Private Versus Public Debt

Since the onset of the last recession the private sector has behaved prudently and reduced its borrowing. The public sector has been decidedly imprudent and continued to run up huge amounts of debt -- that the more prudent private sector will eventually have to pay. This is precisely how Greece got into the fix they are in.

Elefantes Blancos del Gobierno

It never ceases to amaze me that, despite all of the contrary evidence, people tend to think that government is wiser than they about how to spend their money, and that it acts in the best interests of the people rather than the government.

Exhibit A: Cuidad Real International Airport



Now, if you don't know where this is, you have a lot in common with the people of Spain (it;s about 100 miles form Madrid). You see, it's the brainchild of all those brilliant people who work in government. It's a €1 billion airport project, which the Spanish government recently sold to a Chinese consortium for -- ready? -- 10,000 Euros. And it's in pristine condition because it's never been used.

There are, of course, a few people who are quite happy about this. Like the friends of Spanish politicians who run the construction companies that were paid to create this white elephant. But the people of Spain? They're just next in line to slide into the same morass that the Greek government created for its people. For the same reasons.

Capitalism Makes Food Less Expensive.

"It's just sinful how those unfettered capitalists keep making food cheaper." -- Pope Francis?

People Think Obamacare is Bad -- Participation Rates Prove It

HHS released data around the participation rates among people who are eligible for Obamacare. Interestingly, but not surprisingly, as income levels rise and government subsidies decrease, participation levels fall off dramatically. What this says is that people do not find Obamacare to be a good value. The more of their own money they have to put up, the more they reject it.

Wouldn't it be nice if the government created plans that people actually wanted to buy instead of ones with richly mandated benefits that few need or want, restricted physician networks and a shell game where young people are asked to pay more so that older people can pay less?


Subsidy Level
% Above "Poverty Line"                % of Eligibles Participating

110-150%                                                     76%
151-200%                                                     41%
201-250%                                                     30%
251-300%                                                     20%
301-400%                                                     16%

Source: Health and Human Services (HHS)

Questions for Pope Francis

Pope Francis recently decried the effects of "unfettered capitalism" calling it the "dung of the devil".

Two questions for His Holiness:

1. What economic process does he think produced the results shown in the chart below?
2. Could he please name a place  -- any place -- where capitalism is unfettered today?




Don't you think the poor of Venezuela might prefer a big helping of "capitalist dung" to the dung they've had to eat under the "social justice" legacy of Hugo Chavez?

Economics Deniers

The Obama administration has been busy making it more expensive for companies to hire workers. For the first quarter of 2015 compensation increased 2.8%, while benefits increased 2.6%.The Obama administration recently increased employment costs by having the Department of Labor mandate time-and-a-half overtime pay for workers who had previously been classified as managerial. And now the 10-15% price increases for Obamacare medical policies are starting to be posted.  This will only raise labor costs and depress productivity further. 



The Obama administration wails constantly about "deniers" of global warming. But it appears that they themselves are "deniers" of economics -- somehow believing that imposing higher labor costs on employers will encourage them to hire more workers.