Category “Economics”

This Alone is Telling, Huh?

A short snip­pet from Mike Allen’s “Politico Play­book” email from this morning:

ANNIVERSARIES: The Amer­i­can Recov­ery and Rein­vest­ment Act of 2009, a.k.a. the Stim­u­lus, is five today. (hat tip tote board: Repub­li­cans, too many to count; Democ­rats, zero)

Gee, you think the Stim­u­lus was suc­cess­ful if its authors don’t want to celebrate?

Key­ne­sian Eco­nom­ics — Mak­ing the world stag­nantly poor, while encour­ag­ing the growth of gov­ern­ment since 1936.

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H-1B Visa Reform Would Have At Least Made Sense

Let me pref­ace this post by say­ing: “I’m not for amnesty, just san­ity.”

While largely dead for the rest of the 2013–14 con­gres­sional cal­en­dar, there were some things I per­son­ally would have liked to have seen touched in an immi­gra­tion pack­age or sep­a­rate bill.  (You know, that piece­meal approach talked about, but appar­ently not going to be tried.)

At the top of that list is “H-1B Visa Reform.”

H-1B” is, like most visas issued by the State Depart­ment, one of a vari­ety of work visas granted to immi­grants who are tem­po­rary work­ers inside the United States.  H-1B’s are a spe­cialty type of visa which only are avail­able to the fol­low­ing qualifications:

  1. You must be a for­eign national.
  2. You must have already earned a col­lege degree.
  3. Said degree must be in a career related to what are called “STEM” (Sci­ence, Tech­nol­ogy, Engi­neer­ing & Math) fields.

The visas last for three years and can be renewed for another three for a total of six years; and with their employ­ers spon­sor­ship, they can gain cit­ize That stay can be up to ten years, only if you are work­ing for a defense con­trac­tor.  They are highly-coveted by tech­nol­ogy firms in Sil­i­con Val­ley such as Google, IBM, Face­book and Oracle.

Annu­ally, 65,000 new H-1Bs are issued, with an addi­tional 20,000 to eli­gi­ble immi­grants already in the coun­try who get­ting their col­lege degrees. Esti­ma­tions are that since the pro­gram began around 2,000, over 850,000 H-1Bs have been issued.

So why reform them and what to do?  The com­mon answer — accepted on both sides — has been to lift the annual quota.  Why? Because the world is a com­pet­i­tive work­place, and despite con­stant inter­est in com­puter sci­ences and IT, Amer­ica isn’t gen­er­at­ing enough of them fast enough.  Also, other nations also have sub­stan­tial tech­nol­ogy sec­tors them­selves and will grab up these wouldbe employees.

In the most recent pod­cast episode for the center-right web­site Ric­o­chet, renowned polit­i­cal ana­lyst Michael Barone told a story of how a Cana­dian diplo­mat prayed that Amer­ica didn’t change its immi­gra­tion pol­icy towards high-skilled work­ers (the ones sought through the H-1B pro­gram) because then all these folks could come to Van­cou­ver, Cal­gary and Toronto.  British Colum­bia is well-known to be the high-tech hub match­ing its neigh­bors south of the bor­der in Wash­ing­ton State and Sil­i­con Valley.

It is this exact thing which makes the immi­gra­tion debate as a whole so frus­trat­ing.  While we’re fight­ing over what is clearly a hor­rific Sen­ate bill, both sides need to take a moment, fig­ure out where there is actual con­sen­sus on immi­gra­tion — like visa reform, which has noth­ing to do with amnesty much if at all — and craft a bill.

Any­one who still demands a full, “com­pre­hen­sive approach” (Chuck Schumer, I’m look­ing at you.) should be barred from the room.  Ham­mer out some­thing that works, not just for those get­ting the H-1Bs’, but for the U.S. econ­omy as well.

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RadioShack to Close 500 Stores

No word on where they will be, or how many will be in Wis­con­sin.  Guess this more or less proves the the­ory that the $4 Mil­lion they laid down for Sunday’s Super Bowl XLVIII ad was a last grasp at atten­tion for the brand.

