Category Archives: Economics

From Pachyderm: Westar Energy

Voice for Liberty radio logo square 02 155x116From the Wichita Pachyderm Club: Don Sherman, Vice President Community Relations and Strategic Partners with Westar Energy introduced Jeff Beasley, Vice President of Customer Care with Westar for an informative presentation titled, “An overview of Westar Energy — Solar, Conservation, Community.”

This was recorded August 12, 2016. Click here for the audio presentation. Click here for the slides.

State of the States, 2016

What did the nation’s governors tell their constituents this year?

American Legislative Exchange Council (ALEC) has examined the “State of the State” addresses delivered this year by state governors. Its report State of the States 2016 analyzes each for proposals that will affect economic competitiveness.

The good news, according to the report? “The majority of governors seem to understand that lower tax rates and limited government give citizens and businesses a greater incentive to reside and operate in their states compared to others with higher tax rates and more regulations.”

But some states received bad news. Louisiana Governor John Bel Edwards told his state: “So, if you insist on saying that I never said I would raise taxes — that I’m going back on my word — that’s fine. Say it. Get it out of your system, and then please come back here ready to work with me to do the job we were all hired to do.”

In Minnesota — which has a budget surplus — Governor Mark Dayton told his constituents, “They say, ‘give it all back’ to the taxpayers. But that slogan is based upon a wrong premise and a wrong conclusion.”

Kansas wasn’t highlighted in this report, as Governor Brownback’s State of the State address contained little regarding economic policy.

The report is available at no charge from ALEC at State of the States 2016.

Free trade is important, but may be in peril

Robert E. Litan, a lawyer and economist and adjunct senior fellow at the Council on Foreign Relations spoke on “The Future of Trade Policy” before a luncheon at the Wichita Pachyderm Club August 5, 2016. Litan explained the importance of free trade and examined the trade policies of presidential candidates. View below, or click here to view at YouTube.

Value of of money varies by state

From the Tax Foundation, the value of $100 by state. Click to visit the study.
From the Tax Foundation, the value of $100 by state. Click to visit the study.
Based on data from the Bureau of Economic Analysis, the Tax Foundation has produced a map showing how the value of a dollar varies among the states. This difference is due to the relative price levels found in states. Kansas ranks fourteenth highest, with a benchmark $100 being worth $110.25.

To find more about the study and your state, click here.

State and local government employee and payroll

Considering all state and local government employees in proportion to population, Kansas has many, compared to other states, and especially so in education.

State and Local Government Employee and Payroll. Click for larger.
State and Local Government Employee and Payroll. Click for larger.
When considering all state and local government employees, Kansas spent $249.73 per person on payroll (March only).1 This was 15th highest among the states, District of Columbia, and nation as a whole. There were 14.9 citizens for each FTE (full-time equivalent employee), which ranks fourth highest.

In other words, Kansas has many government employees compared to other states, and these employees are costly, again compared to other states.

When considering all elementary and secondary education employees, Kansas spent $93.36 per person on payroll (March only). This was 15th highest among the states, District of Columbia, and nation as a whole. There were 33.8 citizens for each FTE (full-time equivalent employee), which ranks third highest.

In other words, Kansas has many elementary and secondary education employees compared to other states, and these employees are costly, again compared to other states.

Similar results are found for higher education employees. Fortunately, Kansas has zero employees working in state-owned liquor stores.

In the visualization you may create your own tables. Click here to access the visualization. Source of data is U.S. Census Bureau.2 Visualization created using http://www.census.gov/govs/apes/.


Notes

  1. For total payroll (both full-time and part-time employees), the Census Bureau reports a value for a single month, that being March.
  2. U.S. Census Bureau. 2014 Annual Survey of Public Employment and Payroll. www.census.gov/govs/apes/.

State and local direct general expenditures

State and Local Direct General Expenditures, Per Capita, Kansas highlighted.
State and Local Direct General Expenditures, Per Capita, Kansas highlighted.
An interactive visualization of state and local direct general expenditures, per capita. Click here to open the visualization.

Data is from State & Local Government Finance Data Query System. Available here. The Urban Institute-Brookings Institution Tax Policy Center. Data from U.S. Census Bureau, Annual Survey of State and Local Government Finances, Government Finances, Volume 4, and Census of Governments (1977-2013). Date of Access: (20-Jun-2016).

GDP by state and industry

An interactive visualization of gross domestic product by state and industry.

The Bureau of Economic Analysis, an agency of the United States Department of Commerce, has released Gross Domestic Product figures for the year 2015. I’ve gathered this data and present in it an interactive visualization using Tableau Public. This data is grouped by states and regions, and also by major categories of industry.

Source of data is Bureau of Economic Analysis, Regional Economic Accounts. Values are in current dollars.

