Tag Archives: regulation

Another Reason

Posted on by
Reply

The Straits Times, a Singapore-based e-newspaper, has an interesting piece regarding Europe and exit taxes. The lede bullets include these two items:

  • European countries like Germany, Norway, and Belgium are increasing exit taxes to retain wealthy residents and collect revenue on unrealised capital gains
  • These taxes, levied on individuals leaving with significant assets (e.g., over €500,000 in Germany)…

The e-newspaper is of unknown provenance and reliability, at least to me, so take this with a grain of salt. The claims are entirely plausible, though, given the European nations’ broad range of taxes and high tax rates, and the states’ basic assumption that the money citizens earn is for the state to tax and not actually for the citizens to earn and remit a portion.

If the description is true, though, this is just one more reason for successful folks (not just the wealthy: Germany’s Purchasing Power Parity per capita GDP is €61,800. Those €500,000 in assets is upper middle class) to push the pace on leaving Europe before doing so gets even more financially difficult. The Soviet Union erected an Iron Curtain—literally in some places—in order to keep folks from leaving, so as to keep them working for the state. It looks like Europe is erecting a Euro Wall to keep the folks who earn money from leaving, so as to keep them earning money for the state. How long before they erect a 100% tax Euro Wall?

Yeah, And?

Posted on by
Reply

The Federal Reserve and Treasury Department are moving to reduce the supplementary leverage ratio that big banks, and only those big banks, must maintain. The ratio is the amount of money those specifically-selected-by-government banks must maintain over and above their regular capital requirements against times of “market turmoil.” The reduction would make available much more money for those banks to lend into our economy.

Fed governor Michael Barr, once the Fed’s top bank regulator is opposed to the move. He’s cited by The Wall Street Journal as saying that the proposal would “significantly increase” the risk of a big bank failure.

To which I say, so what?

The failure of a “big” bank would be disruptive in the short term and potentially damaging to the particular bank’s creditors—depositors and others lending money to the bank—but in the intermediate- and long-term, such a failure would be net beneficial to our economy.

A big bank failure—without government bailout—would go a long way toward mitigating, even eliminating, the market distortions of an enterprise in our private economy—which is the economy outside of the government—being held as too big to fail and so guaranteed our taxpayers’ dollars being used to keep it alive, despite that lousy management having, over an extended period, brought the enterprise to that strait.

Reducing the supplementary leverage ratio also is a way of injecting more money into our economy without it being government tax money being injected. Our economy’s money supply would be increased, or not, based on sound business decision-making rather than on flawed political decision-making.

Fewer market distortions, less tolerance of bad performance in our market place, and reduced special treatments of particular businesses, would only make our market economy freer and more efficient and more prosperous for us all.

A Useful Move

Posted on by
Reply

The Senate—at least the Republicans in the Senate; the Progressive-Democratic Party’s Senators remain ensconced in their knee-jerk Nothing Republican mode—is working toward easing Corporate Average Fuel Economy requirements by eliminating the penalties associated with failing to comply with ever-increasing and increasingly impossible fuel efficiency standards. Of course there are objections, but most of them are empty.

From the news writers’ own bias:

nullifying rules that for generations have pushed automakers to churn out ever cleaner and more fuel-efficient vehicles. That technology has saved two trillion gallons of gasoline over the past 50 years, according to the journal Energy Policy.

Ignored here, as the writers cite the journal, is the fact that cost of operation—fuel costs, for instance—remain a competitive selling point, and market forces will drive fuel efficiency. That drive will occur on us average Americans‘ schedule, though, instead of by government fiat. Car companies will continue to seek competitive advantages through such techs as turbocharged engines that deliver more power, transmissions with more gears and powertrains that automatically shut off at stoplights to conserve gasoline along with a host of other pathways, including some not yet thought of, but which competitive R&D will bring out.

Other objectors include Chris Harto, a Consumer Reports policy analyst:

Automakers have proven time and time again that without strong and enforceable fuel-economy standards, many of them will leave proven, popular, and cost-effective technologies like hybrids sitting and gathering dust on the shelf[.]

