Tag Archives: political economy

Government Union Extortion

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Five unions that operate the New York State-owned (through the Metropolitan Transit Authority) Long Island Rail Road went on strike—all 3,500 members—and stranded 300,000 residents, keeping from their jobs and errands. The strike lasted 3 days before the government capitulated and gave (I assume; the agreement parameters remain unreleased to the public) what these public unions demanded.

Never mind the baseline from which those union members were proceeding.

At $49.92 in wages before overtime, a Long Island Railroad engineer makes $103,000 per year. Even in an upscale city like Plano, Texas, on a relative cost of living basis, that works out to an equivalent annual income of $66,000 to live in Plano.

Significantly, the cost of commuting to/from work in Plano is more than 50% cheaper than in LIRR’s New York.

Yet the city allows this extortion to punish its residents because, well, the LIRR unions are all public unions, which is to say, run by the city.

“Politically Viable Tax”

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That’s what New York City’s Progressive-Democratic Party and Democratic Socialists of America Party mayor Zohran Mamdani is looking for in order to address the city’s budget shortfall.

This is yet another installment in Party politicians’ cynical (I say) effort to raise ever more taxes in order to cover ever more spending, or as so often is the case with Party’s resolutely profligate spending, to “chip away” at the budget deficits and resulting debts that Party’s habits create.

It’s instructive that Mamdani wants to raise taxes in whatever way he can get away with. It’s further instructive that he can’t—no Party politician can, it seems—conceive of cutting spending, if not overall, at least in those areas not part of his social(ist) program, in order to free up non-deficit and -debt inducing spending for his goals. Mamdani can’t even conceive of simply reallocating existing spending goals to achieve his social(ist) goals.

This ever-increasing taxing is what New York City voters affirmatively chose to inflict on themselves, and it’s a threat the rest of us face if we don’t choose more wisely in our own coming elections, from the national level on down to our city and village levels.

Don’t Mention Cutting Spending

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Don’t you dare. The newly proposed Australian budget contains some tax cuts here, some tax structural changes nearby, and some tax increases there.

The tax cuts and structural changes are small steps in the right direction. The tax increases, though, are rationalized in this way: Saul Eslake, ex-Chief Economist at Merrill Lynch in Australia is claiming, as paraphrased by the WSJ:

If the process of reform is to be extended from here, policy makers should consider increasing and/or broadening the country’s goods-and-services tax to repair the revenue side of the federal budget and help ease the significant tax burden faced by wage earners and companies[.]

“Repair the revenue side?” What’s to repair? It isn’t the government’s money; it belongs to the good citizens of Australia. Their government only takes the money away from them; any seeming shortfalls in collections are nothing less than more money in those citizens’ hands.

And this from Shane Oliver, AMP Ltd‘s Head of Investment Strategy and Chief Economist:

If you do one reform without looking at income tax, then you miss the bigger picture[.]

There are two things wrong with these criticisms. One is the utter lack of justification for the amount of money the government collects through its taxing regime, whether current or as proposed. That “need” is simply assumed as received wisdom. The other is the equally utter lack of consideration of government spending cuts. The supposed necessity of current (or increased) spending levels also is simply assumed as received wisdom, albeit the spending is occasionally weasel-wordedly justified by announced social need—but even that isn’t seriously justified, merely announced from on high.

If Australia—and others, including us—want serious, durable prosperity, it’s necessary to cut taxes and cut spending further. That’s not austerity, no matter how hysterically the Left generally proclaims it to be. Leaving more money in the hands of the citizens is not austerity being inflicted on them, it’s their prosperity being restored to them. And that’s the bigger picture that Oliver is missing.

He’s Right

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But not in the way he thinks. Joe Calvello, New York Mayor Zohran Mamdami’s Press Secretary, said this:

That does not negate the fact, however, that our tax system is fundamentally broken.

“That” was referring to Ken Griffin, his high-value secondary home in New York City, and his supposed failure to pay a deliberately, cynically undefined “fair share” of taxes. After all, Calvello says that the tax system “rewards extreme wealth while working people are pushed to the brink….”

“The tax system,” the city’s, the State’s, and the nation’s are, indeed, broken. The fix, though, is not to constantly raise taxes on those Evil Rich like Griffin. The fix is something so inconceivable to Progressive-Democrats, including Mamdani, that they can’t even say the words: lower tax rates on the middle class and poor, and more broadly, restructure the tax system and its taxing targets so that those middle class and poor pay the same low tax rates on the same things as the Evil Rich do.

The PRC’s Economic Arsenal

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The People’s Republic of China is stepping up its economic war on us, adding additional weapons to its arsenal. Those weapons include

a blacklist for foreign firms it deems hostile, a law authorizing punishment of any company that helps enforce U.S. sanctions on Chinese targets, a rule ordering Chinese parties to ignore those sanctions outright, and expanded powers for its antitrust regulators to kill cross-border merger deals on national-security grounds.

Two responses come to mind. One is that Mark Zuckerberg, Meta’s boss and controlling shareholder, should simply ignore the PRC’s order to unwind its acquisition of Manus. Meta should, instead, proceed with what it has already collected via Manus. The unwinding is strictly a matter between Manus and its government masters. To the extent the PRC then takes economic or legal action against Meta, that should finally demonstrate even to Zuckerberg the lack of utility in doing any sort of business within the PRC.

The other response is that all the players should proceed as though the PRC’s threat to sue or its actual suing have no effect. Such suits, occurring as they will within PRC courts, can have no effect outside the PRC’s borders. In the event the PRC then acts against those intermediate businesses with operations inside the PRC, see above.