Any­one hon­estly think­ing that not spend­ing the money would have saved these stores for any­thing longer than another week or so (RadioShack has rev­enues in the $3 to 5 Bil­lion range) is kid­ding themselves.

U.S. elec­tron­ics chain RadioShack Corp is plan­ning to close about 500 stores within months, the Wall Street Jour­nal reported on Tues­day, cit­ing peo­ple famil­iar with the matter.

The strug­gling retailer, which is due to report results for the fourth quar­ter later this month, said it could not com­ment on rumor or speculation.

RadioShack has been work­ing with bankers from Peter J Solomon Co to boost its liq­uid­ity and with Alix­Part­ners on its oper­a­tional turnaround.

Its sales have been in free-fall amid exec­u­tive depar­tures, strong com­pe­ti­tion and an image prob­lem. Despite its ubiq­ui­tous pres­ence in the United States, ana­lysts say it has not done enough to trans­form itself into a des­ti­na­tion for mobile phone shop­pers, nor has it become hip enough to woo younger shoppers.

RadioShack has been strug­gling for some time.  Heck, there were rumors of the com­pany fil­ing for bank­ruptcy pro­tec­tion in July 2013.  The com­pany fought back against these rumors say­ing it was more likely to “restructure.” 

If they are indeed going that route, than the Super Bowl ad would likely be “Step 1″ in its attempt at re-branding itself and its image.

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Final Numbers for “Cash for Clunkers” Show it Didn’t Do Much Economically

Most damn­ing about this study, is that it comes from the liberal-leaning Brook­ings Insti­tute.  Which, unlike the talk­ing point-producers at the Cen­ter for Amer­i­can Progress, actu­ally does legit­i­mate aca­d­e­mic work.

The Brook­ings Insti­tu­tion this week released an analy­sis of the government’s 2009 Cash for Clunk­ers pro­gram, which briefly offered dri­vers a chance to trade in older vehi­cles for new ones with a sub­sidy from Uncle Sam.

The Brook­ings paper found, as other gov­ern­ment reports have, that the incen­tives didn’t change employ­ment much and were more costly than other stim­u­lus meth­ods. Though Ari­zona wasn’t sin­gled out, there are signs the pro­gram fared no bet­ter here.

The pro­gram cost tax­pay­ers $2.85 bil­lion and took 678,000 clunk­ers off the roads nation­ally. Those who took part received, on aver­age, $4,200 in rebates, accord­ing to Brookings.

Over­whelm­ingly, the pro­gram took trucks off the road and replaced them with pas­sen­ger cars.

It boosted vehi­cle sales 14 per­cent in July 2009 and 28 per­cent in August of that year.

That was wel­come news for auto deal­ers, who saw sales plum­met dur­ing the Great Reces­sion. But Brook­ings found that sales reverted to dis­mal lev­els once the clunk­ers pro­gram ended, sug­gest­ing that many of the sales would have hap­pened anyway.

Even more trou­bling, the cost per job cre­ated was $1.4 mil­lion, far higher than other mea­sures, like increas­ing aid to the unem­ployed, which cost $95,000 per job, and reduc­ing pay­roll taxes for com­pa­nies that add work­ers, which clocked in at $80,000.

So in short: “Cash for Clunk­ers” suc­cess­fully removed nearly 700,000 older vehi­cles — many of which would have been replaced in a year or two any­way — from Amer­i­can high­ways and dri­ve­ways.  More trucks were taken off the roads more than any other type of vehi­cle.  It accel­er­ated car sales two months before they were likely to hap­pen anyway.

It also…substantially killed the used car mar­ket by remov­ing older, still viable vehi­cles which could have been resold.  Prob­a­bly did more dam­age to the envi­ron­ment as “recy­cling” an engine block does more dam­age due to the chem­i­cals used to do it ver­sus the car­bon foot­print the “clunker” would have put out.  It also cost nearly $1.5 mil­lion for each job produced.

No won­der I loathe Key­ne­sian eco­nomic mod­els so much…

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