Tuesday, August 30, 2011

Die Luft Der Verschiedenheit Weht

On August 18, 2011, President Obama issued an executive order “Establishing a Coordinated Government-Wide Initiative to Promote Diversity and Inclusion in the Federal Workforce.”  The order will augment the many numerous existing federal programs on diversity and inclusion.

A committee consisting of the director of the Office of Personnel Management, deputy director of the Office of Management and Budget, the president’s Management Council, and the chair of the Equal Employment Opportunity Commission shall establish a strategic plan and oversee its implementation.

Under the order, federal agencies retain the right to also establish an independent Diversity and Inclusion Office.  It should be remembered that the Dodd-Frank financial regulation law authorizes the creation of 28 Diversity and Inclusion offices in federal financial regulatory agencies and the financial institutions they regulate.

[The title of this post is a play on Stanford’s motto, “Die Luft Der Freiheit Weht,” “The Wind of Freedom Blows,” replacing “Freedom” with Diversity.”]

Monday, August 29, 2011

No Wonder Spain is in Trouble

To reassure Germany and other investors that Spain will not need a bailout, the ruling Socialists and opposition Popular Party agreed on August 26, 2011, to enact a balanced budget amendment to the Spanish constitution.

The lower house of Parliament will vote on the measure on September 2 with the amendment to receive final approval in July 2012.

This will reassure foreign holders of Spanish bonds, yes?  No!

The amendment will not take effect until 2020.  This gives new meaning to kicking the can down the road.  Moreover, the measure can be suspended by Parliament if there is a natural disaster or economic recession.

Huh?  On these provisions, you cannot fool any of the people any of the time, with perhaps the exception of Spanish government officials fooling themselves.

Saturday, August 27, 2011

August 2011

Does August 2011 feel a bit like the end-of-summer days of August 1914.

Friday, August 26, 2011

Confucius Analect of the Week, August 26, 2011

"No one calls Wei-sheng Kuo upright!  When someone asked for vinegar he sought it from a neighbor and gave it to him [the someone]."  (James R. Ware, Chapter 5, Verse 24)

Look on the bright side.  Wei-sheng Kuo ASKED a neighbor.  Today politicians TAKE from a neighbor to give to another (to buy votes).  Who can call tax-and-transfer politicians upright?

P.S.  Confucius was on vacation last week, trying to catch a glimpse of the goings-on in Martha's Vineyard.

Thursday, August 25, 2011

Minorities Clash — Paradise Lost

One would think that the election of a black president would improve relations between the minorities in the U.S.

Sadly, this is not the case between native American Indians and African-American descendants of former Indian slave owners.

When the Cherokees, the second largest Indian tribe, were forcibly moved to Oklahoma from their homeland to what became Oklahoma in 1838, some brought with them their African-American slaves.  After the Civil War, the Cherokee nation voted these “Freedmen” to membership in the tribe .

Now, more than 140 years later, the “Freedmen” have been evicted from tribal membership The Cherokee nation Supreme Court, the highest court in the sovereign Cherokee nation, has ruled that a 2007 tribal decision to detribalize them was proper.

The losses of the denationalized Freedmen entails losing free health care, educational concessions, and other benefits.  Black members of Congress are charging Cherokees with racism and apartheid.

Time will tell if the U.S. Supreme Court steps in to reverse the ruling.

Still think that the Shia, Sunni, and Kurdish peoples will live happily in a unified, democratic, stable Iraq?  Pashtuns and non-Pashtuns in Afghanistan?

Tuesday, August 23, 2011

Chinese Economics With Midwest Characteristics

Brookings Institution scholar Cheng Li has written an historical account of Chinese think tanks.  In recent years, China has turned its attention increasingly in the direction of domestic economic policy and international economic issues.

A recently established think tank is the China Center for Economic Research (CEER) at Peking University, China’s premier university.  As of 2005 (Cheng Li’s data), CEER had 24 scholars, all holding Ph.D. degrees from foreign universities.  (See Table 5)

One held a degree from Stanford.  None held a degree from the East Coast Ivies of Harvard, Yale, Princeton, and M.I.T.  Two held degrees from Chicago.  CEER was to be modeled in line with the traditional Chicago school.

