Bloomberg: Obama Misreads Message of ‘Live Free or Die’: Amity Shlaes

[nonniey]

"Stick with me, families, on this experiment of government expansion. That is the implicit message from President Barack Obama this summer.

Recently, for example, Obama sat down with an Ohio couple, Joe and Rhonda Weithman, to talk about how federal help in the form of cash for Joe’s business and subsidy for Rhonda’s health care would help the Weithmans and families like them recover.

Reading the transcript, I got the sense that the president was making the point that the money or breaks the Weithmans got weren’t the dole, but rather a gift of a higher economic quality. The message was that such smart subsidies encourage private work. The president predicted the government presence generally in this recession would prove a net economic bonus, suggesting that his policies would yield a nation “stronger than it was before this crisis struck.”

The nation doesn’t have to wait for the Obama experiment to finish to learn the outcome. Such experiments have been running over decades at the state level. Even before Obama was born, some states were applying the Obama rule of “spend, even if it means higher taxes, and you will grow.” Others operated on the philosophy that less government, even perhaps in times of trouble, served their residents better.

J. Scott Moody of Public Choice Analytics, a New Hampshire public policy consultant who specializes in cross-state analysis, ran his own experiment. Moody compared Maine, a state that more than 60 years ago embarked on one path, with New Hampshire, which went a different route. Like the president, Moody favors an emphasis on the household pocketbook. He therefore spends time looking at per capita personal income of individuals.

Maine Leads

At the end of World War II, Maine boasted a bigger economy and a bigger population than New Hampshire. In some other respects the two states were similar. They were both in New England, and both were struggling with the death of old industries such as textiles. In 1946, per capita income was $9,610 and $9,768 for Maine and New Hampshire, respectively.

Moody breaks down his per-capita income figure into two components, revenue from the public sector and revenue from the private sector. Pay from governments, such as a public school teacher’s pay, is included in the public-sector number along with traditional benefits.

Back in 1946, only 16.6 percent of what Maine residents earned or collected came from a government, federal, state or local. For New Hampshire, that rate was 18.4 percent. Neither state had an income tax or a sales tax. Then the divergence started. ....................................................

................(NH) Still, the state government never burdened citizens with sales or income taxes. Overall today, Maine residents shoulder a heavier tax burden than do those of New Hampshire. State and local taxes take 12.6 percent of personal income in Maine, the sixth-highest share among states. In New Hampshire state and local taxes take 8.7 percent, putting New Hampshire at 49th for tax burden.

The result? Decade in, decade out, New Hampshire’s economy grew faster than Maine’s, so that the Granite State surpassed the Pine Tree State in 1984 and today boasts an output that is 20 percent bigger. Maine’s recessions and double dips were worse than New Hampshire’s. Eventually New Hampshire also won the population contest, passing Maine, in part thanks to migration. Last month, joblessness was 8.1 percent in Maine, better than Ohio but still bad, and 5.8 percent in New Hampshire.

What about that family pocketbook that the White House highlights? Bureau of Economic Analysis data show average per capita income for Maine in 2009 was $36,745, a bit more than Ohio. In New Hampshire that number was $42,831, eighth highest in the nation. "

Click Link for the entire article

http://www.bloomberg.com/news/2010-08-24/obama-misreads-message-of-live-free-or-die-commentary-by-amity-shlaes.html

[ZoEd]

There you have it. Too bad this thread is about to be blown up with "Obama isn't trying to take over, it's all Bush's fault". Wait for it, wait for it....

[Destino]

Obama isn't trying to take over, it's all Bush's fault

Not sure what that has to do with anything discussed in the linked article but I didn't want ZoEd to have to wait any longer to be right about something for a change.

[SellersHappens]

Shorter article:

New Hampshire has a larger economy than Maine

New Hampshire has a slightly lower tax rate that Maine.

Therefore, a lower tax/ smaller government scheme always lead to larger economies.

Hmmm, I wonder if this might be a fallacy?

[Beans]

Shorter article:

New Hampshire has a larger economy than Maine

New Hampshire has a slightly lower tax rate that Maine.

Therefore, a lower tax/ smaller government scheme always lead to larger economies.

Hmmm, I wonder if this might be a fallacy?

Sigh. It's just an example. An example lost on you. Remember, economics is a social science, not a hard science, so logic need not apply. The guy that wrote the article was just using this juxtaposition (of what he considers to be similar economies at one point) to support his point.

