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Policy

Ted-Cruz-CNBC-debate-AP-Getty

Texas Sen. Ted Cruz, center, delivers talking points on his new tax plan as Carly Fiorina, left, and Chris Christie, right, listen and participate in the Oct. 28, 2015, GOP debate hosted by CNBC in Boulder, Colo. (Photo: Robyn Beck, AFP/Getty Images)

Some honest statists understand and acknowledge that you can’t have bigger government unless you target middle-income taxpayers.

And why do all these statists want higher taxes on ordinary people?

The answer is that they understand you can’t finance a giant welfare state unless there’s a huge increase in the tax burden on lower-income and middle-income taxpayers. Which is exactly what’s happened in Europe.

Of course, you don’t need to favor that outcome to predict (of fear) that it will happen. My opposition to tax hikes, for instance, is precisely because I don’t want America to have a Greek-style fiscal future.

It’s a simple matter of math. The income tax simply isn’t capable of generating enough revenue to fulfill the fantasies of folks like Hillary Clinton and Bernie Sanders.

Robert Samuelson, writing in the Washington Post, explains that the middle class will need to be targeted if politicians actually want to finance an ever-expanding welfare state.

Democrats retort that raising taxes on the rich will provide needed revenues to expand progressive government. …They obviate the need for middle-class tax increases to pay for government. …of Democrats’ faith in soaking the rich. …The trouble is that the math doesn’t match the rhetoric, as a new Brookings Institution study shows. In it, economists William Gale, Melissa Kearney and Peter Orszag asked this question: What would happen if the top income tax rate were increased from 39.6 percent to 50 percent? The answer — less than you think. …it would raise about $100 billion in tax revenues…, but it’s actually slightly less than a quarter of the $439 billion budget deficit for fiscal 2015. …Even if the $100 billion were directly distributed to the poorest fifth of Americans (an average $2,650 per household), the effect on overall inequality would be “exceedingly modest,” the authors say. …tax policies don’t come close to covering the real costs of government.

In other words, there aren’t enough rich people to finance big government, even if you somehow assume that huge tax hikes don’t have negative effects on taxable income (and the evidence from the 1980s shows that upper-income taxpayers have very strong responses to changes in tax rates).

So, given all this evidence, what’s Samuelson’s bottom line?

If middle-class Americans need or want bigger government, they will have to pay for it. Sooner or later, a tax increase is coming their way.

And he’s right.

Which makes it all the more puzzling that some good lawmakers want to give the other side a value-added tax. One of my colleagues at the Cato Institute, Chris Edwards, wrote a column on this topic for National Review. Here are some key excerpts.

Senators Ted Cruz and Rand Paul are strong advocates of limited government. …That is why their embrace of the value-added tax (VAT) in their presidential campaigns is so baffling. VATs are the revenue engine of big-government welfare states, not a proper funding source for the small federal government that both senators favor for America. …the candidates hide behind innocuous names — “business flat tax” for Cruz and “business transfer tax” for Paul.

But calling something a “business tax” doesn’t mean the burden is borne by businesses.

The tab for taxes collected from businesses is ultimately passed through to individuals in the form of lower wages, reduced dividends, or higher prices. …VATs have huge bases. That’s because — unlike income taxes — they do not allow businesses to deduct employee compensation when calculating the taxable amount. …The result would be that tax revenues from businesses under the Cruz and Paul VATs would be enormous.

In other words, the VAT is – among other things – a withholding tax on labor income. And that’s why this levy generates a huge amount of revenue. To make matters worse, this giant tax is hidden from voters.

Because Cruz and Paul shift much of the collection to businesses, more of the tax burden gets hidden from citizens and voters. …If the government is going to take our money, it should mug us on the street in broad daylight, rather than sneak into our homes at night and burglarize us unnoticed. The VAT would encourage more burglary.

And this hidden tax also will give statists an easy method of financing an ever-expanding burden of government spending

Cruz and Paul want smaller government, but down the road, other politicians looking to shore up entitlement programs will say, “They could be financed with just a small tax increase on businesses.” But each “small” increase in the VAT rate would transfer huge amounts of additional cash from the private economy to the government.

Amen.

