There is growing skepticism that these tried and true policies will boost growth rates. It is too late now, pessimists say. The economy missed the 6% or 7% 1980s-style growth at the start of the recovery, and it is impossible to make it up. Or even more pessimistically, an incurable “secular stagnation” plagues the economy with permanently diminished rates of return on investment and ever-increasing income inequality. Why bother with difficult reforms if they won’t make much difference? At least we’re doing better than Europe.

Not once in six years has the Obama Administration even put forward a plan to return to full employment. Blaming it on the Republicans is a lot easier than working for change but that’s the difference between running for office and doing the job.

And the Administration should pay more attention to the labor force participation rate:

As a matter of arithmetic, the growth of the economy equals employment growth plus productivity growth. Simply reversing the decline in the labor-force participation rate—it fell every year of the so-called recovery, to 62.9% in 2014 from 66% in 2008—would cause a 5% increase in employment, or 1% growth for five years. Adding about 1% for population growth from Census projections equals employment growth of 2% a year. The percentage of the working-age population that is working would thereby finally exceed 2009 levels, and the U.S. would begin seeing promising changes.

I wish Dr. Taylor had provided more suggestions for turning that around.

For the last two decades education policy has been the substitute for economic policy. At best that provides a solution for half of young Americans. What is to become of the rest? Are they to become permanent wards of the state?

For all of human history work has been more than just a paycheck. It’s been a source of purpose, meaning, and pride. What will replace that? Drugs? Facebook?


Netanyahu’s Speech

I disapprove of Israeli Prime Minister Benjamin Netanyahu’s addressing Congress on constitutional grounds. The Congress’s role in foreign policyh is delineated clearly there and inviting foreign heads of government to address them exceeds that. However, I agree with the editors of the Washington Post that the president should respond to Mr. Netanyahu’s claims with something other than pique and sniping:

Nevertheless, Mr. Netanyahu’s arguments deserve a serious response from the Obama administration — one it has yet to provide. The White House has sought to dismiss the Israeli leader as a politician seeking reelection; has said that he was wrong in his support for the Iraq war and in his opposition to an interim agreement with Iran; and has claimed that he offers no alternative to President Obama’s policy. Such rhetoric will not satisfy those in and out of Congress who share Mr. Netanyahu’s legitimate questions.

Being wrong on the invasion of Iraq isn’t much of a criticism. It also characterizes our last two Secretaries of State, both of whom were appointed by President Obama. Obviously, the president doesn’t consider that a disqualification. That the prime minister is a politician isn’t much of a criticism, either. BTW, I agree with the assessment that the prime minister’s visit is a political move whose target audience is Israelis. The Congress shouldn’t be so foolish as to allow themselves to become props in foreign elections.

However, the way to respond to arguments is with counter-arguments not ad hominems and the president should provide more of them.


The editors of the Wall Street Journal are much more favorably disposed to PM Netanyahu:

For all the White House’s fretting beforehand about the speech’s potential damage to U.S.-Israel relations, Mr. Netanyahu was both bipartisan and gracious to Mr. Obama for all he “has done for Israel,” citing examples previously not publicly known. But the power of the speech—the reason the Israeli leader was willing to risk breaking diplomatic china to give it—was its systematic case against the looming nuclear deal.

Point by point, he dismantled the emerging details and assumptions of what he called a “very bad deal.” The heart of his critique concerned the nature of the Iranian regime as a terror sponsor of long-standing that has threatened to “annihilate” Israel and is bent on regional domination.

The Administration argues that a nuclear accord will help move the revolutionary regime toward moderation. But Mr. Netanyahu spent some 15 minutes laying out the regime’s historical record. Since Hasan Rouhani became president in 2013, Iran’s internal repression has become worse than in the days of Mahmoud Ahmadinejad . Iran has doubled down on its military support for Bashar Assad in Syria, gained control of north Yemen through its Houthi militia proxies, and continued to arm Hezbollah in Lebanon, Hamas in Gaza and Shiite militias in Iraq.

Those are interesting claims. Is there any actual evidence that the Houthi are Iranian proxies? Or is it merely assumed that all Shi’ites are in cahoots? And like Assad or not the present Syrian government is the internationally recognized government of Syria with a seat in the UN General Assembly. The US, in a bizarre turn of events, has been supporting Al Qaeda and DAESH against it.

I’m skeptical of the White House’s apparent belief that we can have a productive relationship with the mullahs who rule Iran. That’s a reversal of more than thirty years of US policy and it deserves more than a few comebacks.


The Devil You Know

Tom Bevan calls for the re-election of Rahm Emanuel:

So Rahm got his comeuppance. He also became a historical footnote: He’s the first (and only) mayor in Chicago to be forced into a re-election runoff since the city shifted to the “non-partisan” election system in 1995.

It’s not hard to see why many were rooting for Rahm’s humiliation. His foul-mouthed, tough-guy shtick has worn thin over the past four years. His record of accomplishment is even thinner.

Some of his supporters feel he hasn’t gone far enough in tackling the serious budget issues facing the city. (He still has tire marks on his back from getting run over by Chicago Teachers Union President Karen Lewis in his first term.) Despite some nibbling around the edges, the city still faces massive fiscal issues which Emanuel has yet to address in any meaningful way.