[Hubbs]

Shorter article:

New Hampshire has a larger economy than Maine

New Hampshire has a slightly lower tax rate that Maine.

Therefore, a lower tax/ smaller government scheme always lead to larger economies.

Hmmm, I wonder if this might be a fallacy?

A more accurate shorter article:

Sixty years ago, New Hampshire and Maine had nearly identical per capita income and nearly identical state government spending.

Since then, Maine's state government spending has increased much more than New Hampshire's. At the same time, New Hampshire's income per capita has increased much more than Maine's.

Currently, Maine is in much worse economic shape by virtually any measure.

Therefore, there appears to be merit to the notion that New Hampshire's approach is more effective. This should be subject to as many other empirical measurements as we can make.

Is it ironclad? Of course not. Are there other differences between New Hampshire and Maine? More than we could ever count. Is economics ever this simple? Not a chance. But will we ever have two states or countries that are identical in every way that we can test? No. So we should probably try our best to make sense out of what we do have, which is the real world, rather than some sort of sterilized lab experiment. And picking two states that are pretty equal at a given starting point and are geographically and demographically similar isn't bad when it comes to real world comparisons.

[SellersHappens]

True scientific experiments involving macroeconomics are nearly impossible, I agree.

But even allowing for that, this is a very poor article.

Maine and New Hampshire's state economy are based on very different industries, and so even if they started out the same, comparing overall economies really doesn't tell you much. Typically, what is done when trying to do an economic study comparing different economies is to perform a regression analysis where you try to compensate for known difference with known effects. The author of this article didn't do this, and merely asserted that the difference between the state's fortunes was surely due to the different tax policies. Worse, she snottily condemns liberalism in general as being proven wrong on the basis of this very worthless study.

In short, this article adds nothing worthwhile to the discussion.

[DeaconBlue]

Shorter article:

New Hampshire has a larger economy than Maine

New Hampshire has a slightly lower tax rate that Maine.

Therefore, a lower tax/ smaller government scheme always lead to larger economies.

Hmmm, I wonder if this might be a fallacy?

Ok granted thats an absurdly small sample set so perhaps theres not much to glean from it. However. If thats the only data you have to work with and you have to come up with a working hypothesis what would you come up with?

[SellersHappens]

Ok granted thats an absurdly small sample set so perhaps theres not much to glean from it. However. If thats the only data you have to work with and you have to come up with a working hypothesis what would you come up with?

I would ask for more data

It's not the only data we have to work with, though. And if we analyse the history of the US federal economy, we find that the premise that "smaller government is always better no matter the circumstance" does not hold up well. Absolutes, which Republicans love to deal in, generally don't.

[DeaconBlue]

I would ask for more data

It's not the only data we have to work with, though. And if we analyse the history of the US federal economy, we find that the premise that "smaller government is always better no matter the circumstance" does not hold up well. Absolutes, which Republicans love to deal in, generally don't.

Then we can't have a rational economical discussion...at all. I would make a counterarguement but you'd (based on your own words) just dismiss it as me simply making misguided "republican" rambilgs. As far as I can tell based on my conservative leanings none of my thoughts or suggestions will ever mean anything to you. What else am I left to conclude?

[SellersHappens]

My main problem is the article, who takes this "study" then triumphantly exclaims that Obama has been proven wrong. The point I am making is that the evidence the author presented was extremely weak.

Criticizing one conservative's article is not the same as claiming that all conservative ideas are worthless.

[DeaconBlue]

Im sorry Im too gunshy. I think putting more money into the hands of the common folks (rich or not) is a better way to stimulate the economy that to suck more money out of the economy in order to fund a bigger government. I feel like in a rational and fair debate I could carry that arguement on own merits alone but I dont trust the situation. I tire of discussing semantics rather that logic. Simple convictions clouded with politics. I wish this could be trully discussed here but I just don't see it. I just don't see it. The answer isn't more government and it isnt no taxes it IS somewhere in between in a place neither wants to admit. I hate that.

[Destino]

Therefore, there appears to be merit to the notion that New Hampshire's approach is more effective. This should be subject to as many other empirical measurements as we can make.

Based on two states of 50 with no attention paid on the economic events that happened in either state that could have shaped their paths throughout economic history? Was one hit harder than the other by certain industries? Did one benefit more from certain industry? etc etc etc

Macroeconomics are hard to deal with to be certain but choosing two states from 50 that happen to fit the argument isn't convincing.

