Three Up. Three Down.

There have been three high profile criminal cases in the news in the last month.  Although very different, all three were prominent because of the element of randomness involved, as well as the potential to be terrorist incidents.

First was the shootings of two district attorneys in Texas, two months apart.  Both were shot at home.  Media speculation centered on the possibility that the Aryan Nation prison gang was attempting to intimidate prosecutors.  The second case was letters containing ricin, a poison.  These letters were mailed to both a Mississippi senator and President Obama.  The sending of poisoned letters recalled the anthrax scare of 2002.  Finally, of course, there was the bombing of the Boston Marathon.

In all three cases, the anonymity of the criminals was a major factor in the prominence of the case.  That you could be at home, or at work, or walking down the street, and violence could strike you, is an unnerving prospect.

This week all three cases were solved.  In the case of the Texas prosecutors, it was not assassination by free members of a prison gang.  It was the far more mundane and tawdry story of a justice of the peace, who had lost his job because he was caught stealing computer monitors.  The two prosecutors had worked together to convict the man, who lost his job as a result.  After arresting the former justice of the peace, police connected the man’s wife to the crimes.  She broke down and confessed her role in a single interrogation session.

The poisoned letters was a case that was cracked even more quickly.  The FBI traced the letters back to a man in Mississippi, and scooped him up.  It didn’t hurt the investigation that the sender put his initials at the bottom of the letters.  After his arrest, his family came forward with the revelation that they had been trying for years to get the obviously mentally ill man committed before he hurt someone.  In the best detail of the case, it turned out that the perpetrator had worked on more than one occasion as an Elvis impersonator.  You just can’t make that stuff up.

Finally, the case of the Boston Marathon bombing was cracked within three days.  Police were aided by the plethora of closed circuit cameras in the area, as well as the cell phone pictures and video that spectators provided.  As we all now know, one of the two bombers was killed in a shoot out with police, while the other was found after a lockdown search of a suburb of Boston, and is currently in custody.  Turns out they were just a pair of young immigrants who had failed to assimilate in the US.  Their own uncle, a successful immigrant, assigned the proper label to these two: losers.

The big lesson from these three cases is that in the post 9/11 world, the government has a lot of extra resources and tools for catching criminals.  If the case is big enough, they will use those tools to find the criminals.  It really is a CSI world out there.

The Ideology of Equality

It has been interesting to watch the ideology of equality take hold over the last couple of years. Occupy Wall Street and their cries against “the 1%” were part of this movement. Aside from the street theater level of the Occupy movement, the topic of inequality is having more and more media coverage devoted to it.


The evolution of the fixation on equality starts with the concept of a social safety net (unemployment insurance, disability programs), progresses on to socialist concepts like a guaranteed minimum income, or extensive government services (free child care, government paid health care), and in the latest incarnation, has proceeded on to attacking higher incomes themselves.

After all, in a country where 70% of adults are overweight to obese, it is hard to argue that there is a true problem with hunger. When 99% of households have televisions, and over 90% have air conditioning and cell phones, it shifts the definition of poverty. So now the problem isn’t the lack of food, clothing, or shelter. Now the problem shifts to the supposition that some people have too much money; more than their fair share.

Personally, I don’t worry that 1% of the households in this country hold 40% of the wealth. Instead, I worry a lot about whether I will have enough wealth to retire when I choose to. Since I don’t get a lot of transfer payments from the government, higher taxes in exchange for more government services does nothing for me. Mostly I would like the government to leave me alone.

Naked Emperors

Last week Matt Yglesias at Slate.com posted an article entitled "Print Money.  Mail Everybody a Check."  The hypothesis of the article was that the solution to our economic woes would be for the Federal Reserve to print up a whole bunch of money, and then follow up by sending the money out to everybody in the country.  The policy was pretty much encapsulated by the headline.

Amplifying on the original concept, Yglesias goes on to explain that giving everyone free money will stimulate the economy.  People will use their free money by going out and spending it.  In spending the money, business will see increased demand, and hire more workers.  Those workers, once hired, will get paychecks, and spend them.  The paycheck spending will stimulate more demand, leading to more hiring.  A virtuous circle of spending and hiring will take place until the economy is back at full employment.

This is pretty standard Keynesian thinking.  The only problem is that it would not work.  As long as they were receiving the free money, spending would continue.  Once the free money stop arriving in the mail, the stimulative effects would dampen out quite quickly.

I  know this is true, because we have just finished trying it.  Twice.

The most recent round is just finishing up.  We call it "tax season."

Think about it.  The way the tax and withholding system works in America, most people get a refund.  I know I did.  The lower the income level, the more likely you are to receive a big refund, largely because of the Earned Income Credit and Additional Child Tax Credits.  The majority of households received those refund checks from mid February through the end of March.  You may have noticed that stores and restaurants were a little fuller during that time period.  You may have also noticed that there was no great surge in Help Wanted signs appearing.  Once the free money disappears, the stimulative effects decline rapidly.

Back in December was the previous time we tried stimulus spending.  It was called Christmas spending.  Once the spending stopped, the seasonal hires started to get pink slips.  No long term beneficial results in terms of increased hiring by businesses.

Standard Keynesian economics holds that the problem of modern industrial economies is a lack of demand, and that the government can increase demand by deficit spending.  All of the various pump priming schemes put forth are variants of that basic idea.  Now, maybe in the '30's that idea worked, although evidence is emerging that it didn't work as well as originally thought.  But in the new millennium,  deficit spending has proven to be a colossal failure.  Our economy is structured to absorb big deficit spending without reigniting long term economic activity.

So I'll go out on a limb here, and just say it: Keynes was wrong.  Too bad, so sad, sucks to be us.

To find an alternate policy approach, we need to stop deifying the approach that is not working.  The emperor isn't wearing any clothes.  And frankly, there's shrinkage.