Peggy Noonan Comes Around To My Way of Thinking

Peggy Noonan's weekend Wall Street Journal editorial is largely about the Wednesday evening CNBC GOP candidates' event. I wrote my initial reactions about the event here.

Noonan begins with a humorous send up of manic, maniacal Jim Cramer's performance, as well as Maria Bartiromo's. On these we agree. She then meanders through the rest of her half-page piece to arrive at two succinct paragraphs,

"Republicans should sober up. They should be thinking not about what the Republican at the local GOP meeting is thinking, but what the independent across the street is thinking. He's catching the Cain story on TV and thinking: "This guy may have a problem. I want more evidence, but if it's true, then man, we don't need to go there again."

That independent is a pretty important guy. The GOP better start doing a better job of considering how he sees things. He doesn't live in Republo-world, but he's right across the street, and he votes. He's going to pick the next president."

Which is exactly what I've been contending for many months. Only I would go, and have gone, further. I think the GOP should be making sure, if among the publicly-available polls, none does this, of providing timely poll numbers, before each major primary event for the major candidates, for independents' preferences among the GOP candidates.

That's all that will matter, so there's really no point being concerned about who registered Republicans favor. With only about 25% of the voting public registered with a major party, that leaves the 50-60% of independents as far more important than the registered Republicans will be in electing a president next year.

I endorsed Cain prior the recent sexual harassment allegations. But the truth is, no matter who I'd like to see nominated by the GOP, I'll vote for the candidate on the ballot who has the highest poll numbers among independents, assuming I can learn who that is by the day of my state's primary election.

If by referring to "the GOP better start doing a better job of considering how he (independents) see things," Noonan means party officials, she's being opaque. She should explicitly counsel the RNC to publicize the GOP candidates' poll numbers among independents and make a better case to GOP voters about this important strategy for nominating a winning candidate next year.

 If she means GOP voters, she's probably right. I don't know if enough Republicans realize what I have long held, and Noonan has now belatedly also come to see.

But it is critical. I tell every Republican I know about this approach to voting for a nominee. It's the only way the party will retake the White House next year.

Fighting Crony Capitalism In Residential Housing Brokerage

Wednesday's Wall Street Journal carried an editorial excoriating Ron Phipps, president of the National Association of Realtors, for his misleading and largely false letter to the editor in the same edition of the paper.

Here's Phipps' letter in its entirety:

The Wall Street Journal would have people believe that hard-working, middle-class families are not affected by lower conforming loan limits, when nothing could be further from the truth ("More McMansion Subsidies," Review & Outlook, Nov. 1). The representatives in Congress who support higher loan limits understand that this is not a partisan issue, as you are trying to make it out to be.



The majority of markets impacted by the loan-limit decline are not high-cost areas. For example, more than 100 counties throughout the Midwest and more than 200 counties in the South have seen loan limits decline by more than $64,000.


And despite how your editorial tries to position the issue, the loan limits are not the same as reforming Fannie Mae and Freddie Mac. Allowing the mortgage loan limits to expire in October was an arbitrary decision. Creating more market disruptions before reforming mortgage markets will only hurt our recovery.

The Senate measure to reinstate the limits is temporary—restoring the higher limits while the housing and mortgage markets stabilize. Recently, economist Mark Zandi said policy makers could shore up the housing market by "extending the current higher conforming loan limits that are set to decline in a few weeks." Borrowers, not taxpayers, will bear the entire cost of the higher loan-limits provision.


As people across the country are trying to gain a foothold in these trying times, we need to give them the resources to do so. The National Association of Realtors applauds the members of Congress who are standing up for America's families rather than turning their backs on them.

Ron Phipps
President
National Assn. of Realtors
Washington


Here's the related staff editorial referring to Phipps' letter:


To understand why 90% of U.S. mortgages are still underwritten by taxpayers, look no further than the nearby letter from Ron Phipps of the Realtors lobby. He makes clear that the Realtors, like the rest of the housing-subsidy crowd, are working hard to get Congress to reinstate a $729,750 loan-limit for Fannie Mae and Freddie Mac guarantees.



Notice how Mr. Phipps doesn't mention that dollar figure, perhaps because it makes a howler of his claim that the loan-limit reduction in October to $625,500 is somehow a blow to the "middle class." As House Financial Services Chairman Spencer Bachus and several colleagues note in a November 7 letter to GOP appropriations conferees, "the lower loan limits only affect a very small slice of wealthier homeowners in high cost areas." Only 1.3% of all loans done by Fannie, Freddie and the Federal Housing Administration would be affected by the change.


