Is the recession over yet? – II

“What is the use of living, if it be not to strive for noble causes and to make this muddled world a better place for those who will live in it after we are gone?” — Winston Churchill

Statisticians say the recession ended mid-2009, four and a half years ago. But what do you think? Does it feel like the recession ended or does it feel like we are still in a recession? In a recent poll, 74% said we are still in a recession.

It’s no wonder most people feel that the recession never ended. Employment is miserable. GDP growth is pathetic. Median family income is down for four straight years. Almost 50 million Americans live below the federal poverty line. A record 47 million people are on food stamps. One pundit declared that “More people in the United States are poor, unemployed, underemployed, looking for work, disgusted and quit looking for work, on food stamps, and on disability than anytime in our history.”

If those words look familiar it is because I first wrote them three months ago. In that column, the focus was on the worst employment picture in more than 30 years. Three recent pieces of economic news make this a good time to look more broadly at the economy.

1) On April 22, the New York Times reported that the U.S. no longer has the highest Median Family Income in the world. Canada is now #1.
2) April 30, the headline news was that in the first quarter of 2014, the U.S. economy grew at an almost non-existent rate of 0.1%.
3) That same day other headlines stated that China would soon pass the U.S. as the world’s largest economy.

Our economy stinks and we will have more such headlines if we don’t fix it. So, how do we fix it? The first step is to replace all the politicians who don’t even realize there is a problem, who do the same wrong things year after year expecting different results.

For decades, probably for more than a century, the U.S. has had the richest middle class in the world. Not just the richest middle class, but also the richest lower class, the richest upper class, and even the richest poor people. Those in the bottom 10% were much better off than the bottom 10% in any other country.

U.S. median family income is now down for five years in a row. In Canada, median family income is up for four of the last five years. Is it pure coincidence that Canada has been governed by Conservatives in recent years, the U.S. by Progressives?

The Index of Economic Freedom is an annual scoring of some 180 nations by ten measures of economic freedom. As the Index states, “The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination.”

The U.S. was rated economically “free” in 2006. Since then, its freedom score has dropped 6 points, it has fallen out of the top 10 to now #12 and is ranked only “mostly free”. The U.S. has lost economic freedom for seven years in a row, particularly in the areas of property rights, and freedom from corruption.

Conversely, Canada has increased its freedom score by more than 10 points over the last 20 years. It is currently ranked #6, and is rated “free”.

Hmm, is there a pattern here? The U.S. loses economic freedom seven years in a row and median family income goes down for five years in a row. Canada increases its economic freedom and median family income goes up four of the last five years. It now has the world’s highest median family income.

GDP growth in this so-called “recovery” has been pathetic. For four years it has been around 1.5% to 2%. That is the slowest by far of all the recoveries in 65 years. The Federal Reserve Bank of Minneapolis has a nice interactive chart of all postwar recoveries. The current recovery amounts to merely an 11.1% increase in GDP over the almost five years since the recovery began. Many of the previous recoveries had double or almost triple that growth. This recovery is barely half the average of the ten previous recoveries.

Imagine if we had had as much as average growth in the last five years. Investor’s Business Daily estimates that we would now have $1.3 trillion higher income. That is about $10,000 higher per household. That is the cost of bad economic policies.

Apologists for the Obama “recovery” say that the recession was especially severe. Historically, the more severe the recession, the stronger the recovery. It should have been easy to produce better than average numbers. They now say that financial recessions take longer to recover. But that’s not what they said back in 2009 and into 2010. Back then they forecast a strong recovery. It was only after their economic plans failed that they started spouting the “financial recession” excuse.

The Democrat Party would be wise to heed the words of one of its Presidential candidates from some 20 years ago, the late Senator Paul Tsongas, who said, “You cannot redistribute wealth that you never created. You cannot be pro-jobs and anti-business at the same time. You cannot love employment and hate employers.”

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Did we win the war?

Always do right. This will gratify some people and astonish the rest. — Mark Twain

This year is the 50th anniversary of the War on Poverty (WOP). In January 1964, during his State of the Union speech, President Lyndon Johnson declared a “War on Poverty”. “Our aim is not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.” In August of that year, Johnson signed the Economic Opportunity Act of 1964, which stated that it was the policy of the United States to eliminate poverty. “The United States can achieve its full economic and social potential as a nation only if every individual has the opportunity to contribute to the full extent of his capabilities and to participate in the workings of our society.”

Even before the WOP, poverty rates were falling steadily. From 1940 to 1960 the poverty rate for black families dropped from 87% to 47%, then in the 60s it dropped another 17%. In 1950 the overall poverty rate was 30%. By 1956 that had dropped to 25%. By the time of LBJ’s announcement the rate had dropped to 19%.

