Tag Archives: Japan

Is Obama’s economy as good as the mainstream media are telling us?

This article from CNS News was tweeted by GOP presidential candidate Carly Fiorina.

The economy is not good
This economy is not good (click for larger image)

It says:

The federal government taxed away more money, spent more money and ran a bigger deficit in the first half of fiscal 2015 than it did in the first half of fiscal 2014, according to the Congressional Budget Office.

“The federal government ran a budget deficit of $430 billion for the first half of fiscal year 2015, CBO estimates–$17 billion more than the shortfall recorded in the same span last year,” the CBO said in its Monthly Budget Review for March 2015, which was published April 8. “Both revenues and outlays were about 7 percent higher than the amounts recorded in the first six months of fiscal year 2014.”

Keep in mind that these deficit numbers are for half a year. In 2007, George W. Bush was running a deficit of $160 billion for an entire year.

And we’re being taxed more, too:

The biggest source of additional tax revenue for the federal government was the individual income tax. In the first six months of fiscal 2014, Americans paid the federal government approximately $585,000,000,000 in individual income taxes. In the first six months of fiscal 2015, Americans paid $642,000,000,000 in individual income taxes—an increase of $57 billion (or 9.7 percent) from fiscal 2014.

What’s the long-term forecast?

The Wall Street Journal has it:

Question: “How close are we from seeing entitlement programs like Medicare, Medicaid, and Social Security come into direct conflict with defense spending priorities? Defense spending is almost 20% of the Fed budget and nearly 60% of discretionary spending. Current cost of health care and an aging population are strong indicators this could happen sooner than later.”

Zumbrun: “I’d say we’re already seeing it now. As Nick noted above, the CBO projects that mandatory spending and spending on interest will climb, but that defense and nondefense discretionary spending will be squeezed. Anyone who doesn’t want to see that happen in the next decade needs some combination of higher revenue, much faster economic growth, or cuts to entitlement programs.

“The budget deal known as sequestration squeezed down both defense and non-defense discretionary spending. If, instead, everyone agreed it was okay to cut entitlements (which they obviously don’t), you wouldn’t have needed to squeeze that down. So I think it’s fair to say these things are already in conflict.”

Question: “Debt as long as partnered with productivity is no problem. From the looks of it, the U.S. might fall as an economy, but is now the time?”

Timiraos: “That’s a good point. One thing that’s a little bit troubling, however, is that estimates of the potential output of the U.S. economy have been revised down. What does that mean exactly? Instead of growing at a 2.7% rate from 2014-18, it now says the economy will grow at a 2.5% rate. That doesn’t sound too bad, but over time, it adds up.”

Question: “The U.S. has so far been capable of keeping its cost of borrowing at a remarkably low level. What about in the long term where it seems likely that servicing the debt will eat up a larger and larger percentage of government expenditures in an age of slowing growth?”

Zumbrun: “There’s actually decent reason to believe that if the economy slows down a lot then interest rates will stay very low. That’s basically the situation in Japan, right? They’re mired in decades of low growth, driven by aging demographics and a central bank that was really timid for a long time, but as a result of their permanently stagnant economy, interest rates are incredibly low. In the U.S., one scenario like this is known as secular stagnation.

Wow, if our economy starts to look like Japan, that will not be good. They have massive deficits, zero economic growth and a looming demographic crisis (few young workers, many older retirees). It’s a very bad situation that’s being masked by low interest rates and massive, massive borrowing.

The Brookings Institute agrees

Lest you think that this is just the conservative take on this, here’s the leftist Brookings Institute, writing about it just last week.

They say:

Debt figures tell part of the story. When the Great Recession hit, the federal debt was equal to about 40 percent of GDP. But to fight the recession, Congress enacted an $800 billion dollar stimulus bill. Stimulus spending, combined with already enacted spending and tax policy, resulted in four years of trillion dollar deficits. As a result, the debt ballooned to 78 percent of GDP in 2013, almost twice the pre-recession level. The annual deficit is now declining at a stately pace, but by 2016 it will begin increasing again, and by 2020 under CBO’s alternative fiscal scenario, we will once again return to annual deficits above a trillion dollars, thereby once again greatly increasing the national debt.