Aside from the fact that simple competitive pressures in a truly free market, shorn of excessive government regulation, will push “automakers” to continue to work toward, among other things, fuel efficiency. What Harto is ignoring, though, is that his favored vehicles are sitting on the shelf because consumers don’t want them and aren’t buying them.

And this:

Consumer advocacy groups warn that the move could result in…further dependence on foreign oil sources.

This is just disingenuous. The US is the world’s largest producer of oil and a net exporter of it. What would be beneficial here would be a parallel move to deregulate oil production and refining (and exporting).

Also absent is any rationale for why we should care about gasoline savings of that magnitude. My back of the envelope estimation of how much that actually works out to is based on there being 105 million cars on the road in 1975 (those 50 years ago) and 299 million cars and now light trucks and SUVs (which burn gasoline and are much more ubiquitous than 50 years ago) on the road today. A naïve average of that is 201.5 million gasoline-burning vehicles on the road each year. 40 billion gallons of gasoline “saved” each year (those 2 trillion spread across the years) works out to 200 gallons “saved” per car per year.

To achieve that tiny savings, a ton of money has been spent on CAFE compliance rules, on building compliant and so very expensive vehicles, and on wasted money pushing those far more expensive CAFE-meeting vehicles out the factory door in order to meet the mandated manufacturer’s fleet average fuel efficiency numbers. This wastage includes, over the last several years, pushing battery cars and hybrids out the door only to sit unsold on dealer lots as us average Americans refuse to pay the enormous cost of those battery-dependent vehicles.

This is a good beginning, if the Republicans can pull it off, and the Republican caucus in the House goes along. Better would be elimination of CAFE altogether, that should be for a later day.

False Premise

Posted on by
Reply

The Biden administration had argued, in the course of its participation in a lawsuit against Tennessee’s law barring transgender-based treatments for children, that

A teenager whose sex assigned at birth is male can be prescribed testosterone to conform to a male gender identity, but a teenager assigned female at birth cannot.

The Supreme Court last week issued its ruling that the Tennessee law was, in fact, perfectly fine; the ruling was 6-3, with the three activist Justices voting in dissent. Chief Justice John Roberts wrote the Court’s opinion, and Justice Amy Coney Barrett wrote a concurrence centered on answering one of the objections in the dissent. Justice Clarence Thomas wrote a separate concurrence in which he took to task all the plaintiffs’ demand that the Court knee-jerk accede to so-called experts in the Executive Branch regarding transgenderism.

However, it would have been good if the Court had addressed one more item—the Biden administration’s false premise underlying its argument.

That erroneous premise is this: that sex is assigned at birth. This is blatantly false. Sex is assigned at the moment of conception, when the male sperm, carrying either an X chromosome or a Y, joins with the egg and its X chromosome. The subsequent union, the zygote, is then deterministically a male with an XY combination or a female with an XX combination. That male or female—boy or girl—result is carried on through subsequent development all the way through fetus development and birth. The sex determination is immutably fixed at that first moment of union; it is not “assigned” later.

Had the Court put that underlying false premise to bed, also, would have obviated a myriad arguments (legal, anyway) about the origins of an individual’s transgender situation.

Ending a Market Distortion

Posted on by
Reply

The Trump administration is moving to eliminate tax credits for buying battery cars. The Left and their news writers don’t like this.

The removal of the credit, created to incentivize US consumers to purchase electrified vehicles, would likely lead to a drop in EV sales and production.

NSS. The credit was created explicitly to “encourage” purchase of battery cars. On the other hand, Lauren Fix, a co-host of Talk 2 DIY Automotive, has this:

Getting rid of this $7,500 tax credit should not impact [Tesla] sales. People buy Teslas because they like the product…. They know what their customers want, and those that like Teslas will continue to purchase that product.

And [phrase substitutions in the original, emphasis added]

Once that tax credit goes away, I’m expecting [electric vehicles] to be about 2% of sales. There will still be electric vehicle sales, Tesla will still survive, and [Elon Musk] will do well. And other brands will make what consumers want.

There’re hints there. Get rid of government-created market distortions, and the market will produce economically viable products at far less cost without our tax dollars added in. That product mix will include plenty of battery cars as soon as they become technologically and economically viable—and are what us consumers want at prices we’re willing to pay without taxpayer handouts.