Tuesday, June 16, 2009

WSJ: Michigan Needs to Move into a 21st Century Economy

William McGurn has it right:
As Mr. McCain so bluntly put it on the eve of last year's Republican primary, "Some jobs that have left Michigan are not coming back. And the answer to that isn't to raise false hopes that somehow we can bring back lost jobs but to create new ones."

Mr. McCain took a lot of grief for those words and ended up losing the primary to Mitt Romney. But Lou Glazer thinks Mr. McCain had it right. Mr. Glazer heads a nonpartisan think tank called Michigan Future. And he advances a simple argument: While the reliance on manufacturing made sense in the 20th century, the sooner we recognize that manufacturing is no longer the key to a prosperous middle class, the better off Michigan will be in the 21st.

I certainly hope those in Wisconsin are listening, as auto makers lose jobs in Kenosha. Stop giving them false hope; it'll come to bite you, them and the economy in the ass someday.
Mr. Glazer says that the state's most pressing need is to transition to the "knowledge economy," which Michigan Future defines as any industry where the proportion of workers with bachelor's degrees or higher is 30%. That's important, because the knowledge economy is more than the Googles and the Microsofts. The top knowledge industries include information, finance, insurance, professional services, health care and education. Not only are these industries creating jobs, they pay higher wages.
Instead of paying out bribes to help outdated industries move here, help more people go to college and invest in their human capital. Not all people can go to college, but there are ways of increasing access to higher education, including human capital contracts.
The larger point is that what the middle class needs more than anything else is an economy where employers have to compete for their labor. The more open a state's economy is to investment and entrepreneurship, the more employers there will be. And the more education a state's citizens have, the more advanced the industries they can support.
Amen.

Sunday, June 14, 2009

Swine Flu: By the Numbers

According to the CDC, the total number of cases reported in the United States of H1N1 infection is 17,855 cases, and the number of deaths is now up to 45 deaths. While some news outlets continue to try to make us panic (albeit however, the story has died a bit), here are some sobering facts.
The U.S. Centers for Disease Control (CDC) estimates that 35 to 50 million Americans come down with the flu during each flu season.The CDC estimates that in the US more than 100,000 people are hospitalized and more than 20,000 people die from the flu and its complications every year.

90 People are killed by lightning strike every year.

120 are killed in airline crashes.

779 by accidental discharge of a firearm.

7,600 are killed by aspirin (NSAIDs)
So, my question to the news media is, "Why so serious?" Although I already know the answer: scaring the shit out of us brings more ratings than telling us everything is going to be okay.



Wisconsin Budget: Fun Facts

MJS gives us a couple key issues on the new budget attempting to be rammed through by Senate and Assembly Dems:
Oil company tax: To generate $224 million for highways and other transportation programs, Doyle and Democratic legislators want to tax oil companies. But Assembly Democrats dropped a provision saying that oil companies couldn't raise gas-pump prices to cover the tax.
Let me guess, to "create jobs?" No doubt, some of that money will be funneled towards the proposed KRM rail that will prove to be another economic suckhole finding its way towards the red on the Government's account balance. At least they dropped the provision on pump prices. Taxing gasoline, an inelastic good, will undoubtedly pass on most of the cost of that tax to consumers as opposed to producers. But if producers had to bear most of the burden, we would likely see at least some suppliers moving out or going out of business. Theoretically, this could lead to a shortage of supply, and people lining up at the pumps for hours.

Thankfully, the provision was removed, although I would object to the tax increase in the first place.

As for other provisions that have proven less controversial:

• Making residents with taxable incomes of $225,000 for a single person and $300,000 for married couples pay $287 million more in income taxes the next two years. That would be done by creating a 7.75% tax rate.

• Raising income taxes on capital gains, costing some investors an estimated $170.4 million.

• Raising the $1.77 state tax on a pack of cigarettes to $2.52, costing smokers an estimated $310.4 million.

• A 75-cent monthly fee on all phone lines, which would cost customers $102 million. The money would go to protect local police, fire and other emergency services.

• Requiring vehicle owners to buy more liability insurance coverage, which the state insurance commissioner has said will raise premiums.

Hmm. My personal favorite is the one taxing investments. That my friend is a sure-fire way to jumpstart an economy: penalize entreprenuership, which, as Econ 101 tells us, is one of our four factors of production other than land, labor, and capital.