A few years after the WOP legislation was passed, poverty dropped to 12%. Supporters cheered that the law was working, but how much of that drop was due to the new law and how much was a continuation of a long-term trend going back to the 1940s and 50s?

Since then, now amounting to some 45 years, the poverty rate has bounced up and down between 12% and 15%. The average for the last two decades is higher than when LBJ left office. For the first time in about 50 years, the poverty rate is 15% for three years in a row. A record high 50 million Americans live in poverty. 

We can do better. We should do better.

What we have been doing for most of 50 years has not worked. The War on Poverty has not achieved its stated goals: it has not cured, prevented, or eliminated poverty. The goals were laudable but we should judge the law by its results, not its goals. The result after 50 years is an increase in poverty, not a decrease. People are trapped in poverty, not freed from it.

LBJ’s goal was to help people become prosperous and self-sufficient. Instead, people have become dependent on government, surviving from one benefit check to the next. The Act stated as a goal that “every individual has the opportunity to contribute to the full extent of his capabilities.” 50 million Americans are not contributing; the programs’ perverse incentives punish people who try to work.

Some say the WOP has been a success as measured by the great number of people receiving assistance. Wouldn’t it be better – better for poor people themselves – to measure success by the number of people who have been lifted out of poverty and no longer need assistance?

We all know Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results.” For most of 50 years we have been doing the same thing year after year and the result has been to trap more and more people in poverty.

The myriad of welfare programs reward people for being poor and penalize those who try to move out of poverty and up the income ladder. Someone who works harder, takes a second job, learns more skills, might earn $10,000 more but lose $15,000 of benefits. Hence, many say “I can’t afford to take that job. I’d lose my benefits!” With perverse incentives like these, it is no wonder that we have more people in poverty and fewer people making the effort to better themselves.

New York Times’ columnist Nicholas Kristof recognized the problem: “This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.”

As a caring society we want to help the vulnerable. But do we want to trap them into a lifetime of dependency on government, where they are punished for trying to better themselves? Is it good for society to have millions of people unable to contribute their skills and energy? Is it good for the recipients themselves to live in poverty their entire lives with no hope of ever becoming self-sufficient and moving upward? 

For Kristof, “a tentative lesson from the field is that while we need safety nets, the focus should be instead on creating opportunity — and, still more difficult, on creating an environment that leads people to seize opportunities.”

Our social safety net all too often acts as a trap net. It traps people at the edge of poverty and prevents them from moving up the ladder of success. A true safety net is rarely used. People create opportunities to reach their work site above the safety net. In the unlucky event that they fall to the net, they climb back up and continue their work.

Let’s think more about creating ladders or stairways or ramps to help people escape poverty and reach for their dreams and less about nets that support them and trap them at the edge of poverty with no hope of rising higher.

Health Insurance is not Health Care

Tammy Bruce opines that ObamaCare is not just a train wreck, because after all, once a train wreck is over, it is over. It doesn’t keep on going. No, ObamaCare is more like a cancer, growing and destroying everything.

A California man bought insurance on the ObamaCare exchange, then called a doctor for an appointment. He called every single doctor who was listed as being in-network, but none of them actually was.

In the normal world, this would be called “fraud.” In Obama’s America, it’s called a “snag,” and on a national scale, the Obama regime labels it “Shut up, Fox News!”

After all, isn’t the goal getting everyone insured? Who cares if you can’t actually see a doctor or get health care, because everyone will get a terrific piece of paper that says “health insurance policy.” Equality, at last — everyone’s got the same thing; namely, nothing at all.

A woman cancer patient enrolled in ObamaCare, then went to see her oncologist, only to be greeted by a sign at the door announcing that they did not accept any of the ObamaCare plans. She says that she is, “a complete fan of the Affordable Care Act, but now I can’t sleep at night.”

When the Congressional Budget Office forecast that ObamaCare would cause 2.5 million people to lose their jobs, the White House responded that those people were just a “small percentage of the economy.”

Back here in New Hampshire, Jeanne Shaheen and Carol-Shea Porter say that they would vote for ObamaCare all over again if they could. Whose side are they on?

Why Not Common Core?

Extracts from an interesting article by Barbara Haney, PhD.:

If the objective of the K-12 education system in Alaska is to produce students who can excel in the areas of math and science, the Alaska State Standards and the Common Core will not produce that result. These standards are not more rigorous, they are simply ridiculous. They are developmentally inappropriate and do not specify outcomes. Standards specify outcomes, not processes. With rare exceptions, the Alaska State Standards and the Common Core specify processes, not outcomes.
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It is noteworthy that states have been fleeing the consortia and the common core. Michigan has paused and is re-writing their standards. Massachusetts has paused implementation. Maine and Florida left the consortia via executive order and they are fighting to get the common core out of their state with the assistance of both the governor and the legislature. Georgia left the consortia and is re-writing their standards. Alabama and Utah left the consortia, and there are active movements to get the common core out of that state. Pennsylvania has an effort to rescind the core as well, because oil companies like Exxon and Anadarko have thrown considerable support behind the core making the job of Senate Democrats difficult. (Note: Mike Hanley’s brother, Mark Hanley, is a lobbyist for Anadarko). New York State has what could be termed as a rebellion, and the rejection of the common core was decisive in the school board elections in Buffalo, New York as well as in the Mayor’s race in New York City. Governor Cuomo is a major advocate of the Common Core nationally, along with his anti-gun agenda.
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The developmentally inappropriate nature of the common core has had disastrous results in New York and in other parts of the country. The increase in suicides and clinical depressions that have accompanied the implementation of the common core are well documented. One researcher who has been tracking the impact of the standards on mental health is Mary Calamia. Her research shows a marked increase in self-mutilating behaviors, insomnia, panic attacks, depressed mood, school refusal, and suicidal thoughts during the state exam cycle last spring.

Rethinking the War on Poverty

Some time back there was poll that described two options without using party labels. By a 2:1 margin people preferred the option that happened to be the Republican position. But then the pollsters asked the very same questions but identified which were the Democrat positions and which were the Republican positions. The result was a slight preference for the Democrat position.

To put it simply, voters prefer Republican positions, but don’t like the Republican label.

I am going to try a similar experiment here. Below are extracts from an interesting article about the War on Poverty. Decide whether you like the ideas without knowing who wrote it.

Just over 50 years ago, LBJ announced a War on Poverty.

The world has changed profoundly in the half-century since Johnson declared a war on poverty. In that time, as Peter Ferrara points out, the welfare bureaucracy has spent more than $16 trillion on means-tested entitlements. For each American living in poverty, we now spend $17,000 annually on these programs. And after 50 years of this strategy, there are still nearly 50 million Americans living in poverty today, and President Obama calls “inequality” is “the defining issue of our time.” The war, he says, is “far from over.”

He’s right: 50 years in, we’re still far from winning the war on poverty. But what does he–what does the left–propose to turn the tide? A small hike in the minimum wage, (when only about one third of one percent of Americans lives under the poverty line earning minimum wage). They want some higher taxes on the rich, a few new bureaucracies at most. In other words, the same ideas we’ve been trying for the last 50 years–programs whose most notable achievement is trapping millions of Americans in dependency.

The best response to these proposals may be a half century old itself: Ronald Reagan’s “A Time for Choosing” speech, which he, too, delivered in 1964. “Do they honestly expect us to believe,” he asked, “that if we add 1 billion dollars to the 45 billion we’re spending, one more program to the 30-odd we have—and remember, this new program doesn’t replace any, it just duplicates existing programs—do they believe that poverty is suddenly going to disappear by magic?”It didn’t. And none of the same old, timid ideas we’re hearing from the left to mark this anniversary will do that either, of course.

We owe it to the least well-off Americans to develop a completely new approach to the war on poverty. Instead of recycling bureaucratic proposals from the era of black and white television, it’s time to rethink fundamentally how it is possible to help the poor in this very different world.

Poll: Record high number oppose ObamaCare

A record high number of registered voters (59%) oppose ObamaCare and a record low number (36%) favor it. Interestingly, the increase in opposition comes from Democrats and independents. 30% of Democrats, up from 22%, oppose the law. Among independents, 64% (up from 53%) oppose it.

Some apparent reasons for opposition to the law include the fact that majorities think the new law will increase their taxes (63 percent), increase their insurance costs (62 percent) and increase the federal deficit (56 percent).

Meanwhile, just one voter in five thinks Obamacare will increase the quality of their health care (19 percent).  More than twice as many expect the quality of their care to get worse (39 percent) and another 37 percent think it will stay the same.

  • By 42%-27% voters think that Obama’s policies have hurt, not helped, the economy
  • A whopping 74% feel as if the country is still in a recession
  • By 55%-30% they think cutting taxes and reducing regulations would help the economy
  • 55% vs 37% think that long-term unemployment benefits discourage people from trying to find work
  • A majority (52%) think the government should provide unemployment benefits for at most one year

Democrats Are the Out-of-Touch Extremists

The public overwhelmingly believes the country is headed in the wrong direction, that current economic policies aren’t working, that President Obama is doing a bad job, that government should be smaller and that ObamaCare should be repealed. But not Democrats.

Those are findings from a new poll by Investor’s Business Daily. On issue after issue, large majorities of the public tilt one way, but the Democrats tilt the other way.

Is the country headed in the right direction? 64% say no. Among Independents, 71% say we are headed in the wrong direction along with 92% of Republicans. But 66% of Democrats think we are headed in the right direction.

On all of the poll’s questions, Independents aligned with Republicans and against Democrats.