Of note: The list of industries is not exclusive. That is, some categories such as “All industry total” and “Private industries” contain other categories. Use caution when selecting multiple categories.

Click here to access the visualization.

GDP by State and Industry example 2016-06

GDP by state and industry

An interactive visualization of gross domestic product by state and industry from the Bureau of Economic Analysis.

Composition of GDP by State, Kansas and U.S. Click for larger version.
Composition of GDP by State, Kansas and U.S. Click for larger version.
The Bureau of Economic Analysis is an agency of the United States Department of Commerce. BEA describes its role as “Along with the Census Bureau, BEA is part of the Department’s Economics and Statistics Administration. BEA produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation’s economy. To do this, BEA collects source data, conducts research and analysis, develops and implements estimation methodologies, and disseminates statistics to the public.”

A relatively new series of data produced by BEA is gross domestic product (GDP) by state for 21 industry sectors on a quarterly basis. BEA defines GDP as “the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production.” It is the value of the final goods and services produced.

In describing this data, BEA says “These new data provide timely information on how specific industries contribute to accelerations, decelerations, and turning points in economic growth at the state level, including key information about the impact of differences in industry composition across states.” This data series starts in 2005.

I’ve gathered the data for this series for all states and present it in an interactive visualization using Tableau Public. I present the series in real dollars, meaning that BEA adjusted the numbers to account for changes in the price level, or inflation.

Click here to open the visualization.

Growth of gross domestic product of manufacturing for Kansas and the United States, illustrating volatility in Kansas. Click for larger.
Growth of gross domestic product of manufacturing for Kansas and the United States, illustrating volatility in Kansas. Click for larger.

Economic indicators in the states

During this century the Kansas economy has not kept up with the national economy and most neighboring states.

The Federal Reserve Bank of Philadelphia calculates two indexes that track and forecast economic activity in the states and the country as a whole.

Economic Indicators in the States ExampleThe coincident index is a measure of current and past economic activity for each state. This index includes four indicators: nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing, and wage and salary disbursements deflated by the consumer price index (U.S. city average). July 1992 is given the value 100. 1

The leading index predicts the six-month growth rate of the state’s coincident index. In addition to the coincident index, “the models include other variables that lead the economy: state-level housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill.” 2

Positive values mean the coincident index is expected to rise in the future six months, while negative values mean it is expected to fall.

I’ve created an interactive visualization of these two indexes. Examples appear nearby. Click here to open the visualization in a new window.

  1. Federal Reserve Bank of Philadelphia. State Coincident Indexes – a monthly coincident index for each of the 50 states. Philadelphiafed.org. Available at www.philadelphiafed.org/research-and-data/regional-economy/indexes/coincident.
  2. Federal Reserve Bank of Philadelphia. State Leading Indexes – current & future economic situation of 50 states with special coverage of Pennsylvania, New Jersey, & Delaware. Philadelphiafed.org. Available at www.philadelphiafed.org/research-and-data/regional-economy/indexes/leading.

Tax collections by the states

An interactive visualization of tax collections by state governments.

Each year the United States Census Bureau collects data from the states regarding tax collections in various categories. I present this data starting in 1993, in an interactive visualization.

The values are for tax collections by the state only, not local governmental entities like cities, counties, townships, improvement districts, cemetery districts, library districts, drainage districts, watershed districts, and school districts.

Of particular interest is the “State Total” tab. Here you can select a number of states and compare their tax burdens. (Probably three or four states at a time is the practical limit.)

Data is as collected from the United States Census Bureau, Annual Survey of State Government Tax Collections, and not adjusted for inflation. Visualization created using Tableau Public. Click here to access the visualization.

Using the visualization. Click for larger.
Using the visualization. Click for larger.

Spending in the states, per capita

An interactive visualization of per-capita spending in the states, by fund.

Is your state a big spender? Or is it frugal with your tax money? To see how your state compares with others in spending, use the interactive visualization below. The figures presented are per-person, and not adjusted for inflation.

The example appearing below shows general fund spending for Kansas and some surrounding states.

The visualization contains several views that present the data in different ways. Click here to open the visualization in a new window. Data is from National Association of State Budget Officers and U.S. Bureau of Economic Analysis (BEA); visualization created by myself using Tableau Public.

General fund spending per capita in Kansas and surrounding states. Click for larger.
General fund spending per capita in Kansas and surrounding states. Click for larger.

Energy subsidies for electricity production

To compare federal subsidies for the production of electricity, we must consider subsidy values in proportion to the amount of electricity generated, because the magnitude is vastly different.