Oh come on – Obama says that he saved the economy, and everyone in the mainstream media agrees.

Did he?

What’s the word for our fiscal situation? Stunning? Shocking? Desperate? In recent testimony before the Senate Budget Committee, Boston University Economics Professor Laurence Kotlikoff, in effect, told the Committee that all of these terms are pathetically inadequate to describe our true fiscal situation. In compelling testimony, Kotlikoff argues that the federal fiscal situation is much worse than the CBO estimates let on. The reason is that CBO’s debt estimates do not take into account the full financial obligations the government is committed to honor, especially for future payments of Social Security, Medicare, and interest on the debt. He asserts that the federal government should help the public understand the nation’s true fiscal situation by using what economists call “the infinite-horizon fiscal gap,” defined as the value of all projected future expenditures minus the value of all projected future receipts using a reasonable discount rate.

If you’re going to be retirement age around 2030, you’d better do two things right now – first, don’t expect any help from the Federal government. I don’t care if you paid into their Ponzi scheme redistribution programs – there is no money for you there. Second, if you’re working till you’re retired, then expect the government to raise taxes even more on you.

Would you expect secularists to care about the next generation when this is the only life they have? I would not. Ideas have consequences.

The global shift away from marriage and child-bearing

Nicholas Eberstadt explains what’s happening to marriage and parenting, in this Wall Street Journal article.

I just want to pull out the parts that seem interesting.

Why is it happening?

All around the world today, pre-existing family patterns are being upended by a revolutionary new force: the seemingly unstoppable quest for convenience by adults demanding ever-greater autonomy. We can think of this as another triumph of consumer sovereignty, which has at last brought rational choice and elective affinities into a bastion heretofore governed by traditions and duties—many of them onerous. Thanks to this revolution, it is perhaps easier than ever before to free oneself from the burdens that would otherwise be imposed by spouses, children, relatives or significant others with whom one shares a hearth.

People are rejecting responsibilities, expectations, and obligations because they are selfish.

When he talks about Europe, he offers an explanation for this:

Now consider Europe, where the revolution in the family has gained still more ground. European demographers even have an elegant name for the phenomenon: They call it the Second Demographic Transition (the First being the shift from high birth rates and death rates to low ones that began in Europe in the early industrial era and by now encompasses almost every society). In the schema of the Second Demographic Transition, long, stable marriages are out, and divorce or separation are in, along with serial cohabitation and increasingly contingent liaisons. Not surprisingly, this new environment of perennially conditional, no-fault unions was also seen as ushering in an era of more or less permanent sub-replacement fertility.

According to Eurostat, the European Union’s statistical agency, the probability of marriage before age 50 has been plummeting for European women and men, while the chance of divorce for those who do marry has been soaring. In Belgium—the birth-land of the scholars who initially detected this Second Transition—the likelihood of a first marriage for a woman of reproductive age is now down to 40%, and the likelihood of divorce is over 50%. This means that in Belgium the odds of getting married and staying married are under one in five. A number of other European countries have similar or even lower odds.

Europe has also seen a surge in “child-free” adults—voluntary childlessness. The proportion of childless 40-something women is one in five for Sweden and Switzerland, and one in four for Italy. In Berlin and in the German city-state of Hamburg, it’s nearly one in three, and rising swiftly. Europe’s most rapidly growing family type is the one-person household: the home not only child-free, but partner- and relative-free as well. In Western Europe, nearly one home in three (32%) is already a one-person unit, while in autonomy-prizing Denmark the number exceeds 45%. The rise of the one-person home coincides with population aging. But it is not primarily driven by the graying of European society, at least thus far: Over twice as many Danes under 65 are living alone as those over 65.

