Un-intended consequence of "Obamacare"---If you work over 30 hours per week but less than 40 on average, look out for cutbacks to get you below 30 hours. Reality Bites....

One of the consequences of passing a large piece of legislation, that may be scant on implementation details, is the agency in charge of carrying out the provision(s) has to interpret the legislation and issue rules and guidelines.

The IRS has issued such rules on how businesses with over 50 employees must comply with "ObamaCare".   Beware of un-intended consequences!!

The IRS has clarified what determines a Full-Time Employee and a Part-time employee.

 The IRS has established 30 hours per week as the mark to distinguish part-time from full-time work.  Work over 30 hours per week and the business must treat you as a full-time worker eligible for full-time benefits.

This is important because if you work an average of over 30 hours per week the business must provide you insurance coverage under the provisions of the Affordable Care Act.  An average estimate is this will cost a business roughly $5,000 (maybe less, maybe more) per employee OVER the 30 hour mark.  If the business does not provide this benefit they will be subjected to a fine.  Either way, an employee will become more costly to the business.

The un-intended consequence of the rule/regulation is that many businesses may decide to pull down the average hours worked per employee to get below the 30 hour requirement.  This potentially can effect those workers incomes.

If you are one of those "marginal" workers whose hours are perilously close to that cut-off,  look out for cutbacks in your hours in the coming months. Now you know why. 

Also, if you are looking for an example of how government rules and regulations are costly to a business, go to the ACTUAL IRS ruling on this.  Imagine you are a Human Resources person and you have to figure out how to apply this to EVERY worker employed by the business.  Multiply this by 1,000's from various government agencies and you begin to see the scope of the problem.

 
HT: Washington Post for the idea behind this posting.

 

"There is no profit in destruction"---This storm is beginning to affect economic reasoning as well...

An example of Frederic Bastiats "Broken Window Fallacy".  The BWF decries the "bad economist" and his view that there is a positive side to destruction. 

There are visible benefits to rebuilding, or fixing a broken window, but seldom is considered the unseen costs of what might have been purchased had the window not been broken.  What you add you must subtract as well.  This

This is one of the criticisms of calculating GDP----it only counts the stuff purchased to fix things. It does not subtract the value of things already in place and productive that were destroyed.

Yes, broken windows happen and need to be fixed, but it should not be considered a net positive for the economy by politicians and pundits.  It is neutral, at best.

From Forbes

Is Hurricane Sandy To Provide A Stimulus For The US Economy? 

The sharp divergence between macroeconomic and microeconomic data can certainly be attributed to hurricane Sandy that is about to hit Eastern US—a highly populated region—prompting consumers to stack-up to all kinds of things, from batteries and candles, to bottled water, to snacks, and all-sorts of dry food. Is this rush of consumers to spend a very-much needed stimulus of the US economy?

Definitely not, as Sandy is one time event, and as the boost in demand for certain items this week will turn into bust for the same items in the weeks to follow. A boost in the demand for water bottles this week, for instance, will turn into bust next week, as consumers over-stack the product. But, what about the impact of cleaning and reconstruction that is expected to follow the hurricane? Wouldn’t it give a boost to the economy? 

It depends on the extent of the damages and magnitude of the reconstruction to be done. Some experts talk of damages in the order of $10, $20, even $100 billion—seeing a “Sandy stimulus package.” But even if we go with the highest estimate, $100 billion, it is a too small number given the size of the US economy. Besides, whatever stimulus comes from cleaning and reconstruction will be mitigated by other factors like declines in the tourist sector, and losses in economic activity, due to disruptions in transportation and communication. And don’t expect any significant boost from policy makers.

The bottom line: We do hope and pray that the damages from Sandy will be minimal. A stimulus from a storm is something we don’t need.

What do a Platypus and the Electoral College have in common? See here short explanation of what happens in the event of a tie in the Presidential Election.

....when you look at a Platypus and the Electoral College system of electing a President you get the same reaction---You don't really know if they are real, you are not sure what you are looking at and the parts don't seem to fit together.

It is statistically possible for neither President Obama or Mitt Romney to get the necessary 270 electoral college votes to obtain the Presidency.  BOTH could end up with 269! It is not likely BUT possible with such a close race.

Here is what would happen if this were to happen:

1. The election of the President would then take place in the House of Representatives. 

2. Each State would have ONE vote for President according to which Party (Democrat or Republican) has the MOST number of Members of the House in that State.  Example: Texas has a total of 36 members in the House---Currently 24 of those are Republican and 11 are Democrats (there is one toss-up State--not enough to make a difference)  Texas would cast its vote for Romney, no doubt.  California has a total of 52 members in the House---Currently 35 of those are Democrats and 15 are Republicans (2 toss ups---again not enough to make a difference).  California would cast its vote for Obama, no doubt.  So on and so forth through the 50 States.

