Tag Archives: political economy

An Economic Misunderstanding

Posted on by
Reply

The Congressional Budget Office said Wednesday that the two-year budget deal will increase our annual deficits significantly over the next ten years.  That puts a premium on Republicans regaining the majority in the House, retaining/expanding its majority in the Senate, and retaining the White House, with an emphasis on Conservative Republicans in that mix.  That’s for another post, though.

What…triggered…me was this bit at the end of the article CBO Director Phillip Swagel:

The nation’s fiscal outlook is challenging. To put it on a sustainable course, lawmakers will have to make significant changes to tax and spending policies—making revenues larger than they would be under current law, reducing spending below projected accounts, or adopting some combination of those approaches.

Close, but no cigar—not even an ersatz vaping cigar (do they make these?).  To get onto a sustainable course, the only change to tax policy is to continue reducing the rates: make the individual income tax rates permanent, then move onto a course to (permanent) low flat tax rate on all income, regardless of source. Add to that elimination corporate income taxes altogether; it’s corporations’ customers who pay the bulk of those taxes, anyway, in the form of higher prices.

Then cut spending to levels below the resulting revenues, with an emphasis on cutting non-defense spending.  It’s time the government stopped misspending us citizens’ money.  It’s also time the government stopped competing in the economy for products, services, and resources to produce those products and services.

With more money left in our hands, and with less competition from Government driving up our prices, the private economy will truly take off—increasing along the way revenues to the government from that greatly increased economic activity.

That increased economic activity and revenue to Government will have an additional mid-term salutary effect, if politicians are sensible and don’t lose their nerve.  The increased revenue could ease the pain of transitioning our Social Security and Medicare programs to privately done facilities, getting Government further out of our personal economic and health lives.

The increased economic activity also would redound to the States’ collected revenues—facilitating over the same mid-term a conversion of Federal Medicaid transfers to block grants to the States on an annual declining balance to zero schedule.

Standing Tall

Posted on by
Reply

Great Britain has said that it will abide by British law regarding cross-border movement of persons. European Union law will no longer have applicability, with effect from 31 October, Great Britain’s departure date from the EU.  Unless the EU agrees, and begins concretely, to negotiate in good faith a serious departure régime.

Oh, the hoo-raw.  How dare those Brits follow through instead of kowtowing to their betters in Brussels?

Rebecca Staudenmaier, writing at the link, also mischaracterizes the move.

The move is a departure from UK Prime Minister Boris Johnson’s predecessor, Theresa May, who had said the government would end free movement “as soon as possible” if the UK left the EU without a withdrawal deal, suggesting the rules could be phased out.

This is no departure from May. On the contrary, this is a solidification of her position: it clearly defines what “as soon as possible” means.  Phase out? That phasing has just begun, if Brussels will get serious about negotiating the departure.  Indeed, that transition period has been going on, tacitly, since Great Britain made clear its intention to go out from the EU.  Phasing merely has been formalized with this announcement.

Indeed, here’s what the British Home Office actually has said on this subject [bold face emphasis added]:

EU citizens and their families are welcome to stay and there are no changes to the deadline to apply to the EU Settlement Scheme.
This scheme covers all EU citizens and their families living in the UK by 31 October, and EU citizens have until at least 31 December 2020 to apply.
Here is a short explainer:
What is happening? Is freedom of movement ending on October 31?
We are leaving the EU on 31 October come what may. This will mean that freedom of movement as it currently stands will end on 31 October when the UK leaves the EU.

And

EU citizens will still be able to come to the UK on holiday and for short trips, but what will change is the arrangements for people coming to the UK for longer periods of time and for work and study.

Hmm….

Even though the transition period has begun, it will extend for 15 months after Great Britain leaves, and it’s quite a generous transition, to boot.  Much more so than Brussels’ departure demands and May’s meek acquiescence to.

Of course, there are problems with this.

In a phone call with the EU Settlement Scheme office helpline, activist and former Change UK candidate Nora Mulready said she was told that EU citizens would have difficulty reentering the UK if they hadn’t applied by the Brexit departure date.
Those who hadn’t applied “would no longer be entitled to [freedom of movement] rights to live and work and be in Britain,” she said the office told her.

That’s a very serious problem.  Mulready apparently thinks EU citizens are so grindingly stupid or otherwise incompetent that they can’t figure out that they need to make their applications—in the 71 days that they have.  That just isn’t enough time for an adult continental.  Wow.

Unnamed Liberal Democrats (here’s NLMSM policy again) claim this policy is reckless.

