The Watcher’s Council has announced its winners for last week. First place in the Council category was The Razor with Michael Vick and redemption.

First place in the non-Council category was Seraphic Secrets with Harry Potter Actress Beaten and Branded a Prostitute by Her Family After Dating a Non-Muslim.

Full results are here.

Week of December 19

First place in the Council category was The Colossus of Rhodey, with What makes America great …?

First place in the non-Council category was Raymond Ibrahim/Pajamas Media with Islamists Target Christians ‘Wherever They Can Reach Them.’

Full results are here.

Week of December 12

First place in the Council category was The Razor with Friends Like These.

First place in the non-Council category was Rubin Reports with Thanks to International Aid, Gaza Is Going To Be A Well-Off Islamist Republic.

Full results are here.

Week of December 5

First place in the Council category was The Razor with America’s China Problem.

First place in the non-Council category was Iowahawk with White House in Talks With Elusive Taliban Leader.

Full results are here.

Blow me down! The high risk pools, an early feature of PPACA, are proving more costly (and, coincidentally, attracting fewer people) than anticipated:

An early feature of the new health-care law that allows people who are already sick to get insurance to cover their medical costs isn’t attracting as many customers as expected.

In the meantime, in at least a few states, claims for medical care covered by the “high-risk pools” are proving very costly, and it is an open question whether the $5 billion allotted by Congress to start up the plans will be sufficient.

Federal health officials contend the new insurance plans, designed solely for people who already are sick, are merely experiencing growing pains. It will take time to spread the word that they exist and to adjust prices and benefits so that the plans are as attractive as possible, the officials say.

Sounds to me like the experience with the reformed version of healthcare is pretty much what the experience with Medicare was forty years ago. It’s going to cost a lot more than the folks who voted for it expected. Or said they expected.

There’s a science story that I’ve been following with rapt attention that I wanted to comment on. Back in 2008 a team of Russian archaeologists working in Western Siberia in an area adjoining Kazakhstan found some remains in Denisova Cave there. Based on mitochondrial DNA studies performed by German and Swedish scientists announced in March of this year these remains have proven to be neither Neandertal nor modern human but of something different which are being called the “Denisovan hominins” or, simply, Denisovans.

It is believed that the Denisovans are more closely related to the Neandertals than they are to us. Here’s where the story gets interesting:

An international team of scientists has identified a previously shadowy human group known as the Denisovans as cousins to Neanderthals who lived in Asia from roughly 400,000 to 50,000 years ago and interbred with the ancestors of today’s inhabitants of New Guinea.

All the Denisovans have left behind are a broken finger bone and a wisdom tooth in a Siberian cave. But the scientists have succeeded in extracting the entire genome of the Denisovans from these scant remains. An analysis of this ancient DNA, published on Wednesday in Nature, reveals that the genomes of people from New Guinea contain 4.8 percent Denisovan DNA.

Obviously, such scanty remains aren’t going to tell us much about morphology.

The way they’re envisioning things now is that the ancestors of the Neandertals and Denisovans left Africa about a half million years ago, the Neandertals moving west and the Denisovans east. The chronology goes something like this: modern humans separated from the common ancestor of the Neandertals and Denisovans something between 800,000 and 1 million years ago; Neandertals differentiated from Denisovans about 650,000 years ago; “modern humans” and Denisovans interbred no less than 40,000 years ago.

It’s astonishing to me how different scientific thinking about the development of human beings has become in just the last thirty or forty years. Back when I was in college it was blithely asserted that modern humans absolutely, positively preserved no Neandertal DNA. Now the thinking is that modern humans do preserve Denisovan DNA. Is it credible that they don’t preserve Neandertal DNA as well?

My immediate reaction to these findings were two. First, I strongly suspect that we’re going to see a rush by museums, universities, and other collections to reexamine the remains in their collections identified as Homo Neanderthalensis. Second, I’m afraid we’ll see a resurgence of the old, sad arguments about race.

I continue to see the emerging picture of human origins as being far too limited by the old tree model that’s been the standard for so many years and that I suspect that the future will support a more complex network model.

