Category Archives: Economics

Miscellaneous economy stuff

SEIA’s Response to Bidenomic’s Tariffs

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The Wall Street Journal‘s editors correctly noted the internal—and intrinsic—contradictions in the Biden administration’s “renewable” energy demands and its trade policy. The administration is pushing ever harder to shift our economy, for good or ill (mostly ill IMNHO), to energy sourced to non-carbon-based, but renewable only—nuclear need not apply—producers. Then comes Gina Raimondo, Commerce Secretary, and her decision, backed by that same Joe Biden, to apply tariffs as high as 254% to solar power-related products imported from five People’s Republic of China enterprises, never minding that these companies are American domestic solar power producers’ primary sources of the needed articles.

But the Solar Energy Industries Association’s whine about the administration’s tariff policy leaped out at me.

It will take at least three to five years to ramp up domestic solar manufacturing capacity and the global supply chain will be vital in the short-term.

But would SEIA’s members actually ramp up domestic production without the tariffs, or would they simply continue buying from an enemy nation? SEIA is being disingenuous.

I’m not convinced that Commerce’s tariffs are the way to go—in general, they’re being applied as protectionist barriers rather than as foreign policy tools, and Commerce’s tariffs here are no exception—but SEIA’s plaints seem nothing more than excuse-making. After all, those members already have had those three to five years, and more, during which to ramp up domestic solar manufacturing capacity, and they’ve chosen not to do so.

Nationalizing Private Enterprise

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OK, State-ifying private enterprise, for now, if this proposal goes through. Some California Progressive-Democratic Party legislators are setting up legislation that would have California pay unemployment benefits to strikers. The move also would put businesses and workers, both, at some risk from Government control, but never mind that.

A group of California Democrats are expected to propose handing out unemployment benefits to striking workers.
Language expected to be released in the coming days or weeks to provide striking workers with benefits from California’s unemployment insurance program that is $18 billion in debt. The move comes amid historic strikes by both screenwriters and actors, forcing many movies and TV shows to halt production.

This move would lessen the incentive for workers and their unions to build up strike funds. Uncle Sugar—or for now Daddy Gavin—will pick up increasing portions of the strike tab.

But this move is more dangerous than that in the longer term. This is an active assault on the free enterprise system that’s at the center of our economy, whether that’s the intention of this move or not.

Workers pay each other during strikes. That’s what a significant fraction of their union dues are for: setting up a strike fund so while workers are on strike, and so not being paid by their employer, still have money coming in to cover their critical expenses. The bigger the strike fund, the longer the strike can last, and the more the business(es) being struck can be damaged. It’s hard to find a bigger strike fund than Government’s control of its citizens’ tax remittals, which under this proposal would supplant union dues.

This move, if realized, would lead to Government saying to any business, individually or collectively, “Nice business you got there. Be too bad if your employees didn’t come to work for a while.”

This move also would put the labor force at risk of government control. With strike funding coming from Government under the guise of unemployment benefits, Government would be in a position to reward workers for not working striking, when Government wants to use them to pressure a Government-disfavored business. On the other hand, Government would be in a position to punish withhold benefits from workers who don’t strike this time from those who do strike on their own initiative at a later time, or who strike without Government’s prior permission.

A Thought on SALT Deductions

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New York Republican Congressman John Tamny had an op-ed in the Wall Street Journal early last week in which he advocated enthusiastically for raising the ceiling on the deduction of State and Local Taxes from Federal income taxes. That deduction currently is capped at $10,000, and Tamny worries that that works a hardship on his constituents, since despite their high incomes, those folks aren’t really all that rich. New York’s high taxes and prices already work to reduce those folks’ relative wealth.

A WSJ reader responded in WSJ‘s Sunday Letters section.

