Tag Archives: economics

Was Brexit a Failure?

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The Tories, who took the United Kingdom out of the European Union (saving the nation’s sovereignty, I say), now are going to get tossed out of the UK government, likely to be limited to a few ignominiously back bench seats in Parliament. And they’ll deserve it.

Some excuse their failure, attributing it to the onset of the Wuhan Virus Situation shortly after the Brits had gone out from the EU. That’s a coward’s excuse-making copout, though.

The Tories didn’t only make missteps, they were determinedly incompetent, and many government officials (vis., Mark Carney, the then-Governor of the Bank of England, the British Central Bank) acted solely out of their own hubris and/or for their personal political gain.

Energy lies at the heart of any nation’s economy, and cheap energy directly facilitates a healthy, burgeoning economy. As soon as the UK had (re)gained its sovereignty, the Tories abjectly surrendered to the British Climate Funding Industry and heavily increased restrictions on regulation of British fossil fuel production in favor of expensive (not only to the government, but to the British subjects, also) and unreliable “green” energy.

The Tories, having just regained the nation’s sovereignty, “negotiated” with the EU over where the UK’s internal boundaries should be drawn. This is the Northern Ireland customs border fiasco.

The then-Prime Minister Theresa May moved to institute a broad-scale tax rate reduction program which would have left millions more pounds in the hands of the UK’s private citizens and their businesses, which would have fostered a more active private economy—and more revenues on net flowing into government back pockets. But in her own display of incompetence, May chose simply to try to ram the cuts through Parliament with no serious effort to explain the benefits to anyone—not her Party members in Parliament, not to the public at large. And she chose not to put forward a serious spending plan that would live within the new tax rates.

The plan also was deliberately sabotaged by the self-important, personal gain-seeking Carney who used his office as BoE Governor to manipulate the Bank’s interest rates so as to counter and destroy the beneficial effects of those tax rate cuts.

The Tories have failed (a failure so complete I almost have to conclude it was a conscious decision by otherwise highly talented politicians (or so they claim about themselves)) to decisively address the influx of illegal aliens into their nation. Illegal aliens still flood in, absorbing national resources and jobs that otherwise would have gone to British subjects and legal residents.

Brexit was no failure; it was an excellent chance for the UK to revive itself as a serious player on the world stage. The failure was entirely that of the Tory Party and of some officious officials. Brexit still can work to the benefit of the nation. The people just need to elect responsible and competent representatives.

The coming (snap) elections will tell the tale.

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

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.
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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.