QUOTE OF THE DAY
The Economist: America’s lost oomph
Back in the mid-1990s, America’s economic prospects suddenly brightened. Productivity soared. Immigrants and foreign capital flocked to take advantage of what was quickly dubbed the “New Economy”. The jobless rate fell to 4%, yet inflation remained low. All this led economists to conclude that America’s potential rate of growth—the speed at which the economy can expand while keeping unemployment steady and inflation stable—had risen sharply from its decades-long average of 3%, to 3.5% or even higher.
Sadly, the New Economy is no more. The recovery from the recession of 2008-09 has been the weakest of the post-war era, and evidence is mounting that America’s potential growth rate has plummeted. Its two big determinants, the supply of workers and the rise in their productivity, have both fallen short. Performance in the past year has been particularly feeble: America’s labour force has not grown at all and output per hour worked has fallen. The IMF recently cut its estimate of the country’s potential rate of growth to 2%. Other economists put it as low as 1.75% (see article).
So far, the slide in potential has had little practical impact. Because the recession was so deep and the recovery so weak, the economy is still operating below its capacity. But in the long term a halving of the economic speed limit would have grim consequences. Living standards would rise more slowly, tax revenues would be lower and the burden of paying today’s debts heavier.
Ars Tecnica: Who’s banned from editing Wikipedia this week? Congress
Most members and staffers of the US House of Representatives won’t be able to edit pages on Wikipedia for more than a week. Administrators of the popular Web encyclopedia have imposed a 10-day ban on the IP address connected to Congress’ lower house.
The ban comes after a series of wild “disruptive” edits that appeared following the creation of @congressedits, a bot that monitors anonymous edits from congressional IP addresses and announces them to the world via Twitter. The account was created just over two weeks ago and already has more than 23,000 followers.
Wikipedia editors explained their castigation for the IP address 143.231.249.138 on the user talk page. The 10-day edit ban follows a one-day ban imposed earlier this month, which apparently didn’t do the trick.
Crain’s: Illinois health insurers to pay back millions in premiums
Illinois consumers will receive $8.4 million in rebates from insurance carriers that didn’t meet federal rules on medical spending in 2013.
About 109,000 people will receive the rebates, which will average $120 per family, according to figures released by the U.S. Department of Health and Human Services today. The consumers getting reimbursements represent only 3 percent of the roughly 3.3 million people in Illinois’ fully insured insurance market.
The total payout this year is well below the $61.8 million that 300,000 Illinois policyholders received in 2012 based on insurers’ performance in 2011, the first year medical loss ratio rules went into effect. Illinois insurers paid back $6.1 million to 179,000 consumers last year.
Chicago Tribune: Chicago aldermen ask City Hall watchdog to probe red light ticket program
A group of Chicago aldermen has asked City Hall’s top watchdog to probe the city’s besieged red light ticketing program, raising questions about the oversight, consistency and fairness of a camera system in “continued disorder.”
The request follows a Tribune investigation that found thousands of drivers cited during a series of suspicious spikes in tickets throughout Chicago that Mayor Rahm Emanuel’s administration has been unable to explain.
The aldermen asked Inspector General Joseph Ferguson to also probe the operations and revenue of the red light ticketing program, including issues ranging from the timing of yellow lights to inconsistent enforcement of traffic laws. And the City Council members requested a flow chart of city employees involved in the program’s oversight “because no one seemed to be in charge.”
ABC 7: Walgreens headquarters relocation plan meets opposition
Protesters gathered at the corner of happy and healthy Thursday to object to plans by the Walgreens Corporation to move its headquarters overseas.
The possible move would allow Walgreens to lower the amount of taxes it pays.
Protesters from two citizen groups delivered 70,000 online signatures to Walgreens’ flagship store at the Wrigley Building after they called on the Deerfield-based corporation to keep its headquarters in America.
City Journal: Across New York State, underfunded pensions are clouding the future
Municipalities across New York State face myriad financial problems, ranging from flat economic growth and stagnating tax revenues to expensive state mandates. It’s not surprising, then, that dozens of cities, counties, and towns, especially in upstate New York, have embraced a program allowing them to postpone billions of dollars of contributions into the state’s pension system. Unfortunately, the future cost may prove tough to repay. In the last fiscal year, 139 New York municipalities deferred $472 million in retirement-system payments, while the state government skipped another $937 million, according to state comptroller data. Since New York introduced what is euphemistically known as the “contribution-stabilization program” three years ago, governments have put off $3.3 billion in payments—apparently unconcerned that pension underfunding helped propel cities such as Stockton, California, and Detroit into bankruptcy.
The program lets governments “amortize” required payments into the pension plan over a period of ten to 12 years, to slow the budgetary impact of rising retirement costs. Though New York has one of the better-funded government-pension systems, its pension costs have rapidly swelled, thanks to the generous benefits that the state offers and the financial downturn in 2008 and 2009, which increased the system’s unfunded liabilities. Instead of paying off the pension system’s rising debt now, New York governments are borrowing money by deferring required contributions into the future.
There may not be a better study in modern liberalism than a pair of urban human-rights crises that erupted in recent days. If the arc of the moral universe is long, evidently it bends toward free utilities for Detroit deadbeats and free spas for New Yorkers living in heavily subsidized luxury apartments.
Manhattan liberals are incandescent after the city zoning board this week approved a new high-rise condominium that includes dozens of units with artificially cheap rents reserved for low-income tenants. The problem is that they’ll use a separate entrance, at least until outraged politicians ban the “poor door” practice as an insult to equality.
Developers typically can get a new tower approved in Gotham only if they agree to the political quid pro quo of setting aside low-cost housing. But they are starting to compartmentalize these apartments within the building because the reality is that they lower all other property values and can make some projects unprofitable. Residents of such units are also sometimes not allowed to avail themselves of amenities including sun decks, gyms, pools, doormen and concierge services.
CARTOON OF THE DAY