When I wrote about Sen. Cruz’s plan and Sen. Paul’s plan, I specifically pointed out that the VATs needed to be jettisoned.

But Chris makes an even stronger case. And he’s correct. Adopting a VAT would be a cataclysmic error for advocates of limited government. It would be a truly perverse tragedy if the other side eventually gets a VAT because well-meaning (but misguided) conservatives paved the way.

P.S. The left also is salivating for a broad-based energy tax.

Honest statists understand and acknowledge that you

Politics

RNC-Chair-Glenn-Beck

Glenn Beck, founder and head of TheBlaze, left, and RNC Chair Reince Priebus, right. (Photos: TheBlaze/AP/PPD)

Glenn Beck, sent an open letter to Republican National Committee Chairman Reince Priebus Monday, requesting TheBlaze TV host the ninth scheduled GOP presidential debate, Feb. 26, 2016. The letter comes after Priebus announced that he is suspending the partnership with NBC News for an upcoming debate, replacing them with National Review following a widely criticized disaster at the debate hosted by CNBC in Boulder, Colorado.

Beck said in an interview Monday night that TheBlaze would bring in issue experts, such as Thomas Sowell (PPD columnist), to pose economic questions to the candidates. He said voters “don’t need to hear sound bites reaffirming” red meat issues, but rather “meaningful, thoughtful and responsive” responses “to the issues of … all Americans.”

“Our body of questions and responses will become a digital library of conservative thought to guide voters as they make critical choices in the months ahead,” Beck wrote.

Glenn Beck's letter to the RNC

Glenn Beck sent an open letter to

World

Metrojet-Airbus-A321-200

Debris from Metrojet Airbus A321-200. (Photo: AP)

The U.S. Embassy in Egypt has instructed its staffers not to travel anywhere in the Sinai Peninsula following Saturday’s crash of a Russian airliner that killed all 224 people on board. The move comes just one day after officials, including U.S. officials, disputed claims made by the Islamic State that the group “brought down” Metrojet Airbus A321-200.

James Clapper, the director of national intelligence, said there was no “direct evidence of any terrorist involvement yet” that ISIS was responsible for the tragedy. Metrojet Airbus A321-200 was en route from Sharm el-Sheikh to St. Petersburg when it went down over the northern Sinai Peninsula approximately 23 minutes after takeoff. The overwhelming majority of the passengers were Russians on holiday flying home.

“It’s unlikely,” Clapper said. “But I wouldn’t rule it out.”

In a statement released Tuesday, the U.S. Embassy in Egypt said that the travel ban was in place as a precautionary measure pending the outcome of the investigation into the crash.

Egyptian President Abdul Fattah al-Sisi said ISIS’ claims to have “brought down” the Russian airliner is simply “propaganda” meant “to damage the stability and security of Egypt and the image of Egypt.”

“Believe me, the situation in Sinai — especially in this limited area — is under our full control.”

Though the cause of the crash, which killed all 224 people on board, has yet to be determined, the Islamic State’s claim was widely disputed immediately. Of course, the crash threatens to deliver another blow to the pro-West country’s already struggling tourist economy. Speculation was fueled further by the airline’s statement that the crash was likely caused by “an external impact on the plane.”

“We absolutely exclude the technical failure of the plane, and we absolutely exclude pilot error or a human factor,” Aleksandr Smirnov, Metrojet’s deputy director for aviation said at a press conference in Moscow on Monday. Smirnov also said that a total of 140 bodies and more than 100 body parts were delivered to St. Petersburg on two government planes on Monday and Tuesday, adding that a third plane is scheduled to bring more human remains later on Tuesday.

However, the head of Russia’s federal Air Transportation Agency said that these claims “were not based on real facts.” Yet, late Monday a senior U.S. defense official confirmed that American satellites detected a heat flash where the plane went down, which indicated a possible explosion either from a bomb or a fuel tank. Though they have ruled out the presence of a surface to air missile, the bending of the metal suggests an internal explosion.

