Author Archives: Les Schreiber

They Keep Getting Worse in the Republican Party in Virginia

Recently, newly elected Congressman David Bratt held a meeting with supporters in Richmond.  According to press reports, Bratt continued to emphasize the issue of immigration that led to his surprise primary victory over Eric Cantor.  His only other qualification is that he is a PhD economist.  In fact, Mr. Bratt’s hatred of “the other” recently compelled him to refuse to fund the government department whose task it is to fight “real” terrorist group, i.e. ISIS.

Bratt’s fervent hostility to immigrants brings into question his qualification as an economist.  In the 1980’s,  Japan was considered the “miracle economic engine” of the world.  For over two decades now, growth has stagnated and shows no sign of recovering its former vigor.  Many economists who have examined the end of the post-war economic miracle site Japan’s program that virtually eliminates immigration as a retardant to achieving its economic potential.

America’s economic history is full of industries started by immigrants from the Sarnoffs who started NBC to Andy Grove whose family left Hungary during the revolution of 1956 who started Intel.

Unfortunately, the history of immigration in the United States has a dark side. The 19th century saw much anti-Irish, anti-Italian, and anti-Catholic politics that birthed the No-Nothing Party that is an early ancestor of today’s G.O.P. Congress also passed a Chinese Exclusion Act in the early 20th Century and in a prelude to World War II refused to hike quotas that would have provided a haven to some European Jews.  The tragic fate of the S.S. St Louis demonstrates where a hatred of “the other” that Bratt embraces might lead.

Rumor has it that this Bratt is planning another rally at a rural location to be determined later.  Attendees are responsible for bringing their own sheets and hoods, and Dave might provide the fiery cross and an ample supply of matches.

– Les Schreiber

You Must Be Joking

The RTD reports today that the city of Richmond will PAY the Redskins about $250,000 for having summer camp in the city. Is this true or did the newspaper publish the April Fools edition a month early?

– Les Schreiber

Has Economic Reality Hit Education?

Last week several interesting articles about education appeared in the Richmond Times-Dispatch and the New York Times.  Locally, Henrico County might hire more teachers in response to complaints over large class sizes.  The NYT reported a significant decline in the number of recent graduates applying to the Teach for America program.  This program places recent graduates in inner-city schools.  Reflecting an improving economy, Teach for America has advised some school districts that its applications are down about 10%.  Additionally, the NYT‘s article indicated participation in undergraduate education programs is down about 13%.  For some districts, Teach for America supplies as much as 20% of teaching staff.

Salaries in education have been nominally stagnant for many years.  Since I retired at the end of the 2008-09 year,  my former colleagues at the Governor School have experienced only one increase of 2% which is in-line with the general trend of teacher salaries.  Utilizing the Bureau of Labor’s inflation calculator, an individual making US$40,000 in 2008 would need a nominal salary of US$43,981 to maintain the same level of purchasing power. At what point will politicians and educrats understand that promising employees a diminishing standard of living is not a business model that assures success?

-- Les Schreiber

“Putinomics” Comes to Virginia

Several weeks ago, I was shocked to read a story in the TD that Dominion, Virginia’s dominant electric monopoly, was suing several land owners as a result of their refusal to allow a survey team to access their land to measure for a potential pipeline that Dominion and several other firms want to build.  The land is privately held, i.e. not in the public domain, private property and privacy are essential elements of a democratic and capitalistic society.  I was later informed that 10 years ago, the Virginia legislature in effect granted the right of eminent domain to Dominion, a private corporation.  Conceptually, eminent domain is used by governments to obtain property for public use such as schools, highways, and hospitals.  This is a prime example of anti-capitalist behavior on the part of Dominion and all of those “capitalists” in the General Assembly.

Today,  the TD reports that the electricity monopoly is playing accounting games with the legislature in an attempt to pass on inflated costs to its customers as it closes older power plants. Companies depreciate capital investments over a number of years.  Dominion failed to mention the original costs of these plants and that the charges that they have taken to their profits as legitimate depreciation.  The present book value can not be the same as replacement costs.  These costs are amortized over many years.

Perhaps Dominion should take the approach utilized by Lloyd Blankfein of Goldman Sachs to justify taking part in the huge A.I.G. bailout.  Lloyd said: “We do God’s work.” Vladimir Putin could not have said it better.

