Category Archives: political economy

Regulatory Oversight

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The Wall Street Journal outlined what its newswriters think are the four priorities of the incoming FCC chairman Brendan Carr, assuming he gets confirmed. On the whole, those priorities foster reduced government involvement in business decisions and increased business competition. One of those priorities drew my eye, though:

Clearing a path for media consolidation

One consolidation possibility: Meta or Alphabet or Truth Social acquiring one or more of the legacy broadcast media: ABC, or ESPN (OK, that’s a legacy cable medium, but my point stands), or….

That would create some serious consolidation, and I’m not convinced that degree, or consolidation across those milieus, would be a good idea.

Still, let the markets determine the utility of such acquisitions, within government’s optimal oversight: blocking abuse of monopoly power rather than blocking the monopoly itself. Aside from the economic forces involved, the one is a reaction to an actual misbehavior, the other would be a preemptive action regarding a purely speculative outcome.

One of those would remain consistent with the American style of jurisprudence, and that’s to the general good.

Labor Unions, Labor Workers, and Employers

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The lately formed Republican Party coalition, led by President-elect Donald Trump, consists of business-friendly and labor-friendly folks from opposite wings of the party.

Opposite, though, is not the same as opposing, a distinction the misconception of what’s involved masks. For instance:

People close to the transition said Trump’s potential appointments to key labor positions could include old-guard Republican functionaries, corporate executives, or individuals who are closer to the New Right and see themselves as more pro-worker.

Maybe and individuals who are pro-worker.

This makes plain the misconception:

[U]nion officials said Trump’s record is at odds with his pro-worker rhetoric. “It’s going to be a rude awakening for a lot of folks who wanted to take Trump at his word,” said Steve Smith, a spokesman for the AFL-CIO, which campaigned for President Biden and, subsequently, for Vice President Kamala Harris. “They talk a big game when it comes to workers, but…they’re going to attack the working class.”

Not at all. It’s entirely possible—useful, too—to be both pro-company and pro-working class while simultaneously opposing today’s unions. This is especially the case with today’s unions, where union management, far from concerning themselves with their membership—those working class folks—concern themselves more with what’s good for them personally.

That misplaced concern includes threatening employers with destruction of their businesses—striking and denying the businesses’ ability to function at all unless and until the union managers get their demands satisfied—and with ripping off workers with their efforts to force unionization in businesses where employees continually reject unions in labor votes. Union management in the past ripped off workers even more blatantly by exacting tribute union dues from workers whether they were union members or not. Court rulings have slowed that particular abuse, but they’ve not eliminated it.

What’s needed, and what becomes possible with the incoming administration, is bringing those pro-business and pro-labor folks into the same room to work out processes that benefit both, without the middle man union management in the room clouding things up and constantly trying to pit the one against the other, rather than helping them collaborate on business-labor policies.

Inflation vs Prices, but Not in Isolation

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Not in isolation from each other, but more importantly, not in isolation from other factors that also impact our economy.

The Biden-Harris administration and the associated “advisors” on staff focused on inflation during the just concluded campaign season (the article at the link mentions spending packages during the first Trump administration along with spending packages at the onset of the Biden-Harris administration as causes of that inflation), but they missed other key factors.

…roughly 40% of voters said the economy was their top issue, far outstripping any other. Those voters backed Trump by a 22-percentage-point margin. Inflation has declined without a recession, but many were thinking instead about how prices are still high.

This was while the Progressive-Democrats and the Left kept on about how inflation was abating (that the Biden-Harris administration’s spending had caused the sharply higher inflation is beside the point of this post), while us average Americans were concerned about prices. After all, we pay our bills based on actual, extant prices, not based on how prices change from time to time.

That’s not all, though:

White House officials interviewed for this story defended their record by pointing to how the ARP was designed at a time when it wasn’t at all clear the country was about to escape the pandemic. Virus counts and deaths were rising as Biden took office.

The data, collected in real time, made clear that while the Wuhan Virus was enormously contagious, it wasn’t very dangerous except to one relatively small slice of our (and the world’s) population: the very old and especially those with severe comorbidities. Outside of that, the mortality rate from the virus was a very small fraction of one percent; even the risk of hospitalization was not much larger than that tiny rate. The rising virus counts and deaths were solely the result of the virus’ enormous infection rate.

And yet, the Biden-Harris administration extended the virus-related declared national emergency for another two years, which facilitated the administration’s ability to control our economy wholly independently of actual economic factors.

Then,

Strong demand from Biden’s additional fiscal stimulus…ran headlong into crippled supply chains and discombobulated labor markets.

This would have been known, and was at the time, to any high school economics student. The hard drop in labor had already occurred—those shutdowns—and was already in rapid recovery at the end of the Trump administration, for all that employment still had a considerable ways to go, and the disruption to the supply chains—from the various nations’ shutdown of their borders—had already occurred and was in full disruption. It’s a basic tenet of economics, too, that when demand outstrips production supply, prices have nowhere to go but up. It was clear at the time, too, that production supply was going to be disrupted for some time as producers were not going to be able to expand production (they couldn’t even maintain their original production rates) from those labor and input supply chain dislocations.

The administration worthies and the press ignored all of this in their determination to panic-monger and deprecate everything Trumpian in that preceding administration.

There’s this laugher (otherwise it’s simply insulting to our intelligence), too:

White House and Democratic officials have argued that overall US economic outcomes were better than those achieved in nearly every other advanced economy.

