Thursday, October 07, 2010
Oh, Share My Sorrow
However I'd like to point your attention to a couple of items he did not cover. Page 80, Table A-4. Costs of per employee environmental compliance:
Small 1-19 emp $22,594Page 64, two quotes:
Medium 20-499 emp: $7,131
Large 500 or more: $4,865
The most disadvantaged of all by federal regulations are small manufacturing firms.and
This study provides a broad sense of the costs of federal government regulations in the United States and how they affect the balance in public versus private sector responsibilities. In 2008 federal regulatory compliance absorbed about 14 percent of U.S. national income, a clear indication of what citizens give up in exchange for this government function.A quote from page 63:
The regulatory burden is distributed most evenly with respect to firm size in the services sector, as summarized in Table 17 and displayed in detail in Table 16. In the services sector the total cost per employee for small firms is only 13 percent larger than the cost in medium-sized firms, and 9 percent less than the cost in large firms. In the trade sector, small firms face a 15 percent heavier cost burden than large firms, but have a 13 percent cost advantage over medium-sized firms. In other words, within the trade sector, the heaviest cost burden falls on mid-sized firms.The service-heavy structure of the US economy has come to be, IMO, largely because of our regulatory structure.
A quote from page 62:
The disproportionate cost burden on small firms is dramatic for the manufacturing sector. In that sector the estimated cost per employee for small firms is 110 percent higher than in medium-sized firms ($28,316 versus $13,504), and 125 percent higher than in large firms ($28,316 versus $12,586).The Fed is trying to stimulate manufacturing by driving down the dollar. In the process, they are going to cut real incomes substantially. And they won't succeed, because it takes too much money to start up these businesses.
Carl included some graphs from the data in the report. Here are a few of my own:
The SBA has been commissioning these reports for years. Here is the time sequence with costs allocated to each household.
Red = costs, Green = total federal receipts, Yellow = sum of both.
Note that the yellow is remarkably stable over the period compared to the regulatory costs. This is probably because of lost jobs - the more regs we slap on, the less jobs we have, the less tax receipts on average.
This is the ratio of costs to tax receipts. As regulatory costs keep rising, you can expect tax receipts to be depressed.
Move the red line down and the green line will rise. Since we were not reeling around choking on toxic fumes in 2000, I think we can safely cut a lot of this.
If we don't, our long decline will continue. That's my view. If your view differs, please explain why!
BobN requested that I explain more of the SuperDoc's travails. I will. Call it a specific instance of how the green and red lines are going to be moving in the next scheduled survey as a result of the last few years of legislative neurosis.
In any case, the Fed is trying to inflate now. The result is much higher oil, and soon to be higher medicine and food costs. And then clothing and the rest.
If the Fed actually pushes this through, they will create another contraction next year. I am losing my religion; I always thought the Fed was at least competent. Will I be left with no illusions at all?
Competent or not, no man is immune to confirmation bias. The Fed has been using the same hammer to pound down the same nails for 100 years. I'm sure they're competent with that hammer, but only the electorate is competent to tell them that the things they're hitting aren't nails.
Where's Andy Jackson when you need him?
...I always thought the Fed was at least competent. Will I be left with no illusions at all?
I'm going to really regret saying this but I just can't seem to help myself.
Competent? How about impotent?
It's all about Extenze and Pretenze!
For you young 'uns, consumer saving is the old-fashioned way of "bailing out" troubled banks. Bernanke evidently thinks that's not helpful anymore.
Remember when Obama told the bankers he was the only thing standing between them and the "pitchforks". Both Obama and the Fed may be seeing those same pitchforks in their sleep.
As Craig puts it, we are inhibiting capital formation and forcing many to draw down their savings because they earn nothing on them. In the next post, you talk about the number of older folks working going up. It may be because their savings are being depleted.
The Fed is living in a dream world. It's the circulation of money that is impaired. There is a surfeit of money.
And they don't have much room to push down real interest rates either. Real interest rates are negative. Risk factors now determine the vast majority of most interest rate pricing, and suppressing the real economy will increase risk factors and raise real interest rates.
This is an example of nutcase academics going loopy.
More to the point, it's an example of why "economics" in its current state is so flippin' dangerous. Academic economists are absolutely wedded to the "correlate, simplify, and interpolate" model of "science". And yes, the scare quotes around "science" are appropriate here. They take a limited set of historical time series, correlate current events to a limited window within that data set, and say "therefore, today is just like January 8, 19XX and our fiscal policies should be exactly like/the opposite of the actions of the Fed on January 9, 19XX".
The old "political economists" were much better at these games. They weren't able to blind themselves with data, and had to approach things from first principles. By which I mean the human condition. Adam Smith made tremendous strides in understanding economics without the benefit of databases.
These same poorly-understood statistical games are what is wrong with a lot of science these days, health care, nutrition, and climate studies being some of the worst offenders.
If we're going to revive manufacturing in the US, we need to trash whole volumes of regulations.
What the progressives do not understand is that the government does not create jobs. The government sets the conditions for job creation by the private sector. More regulation means fewer jobs. Yeah, we need some regulation, but the Big Green Monkey wants a return to the nineteenth century when it comes to energy use. That way lies the poorhouse.
The notion that the economic pie is being divided unequally is what drives the progressives.(Equal outcomes) What they don’t get is that the size of the economic pie is expandable. But only if people are willing to take chances to make more and bigger pie. Every time someone dreams up a new product or service that makes people’s lives better and successfully puts it out there, it expands the amount of pie. Everybody gets more pie! The progressives think those creative risk takers have taken too much of the economic pie, so their inclination is to stop them. Hence the economic pie shrinks under their policies, while the slice of the pie that government takes grows ever larger. But they want even more (higher taxes) so they can give bigger slices to their favored constituencies. In the meantime they discourage the pie makers from making more pie. The progressives don't understand that the government must keep its share of the pie low and encourage the pie makers to make more pie because government does not know how to make pie. They only know how to consume it. When everybody in this country understands that, nothing will be able to stop us from making more and bigger pie.
More economic activity (pie) means more jobs, profits, tax revenues. Everyone wins. Pass it on to everyone who believes more big government, regulation, and higher taxes are the answer.
Federal regulation is my livelihood--but Washington lawyers is the only job it stimulates.
I always thought the Fed was at least competent.
That is probably because you think their job is anything other than pandering to their shareholders - the big banks.
Do you really think Bernanke believed that subprime was "contained", when he said so in 2007? I do not.
That's why your buddy Carl is so much against any audit of the Fed - that would get his heroes at Goldman Sachs, etc., in trouble. When you press him on it, he says the banks can keep the Fed in check, an amazingly feeble argument since the Fed regulates the banks - in theory anyhow.
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