Another lobby classic is Mr. Phipps's claim that letting the loan-limit fall in October was "arbitrary" and that the Realtors only want a "temporary" extension. But any temporary program has to end sometime, and Congress first raised the loan limit on a temporary basis in 2008. It has since extended the higher loan-limit three times, and if it were extended again the Realtors would no doubt plead for another "temporary" extension the next time it expires, ad infinitum.


Reducing the loan limit is a modest attempt to restore some private competition to the mortgage market, at least at the high end. Mr. Phipps says this issue shouldn't be "partisan," by which he seems to mean that both parties should remain wholly owned Realtor subsidiaries. For Republicans who run the House, this is not a test of their partisanship. It is a test of their alleged free-market, tea-party principles.


The Realtor letter is at least educational, a reminder that one reason the U.S. economy is so burdened with government is that many alleged capitalists want government to guarantee their business. That's known as crony capitalism.

I wrote in this recent post concerning a Paul Ryan speech vilifying this sort of crony capitalism. It's helpful to see it up close in Phipps' letter. This is what my Congressman, Leonard Lance, is supporting, as I explained in this recent post.

John Boehner's House GOP will continue to be vulnerable so long as morons like Lance consent to be used by crony capitalists like Phipps to mindlessly feather the nests of the nation's realtors while those house brokers lie about the real situation.

Mark Zandi is a liberal, neo-Keynesian, hacked-up economist who believes in more government in business and more government spending for everything. He's a Democratic patsy.

Realtors don't want housing prices to fall to market-clearing levels because they'll share the pain of falling prices, not to mention that their business is fighting off competition from cheaper, online-based sales channels for housing.

It's also very clear now, in the wake of a decade of disastrous federal housing policies, primarily driven by wrongheaded Congressional mandating of stupid GSE mortgage-backed bond guarantees for low-income housing, that housing isn't and shouldn't be a major drive of the US economy.

Housing isn't a good bet as an investment for most Americans. It retards labor mobility and exposes owners to bad local and state fiscal policies which result in higher property taxes and lower housing values.

It's time we put an end to this particular variant of crony capitalism. John Boehner and Paul Ryan would be well-advised to muzzle the GOP House members who are supporting Phipps and his association in trying to prolong higher lending limits for GSEs and, instead, speed exit of the GSEs from the market, then kill them.

Last Night's CNBC GOP Candidate Event

Here's a link to the post I wrote on my companion business blog today about last night's latest faux-debate travesty.

Because the event was ostensibly concerning economics, I thought it appropriate to post there, and cross-post here.

Dorothy Rabinowitz Makes The Case For Newt Gingrich's Nomination

Some weeks ago, I wrote a post endorsing Herman Cain for the GOP presidential nomination. It was triggered by the Wall Street Journal's Daniel Henninger's editorial in support of Cain.

The past two weeks have seen Cain engulfed in a flurry of sexual harassment charges, mostly by anonymous women. Frankly, the lateness of the charges- some 14 years or so after the alleged fact- and the anonymity of several of the women, make them less credible, in my opinion. And most people with business experience understand that there is a sort of cottage industry in people getting small- to medium-sized settlements for making unsubstantiated allegations go away, rather than cost an organization much more in legal fees.

If Cain becomes severely wounded by these allegations, e.g., even one becomes a confirmed instance, in direct contradiction to Cain's assertions last night, he's finished.

Who would I then like to see as the GOP nominee?

In prior posts, I have written of how I believe Newt Gingrich is the most intelligent GOP candidate, probably the most appropriately experienced, and, to paraphrase a Fox News Contributor, in a debate he'd 'make Obama wish he'd never left Chicago.'

But conservative friends of my age share my concerns over Newt's ego, ethical issues, and multiple marriages, with infidelities apparently leading from one to the next. Character does matter, and Newt's continues to be in question.

Never the less, here's Wall Street Journal columnist and editorial board member Dorothy Rabinowitz discussing why she believes Newt may yet be the GOP nominee for 2012.

If Newt's numbers among independents were in the same range as Romney's, then I'd clearly support Gingrich.

Regarding Public School Teachers' Compensation

Yesterday's Wall Street Journal published this an important editorial entitled Public School Teachers Aren't Underpaid. Written by Andrew G. Biggs, a resident scholar at the American Enterprise Institute, and Jason Richwine, a senior policy analyst at the Heritage Foundation. It is drawn from a new paper, "Assessing the Compensation of Public School Teachers" (aei.org/paper/100259).




