Self-Regulation

George ShaffnerLeave a comment

By Hugh Griffin-Banerjee

From time to time, the Usual Pundits from our esteemed Fifth estate like to argue about “self-regulation,” even though—with a moment’s thought—it becomes imminently clear that the contraction “self-regulation” is in fact a dangerous contradiction. To wit:

  • The counter salesperson at Sunrise Tactical Supply was self-regulating when he or she sold an AR-15 assault rifle to a mentally unstable 19-year-old, who then murdered three Parkland teachers and 14 high-school students with it. Civilian ownership of assault rifles was banned until 2004, when an enlightened (Republican) Congress overturned the law and let self-regulation take over. Good show! You’ve been accomplices to thousands of deaths since. 
  • President George Bush the Younger was self-regulating when he ordered the invasion of Iraq. More than 4,000 American soldiers and 100,000 Iraqi civilians died in the war. To be fair, Congress hasn’t issued a formal Declaration of War since 1941. Maybe they should rethink their approach.
  • The FDIC, aka the Federal Deposit Insurance Company, shuttered more than 350 banks in the three years after the Crash of 2009. The bankrupt banks self-regulated themselves out of business.
  • Congress was self-regulating when they awarded themselves lifetime pensions at age 62 after five years of service. Presumably, America’s workforce can expect to benefit from similar legislation in the near future.
  • Self-regulation is working in Idaho, where the maximum interest rate that payday lenders may charge their customers is unlimited by law. Thanks to the government’s hands-off, laissez faire policy, the average payday loan in the state carries an annualized interest rate of only 582%! 
  • Cain was self-regulating when he murdered Abel. (The Ten Commandments came later.)

For the record, there’s no point in regulating every petty act of meanness or stupidity. Picking one’s nose at the dinner table and dipping the outcome in the pea soup will have a detrimental effect on most appetites, but Congress needn’t pass a law that forbids it, nor, perish the thought, do they need to create yet another three-initial bureaucracy to enforce it.

At the opposite end of the spectrum, there’s an English word for the absence of regulation. It’s called “anarchy.” A civilized society like ours has to draw the line between anarchy and a four-hundred-year-old body of American law that’s suffocating, ambiguous, contradictory, and costly. But when we draw the line, we need to be honest with ourselves.

Self-regulation is a myth, a con. It’s identical to no regulation. If you still harbor doubts, ask the surviving students and faculty at Parkland High School.

The GOP v. Democrats, Round 1 – The National Debt

George ShaffnerLeave a comment

By Hugh Griffin-Banerjee

We Americans are often told that Republican administrations are better at cutting the deficit than Democratic administrations. For some unknown reason, the Democrats are inclined to bring a zucchini to a knife fight, but on the rare occasion some minor party factotum attempts to disagree.

The Near-Canada Gazette is a foster home for skeptics; we’re disinclined to believe anything we’re told by politicians or pundits or pedicurists or anybody else. If a significant assertion is controversial, then we try to make sense of it. If it’s testable, then we use simple, commonly accepted metrics to test it. (See Notes below.)

This is the first article of three that compares the relative economic performance of the three Republican administrations before the Trump Reign of Error against the last three pre-Biden Democratic administrations. Each article uses a single criterion––in this case the annual federal deficit, in sum the national debt.

For the purpose of this comparison, we (Miranda and I) researched the growth of the national debt during each presidential administration beginning in 1978, when Jimmy Carter approved his first federal budget. The comparison ends on September 30, 2018, which was the last day of the last fiscal budget approved by Barack Obama.

The incoming and outgoing national debts by administration over the forty-year period were as follows (in rounded billions):

President Party Years Entry Debt Exit Debt Increase Percent
J Carter Dem 1977-81 772 $1,142 $370 48%
R Reagan GOP 1981-89 $1,142 $3,233 $2,091 183%
GHW Bush GOP 1989-93 $3,233 $4,693 $1,459 45%
B Clinton Dem 1993-01 $4,693 $6,228 $1,535 33%
GW Bush GOP 2001-09 $6,228 $13,562 $7,333 118%
B Obama Dem 2009-17 $13,562 $21,735 $7,813 58%

Reading across the top line, the chart shows that President Carter inherited a national debt of $772 billion. The debt had reached $1.142 trillion (that’s trillions, with a “t”) by the end his last fiscal year, which was an increase of $370 billion, or 48% more than the debt he inherited.