Kansas wind turbinesWhen comparing federal subsidies for the production of electricity, it’s important to look at the subsidy values in proportion to the amount of electricity generated. That’s because the scales vary widely. For example, in 2010 for the United States, as can be seen in the accompanying table, coal accounted for the production of 1,851 billion kWh (or megawatt hours) of electricity production. That’s 44.9 percent of all electricity produced. Solar power accounted for the production of 1,851 billion kWh, which is 0.025 percent of all electrical production.

Solar power, however, received 8.2 percent of all federal subsidies, or about 328 times its share of production.

The nearby table and chart are based on data from the Energy Information Administration (EIA), Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010 through the Congressional Research Service, along with the author’s calculations.

Click table for larger version.
Click table for larger version.

Of particular interest is wind power, as it receives subsidy in the form of cash equivalent tax credits, and many states (including Kansas) have mandates forcing its use. For the year covered in the table, wind accounted for 2.3 percent of U.S. electricity generation. It received 42.0 percent of federal energy subsidies.

Electricity production and subsidy, 2010

Machinists Union has been bad for Wichita

The Machinists Union hasn’t been very good for Wichita.

Besides destroying the jobs of some 2,100 Boeing workers in Wichita when the company fled to somewhere with lower labor costs, it seems that the local Machinists Union in Wichita may be stealing from its members. KAKE Television quotes union members using the word “embezzlement,” with one saying the unions is “three and a half million dollars in arrears.” (Machinists Union members hear investigation findings, February 22, 2016)

The union members still with jobs may have thought they were the lucky ones. That is the economic effect of labor unions, after all. By driving up the cost of labor, less is demanded. So union workers who still have jobs are doing better than they would otherwise — that is, until their leadership steals from them, allegedly. Or until the company employs no one, as does Boeing in Wichita.

The 2,100 Boeing workers without jobs in Wichita because of the union’s effect — well, at least the union isn’t able to steal from them, allegedly.

Tax increment financing in Kansas

In this excerpt from WichitaLiberty.TV: How does Tax Increment Financing (TIF) work in Kansas? Is is a good thing, or not? View below, or click here to view at YouTube. Originally broadcast June 7, 2015.

Continue reading Tax increment financing in Kansas

Brownback and Obama stimulus plans

There are useful lessons we can learn from the criticism of Kansas Governor Sam Brownback, including how easy it is to ignore inconvenient lessons of history.

It’s been three years since the tax cuts in Kansas took effect; tax cuts said by Governor Brownback to be a “shot in the arm” for the Kansas economy. Opponents of the governor and the tax cuts take great delight in reporting the generally anemic growth of the Kansas economy since then. Month after month, the tax cuts are condemned by Kansas newspaper editorial writers and the governor’s detractors.

I don’t think it’s a particularly strong form of argument to defend someone by showing how someone else is equally as bad — or worse. Similarly, criticizing someone for their fixation on A while they ignore the equally bad B: We need to know why they ignore B. Have they forgotten B? Do they not have time to write about B? Or do they ignore B because the fact of B is inconvenient to their ideology or their criticism of A? But I see that not everyone shares these ideals, and even so, perhaps we can learn something.

Many people remember that President Barack Obama promised that the unemployment rate would not top eight percent if the stimulus was passed. In January 2009 two Obama administration officials, including Christina Romer (who would become chair of the Council of Economic Advisers) wrote a paper estimating what the national unemployment rate would be with, and without, the American Recovery and Reinvestment Plan, commonly known as the stimulus. That plan passed.

The Romer paper included a graph of projected unemployment rates. The nearby chart from e21 took the Romer chart and added
actual unemployment rates. (The accompanying article is Revisiting unemployment projections. That chart and article were created in 2011. I’ve updated the chart to show the actual unemployment rate since then, as black dots. The data shows that the actual unemployment rate was above the Obama administration projections — with or without the stimulus plan — for the entire period of projections.

The purpose of this is not to defend Brownback by showing how Obama is even worse. (Disclosure: Although I am a Republican, I didn’t vote for Brownback for governor.) Instead, we ought to take away two lessons: First, let’s learn to place an appropriately low value on the promises and boasts made by politicians. Then, let’s recognize the weak power government has to manage the economy for positive effect. Indeed, the lesson of the Obama stimulus is that it made the unemployment rate worse than if there had been no stimulus — at least according to the administration projections.

And, there is one more lesson to learn about our state’s newspaper reporters and editorial writers, but I think you’ve discovered that already.

Unemployment with and without stimulus through 2014-01

Kansas, a rural state?

How does the population in Kansas compare to the nation and other states?

One of the most-often repeated themes in Kansas is that we are a rural state. Therefore, comparisons of Kansas to other states must be tempered and adjusted by this. It seems to be common knowledge.

