Category Archives: Economics

Miscellaneous economy stuff

Inflation

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The headline screams Fed’s inflation measure soars by most in 30 years. The lede then cries out

The Core Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation measure, accelerated last month by the most on an annual basis in 30 years.

And

Core PCE, which excludes food and energy, rose 3.6% year over year in July, according to the Bureau of Economic Analysis, the most since 1991.

2020 is an aberrational year, though, with its economic dislocation caused by government fiat rather than by economic forces. All comparisons with 2020 should come with an asterisk.

A better comparison is with 2019, the last year prior to the government’s interference. Core CPE rose only around 2.4% per year compared to those two years ago, according to my third-grade arithmetic and data from FRED (with the graph adjusted to start 2019-01-01), roughly in line with the Fed’s target of 2%.

That’s a rate worth watching, but it’s nothing to get excited over. It’s also the case that, within the current year, month-over-month inflation may be decreasing. It’s too early for this to be taken as a serious trend, but it also bears watching.

Escalating

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First (well, almost first, but the early large), President Joe Biden (D) surrendered in Afghanistan, and he did it so abjectly that he abandoned Americans (he was correct when he said through his Press Secretary, Jen Psaki, that he wasn’t merely “stranding” them), allies’ citizens, and Afghan partners in his desperation to meet the terrorist Taliban’s deadline.

Then Baby Kim has resumed northern Korea’s weapons grade plutonium-producing nuclear reactor—and not even troubling to conceal that effort.

Now this.

In a move that could have ramifications for the free passage of both military and commercial vessels in the South China Sea, [People’s Republic of China] authorities said on Sunday they will require a range of vessels “to report their information” when passing through what China sees as its “territorial waters,” starting from September 1.

And

[The PRC] claims under a so-called “nine dash line” on its maps most of the South China Sea’s waters, which are disputed by several other countries, including the Philippines, Vietnam, Malaysia, and Indonesia.

And by Japan and most of the rest of the world, including—used to be, anyway—the United States.

It’ll be instructive to see how the Biden/Harris administration responds to this demonstration of contempt for their timid fecklessness. Compare their response, then, with the prior administration’s reaction to the PRC government’s declaration of an ADIZ that encompassed significant swaths of the South and East China Seas airspaces and tried to require all air traffic to check in with the PRC. (Spoiler: that administration ignored the PRC’s demand, and so did most of the rest of the world.)

It’s shaping up to be a disastrous period of American headlong retreat under this Progressive-Democrat administration.

Government Fiat

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This is what the Progressive-Democrats in charge of our Federal Government are plotting [sic] in the way of drug pricing under Medicare Part D (the drug provision of Medicare), per the Tax Foundation.

Under HR 3 [the Elijah Cummings Lower Drug Costs Now Act], if drug manufacturers do not agree to participate in negotiations, or do not agree to the negotiated price, they would be subject to an escalating excise tax on the sale of the drug in question. The tax would kick in at 65 percent and would rise by 10 percentage points each 90 days the manufacturers are in “noncompliance,” reaching a maximum tax rate of 95%.

What “negotiation?” This is the price we’re negotiating for, says the Health and Human Services Secretary, the Government official that HR3 says will represent the Government.

Here’s our counteroffer, says the drug manufacturer.

No, no, that’s too high, says SecHHS, repeating his original offer. Then he says, Here’s your noncompliance tax.

This isn’t negotiation, yet that’s what will occur, with the Government holding all the cards. Targeted drug manufacturers and sellers would not even be allowed to opt out of Medicare under HR3.

The Tax Foundation is concerned about drug innovation, and rightly so.

I’m also concerned about the fate of free enterprise and of individual freedom.

Is Biden at it Again?

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Is this another dangerous failure of the Biden/Harris administration?

US officials have approved license applications worth hundreds of millions of dollars for China’s blacklisted telecom company Huawei to buy chips for its growing auto component business, two people familiar with the matter said.

Apparently, it’s been going on behind our backs since shortly after Biden took office.

But in recent weeks and months, people familiar with the application process told Reuters the US has granted licenses authorizing suppliers to sell chips to Huawei for such vehicle components as video screens and sensors.

It’s true enough that these moves are only claimed by Karen Freifeld’s childhood invisible “people familiar with” friend, but Biden’s actions here, if true, would be of a piece with his empirically demonstrated timidity in the face of our enemies.

The Value of a College Degree

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According to Credible:

High school graduates make about $39,000 per year, while those with a Bachelor’s degree earn $73,000.

Average student loan debt on graduation, though, runs a bit over $37,000, with a typical annual payment on that debt is more than $4,700.

Here are the annual incomes from some of the skilled trades, according to my arithmetic and data from Indeed. Based on 50-week years (because some vacation matters, even if it’s not paid):

  • Journeyman Electrician (an entry level): $48,500
  • Journeyman Plumber: $45,040
  • Welder: $44,020
  • Carpenter: $42,720
  • Pipefitter: $51,270
  • Ironworker: $48,640

Tradesmen, also, have none of that $37,000 of student debt coming out of their training.

Keep in mind, too, that doctors, lawyers, philosophers, teachers, and on and on, have no place to apply their skills (and no place to live or play in their off hours) without the trades to build those facilities, or without the trades to build the communications, power distribution, and transportation infrastructures to connect them and to provide the means by which to get to and from them.

The financial value of a degree might seem greater than the value of a certification in a trade, but its greater value depends on the prior existence of those trades.