Tag Archives: economics

On Harris’ Housing Subsidy Gimmick

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Progressive-Democrat Vice President and Progressive-Democratic Party Presidential candidate Kamala Harris wants to fork over $25,000 to every first-time home buyer looking to buy a house to help them buy. The quick and dirty of that silliness is as follows.

Harris and her team don’t believe in or don’t understand the truism of a simple supply-demand graph that’s taught in any serious high school Intro to Econ class. Throwing money at a supply of something whose supply cannot grow as fast as the increase in money will only run up the price of that something, along with the price of the inputs to that something—and that input price inflation will slow the demand-encouraged increase of the supply of the something.

Those getting the 25 stacks aren’t going to be helped at all beyond the first few. Those getting the Harris Bucks later not only will find it difficult to find a house among that reduced and reducing supply, they’ll be no more able to afford that find than they are now.

Ignored by Harris with her gimmick are those who’ve become empty nesters and those at the other end of their lives, retirees, looking to downsize into smaller, used to be cheaper, housing. These folks will be actively harmed by the same outcomes that will render the gimmick merely useless to those first-time buyers.

Alternatively, and more likely, these Harris Bucks are just a 21st century bread and circus vote-buying scheme and who cares about those first-timers and downsizer wannabes. Richard J Daley is spinning in his grave over not having thought of this.

Hmm….

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The wonders in New York City’s government has spent some $4.88 billion on means of support for illegal aliens “migrants” in the city over the two years ending with the end of FY2024.

Imagine the benefits to the city’s residents and to their city’s economy were those billions of dollars spent on a couple of alternatives:

  • increased policing with more cops on the beat, and/or
  • increased prosecution of criminals rather than releasing them on no bail, and/or
  • recriminalizing misbehaviors like shoplifting, vandalism, assaults

Even [trigger alert] leaving some of that money in the hands of city residents through tax rate reductions.

A Couple of Suitable Civil Sanctions

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General Motors is being sued by Texas’ Attorney General Ken Paxton for allegedly

unlawfully collecting driving data from users and selling it to other companies.

GMC allegedly

used technology that was installed in the majority of 2015 or newer General Motors vehicles that would “collect, record, analyze, and transmit highly detailed driving data about each time a driver used their vehicle[.]”

That’s a long time to be collecting and peddling personal information without the permission of the vehicle’s owner.

After all,

Unbeknownst to customers, however, by enrolling in GM’s products, they were “agreeing” to General Motors’ collection and sale of their data. Despite lengthy and convoluted disclosures, General Motors never informed its customers of its actual conduct—the systematic collection and sale of their highly detailed driving data.

I see two suitable civil sanctions here, assuming conviction. One is to force GMC to disclose the amount of money it received over those two years from its sale of those data. It must then be required to pay that money to each person who bought a GMC vehicle from those two model years, whether the vehicle was bought new or used. Yes, yes, identifying all the used vehicle buyers will be difficult. Cry me a river. GMC should have thought about that beforehand.

The other isn’t really a sanction, per se. GMC should be required to disclose each of the buyers of those data, and then each of those buyers should be required to certify that it has purged all of the data of this type that GMC sold to it.

It would be suitable, also, to go after criminal sanctions against the GMC executives who authorized the illegal collection of the data, who authorized the sale of those illegally collected data, and who carried out the collections, and who carried out the sales.

It’s time to get draconian in sanctioning these data thefts. Bad enough we have to deal with hackers; we shouldn’t have to be subject to such thefts from allegedly mainstream companies.

A Silly Tradeoff

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In an editorial regarding former President and current Republican Presidential candidate Donald Trump as “Central Banker”—The Wall Street Journal editors’ tongue-in-cheek term—those same editors noted this about the Federal Reserve’s economic models:

[T]he Fed staff’s models that are still rooted in the tradeoff between inflation and unemployment.

The editors are right about that being a mistake; although they don’t expand on that claim with their reasoning about why that’s a mistake.

My claim about why that’s a mistake is this. First, the Fed’s situation is rooted in its statutorily mandated requirement to maintain price stability and to maintain full employment. The view from Congressional and White House politicians, the Fed, and so many economists is that these are separate, if not mutually opposing (and so not so separate) requirements.

My view, then, is that the two requirements are closely related, but in sequence, not in opposition. Keeping prices reasonably stable—the Fed’s nominal inflation target of 2% per year works well enough—greatly facilitates a healthy, growing economy. That healthy, growing economy itself pushes toward full employment. The Fed’s strongest move toward its full employment mandate, then, is to satisfy its mandate of maintaining price stability and to take no overt action regarding employment.

Another Example

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Lots of folks—pundits who should know better—expend a lot of ink and pixels commenting on the stock market’s behavior and how that’s a powerful indicator of our underlying economy. I, on the other hand [ahem] have commented on the stock market’s firm tie to our underlying economy, but with a lot of slack in that connection: there is a lot of highly variable time lag between the private, real economy in which all of us must live and operate and the stock market in which investors (which includes far more of us than those same pundits seem to understand) operate, with the real economy, which drives the stock market, making its moves and the stock market, eventually, responding, or the stock market betting on an upcoming real economy move that may or may not happen within a useful timeframe, or at all.

Here’s an example of that essential temporal disconnect:

They [investors] built over months: big bets on the Japanese yen. Complex cryptocurrency wagers. Investments in hot tech companies.
Common to all the trades were heavy doses of leverage, or borrowed money, which investors used to amplify expected gains. As markets rose through the first half of 2024, the investments generated windfall profits, inspiring copycat traders to get on board and pushing prices higher.
Now the tide has turned. Unrest has returned to global markets over the past month, and investors are now in retreat from these once-unstoppable trades.

Very few of those moves had any direct connection with the underlying real economies as they were behaving in the moment or had been behaving for some time. They were moves in anticipation of those real economies’ future behavior.

My point here is not to stay out of the stock market altogether and forever. It is, contra the above, always a good time to invest in the American stock market. Just don’t constantly chase the latest hot tip or gee whiz fad. Don’t assume, either, that what the real economy does will be promptly reflected in the stock market or vice versa. The former likely will occur, but only eventually; the latter is a crap shoot on the house’s table.

Instead, have clearly defined—and written down, so memories can’t fade or impressions can’t distort memories—goals and a clearly defined—and written down, so memories can’t fade or impressions can’t distort memories—plan for getting there.

Do the research necessary to understand investing and investment plans and development, do the necessary research into the companies under consideration for investment and/or into the stock selection algorithms you intend to use, and then stick to your plan. That plan, too, cannot be impossible to change, but it should be very difficult to change.

Yes, it takes work. But that’s the nature of success in any endeavor.