Category Archives: Economics

Miscellaneous economy stuff

Why Would They Want To?

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The lede says it all, even if the article is a bit dated now.

The leader of Senate Democrats moved to take the threat of a government shutdown off the table, following a grueling intraparty fight in which lawmakers struggled with how best to resist President Trump’s fast-paced efforts to slim down federal agencies.

Why would the Progressive-Democratic Party object to slimming Federal agencies and making them more efficient?

Oh, wait—this is the Party that insists Government knows better than us poor, benighted and ignorant average Americans, and that the way to make Government more efficient is to grow it in both financial and physical size and give it more control over our lives.

Circular Pseudo-Logic

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William Galston had this bit of circularity in his Tuesday op-ed in The Wall Street Journal:

Economists studying past tariffs have found that their effects endured even after the tariffs were removed. … Further, the Federal Reserve Board is concerned about Americans’ increased inflation expectations, which could trigger a damaging price spiral.
The American people smell a rat. In a recent poll by the Economist/YouGov, 68% said that higher tariffs mean higher prices and that consumers will bear a large share of the burden.
They’re right. Tariffs are import taxes paid in the importing nation.

It couldn’t possibly be that we Americans poll that way because that’s what we’re told by a steady stream of news writers, including a plethora of them who cite “economists” or who cite named economists without also citing those economists’ data.

Instead, these news writers just make their bald, unsubstantiated claims, providing no data at all.

It may well be true that tariffs, by their nature, are inflationary. That certainly seems plausible. However, plausibility isn’t fact, and it would be good to see the evidence—including evidence indicating how inflationary tariffs are, if they are, and under what circumstances.

“Austerity”

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I do not think this means what some news writers think it means. In a Wall Street Journal article, the news writer used the term this way:

A budget deficit contributes…by injecting more demand into the economy via spending than it subtracts via taxes.
…
But deliberately shrinking the budget deficit, via fiscal austerity, or expanding it, via fiscal stimulus….

What he’s talking about here is reducing government spending as austerity. Government spending is one component of the overall spending that is the demand component of GDP; the other component of demand at the GDP level is consumption spending by us citizens. But reducing government spending, while reducing that overall component of demand, isn’t austerity. That reduction simply reduces the level of competition between government on the one hand and us citizens and our private enterprises on the other hand for the same goods and services. That reduction in the government’s side of that competition at the very least reduces upward pressure on the price we citizens and our businesses face for those same goods and services, even eliminates pricing pressure in some areas, and in some few areas, allows prices to fall.

That’s not austerity, that’s an early step in prosperity.

The news writer again misused the term:

Fiscal austerity does the job with much less collateral damage than tariffs. Inflation goes down instead of up. Trading partners don’t retaliate. There’s no special-interest lobbying or corrosive uncertainty over who gets hit with tariffs for how long.
Austerity’s main drawback is that it slows growth.

Reducing government spending isn’t the only path to private prosperity, and done by itself can be decidedly reductive of that. Taxes directly take money away from both us citizens and our private enterprises. Some taxation is necessary for our government to do the things we hire it to do—pay our national debt, see to a defense capability adequate to the threats we face, and satisfy our nation’s general welfare in the ways delineated in our Constitution. Leaving taxes alone—or raising them—whether in isolation or in order to fund spending unrelated to those three purposes takes money away from us and our businesses that we’re better situated to allocate to our actual needs and wants.

Those taxes are the source of austerity inflicted on us by government. Reducing those taxes to the more minimal level needed to satisfy those three Constitutional requirements reduces austerity far more directly than reducing spending: every dollar left in our and our businesses’ pocketbooks and not taken by government is a dollar we can allocate more efficiently than government is capable of doing.

Reducing government spending—the news writer’s definition of austerity—actually indirectly facilitates prosperity if not actually increases it, and reducing taxation—not addressed at all by the news writer—directly increases prosperity by reducing real austerity, the taking of money from private coffers and putting it in government coffers. Doing both in concert with each other—that’s the far opposite of austerity.

Yapping vs Action

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Republican Congressmen are starting to push back, ever so gently, against President Donald Trump’s (R) DOGE initiative and agency. They want more control, for themselves and for the several Department and Agency heads, over spending and Federal job cuts.

The calls come as some GOP lawmakers have pushed back against job cuts and characterized moves as haphazard, even as they largely agree with the broader goal of reducing government costs and inefficiencies.

That’s the difference between yapping and action. It’s necessary to be specific, to name programs and to name names, if actual action—cuts—are to be made. Republicans are exposing themselves now.

The House, with its alleged Republican majority, has passed its budget outline proposal, and already it does not include an aggregated ceiling for spending cuts that’s high enough to have room for all of the ones the DOGE effort is suggesting.

Certainly, it’s useful to not make cuts as sweeping as those on offer from DOGE and from Trump all at once; business and especially State budgets need time to adjust to the sharply reduced inflow of Federal dollars and outflow of ex-Federal employees, but that’s easily enough accommodated over a period of two years, so all the cuts proposed could be accomplished within a single Congressional session.

Just as certainly, the several constituencies of the several Republican Representatives have differing imperatives and needs—Congresswoman Nicole Malliotakis’ (R, NY) constituents have different views of appropriate levels of cuts and where to make them than do Congressman Thomas Massie’s (R, KY), but in the Federal Congress, these Congressmen have national level constituents in addition to their local ones.

But, as ralflongwalker passed along to me:

You want to gore my ox? Oh, no!

Pick one, guys. Either you’re for spending cuts and reductions in the bloated Federal bureaucracy labor force, or you’re like a bunch of spendthrift Progressive-Democrats, just yapping differently.

An Alternative Approach to Bird Flu

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The current approach is, when a chicken in a chicken flock shows itself to be infected with the avian flu, kill the entire flock. That’s hard on a chicken farmer’s pocket book, since the government only reimburses the farmer for part of the cost of his loss (whether the government should reimburse the farmer for 100% or 0% of his loss is a separate question).

A current alternative is to vaccinate the chickens in the flock against the avian flu, but that’s a labor (and cost) intensive effort since the vaccine must be delivered by injection under the skin, chicken by chicken. Vaccines are under development that would allow mass vaccination, but those are a ways away.

There’s an alternative approach that isn’t, as far as I can tell, being looked into. I sympathize with one of the motives for the mass killing of entire flocks—no one wants to let the chickens die miserable deaths one by each. However, if the avian flu is allowed to run its course through the flock, 90% to 100% of infected birds die. That means that some number of those chickens survive their infection.

How about letting the avian flu run its course through some number of flocks and collecting up the survivors? Those chickens have shown themselves to be resistant to the avian flu. These should be bred among themselves to see if an avian flu-resistant population of chickens could be bred.

Or not, but it seems worth the try.