– Les Schreiber

Dave Brat Part Deux

In three days, the seventh district in Virginia will elect one of the most disturbing candidates in recent history.  The self-styled economist Dave Brat  has an elect web site that paints a portrait of an individual only loosely linked to reality.

As most Republicans, Dave is a big supporter of the 2nd Amendment’s right to bear arms.  His rationale is that this right derives from God.  Really! Does Dave speak to God?  A religiously connected group in the 21st century that links firearms to God is ISIS.  It is unbelievable that a far-right GOP member and a terror group would find a fundamental belief in common.

Brat is a big supporter of the Keystone Pipeline to energy independence.  This is a straw man.  The pipeline transports oil produced by Canadian tar sands to be exported to China.  This means of manufacture will make the most pollution of any known method, leading to a significant rise in pollution.  I guess Dave forgot to read the chapter on negative externalities in his Economics 101 text.

Dave wants energy independence.  I guess in the past few weeks he has been too busy talking to God to look at the Chicago Board of Trade market in crude oil. At a time of 3 1/2% growth in GDP,  political unrest in two large oil-producing regions, Russia and the Middle East, the price of crude has dropped by nearly 20% in the past several months.  America’s energy Renaissance in here.  In the face of all that so-called “excessive regulation,” that Brat always screams about,  the United States will be almost energy-independent in the next several years.  If Brat would do a little fundamental analysis, he would support this progress by lifting the ban on energy exports, and supporting a tariff on crude imports from a nation like Saudi Arabia to make sure that American production remains competitive.  The proceeds for this tariff could be used to reduce the deficit and the national debt, build infrastructure, and increase the Earned Income Tax Credit.

There are few issues that the Chamber of Commerce and Paul Krugman  do agree on, but immigration reform has broad support across the political spectrum.  As an economist, Dave should know that one of the reasons often given for the stagnation of the Japanese economy is an aging population and a government policy that forbids all immigration.

Like the Japanese, Dave is against immigration.  His position resembles some of the lowest points in American history that brought forth the Chinese Exclusion Act in the 19th century, subjected Irish immigrants to intense discrimination, and formed the “American Firsters” movement in the 1930’s and 1940’s, who pressed the U.S. Government not to admit the Jews on the S.S. Saint Louis.

Les Schreiber

This Brat is the Worst

In one week the voters of the 7th district will send a self-styled “economist” named David Brat to the House of Representatives.  I am amused that Mr. Brat advertised himself as an economist but advocates policies that have already been tried and have proven to be at best ineffective and at worst disastrous.

When running in the primary, Mr. Brat advocated auditing the Federal Reserve.  Perhaps this self-styled economics wizard has missed the years of debate concerning the Federal Reserve’s policy of buying Treasury and mortgage-backed securities.  The numbers are available for all to see who have any interest, on the Fed’s website.  Perhaps Dave’s real problem is that he believes that the black helicopters that the United Nations will use to institute “world government” are secretly hidden in the basement of the New York Federal Reserve on Liberty Street in downtown NYC.

Of course Brat wants to repeal the Affordable Care Act, but offers no reasonable alternative.   Dave wants to allow sales of health insurance across state lines, but this would only encourage a race by insurance companies to the bottom of the insurance barrel.  I wonder how all of those folks from Hartford Connecticut and Manhattan will adjust to life in Mississippi?

Dave wants to have a self-styled balance-budget amendment.  This guy really live in a Disneyland bubble.  For instance, a recent article in the Journal of Post-Keynesian Economics strongly makes the case that more deficit spending in the wake of the 2008-2009 financial crisis would have led to a much stronger recovery. Brat’s policy of supporting a balanced-budget amendment strongly echoes the restraints placed on European governments by the Treaties of Maastricht and Amsterdam that are currently supported by the Germans.  This extreme-type of infallible austerity has led to levels of unemployment in the Euro zone that are often at 10% for the general population and youth unemployment that approaches 50% inGreece, Portugal and Spain.  It is unbelievable to me that a serious student of economics would loo0k at this unsustainable crisis and advocate the policies that brought it on.

– Les Schreiber