The U.S. Embassy in Egypt has banned

Entertainment, Video

[brid video=”19226″ player=”1929″ title=”YouTube Challenge I Told My Kids I Ate All Their Halloween Candy 2015″]

For the past four years, the Jimmy Kimmel Halloween candy prank YouTube challenge shows parents pretending they ate all their kids’ Halloween Candy. On Monday night, Kimmel said the show got a record number of submissions this year for the 5th annual #HeyJimmyKimmelIToldMyKidsIAteAllTheirHa­lloweenCandy.

Here are the best of the best.

Video H/T: Jimmy Kimmel Live

For the past four years, the Jimmy

Opinion

CNBC-Debate-John-Harwood-Marco-Rubio

CNBC debate moderator John Hardwood, left, argues with Florida Sen. Marco Rubio, right, during the third Republican presidential debate on Wednesday Oct. 29, 2015. (Photo: Screenshot)

So CNBC’s John Harwood is not only unashamed of his disgracefully biased moderating of the GOP debate, he’s doubling down — entrenched as a five-year-old boy guarding his Halloween candy.

After the debate he tweeted, “GOP debate in 2015 enriched my understanding of challenges @SpeakerBoehner has faced and @RepPaulRyan will face.” I assume he was not speaking complimentarily of these “challenges.”

In an interview, Harwood insisted he was justified in asking Donald Trump if his campaign was a comic-book version of a presidential campaign. “There is no one on that stage,” said Harwood, “who actually believes you can send those 11 million people out of the country. There is no economist who believes that you can cut taxes 10 trillion dollars without increasing the deficit. It is simply a set of discussions that is not connected to the real world we live in.”

Silly me, I thought Harwood was talking about Trump’s legendary bombast, not his policy proposals. Is it the moderator’s place to show contempt for a candidate’s policies and depict them as fantastical? Besides, when did debt reduction become the liberals’ concern, much less their priority, and even less their acid test for assessing the merits of an economic policy?

You really want to talk about the deficit? How about Harwoodian liberals’ surreal defense of President Obama’s reckless stimulus and other spending, his unconscionable waste on uber-fantastical green projects, his intransigence on entitlement reform and his demonstrable lies on Obamacare?

You want to cite your vaunted economists, Mr. Harwood? How many of them accurately predicted the budgetary effects and premium increases of Obamacare? How many of their predecessors believed that John F. Kennedy’s or Ronald Reagan’s tax cuts would increase revenues while keeping inflation in check? And while we’re on the subject of your allegiance to reality and your commitment to debunking fantasies, Mr. Harwood, why don’t you explain to us why you haven’t assailed President Obama and Hillary Clinton for their manufactured lie that the Benghazi attacks were prompted by a video? For calling the terrorist attack at Fort Hood “workplace violence”? For playing semantic games with “boots on the ground” in Syria? Who is it that has trouble with reality?

Here’s a dose of reality: Obama has doubled the national debt during his tenure and he would have spent substantially more but for tea party pressure on the GOP to rein him in. If we don’t restructure our major entitlements they will — not might — go belly up, which will have devastating consequences on real people’s lives.

Cloistered beltway liberals obviously have no idea what Americans outside their bubble think — or are so contemptuous of it as to dismiss it as insane. They believe that anyone who rejects the apocalyptic theology of the man-made-global-warming cult is a science-denying knuckle-dragger. It couldn’t possibly be that the “science” they cite is bought and paid for, tainted by peer pressure, based on questionable models and often steeped in corruption. Leftists are the ones bastardizing and politicizing science to advance their agenda.

Why else would they have predicted doom in the ’60s from global cooling, switched to global warming to conceal the egg on their faces, and then recently have descended into the shameless ambiguity of “climate change”? Have these fear mongers ever answered the charge that even if we implement all the socialistic, Luddite, Draconian measures they and their fellow traveling globalists advocate, it won’t make an appreciable difference in reducing the global temperature in a century’s time? Their hubris is as stunning as (SET ITAL) their (END ITAL) avoidance of reality.

Have pseudoscience-deifying leftists ever apologized for the flagrant failures of their doomsday predictions of the last half-century? Have they apologized for the embarrassing predictions of Paul Ehrlich in his “The Population Bomb”? Or for Ted Danson, who predicted more than 25 years ago we had 10 years to save the oceans?
Don’t be ridiculous; being a liberal means never having to say you’re sorry. These men are more likely to be sainted by the Global Warming Church than ridiculed by their enablers.

