Category Archives: political economy

Economic Travails

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This time those of the People’s Republic of China’s economy. In a Wall Street Journal editorial in which the editors, correctly, deprecate the idea that the continuing slow devaluing of the yuan is necessarily something about which to worry. Neither the falling yuan relative to the US dollar, nor the parallel weakening vs the dollar of Japan’s yen, the Republic of Korea’s won, Malaysia’s ringgit, and a number of others across Asia reflect anything other than the strength—more accurately, the lesser weakness—of our economy compared to those nations’.

Then the editors dropped this mistake:

No one can say whether an economic crisis is imminent in China, but no one should want one.

The first part is true; the mistake is in the second. Absolutely we, the rest of Asia—particularly the Republic of China and the nations rimming the South China Sea—should want one, as well as Europe and the United States. The PRC’s increasing aggressiveness and threats against those Asian nations, and its support for Russia’s barbaric invasion of Ukraine and the threat that represents for the rest of Europe, and its economic support for a nuclear Iran and the threat that represents to the existence of Israel and the threat of Iran-nuclear armed terrorist attacks on Europe and the US—these are possible only with a strong economy with which to fund the PRC’s militarism, its supplies of military materiel to Russia, and its purchases, even at slight discount, of Russian and Iranian oil, thereby funding those nations’ misbehaviors.

An economic crisis in the PRC or, especially hopefully, a prolonged economic meltdown would be economically disruptive for the world at large in the short run, but it would be a very good event in the medium- and long term for the security, and economies, of non-PRC Asia, Europe, and the US.

Green Subsidies

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There’s this bit from Power Line:

And this quote from Severin Borenstein’ and Lucas Davis’ The Distributional Effects of U.S. Tax Credits for Heat Pumps, Solar Panels, and Electric Vehicles:

Over the last two decades, US households have received $47 billion in tax credits for buying heat pumps, solar panels, electric vehicles, and other “clean energy” technologies. Using information from tax returns, we show that these tax credits have gone predominantly to higher-income households. The bottom three income quintiles have received about 10% of all credits, while the top quintile has received about 60%.

It’s reasonable to ask why those “bottom” quintiles—which include the middle-class folks—don’t buy more of these cool green devices. The answer is because even after the lavish subsidies, they can’t afford the devices. The remaining, out of pocket, costs still are too great. Worse, those remaining out of pocket costs comprise the entirety of the costs for much of the bottom two quintiles:

About 40% of US households pay no federal income tax, so millions of mostly low- and middle-income filers are simply ineligible for these credits.

It’s also reasonable to wonder whether Government is simply subsidizing a market until the devices become ubiquitous enough for prices to come down. Leave aside the fact that subsidies vanishingly rarely go away and protected industries just as vanishingly rarely lose their “protection.” The plain fact here is that, after all these years of pushing the devices, and even after all these years of real improvements in their performance, there is no interest in these devices across the broad market. It’s an industry that’s not going to take off without ever larger subsidies, ever increasing government pressure on us to get these devices anyway, ever increasing effort government effort to deny us access to alternative devices.

These green subsidies just give the already rich liberal Left a way to look good to each other in their solar-heated showers.

Maybe it’s time to start making the supporters of Green Politics pay their fair share.

 

H/t Ralf Longwalker

Lab-Grown Meat for our Troops

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And for everyone else, too. DoD wants to have this stuff for our soldiers to the tune of a $450 million budget increase—increase, not an initial funding—for BioMADE to produce meat in a petri dish for our military’s chow halls and, presumably, for what passes for MREs these days.

The Department of Defense is funding a bio-industrial manufacturing company that has proposed feeding US troops lab-grown meat to help “reduce the CO2 footprint of food production.”

BioMADE’s proposal includes

growing meat and other kinds of food by “utilizing one carbon molecule (C1) feedstocks for food production.”

There are plenty of reasons to object to this expenditure and to this food “development” program. One thing not being addressed, though, is the simple fact that there are some few lipids—fat molecules—that our bodies cannot make from scratch and must be eaten intact. They are essential lipids in precisely the same manner that essential amino acids cannot be made by our bodies and must be eaten intact by eating…meat. (I’m eliding here the question of whether these essential amino acids will be produced in the petri dishes.) These essential lipids are best taken in by eating…red meat. Which is not the petri dish meat—which isn’t really meat, but protein—that BioMADE wants to inflict on sell to our troops.

Will BioMADE be growing fat in adjacent petri dishes? Or will our troops’ diets suffer, and their health be heavily endangered, by that lack?

Tax Cuts are Costly

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Arkansas’ Republican Governor Sarah Huckabee Sanders has signed into law the State’s latest round of individual and corporate tax cuts. “Finance officials” say that

the cuts will cost about $483 million the first year and $322 million a year after that.

Sanders also has signed into law a different tax cut, this one in the form of a tax credit increase. This one

increases the homestead tax credit from $425 to $500, retroactive to January 1.

“Finance officials” piped up again:

That cut will cost $46 million.

Cost whom, exactly? The money isn’t the State government’s after all. The money belongs to the citizens of Arkansas, they just remit it in the form of tax levies. It doesn’t cost the government a single copper penny to not get what doesn’t belong to it.

Beyond those “financial officials'” distortion, there’s another item missing from their pseudo-analysis.

Those officials are ignoring the impacts of the increased economic activity in the State’s private economy from all that money now being left in the private hands of the State’s citizens and private businesses. There are two primary impacts. One is the increased prosperity of those citizens both from their being able to hold onto more of their money and from that increased economic activity. The other is the increased tax receipts the government will receive, on net despite the reduced tax rates, from the increased aggregated revenues flowing from all that increased economic activity.

Spending vs Revenue

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…in the Progressive-Democratic Party’s world.

The Wall Street Journal‘s editors have this one right.

CBO projects that this year’s budget deficit will clock in at roughly $2 trillion, some $400 billion more than it forecast in February and $300 billion larger than last year’s deficit.
…
Notably, CBO’s revenue projections are little changed. Revenue is expected to total 17.2% of GDP this year—roughly the 50-year average before the pandemic….

So, whence the deficit explosion? Plainly, it’s in all that spending that the Progressive-Democrat President Joe Biden and his Party syndicate in the House and Senate insist on doing.

CBO significantly revised up projections for federal spending. Outlays are now expected to hit 24.2% of GDP this year and average 24% over the next decade. Wow.

Mind you, that’s against a steadily, if slowly, growing GDP. That projection means that Party spending will be growing, too. All while revenue remains steady—which is to say, flat/not growing.

This is the politicians of the Progressive-Democratic Party’s utter inability to say “cut spending,” which plays into their inability actually to cut spending. After all, the money, in their minds, isn’t real; it’s only monopoly money, and if they need want more dollars, they have only to go to their Modern Monetary Policy money tree and pick more dollar bills from the branches.

The reality, though, is that the money Progressive-Democrats demand to spend is our money. Those politicians have no skin in the game beyond their political power. The skin us average Americans have in this game is real: our ability to get along in the real (and real economic) world in which we live, having as we do, only those real dollars that Party policies steadily devalue.

We need to remember that this November.