Reconciliation
— Shorter Fed’s Beige Book: Holiday sales at the end of 2011 were okay, but the housing market’s still holding us back. Oh, and chicken slaughtering in St. Louis is down. Just FYI.
— Excerpt from a new book on Mitt Romney.
— Why the Twinkie will never die.
— Coming soon to America: whiskey in a can.
— Volcano appears out of nowhere in the Red Sea.
— This winter’s weirdly warm weather explained. (And no, global warming isn’t one of the answers.)
— Why do well-off people shoplift?
— Engineer from 1900 made a bunch of predictions about what the world would be like a century later. He got ten of them right.
Odd economic indicator of the day
Thanks to the growing popularity of Internet piracy and video-on-demand services, burglars in Great Britain no longer consider DVDs and CDs worth stealing:
“Years ago, you’d see a man in a pub selling CDs,” says Eric Phelps, a detective in London’s Metropolitan Police. “Not any more.” Indeed, thefts of entertainment products like CDs and DVDs have collapsed in England and Wales, to the point that they are now taken in just 7% of all burglaries in which something is stolen (see chart). They are now targeted no more frequently than are toiletries and cigarettes.
The computer-theft industry, on the other hand, is booming...
How budget cuts can increase the deficit
The Internal Revenue Service got hit with a 2.5 percent budget cut for 2012, paring back money for tax enforcement even as tax compliance has gotten worse. The agency got $300 million less than in the previous year — including $193 million less for tax enforcement.
The IRS estimates that every additional dollar spent on enforcement brings in about $4 to $5 dollars of additional revenue, which would mean that the 2012 budget could lose taxpayers anywhere from $772 million to $965 million — more than twice what it originally saved through the cuts to enforcement. As a result, the recent IRS budget cuts would actually be contributing to the deficit, according to Nina Olson, who runs an independent watchdog for taxpayer advocacy within the IRS. According to Olson’s latest report to Congress, the budget cuts combined with the IRS’ growing workload have become “the most serious problem facing U.S. taxpayers.” The report explains:
Giving advertising its due
There are a few industries and institutions we associate with the widespread accessibility of information: The news media. Search engines. Book publishing. Libraries. These days, perhaps Twitter, Facebook and Wikipedia. But here’s another, and perhaps one of the most important: Advertising.
It’s not because the information contained in advertisements is so useful. The world would spin even if we didn’t know Miller High Life was “the champagne of beers.’ But advertising is the industry that allowed most of the other industries to grow. It’s the industry in whose absence the others might not exist.
EPA map lets you find out who’s polluting in your town
As the EPA has slowly been crafting its new rules to regulate global-warming emissions, one of the crucial first steps has involved getting a basic sense of where the pollution’s actually coming from.
Back in 2009, the agency required all large greenhouse-gas emitters — any power plant, refinery, or other facility that puts out more than 25,000 metric tons per year — to report their emissions. And today the EPA has unveiled a interactive online map that lets people check out the major polluters in their area (the emissions data are all from 2010). For instance, here’s a map for downtown Washington:
Jon Huntsman’s immoderation
Kevin Drum is right: Policy isn’t the only thing that matters. Part of Jon Huntsman Jr.’s reputation for moderation is the tone in which he campaigns, and his willingness to buck the base on climate change and evolution.
But is he really so willing to buck the base? Example A for Huntsman’s independence is a tweet he wrote early in the campaign, where he said, “I believe in evolution and trust scientists on global warming. Call me crazy.” But how much does that tell us, really? Huntsman opposes efforts to do anything about global warming. So which is more moderate? Michele Bachmann’s position, which is that global warming isn’t real and thus we don’t need to do anything about it, or Huntsman’s, which is that global warming is real but we don’t need to do anything about it? I’d take Bachmann’s position, actually.
Lunch break: Bath time for baby sloths
Via Animal Planet’s recent documentary, “Too Cute! Baby Sloths,” here are some sloths taking a bath:
Previous lunch break coverage of small, adorable animals being bathed includes this primer on how to wash a hedgehog (hint: it includes a tooth brush).
Total health spending is slowing. Government health spending isn’t.
Largely due to the recession, health care spending grew in 2009 and 2010 at its slowest rate in five decades. What has not slowed, however, is government spending on health care: A new analysis from the McKinsey Center for U.S. Health System Reform shows that state and federal spending on health care has grown by 55 percent since 2003, nearly twice as fast as private spending growth. Two changes in health care spending, both also products of the recession, explain this trend.
Gingrich advised private-equity firm that landed in court for negligent investing, report says
Newt Gingrich has gone nuclear against Mitt Romney’s work in private-equity and venture capital at Bain, claiming that his work was comparable to “rich people figuring out clever legal ways to loot a company.” But from 1999 to 2001, Gingrich served as a paid member of an advisory board for Forstmann Little, one of the early leaders in the private-equity world, as The New York Times reports.
Behind Tim Cook’s giant, unnecessary payday
So did Tim Cook really just get awarded $378 million by Apple’s board? Well, no. He got awarded much more than that. Or perhaps much less. At this point, it’s hard to tell.
Cook got a salary of $900,000 and a grant of Apple stock worth $376 million. But he can’t go out and spend it right now. He gets control of the first half if he remains as CEO for five years. He gets control of the second half if he remains CEO for 10 years. And whether his stock is worth more than $376 million in 2022 or less depends on how Apple performs over the next 10 years. This is supposed to incentivize Cook to do a good job. But Cook has, presumably, been doing a good job over the last few years, too. That’s why he got promoted to CEO. And he was doing that good job without $376 million in stock options as an incentive.
