Category Archives: Economics

Miscellaneous economy stuff

Tariffs

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When considering the utility of tariffs, it’s useful to keep in mind that foreign trade has very little to do with economics and very much to do with foreign policy. Tariffs, within that framework, can be either good or bad, although as with any tools used in any conflict, they won’t come without cost.

Tariffs imposed solely to protect domestic industry are strictly protectionist, and they result in a less efficient economy with higher costs for domestic consumers. However they might seem justified at their outset—to give a nascent industry (not a nascent company) a chance to get established, for instance—they don’t get canceled once the need for the protection is gone. After that, protectionist tariffs just become a drag on the domestic economy. A canonical example of this is the LBJ-era chicken tax on German light pickup trucks, still in place to the point that we import no German light pickups at all.

On the other hand, tariffs to influence foreign nations to change their ways are matters of foreign policy more than they are of protection, for all that their impact is economic. Such tariffs impose the same domestic costs as protectionist tariffs, but the long-term gain, if they’re done carefully, will outweigh those short-term costs—just as is the case with any set of tools used in other sorts of conflicts.

This is the case, for instance, when a foreign nation government subsidizes its own output to gain an advantage in an otherwise free market international trade environment. It’s especially the case when those subsidies effectively close off that nation’s own domestic market to nations that would otherwise compete in the subsidizing nation’s domestic market with their own exports into it.

This is especially the case when the foreign nation is an enemy nation using its subsidies as its own foreign policy tool to dominate our economy with a view to…influencing…our own international—and domestic—actions.

That brings me to the People’s Republic of China in particular.

[The PRC] is competing with advanced economies in cars, computer chips, and complex machinery—higher-value industries that are viewed as more central to technological leadership.

And

Beijing…plowing money into factories, especially for semiconductors, aerospace, cars, and renewable-energy equipment, and selling the resulting surplus abroad.

That money is cheap, state-directed loans, and from those subsidies, PRC companies are glutting foreign markets.

To be sure, the PRC is rationalizing this—as are many non-PRC economists—as a need to revive its domestic economy, one that, at 5.2% GDP growth year-on-year, is outgrowing our own. It does seem that the PRC economy is slowing, but it’s slowing from a very high growth rate to a high growth rate. The outcome remains one of potential dominance of our economy, especially in national security-critical technologies and energy production. This is coupled with the PRC’s nakedly acquisitive moves in the South China Sea and to a growing extent in the East China Sea, and with its increasingly overt and threatening behavior toward the Republic of China.

That brings me to tariffs as a foreign policy tool.

We should be answering the PRC’s behavior with tariffs of our own, and we should be working to get our friends and allies to apply tariffs, also. To be sure, they will be unlikely to go along with us, but they certainly won’t if we don’t make the effort to persuade.

Such tariffs ordinarily would only be high enough to offset the subsidy advantage the PRC is looking to achieve and return those markets to free competition. However, the PRC’s overall behavior makes these tariffs important foreign policy tools rather than merely protectionist. The tariffs to be imposed should be designed to strongly influence the PRC’s overall international behavior, especially in its current, apparently shrinking, economic position.

The tariffs we impose should begin at least twice the value of the PRC subsidies, and increase—rapidly, don’t give time for the PRC to adjust—from there until the PRC’s international behavior has been suitably altered.

Empty Promises

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The Left and their Progressive-Democratic Party politicians have been promising “good paying” jobs in green energy as they try to push our nation off hydrocarbon-based energy onto their “green” energy sources. Here’s an example, in Moapa, NV, of how well kept those promises are.

A coal power plant that once employed as many as 300 people closed near this small town about an hour outside of Las Vegas in 2017. Nevada’s public utility has since transformed the site into a home for batteries that store energy captured by nearby solar panels. The $257 million project received roughly $100 million in federal tax credits because of President Biden’s Inflation Reduction Act.
… Construction of the site and installation of the batteries required roughly 200 workers over a year. Maintaining and operating the batteries will require about five.

Never fear, tough.

NV Energy [that Nevada public utility] executives said the federal money will enable the utility to make new investments while keeping energy costs low for consumers across the state. “We can pass that benefit directly onto our customers in a time-efficient way,” NV Energy Chief Executive Doug Cannon said.