3. According to Larry Sabato's "Crystal Ball" website, the Republicans are in pretty solid control of 29 States and the Democrats are in solid control of 15 States and 6 are toss ups and too close to call. 

4. If all of the 50 States representatives showed up to vote a simple majority (26) vote would determine the President. If the Republicans have 29 votes, then no doubt Mitt Romney would win, right??

5. Hold on a minute.  The Constitution requires AT LEAST 2/3 of the States show up to vote. Which means a minimum of 35 States have to be present for a vote to even occur and 15 could not show up at all.

6. If all the Republican States showed up that would be 29---SIX SHORT of the quorum!  Democrats could boycott the process.  The Republicans would need either (1) for 6 Democrats to show up or (2) win ALL majorities in the 6 remaining States that "Crystal Ball" says are toss ups. This seems unlikely. 

7. If those 6 Democrats did not show up then no quorum and no immediate election of a President.

8.  Does it stop there? No, the process evolves to another layer of steps but I am getting "tired-head" trying to follow the numbers so I will stop there. 

Any questions??

Here is an excellent video illustrating what I spoke of here PLUS additional analysis.  Again, SO MANY layers and odd pieces to fit together. 

You know, like a Platypus...

Thanks to Andrew Monrreal for this link!!

"Why I Love the Electoral College"---A defense of a much maligned part of the US Constitution. Not to be missed if you are interested in this topic!

Garrent Jones at Econlog gives a defense of the Electoral College, something we don't see enough as of late.  I have never been in favor of changing the Constitution without a lot of introspection.

He explains some of the benefits of the E.C. that I never really thought about.  It is very short and concise...

Why I Love the Electoral College

Garett Jones

There's some evidence that democracy itself makes people happier, but largely I see democracy as a means to an end. One among those ends is "reducing social conflict." 
 

The electoral college, set forth in the U.S. Constitution, is a great tool for reducing social conflict across regions of the United States. You might think that's a crazy claim--don't we see maps of red and blue, and aren't the red places--the places supporting the Republican--mostly in the South and Midwest? Indeed, and that pattern across regions is key to explaining how the electoral college defuses some social tension. 

  

As it stands now, the states implicitly vote for the President. Each state is granted a number of electors (equal to the number of House members plus Senators), so populous states states get more weight. In almost every state, every single elector votes for the candidate who wins the plurality of that state's popular vote. 

  

That means candidates only care about winning a plurality of the votes in each state---winning California by one vote is just as good as winning by two million. Of course, there's always some uncertainty about how things will turn out, so candidates love a cushion, but it's safe to say that if your state is polling 65% for a particular presidential candidate, neither candidate is likely to campaign there any time soon.

  

And that's great news for social peace. We rarely hear too much about regional issues in the U.S. other than farmers vs. everyone else. But if the presidency was decided by majority rule, I'm sure we'd hear a lot more about regional differences. Could a presidential candidate get 75% of the votes in Texas, Louisiana, Mississippi, and Florida by promising broad-based Gulf Coast subsidies and a few other goodies? Could a candidate get 85% of California's and New York's votes partly by offering housing subsidies for people facing high housing costs?

 

I don't know: But if we got rid of the electoral college and had a popularly elected president we'd sure have a chance to find out.

 

As it stands, presidential candidates are trying to appeal to the median voter in each state across a large number of states. That's how you get to be president. This reduces regional tensions because candidates are never trying to get 90% of the votes in a state. When you're pitting 90% of one region of the country against 90% of another region of the country, you're substantially raising the probability of social conflict.

 

Too many civil wars are based on regional differences for this to be no big deal. And you don't need to get to the point of civil war to get bad outcomes--mere regional transfer programs, switching across regions every four or eight years, would be quite bad enough.

 

Right now, U.S. presidential candidates have zero interest in winning 100% of a state's votes. But I'm guessing the campaign consultants could find some underexplored regional tensions if the incentives were right.

 

Here's hoping they don't get that opportunity.

"The Private Sector is doing fine" revisited---Nice graph here to support your point of view on this statement, whether you agree or disagree with it.

This graph is as simple as it gets when looking at the change in private and public sector jobs since the advent of the recession in December of 2007 (the official end of the recession was declared in June 2009).

It is divided up into 2 year segments (I assume some overlap).  From 2008 to 2010 net job LOSSES (jobs added minus jobs lost) in the private sector were 6,833,659.

