Tuesday, May 24, 2016

Manheim Township Student Wins National InvestWrite Competition

Meet our National InvestWrite Winner

On May 20, EconPA staff invited Lancaster's Manheim Township High School student Zach Andrews, his teacher Julie Frey and his parents Wendy and Todd Andrews to an awards recognition luncheon to honor him for his achievement.  Zach knew that his winning essay was selected as the high school winner for the state of Pennsylvania but Zach didn't know that his essay was the NATIONAL WINNER!! 

InvestWrite National Competition is an essential tool that enhances the The Stock Market Game™ program by providing your students with a way to demonstrate what they are learning in the classroom.

Learn more about InvestWrite

The Center for Economic Education at Millersville University is an affiliate of ECONOMICSPennsylvania and the Council on Economic Education.

ECONOMICSPennsylvania and the Council on Economic Education's mission is to ensure that every student in America understands essential economic concepts, is able to use economic ways of thinking and problem solving, and has a solid grasp of the nature and structure of the national and global economy, as producers, consumers, and citizens. Through seminars, workshops, course offerings, and instructional resources, the MUCEE will aid economic educators in their preparation to teach students how to become productive members of the labor force, responsible and informed voters, prudent savers and investors, knowledgeable consumers, and lifelong decision makers. These attributes of an economically literate citizenry are imperative to the success and well-being of our state and nation.

Monday, February 15, 2016

ANTONIN SCALIA, I remember when I heard his name for the second time.
By Neil McCarthy 2/14/16


I remember when I heard his name for the second  time.

The first time was in the summer of 1981.  Ronald Reagan had been President for about seven or eight months and The New York Timesran a story listing a group of law professors he intended to appoint to the various U.S. Courts of Appeals.  Scalia -- along with Posner, Bork, Winter and Easterbrook -- was on the list.  All of them were ex or current law professors.

And constituted President Reagan's brigade of conservative intellectuals.

The second time was about a year to two thereafter.  By then I was working as a law clerk for one of Reagan's brigade.  In between bench memos, opinion drafts and editing conferences, we clerks drank coffee and socialized with the judge (who, by the way, are in need of constant socializing for the simple reason that being an appellate judge is a very lonely job).  At one of those coffee klatches, we were speculating on who President Reagan would pick as his second appointee to the Supreme Court (Sandra Day O'Connor had been his first, very early in his initial term.)

The Judge's candidate was . .

"Nino" Scalia.

Who, by then, I had totally forgotten.

When I asked why that would happen, the answer had nothing to do with judicial philosophy or originalism or antidotes to liberal activism.  Instead,  according to my boss, Scalia would get the nod because he was Catholic and Italian.  At the time, the Supreme Court lacked the latter and had only one of the former.


I never thought I'd ever say this .

But let's bring back the good old days . . .

When politics was normal and even Supreme Court justices were evaluated by more than their fidelity to extremist ideologies.

Because we are nowhere near normal today.

Justice Scalia, as everyone now knows, died yesterday.  Instead of a bi-partisan period of mourning, we have been catapulted into a year long political mud wrestle.  In the not too long ago old days, Justice Scalia's death would have been greeted with a bi-partisan period of mourning -- one where opponents and adversaries praised the intellectual firepower, side-splitting humor, and genuine loyalty of the man.  Today, however, Nino's passing to the other side is met with an obligatory nano-second of condolences, followed by a torrent of hypocritical posturing.

This is all so childish.

Indeed, so much so  that we have to revert to kids rules even to referee the contest.  Under which, the first comment that has to be made is  .  .  .

Sen. McConnell started it.

That's right.  

Within an hour of the announcement of Justice Scalia's death yesterday, McConnell issued a statement saying that the seat on the Supreme Court left vacant thereby "should not be filled until we have a new President."  McConnell asserted this was necessary because "the American people should have a voice in the selection of their next Supreme Court Justice."  Of course, the American people already had such a voice.  They exercised it in 2012 when they re-elected Barack Obama to the Presidency, a position which -- on this issue -- comes with a written job description -- called the Constitution -- entitling the holder to nominate justices to the Supreme Court when vacancies arise. Though conservatives like McConnell regularly praised Justice Scalia for a commitment to enforcing our founding text as written, that rule apparently has been waived in the last year of the Obama presidency.

