The leading expert on the regional economics of the Houston metropolitan area is Dr. Barton Smith, University of Houston professor of economics and director of the UH Institute for Regional Forecasting. This Chronicle article reports on Dr. Smith’s latest report, whose seasonal adjustment model of the Houston economy which predicts an annualized rate of job growth of 2.6 % that, if sustained for the next six months, would translate into about 50,000 jobs. That is the best job growth rate in Houston since 2000.
Twice a year, Dr. Smith gives an oral presentation over lunch regarding the state of the Houston economy at one of the Reliant Park hotel ballrooms. If you are interested in Houston economics or business, and you have not attended one of Dr. Smith’s talks, you should make a point to attend one soon. Dr. Smith is a special talent, one of the many professionals who make Houston an enjoyable place to live.

This David Wessel column in the Wall Street Journal ($) makes some good points on the value of imports. Inasmuch as that value is often misrepresented during a political season, Wessel observes:

Let us now praise the virtues of imports.
Consider the clothes Americans buy for the four million babies born each year in the U.S. The typical family with a young child spends about $500 a year on those cute T-shirts, blue jeans and tiny socks. That’s $2 billion a year.
Not so long ago, the U.S. had a ceiling on imports of baby clothes. That limit was lifted for most countries in 1998, and for China at the beginning of 2003. Imports of baby clothes more than doubled between 1997 and 2003, notes Ed Gresser, who labors to make the case for free trade for the centrist Democrats’ Progressive Policy Institute. Wholesale prices at the ports dropped 28%.
Consumers saved. In the same years, the consumer-price index for all items rose 15%. But the retail price of infant and toddler apparel of all sorts fell 5.2%. Had the price of baby clothes increased as much as the price of everything else, parents would have had to spend about $400 million more to buy as many baby T-shirts, blue jeans and socks as they did last year.
Imports are the consumer’s best friend.
You wouldn’t know that to listen to public debate: Exports equal jobs. Exports are good. Imports kill jobs. Imports are bad. We must accept imports because only then will others take our exports. Imports are a necessary evil.
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Politicians don’t find the appeal to consumers a winner, though. As one Bush administration official confides, it’s like telling a textile worker whose job has moved abroad: “Imports allow you to stretch your unemployment check further at Wal-Mart.”
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The case for free trade is flimsy without remembering that Americans are consumers as well as workers. It is as consumers that Americans benefit the most. Paying lower prices because of imports is as much of a benefit to American families as getting a raise, even though it never feels as good.

During this political campaign, your “demagogue antenna” should turn on anytime you hear a politician arguing against free trade. In the vast majority of circumstances, such drivel is directed at persuading a narrow interest group for political gain. As Mr. Wessel points out above, everyone else loses.

Daniel Drezner points us to a clever Foreign Policy article by Kenneth Rogoff, former IMF chief economist and professor of economics and Thomas D. Cabot professor of public policy at Harvard University in which Professor Rogoff compares the pre-election macroeconomic policies of President Bush against those of former President Richard Nixon and other world leaders. The entire article is a must read, but here is an excerpt to give you a flavor of the article:

Does all this election-year economic engineering pay? In the short run, yes, because voters sure like a booming economy and a free-spending government at election time. They don?t seem to question why anyone should reward a politician for artificially boosting an economy before elections, even if doing so produces serious long-term problems. Perhaps, like moviegoers who expect to be emotionally manipulated, voters just enjoy an election-year high.
Of course, U.S. presidents are hardly the only or the best practitioners of electoral economics. Mexico, for example, boasts a history of political business cycles that make the United States look fiscally Puritan. Mexican Presidents JosÈ LÛpez Portillo in 1982 and Carlos Salinas de Gortari in 1994 set benchmarks that few have surpassed. Former Russian President Boris Yeltsin gave away the country?s natural resource base (under the guise of ?privatization?) to ensure his reelection in 1996, a problem the country is still painfully sorting through today. In Italy, every prime minister seems to produce a fiscal splurge come election time?and Italy has a lot of elections. But then, a country does not achieve one of the world?s highest debt-to-GDP ratios (more than 100 percent) without effort.