“Perenially conditional, no-fault unions”. That means that either party can leave at any time, for any reason.

Who is hurt most when marital stability declines?

Kids:

Our world-wide flight from family constitutes a significant international victory for self-actualization over self-sacrifice, and might even be said to mark a new chapter in humanity’s conscious pursuit of happiness. But these voluntary changes also have unintended consequences. The deleterious impact on the hardly inconsequential numbers of children disadvantaged by the flight from the family is already plain enough. So too the damaging role of divorce and out-of-wedlock childbearing in exacerbating income disparities and wealth gaps—for society as a whole, but especially for children. Yes, children are resilient and all that. But the flight from family most assuredly comes at the expense of the vulnerable young.

And the elderly:

That same flight also has unforgiving implications for the vulnerable old. With America’s baby boomers reaching retirement, and a world-wide “gray wave” around the corner, we are about to learn the meaning of those implications firsthand.

In the decades ahead, ever more care and support for seniors will be required, especially for the growing contingent among the elderly who will be victims of dementia, or are childless and socially isolated. Remember, a longevity revolution is also under way. Yet by some cruel cosmic irony, family structures and family members will be less capable, and perhaps also less willing, to provide that care and support than ever before.

I did a quick search for pro-marriage policies and came across an article from USA Today. The author wanted to bash a legislator’s pro-marriage ideas, and to do that she found a single mother to quote who disagrees with pro-marriage policies.

Look:

Indianapolis mother Amanda Louden, 46, has seen parenthood from both married and unmarried standpoints.

She had three sons with her former husband, deciding to marry to be traditional about it and for the convenience of everyone having the same last name. Louden later divorced her husband and had another son with her then-boyfriend.

And she says she doesn’t think marriage made that much of a difference in raising her children.

“It’s really an oversimplification to say that single parenting is bad,” Louden said. “Intact families where both parents are involved in their children’s lives, that’s good. I’m in favor of that. But let’s not demonize families that don’t have that. It’s demonizing people who are doing whatever they can.”

The father of her youngest son didn’t seem ready or interested in a live-in family role, she said. He became less involved and eventually stopped visiting.

Louden is now raising four sons on her own as a single mother. She disagrees that children with married parents are somehow automatically “better” than hers.

If we are serious about marriage, we are going to have to change attitudes like that. We have to get used to responding to people who say that marriage doesn’t matter with real, peer-reviewed evidence. Broken families arise when people think that there are no best practices that should affect their decision making beyond “follow your heart”. Following your heart get no disapproval at all from the culture. Young people often don’t have friends who will challenge them when they are about to make a bad decision. Young people will often seek out peers who agree with them, and avoid parents and other responsible adults who disagree. Peer-approval – that’s how disasters happen. The only way to stop people from messing up their lives is to tell them before they mess up their lives – and that means breaking through “follow your heart” as gently and effectively as possible.

One reason why so many marriages break up is recreational premarital sex.

CNS News explains:

The seeds of this sexual maturity are sown in early childhood, when a child’s married parents model faithful love of each other, guide him or her through modesty to a criteria of selecting a spouse and courting the right young man or woman, eventually leading to marriage and a family of their own. Without this guidance—without married parents who have modeled a healthy, monogamous relationship since the child’s birth—children generally get lost in pre-marital sex, leading to multiple sexual partners before marriage, in turn leading most into cohabitation and later divorce or permanent single parenthood. The culture has lost its sense of sexual morality.

[…][M]ost people do want marriage for themselves and for society; unfortunately, most have severed the connection between premarital chastity and later marriage stability, not knowing that the more sexual partners before marriage the greater the likelihood of divorce.  Ninety-five percent of those whose only sexual partner ever is their spouse are still in their first marriage after five years. This figure drops to 62 percent for women who had one sexual partner other than their husband (before they married), and drops down further to 50 percent for those who had two such sexual partners before marrying their husband.