In aggregate, the data tell us that the national debt increased by $10.9 trillion during the last three Republican administrations and by $9.7 trillion during the last three Democratic administrations. In other words, Republican presidents increased the national debt by $1.2 trillion more than Democratic presidents, or a paltry $60 billion per fiscal year!

If that’s insufficiently clear: The average Republican administration increased the national debt by 115%, and the average Democratic administration increased the national debt by 46%.

Unless the moon is indeed made of cheese, the Republicans will yell foul and produce their own “unbiased” analysis. That’s not to say that Democrats use agnostic, statistically valid data and Republicans get theirs from a twelve-year-old “statistician” who flunked math and who happens to be the daughter of an NRA lobbyist. Sadly, the pols in both parties are skilled in the dark art of data manipulation. If, however, you have qualms about the outcome, then change the dates, find a better barometer, and run your own numbers. The Republicans will be grateful––if perchance you can produce a different result.

It can also be argued that White House occupancy is a poor basis for comparison because Congress passes the budget, and the president merely approves it. In fact, the executive branch creates the budget at the president’s direction, he and Congress negotiate it, the president signs the final bill, and then he manages federal expenditures for the entirety of the fiscal year.

Update: The national debt increased by $7.8 trillion during Donald Trump’s Reign of Error, or about as much as it increased during the Obama years. Two small points of clarification. First, President Obama inherited the worst economy since the Great Depression; trillions in stimulus were required to save it. In contrast, The Donald inherited the longest bull run in history. Second, it took the Obama administration eight years to increase the debt by $7.8 trillion. In contrast, Trump et al managed to achieve the same result in a paltry four years. Well done!

Notes:

1) Higher national debts are bad, not good.

2) The forty-year period beginning with the Carter presidency in 1977 and ending with the Obama presidency was not chosen at random. Between 1977 and 2017, Republican presidents occupied the White House for twenty years and Democratic presidents occupied the White House for twenty years. In both cases, two presidents served two terms and one president served one. Apples to apples.

3) The sources for the budget deficits and other data are the US government and Statista. Nothing in this article came from Cambridge Analytica. (If you don’t recall the name, Google it.)

4) Neither party produced an annual budget surplus except for the last two fiscal years of the Clinton (D) administration. That’s 38 (now 42) years of deficits versus two years of surpluses.

5) This article was first written in 2018. I didn’t bother to redo the entire comparison for the obvious reason.

The GOP v. Democrats, Round 2 – The Stock Market

George ShaffnerLeave a comment

By Hugh Griffin-Banerjee and Miranda Park

This is the second article in a series of three which examines the relative economic performance of Republican and Democratic administrations in the 40 years from 1977 through 2017. If you haven’t already done so, start with the first article, which compares management of the federal debt—a contest the underdog Democrats won, and not by a small margin.

In this article, we determine which party has been the better steward of economic growth during the same four decades. There are a lot of ways to gauge economic growth, but most are arguable or complicated or both. (See our Notes below.) For the purpose of this comparison, we’ve chosen yet another simple, agnostic, and numeric yardstick: relative stock market performance during each party’s administrations.

The three major American market indices are the Dow Jones Industrial Average, the Standard and Poor 500 Index, and the Russell 2000 Index. The markets tend to move together, thus any one would be a fair measure, but, to misquote Goldilocks, “The Dow is too small, and the Russell 2000 is too big, but the S&P 500 is just right.”