Meanwhile his enemies, including the aforementioned Lewis, feel he’s gone too far on the budget and accuse him of racism, among other things, for closing some 50 public schools in poor neighborhoods around the city. They also accuse Emanuel of catering too much to business — those evil one percenters, in particular — and claim he’s responsible for creating “two Chicagos”: one where the downtown thrives and the other in which the neighborhoods on the south and west sides are left behind.

Mr. Bevan’s basic point is that bad as Emanuel is Chuy Garcia would be worse.

I think he needs to look at the bigger picture. Chicago will need a full-time mayor and whether he’s re-elected or not Rahm Emanuel won’t be a full-time mayor. He’ll inevitably be drawn into the presidential election and Chicago will receive short shrift. The difference between Michael Bloomberg and Rahm Emanuel is that Michael Bloomberg knows something about business. Rahm Emanuel knows something about fundraising.

Mayor Emanuel had better hope that my neighbors aren’t typical of Chicagoans. His support is extremely thin here. Of the Chicagoans that bothered voting the majority voted for “Anybody But Emanuel” and that feeling hasn’t gone away yet.


Business Model Failure

I’ve got some advice for Catherine Rampell:

McDonald’s has thus far tried to address its image crisis by giving away free food and airing sentimental ads. But a better, more effective solution might be to address the sources of its troubles head on, and try to become a better global corporate citizen.

A lot of the superannuated hipsters who are complaining about McDonalds being a bad corporate citizen wouldn’t be caught dead in a McDonalds and there’s nothing the franchiser can do to change that. Its franchisees can’t raise their prices enough to cover the additional costs that would be incurred without business falling off disastrously.

McDonalds problem is business model failure. The company grew up in a period when there were a lot of growing families and lots of young workers without responsibilities coming into the job market for the first time. Cheap grub and cost control was the basic model. Those days are gone and the golden arches have lost their luster.


The Other Shoe

Three prominent House Republicans double down on the Senate proposal for amending the PPACA that I mentioned yesterday. Here’s the kernel:

Here’s how it would work:

First, make coverage more affordable. Any state that uses our off-ramp would be able to opt out of ObamaCare’s insurance mandates. These coverage requirements are driving up costs, so eliminating them would empower individuals and families to choose from a wider range of plans that fit their personal needs and budgets. Our proposal will also allow participating states to opt out of ObamaCare’s burdensome individual and employer mandates, allowing Americans to purchase the coverage they want.

We would also force insurers to compete for your business, rather than force Americans to buy a government-approved health plan under the threat of IRS fines. Let people buy insurance across state lines. Stop frivolous lawsuits by enacting medical-liability reform. Let small businesses band together so they get a fair deal from insurance companies. Our committees and nonpartisan analysts alike estimate that these proposals will cut costs and raise quality across the board.

At the same time, we would set up other safeguards for patients. We would allow parents to keep children on their plan until age 26. We would prohibit insurers from imposing lifetime limits on benefits. We would protect people with existing conditions. And we would guarantee renewability for people already enrolled in a plan.

Second, help people buy coverage. Right now, those who get insurance through their employer get a lot of help from the tax code, while some people who buy insurance on their own, including potentially the millions of Americans the IRS put at risk, get no help at all. So we would offer those in the affected states a tax credit to buy insurance.

The credit would be “advanceable”—that is, you would get it when you needed it; you wouldn’t have to wait for tax season. It also would be “refundable”—that is, you would get the full amount no matter the size of your tax bill. And would adjust the size of the credit for age; the elderly, who face higher coverage costs, would get more support.

That confirms what I said yesterday—they’re ending White House regulation of what’s acceptable or not acceptable in healthcare insurance. And it relies on something I think is fictive: that there is a market in healthcare. There is no functioning market when the cost of entry is as high as it is in healthcare. And healthcare consumers are not rational optimizers. They don’t distinguish well between economizing on necessary healthcare and economizing on unnecessary healthcare and by and large those decisions are made for them by their physicians anyway.


The Devil in the Details

I’ve told you the story of the mathematician, the lawyer, and the accountant before so you know how aware I am that given the impulse you can jigger the numbers to achieve any result you want. That’s the basic point of Alan Reynolds’s Wall Street Journal op-ed and it’s a reasonable one. However, in getting there he instantiates the very thing he’s complaining about.

I agree with him that the White House’s insistence that the average of the incomes of the lower 90% of income earners is a fair proxy for median income is a maddening one. It might be simpler just to say that normal distribution of income stops with the top 10% of income earners. I also think his determination that, if you use the same methodology as the White House does to find that median income is about the same now as it was 35 years ago, it was also the same 47 years ago is an interesting one. It certainly supports the point I’ve made here that our problems are not a result of differences of opinion between Republicans and Democrats so much as a remarkable agreement between Republicans and Democrats, both of which have followed the same lousy policies for the last half century.

However, I find the errors and elisions in his op-ed just as maddening. For example, he writes:

Are all those shopping malls, big box stores, car dealers and restaurants catering to only the top 10%? The question answers itself.

