Court’s Latest Stay of Clean Air Regulations Shows the Best can be the Enemy of the Good

On December 30, The U.S. Court of Appeals for Washington, D.C. stayed implementation of the Environmental Protection Agency’s proposed Cross-State Air Pollution Rule (CSAPR), which was to take effect on January 1, 2012. The EPA maintains that CSAPR would save 13,000 to 34,000 premature deaths annually, as well as lead to improvements in visibility in national and state parks, and increased protection for sensitive ecosystems including Adirondack lakes and Appalachian streams, coastal waters and estuaries, and forests. The stay was the latest in a long series of setbacks to EPA efforts to regulate a family of air pollutants from coal-fired power plants and other sources, including sulfur dioxide (SO2), oxides of nitrogen (NOx), ozone, and fine particulates. READ MORE>>>

Ed Dolan is the author of  TANSTAAFL: A Libertarian Perspective on Environmental Policy.

U.S. Employment Data: Strong Jobs Report Shakes Up the Election Season

Everyone knows what this election will be about: jobs, jobs, jobs. If so, the latest numbers from the Bureau of Labor Statistics should shake things up a little.

The headline number in the report is a relatively robust gain of 200,000 jobs in December, confirming that the jobs market is picking up after a mid-year slump. The November gain was revised downward from 120,000 reported last month to just 100,000, but that was partly offset by an upward revision of the October figure from an originally-reported 100,000 to 112,000. There was good news in the line-by-line numbers, as well. Goods-producing jobs increased by 48,000, after a decrease in November.
Read the complete commentary then,  follow this link to view or download a classroom-ready slideshow with charts of the latest jobs data.

Why the Russian Economy is No Longer a Big Plus for Putin

Vladimir Putin’s decision to return to the presidency has touched off a wave of protests in Russia. The motives behind the protests are partly social and political (see this recent post), but economics also plays a role in Putin’s fading popularity. It is far from clear that the present regime will be able to continue to offer growth and rising incomes in exchange for a monopoly of political power, as it has in the past. Here are some of the problems facing Russia’s economy in as we look toward the March election and beyond. Read More >>>

Best Economics News Story of the Year: Dickens Meets Hayek in a Mumbai Slum

My one-man committee has met and made a decision: The award for best economics news story of the year goes to Jim Yardley of The New York Times for an article titled “In One Slum, Misery, Work, Politics and Hope,” published in the December 29 issue.
It is a story about Dharavi, Mumbai’s most famous slum, a seething hive where perhaps as many as a million people live in 60,000 structures on an area smaller than central park. Not surprisingly, in every alley, there are scenes of appalling poverty: Read more>>>

Choral Singing, Malpractice, Italy: More Links for Your Classroom

• Most economists are familiar with the distinction between coordination via spontaneous order and coordination via hierarchy. (See, e.g., discussion in Ch. 1 of my textbook.) In the real world, coordination often involves a mix of the two. This post from Lynne Kiesling of The Knowledege Problem  illustrates the coordination issue with the example of choral singing. If you scroll down the comments, you will see one I have added.
• The euro crisis is not about tiny Greece, Ireland, or Portugal; it is about Italy. Italy is not only too big to fail, it is too big to rescue. In this post from Economonitor Ed Hugh digs deep into the Italian problem and explains why the euro's ultimate fate will depend on whether Italy can pull itself out of the very deep hole it is in. Hint: Government finance is only part of the story.
• Everyone agrees it would be good to slow the runaway growth of medical costs, but where to attack the problem? Conservatives often single out the need to reign in excessive medical malpractice suits. Others dismiss malpractice as a minor problem, citing data that malpractice legal costs and awards amount to only 2.4 percent of medical spending. This interesting post from the NY Times by Pauline W. Chen, M.C., a practicing physician, explains that the damage done to the medical system by excessive malpractice suits may be far greater than the measured 2.4 percent if one takes into account the way doctors respond to the fear of malpractice claims.

US GDP: Can We Blame the Grinch for Yet Another Downward Revision of Growth?

The third estimate of US real GDP for Q3 2011 brought yet another downward revision. Can we blame the Grinch who Stole Christmas?

GDP is now reported to have grown at an estimated 1.8% annual rate in Q3 2011, less than the 2.0% second estimate released in November and less still than the 2.5% preliminary estimate reported in October Although slowing, the July-September 2011 quarter was the 9th consecutive quarter of growth since the end of the recession that lasted from Dec 2007 to Jun 2009.

Even after the revision, Q3 GDP was still above its pre-recession peak reached in Q4 2007, although only by a razor-thin 0.04%. According to standard business cycle terminology, the recession phase of the business cycle is the downward movement of GDP from its previous peak. The recovery phase is the upward movement from the trough (low point) of the recession and continues until GDP again reaches its previous peak. Once GDP moves above its previous peak, the expansion phase begins. The revised Q3 data still suggest that after a recovery of 2 years duration, the expansion phase has now begun.

Consumption was revised downward but still accounted for much of the growth in Q3. Investment was revised up to weakly positive compared with the negative number in last month’s second estimate. Federal government defense spending grew but was offset by continued decline of federal nondefense spending and state and local government spending. Exports grew even more strongly than previously reported, but they were offset by an upward revision of imports (a negative entry in the GDP accounts).

The revised growth of nominal GDP (NGDP) was 3.9% in Q3. NGDP growth consisted of 1.8% real growth and 2.1% inflation. An increasing number of economists focus on NGDP growth as a key policy target. Over the long run, NGDP growth of about 4.5% would allow real GDP to track its potential level with about 2% inflation. The Q3 NGDP growth of 3.9% suggests that the gap between actual and potential GDP that opened during the recession continued to widen.

Follow this link to view or download a classroom-ready slideshow presentation of the latest GDP data

Linking Keystone XL to the Payroll Tax Only Shows Why we Need a Real Energy Policy

The administration is coming under increasing pressure to accelerate approval of the Keystone XL pipeline, designed to carry increased U.S. imports of bitumen from Canadian oil sands. The latest form of pressure is a Senate bill that would fast-track KXL in exchange for a two-month extension of the payroll tax cut and other items. After some resistance, it now appears the House will go along with the proposal. It is a bad idea. READ MORE>>>