Many mainstream liberal reporters are so ensconced in their echo chamber that they are convinced their subjective political views are self-evidently and objectively true and everyone else is extreme, delusional, reality-challenged, science-illiterate or just plain evil. That’s how they delude themselves into believing they’re journalists and not glorified partisan cheerleaders.

Even with their limited contact with the outside world, how can they be so devoid of self-awareness and blind to the legitimacy of contrary opinions?

I fully acknowledge my own conservative bias and make no apology for it — but admitting it doesn’t relieve me of my duty to state the facts correctly. To me, there are conservatives and liberals and all kinds of shades in between. To them (not every liberal, but the smug journo types), there is the reality-based culture, and there’s the rest of the world — you know, conservative talk radio; Fox News; the Republican Party; the tea party; patriots; most of the South; and people who believe in American exceptionalism, the United States Constitution, limited government, traditional morality and God.

CNBC's John Harwood is not only unashamed

Opinion

jobs-employment-line-reuters

Unemployed Americans wait in line for to fill out applications for jobless benefits. (Photo: Reuters)

I came upon this article on procrastination and saved it for “later reading.” Ha-ha-ha. Procrastination jokes are one of the best ways of putting off work.

The article’s headline reads, “To Stop Procrastinating, Start by Understanding the Emotions Involved.” It appears in The Wall Street Journal, a good source of pointers on getting us gerbils to beef up our output.

Before we get to the thesis, let me offer this subversive idea: Many who see themselves as procrastinators aren’t really procrastinating. They don’t get around to certain assignments because they are trying to complete other assignments.

Procrastination is defined as voluntarily delaying to do something, thus resulting in future negative consequences. Researchers at Stockholm University believe that chronic procrastination is an emotional strategy for dealing with stress, according to the Journal.

Houseguests and dry plants are time-honored excuses for procrastinating. But some less obvious activities, such as going to the gym, also qualify, the researchers concluded. Procrastinators are doing other not-entirely-pleasant activities as “moral compensation” for not doing job No. 1.

In a similar vein, horror novelist Stephen King once said that calling procrastination research is “the scholar’s greatest weakness.” Procrastinators know all the tricks.

We’ve often heard that procrastinators are perfectionists, that they put off tasks thinking themselves unable at present to operate at virtuoso level. They may assume the magic wand of genius will boing them tomorrow.

But that’s wrong, according to the researchers. It’s not perfectionism but impulsiveness. Anxiety pushes people who are not impulsive into action. But anxiety pushes people who are impulsive “to shut down.”

Thus, better time management is not the fix for procrastinators. Emotional regulation is.

Regulate the emotions? We all can do that, right?

First we have to get past denial, a defense mechanism allowing us to ignore certain information in order to avoid painful thoughts.

Next we must deal with avoidance, withdrawing from undesirable situations rather than dealing with them directly.

We must work through our ambivalence, the coexistence of contradictory beliefs or emotions toward one thing.

So much to work on. And how many deadlines will have flown by in the time it takes to conquer one’s counterproductive patterns of emotional reactions? Coping mechanisms don’t come in a pill, I don’t think.

Anyhow, there are some tried-and-true means of countering procrastination. One is setting sub-goals — that is, breaking the job into smaller pieces. (Be sure to reward yourself for meeting each sub-goal.)

Set a timer for a specified number of minutes or hours, and vow to sit there till it goes off. That’s what Ingmar Bergman did when the Swedish director suffered writer’s block.

Another is to just suck it up and start the darn project. That sounds pretty obvious, but it is on the Journal’s list of solutions.

Novelist Sinclair Lewis wrote, “NOW is a fact that cannot be dodged.” Of course, his “now” didn’t demand posting on Facebook, Twitter, Instagram or Pinterest — nor did he have to respond to a load of email that would never have come his way in the form of written letters.

Mars has almost a 25-hour day, but until we humans populate the Red Planet, we’re stuck with 24 hours. To go back to my earlier idea, I’m not sure 30-hour days would be enough to do all that’s expected from many of us.

Overwork may be the problem. If so, labeling an inability to get it all done as “procrastination” is merely blaming the victim.