Forthwith, the incoming and outgoing S&P 500 indices by Republican and Democratic administration were as follows:

President Party In Office  S&P Open S&P Close Change
Jimmy  Carter Dem 1977-81  101.00  128.40 27.1%
Ronald Reagan GOP 1981-89  128.40  294.00 129.0%
George HW Bush GOP 1989-93  294.00  441.70 50.2%
Bill  Clinton Dem 1993-01  441.70  1,305.75 195.6%
George W Bush GOP 2001-09  1,305.75  805.22 -61.7%
Barrack  Obama Dem 2009-17  805.22  2,329.91 189.4%

On average, the S&P 500 index increased by 32.9% during the last three Republican administrations. In comparison, the average S&P 500 index increased by 137.4% during the last three Democratic administrations.

Using the S&P 500 as a benchmark, the last three Democratic administrations beat the last three Republican administrations––by a factor of more than four!

The next time someone tells you that the Republicans are better stewards of the economy than the Democrats, ask, “By what measure?” Better yet, simply respond, “Bollocks!” Then walk away.

Update, March, 2021: From February 1, 2017 to February 1, 2021, the S&P 500 Index increased from 2329.91 to 3,714.24, or 54.9%, which raised the Republican average to 43.1%. Not awful, but still paltry compared to average stock-market performance during the last four Democratic administrations.

Notes:

1) The comparison begins on February 1, 1977, twelve days after Jimmy Carter was inaugurated, and continues through February 1, 2017, twelve days after Barack Obama left office.

2) Common metrics we might have chosen but didn’t were per capita income and gross domestic product (GDP) growth. Since 1977, per capita income has increased every year except 1991, 2002, and 2009, but the majority of that growth favored the wealthy––which may make it the Republican party’s favorite benchmark, but it’s certainly not ours.  The other candidate was GDP growth, but this measure has a long policy tail. There’s no reasonable way to approximate the beginning of each administration’s influence, and the length of the tails will vary.

3) For simplicity’s sake, we ignored the length of each administration, which, excepting the update from the Trump administration, was equal in total for both parties. Once again, apples to apples.

The GOP v. Democrats, Round 3 – Jobs

George ShaffnerLeave a comment

By Hugh Griffin-Banerjee and Miranda Park

This is the third article in a series of three that examines the relative economic performance of Republican and Democratic administrations since 1977. If you haven’t already done so, read the first and second articles, which compare party US federal debt and stock-market performance during the same period. Spoiler alert: the underdog Democrats defeated the overdog Republicans in both instances, and neither outcome was a close call!

In this piece, we attempt to determine which party has been the better “job creator” over the last four decades. As in the last two episodes, there are a number of metrics that can be used to measure relative job creation, but the simplest, most widely understood, and least obscured by specious data is the unemployment rate.

The incoming and outgoing unemployment rates by administration were as follows:

President Party In Office Incoming Outgoing Change
Jimmy  Carter Dem 1977-81 8.5% 8.0% -0.5%
Ronald Reagan GOP 1981-89 8.0% 5.6% -2.4%
George HW Bush GOP 1989-93 5.6% 7.8% 2.2%
Bill  Clinton Dem 1993-01 7.8% 4.1% -3.7%
George W Bush GOP 2001-09 4.1% 8.6% 4.5%
Barrack  Obama Dem 2009-17 8.6% 4.9% -3.7%

On average, the unemployment rate increased from 5.9% to 7.3% during the last three Republican administrations (prior to the Trump Reign of Error). On average, the unemployment rate decreased from 8.3% to 5.7% during the last three Democratic administrations before Biden.

Another way to gauge the difference: The unemployment rate increased by an average of 24% during the average Republican administration; it decreased by an average of 32% during the average Democratic administration. That’s a difference of tens of millions of jobs over forty years.

Naturally, the American electorate is generally oblivious to the fact that unemployment drops during Democratic administrations. More than anything else, this is a testament to the Democrats’ infuriating ability to hide their successes while the Republicans take credit for things they didn’t do.  

