March has sprung, and we in New York State are now experiencing the multi-foot snowfalls that our friends in Washington saw. Winter is starting to linger more than Kate Gosselin, and we at JDA are really looking forward to spring!

This spring will bring forth not only tulips and out of work actors as we will see the coming of thousands of census takers as the country begins the decennial census mandated by the US Constitution. The census is important for elected officials because it provides them with new information to better Gerrymander their districts. It is important for economists because it provides us with much of the information that we need to help our clients work with these same politicians.

JDA’s Monthly Manifesto will look at two issues that reign large in the upcoming census. First, we will look at the importance of immigrants to the growth of the US economy. Next, we will discuss different ways that the government categorizes people.

The Monthly Manifesto is one way John Dunham & Associates assists our clients and friends to better communicate and manage issues using sound economic and fiscal research; what we call Guerrilla Economics. For more information on how we can help on your legislative issues, please contact us at 212-239-2105.

Best Regards,

The Monthly Manifesto is published by John Dunham and Associates as a service to our clients and friends.  For more information on the content or for a free consultation on how we can assist your company or organization with your issues please contact us at 212-239-2105, or  at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

We are pleased to announce that Victor Fung and Nell Mackenzie have joined John Dunham and Associates as partners. This will better focus the firm and allow us to continue to grow and better serve our clients. Victor’s role will be as Managing Economist. Nell will continue to serve as the Director of Marketing with the key role of better managing our client relationships. Please join me in congratulating both Nell and Victor.

On The Economy – The Immigrant Song

The Monthly Manifesto has long argued that the loose monetary policy of the Federal Reserve and the US Treasury will stoke inflation, and we believe that we’ve seen that set in motion. Although January’s CPI rose at an annualized rate of just 2.6%, consistent downward pressure in housing costs masked 6% commodity price inflation, 15% inflation in transportation costs and a 3.7% rise in the cost of health care.

Those who argue for loose interest rate policies often suggest that the US economy mirrors the Japanese economy in the 1990s. During the 90s Japan’s economy stagnated, and prices fell across the board. Some have argued that this generalized deflation will happen in the United States. However, all of the models of GDP growth include population as one of the key factors. This argument fails to take into account that Japan’s population barely grew through the 1990s to the present, and has now begun to fall, An economy with a declining population cannot by definition grow and must deflate.

The United States, has dynamic population growth which has been fueled by an influx of immigration. While the US population was around double that of Japan in 1960, it is now nearly three times as large. This rapid growth in population and immigration is one of the factors that led to rapid growth in the 1990s and as immigrants return to the US as the recession lets up, it will be one of the factors that will push the economy back toward a level of modest and sustained growth.

Remember to look at our regular blog postings and economic information feeds at: www.guerrillaeconomics.com

Tobacco: Xu, Xin and Robert Kaestner, The Business Cycle and Health Behaviors, NBER Working Paper No. 15737, February 2010: According to the authors, increases in hours worked are associated with an increase in cigarette smoking, a reduction in physical activity, and fewer visits to physicians. Increases in wages are also associated with greater consumption of cigarettes. This is an important finding, as it shows that cigarettes are a normal good, subject to the regular effects of supply and demand.

Obesity: Lu, Yang and Dana Goldman, The Effects of Relative Food Prices on Obesity — Evidence from China: 1991-2006, NBER Working Paper No. 15720, February 2010: The authors examine the effects of relative food prices on body weight and body fat over time in China. Their findings suggest that changes in varying food prices can increase percentage body fat to risky levels. The authors suggest that food prices and subsidies could be used to encourage healthier food consumption patterns and to curb obesity.

Pharmaceuticals: Cook, Joseph, et. al., Generic Utilization Rates, Real Pharmaceutical Prices, and Research and Development Expenditures, NBER Working Paper No. 15723, February 2010: According to the authors, the utilization rate of generic drugs is approximately 70 percent. The authors found a relationship between generic utilization rates and real prescription drug prices suggesting that higher utilization rates reduce pharmaceutical spending.

As Seen on TV: Troesken, Wemer, The Elasticity of Demand With Respect to Product Failures; or Why the Market for Quack Medicines Flourished for More Than 150 Years, NBER Working Paper No. 15699, January 2010: Between 1810 and 1939, spending on patent medicines grew at an astonishing rate. This is puzzling considering that these products were ineffective. This paper finds that consumers in other markets stopped searching for a viable product after a few failed attempts, but those of patent medicines kept trying different products, no matter how ineffective they were. Since no one was ever cured and demand was highly inelastic with respect to product failures, sales growth was unrelenting. In short, patent medicines flourished not despite their dubious medicinal qualities, but because of them.

Politics: Brollo, Fernanda, et. al., The Political Resource Curse, NBER Working Paper No. 15705, January 2010: Based on an analysis of municipal government in Brazil, the authors found that additional government revenues increase political corruption and the quality of candidates for mayor.

A little understood academic discipline known as General Semantics examines how manipulative distortions in language routinely used in advertising, politics, and religion can change individuals’ view of reality. It is because of general semantics that a nuclear bomb can be named the “peacemaker,” that a pork-barrel spending package can be called a “stimulus,” and why the meaning of “is” is not always - well - is.

One of the ways in which the nanny-state and activist government manipulates policies, the media and the general public is through the way it labels things. For example, the “Obesity Epidemic,” or the term Obese is not really a measure of one’s weight or amount of body fat, but rather a ratio of weight to height. The Centers for Disease Control and Prevention (CDC) itself admits that “Although BMI correlates with the amount of body fat, BMI does not directly measure body fat. As a result, some people, such as athletes, may have a BMI that identifies them as overweight even though they do not have excess body fat.” So by definition much of the US Olympic Team would be considered obese!

It is intriguing that the CDC and anti-tobacco advocates labeled anyone who had ever smoked a cigarette (even one puff at one point in their life) as a “smoker.” A drinker was defined as someone having one drink a month and a “binge drinker” as someone who occasionally has five cocktails in one evening. This manipulation of the language of measurement make the incidence of tobacco and alcohol consumption appear much larger than a reasonable person might consider them to be and provides ammunition for advocates to call for support to stop an “epidemic.”

In fact, the term epidemic in common usage itself makes little sense when discussing issues like smoking, drinking or eating. Most associate the term with the rapid spread of a disease – something that they have little control over. The “epidemics” that public health advocates are talking about now are totally self-created, and reflect the fact that people receive a value from smoking, drinking and eating gouda cheese.

Advocates of higher taxation try to semantically get around the efficiency, adequacy and equality problems of excise taxes by labeling them taxes on “sin,” though it is doubtful that many deities worry much about whether someone drinks wine, talks on a telephone, drinks a soda, or maybe drives a car.