Gallup World Poll

A few years ago I read this article from Gallup Reserch which talked about a new world poll they planned on conducting every year from then on out. They first talk about how difficult it was to conduct a survey of everyone in the world and still get somewhat reliable results. If you think about all of the different variables like language and culture, you can see how hard it would be to ask a question of someone in California and then ask a question that had the same meaning both linguistically and culturally for someone in India. Apparently they did figure out how to do it and conducted their survey and had some interesting results.

I was re-reading the poll again the other day and had not remembered until then that, according to Gallup's research, the primary thing that everyone in the world wants is a good job. They want to be able to contribute to society and they want the benefits that come from having a job, like money, prestige, a sense of belonging, etc. Of course, if you stopped reading the research report there you might think that all Governments should do is focus on making sure everyone has a job and they would all be happy. Unfortunately it seems that our current leaders didn't even get that far in the report.

If you keep reading their report they talk about how, if countries, cities, and towns want to succeed they would create and encourage an environment that would entice those that the report calls Stars. These stars are the job creators. They are the idea people. They are the ones who have a vision and plans to change the world, and they will follow through on those plans. If it were not for these stars Gallup theorizes that the economists who predicted the decline of the U.S. in comparison with other countries would have been right. Those economists were off in their prediction of where our GDP would be at by trillions. How could they be so far off? Because they couldn't predict companies like Google, Walmart, etc. getting as big as they are. They discounted the possibility of Stars being created in the U.S. So what can governments and leaders do to attract and encourage stars (what Gallup refers to as Brain Gain) to to move to their countries/cities, etc.? Economists are now saying that the U.S. will fall second to China by 2040. What can we do in the U.S. to ensure that doesn't happen?

According to Gallup, and I would agree with most points, those who want brain gain need to have 7 things in place. I really agree with 6 of those items being something over which the government has or can have major influence. Those 6 things are:

Law and Order: Primarily they need to protect each individuals rights and provide safety.

Food and Shelter: Back in 2006 the U.S. had 17% of respondents say they didn't have adaquate food throughout the whole year.

Work: I love the way that Gallup writes this one - "While food and shelter and law and order are basic needs and are associated with self-preservation, work is where well-being turns the corner. This is where positive emotions that lead to creativity and openness are built. Good work facilitates a higher standard of living, higher potential for health, and higher well-being. Work is crucial to every adult human because work holds within it the soul of the relationship of one citizen to one government and one country."

Health: "Healthy people create more vibrant communities and more productive workplaces, which contribute to productivity, brain gain, and quality GDP growth." I would ask our currently leaders if what they are drafting currently would have a provable affect on the actual health of the people. If not then they need to go back to the drawing boards. I personally think that there is a need for health care reform, but I don't think the publicized government discussions are anything close to what will truly deliver a healthier population.

Well-Being: "While health domain reports perceived physical and mental helath, well-being reports the presence of suffering or thriving, misery or inspiration, feeling controlled or feeling independent. This 'soft' issue affects a populations ability to innovate, improve, and invent, because it reports the all-important presence of hope." It is probably my own opinion, but the current government programs have placed a cap on that hope. If you are too successful the government will put a stop to it.

Engaged Citizens: It starts with the leaders. It is a measurement of charity and the willingness to help those in need. From personal experience and in looking at the numbers our nation is doing a fantastic job in this area. We can always do better, but quite easily do worse. The government needs to encourage this and then stay out of the way.

A good leader will encourage and help push their citizens towards these areas. They will never try to fix the problem, according to Gallup. You can't fix the problem, as in make people have a sense of well-being or be engaged citizens. That is the area where I think our current leaders are going wrong. They are trying to Fix the problem rather than encourage people and businesses. As a people, apparently these are the things we want however and these are the things that will help our society grow and remain the top in the world.

Here is a link to where you can get the full report, which is an interesting read.

Why Government Taxing and Spending Does NOT Work

There is an interesting article written by Van Hoisington and Dr. Lacy Hunt of Holsington Investment Management Company (which does bias their work somewhat I am sure, but you'll notice in the below excerpt it is written as a research report and quotes many other reports including Christina Romer's study done before she got her current job).

While this is a bit of a long read, and may be a little technical in areas, you definitely should read it and pass it on to your representatives as something to think about before they think that more Government stimulus is necessary.

"Interestingly, the term "federal stimulus spending" is an oxymoron. Many assume that the act of sending checks from the federal government sector to the private sector helps the economy through so-called spending multipliers. Multipliers take into consideration the second, third, fourth, etc. round effects from an initial change. Thus, multipliers capture the unintended consequences of policy actions. Although the initial spending objectives may be well intended, the ultimate outcome becomes convoluted. Over the past several years, multipliers have been intensively examined by leading economic scholars. Robert Barro of Harvard University calculates in Macroeconomics a Modern Approach (Thomson/Southwestern, 2008, p. 307) that the government expenditure multiplier from 1955 to 2006 was negative .01, not statistically different from 0. The highly respected Italian econometrician Roberto Perotti of Universita' Bocconi and the Centre for Capital Economic Policy Research has also done extensive work on this subject while visiting the fiscal policy division of the ECB. In October 2004, in his Estimating the Effects of Fiscal Policy in OECD Countries, Perotti calculates that the U.S. expenditure multiplier is also close to 0. Thus Barro and Perotti are saying that each $1 increase in government spending reduces private spending by about $1, with no net benefit to GDP. All that is left is a higher level of government debt creating slower economic growth. There may be intermittent periods when government spending will lift the economy, but offsetting episodes will follow. The best available empirical research suggests that the current federal policy of expanding spending will retard, not improve, the performance of business conditions. In addition to spending multipliers, however, there are also tax multipliers."

"The most extensive research on tax multipliers is found in a paper written at the University of California Berkeley entitled The Macroeconomic Effects of Tax Changes: Estimates Based on a new Measure of Fiscal Shocks, by Christina D. and David H. Romer (March 2007). (Christina Romer now chairs the president's Council of Economic Advisors). This study found that the tax multiplier is 3, meaning that each dollar rise in taxes will reduce private spending by $3."

"Presently, the federal government is increasing spending that in the end may actually retard economic activity, and is also proposing tax increases that will further restrain private sector growth. This policy mix is the same approach that failed in the U.S. from 1929 to 1941 and also failed in Japan over the past two decades, a subject we addressed in our April letter. In other words, fiscal policy is executing a program that is 180 degrees opposite from what it should be to stimulate the economy. How is it possible to get an inflationary cocktail out of deflationary ingredients?"

When is our government going to actually pay attention to economists who obviously have nothing to do with getting a paycheck from the government (they could even listen to what their paid economists said before they started getting the checks)?