Whoopty-do. None of us, average Americans and elitists alike, live in any of those “other advanced economies.” We live here, in our US economy, confronted with our US economic outcomes, and those outcomes were highly disruptive to our lives when they weren’t being outright destructive of our livelihoods.

That these folks still are making excuses rather than learning from those mistakes makes it unlikely that Party can be trusted with our economy any time soon.

Audit Failure and a Target for Reduction in Force

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The Pentagon has failed, again, the audit of its finances. This makes seven in a row, and it calls into question how hard the relevant officers and civilians are trying, along with their level of competence.

A total of 1,700 auditors worked on the 2024 audit, which cost about $178 million.
A breakdown of the audit found that 15 of the 28 standalone financial audits received a failing grade….

Pentagon Comptroller Michael McCord:

…the Department has turned a corner in its understanding of the depth and breadth of its challenges[.]

After seven years.

As Elon Musk and Vivek Ramaswamy look around the Federal government for places to cut, and as SecDef nominee Pete Hegseth (assuming he’s confirmed, even as the Left and their Progressive-Democrats ramp up their smear campaigns) looks into the Pentagon establishment he’d be overseeing, here is a lucrative, target-rich environment to enter.

A RIF is a Reduction in Force, a move whereby the military branches occasionally winnow down their ranks of officers and enlisted that each branch deems excess to its needs. The financial types—both military and civilian—in the Pentagon’s budgeting and acquisition sections, from supervisors on down, have by their successive and apparently determined failure to perform have self-selected for RIF. Start with McCord and his disingenuosity.

The RIF shouldn’t be limited to these folks, though. To the extent they’re getting bad, or merely slow, data with which to work, Pentagon training staff (and training is at the center of the Pentagon’s mission), branch Secretaries and Chiefs of Staff, and their financial staffs should be similarly targeted, over and above the Secretaries and Chiefs themselves being fireable by the incoming President for reasons suitable to the President.

Nor should it stop there. The Combatant Commands and the supporting commands—supply, transport, personnel, and so on—need to be closely scrutinized with a view to assessing the quality and timeliness of the data they’re sending to the Pentagon. Those personnel, again both military and civilian and again regardless of rank or position in the hierarchy, need to be RIFed also.

No doubt, this will lead, if carried out with sufficient breadth and depth, to a large reduction in the personnel complement of the Pentagon and of those additional establishments.

That opens up a twofer. Many of the critics of Hegseth’s nomination stew openly about his lack of experience in leading so large an organization as Defense. One approach for dealing with that is to shrink Defense. These RIFs would go a long way in that direction.

Stop Treating These in Isolation

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Richard Rubin thinks he has an approach to Republicans’ desire to cut taxes:

To pass a bill without Democrats, GOP lawmakers seek agreement on the deficit number

That’s the subheadline for his article. He then opens his piece with this:

As Republicans prepare the party-line tax bill at the core of their 2025 agenda, the key to everything is, simply, “The Number.”
The Number is the maximum budget deficit increase that Republicans are willing to tolerate as they extend tax cuts scheduled to expire after 2025 and advance the rest of President-elect Donald Trump’s plans. To unlock the gate to the legislative fast track that lets them sidestep Democratic objections, Republicans must agree, with virtually no defections, on The Number.

But that’s only part of the matter, and as long as Republicans—either party, come to that—insist on treating taxes in isolation, they’ll continue to fail. The plain fact is that Republicans don’t have to agree on any deficit Number; what they need to agree on instead is a Number that represents any value in the interval from zero to budget surplus.

That, of course, also would require them to agree on spending cuts that bring that overall spending down to within the expected (dynamically projected) revenues realized from the tax cuts.

There are two ways those revenues will grow on net from the from this sort of budget move. One is the well-known increase in overall economic activity that results simply from tax rate cuts. These leave more money in the hands of private economy players—individuals, households, and the businesses they own and operate. It’s been repeatedly demonstrated that those players allocate their spending far more efficiently than anything a government can achieve.

The other way revenues increase, though, is less frequently discussed, even as it’s closely related to tax cuts. This is that, with less government spending, there is less competition for the resources—labor, raw materials, finished and semi-finished products—that private enterprises need for their own operation. With that resource competition from Government greatly reduced, the prices for those resources come down, and private businesses can more easily and cheaply acquire what they need. Private enterprise competition then increases and overall economic activity increases, overlaying the increase from simply reducing taxes, and a positive feedback loop develops among increasing production, lowering prices, increasing private demand, increasing employment, and increasing innovation. And net increasing revenues to Government.

Those two outcomes achieve one other item of critical economic, and political, and security importance. It provides an opportunity to commit those budget surpluses to paying down our national debt.

Of course, the Progressive-Democratic Party is going to quibble over any spending cut and tax cut, all the while objecting to either altogether, so to get these done even temporarily, Republicans will have to do them through legislative reconciliation.

That, in turn—both the taxing and the spending reductions—will require the Republicans’ Chaos Caucus to leave off their ego-driven their-way-or-nothing-at-all obstructionism and agree to compromises that move things in their direction, even if not everything all at once.

And get Republicans like Senator James Lankford (R, OK) to shape up or at least stay out of the way. According to him:

We’re not going to have something that’s going to have zero deficit impact. That’s not going to happen[.]

On that score, the Chaos Caucus is right. There need to be spending cuts to achieve outright deficit elimination and actual surplus.