StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

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Posted by Stan Collender're our economics-of-the-airline-industry maven so this question is for you.

I just returned from three of the toughest travel days I can remember: every flight was delayed.  One, from LA to San Francisco, was delayed for more than three hours.

Some of the delays were weather related and, as much as I'd like to blame the industry, I know that responsibility lies elsewhere. 

Most of the delays seemed to be the result of air traffic, especially jammed schedules that had too many plans scheduled to depart at the same time from the same airport.

That's what prompts this question.  Is there a silver lining to the reduced schedules the airlines seem to puuting in place for economic reasons?  Is it possible that (putting weather problems aside) flights will leave and arrive on time more often if there are fewer of them?  Or should we assume that the FAA will reduce the number of controllers to match the schedule leaving us all right where we started?

Posted by Andrew Samwick

The May employment report is another disappointment.  Nonfarm employment fell another 49,000, marking a 324,000 decline (0.23%) since the peak in December.  That headline will likely be overshadowed by the large increase in the unemployment rate, from 5.0% in April to 5.5% in May.  Note that these two statistics come from different surveys--nonfarm employement is from a survey of establishments and the unemployment rate is from a survey of households.

What's behind the unemployment rate increase?  The unemployment rate is the ratio of those unemployed to the civilian labor force (the sum of those employed plus those unemployed).  Recall that you can be out of work but not counted as unemployed--to be unemployed, you have to be looking for work.  When interpreting the numbers, we also have to be careful to acknowledge that these are net flows from the survey.  For example, in May, according to the household survey:

Posted by Andrew Samwick

Paul Krugman begins his column today, "Bits, Bands and Books," with an interesting question:

Do you remember what it was like back in the old days when we had a New Economy? In the 1990s, jobs were abundant, oil was cheap and information technology was about to change everything.

Sure I remember the 1990s.  In addition to the things listed above, we had Paul Krugman writing insightful and witty books and articles about economics.  I don't know if it will last, but we have that Paul Krugman back today.  I particularly liked these paragraphs near the end:

Indeed, if e-books become the norm, the publishing industry as we know it may wither away. Books may end up serving mainly as promotional material for authors’ other activities, such as live readings with paid admission. Well, if it was good enough for Charles Dickens, I guess it’s good enough for me.

Posted by Andrew Samwick

As I've noted from time to time, I don't consider myself a Democrat, but I wouldn't mind voting for one.  I don't know if I am the swing voter that Senator Obama needs most in the general election.  But I can say that he does himself no favors in my estimation by appeasing Senator Clinton after her performance last evening.  Some reactions from those well to the Left of me:

Dana Milbank: "In Defeat, Clinton Gracioiusly Pretends to Win"

Ezra Klein: "She Doesn't Accept"

Matthew Yglesias: "Clintons Speech"

As often happens, I think Brendan Nyhan sums it up pretty well in "Hillary: For Hillary:"

Posted by Pete Davis

The climate change debate began in ernest in the Senate yesterday afternoon.  Few are questioning the science anymore; the earth is warming.  The question is how best to control carbon emissions to reduce future global warming?

We economists usually recommend a carbon tax as the best way to go as Andrew eloquently explained on NPR last night.  We like that fact that the tax is explicit, not hidden, that it is efficient, minimizing collateral damage to the economy, and that it is effective, raising the price of greenhouse gas emissions and encouraging alternatives.

I kid my friends that "I formulated three carbon taxes for Bob Dole back in the early 1980's that are still in his filing cabinet."  I'd be very surprised if the former Senate Finance Chair really kept them, but the fact that they were formulated at all shows that Senate leaders, then as now, were fully aware of of the advantages of a carbon tax.  That none of those proposals saw the light of day is conclusive evidence that:

Political leaders don't want

Samwick Media Watch

02 Jun 2008
Posted by Andrew Samwick

I was on NPR's Marketplace this evening with a commentary titled, "We need a carbon tax on gasoline."  Here's the teaser:

Can you put a price on pollution? That's the question Congress takes up this week as they begin debate on the Climate Security Act of 2008. The legislation would enact a cap-and-trade system, whereby large polluters would buy and sell emission permits.

