Good morning, all. Welcome to the new week and lots of choice items for your reading enjoyment.
Economist discovers secret of the universe
Perhaps I'm mistaken, but I thought it was settled science that human beings are the product of nature and nurture. Specifically, we are born with a genetic predisposition to certain diseases. (Isn't that why doctors have patients fill out an initial form with questions about the history of disease in their family?) What we do with what we've got -- life style choices, such as diet and exercise -- exacerbates or counteracts that predisposition. So I was somewhat surprise to see Harvard economist Sendhil Mullainathan's New York Times Economic View column, in which he discovers that "biology and behavior interact." If economics is a science, it has some catching up to do.
The era of state and local austerity is over
You've probably been reading that fiscal policy -- higher taxes, a decline in government spending -- is putting a damper on U.S. economic growth. Actually, total government expenditures made a tiny positive contribution (0.04 percentage point) to third-quarter GDP growth. Federal spending was a negative, but state and local expenditures were positive for the second consecutive quarter, the first back-to-back increases since 2009. That's good news, according to Calculated Risk's Bill McBride. Given the year-to-date increase in state and local hiring -- the first annual increase since 2008 -- McBride is comfortable claiming that state and local government austerity is history.
Paging Monsieur Bastiat
Café Hayek's Don Boudreaux writes an open letter to U.S. Labor Secretary Thomas Perez on the president's proposal to raise the federal minimum wage to $10, the equivalent of a 39 percent increase. Boudreaux has a better idea. If it's that easy to increase consumer purchasing power, just order all firms to lower the prices of their goods and services by 39 percent. "If government can indeed make people wealthier merely by commanding prices to change, your proposal to raise the minimum wage is unethically too modest," Boudreaux writes. "Government's god-like power over prices should be exerted much more ambitiously."
The upside of regulation
It's good to know some folks are benefiting from the growing body of regulations enacted and written since the financial crisis: professional compliance officers, who are "paid to help companies understand and adapt to the new requirements," according to The Hill. The conservative American Action Forum estimates an 18-percent increase in compliance officers between 2009 and 2012. That compares with a 5.6 percent increase in private non-farm payrolls. Small firms may not have the luxury of hiring a compliance officer, which doesn't alleviate the expense of complying with the new rules.
'A jumbled and confused account'
When a reviewer starts by saying the book "could have been fascinating," you know it's not going to be a positive review. The reviewer in this case is the Economist magazine. The book is Alan Greenspan's "The Map and the Territory," which has not exactly been earning raves. "This book is a difficult read, jumbled and confused," according to the Economist. Greenspan sets out to explain how the economy works, but a coherent macro view never emerges. Clear themes, yes, which the reviewer says "would fit comfortably within a Tea Party polemic." Ouch.
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