The case for cheaper wine, in one chart
Over the weekend, I wrote about Canadian policy experiments that could reduce alcohol consumption by setting a minimum price for beer, wine and liquor. Wonkblog reader and Cornell University economist Brad Rickard passed along new research he’s done on the economics of alcohol consumption, which suggests another, albeit counter-intuitive, approach that may curb negative impacts of excessive alcohol consumption: make wine cheaper and more available.
In a working paper for the American Association of Wine Economists, Rickard and his team start off by looking at the states that allow grocery stores to sell wine, versus those that limit such sales to liquor stores. The increased competition of grocery stores selling wine, unsurprisingly, correlates with both lower wine prices and higher rates of wine consumption.
If we add 200,000 jobs a month, will recovery take 7 years or 12 years?
On Friday, we got the December jobs number: +200,000. That’s good, but not good enough. I posted a graph from the Hamilton Project showing that, at that rate, the labor market wouldn’t recover till 2024.
But perhaps that’s too pessimistic. The Economic Policy Institute took a look at the same numbers and concluded that a growth rate of 200,000 jobs per month would lead to a full recovery in seven years or so. That’s nothing to celebrate, but it’s better than the Hamilton Project’s estimate of 12 years. It’s also a bit odd: Isn’t this a simple matter of taking job losses and dividing by monthly job gains? Well, no. The date of our eventual recovery depends on some crucial unknowables about the future of the American labor force.
The mafia is now Italy’s largest ‘bank’
The crisis in Europe hasn’t been terrible for everyone. Reuters reports that, according to one anti-crime group, the Mafia is now Italy’s largest “bank,” lending out some $179 billion each year, more than any other financial institution in the country:
Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said. “This is extortion with a clean face,” it added. “Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly.”
Americans are eating less and less meat
(Source: Daily Livestock Report)
Meat eating in the United States is going out of style. According to a Department of Agriculture report, Americans are projected to eat 12.2 percent less meat in 2012 than they did 2007. And it’s not just the weak economy. As Mark Bittman observes, there’s a real long-term trend here: “Beef consumption has been in decline for about 20 years; the drop in chicken is even more dramatic, over the last five years or so; pork also has been steadily slipping for about five years.”
Wonkbook: Moderation is winning in the Republican primary
In the end, the polls were right. Mitt Romney took first, Ron Paul took second, and Jon Huntsman took third. Huntsman's weak finish led many to suggest that the GOP was no place for moderates. But the truth is that Huntsman's campaign didn't prove that, or anything like it. For all Huntsman's signaling and hinting, his policy platform is no more moderate than Romney's. In fact, it might be less moderate.
Reconciliation
— The geometry of pasta, math equations edition.
— WSJ: The New Republic explores sale.
— “Four out of five Haitians who have escaped destitution have done so by leaving the country."
— FDR had only six staffers working for him — and he had to fight for even that.
— Under international law, the U.S. still owns the urine bags left on the moon.
— How Mr. Rogers saved the VCR.
— Study: “A higher educational level may be associated with an increased risk of food allergy.”
— New Apple CEO Tim Cook will receive compensation worth $378 million for 2011, which Bloomberg calls “one of the biggest pay packages on record.”
— Calvin Trillin imagines Mitt Romney meeting world leaders; hilarity ensues.
Romney wants more tax cuts than Bush did
“Mitt Romney has his rhetorical emphasis on the middle class and his careful refusal to endorse the kind of upper-bracket income tax cuts that past Republican nominees have championed,” writes Ross Douthat, by way of complimenting the moderation of the GOP frontrunner. But Romney has endorsed exactly the kind of upper-income tax cuts that past nominees have championed. In fact, he’s endorsed exactly the same upper-income tax cuts past nominees have championed — and proposed a few more.
Bigger credit booms = bigger busts?
Three economists looked at recessions over 138 years and found that highly leveraged, credit-intensive booms resulted in bigger, more painful busts. From their paper for the National Bureau of Economic Research:
Based on a study of nearly 200 recession episodes in 14 advanced countries between 1870 and 2008, we document a new stylized fact of the modern business cycle: more credit-intensive booms tend to be followed by deeper recessions and slower recoveries. . .The aftermath of leveraged booms is associated with somewhat slower growth, investment spending and credit growth than usual. Yet we also show that the economic costs of crises vary considerably depending on the run-up in leverage during the preceding boom. . .Generally speaking, a leverage build-up during the boom seems to heighten the vulnerability of economies to shocks.
Mitt Romney’s bad bet on Bain
Mitt Romney did an excellent job running Bain Capital. His purpose was to create wealth for shareholders. He more than doubled their investment. But he’s doing an awful job selling Bain Capital.
Romney has taken to suggesting that what he did at Bain was “create jobs.” That’s not true. Worse, it’s an argument Romney can’t win. It’s impossible to net out the effect of the hundreds of investments Bain made into different companies. It’s impossible to say how many of the companies that Bain managed into bankruptcy would have gone bankrupt anyway. It’s impossible to calculate how much credit Bain deserves for growth that happened after it let go of a company. But it’s very, very, very possible for Romney’s Republicans challengers — and, eventually, the Obama campaign— to find people who were fired while Romney was in charge. And Romney’s fuzzy math is no match for their heartrending stories.
How government keeps New Hampshire afloat
Seeing as how New Hampshire’s in the news today, it’s worth looking at why the state’s economy — 5.2 percent unemployment, low poverty — has been chugging along nicely. Is it the lack of income tax? The lax regulations? Perhaps. But Michael Mandel makes the case that the public sector has played a vital role in keeping New Hampshire afloat:
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