I have two problems with the remark. First, he’s ignoring the tremendous changes in real consumer prices over the last half century. Your phone bill is a fraction of what it would have been then and that’s changed your behavior. Your doctor’s bill is a lot higher.

Second, there are a lot fewer car dealers than there were a half century ago. For reasons not entirely clear to me the auto manufacturers have decided they’re better off with fewer customers rather than more (you aren’t the customer for auto manufacturers—auto dealers are). That means there are just about half as many much wealthier auto dealers serving twice as many customers as there were in 1970, a common pattern throughout the economy.

Here’s the story I would tell about the changes in the economy over the last half century. We’re importing a lot more of what we consume than we did 50 years ago. That plus government subsidies paid to people in the top 10% of income earners have resulted in a lot more money relative to the rest of us for the top income earners. We’ve also imported a lot of low skill and unskilled workers which has pushed the wages of the lowest and, increasingly, middle income workers down relative to what they might have been otherwise.

That has been offset to some degree by a drop in the prices of consumer goods, especially electronics. Your television today is bigger, better, and a lot cheaper than your television would have been in 1970.

Finally, a lot of income has been taken in the form of non-wage compensation and most of that has been in the form of healthcare insurance.

That’s the story of the last fifty years as I see it. I think it sticks to the observed facts better than either the White House’s version or Mr. Reynolds’s.


Adventures in Moving

Illinois has the second greatest outmigration among the states:

Illinois’ net loss of 95,000 residents is so large that it defies belief, and speaks to the fact that Illinois has the worst job-creation rate in the Midwest in 2014, with food-stamp enrollment also hitting new record highs. Although Illinois has been a net loser of residents as far back as such data are recorded, never has the state lost so many people in one year.

Only New York lost more people to net migration, as the two states once again battled it out to be the nation’s largest exporter of talent. Meanwhile, states such as Texas, Florida, Arizona, Colorado and the Carolinas happily herded more of the nation’s talent pool across their borders.

Two of nation’s three largest moving companies, United Van Lines and Atlas Van Lines, corroborated the census data. Both moving companies show the rate of outbound traffic from Illinois spiked to new highs in 2014. Atlas and United respectively showed that Illinois ranked second and third-highest for the outbound rate nationally, with New York coming in last in for both moving companies.

The stunning data underscore an important point as power shifts to Governor-elect Bruce Rauner: Illinois cannot raise taxes on a population that is shrinking due to massive numbers of people leaving. We know the number one reason Illinoisans leave is for better job and business opportunities, according to Gallup.

And yet our state legislature remains committed to the ideas that higher tax and a higher cost of doing business in Illinois will solve Illinois’s problems.


Just When You Thought…

Just when you thought it was safe to go back into the water, we learn there will be a Sharknado 3:

Syfy’s Sharknado 3 has elected a new president and vice president.

Mark Cuban and Ann Coulter have joined the growing list of guest stars for the third TV movie in the phenomenon, The Hollywood Reporter has learned. Launching in July, Sharknado 3 will be set in Washington, D.C., this time and, per Syfy, will “cause mass destruction in the nation’s capital” before it roars down the Eastern Seaboard.

Entrepreneur/Dallas Mavericks owner Cuban of Shark Tank will play the president, while conservative commentator/author Coulter will play the vp.

They join a rapidly growing list of guest stars set to cameo in the third film, including Bo Derek as May, the mother to star Tara Reid’s April; Jerry Springer, appearing as Mr. White, a manic tourist; ‘N Sync’s Chris Kirkpatrick as a pool lifeguard; and Chris Jericho, who will play Bruce, a roller-coaster ride operator.

What does Sharknado 3 have in common with the Congress? Both “cause mass destruction in the nation’s capital”.

Now I have four reasons not to watch it. Make that seven reasons.

The list of movies I need to avoid is growing rapidly.

Hat tip: memeorandum

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The Verdict on the Republicans’ Reform Plan

Three Senate Republicans have announced their plan to amend the Affordable Care Act if the Supreme Court decides it should be construed as the plaintiffs in King v. Burwell have proposed:

irst and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.

Most of these people have gone through the wringer to get this insurance. Millions lost their previous health-care plans because those plans didn’t meet Obamacare’s requirements; others no longer have access to the doctors or hospitals they were accustomed to; millions spent weeks trying to purchase insurance on the flawed Web site rolled out by the administration; and many have seen their out-of-pocket health costs or premiums skyrocket.

People do not deserve further disruption from this law.

Second, we will give states the freedom and flexibility to create better, more competitive health insurance markets offering more options and different choices. Republicans understand that what works in Utah is different from what works in Tennessee or Wyoming. We want to give states the time and flexibility to design health-care systems that work for them, not for the bureaucrats in Washington.

I presume that means that the Obama Administration’s power to determine what is acceptable healthcare insurance and what isn’t would be at an end.

I really have no strong feeling about their plan one way or another other than that it’s a patch on a patch. I don’t see that it fixes much and it leaves us just as much in need of healthcare reform as we have been for the last six years with even slimmer prospects for getting any.