The Wikipedia article on the Denisovans is here.

Early returns are finding that retail sales were the highest in the 2010 Christmas season that they’ve been in five years:

A holiday spending resurgence led by strong online sales gave U.S. retailers a much-needed boost and helped improve the nation’s economic outlook heading into the new year.

Retail sales from Nov. 5 through Dec. 24 rose 5.5% to $584.3 billion over the same period last year, according to MasterCard Advisors’ SpendingPulse. The figures, which exclude auto sales, are ahead of industrywide projections for a 3.3% to 4% rise for the Christmas season and are the best since before the recession.

“The numbers verify what people have been talking about: a positive season and a good step forward,” said Michael McNamara, vice president for research and analysis at SpendingPulse, which estimates sales for all forms of payment. “Consumer confidence is a bit more improved as there has been stability in the system.”

As the proverb says one swallow doesn’t make a summer but an increase is better than no increase, no? It must be emphasized that these are early returns so we’ll need to wait a bit to see if they prove out.

This is particularly good news for state and local governments. These tend to be very dependent on sales tax and at least three-quarters of the retail sales are local, i.e. not online or mail order, and, consequently, they mean additional sales tax revenue. The sales tax revenue reports from state governments should be telling.

Barry Ritholtz says he knew it all along:

Leading into the holiday period, the data — I refer to actual sales numbers, and not surveys, gut feelings or proof of recency effect — strongly suggested that the 2010 orgy of consumerism known as the holiday shopping season was likely to be strong.

The first clue I had of this was the Amazon sales from TBP. The embedded code of each link allows me to track click-throughs and purchases. All year long, it has been running significantly higher than 2009. (I’ll post some charts later this week).

Of course, plenty of people were stuck looking backwards. They gave tortured reasons as why this was not going to be a decent season. Call it a classic case of confirmation bias, these were the folks who simply refuse to acknowledge any improvements in the economy. These analysts seem to be shell shocked from the collapse; you should feel free to to do what you like, but once I recognize someone is caught in a negative loop, I tend to avoid their work until they prove they have some objectivity.

Why were the improved sales not a surprise to those people paying attention to the data? The negatives — weak job gains, housing overhang, consumer deleveraging, terrible municipal finances — were already well known all year. Even Oil over $90 was a not a big deal — it seems to have been in the $75-85 range for so long that gasoline over $3 had little shock value.

Most people don’t buy aircraft or semiconductor manufacturing equipment as part of their Christmas shopping so the economic boost that the increased sales provides will be limited to the retail sector. Consumer good, e.g. apparel and electronics, are overwhelmingly made somewhere else. We’re not going to generate enough jobs through increasing retail sales to put many of the people who are unemployed back to work.

There was one more point that I had intended to make in the original post on cyclical and structural unemployment but neglected to in that post so I’ll make it here. Are both Dr. Krugman and James Surowieczki mired in an obsolete view of the economy?

During the Great Depression of the 1930s at least 75% all workers worked in direct production: they were either farmers, miners, or worked in manufacturing. Structural unemployment could be distinguished from cyclical unemployment because it wouild be localized to specific affected sectors.

Now the nature of what people actually do is almost completely the reverse. No more than 25% of American workers work in direct production. What would structural unemployment look like for those involved in indirect production? I suggest that it might not be isolated to specific sectors but be spread throughout the economy.

In other words, it might look a good deal like what we’re seeing now.

Writing in The New Yorker, James Surowieczki trods familiar ground in wondering why unemployment has stayed so stubbornly high:

The structural argument sounds plausible: it fits our sense that there’s a price to be paid for the excesses of the past decade; that the U.S. economy was profoundly out of whack before the recession hit; and that we need major changes in the kind of work people do. But there’s surprisingly little evidence for it. If the problems with the job market really were structural, you’d expect job losses to be heavily concentrated in a few industries, the ones that are disappearing as a result of the bursting of the bubble. And if there were industries that were having trouble finding enough qualified workers, you’d expect them to have lots of job vacancies, and to be paying their existing workers more and working them longer hours.