Therefore, if the nation wants stable marriage, we first must reinvest in shepherding youth to be chaste.  This has become more and more difficult for parents as the sexual principles of radical feminism and sexual autonomy pervades our courts, schools, colleges and media, and sadly, even to some extent in our churches.

Yes, in our churches.

But there’s more to restoring marriage than just confrontation at the one-on-one level. From a policy point of view, we should be voting for policies that promote marriage and child-bearing within marriage. I think we should be giving rewards to married couples who stay together and have children, not to people who want to try any other crazy arrangement that isn’t as good for kids. Not every association of people is as stable and healthy as marriage, and the government shouldn’t be treating these alternatives as we treat the real thing.

You can look over a list of pro-marriage policy ideas here.

Japan in recession after following Paul Krugman’s Keynesnian advice

Here’s the news story as reported by CBC:

Japan’s economy unexpectedly slipped back into recession as housing and business investment dropped following a sales tax hike, hobbling its ability to help drive the global recovery.

The world’s third-largest economy contracted at a 1.6 per cent annual pace in the July-September quarter, the government said Monday, confounding expectations that it would rebound after a big drop the quarter before.

The news cast a pall over financial markets: Japan’s share benchmark fell 3 per cent, and many others in Asia also declined. Shares were lower in early trading in Europe and Dow Jones and S&P futures were off 0.5 per cent, suggesting a dismal start for the week on Wall Street.

This Daily Signal article by respected economist Stephen Moore explains what led to this mess:

The tenets of Lord Keynes and his modern disciples have been put on trial in Japan, and the verdict is not a happy one. The rest of the world, not least of all the U.S., ignores these lessons at its own peril.

The engine of growth that created the Land of the Rising Sun economic miracle in the post-World War II era first began to falter in the early 1990s in large part because of a centrally planned industrial policy model.

The panicked response to the downturn was to flood the economy with a continuing series of Keynesian monetary and spending stimulus injections.

None of it has worked.

The collapse of Japan’s stock market tells the whole story. In December 1989, the Nikkei 225 index stood at a lofty 38,900. Today, almost a quarter-century later, the index stands at just under 16,000.

In 25 years Japan has experienced a nearly 3/5 liquidation of its financial wealth.

Japan has directed tens of billions of dollars into public works projects — “investments,” as President Obama calls them. This was paid for with debt. In the last two decades, Japan’s debt burden catapulted from 19% of GDP, among the lowest in the industrialized world, to over 142%, among the highest.

The government spending coincided with a monetary policy almost unprecedented in its looseness. From the late 1980s through 2000, the central bank’s balance sheet more than doubled — a precursor to the “quantitative easing” carried out by the U.S. Federal Reserve. And since 2000, the balance sheet has doubled once again.

Inflation rates in Japan are bearing down on 4% — a near-high among major competitors.

The result? The expected Keynesian “multiplier effect” from spending and a flood of yen into the market never arrived.

Housing starts in Japan are still lower than the level nearly 25 years ago. Unemployment, still low by international standards, is nearly twice the level of 1990, and wages have been flat.

Labor force participation continues to trend downward as well — falling by around 4 percentage points over the last two decades.

Yet, liberal economists have urged Japan to keep the stimulus coming. Last winter, the New York Times’ Paul Krugman exulted in Prime Minister Shinzo Abe’s expansionary fiscal and monetary policies.

“So, how is Abenomics working?” he wrote. “The overall verdict on Japan’s effort to turn its economy around is so far, so good. If Abenomics works, it will serve a dual purpose — giving Japan itself a much-needed boost and the rest of us an even more-needed antidote to policy lethargy.”

Japan, Krugman predicted, “may also end up showing the rest of us the way out” of stagnation.