Update as of March, 2021: The unemployment rate when Donald Trump left office was 6.2%, up 1.3% from the end of President Obama’s second term. We might give The Donald some slack if he hadn’t botched the management of the COVID-19 pandemic so badly that more Americans were sickened and died per capita than in any other nation in the industrialized world. 

Notes:

(1) The unemployment data are from Bureau of Labor Statistics.

(2) The comparison assumes that each incoming president was responsible for the economy from the first day of February after his inauguration until the first first day of February after his successor’s inauguration, which is why incoming and exit figures are identical.

3) This article was first written in 2018. We didn’t redo it for the usual reason: the results got worse for the Republicans.

 

A Ban on AR-15’s – By the Numbers

George ShaffnerLeave a comment

By Hugh-Griffin Banerjee and Miranda Park

In the wake of so many heartbreaking massacres like the tragedy at Sandy Hook Elementary School, where 20 children and six adults were murdered by a single deranged man, there’s been a lot of discourse in the nation’s capitol about limiting the sale—but not the ownership—of semiautomatic assault rifles like AR-15s to buyers 21 and over who can pass background checks. 

According to CBS News, there were 417 mass shootings in the US in 2019, more than one per day, so it’s impossible to argue against the objective, but we in Near Canada are skeptical of any solution, or in this case semi-solution, that gets bandied about in the halls of Congress. We’d rather examine its possible efficacy through the lens of the most reliable numbers extant.

According to the National Shooting Sports Foundation, somewhere between five and 10 million AR-15 type firearms are owned by American citizens. We can’t speak for you, but our confidence doesn’t soar when the range of informed estimates is two to one. Regardless, let’s settle on the midpoint: 7.5 million rifles capable of being converted into semi-automatic weapons. The population of the US is around 330 million, which means that one in circa 40 of us owns an AR-15 or similar weapon.

Now that we’re equipped with the data, let’s revisit a few massacres where the killers were equipped with AR-15 type firearms:

  • The population of Sutherland Springs, Texas, where 26 worshippers were murdered and ten were wounded, is around 600. If the averages hold, then the town’s residents owned 15 AR-15 type semiautomatic rifles at the time of the massacre. Fifteen, in a town of only 600!
  • The population of Parkland, Florida, where 17 high-school students and teachers were murdered and 14 were wounded, is about 31,000. If the averages hold, then the city’s residents owned 750 AR-15s or equivalents at the time of the massacre.
  • The population of the Las Vegas metropolitan area, where 58 concert goers were murdered and 851 were wounded, is approximately 2,000,000. If the averages hold, then area residents owned 50,000 AR-15 type rifles at the time.

Unfortunately, the banning of just the sale of AR-15 or similar firearms to Americans under the age of 21, whether they can pass background checks or not, will have no effect whatsoever on the millions of guns already in circulation. Forbidding the manufacture and sale of ammunition for semiautomatic rifles would do eventually do the trick, but ammunition for still-legal weapons would also have to be forbidden. In other words, it’s a nonstarter politically speaking.

Notably, civilian ownership of AR-15 type semiautomatic rifles was prohibited in the US until 2004, when the ban was lifted by a Republican-controlled Congress. No surprise there, eh? By the numbers, though, it’s brutally clear that nothing less than reinstatement and enforcement of the ban will make a serious dent in the frequency of mass shootings—and the body count.

We’re well aware that a significant percentage of AR-15s would not be turned in if the 2004 ban was reinstated. Many would be locked away in gun safes, and many more would disappear into black markets. But, according to John Maynard Keynes, Milton Friedman and Miranda, price increases when supply is constrained, which means that all but well-healed mass murderers would be forced to brandish less lethal weapons. Baby steps, but progress nonetheless.

We at The Near-Canada Gazette have every hope that the grass-roots movement started by the students of Marjory Stoneham Douglas High School will cause material, life-saving change, but we’re not holding our breaths. Given the current political climate, we expect that there will many more massacres before a less stone-hearted Congress will have the courage to defy the NRA and deny their gun-crazed members the ownership of AR-15 type weapons.