Rural populations of the states. Click for larger version.
Rural populations of the states. Click for larger version.
There may be several ways to measure the “ruralness” of a state. One way is the percent of the state’s people that live in rural areas. The U.S. Census Bureau has these statistics. In the chart made from these statistics, Kansas is right in the middle of the states. 25.80 percent of Kansans live in rural areas.

That’s not too far from the country as a whole. For the entire United States, 80.7 percent of the population lives in an urban setting, according to the 2010 census. For Kansas, the figure is 74.2 percent.

Over time, Kansas is becoming more of an urban state, just as are most states and the country as a whole.

Do these numbers mean anything? It’s common for Kansas politicians to emphasize — even exaggerate — whatever connections they may have to a family farm. It’s part of a nostalgic and romanticized view of Kansas, the Kansas of Home on the Range. We are the “Wheat State” and “Breadbasket of the World,” and “One Kansas farmer feeds 128 people (plus you).”

So while Kansas is in the middle in the ranking of percent of population living in rural areas, our state’s politicians continue to play the “rural card.”

Voters and policymakers should keep this in mind, although politicians may not.

Click here to view and use an interactive visualization of states and urban population.

Percent urban population by state, with Kansas emphasized. Click for larger.
Percent urban population by state, with Kansas emphasized. Click for larger.

Employment by state and industry

An interactive visualization of employment in the states.

I’ve gathered employment data from the Bureau of Economic Analysis is an agency of the United States Department of Commerce, for the states and present it in an interactive visualization using Tableau Public. In the visualization you may use several different presentations of the data and filter for specific industries. The series are presented as the percentage change since the first values, so that relative growth, rather than magnitude, of employment is shown.

Growth in private nonfarm employment, Kansas emphasized. Click for larger.
Growth in private nonfarm employment, Kansas emphasized. Click for larger.
The nearby example from the visualization shows growth in private nonfarm employment, with Kansas emphasized against the other states.

Click here to access the visualization.

Employment by metropolitan area

An interactive visualization of employment in metropolitan areas.

Growth in Employment by MSA. Wichita is the bottom line.
Growth in Employment by MSA. Wichita is the bottom line. Click for larger version.
I’ve gathered employment data from the Bureau of Economic Analysis is an agency of the United States Department of Commerce, for all available metropolitan areas and present it in an interactive visualization using Tableau Public. In the visualization you may use several different presentations of the data and filter for specific areas and industries. The series are presented as the percentage change since the first values, so that relative growth, rather than magnitude, of employment is shown.

In the nearby example we can see that Wichita –- the bottom line — has performed poorly compared to some peers of interest.

Click here to access the visualization.

GDP by state and industry

An interactive visualization of a new data series from the Bureau of Economic Analysis.

The Bureau of Economic Analysis is an agency of the United States Department of Commerce. BEA describes its role as “Along with the Census Bureau, BEA is part of the Department’s Economics and Statistics Administration. BEA produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation’s economy. To do this, BEA collects source data, conducts research and analysis, develops and implements estimation methodologies, and disseminates statistics to the public.”

This week BEA issued a release of a new series of data: gross domestic product (GDP) by state for 21 industry sectors on a quarterly basis. BEA defines GDP as “the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production.” It is the value of the final goods and services produced.

In describing this data, BEA says “These new data provide timely information on how specific industries contribute to accelerations, decelerations, and turning points in economic growth at the state level, including key information about the impact of differences in industry composition across states.” This data series starts in 2005. The announcement of the release of this data from BEA is here.

I’ve gathered the data for this series for all states and present it in an interactive visualization using Tableau Public. I present the series in real dollars, meaning that BEA adjusted the numbers to account for changes in the price level, or inflation.

In the visualization you may use several different presentations of the data and filter for specific states or industries. The series are presented as percentage change over time since the first values, so that growth, rather than magnitude, of GDP is shown.

Click here to open the visualization.

Using the visualization. Click for larger version.
Using the visualization. Click for larger version.

Are we winning the war on poverty?

For about 50 years we’ve been fighting a war on poverty. Initially, the poverty rate declined, before the start of the war on poverty. But over the last four decades the poverty rate has gone up and down, but is largely unchanged over this period. Spending on welfare programs, however, has continually risen, and rapidly in the past few years. The accompanying chart shows the poverty rate and welfare spending. The spending is per person in the U.S., adjusted for inflation, and doesn’t include spending on health care.

poverty-rate-welfare-spending-2013-12

For more on this topic, see:
The American Welfare State: How We Spend Nearly $1 Trillion a Year Fighting Poverty — and Fail (Cato Institute)
Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending (Heritage Foundation)
The Failure Of The War On Poverty (FreedomWorks)
Does Welfare Diminish Poverty? (Foundation for Economic Education)