Not at all. What’s been reckless is the EU’s bad faith pretense of negotiation for a smooth exit, instead using the talks and outcome to punish the Brits for their effrontery and to serve as a warning to other nations contemplating the presumption of leaving.

Here’s hoping a Johnson government is good to its word.

The Purpose of a Company

Posted on by
1

The Business Roundtable thinks we need to change our view of the purpose of the companies we own.

CEO group urges firms to remember obligation to society, employees, and customers

And

The Business Roundtable said Monday that it is changing its statement of “the purpose of a corporation.” No longer should decisions be based solely on whether they will yield higher profits for shareholders, the group said. Rather, corporate leaders should take into account “all stakeholders”—that is, employees, customers and society writ large.
“Each of our stakeholders is essential,” the new statement says. “We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

The Roundtable is virtue signaling.

The only stakeholders are a company’s owners. Full stop.

Of course, a company should listen to its employees; it can’t function without them. But stakeholders? We’re seeing the effects of the destructive self-absorption of employees given too much “stakeholder-ness” in Alphabet’s shameful behavior—on society writ large, yet.

Of course, a company should listen to its customers, and potential customers; that’s why a company exists at all: to provide a product or service that fills a gap in their lives.

Society at large? Society is best benefited by the company doing what it does best: satisfying its customers’ needs and wants, providing jobs along the way, innovating to better satisfy those needs and wants. Further, by being successful, a company can grow and foster new businesses, which increase jobs and innovation—and maximizes profit, which draws more investors and owners into the company and into the larger market, a positive feedback loop in its own right.

Profit max is the most efficient way to achieve any of that, and maximizing those returns to the owners within a free market economy maximizes that efficiency.  That, in turn, enhances the company owners’, and their employees’ and customers’, ability to work toward the good of society at large, with each acting according to his own view of what that good is, undiminished by being mixed into a mishmash of phantom “stakeholders.”

Mr [JPMorgan Chase CEO James] Dimon, for example, has challenged the shareholder-profit focus as too narrow and an impediment to executives’ ability to focus on long-term goals.

That misunderstands the problem. This is an investor education matter; business executives need to show the gains to be had from mixing a long-term view with a shorter-term view. Diluting the owners’ control over their company by passing too much power to pseudo-stakeholders only weakens any sort of view.

Because Politics, not Policy

Posted on by
Reply

Even the more moderate Progressive-Democratic Party Presidential candidate, Joe Biden (more moderate? He says he’s the most Progressive of them all, but never mind that, just now), says Party should appoint him because—he can beat Trump.  His wife says so.

Speaking at a bookstore in Manchester, NH, Dr Jill Biden urged voters on Monday to consider the “electability” of her husband, former Vice President Joe Biden, ahead of the 2020 Democratic primaries….

She went on:

I know that not all of you are committed to my husband, and I respect that, but I want you to think about your candidate, his or her electability, and who’s going to win this race[.]

I respect that.  That’s awfully decent of you, Ma’am.

But leave that bit of self-absorption aside.  It’s certainly true that winning an election is highly useful for implementing policy (so is willingness to compromise with other participants in government).

But the most effective way to win the election is by having and communicating better policies than the other party or parties.

Maybe this is why the Progressive-Democrats and pseudo-Progressive Democrats like Senator Bernie Sanders (I, VT) and Tom Steyer are pushing “beat Trump” or “impeach Trump” instead of actual, concrete policies.

Maybe this is why all the leading and middle-tier Progressive-Democratic Party Presidential candidates are touting, secondarily to their “I can beat Trump” mantra, carefully amorphic offerings like free stuff for everybody (except privileged white males and Evil Rich).

None of them have serious policy offerings, so all they can do is run on “electability.”

The Fed, Policy, and Political Interference

Posted on by
Reply

The Wall Street Journal, in a piece about the relationship between Federal Reserve President Jerome Powell and President Donald Trump, had a question:

Who should shoulder the blame for a slowing US economy: President Trump? Or Fed chief Jerome Powell?

The question presents a false choice. Neither is to blame because there is no “blame” to be had. Economic cycles (“cycle” is a loose term in economics; it implies a temporal regularity that doesn’t exist) come and go on market forces, especially in a reasonably free market economy.

The Fed, though, should stop chasing the market and simply set its rates at levels consistent with a 2% inflation rate, the Fed’s stated target rate; then it should sit quietly.

As to the Fed’s political independence, that depends on how timid its President and BoG are. Such interference is very difficult to achieve: firing can only be done for cause, which is a high bar. Impeachment and conviction take both houses of Congress and a supermajority in one.

Of course, Fed moves can be countered or potentiated through Congress’ or a President’s fiscal moves, but those don’t politically interfere within the meaning of this article.