[Smoot Point Really]

Based on two states of 50 with no attention paid on the economic events that happened in either state that could have shaped their paths throughout economic history? Was one hit harder than the other by certain industries? Did one benefit more from certain industry? etc etc etc

Macroeconomics are hard to deal with to be certain but choosing two states from 50 that happen to fit the argument isn't convincing.

Ok, let's throw in Cuba which ranks near these two States in world GDP, but has 9 times the population.

Feel better? Neither do I.

The comparison is between 2 States demographically and geographically similar who would each rank at or near the top 70 in GDP if they were countries. Why is it important to talk about the 48 other States? Because you want to disagree so you bring up something totally irrelevant?

[hkHog]

My main problem is the article, who takes this "study" then triumphantly exclaims that Obama has been proven wrong. The point I am making is that the evidence the author presented was extremely weak.

Criticizing one conservative's article is not the same as claiming that all conservative ideas are worthless.

The problem is there are numerous empirical examples we can look at that show that Obama's policies don't work. Please, just show us a few examples of where major wealth redistribution and increased government has improved overall economic well being in any truly measurable way in the long term, then you can write this "study" off.

[alexey]

The problem is there are numerous empirical examples we can look at that show that Obama's policies don't work. Please, just show us a few examples of where major wealth redistribution and increased government has improved overall economic well being in any truly measurable way in the long term, then you can write this "study" off.

USA, Europe.

[hkHog]

USA, Europe.

Wow, seriously!? :doh: And how do the long term prospects for these places look? At least explain yourself a little bit because right now your answer is pretty laughable.

[The Robert Griffin Experience]

USA, Europe.

Sorry, I missed where a 20 year depression (New Deal), the subsidization of irresponsible behavior (Great Society), and the devaluation of the money supply (massive spending and inflation) help the economy.

Liberal economic policies don't work; deal with it.

[Johnny Punani]

USA, Europe.

:laugh::laugh::laugh:

wait...

:laugh::laugh::laugh::laugh:

[Thiebear]

Virginia / Maryland?

They share the same location and Wash D.C.

Yet they have completely different styles.

USA / France not USA /Europe...

Can't use dictatorships as they can do whatever they want (China: manipulates currency).

[alexey]

Wow, seriously!? :doh: And how do the long term prospects for these places look? At least explain yourself a little bit because right now your answer is pretty laughable.

Define what you mean by "major wealth redistribution" and "improved overall economic well being in any truly measurable way in the long term", and then lets look at the numbers.

Sorry, I missed where a 20 year depression (New Deal), the subsidization of irresponsible behavior (Great Society), and the devaluation of the money supply (massive spending and inflation) help the economy.

Maybe you could outline what metrics you consider meaningful? Your language is colorful, but what about them numbers... because some may point at actual economic indicators after WWII and say that things were going quite well.

[Hubbs]

Based on two states of 50 with no attention paid on the economic events that happened in either state that could have shaped their paths throughout economic history? Was one hit harder than the other by certain industries? Did one benefit more from certain industry? etc etc etc

Macroeconomics are hard to deal with to be certain but choosing two states from 50 that happen to fit the argument isn't convincing.

Didn't say it was convincing. Said that there appears to be some merit, and it should be subject to as many other empirical measurements as possible, which would include analysis of various industries, demographics, and the like.

Dismissing the information as completely irrelevant is as much of a mistake as accepting it as golden truth.

[alexey]

Didn't say it was convincing. Said that there appears to be some merit, and it should be subject to as many other empirical measurements as possible, which would include analysis of various industries, demographics, and the like.

Dismissing the information as completely irrelevant is as much of a mistake as accepting it as golden truth.

Then again, it could all be due to rich people from Massachussetts living in southern New Hampshire to pay lower taxes while using mostly MA public roads and other services, essentially shifting their tax burden onto others.

A lot of ideas may appear to have some merit, but as SellersHappens pointed out, without enough information it's all just :blahblah:

[Hubbs]

Then again, it could all be due to rich people from Massachussetts living in southern New Hampshire to pay lower taxes while using mostly MA public roads and other services, essentially shifting their tax burden onto others.

A lot of ideas may appear to have some merit, but as SellersHappens pointed out, without enough information it's all just :blahblah:

Sure. That sounds plausible.

But without more information, it's just :blahblah:.

:pfft:

[alexey]

Sure. That sounds plausible.

But without more information, it's just :blahblah:.

:pfft:

Sept 12 is almost here :point2sky