The Journal piece carried the rather shocking subheadline,
"Our research suggests that on average—counting salaries, benefits and job security—teachers receive about 52% more than they could in private business."

Because I feel so strongly about this issue and this article, I'm going to simply repost it in its entirety.

Public School Teachers Aren't Underpaid
 A common story line in American education policy is that public school teachers are underpaid—"desperately underpaid," according to Education Secretary Arne Duncan in a recent speech. As former first lady Laura Bush put it: "Salaries are too low. We all know that. We need to figure out a way to pay teachers more."


Good teachers are crucial to a strong economy and a healthy civil society, and they should be paid at a level commensurate with their skills. But the evidence shows that public school teachers' total compensation amounts to roughly $1.50 for every $1 that their skills could garner in a private sector job.


How could that be? First, consider salaries. Public school teachers do receive salaries 19.3% lower than similarly-educated private workers, according to our analysis of Census Bureau data. However, a majority of public school teachers were education majors in college, and more than two in three received their highest degree (typically a master's) in an education-related field. A salary comparison that controls only for years spent in school makes no distinction between degrees in education and those in biology, mathematics, history or other demanding fields.


Education is widely regarded by researchers and college students alike as one of the easiest fields of study, and one that features substantially higher average grades than most other college majors. On objective tests of cognitive ability such as the SAT, ACT, GRE (Graduate Record Examination) and Armed Forces Qualification Test, teachers score only around the 40th percentile of college graduates. If we compare teachers and non-teachers with similar AFQT scores, the teacher salary penalty disappears.


While salaries are about even, fringe benefits push teacher compensation well ahead of comparable employees in the private economy. The trouble is that many of these benefits are hidden, meaning that lawmakers, taxpayers and even teachers themselves are sometimes unaware of them.


Data on employee benefits from the Bureau of Labor Statistics (BLS), for example, do not include retiree health coverage, which for teachers is worth about an additional 10% of their salaries. Because of differing accounting rules between the public and private sectors, BLS data also make teachers' defined-benefit pensions appear only slightly more generous than the typical 401(k) plan found in the private sector.


In reality, a teacher who retired after 30 years of service with an annual salary of $40,000 might receive guaranteed annual pension benefits of about $20,330. Under a typical private 401(k) plan, a guaranteed annual benefit might be only around $4,450 (assuming the money is invested in U.S. Treasuries and the employee buys an annuity).


BLS data on paid leave for teachers count vacation days only during the school year, omitting summer and long holiday breaks. A valid pay comparison should include this extra time off, in which teachers can enjoy longer vacations or earn additional income.


Properly counted, a typical public school teacher with a salary of $51,000 would receive another $51,480 in present or future fringe benefits. A worker in private business with the same salary would receive around $22,185 in fringe benefits.


Finally, despite recent layoffs, teachers still have greater job security than workers in private businesses. While employment in education declined by 2.9% between September 2008 and July 2011, according to BLS data, overall private-sector employment declined by 4.4%. Moreover, from 2005 through 2010 the unemployment rate for public school teachers averaged 2.1%, versus 4.1% for private school teachers and 3.8% for occupations that some consider comparable, such as computer programmers and insurance underwriters.


Job security protects against the loss of compensation suffered by the unemployed, and it also protects a position in which total wages and benefits are on average above market levels. This job security is surely valuable.


Consider that one-fifth of the highest-performing public school teachers in Washington, D.C., recently declined to give up even part of their job security in exchange for base salary increases of up to $20,000. According to our model—which factors in the probability of becoming unemployed, the average duration of unemployment, the level of unemployment insurance benefits, and the risk aversion of public employees—job security is worth about an estimated extra 9% of compensation.


One important caveat: Our research is in terms of averages. The best public school teachers—especially those teaching difficult subjects such as math and science—may well be underpaid compared to counterparts in the private sector.


Nevertheless, most public school teachers would not earn more in private employment. According to our analysis of the Census Bureau's Survey of Income and Program Participation, the average person who moves into teaching receives a pay increase of almost 9%, while the average teacher who leaves for the private economy must take a pay cut of over 3%.


This is the opposite of what we would expect if teachers were underpaid. It also helps explain why more people seek teaching jobs—as measured through the number of teaching graduates and applications for teaching positions—than can possibly find them.