McConnell's hypocrisy was then met with a cascade of supporting endorsements.

In the Republican debate last night, five of the six left in this season's crop of GOP ideologues agreed that Obama either shouldn't -- or would not be allowed to -- fill the vacancy.  (The outlier was Jeb Bush,  who -- given his relentless attacks on Trump and now unique willingness to abide by the Constitutional rules on selecting members of the Supreme Court -- has become the only GOP candidate I can remotely respect.)  In any case, the Gang of Five claimed there was "precedent" for this refusal, invoking at or after the debate different versions of the assertion made by Republican Sen. Grassley that "It's been standard practice over the last 80 years to not confirm Supreme Court nominees during a presidential election year."

That claim, however, gives hyperbole new meaning.

At one level, it is demonstrably false.   If eighty (80) years is a cutoff, then there have been at least two instances where confirmations have occurred in presidential election years. Justice Butler -- a Roosevelt appointee --  was confirmed in 1940,  and Justice Kennedy, though nominated by President Reagan in November 1987, was confirmed after hearings were held in 1988, both Presidential election years. 

The notion that there is something magical about eighty years is also sheer nonsense. In fact, the reason Grassley chose it is because, before 1940,  there had been numerous Supreme Court nominations and confirmations in presidential elections years. President Taft did it in 1912; President Wilson did it (twice) in 1916; and President Hoover did it in 1932.  Among those ostensibly politicized jurists who, in Sen. McConnell's words, the American people never had a "voice" in selecting were Justices Brandeis and Cardozo.  Brandeis was one of Wilson's appointees in 1916 and Cardozo was Hoover's in 1932.

Neither, of course, were judicial lightweights.

In fact, both of them became giants on the Supreme Court, lauded in their day with the encomia being laid at the feet of Justice Scalia today.

On Meet the Press this morning, conservative talker Hugh Hewitt said the Kennedy confirmation in 1988 didn't count, ostensibly because the nomination came in late '87 (oh what a difference two months makes) and followed the Senate's rejection of President Reagan's original nominee for that vacant seat (Robert Bork).  (Hewitt would say the same thing about the 1912 and 1940 confirmations because, in each case, those nominations were announced late in the year before.)

As with many explanations designed to fit pre-determined conclusions, this one turns out to refute itself.  On the one hand, the Senate's deliberations and vote on the Kennedy nomination -- namely, all the interesting and contentious stuff -- occurred in a presidential election year, as will be the case when Obama sends his nominee to the Senate this year.  The two circumstances are perfectly comparable.  On the other, apart from Constitutional requirements, the reason hearings and deliberations had to go forward on Justice Kennedy (after the Bork rejection) is that the Court would have been operating for too long without a sitting ninth justice.  It would have had only eight members instead of nine, creating the possibility of four to four splits.

The problem of equal division cannot be gainsaid.  Without Scalia, the present Court on most contentious issues -- abortion; the right of unions to charge non-members a fee for having negotiated wages; the death penalty; whether Obamacare is authorized by the commerce clause -- is now split four to four. The consequence is that it really cannot decide anything on those cases or issues. Granted, some of them are over (e.g., whether the commerce clause authorizes the Affordable Care Act; it doesn't under current precedent but the taxing power does so the ACA is constitutional). Others, however, are alive and on the Court's current docket.   

If the Court hears these cases and remains deadlocked at four each, the lower court decisions and orders will be deemed "affirmed by an equally divided Court."   In other words, the Supreme Court will no longer be supreme.  Instead, that honor will fall to a lower panel of appellate judges.  And it gets worse.   The federal appellate courts -- there are twelve of them throughout the country -- are often split on issues; in fact, disagreement among the various appellate circuits, and even within them, is a typical reason the Supreme Court agrees to hear a case in the first place.  With a deadlocked court, those splits remain and what is illegal in one jurisdiction can be legal in another. 