We've often heard that procrastinators are perfectionists,

Opinion

SC-Officer-Ben-Fields

South Carolina Deputy Ben Fields, 34, physically takes down a 16-year-old high-school student after she failed to get off her cell phone as instructed.

A recent, widely publicized incident in which a policeman was called to a school classroom to deal with a disruptive student has provoked all sorts of comments on whether the policeman used “excessive force.”

What has received far less attention, though it is a far larger question, with more sweeping implications, is the role of disruptive students in schools.

Critics of charter schools have often pointed to those schools’ ability to expel uncooperative and disruptive students, far more readily than regular public schools can, as a reason for some charter schools’ far better educational outcomes, as shown on many tests.

The message of these critics is that it is “unfair” to compare regular public schools’ results with those of charter schools serving the same neighborhoods — and often in the same buildings. This criticism ignores the fact that schools do not exist to provide jobs for teachers or “fairness” to institutions, but to provide education for students.

“Fairness” is for human beings, not for institutions. Institutions that are not serving the needs of people should either be changed or phased out and replaced, when they persistently fail.

Despite the painfully bad educational outcomes in many public schools in ghettos across the country, there are also cases where charter schools in the very same ghettos turn out students whose test scores are not only far higher than those in other ghetto schools, but sometimes are comparable to the test scores in schools in upscale suburban communities, where children come from intact families with highly educated parents.

Charter schools with such achievements should be celebrated and imitated, not attacked by critics because of their “unfair” exemptions from some of the counterproductive rules of the education establishment. Maybe such rules should be changed for all.

If the critics are right, and getting rid of the influence of uncooperative or disruptive students contributes to better educational results, then the answer is not to prevent charter schools from expelling such students, but to allow other public schools to remove such students, when other students can benefit from getting a better education without them around.

This is especially important in low-income minority schools, where education is for many their only chance for a better life.

Back in the supposedly bad old days, before so many people became so politically correct, there were schools and other institutions that were basically dumping grounds for students who endangered the education — and often even the safety — of other children.

Yet a front-page story in the New York Times last week dealt with how Success Academy, a high-performing charter school network in New York City’s low-income and minority neighborhoods, has been accused of “weeding out weak or difficult students.”

The Times’ own story opens with an account of a child who was “not following directions,” who “threw tantrums,” was screaming, threw pencils and refused to go to another classroom for a timeout. Yet the headline declared that charter schools “Single Out Difficult Students.”

“Singled out” usually means treating someone differently from the way others are treated for doing the same things. Are convicted criminals “singled out” when they are sent to jail?

The principal of a Success Academy school in Harlem was accused of telling teachers “not to automatically send annual re-enrollment forms home to certain students, because the school did not want those students to come back.”

A mother in Brooklyn complained about her son’s being suspended repeatedly, and her being called repeatedly to come to school to pick him up early. She admitted that he was “hitting, kicking, biting and spitting at other children and adults.”

After he was transferred to another public school, “he was very happy and had not been suspended once.” How happy others were to have him in their midst was not reported.

It would be wonderful if we could develop ways to educate all students, despite whatever kinds of attitudes and behavior they had. But how many generations of other youngsters are we prepared to sacrifice to this hope that has never yet been fulfilled?

While focusing on recent incidents, such as

Video

[brid video=”19166″ player=”1929″ title=”Ben Carson “The Launch of The Cruz Missile” at CNBC Debate was a “Brilliant Move””]

Ben Carson, while defending his campaign strategy on Fox News Sunday, said “The Launch of The Cruz Missile” during Wednesday’s debate hosted by CNBC was a “brilliant move.”

“The Launch of The Cruz Missile, and when Sen. Cruz chastised them specifically pointed out what they were doing… brilliant move,” Carson said.

Cruz ripped the CNBC moderator for blatant bias questioning during the GOP debate in Boulder, Colorado on Wednesday October 28, 2015.

However, ultimately, Dr. Carson was defending his campaign strategy and move to regulate forums during the interview on Fox News Sunday, calling the debate a joke, with biased moderators and unfair speaking time formatting.

“This was so bad that even the RNC will recognize that it was a mistake,” Dr. Ben Carson said about Wednesday’s debate hosted by CNBC. “And maybe we need to be looking for a better way to do this; a way that will advance us rather than the other party.”