From 2010 to 2012 there was a net job GAIN of 3,936,444. 

The difference between these two numbers will result in a "jobs deficit" relative to pre December 2007.  In other words, we are short 2,897,215 jobs to get us back to where we were just before the recesson hit. In percent terms we have recovered 58% of the jobs lost.

If you do the same math for the public sector (Government jobs at the local, state, and federal level) you will find a deficit of 443,969 jobs.

Now you know....

Source: EMSI

Nice, short video "It's a Wonderful Life! (without Capitalism)". If you are able to watch this, well, thank a Capitalist even if it hurts to do so....

A short video illustrating what it might be (would be?) like without the daily trappings of Capitalism. 

The "macro" view of the video demonstrates how markets have elevated our standard of living in ways that we don't perceive or acknowledge on a daily basis.  They have become so intergrated in our lives we forget how they came to be.

The "micro" view is that it pokes fun at the sunshine (only protests when it is convenient or popular)  "Occupier".

On both accounts, I enjoyed this.  :)

The first statement for a new candidate for President. Please support him (me). God Bless America!!

I have created (I think it is original) a composite Presidental Candidate named "Barmitt Robamneya".  The follow is a merging of gaffes of the two running for the office right now to form Robamneya's first statement regarding his own candidacy. Will you vote for him (me)??

I am Barmitt Robamneya and I approve this message: “You did not build those whole binders full of women. Someone else did that because I like being able to fire people who provide services to me. Hold on one second, sweetie, I’m in this race because I care about Americans. I’m not concerned about the very poor, because I think when you spread the wealth around, it's good for everybody. There are 47 percent of the people who will vote for the president no matter what, so it's not surprising, then, they get bitter, they cling to guns. I've now been in 57 states -- I think one left to go. I’m not familiar precisely with exactly what I said, but I stand by what I said. Whatever it was. God Bless America…”
 

Thank you.  :)

Both candidates are "LYING" when they say they are not going to raise your taxes. If you think a Tariff is NOT a tax then move on. You will not be interested in this posting...

Ok, maybe "lying" is a little harsh.  However, I am perplexed by politicians. Guessing I am not alone.

Both President Obama and Gov Romney have pledged to not raise taxes on the "Middle Class".  Seem pretty adamant about it.

However, they both seem to accept, rather proudly in fact, tariffs as a punitive measure against "foreigners", specifically China but it could be any country.

Obama: ""When I said that we had to make sure that China was not flooding our domestic market with cheap tires, Governor Romney said I was being protectionist, that it wouldn’t be helpful to American workers. Well, in fact we saved a thousand jobs, and that’s the kind of tough trade actions that are required"".

Romney:  On day one, I will label China a currency manipulator, which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers.
 

Tariffs ARE taxes imposed on imports coming in to the US.  They serve to increase the price of those imports for consumers! That is what they are supposed to do in order to protect a domestic producer from foreign competition in the name of "fairness".

 Most of the things that are subject to the HIGHEST tariffs are purchased by low income and middle class people. 

Am I being to condemning to suggest that BOTH candidates are "lying" when it comes to saying they are not going to raise taxes on the American people. 

Do you have ANY idea how much you pay in TOTAL in tariffs on the goods you buy from those scary foreigners?  I don't either, but I will come up with some examples for you. Stay tuned.

"They see me blog-rollin'. They Hatin'"...I am the Chamillionaire of blogs...

If you look at my blog roll to the right of this page you will see the blogs and other sources I visit on a daily basis (several/many times a day) to learn, gather information, find things to post here and, in general, amuse myself.  It is quite a long list! 

Source: Brad Delong

I consider this my hobby (don't play golf anymore and don't spend much time watching stuff on TV--other than news and news analysis) and it helps me as an Economics teacher to stay up on current events and trends in political and economic thinking. I think it adds value to me as a citizen as well as a teacher. 

However, as of late there are some blogs I just cannot bring myself to click on anymore.  Not that they don't have pertinent or useful information, but because of the caustic, partisan nature in which they present their ideas or policy analysis.  It is difficult to know what is valid and not valid when information is filtered through such a clouded lens.

Otherwise intelligent and fascinating academics with great ideas are sinking to the lowest common denominator in terms of personal attacks.  This is not helpful to the "great unwashed" like me who just want some semblance of decorum and professionalism when reading what they have to say.

Oh, well, I am just having a "blah, blah, blah"  moment.

I will let the two dogs in the cartoon sum up my feelings about the current state of blogging...

