Category Archives: Economics

Miscellaneous economy stuff

Right Idea, Bad Plan

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Progressive-Democrat New York City Mayor-elect Zohran Mamdani wants to send $6 billion of city taxpayer money to a fancy, glittering new infrastructure of child care centers that he wants to build so mothers of small children—6 weeks old to 5 years old—can get back to work. (As if mothering children isn’t work in its own right, but that’s beyond the scope of this article). Erica Komisar, a psychoanalyst, wants that money sent, instead, directly to the parents for their use in raising their children their way.

That’s the right idea, but it’s a decidedly suboptimal plan.

Instead, reduce the city’s taxpayer bill by those $6 billion. Let all of the city’s taxpayers hang onto their money, instead of giving it up to the city’s government for spending on the favorite programs of whomever happens to be sitting in Gracie Mansion. Those parents of toddlers will benefit at least as much, from the increased city economic activity that tax reduction would generate, activity that would include increasing job availability; increasing wages; increasing availability of child care and babysitters at prices those parents actually could afford; increasing availability of employer-provided child care, not from government mandate but from it being a good business practice.

That economic flow-through won’t quickly develop; there’s a lot of economic destruction from prior city administrations’ Big Government impositions that needs to be corrected. That, though, simply puts a premium on getting a $6 billion reduction in city taxes enacted.

Dueling Mischaracterizations

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David Kennedy, Stanford University Emeritus Professor, responded to The Wall Street Journal‘s Holman Jenkins in Kennedy’s Letters letter in Tuesday’s Wall Street Journal. Kennedy said Jenkins mischaracterized his book regarding Franklin Roosevelt’s handling of government during the Great Depression.

Mr Jenkins has me arguing that “Franklin D Roosevelt didn’t end the Depression, he used it to enlarge the federal government.” True enough but too reductive.
Roosevelt didn’t simply “enlarge” the federal government; he right-sized and reformed it for the conditions of modern society. His initiatives rescued and dramatically upgraded capitalism, as witnessed by the unmatched performance of the US economy in the post-World War II decades. The New Deal gave to the exceptionally fortunate “greatest generation” a scaffolding of institutions and practices that reduced risk in sector after sector of American life, brought stability and predictability to millions, nurtured the shared prosperity and consequent trust that ended the Jim Crow era, and positioned the US for world leadership to century’s end and beyond.

Kennedy’s own mischaracterizations begin with his Roosevelt didn’t simply “enlarge” the federal government; he right-sized and reformed it for the conditions of modern society. This is his cynical arrogance of presenting that claim as though it’s received fact rather than the matter of opinion that it so plainly is.

Kennedy’s other serious mischaracterization is his risible claim that Roosevelt’s New Deal created the conditions for US leadership in producing global prosperity and stability. This is a just-as-cynical omission of the simple fact that in the aftermath of WWII and the war’s global destruction of assets and of lives (the latter far beyond the merely killed), during those decades of the Greatest Generation, the US was the only economy in the world that could function. Nearly any “scaffolding” would have put us in the global economic driver seat.

How much better could we and the world have done without Roosevelt’s wage and price controls, still intact today in one form or another (minimum wage laws directly controlling wages, and price controls indirectly in place with Roosevelt-populated Supreme Court rulings like Wickard v Filburn, which made it illegal for farmers to grow for their personal (and so wholly intrastate) consumption without counting it in their interstate commercial production, a ruling that also called a farmer’s strictly intrastate commercial production a part of interstate commerce)?

Roosevelt’s expansion both artificially created jobs for a bloated civil service, it straitjacketed our free market capitalist economics.

No Government Bailout

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Not even by city governments, and not even for this.

The Wall Street Journal‘s editors noted that

The New York Housing Conference, a nonprofit that promotes so-called affordable housing, warns in a new report that landlords will need $1 billion in government aid to avoid default. “A significant number of affordable housing buildings in New York City are experiencing operating deficits, where rents are not covering expenses,” the report says.

The buildings are publicly financed, and their costs are skyrocketing—costs ranging from insurance to maintenance to unpaid rents.

This is the problem with government paying for stuff, no matter how glitteringly wonderful the intent might seem.

The city government, the State government, the Federal government—none of them—should be forking over any more of the taxpayers’ money for this sort of thing. The best way to solve this kind of shortfall does not include throwing ever more money into the ever expanding maw of city resident dependency.

Instead, cut the buildings’ costs: get out of the way of rent collections, greatly reduce insurance regulations, property taxes (even public housing must pay these), zoning requirements. Lower sales taxes that drive up the cost of maintenance supplies. Let the market determine wage rates, not bureaucrats snug in their government job sinecures.

Globalism

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New York City Mayor-elect and Progressive-Democrat and Socialist Zohran Mamdani has laid it out quite clearly. In his renewed statement that he would uphold an International Criminal Court (to which the US is not signatory) arrest warrant for Israel’s Prime Minister Benjamin Netanyahu, Mamdani said this:

I’ve said time and again that I believe this is a city of international law, and being a city of international law means looking to uphold international law[.]

No. New York City is an American city, and so it is bound by American law. And that means that at the city level (at the State level, come to that), international law is irrelevant. In the case of the ICC, this is doubly so. With the US not being a part of the ICC or the treaty that created it, neither the ICC nor any of its warrants or rulings have any standing in the US.

Whatever one thinks of globalism, this is globalism run amok. This is how far to the left the Progressive-Democratic Party has gone.

If They Depend on Subsidies…

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…then they shouldn’t be in business. The subheadline laid it out:

Republicans want to shift subsidies away from some of the frailest companies in the industry

In this context, “the industry” is the health care coverage industry, and the subsidies are those paid health coverage providers in the Affordable Care Act. I claim, though, that “private” companies that require government handouts are neither all that private nor deserving of staying in business. If they cannot survive without taxpayer money as anything more than a shortish-term loan to survive a catastrophe, they should be left to go out of business.

The news writer at the link made a big deal out of the need for the subsidies to those coverage providers in order to hold down the prices—the premiums—the customers pay for the policies, jerking tears especially for the lower income customers. What he does not address, though, is the deductibles and the out-of-pocket caps those Obamacare policies have. The deductibles and caps each separately represent significant fractions of those lower income customers’ income. They, especially, had better not get sick. If they do, their strait is not much different from that of those folks who are uninsured at all.

The subsidies paid into their hands directly would at least give them a little relief, but that’s only a stop gap. The real solution is to eliminate the ACA altogether and free up the health care coverage industry, restoring it to a health insurance industry in a free market with policies marketable nationwide, rather than limiting them to intrastate sales with the permissions and regulations of fifty different States.

Companies providing health care coverage or insurance should see their prosperity in how well they treat their customers and how well they serve them. Their prosperity should not come from government handouts—transfers from us taxpayers who don’t use their services.