In fact, RNC Chair Reince Priebus announced Friday that he is “suspending the partnership” with NBC News for the upcoming February debate, replacing them with National Review. Priebus broke the news in a letter to NBC News Chairman Andrew Lack–viewable here–following the blatantly bias CNBC debate.

Ben Carson said on Fox News Sunday

Policy

Is “Inequality” Bad if It Simply Means Some People Get Richer Faster than Others?

Hillary-Clinton-Bernie-Sanders

Vermont socialist Sen. Bernie Sanders, left, and former Secretary of State Hillary Clinton, right. (Photo: AP)

I’ve already commented several times on the good and bad features of the Nordic Model, largely to correct the false narrative being advanced by Bernie Sanders (though I was writing on this issue well before the Vermont Senator decided to run for Chief Commissar President of the United States).

In any event, Sanders is a self-proclaimed socialist and he says he wants to adopt Scandinavian policies in the United States because he thinks this will boost the poor.

Yet he may want to check his premise. Warren Meyer of Coyote Blog looked at the numbers and concluded that poor people are not better off in Nordic countries.

When folks like Bernie Sanders say that we have more income inequality than Sweden or Denmark, this is certainly true. …Sanders implies that this greater income equality means the poor are better off in these countries, he is very probably wrong.  Because the data tends to show that while the middle class in the US is richer than the middle class in Denmark, and the rich in the US are richer than the rich in Denmark, the poor in the US are not poorer than those in Denmark. And isn’t this what we really care about?  The absolute well-being of the poor?

Regarding his rhetorical question, the answer may not be yes. As Margaret Thatcher famously observed, some statists resent the rich more than they care about the less fortunate.

But the motives of the left is not our focus today. Instead, we want to know whether the poor are worse off in the U.S. than in Nordic nations.

Meyer’s article seeks to measure living standards for different income classes in the United States and then compare them to living standards for different income classes in Denmark and Sweden.

Meyer found some data on this issue from the Economic Policy Institute, the same source that I cited in my 2007 study on the Nordic Model (see Figure 9 on page 11).

But he wanted to update and expand on that data. So he started digging.

I used data from the LIS Cross-National Data Center.  …the same data set used by several folks on the Left (John Cassidy and Kevin Drum) to highlight inequality issues…  I then compared the US to several other countries, looking at the absolute well-being of folks at different income percentile levels.  I have used both exchange rates and purchasing price parity (PPP) for the comparison.

And what did Meyer discover?

…all the way down to at least the 10th percentile poorest people, the poor in the US are as well or better off than the poor in Denmark and Sweden.  And everyone else, including those at the 20th and 25th percentile we would still likely call “poor”, are way better off in the US.

Here’s the data for Denmark.

As you can see, the poor in both nations have similar levels of income, but all other income classes in the United States are better off than their Danish counterparts.

And here’s the comparison of the United States and Sweden. Once again, it’s very clear that America’s smaller overall burden of government generates  more prosperity.

So here’s the bottom line. If you’re a poor person in America, your income is as high as the incomes of your counterparts in Scandinavia.

But you have a much better chance of out-earning your foreign counterparts if you begin the climb the economic ladder. Yes, that means more “inequality,” but that’s why the term is meaningless. By the standards of any normal and rational person, the US system is producing better outcomes.

Now that we’ve ascertained that the United States is more prosperous than Nordic nations, let’s now say something nice about those countries by defending them against the scurrilous accusation that they follow socialist policies.

I’ve already shared my two cents on this issue, pointing out that neither Bernie Sanders nor Scandinavian nations properly can be considered socialist.

But if you don’t believe me, maybe you’ll believe the Prime Minister of Denmark, as reported by Vox.

Bernie Sanders…consistently references the social models of the Nordic states — and especially Denmark — as his idea of what democratic socialism is all about. But…Danish Prime Minister Lars Løkke Rasmussen said…he doesn’t think the socialist shoe fits. “I know that some people in the US associate the Nordic model with some sort of socialism,” he said, “therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.”

The key statement from the Prime Minister is that Denmark is not a “planned economy,” because that is what you automatically get when the government is in charge of allocating resources and controlling the means of production.