Right. And I might know of some beachfront property north of Santa Fe that these folks might be interested in.

Not only is Party doing its best to push us onto expensive, unreliable energy sources, it’s also reducing the number of jobs available in our energy production industry, and farther as the ripples from the sort of failure here spreads.

This is why we’ll never have nice things as long as the Progressive-Democratic Party reigns.

Speaker Johnson’s Job

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House Speaker Mike Johnson (R, LA) has a job to do, and The Wall Street Journal tried to characterize it this way:

…Johnson has to decide whether to cut a government funding deal with Democrats that risks costing him his job.

No. The House’s job, and so Speaker Johnson’s job, is to control the Federal government’s spending. That job, that spending control, most assuredly does not include cutting deals with a Progressive-Democratic Party that is bent on profligate spending. That he’s confronted with so many timid Republicans desperate for the comfort of loyal opposition rather than the hard reality of governing only makes his own job harder. That timidity, no more than spendthriftiness, alters his job not a whit.

If the government partially shuts down, that’s on those obstructionist Progressive-Democrats, even as they’re aided and abetted by timid Republicans.

This Is Why Unions Need to be Busted

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Iowa State Senator Adrian Dickey (R, Packwood) has introduced SF 2374, which is a bill that would

require each public employer to “submit to the [Public Employee Relations Board, or PERB] a list of employees in the bargaining unit” within 10 days of a union recertification election.

Never mind that Iowa’s taxpaying citizens have every right to know what their tax dollars are being used for and who’s being paid with them. Never mind, either, that the bill requires public employers, not unions, to submit lists of eligible employees. Never mind, either either, that unions insist on precisely this information when it’s useful for them; unions just call it card checking.

Jesse Case, Teamsters Local 238 Secretary-Treasurer, says that everything—including strikes—are on the table if that’s what it takes to stop the bill. He’s even proposing some wildly inappropriate, deliberately dangerous, union actions if his union doesn’t get its way:

Let’s say you’re a water treatment person and you get a call at three in the morning that says, “The water supply’s going down,” you’re not obligated to answer that call and that’s not a strike.
It’s not a work stoppage because you’re not getting paid at three o’clock in the morning to answer your phone. In fact, it’s against the law to make somebody answer their phone if they’re not receiving pay.
…
It’s [sic] there’s a blizzard moving in at three in the morning, you can go into work at seven or six or your regular scheduled time—call Senator Dickey to come plow your streets.

The union doesn’t care about the risks to businesses or lives; they want their way. The union doesn’t care that those hours already count as serious overtime, emergency or not, with serious extra pay associated.

These strike threats, these union flu work slowdowns, this you can’t have anything unless we get everything ideology, this legalized extortion—nice business/state/whatever you got there, be too bad if something was to happen to it—is exactly why today’s unions need to be busted.

The Iowa legislature and Governor need to stand tall and pass the bill and apply the consequences to these unions.

No CR

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The House Freedom Caucus wants House Speaker Mike Johnson (R, LA) to attach a House-passed border security bill that’s sitting in the US Senate to the next spending bill that Congress must pass to avoid a government shutdown. Freedom Caucus member Bob Good (R, VA):

I think we ought to be willing to have a fight over securing the border. I think we ought to refuse to fund the government if the administration continues to be unwilling to secure the border, then we ought to tie the funding of the government to border security implementation where some funds are held back until the measurables are met, the performance metrics that demonstrate that the border is being secured. And we do it to through Sept. 30 at the FRA levels[.]

No, that’s a typically Republican timid temporization, and as such, it continues to cede the budget—and our border security and support for our friends and allies—to the not-tender mercies of the Progressive-Democratic Party.

Republicans, including the apparently courage-fading Freedom Caucus, need to be willing to engage in a fight over securing the border (et al.) by not having another CR.

Let the Progressive-Democratic Party and Progressive-Democrat President Joe Biden eat their government shutdown over their flat refusal to secure our border and to pay for the spending they want for Ukraine, Israel, and the Republic of China, however badly that spending is truly needed.

Of course that means Republicans need to stop being so timid when talking about government shutdowns—when they’re not actively ducking the subject—and they mustn’t hesitate to identify, by name, those Congressmen and Senators who are actively blocking the agreements necessary to conclude the bills.