As it happens, you don’t see any of those things. Instead, jobs have been lost and hiring is slow almost across the board. Payrolls were slashed by five per cent or more not just in the bubble categories of construction and finance but also in manufacturing, retail, wholesale, transportation, and information technology. And take hiring: one of the industries that have been most cautious is the hotel and leisure business. Needless to say, there’s no shortage of people with the skills to be maids or waiters; there just isn’t enough work. Another sure sign of weak demand is that people with jobs aren’t deluged with overtime; hours worked have barely budged in the past year.

I seem to recall that Paul Krugman made a very similar point about a month ago. Yes, here it is:

There’s a story behind why that might happen — it might happen because unemployed workers have the wrong skills, or they’re in the wrong places, or they can live so well off the dole that they don’t really want to work, or whatever. But the measure of structural unemployment is that worsening of the inflation-unemployment tradeoff. So, for example, the demonstration that Britain suffered a large rise in structural unemployment in the late 70s through the 80s was the way inflation took off in the late 80s, even though the unemployment rate was quite high by historical standards.

Once you realize that’s what it’s about, you see that many of the things people say show a rise in structural unemployment don’t really bear on the issue. You say we had a big bubble in the past? OK, but that doesn’t explain why trying to raise employment now would cause inflation. You say that we’ve been living beyond our means? OK, but again, why does that limit the number of workers we can employ making stuff for somebody?

I think they may be defining both “structure” and “cycle” far too narrowly. The conventional business cycle, the interaction between supply and demand, inventories and sales, isn’t the only cycle that affects business. As I’ve documented here previously there’s some evidence that the present economic downturn is being influenced by generational change, a cycle that is measured in decades or even centuries rather than months and years.

There are other factors involved that I think we might deem structural. As the 2010 census has revealed over the last decade much of the increase in our population has been due to immigration from Mexico. When a Mexican worker comes to the United States and sends a good portion of his wages back home to Mexico that portion of his wages isn’t producing increased economic activity here in the United States, it’s producing increased economic activity in Mexico. I wonder what the economic story of the last couple of decades would be if the United States, Canada, and Mexico were considered as a unit rather than distinctly?

Does China’s practice of using the dollars it receives for the goods it produces to buy Treasury notes rather than to buy American goods constitute another sort of structural change? Does Ricardian comparative advantage continue to work under the present circumstances? It may be that China will eventually use its stock of dollars to buy real goods but I’m guessing that at least some of the goods it buys will come in the form of arable land.

I also have a sneaking suspicion that we’re asking the wrong question. Rather than wondering why unemployment is so high now we might well consider why it has been so low over the period of the last 15 years. We have had two successive bubbles, one more extreme than the last.

Absent those bubbles what would the employment picture have been in the United States over the last 15 years? I think you’ve got to look a lot farther than the last five or even ten years to find the source of our present problems.

Christmas this year followed our familiar patten: 6:00pm Mass at Queen of All Saints on Christmas Eve, dinner of spinach and white beans (a remarkably delicious if frugal dish), opening presents on Christmas morning, dinner and birthday cake in the evening.

I have no established Christmas dinner menu and I don’t recall one from my childhood. This year I made a sort of mini Beef Wellington with a red wine sauce, pilaf of wild and brown rice, and braised kale with garlic and red pepper. 2007 Frei Brothers Cabernet Savignon.

I had a Very Oxo Christmas this year—my wife gave me a couple of new spatulas (at least partially a pretext for throwing out my old spatula which had become quite disreputable), a large stirring spoon, and a perforated stirring spoon. She also gave me a couple of DVDs (more about these later), a Wii fitness and exercise game, and some new pillows. I gave her a Stephen Sondheim’s new book, Finishing the Hat, and a Makita compact driver-drill and an impact drill along with the matching drill bits. My wife is an extraordinary woman.

I received some very lovely wooden stirring spoons from two of my siblings and the latest Supreme Court Law Review from some dear old friends as has been their custom for many years.

As our Christmas brunch I prepared some of the country ham I received in the southern care package we’d received from other dear old friends.