Commentator and economist Andrew Samwick has taken a look at his carbon output and his family's. He says if we're serious about cleaning up our act, we should consider a straight tax on carbon.

In a nutshell, while it is true that the largest part of our emissions come from automobiles, plenty still come from heating our homes and traveling by air.  The more emission reduction we can get at the thermostat and in the air, the less we need to squeeze out of automobiles.


Posted by Stan Collender

Here's this week's "Fiscal Fitness" column from Roll Call.

Hey, Scott. Bob Dole Did theSame Thing to Me 

As far as I know, Scott McClellan and I only have one thing in common: Bob Dole has attacked us both.

Dole’s attack on McClellan occurred last week when he sent an e-mail to the former White House press secretary to express his unhappiness about his tell-all book. Dole, a Kansas Republican who served as Senate Majority Leader, never said anything in the book was wrong. He simply implied that, because of his character, McClellan's opinion wasn't worth reading.

Posted by Andrew Samwick

Quite a bit of the housing stock in the urban areas of New England consists of triple-decker, multifamily buildings.  Mark Jewell of the Assoicated Press writes that the slump in the housing market is taking its toll there, as well:

LOWELL, Mass.—When Osman and Rose Bangura bought a two-family home three years ago at the peak of a housing boom, they saw a good investment in the $400,000 colonial, just a quarter-mile from the Merrimack River and the renovated 19th century textile mills now helping to fuel Lowell's rebirth.

For a couple years, they lived upstairs while rent from a downstairs tenant helped cut hundreds of dollars off the monthly payment they would have faced if they'd bought a single-family home.

But, like many owners of southern New England's nearly 320,000 two- and three-family homes, the Banguras ran into trouble. Their monthly payment on a pair of adjustable rate mortgages jumped from about $2,900 last summer to nearly $4,200 -- out of reach for a couple with $50,000 in annual income, supplemented by $1,150 in monthly rent from their tenant, a single mother of two children.

Similar stories are playing out across the densely packed cities and pricey housing markets of southern New England, where generations have found older two- and three-family properties more affordable routes to home ownership than single-families.

Posted by Stan Collender

I am rapidly becoming a big fan of Megan McCardle's McArdle's blog. I don't always agree with what I read, but it's always well-written and extremely thought-provoking.

This post from late last week really captured my imagination. Guest poster Jon Henke listed four factions within the Republican Party -- Progressive Republicans, Goldwater Republicans, Bush Republicans, and Status Quo Republicans -- and wondered aloud which would be alpha in the years ahead.

I have some quibbles with the four factions Henke listed. Bush and Status Quo Rs are basically the same group. I'm also sure a few others could be added.

But that's largely beside the point. The only thing these four groups really seem to have in common is that they all use the name "Republican." Other than than, the only real reason they have to work together is that they are opposed what each sees as comming from the Democratic Party.

Posted by Stan Collender

The last time I bought and read a kiss-and-tell book was 22 years ago when David Stockman's The Triumph of Politics was published.  Most are uninteresting and poorly written.  I don't want to help create a market for them and in the process encourage others to be writen and published.  I have far more respect for those who wait to write them than those who rush them into print and are willing to trade their confidences for a few sheckles.

So I'm not going to buy Scott McClellan's book.

But this is not about him or his book in any case; it's about the Bush administration's massive response to it's publication.

The key phrase is "nondenial denial."

I first remember hearing it during Watergate, when the Nixon White House repeatedly denied accusations with angry sounding words and tones that actually meant very little when you read them closely.  The Nixon folks typically denounced those making the allegations or even just asking the questions.  They or their publications were said to be no friend of the president's or the administration.  They were accused of being disloyal and unAmerican.

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