Note: If you are not sure about the reference to Chamillionaire in my title, well, enjoy this:

The US and World Rankings of Blogs is out and I am ranked---that is all I have to say about that...

This is the US and World Ranking for my blog (Yes, that is in "millions"). I have a long way to go. 

I would estimate there are 2.5 million blogs dedicated to Cat Videos ahead of me, so I don't feel so bad. LOL! Oh, well, I will decieve myself into thinking quality ranks ahead of  quantity. 

Go HERE to check out your site, if you are a fellow blogger. 

Source: HERE

"Hooray for GDP!!" Nice paper on the positives and negatives of this measure of production and whether is it a good measure of Standard of Living.

Here is a link to The Conversable Economist to a TERRIFIC post on the significance of Gross Domestic Product as a measure of societal well-being/standard of living.

Gives the pros and cons of this way of measuring of production. 

Here are the top 4 points of a the paper the posting cites as source material.

1. GDP is hopelessly flawed as a measure of welfare. It ignores leisure and women’s
   work in the home. It takes no account of pollution and carbon emissions.
2. GDP ignores distribution. In the richest country in the world, the United States, the
   typical person or family has seen little or no benefit from economic growth since the
   1970s. But over the same period inequality has risen sharply.
3. Happiness should be the grand aim of policy. But the evidence is that, above a certain level, a higher material standard of living does not make people any happier. ...
4. Even if higher GDP were a good idea on other grounds, it’s not feasible because the
   environmental damage would be too great.

Here is the link to the original paper cited. "Hor

Nice interactive showing the wealth of Members of Congress based on their style of investing...

Each dot represents a Member of "Congress"---The House of Representatives (435 of them) and the Senate (100 of them).  Republicans are the Red dots and the Democrats are the Blue dots.

Scroll your cursor over a dot and the name of the Congressperson will pop-up.  Wish they had the estimated value of their wealth. That would have been helpful.

It is set up in quadrants so you can see the results based on how aggressive Members are in their investment portfolios relative to their wealt.  One would presume the more aggressive you are in investing the higher the return on those investment. However, it does not always work out that way.

More info HERE where I found this infographic.  Go HERE for MUCH MORE interactivity with this graphic.  MANY parameters you can set and change.  Very informative.

Snapshot of where jobs were added and subtracted last month---I look at these numbers and see the reason for Income Inequality in the US. What do you see??

Here is a snapshot of where jobs were added and subtracted for the month of September.

Private Sector Goods  producing industries lost 10,000 jobs. Private Sector Service Jobs gained 114,000 and Govt (at all levels) added 10,000 for a net change of 114,000.

Notice the bright spots in jobs created (ignore the Stars I put on the graph--was going to do something else with those). 

A perponderance of the jobs created went to people with elevate knowlegde/skills and education.  The income inequality story in the US is embedded within these numbers. I wish more attention were paid to this fact.

Does money create the presence of goods and services or do goods and services create the presence of money? Economists answer: Yes, No, well, maybe...

Stole this graphic below from my blogosphere friend, The New Arthurian.  Money, specifically MORE money, is MOST useful if there is a newly produced good and/or service AVAILABLE to exchange it for. Yes, I am a master of the obvious!

I guess it begs question(s): What comes first---money to buy a good or service or the availability of a good or service to buy with money?  Does money create wealth or does wealth create the need for money? 

(UPDATE: upon re-reading my first question, I find it to be very inelegant. Suggestions in how to re-phrase it would be helpful).

I don't really know. I can't quite figure it out. Seems like it depends----sometimes the chicken comes before the egg and somethimes the egg comes before the chicken.  That reminds me, I have to eat breakfast.

This is from a letter to the editor in 1933.  Is it still appropos today??

Source: The New Arthurian via Financial Times

If you want to get a deeper understanding of the relationship between "money" and "credit" and how these two merge (and diverge) to create the REAL problem with our economy---PRIVATE DEBT, then PLEASE visit The New Arthurian to get the scoop. 

Need a breakdown of what the "Fiscal Cliff" is all about? I always like to know what I am "falling into". How about you?

We have all heard the term "Fiscal Cliff" (assuming you pay some attention to current events) and have some idea what it is about and that it appears to be a bad thing. 

BUT what are the details?

This report by The Tax Policy Center is as good an explanation as I have seen,in the simplest possible terms (with NICELY organized and presented charts!!!), of the issues on the Federal taxation side. 

It does NOT address the spending cuts that are part of the "Fiscal Cliff".

I especially like the detailed breakdown as to how the different income groups may be affected by the expiration of MANY different tax breaks/cuts and the implementation of NEW taxes scheduled to take effect in 2013.

ENJOY!!