The five New York Republicans in Congress take a page from the Democratic playbook to defend changing the SALT cap (Letters, Aug. 15), “especially since New York continues to be a donor state, paying more in federal taxes than it receives from Washington.”
When did that become the objective? They make it sound like the role of the federal government is to redistribute all funds in a fair and equitable manner. Sorry guys, we send our tax dollars to Washington to pay for essential services like national defense, not to have it parceled out again to the states in equal portions.

It’s true enough that Tamny and his fellow New York Republican Congressmen (all Congressmen, come to that) have to represent his—their—constituents first, and even as Federal Congressmen, our nation second. But as Federal Congressmen, they do have to represent all of us at some stage.

That tension makes the Congressional Tamnys’ collective and individual jobs hard, but if they wanted cushy jobs, they should have taken positions as mattress demonstrators.

That’s not all. Another Letter writer disagreed with Tamny in a different direction.

The New York lawmakers’ argument bears considerable similarities to Mayor Eric Adams’s demands for federal assistance to take care of the illegal immigrants his city invited. Talk about moral hazard. Both amount to pleas from politicians for federal relief from the consequences of their own state or local governments’ policies and, as such, should be summarily denied.

What the letter writers said is spot on, and their words carry national, and moral, weight.

Inflation

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The learned Emeritus Profess (Roanoke College) Robert Stauffer, in his Sunday letter to The Wall Street Journal‘s Letters section objects to the inclusion of “owner equivalent rent” (OER) in standard inflation measures on the grounds that “real” inflation is much lower than it’s represented to be, and this exclusion would make the measures more reasonable. (Oh, and no one pays that rent anyway.)

Stauffer’s beef is irrelevant.

Stauffer worries about OER, but he studiously ignores energy and food, whose inflation numbers are excised from those standard measures to leave so-called core inflation on the rationalization that food and energy pricing is so volatile.

However, real consumers, us ordinary Americans, pay actual dollars for that food and energy, and the prices we pay keep on going up, however variably from time to time, and those price increases, smoothed over a few periods, remain higher than “core” inflation, and especially so regarding Stauffer’s “corrected” inflation.

Private Enterprises as Government Jobs Welfare Programs

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That’s the position of the Pennsylvania Progressive-Democratic Party’s Representative G Roni Green. She’s proposing, with an absolutely straight face, a State law that would require businesses with 500 or more employees to cut their employees’ 5-day, 40-hour work week to 4-day, 32-hour work weeks—with no change in pay. That’s a government-mandated 25% pay raise.

Jobs welfare doesn’t get much better than that.

Green’s rationalization centers on two premises. One is that society looks and operates differently than it once did in 1938 (when the government-mandated 40-hour work week was enacted). That’s true enough. Society has grown more complex, more technologically capable, and consumers’ needs (consumers being, after all, at the core of society) have grown quite a bit.

All of that, though, requires continued and increasing employee productivity to enable us Americans to continue, and continue to improve, our standard of living. That growing productivity isn’t possible with the proposed 25% reduction in hours of productivity Green is proposing.

That last brings us to Green’s second rationalization.

Technological advancement alone have [sic] significantly increased the productivity of workers allowing more work to be accomplished in less time.

That’s also true. Indeed, technological advancements have advanced to the point that entire worker jobs have been replaced. Technology does a lot of things that employees currently do at least in part. One result of Green’s move, were it to become law, likely would be a further reduction in employee hours, this time on business’ initiative: to substantially less than 32 hours, converting full-time employees to part-time, with commensurate reduction in pay and in most cases reduction or outright elimination of benefits. The eliminated hours of work would be done by robots…technology.

Green further claims (as cited by Fox Business) research [that] has shown that companies have been able to adopt a shorter workweek without compromising productivity. What isn’t looked at in such “research” is the degree to which such a shorter work week caps productivity growth so that there is no longer any improvement, merely maintenance. So much for keeping up with “society’s” increasing complexity and consumer needs.

Technological advancements—spurred by this government interference—will accelerate this trend in reducing human employment and reducing human income.