That's not the rule of law.

It's chaos.

Had the Democrats not gone forward with hearings and a confirmation vote on Justice Kennedy in 1988, the seat he filled would have been left vacant for more than a year.  If today's Republicans do not hold hearings and confirm an Obama nominee, the vacancy period will be as long.  In 1988, the Democrats controlled the Senate, just as the Republicans control it today.  Had the Democrats wanted to, they easily could have refused to go forward with hearings on Justice Kennedy and taken their chances on winning the Presidency.  But they didn't. 

Because . . .

Sometimes politicians really do put country first.

Finally, there is the whole question of what -- precisely -- Sen. Grassley means when he says there is an eighty (80) year-old "standard practice" of  avoiding Supreme Court confirmations in presidential election years.  As far as I can tell from the historical record, this has occurred only once, with Abe Fortas's nomination to replace Chief Justice Warren in 1968, and in that case, President Johnson did not pull the nomination because it was a  presidential election year; he pulled it because the nomination was being filibustered on a bi-partisan basis.

In Sen. Grassley's arbitrary eighty years, the only other time -- after Justice Kennedy in 1988 --  there was even the possibility of an election year nomination and confirmation was in 1956 when Justice Brennan replaced retiring Justice Minton.  In that case, however, far from refusing to go forward, President Eisenhower actually put Brennan on the Court with a recess appointment that did not even require Senate action. (Though Brennan was thereafter re-nominated and confirmed in 1957 when the Senate was back in session, no one appears to have drawn and quartered Ike for having jumped the appointing gun in a presidential election year.)

Why are we in this mess?

The answer is division,  and -- frankly -- a Republican Party bound by nothing other than the hypocritical assertion of its raw power.  The arguments about "standard practice" and allowing the American people a "voice" are transparently false.  There has been no standard practice (if anything, there's been the opposite) and Americans decided three plus years ago who should fill a Supreme Court vacancy were it to occur in 2016.  They did that in 2012 and the guy they chose was Obama -- not Romney, or any of the six Republicans now running for President, or even Hillary or Bernie Sanders.  None of them has the right to make this decision and giving it to any of them would not honor the Constitution.  It would demean it.

The GOP is preemptively telling Obama it will not go forward on anyone he sends up for one and only one reason.  And that is this . . .

It can.

And, unfortunately, the reason the GOP embraces this raw assertion of power, draping it in a curtain of false justifications, is that this approach worked in the past.  In fact, it worked in the not too distant past . . .

In 2000 . . . 

When five unelected justices invented an equal protection claim that had no precedential support, stopped a re-count which had been ordered by a state Supreme Court, effectively got to vote twice, and then (illegitimately) put George W. Bush in the White House.

One of those Justices was Antonin Scalia.

I praise his intellect, his devotion to public service, his sense of humor, his enormous family, and his close friendship with the liberal Justice Ruth Bader Ginsburg, the latter of which proves he did not take himself too seriously and which -- in the ethereal circles he travelled for almost thirty years of his life -- was a very good thing.  

I am proud he and I graduated from the same Jesuit high school -- Xavier -- in lower Manhattan.  The Jesuits know how to educate people and in his case they obviously did not fail.  

Nevertheless, Antonin Scalia wasn't a genius and his jurisprudence created more problems than it solved.  The invented basis that led to the appointment of Bush II was one of them; we are still dealing with its consequences at home and abroad.  But there were others, principally in the form of an asserted devotion to text that proved to be much less consistent, and much more unbounded, than he (or his legion of conservative supporters) claimed it to be.  Contra Scalia, the Constitution is not a "living" document because a bunch of liberal ex-law professors sitting on the Supreme Court say it is.  It is a living document because the founders used words -- like due process and equal protection -- that do not have fixed meaning.  Today's conservative jurists rarely see this.

So . . .

May Justice Scalia  rest in peace.

