You Can't Live There Any More

Washington Post buries a report from the Urban Institute on housing prices:

a medical services manager who earned $87,300 a year could afford only 14 percent of the homes in the Washington area last year, compared with 49 percent four years earlier, the study said.

households needed to earn $49,000 a year to afford the region's average monthly rent of $1,226.

All in Your Point of View

The Washington times has one take on a study of immigration, the Washington Post
has another. (One emphasizes the fact that illegal immigrants rely on welfare, the other that they don't rely on "welfare". The picture I get is that immigrants with families don't have health insurance so they use Medicaid in emergencies and food stamps regularly while they don't sign up for what used to be called the "dole".)

Who Is a Farmer, CRP Version

Farmgate has a piece, passing on concerns about whether IRS is going to require absentee landowners of CRP land to pay self-employment tax on the CRP payments. This is more complex than I can handle at my advanced age, though I'm amused by the possibility that retired farmers have been trying to have their cake and eat it too. (We expect better of farmers, don't we.) There's a reference back to the 1983 Payment-in-Kind program and IRS handling of those payments. (There was an option then to put your whole farm into the PIK program--which raised all sorts of questions about reducing numbers of tenants, which in turn twanged guitar strings that reached back to 1930's era questions about fair treatment of tenants, which involved some of the communists who then walked the hallways of USDA.) The issue then was, if the farmer doesn't have to do anything, is he or she really a farmer? To share in some USDA payments, you have to be really a farmer, but maybe the IRS says, if you're really a farmer, then you are self-employed and your revenue is subject to the self-employment tax.

Who knows. It's all an amusing mess for me, if not for the people who have to employ accountants and lawyers to straighten it out.

No Farm Bill

Farmgate has a post discussing a Congressional Research Service analysis of what happens without a farm bill. I'm confused. As I've posted before, in the old days the administration used to threaten the imposition of wheat marketing quotas in the summer of the year the farm legislation expired. (I well remember having to come up with estimates of costs in the summer of 1985 if acreage allotments were implemented for wheat and we had to hold a referendum on marketing quotas.) I had thought that in the 1996 farm bill they'd tinkered with the wording of the law to remove that leverage. Apparently not, from the analysis.

Not Seeing the Bubble in Front of You

I like John Phipps, but I have to conclude his crystal ball has a bubble in front of it. In this post
triggered by the inability to buy a $300,000 combine, he says:

" In every bubble (which this well could be) the secret was to bet heavily early, and I think this is still early because we are not sure it's a bubble yet."

I think he's wrong--when most people agree it's a bubble, it's too late. (See the tech bubble, see the housing bubble.) It probably made sense to buy farmland in 2005, maybe even 2006, but not in 2007. (I keep remembering the state specialist in Iowa who almost bought a farm too far in 1979.)

Liberal Hypocrisy

A quote from a post on Gristmill, with reference to the need for action on global warming:

"So, will the next president be willing to act unilaterally with assertive, even aggressive use of executive authority -- like George Bush, except for nobler purposes? Who among the candidates is willing to promise, as FDR did, that "In the event that Congress should fail to act, and act adequately, I shall accept the responsibility and I will act."

So it all comes down to whose ox is gored. If GW does things I don't like, and I don't, I rail about abuse of Presidential power. If Hillary does things I do like, I praise her Presidential leadership.

SS Number Problems

DHS is revising its plan for using SSA's database in enforcing immigration rules, according to this article. SSA's IG reported that there's a high inaccuracy level in the data, which undermines enforcing strict rules on employers.

This is a symptom of the problem, which is we're trying to use the Social security number system for work it was never designed to do. It would be much better to start over, setting up an accessible system with proper updating and quality checks, and privacy safeguards.

Secretary Gates, Meet Senator Helms

Secretary Gates spoke in Kansas, suggesting we needed to boost our diplomacy, specifically mentioning, AID and USIA, two agencies merged with State under Clinton. But as I remember the story, Senator Helms, then chair of Foreign Relations, held their feet to the fire until Sec. Albright and VP Gore agreed to the reorganization. The illustrious Senator from North Carolina (one of the few politicians I really, really dislike) thought the striped pants crew were a waste. So much for his wisdom. Of course, the Reps won't step up and take responsibility, nor will Bill and Hillary for caving.

Changing Contours of Class

Joel Achenbach has an article on class in the US in today's Washington Post. One thing toward the end of the article struck me. Someone is discussing current class lines: today, the rich have staff, a personal assistant or whatever.

I think it's true before WWII most upper middle class families had staff--i.e., maids/cooks. Electric appliances in the home, the spread of restaurants, and processed food reducing cooking time has had an impact. I wonder, is it easier to accept inequalities of income when there's no employer/employee relationship involved?

Emulation and Envy

Robert Frank, an economist, has a liberal argument for higher taxes. Facetiously, the idea is that money is a positional good, used for ranking people and that gold stars would be just as good. More seriously, Alex Rodriguez doesn't care that much what's left in his pocket from his new Yankees contract after agent fees and taxes are deducted--what's important is that he maintains his rank as highest paid player.

Via Greg Mankiw, an economist writing for Cato takes on Frank's arguments here. I'm not up on the subject enough to offer much comment, but I did find the climax of Henderson's argument interesting:

It is true that we often want something when we see that someone else has it. But what doesn't ring true is Frank's view about why we want things. One of my earliest instances of an intense want was in 1955, when the coonskin cap came along after Walt Disney had made Davy Crockett famous. I saw some of my friends wearing them and I badly wanted one. My father, though, would not buy one for my brother or me. I remember the intense pain I had about not having it. But did I want that coonskin cap because I was competing with my friends for status and position? Not at all. I wanted it because it was so neat. Now, you might doubt the memory of a 56-year-old about his introspection 52 years earlier. Fine. Then consider this case. I also remember when the Ford Mustang and the Mercury Park Lane came along in 1965, when I was 14. I wanted either one of those cars badly. I tore out the full-page magazine ads picturing those cars, taped them on my wall, and pined for them every day. But the reason I wanted them was not that I saw people around me with them. I lived in a small town in rural Canada where you didn't see new cars as soon as they came out. I had seen the ads for these cars and started yearning for them long before anyone in my town owned one. So, why did I want one of these cars? Because they were just so beautiful. I've asked other friends why they want the new expensive gadgets when they come out and invariably the answer is that they're such neat toys. Few mention that they want them because they want to be higher up on the positional scale.

It seems that the invisible hand of the positional good market operates much the same as the invisible hand of the free market. Free market capitalism doesn't really require everyone to be price/quality conscious all the time. Many of us can continue to operate in ruts, buying what we always buy from the vendors we always buy from. But some people have to be different. That difference is enough to make competition operate.

So too with positional structures. Dr. Henderson wanted goods as a boy because they were beautiful. What he considered beautiful were the rare goods, the neat ones, the ones only a few of his friends had. What does that mean--they were expensive, they were above average in cost. So Dr. Henderson, even though he's pure of heart and doesn't envy others, is looking up the positional ladder.