During the day we watched two of the DVDs I’d received. The commentary to the Crosby-Astaire musical Holiday Inn was extraordinarily good. I recommend it highly. Did you know that Fred Astaire was actually drunk when he did the “drunk dance” New Year’s Eve number in the film? Neither did I. Film historian Ken Barnes’s treatment of the blackface Abraham production number struck exactly the right note: rather than sidestepping it or deprecating it he put it in context. IMO that’s how we should be dealing with the aspects of our history of which we are less than proud rather than simply denying they ever happened as seems to be the case today.

I wish all of you Merry Christmas, Happy Holidays, or simply a peaceful and restful day. Celebrate the good!

Update

I neglected to mention some presents, one a very significant one. My wife gave me a Japanese tetsubin teapot. Very nice. I also received an Oxo cheese grater.

As the year draws to a close it seems appropriate to take stock of the conditions in which we find our country at the end of 2010. In this post I’ll consider three areas: the economy, politics, and the environment. I also plan to post a similar assessment of the international situation at the end of the year over at Outside the Beltway.

The economy is essentially moving sideways. The level of employment continues to deteriorate and the unemployment rate, at least to some degree an artifact, remains at 9.8%. The decrease in employment renders the unacceptably high unemployment rate that much less acceptable.

Solutions to the employment situation remain elusive. I’m skeptical that government action is likely to help much since it will inevitably be focused on an economy that no longer exists, hearkening back to the 1950s or even the 1930s, or be targeted at large, established businesses. These are the business that have shed jobs at an alarming rate over the last few decades. For example, in 1979 GM employed nearly 620,000 people in the United States. It now employes fewer than 70,000. That’s roughly the same as Microsoft.

BTW, the largest private employers today in the U. S. are Wal-Mart (1,800,000), Kelly Services (750,000), McDonald’s (465,000), and UPS (428,000) with most of the other larger employers falling below 350,000 total U. S. employees. The rise in the number of temporary workers in the United States is a subject for a post on its own. Temporary workers are typically paid less with fewer benefits than their permanent counterparts and they definitely have lower job security. Lower job security in turn has a negative influence on things like retail sales (lowering sales of durable goods, for example) and indebtedness (increasing it).

The political situation at the close of 2010 remains uncertain. The November elections produced the largest change in the part affiliation of the House of Representatives since the end of World War II. Many of the incoming freshmen ran with Tea Party support or on a Tea Party-style platform. The upcoming months will show whether they genuinely believe in the small government gospel they’ve preached or whether they differ from their Democratic opponents primarily in how they want to spend tax dollars and the borrowed money on which the federal government depends.

Recent weeks have seen the extension of the tax cuts of the early 2000s and a substantial additional fiscal stimulus package, the repeal of the enabling legislation of the “Don’t Ask, Don’t Tell” policy on homosexuals serving in the U. S. military with tepid bipartisan support, and the passage by the Senate of a new strategic arms reductions treaty with Russia with strong bipartisan support.

Among the significant political develops of 2010 was the decision of Chicago’s Mayor Richard M. Daley not to seek re-election. Make no mistake: the mayor of Chicago is arguably the most powerful elected Democratic official in the country including the Democratic president and a Democratic Speaker of the House. Unlike the president, the mayor of Chicago faces no term limits and unlike the Speaker of the House, as we have seen, the mayor of Chicago doesn’t face much in the way of an opposing party. Democrats have dominated the Chicago mayor’s office for the last 140 years with the last Republican to hold the job leaving office 80 years ago.

Chicago’s new mayor will not only have enormous influence and power in the nation’s 3rd largest city, he (or she) will have substantial influence over national politics and policy and the potential to be a mentor for an entire generation of Democratic politicians.

Right now the frontrunner in the mayor’s race is Rahm Emanuel, formerly President Obama’s chief of staff. He has cleared the first hurdle in his race for the job by receiving approval from the Board of Elections to run. It’s far from a done deal—I have little doubt the BoE’s decision on Mr. Emanuel’s residency will be taken to the courts.