And may the rest of us survive his legacy.

Wednesday, December 9, 2015

Political Sabatoge - Everyboby Loses

A NYT article from 12/9 explains how Marco Rubio has quietly undermined the ACA and is  responsible for higher health care premiums, for plan cancellations, and for some insurers to close their doors.  Yet, he continues to be praised by the very same people he's giving the shaft.  Why?  In my opinion, the lack of basic economic literacy.

Insurance companies adjust rates based on the pool of people they insure.  If that pool is expected to use more health care, premiums rise.  In the first few years of the ACA, without strong incentives for the healthy and financially capable to sign up (because the opposition watered down the penalties), only those uninsured and in poor health sign up.  The purpose of the "temporary" reimbursements to insurers referenced in the article is to offset these risks and uncertainties through 2016, otherwise insurers would have had no choice but to set very high rates in anticipation of a less healthy- more expensive- pool.  If that were to happen, then adverse selection would lead to the end of any effort -the vast majority of Americans supported- to provide uninsured citizens with basic health coverage.  

Rubio and his fellow Republicans, betting that they understand basic economics better than their supporters, killed the provision to reimburse insurers for anticipated adverse selection problems.   Their actions are nothing more than political sabotage.  Killing the provision has ZERO economic merit and does nothing but shift the cost of adverse selection from "taxpayers" to health care consumers - who are the same people!   Rubio and his colleagues are willing to throw everyone under the bus, calling it "saving the taxpayer" hoping to fool the uninformed without ever offering any acceptable policy or reform to make it better.  Many conservatives reading this article, quick to blame Obama and the ACA for the cancellation of plans, higher out-of-pocket expenses, and insurers going out of business, are playing the fool.  Few of Rubio's supporters have any idea how they are being used to only support a political power grab, while still paying for it all in the end (pun intended).

Marco Rubio Quietly Undermines Affordable Care Act

Saturday, September 12, 2015

Poor Journalism

See the following story written by Matt Egan at CNN Money:


1. "It's no secret that China is the largest holder of U.S. debt." There is no secret because it is not even true.  ALL foreign holders of US government debt make up less than 50% of publicly held national debt.  China is the largest "foreign" holder but holds less than 10%.  Interestingly, as recently as 2008, Japan was the largest foreign holder of US debt and was for many years.  In addition, since 2008, Japan has owned almost as much China yet I never see an article written about Japan's US debt holdings.
It is misleading and inaccurate to refer to China as the largest holder when US individuals, pension funds, mutual funds, banks, and insurance companies hold significantly more.
2. "China is dumping US debt" - According to US Treasury data, China's holding increased from Jan 2015 through June 2015 (last date for published data).  Where is the evidence, source?  Wonderfully inaccurate, misleading, and unsubstantiated headline.
3. "But China's foreign-exchange reserves plunged by a record $94 billion in August, according to the country's central bank, leaving it with a war chest of $3.6 trillion. Analysts say it's very safe to believe a big chunk of that decline occurred due to a reduction in U.S. Treasury holdings." - Since the most recently published data show China increasing their holdings of US debt, it would certainly be proper journalism to provide some reference or source for the data. Who are the "analysts"?
4.  Even if #3 is true, a "big chunk" of $94 billion is just 2% of their "war chest" and if they are actually "dumping" US debt as stated by your unknown analyst, at most $94 billion would result in about 7.5% of their US debt holdings, but probably less than that depending on what the mathematical equivalent of "big chunk" is.

This article should never have been published.  The editors at CNN Money need to do some better quality control.

Friday, March 13, 2015

Teaching the Elasticity Concept - Traffic Fines Based on Income

Adjusting the size of penalties and fines to income sends the same price signal to everyone.  This system is not only fair, it makes economic sense given that the purpose of a system of fines and penalties is to create socially accepted deterrents for reducing socially unacceptable behavior.  Using a sliding scale for the fine takes into account the inelasticity of demand for those who are wealthy. 


Most of Scandinavia determines fines based on income. Could such a system work in the U.S.?

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