Forbes magazine confirms leftist “economist” Paul Krugman’s detailed advice to Japan:

In the 1990s it was Krugman who most loudly championed Japan’s innumerable and reckless “stimulus” schemes, together with dozens of rounds of “quantitative easing” (fiat money printing). Japan followed his advice and ever since then has suffered a secular stagnation. Since 1990 Japan’s public debt has ballooned from 68% to 233% of GDP; its money supply is up 286%, while its industrial output is lower by 3.4% and its equity index is down by 73%. This is what Keynesians “stimulus” has done for Japan – and Krugman wants the same for the U.S.

Mr. Krugman repeatedly invokes the magic multiplier, the bogus claim that when we spend our own dollar we boost GDP by a dollar, but when the government takes it and spends it, GDP is boosted by $1.40. Wow. Fabulous. Government spending not only “pays for itself,” but more than pays for itself. On this view, were government to take everything we earned and spend it, the economy might well expand to the moon. Is it magic – or voodoo?

I notice that leftists at the BBC are calling the failure a “surprise“.

Where did Abenomics go wrong?

In the spring of 2013, Prime Minister Shinzo Abe launched an ambitious growth strategy that rapidly became known as Abenomics.

Its aim was to drag Japan’s economy out of 20 years of deflation and put it back on the road to growth. Billions of dollars were pumped into the economy through stimulus spending. The Bank of Japan went on an even bigger spree, printing hundreds of billions of dollars of new money and using it to buy government bonds.

And the leftist New York Times is calling it “unexpected“:

The surprise recession underscores the difficulties faced by Mr. Abe, who won power two years ago on a pledge to reinvigorate the economy and end his country’s long streak of wage and consumer-price declines. His agenda, dubbed Abenomics, has focused largely on stimulus measures, in particular an expanded program of asset purchases by the central bank. Yet its impact, economists say, has been dulled by the tax increase, which was approved under a previous government.

[…]Then, in early 2014, Mr Abe’s government took a calculated gamble. With the economy growing he could risk putting up taxes for the first time in nearly 20 years. Consumption (purchase) tax would rise from 5 to 8%. The tax rise was urgently needed to plug the giant hole in Japan’s public finances.

Why does anyone take economic advice from people on the left like Paul Krugman? Raising taxes, increasing debt and more government spending never helps the economy grow. Certainly not at the rate that pro-growth policies do.

We need to cut our corporate tax, which is the highest in the world. We need to cut spending and cut government duplication and waste. We need to privatize inefficient government programs. We need to reward work instead of dependency. We need to stop borrowing money and raising our national debt. We need to stop printing money, aka – quantitative easing. We need to raise interest rates and encourage saving instead of spending.

Democrats in California want to pass laws to penalize Asians

Basically, the Democrats in California want to pass an affirmative action bill, which would penalize overachievers. Asians tend to outperform other races in academics, so they are always the losers when academic criteria are minimized in favor of racial criteria for college admissions.

Here’s an article from National Review, sent to me by Letitia.

Excerpt:

The California state legislature was on the verge of approving a referendum to restore the consideration of race and ethnicity in admissions to state universities.

[…]What both sides of the bimodal Asian immigration population have in common is that their children do uncommonly well in school. They are represented in California’s much-admired universities in far larger numbers than their share of the population would suggest: Asians compose 14 percent of California’s population but 37 percent of the undergraduates at its state universities. They make up about 40 percent of the students at UCLA, 43 percent of the students at Berkeley, half the students at UC San Diego, and more than half of the students at UC Irvine. A relatively small minority, they compose the largest single ethnic group on California university campuses (at least as California defines “ethnic group”).

