Category Archives: Economics

Miscellaneous economy stuff

Mistaken Emphasis

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This is what our Federal Reserve Bank MFWIC Jerome Powell said, with a straight face, on public radio last Thursday:

Given the low level of interest rates, there’s no issue about the United States being able to service its debt at this time or in the foreseeable future[.]

Our current national debt is some $27.8 trillion. At Powell’s low interest rates, our interest payments on that debt will amount to some $380 billion for FY2021. Our economy has use for those $380 billion; it would behoove Powell and our…politicians…to cut out the borrowing and begin paying down the debt, rather than hiding behind “sustainability.”

Powell’s claim is just a tad bit circular, too: it’s his Fed that’s artificially suppressing those interest rates. And he’s going to lose control of the whole thing when, as our economy recovers from the Government-created shutdowns from the Wuhan Virus situation, Mr Market begins bidding down the prices of private economy debt instruments—driving interest rates higher—and walks away from Federal debt in favor of those private instruments’ returns—which will drive up Federal interest rates, whether Powell likes it or not.

After that claim, too, Powell added this, with no sense of irony:

[T]here will come a time—and that time will be when the economy is back to full employment, and taxes are rolling in, and we’re in a strong economy again [see, by the way, a couple paragraphs above]—when it will be appropriate to return to the issue of getting back on a sustainable fiscal path.

“Get back on a sustainable fiscal path.” Implying—no, meaning very clearly—that we’re not now on a sustainable fiscal path.

Which drives the question: since we’re not on a sustainable fiscal path, in what universe is our ability to service our national debt—which is Fed-speak for “make the interest payments, to hell with paying down principle”—a sustainable path at our debt’s current, and growing, level?

Income Inequality

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The Left and their Progressive-Democratic Party like to bleat about this and to complain further about how it has only gotten worse.

They know better.

Here’s a little tidbit, from Phil Gramm’s and John Early’s op-ed in Tuesday’s Wall Street Journal:

While the disparity in earned income has become more pronounced in the past 50 years, the actual inflation-adjusted income received by the bottom quintile, counting the value of all transfer payments received net of taxes paid, has risen by 300%. The top quintile has seen its after-tax income rise by only 213%. As government transfer payments to low-income households exploded, their labor-force participation collapsed, and the percentage of income in the bottom quintile coming from government payments rose above 90%.

That bit is disguised, as Gramm and Early point out, by the Census Bureau’s decision to not count taxes paid and Government transfers—welfare payments—paid when it measures income.

Of course the Left and their Party want to ignore actual facts—that’s demonstrated by that last part: [low-income household] labor-force participation collapsed, and the percentage of income in the bottom quintile coming from government payments rose above 90%.

Those are carefully created Government dependents—and votes collected in payment for those handouts.

“Sanctions”

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That’s what US, Canada, Britain, and European Union politicians are claiming they’ll impose on the People’s Republic of China in response to PRC genocide efforts against the Uyghurs in the PRC’s Xinjiang Uygur Autonomous Region.

The sanctions are expected to vary in type, and will include Global Magnitsky economic sanctions on individuals alleged to be involved with the mistreatment of the Muslims in the Xinjiang region of China.

Among those sanctions are these which the US, Canada, the UK, and the EU already imposed last Monday to four (count ’em) PRC officials:

  • Zhu Hailun, former deputy Communist Party head in Xinjiang
  • Wang Junzheng, party secretary of the Xinjiang Production and Construction Corps
  • Wang Mingshan, member of the Xinjiang’s Communist Party standing committee
  • Chen Mingguo, director of the Xinjiang Public Security Bureau (PSB)
  • Xinjiang Public Security Bureau itself

Politico noted, interestingly, that the EU explicitly omitted to sanction the top Communist Party boss in Xinjiang, Chen Quanguo.

That’ll show them. We’re wagging our fingers very firmly at the PRC, and shortly we’ll be wagging our fingers even more vigorously.

Right.

What’s truly needful here is—at the minimum—a ban on import or even purchase of goods manufactured, including constituent parts, or assembled in Xinjiang or any business anywhere in the PRC with any sort of tie back to Xinjiang, and a parallel ban on doing any sort of business with a Xinjiang-associated enterprise.

Better would be to expand that list to include an ever broadening set of imports from or exports to the PRC until that nation provides publicly available and publicly verifiable proof that the PRC has put an end to its assault on the Uyghurs.

Fat chance, though, as the politicians of the four nations have shown themselves too timid to do more

Minimum Wage and “Must Pass” Bills

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Congressional Progressive-Democrats are looking for ways to pass a national minimum wage law through Congress.

Progressive House Democrats are rapidly searching for ways to revive the $15 minimum wage increase after a stinging loss in the passage of President Biden’s $1.9 trillion coronavirus stimulus law.

Congressman Mark Pocan (D, WI):

We will get at least 50 votes in the Senate, and we will find a way to finally do what Congress has been negligent to ask for too long; whether it’s adding it to a must-pass bill or pushing it around those arcane Senate rules or some other measure, America will get the raise that is long overdue that we are committed to[.]

Along strictly Party lines and/or by being buried in a bill that Congress and the President will decide the nation can’t exist without.

Not that anyone in the Progressive-Democratic Party cares about bipartisanship. Here’s Congresswoman Ilhan Omar (D, MN):

We should not allow any obstacles to get in our way as we push for this policy. It’s imperative that we explore every avenue, every strategy, that will allow us to push through[.]

And here’s the utter contempt for those ordinary Americans who run the small and mom-and-pop businesses that will be most damaged by a nationally mandated minimum wage. Congressman Donald Norcross (D, NJ), Co-Chair of the Progressive-Democrats’ Congressional Labor Caucus insists that:

small business owners opposed to a $15 minimum wage hike are crying “crocodile tears,” arguing that “they should be happy because it levels the playing field with competition; across the street will be paying the same thing….

Yeah—those whiners should be satisfied that all of them are being equally damaged. Never mind that they aren’t only competing against those “across the street;” they’re also competing against the major businesses and chains—who can handle a mandated increase in wage.

But hey—the Progressive-Democrat knows far better, from the august heights of his Beltway bubble, than do actual business owners and operators what the situation is on the ground.

There’s a hint buried in there, though, somewhere. If the concept of a Federally mandated minimum wage can’t pass through Congress as a stand-alone bill, maybe it’s just barely possible that a Federally mandated minimum wage is a terrible idea, a bad law, and something that us Americans—and us actual business owners—don’t want.

Earmarks

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Progressive-Democrats in Congress are moving to bring these back. On this, I tend to agree.

Go ahead and do earmarks; they can be useful horse-trading tools. Just set aside 1% of the budget, the rough amount historically spent on them, as a separate line item.

Then require all earmarks in their aggregate to fit within that 1%, and require each earmark to be individually debated on the record and on the floor of the House and the Senate.

Let the public see, up front, what their tax dollars are paying for, and let the particular constituents see how effective their Congressman and Senator really are in representing them in each Congressional session.