Half held degrees from Midwestern universities, the heartland of red states.  (The same was true for the foreign trained economists in Korea and Taiwan that spearheaded reform in those lands.)  Midwestern doctoral programs tend to deal more with real world issues than with the finer points of mathematical models that have little real-world applicability.

China’s economic policy is generally regarded as pragmatic.  Its foreign trained economists have been educated to see things in the same way.

Could we swap some of their think tank economists for ours?

Monday, August 22, 2011

The American People Want Leadership

So said all the television talking heads, journalists, pollsters, and political consultants.

Just to let them know, Hu Jintao and Wen Jiabao are both available starting next year.  And they don't take vacations during economic crises.

Sunday, August 14, 2011

Politicians Uttering Platitudes

We need more aggregate demand---We have to cut spending.

We need to protect Social Security---We can't cut defense.

We need a balanced approach to deficit reduction---No new taxes.

Saturday, August 13, 2011

Understanding British Street Riots

Read Chapter 9, "Rioting Mainly for Fun and Profit," in Harvard's Edward Banfield, The Unheavenly City Revisited.

Friday, August 12, 2011

Confucius Analect of the Week, August 12, 2011

Somebody remarked.  “Jan Yung may be Man-at-his best but he lacks eloquence.”

“Of what use is eloquence?  He who engages in fluency of words to control men often finds himself hated by them.  I don’t know whether Jan Yung is Man-at-his-best, but of what good would be eloquence to him?”  (James R. Ware, Chapter V, Verse 5)

Confucius describes the class of smooth (slick, sleazy) political talkers, who conflate eloquence with good judgement and competence in government.

Thursday, August 11, 2011


President Obama wants tax incentives for small businesses to encourage them to expand and hire.  Yet he wants to increase tax rates on those very same enterprises.  Is it small wonder that they are reluctant to expand and hire?

Mr. President: NO YOU CAN’T!

(HT:  I concur with Barry Eisler's characterization of Obama's statement on August 8)

Wednesday, August 10, 2011

Mirror, Mirror on the Wall. Who is the Fairest Credit Rating of them All?

Not the United States, which Standard & Poor's has downgraded from AAA to AA+ with a negative watch.

More than a dozen countries still enjoy an S & P AAA rating.  As of June 2011, these include Norway, Switzerland, Sweden, Denmark, Finland, Luxembourg, Canada, Netherlands, Hong Kong, Singapore, Australia, United Kingdom, Austria, Germany, and France.

Most interesting is China’s rapid rise through the ranks, from BBB in February 1992, to BBB+ in June 1997, A- in July 2001, A in July 2006, A+ in July 2008, to AA-, its current rating.

One more slip down for the U.S. and one more upgrade for China, and the two are even.  Whoduvthunkit?

Tuesday, August 9, 2011

Why Are So Many Economic Reports Unexpected?

It has become routine to say that economic reports on jobs, growth, inflation, consumer confidence, factory orders, home sales and prices, and other measures are “unexpected.”

How can this be?  Private and public economic forecasters have been trained in the nation’s finest universities and business schools.

Does anyone really expect that ten-year projections of deficit reduction have any credibility at all?  Does it matter if the long-term forecasts are put out by Democrats, Republicans, “independent agencies,” or White House staff?

Monday, August 8, 2011

Macroeconomics Final Exam Question

Draw up a list of factors that affect economic growth and contraction.  (Minimum of 20, maximum of 30)  Rank in order of importance.  Justify using examples and citations of demonstrative research.

On the basis of your answer, write a memo (not exceeding 1,000 words) to the president of the United States advising him of the best course of action to improve the economy. 

Friday, August 5, 2011

Confucius Analect of the Day, August 5, 2011

"Continuous readaptation to suit the whims of others undermines Excellence."  (James R. Ware, Chapter XVII, Verse 11)

Small wonder that politicians rarely achieve Excellence!

Thursday, August 4, 2011

Uncertainty is not Crashing the Stock Market

No, indeed!  Rather, it's the certainty that the United States is governed by buffoons in both parties whose actions will likely make things worse in the coming year(s).