[…]Liberals talk a great deal of mindless rot about what they like to call “privilege,” the supposedly omnipresent advantages that accrue to the white, the male, the heterosexual, those whose sense of self is more or less congruent with their biological genitals, etc. But it is worth keeping in mind that progressive social-engineering programs such as the use of racial criteria in university admissions do not hurt only hurt well-off white people sporting penises. (Not that we should shortchange the interests of well-off white penis-sporters.) They also hurt poor people and immigrants, in this case a group of immigrants that we as a country should count ourselves lucky to have. It is important to remember why race-based admissions are such an important issue for progressives: The Left lives in the public schools, which do a terrible job of teaching black, Hispanic, and poor students, who consequently show up in embarrassingly small proportions at elite institutions. Asian students, on the other hand, do a tremendous amount of work outside of school, spending ten times as much time as non-Asian students do on organized non-school activities ranging from music lessons to tutoring to test-preparation courses. That is true across the economic spectrum: Working-class Asian immigrant families in Queens send their children to tutoring sessions and piano lessons at a much higher rate than does the non-Asian population, even though the relative financial sacrifices necessary for them to do so are heavy.

For that, California’s professional race hustlers, and their allies across the country, would see them punished.

So, here is another case where the party that talks a lot about racism and race is actually the one that is opposed to Asians getting ahead. My view is that if Asians have the strong families that produce high achievers, then let them be 40% of the students at the university. Maybe then people of other races will get the message that they need to focus more on raising children who can compete. Follow the rules and you won’t be poor: finish high school, get jobs, get married, have children, don’t get divorced. If you follow those rules, you will not be poor, and your children will outperform you.

Wall Street Journal covers the demographic crisis in America

Mary sent me this socially conservative article in the Wall Street Journal.

Excerpt:

The nation’s falling fertility rate underlies many of our most difficult problems. Once a country’s fertility rate falls consistently below replacement, its age profile begins to shift. You get more old people than young people. And eventually, as the bloated cohort of old people dies off, population begins to contract. This dual problem—a population that is disproportionately old and shrinking overall—has enormous economic, political and cultural consequences.

[…]Low-fertility societies don’t innovate because their incentives for consumption tilt overwhelmingly toward health care. They don’t invest aggressively because, with the average age skewing higher, capital shifts to preserving and extending life and then begins drawing down. They cannot sustain social-security programs because they don’t have enough workers to pay for the retirees. They cannot project power because they lack the money to pay for defense and the military-age manpower to serve in their armed forces.

[…]If you want to see what happens to a country once it hurls itself off the demographic cliff, look at Japan, with a fertility rate of 1.3. In the 1980s, everyone assumed the Japanese were on a path to owning the world. But the country’s robust economic facade concealed a crumbling demographic structure.

The Japanese fertility rate began dipping beneath the replacement rate in 1960 for a number of complicated reasons (including a postwar push by the West to lower Japan’s fertility rate, the soaring cost of having children and an overall decline in the marriage rate). By the 1980s, it was already clear that the country would eventually undergo a population contraction. In 1984, demographer Naohiro Ogawa warned that, “Owing to a decrease in the growth rate of the labor force…Japan’s economy is likely to slow down.” He predicted annual growth rates of 1% or even 0% in the first quarter of the 2000s.

From 1950 to 1973, Japan’s total-factor productivity—a good measure of economic dynamism—increased by an average of 5.4% per year. From 1990 to 2006, it increased by just 0.63% per year. Since 1991, Japan’s rate of GDP growth has exceeded 2.5% in only four years; its annual rate of growth has averaged 1.03%.

Because of its dismal fertility rate, Japan’s population peaked in 2008; it has already shrunk by a million since then. Last year, for the first time, the Japanese bought more adult diapers than diapers for babies, and more than half the country was categorized as “depopulated marginal land.” At the current fertility rate, by 2100 Japan’s population will be less than half what it is now.

If the Wintery Knight blog stands for anything it stands for 1) defending Christianity with reasons and evidence and 2) promoting fusionism, which is the view that social conservatives and fiscal conservatives are allies who need to understand each other’s views so that we can work together. Well, fiscal conservatives, now you know that social conservative issues are your problem. Conservativism is a seamless garment.