But since that doesn’t happen in Denmark, Mr. Rasmussen is exactly right that his country isn’t socialist.

It’s high tax, and that’s not good. There’s a huge amount of dependency on government because of redistribution programs, and that’s also not good.

But a high-tax welfare state is not the same as socialism. statism spectrum ideological spectrumIndeed, nations such as Denmark and Sweden would be somewhere in between France and the United States on my statism spectrum.

By the way, don’t let anyone get away with claiming that Scandinavian nations somehow prove that big government isn’t an obstacle to a country becoming rich.

Yes, Nordic countries are rich by world standards, but the key thing to understand is that they became prosperous in the late 1800s and early 1900s, back when government was very small.

It wasn’t until the 1960s that nations such as Denmark and Sweden adopted big welfare states. And, not coincidentally, that’s when economic growth slowed in those countries.

Why Bernie Sanders, a self-proclaimed socialist, is

Economy

ISM-manufacturing-index

The Institute for Supply Management’s Manufacturing Report On Business Survey. (Photo: REUTERS)

The Institute for Supply Management gauge of national manufacturing activity fell to 50.1 in October from 50.2 in September, marking a 4th straight month of decline.

While the reading was just barely above economists’ expectations of 50, it was the lowest since May 2013. Readings above 50 point to expansion, while those below indicate contraction, where most of the regional gauges have been in October.

“Comments from the panel reflect concern over the high price of the dollar and the continuing low price of oil, mixed with cautious optimism about steady to increasing demand in several industries,” said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

From the Manufacturing ISM Report On Business:

Of the 18 manufacturing industries, seven are reporting growth in October in the following order: Printing & Related Support Activities; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Chemical Products; Paper Products; and Fabricated Metal Products. The nine industries reporting contraction in October — listed in order — are: Apparel, Leather & Allied Products; Primary Metals; Petroleum & Coal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Machinery; Transportation Equipment; Wood Products; and Computer & Electronic Products.

However, the employment index contracted to 47.6, marking the first time the subindex fell below 50 since April and its lowest level since August 2009. The September jobs report released by the Labor Department last month showed the lowest number of male workers in the labor market ever recorded. Expectations called for a reading of 50.1.

New orders rose to 52.9 from 50.1, while the prices paid subindex was up 1 from 38.0 to 39.0, beating out expectations of 38.0. Still, overall, the U.S. manufacturing sector has been hurting for months, particular regional activity that appears to just now reflect in the national manufacturing sector survey conducted by ISM.

The New York Federal Reserve’s Empire State Manufacturing Survey remained stuck in contraction territory in Oct., declining for a third consecutive month. The Philadelphia Federal Reserve said the Manufacturing Business Outlook Survey showed continued contraction for the second straight month in the mid-Atlantic region, while the Commerce Department said new durable goods orders fell 1.2%.

However, The Chicago Business Barometer, or the Chicago PMI gauge of Midwest manufacturing activity, unexpectedly increased to 56.2, up from 48.7 in September.

MANUFACTURING AT A GLANCE
OCTOBER 2015
Index Series
Index
Oct		 Series
Index
Sep		 Percentage
Point
Change		 Direction Rate
of
Change		 Trend*
(Months)
PMI® 50.1 50.2 -0.1 Growing Slower 34
New Orders 52.9 50.1 +2.8 Growing Faster 35
Production 52.9 51.8 +1.1 Growing Faster 38
Employment 47.6 50.5 -2.9 Contracting From Growing 1
Supplier Deliveries 50.4 50.2 +0.2 Slowing Faster 3
Inventories 46.5 48.5 -2.0 Contracting Faster 4
Customers’ Inventories 51.0 54.5 -3.5 Too High Slower 3
Prices 39.0 38.0 +1.0 Decreasing Slower 12
Backlog of Orders 42.5 41.5 +1.0 Contracting Slower 5
Exports 47.5 46.5 +1.0 Contracting Slower 5
Imports 47.0 50.5 -3.5 Contracting From Growing 1
OVERALL ECONOMY Growing Slower 77
Manufacturing Sector Growing Slower 34

Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

The Institute for Supply Management gauge of

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