Category Archives: political economy

A Subsidy

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It may be that the People’s Republic of China will start subsidizing mainland Chinese families who have more than one child, to the tune of 800 yuan per child for a family’s second and third children per month. Is that a little, or a lot?

The PRC’s 2024 per capita GDP in nominal terms is a bit over $13,000, which works out to 92,300 yuan, or 7,700 yuan per month. Those 800 yuan are roughly $113.

Using data from just before the Wuhan Virus Situation, per capita household electricity consumption was some 750 kilowatt-hours per month. That consumption cost $0.083 per kilowatt-hour; that works out to roughly 425 yuan per month.

Food consumption cost mainland Chinese roughly $270, or 1,915 yuan per month for a family of three, rising (in a naïve estimate) to $360 per month, or 2,555 yuan for a family upsized to four.

In those broad strokes, it seems that electricity and food consume that subsidy before getting to housing, which already is badly under water, for all that the housing industry may be—may be—turning around.

Given the decision of mainland Chinese families not to have more than one child, even after the murderously enforced one-child edict was lifted, this likely won’t increase family size in the PRC. And that’s separate from the editors’ note that child subsidies have never worked anywhere.

Just One More Reason

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The European Union’s latest attempt to dictate to American companies how they do business is the most pernicious. Progressive-Democrat President Joe Biden and his Vice President and Party Presidential candidate Kamala Harris whole-heartedly agree with the EU’s power putsch, as demonstrated by their silence on the move [emphasis added].

In May the EU adopted the Corporate Sustainability Due Diligence Directive, which converts a range of international conventions into binding law enforceable on American companies. ….
The new regulation forces US companies to adhere to the EU’s “net zero” carbon emissions target and to comply with onerous labor-related standards—even when they exceed the requirements of US law. ….
Though the regulation directly targets US companies with European market revenue exceeding €450 million (about $500 million), it indirectly harms small and medium-size businesses too. It requires big companies to police their subsidiaries and supply chains….

This is just one more reason for American businesses to find other outlets than EU member nations. It’s also justification for foreign policy-centric tariffs, as opposed to protectionist tariffs, to be applied to imports from EU nations, tariffs equal to the cost to American businesses of complying with the EU’s extra-territorial diktats.

Sadly, it will require a change of administrations and Senate makeup (and an expanded Republican House majority) in order to take any action to protect American businesses and American sovereignty. The Harris-Biden administration is so disdainful of American business success that they agree with the EU’s extension of its control over our privately and publicly owned enterprises.

It’s Not Only That

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The Wall Street Journal notes that the Federal Reserve says it makes its determinations based on what the data tell it, and then the WSJ notes that the Fed has been wildly wrong lately and lays that off to data volatility. The failures, it seems, are in the Fed’s data dependency.

The Fed says it sets policy based on incoming data, especially on inflation and jobs. And those data have been both unreliable and far more volatile than usual….

The WSJ then provides its definition of data dependency:

“[D]ata dependency” has come to mean looking only at recent data, ignoring projections for the effects of interest rates on the economy in future.

The problems with this definition are two. In the first place, projections of the future are just guesses, even if somewhat informed by current data. As a great 20th century American philosopher understood, it’s tough to make projections, especially into the future.

The other problem is that this definition of data dependency wholly ignores realized, empirical data: those that have occurred before “recent.” Decent data reliance requires those past data be included, even if as estimates of the underlying trend through that empirical past into “today” (and some little way into the future).

A Determination to Create Dependency

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The Progressive-Democrat-run government of California has placed on its November ballot a proposal to require a State-wide minimum wage of $18 per hour. The Wall Street Journal editors provide some data, citing a Beacon Economics study.

  • 90% of the 130,000 newly unemployed in California during the past two years were under age 35
  • Between the first quarters of 2022 and 2024, unemployment among those ages 16 to 19 increased to 19.2% from 10.8% in California, versus 11.9% from 10.5% nationwide
  • Unemployment among those 20 to 24 years old also ticked up 1.3 percentage points in California, while declining 0.7 percentage points nationwide
  • unemployment averaged 3.2% in the 20 states that followed the federal minimum wage compared to 4.1% in the 15 with minimums between $14 and $17
  • fast-food employment in California has declined 3.2% over the last five months while increasing 3.6% nationwide
  • fast-food prices in California increased 3.7% after the higher minimum took effect in April

The editors asked a question: Are they trying to keep teens out of work? It’s far broader than that.

Where do these unemployed go? To Government for early on unemployment insurance and for long-trm welfare payments. The youth—those 16-19 years old and 20-24 years old—who start out dependent on Government for handouts have very little hope of breaking that dependency; it’s hard enough for adults who’ve been and are being priced out of low-skill jobs. Especially in an economic environment so riddled with these Progressive-Democrat policies.

That dependency on government, though, is votes for that government’s incumbents and preservation of those incumbents’ power.

A Cost of Government

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The Congressional Budget Office is saying that the Progressive-Democrat Biden-Harris administration’s Medicare prescription drug scheme could cost taxpayers more than $20 billion over three years.

The budget analysis arm of Congress said the increased costs are due to the government subsidizing many seniors’ premiums by sending money to insurance firms, and it would cost at least $5 billion extra in 2025 alone and add to the deficit.

If the administration really wants to spend our tax remittals on subsidies for seniors’ prescription drugs, it would be orders of magnitude more efficient to send those subsidy dollars directly to the seniors and let each individual senior use the money for his own particular medicine needs.

That’s anathema, though, to Progressive-Democratic Party politicians. That would put the decision-making, the responsibility, in the hands of us average Americans as individuals, in the hands of individual geezers in the particular case. Party doesn’t think we’re capable of making our own decisions, though. Party insists that only its members who are in government are capable of such decision-making; the rest of us really need to just sit down and do as we’re told. And experience the joy of that.