The BoE’s decision has seen more of the regular Democratic leadership fall into line behind Emanuel’s candidacy but he’s not the only candidate. I expect that we’ll see a black candidate, an Hispanic candidate, and at least one “other” candidate in the primaries as serious contenders. James Meeks’s withdrawal from the race place former Senator Carol Mosely-Braun and present Representative Danny Davis in stronger positions. If the “one black candidate” concept can take hold, it will put Emanuel’s mayoral chances in serious doubt.

Other than the economy and the political upheaval that our economic problems have brought with them, IMO the biggest story and most important developments have been in the area of the environment. The consequences of the Deepwater Horizon fire, explosion, blowout, and cleanup on the Gulf of Mexico and adjacent areas will be played out in the courts, on our beaches and wetlands, and in the Gulf for decades to come. See also here.

California is experiencing recordbreaking rains. Atlanta had its first white Christmas since 1882 although the small amount of accumulation did not exceed the third of an inch that happened then. The southeast has experienced unseasonably cold weather. New England may be on the brink of its biggest snowstorm in 15 years. Drought in the Midwest and Southeast has reduced crop yields.

Proponents of policy change to deal with climate change attribute the unusual weather to global warming; skeptics question the data and wonder how a theory that whose adherents explain exceptional cooling by exceptional warming might be disproved.

We live in interesting times.

As if on cue the Wall Street Journal observes that cities, faced with dwindling revenues and increasing costs, are raising property taxes:

Cities across the nation are raising property taxes, largely citing rising pension and health-care costs for their employees and retirees.

In Pennsylvania, the township of Upper Moreland is bumping up property taxes for residents by 13.6% in 2011. Next door the city of Philadelphia this year increased the tax 9.9%. In New York, Saratoga Springs will collect 4.4% more in property taxes in 2011; Troy will increase taxes by 1.9%.

Property-tax increases aren’t unusual, in part because the taxes are among the main sources of local revenue. But officials say more and larger increases are taking hold. “This year we have seen a dramatic increase in our cities and towns having to increase property taxes” for pensions and other expenses, said Jack Garner, executive director of the Pennsylvania League of Cities and Municipalities.

They include some local examples:

Rolling Meadows, a Chicago suburb, is raising its property taxes next year by 9.8%, on top of a 16% jump in 2010, due to increased police and fire pension costs, said Mayor Ken Nelson. Those increases are the largest in nearly 20 years, he said. The local police and fire pension funds are around 45% funded.

Chris Lee, a firefighter paramedic and president of the city’s pension fund, says the pensions must be paid because they are “promises the city made to us.”

Rolling Meadows has paid less than it should into its pension fund by relying on higher assumed rates of returns than those recommended by the Illinois Department of Insurance, Mr. Lee said. Lower annual contributions mean the fund has trouble staying abreast of ballooning costs, leading in part to the underfunding, Mr. Lee said. The city recently changed to the Department of Insurance’s recommended annual contributions, Mr. Nelson said.

The 70,000-person village of Palatine, near Chicago, recently voted to raise property taxes 3.99%, the most in at least five years. That’s an average increase of $40 per home. “But for the pensions, [the property tax] would not have gone up at all,” said Village Manager Reid Ottesen.

The increase comes after cost-cutting steps in the past two years, including a hiring freeze and not replacing three firefighters and several police officers who retired, said Mr. Ottesen. “There is nothing left to cut if you still want to deliver the services that make you the community you are.”

Rolling Meadows and Palatine are ordinary, middle income suburbs northwest of Chicago. They aren’t where the wealthy live.

Some of these increases will no doubt be grudgingly shouldered by taxpayers but boosting property taxes will result in more defaults and foreclosures than would otherwise have occurred. Expect, too, a rise in demands for exemptions, especially among the elderly, who are frequently on fixed or in the present economic climate diminishing incomes and may be driven from their homes by tax increases. This could have the perverse result in making them more rather than less likely to make demands on government services.

In my view this is the sort of inequality about which we are concerned. The rich and ultra-rich have a much smaller proportion of their wealth in their homes than those at lower income levels. And the ultra-rich are a lot more mobile.