In short, combining salaries, fringe benefits and job security, we have calculated that public school teachers receive around 52% more in average compensation than they could earn in the private sector.


The compensation premium is especially relevant today, as states and localities struggle with budget deficits. Restraining the growth of teacher compensation—in particular, pension and retiree health benefits that outstrip what comparable private-sector workers receive—could help balance budgets and perhaps restore school resources lost to rising labor costs. Broader pay reform should give school administrators greater flexibility to reward the best or most-needed teachers with high salaries and benefits, while encouraging the least effective ones to improve or to leave the profession.


Effective reform, however, requires knowing all the facts about teacher pay. Policy makers and the public should not accept at face value that the typical teacher earns far less than he or she would in the private sector. The evidence points to a very different conclusion. (End of editorial)

I sent this editorial via the Journal's email link to a public school teacher friend. She replied that she would now feel better knowing she was being paid above-average compensation for being an above-average teacher. I replied by quoting the passage below and lamenting that she obviously doesn't "get it,"

"However, a majority of public school teachers were education majors in college, and more than two in three received their highest degree (typically a master's) in an education-related field. A salary comparison that controls only for years spent in school makes no distinction between degrees in education and those in biology, mathematics, history or other demanding fields.



Education is widely regarded by researchers and college students alike as one of the easiest fields of study, and one that features substantially higher average grades than most other college majors. On objective tests of cognitive ability such as the SAT, ACT, GRE (Graduate Record Examination) and Armed Forces Qualification Test, teachers score only around the 40th percentile of college graduates. If we compare teachers and non-teachers with similar AFQT scores, the teacher salary penalty disappears."


I am sure my readers do get the point. As it happens, my friend is a walking textbook case of the editorial's point. She has only education-related degrees. Science and math are mysteries to her. If you told her she received her degrees in "one of the easiest fields of study," she'd lash out angrily. But, really, is anyone going to believe that teaching reading requires anything remotely like the education it takes to teach mathematics or science?

By the way, in the school which my daughters attended, it was predominantly math and science teachers who left, frequently in mid-year, either for better teaching positions or more money in private industry. Never, to my knowledge, reading teachers or most run-of-the-mill primary or middle school teachers.

This is the dirty secret I think most thinking citizens understand. The teachers they know are rarely among the most intelligent or best-educated in their social circle. But they wear this 'I'm teaching your kids so back off, buddy' Teflon mantle. As if merely doing this thankless task entitles them to compensation far above parity for their actual skills or educational accomplishments.

The friend to whom I sent this article frequently contends that she is underpaid as a teacher, and should be making much more, because she would have in the private sector. The research cited, of course, shows her belief to be false.

But it's truly shocking to learn that, on average, her kind are paid more than 50% above the compensation they'd receive in the private sector.

Faux Populism from Wonderboy

George Melloan, a former Wall Street Journal senior staffer, wrote a good editorial in the paper's Friday edition drawing attention to Wonderboy's attempt to run on a populist platform, while economically damaging the very base to whom he is trying to appeal with that approach.

Melloan ticks off a litany of bad economic data, including declining median personal income, exploding federal debt and money supply, and rising food commodity prices.

The First Rookie's rhetoric may make some liberal lower income voters feel better temporarily. But when they return home to buy more expensive food with fewer real income dollars, the truth will out.

Liberal Democrats, Occupy Wall Street, & The Oakland Riots

Frisco Nan praises Occupy movements. Especially their 'spontaneity.'

Wonderboy endorses Occupy movements, rather liberally interpreting their motivations and inserting his own agenda. Somehow, I don't think the movement's members are as deeply contemplative as is Wonderboy, spinning this surreal narrative concerning the protestors' thinking.

Then we have the recent Occupy Oakland riots. Despite Democrats' attempts to equate OWS with the Tea Party movement, the latter never engaged in, nor spawned riots in its wake. Here we see Oakland, ironically in Frisco Nan's backyard, exploding in violence. The Occupy Oaklanders claim it wasn't them, but this is the point. These movements have been infiltrated and hijacked by others with a much more violent, anti-establishment message and motivations.

The Tea Party sought to work within the existing governmental frameworks, and helped elect one of the largest classes of new House members. OWS, like its 1960s student protester ancestral movements, seeks to abrogate existing governmental structures and simply demand and take what they want.

I just searched YouTube this morning for these clips. Let's hope dozens of GOP candidates will do a more thorough job pinning the OWS mayhem to Democratic opponents who have been foolish enough to ally themselves with the movement.