Tag Archives: political economy

PRC Personal Savings Rate

Posted on by
Reply

James Areddy had an extensive article on this in a recent Wall Street Journal.  It seems that the personal savings rate of People’s Republic of China’s citizens peaked around 2010 and has been trailing off ever since.  Areddy posited a number of reasons for this, and why it’s likely to continue.  Chief among them is the usual suspect of an increasingly less poor, if not increasingly prosperous, population wishing to live better rather than save more.  Another major reason seems to be the PRC’s one-child policy, lately relaxed legally, but not socially.  With fewer kids in the family, there’s less reason for parents to save against those kids’ future.

I see another reason, though, for the continuation of the fall-off in savings rate, and that continuation running to disastrously low levels, from a national economic perspective.  This is the aging of the PRC’s population.

That aging is driven by a couple of things. One is that folks get old before they die (duh), and today’s PRC population being healthier than yesterday’s, these folks are living longer.  The bookend to this is the shrinking—across generations—of the population of working age citizens.  This stems from that one-child policy, emplaced explicitly to shrink a population that had severe trouble feeding and housing itself and from the continued social lack of desire for more than one child in a family, and from the desire to live better materially today, now that folks are better off (or at least not so bad off).

With fewer folks working relatively to aging and retiring, this means there’ll be less public money to pay for old folks’ retirement (and retired) needs, so the old folks will need to spend their savings even faster than might be the case otherwise.

Another feedback loop likely is inflation.  This will accelerate the fall-off in personal savings. This inflation will be driven by that same shrinking labor force, this time reducing production output—the availability of goods and services—even as spending increases across all age demographics: a classic case of (relatively) too many yuan chasing (relatively) too few goods.

Fiscally Sound Socialism

Posted on by
Reply

Richard Rubin posited, in his Wall Street Journal article, some hypotheticals for how Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren (D, MA) might pay for her Medicare-for-All plan. He suggested that one of the ways toward this goal of Medicare-for-All that all the Progressive-Democrats running for President need to do was to

find[] ways to reduce health-care costs

Were Progressive-Democrat candidates serious about this, though, they’d stop conflating health care costs with health care coverage costs, get government out of the way of both industries, and put them both (back) into competitive, free market environments.

Rubin also asked whether

(I) would…support Senator Elizabeth Warren’s Medicare-for-All plan if she presented a fiscally sound option to fund it[.]

The question as phrased is a bit of a non sequitur since it’s virtually impossible for such a thing to be funded in anything remotely approaching a fiscally sound manner.  Leaving that aside, though, no, I would not support her or her “fiscally sound” plan.

Warren’s plan, as with her other plans, are fundamentally socialist. There might—might—be a way to make such a thing fiscally sound, but socialism can never be economically or morally sound.

Socialism can never be economically sound because it caps the performance of the most successful, reducing the incentive to work to one’s potential, and so leads to erosion of output, both individually and in the aggregate across a national economy. Beyond that, socialism puts government in control of production, sales, and purchasing decisions, and government can never be as efficient or as prompt in responding to changing conditions as the totality (or subsets of the total) of private citizens acting on their own needs and wants.

Nor can socialism ever be morally sound. By transferring the responsibility for those production, sales, and purchasing decisions to government and away from the individuals who otherwise would make them, socialism eliminates personal initiative and personal responsibility, indeed, the very concepts of personal initiative and personal responsibility.  Instead of letting men be moral actors in their own right, socialism simply reduces them to wards of the socialist state—which is to say to subjects of the men who populate the socialist state from time to time.

“Clean” Cars

Posted on by
Reply

That’s what Senate Minority Leader Chuck Schumer (D, NY) wants Government to subsidize.  He’s proposing Government spend $462 billion to pay Americans trading in our gasoline-powered cars for electric ones.  He wants to drop $17 billion on subsidies for auto manufacturers to “help” them build more electric cars along with batteries and associated parts, and $45 billion on charging stations and associated “infrastructure.”

In addition to ignoring where this money is supposed to come from, he’s also misleading on the “clean” electric car bit.  He knows, after all, where the electricity must come from to charge those batteries, whether at home or at his charging stations.

That electricity is generated by coal-, oil-, and gas-fired generating plants.  In New York, where Schumer’s fellow Progressive-Democrat Governor Andrew Cuomo has banned fracking and additional gas infrastructure, those generating plants can’t use clean gas to produce electricity for Schumer’s cars: those plants are dependent on coal and oil fuel: Schumer’s electric cars will have even larger carbon footprints.

“Clean” electric cars, indeed.

This sort of scheme also is an affront to our free market economy and an insult to ordinary Americans’ intelligence.  If electric cars were ready for market, they wouldn’t need government subsidies to be saleable.  If Americans wanted electric cars, we’d buy them in droves on our own, without needing to be bribed into buying them.

Small Increase

Posted on by
Reply

That’s what an oblivious press has termed Chile’s attempted 4% increase in the cost of a ride on the subway. Chile, especially its capital, Santiago, has been in an uproar over that increase for the last several days, and the protests have expanded to address “social/economic inequality” in general.

The turmoil was triggered by a small increase in metro fairs in the capital….

Here are some round numbers, used for illustration, that compare a poor man and a rich man, one needing to use the subway to get to work or to get to market to buy other necessities and the other on a strictly occasional basis (he has personal transportation).  Subway use absorbs 40% of the poor man’s income, 4% of the rich man’s. Whom do you suppose that 4% increase hits the hardest? For whom is the increase just another coin in his pocket?

There may be good reasons for the fare increase, but not understanding the situation isn’t one of them.  (I’m ignoring, too, the relative impacts of a free market economy vs a centrally directed one, and separately, who should be making the fare decisions.)

And not too tangentially (excuse the opening ad)….

‘Twas a Famous Victory

Posted on by
1

The UAW is touting its strike resolution with GM as a victory and a model to be used against [sic] Ford and Fiat-Chrysler. A letter writer to The Wall Street Journal has pointed out some other aspects of the union’s most famous victory.

For every GM employee at an assembly plant, there are at least 30 working at suppliers providing parts, materials, and services to those plants.
…
During the strike almost all the tier suppliers were forced to shut down or seriously curtail their operations, meaning layoffs (union and nonunion alike). Many of those employees must seek other employment….
…
the [suppliers’] employees who do go back to their jobs will simply go back to work with accrued lost wages and benefits incurred during the layoffs. Those suppliers will also have to go out, recruit and train new employees to replace those who left and don’t return, adding to their costs.

But, hey, UAW management got theirs.