As anyone who has ever had to oversee administration of an employer’s health insurance program knows, America’s health care finance system is in crisis. For those interested in the issues involved in this crisis, the Wall Street Journal ($) has put together a special health care finance section that includes links to a series of stories involving the issue of rationing in America’s health care system. The stories include: “Six Prescriptions to Ease Rationing”; “Universal Care Has a Big Price: Patients Wait”; “Longer Dialysis Raises Hopes, but Poses Dilemma”; “Stark Choices at a Texas Hospital”; “Lilly Fuels Debate Over Rationing”; “An Invisible Web of Gatekeepers”; “Health Care’s Big Secret: Rationing Is Here.” This is a great resource for reviewing the problems and issues confronting our health care finance system, and is worth the price of a WSJ subscription alone.
Along these lines, Jack over at TigerHawk posts this instructive blog entry regarding allocation of health care costs.

Virginia Postrel writes about free trade in this NY Times piece. Inasmuch as you will be hearing much from the demagogues about this issue in the upcoming political campaigns, Ms. Postrel’s article is timely reading.

Thomas Sowell has a good WSJ ($) op-ed today in which, as former House Majority Leader Dick Armey — an economist by trade — put it: “Demagoguery beats data in making public policy.” The entire article is well worth reading, but here is a tidbit:

At the state and local levels, this confusion of tax rates and tax revenues has led some local politicians to see higher tax rates as the answer to budget problems, even though higher tax rates can drive businesses out of the city or state, with adverse effects on the total amount of tax revenues collected.
Price controls are another area where very elementary economics is all that is needed to show what the consequences are: shortages, quality deterioration and black markets. It has happened repeatedly in countries around the world, over a period of centuries. Yet politicians keep selling the idea of price controls and voters keeping buying it.
Many economic issues are complex, but sometimes a single fact will tell you all you need to know. When you know that central planners in the Soviet Union had to set 24 million prices — and keep adjusting them, relative to one another, as conditions changed — you realize that central planning did not just happen to fail. It had no chance of succeeding from the outset. It is a wholly different ball game when hundreds of millions of people individually keep track of the relatively few prices they need to know for their own decision-making in a market economy.

Two first rate economists–Jeffrey Faux and Bradford DeLong–take a close look at the legacy of former Clinton Administration Treasury Secretary Robert Rubin’s fiscal policies in this exellent piece from The American Prospect Online. A sampling of the observations:

(from Mr. Faux):
As Rubin tells the story in his new memoirs, he persuaded Clinton early on to make financial-market “confidence” the administration’s chief economic priority. Key to the strategy was Greenspan, who was supposedly concerned that spiraling federal deficits would ignite inflation, forcing him to raise interest rates and thus choke off growth. Cut the deficit, argued Rubin, and Greenspan will let the economy live.
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So Rubin’s plan worked, but the cost was high. Hopes that the peace dividend from the end of the Cold War would finance major new programs in health care, education, and other areas of public need were dashed. Social investments as a share of the country’s national income actually declined over the Clinton years. Fights over free trade split the party and contributed to the loss of the House of Representatives, from which Democrats have still not recovered. And deregulation led to an orgy of irresponsible speculation and fraud that eventually left workers without pensions, small-scale shareholders with worthless paper, and California — among other places — without the money to pay for basic services.
(from Professor DeLong):
Running surpluses now, giving the country the debt capacity to finance these forthcoming rises in social-insurance expenditures, seemed to us a wise policy. The alternative — to merely stabilize the debt-to-GDP ratio and make no special provision for the generational future — seemed to us likely to create a situation in which a) the elderly programs eat the rest of the social-insurance state alive and b) they then self-destruct.
Mr. Faux closes by posing this interesting question: “Does anyone believe that more investment in health care and education would have been less productive for the American economy in the 1990s than yet more private investment in financial derivatives or shopping malls increasingly loading up consumers with imported toys and unsustainable debt? “