Category Archives: Economics

Miscellaneous economy stuff

The Business of Business and the Wuhan Virus

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Another precinct is passing in its results.

After scrambling to hoard cash in the spring, some large US companies that halted their dividend payments are reversing their decision, a sign that their leaders believe the worst of the crisis is behind them.

Mark Zandi, Chief Economist at Moody’s Analytics:

The resumption of corporate dividend payments is an encouraging sign that executives believe that the pandemic will soon be behind us.

And

[Kohl’s r]evenue fell 14%, compared with a 23% drop in the previous quarter. Kohl’s said it would resume its dividend in the first half of 2021.

And

Retailer TJX Cos said last week that it would resume its dividend, but at a 13% higher rate than it last paid in March, citing its cash flow and $10.6 billion in cash on its balance sheet. The company has reopened most of the TJ Maxx, Marshalls, and HomeGoods stores it had closed in the spring.
“We are very bullish on the longer-term outlook because that feels significantly better than it did at the beginning of [the third quarter] when we didn’t know where all of this was heading,” CEO Ernie Herrman said on a conference call.

Those are just a few of the myriad illustrative examples that aggregate into the trend. It’s time the bureaucrats in our governments, at all levels of jurisdiction, stopped abusing their authority and stopped their panicky responses to the Wuhan Virus situation.

Full stop.

Tax Breaks

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In particular, child tax credits and their proposed expansion, but the principle below applies across the board.

…pair the expansion of the child tax credit with extensions of expiring business-tax provisions, some of which have Democratic support.

Pairing in order to get the credit passed, one being a bell for the other’s whistle.  Refundable credits, too, so those who don’t pay much, if any, income tax can get their own taste. Here’s Progressive-Democratic Party Presidential candidate Joe Biden’s offer on the credit:

…a temporary expansion of the child tax credit that would bump the $2,000-per-child credit to $3,000 for most children and to $3,600 for those under age 6. He would expand the credit to include 17-year-olds and allow monthly payments, so families wouldn’t need to wait for lump sums at tax-filing time.
Mr Biden’s proposal would cost more than $100 billion a year.

Leave aside the fact that refundability is spending increase, not taxing cut.

Here’s a better idea: lower income tax rates (permanently) across the board, for both businesses and individuals.

Leaving all that money in the private economy, which is to say in the hands of the businesses and individuals who are earning the money, pays far more benefits far more quickly, running from the folks more efficiently spending their money than can any government spend it for them through businesses having more—again, of their own—money for capital improvement, product/service development, R&D, wages, hiring.

All that increased economic activity—real activity, not the fiction of government spending as economic activity—is what will help families with children. And if Government—or rather the politicians populating Government—take the additional step of not singling out particularly favored groups of Americans for special treatment, that increased economic activity will particularly help minority families, who are the ones most needful of access to that increasing prosperity.

Another Reason

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…why neither the People’s Republic of China nor the World Health Organization can be trusted.

Opposition from the Chinese government is preventing participants in a World Health Organization meeting on the Covid-19 pandemic from learning directly about one of the world’s biggest coronavirus success stories.
Taiwan hasn’t recorded a locally transmitted coronavirus infection in about seven months but has been blocked from participating in a virtual gathering this week [last week as this is posted] of the WHO’s 194-member World Health Assembly because of objections from Beijing, which considers the self-ruled island part of its territory.

WHO was carefully silent on the shunning, mindful of its master’s requirements.

Never mind that the Republic of China just might have some ideas on how to control the Wuhan Virus.

This is the WHO that Joe Biden wants us to cozy up to.

This is the PRC that Joe Biden wants us to trust so.

Foreign Takeovers of Domestic Companies

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Great Britain is concerned with

strik[ing] a middle ground between welcoming foreign investment and protecting strategic industries from takeover, particularly amid concerns around acquisitions by Chinese state-backed companies.

Thus,

Under…proposed rules, investors would have to notify the government about transactions involving 17 sectors including nuclear, artificial intelligence, transport, energy, and defense.

That would seem to make a foreign investment law unnecessarily byzantine, and require revisiting at some aperiodic intervals.  After all, what’s not strategic today might turn out strategic tomorrow. This is illustrated by the timing of this proposal.

The rules update a takeover regime dating back 20 years that the government says is no longer adequate.

Well, NSS.

I have a better idea (also because I don’t lack for hubris). Don’t worry about strategic sectors. Bar all foreign takeover transactions unless and until they’re approved by a CFIUS-like facility. It would work for us, too.

Joe Biden’s Agenda

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Assuming the unofficial results of the election become official. Here’s the nutshell:

Tax hikes for the rich, broadened health care coverage, and student loan forgiveness were some of the projects on candidate Biden’s to-do list.

Tax hikes on the rich will be tax hikes on the middle class and poor as well. Biden has promised to sharply increase Trump’s tax cuts on America’s businesses—which will result in higher prices to consumers, and those price increases will especially attack our poor. Biden has promised to increase personal income taxes on Americans making over $400,000, but he’s chosen not to index that to inflation, which means that more and more folks will face this tax. What’s not being talked about overmuch is his tax hike promise includes cutting back on the child care tax credit/subsidy—which hits our poor especially hard. Biden’s tax plan also includes vast increases on capital gains we have on our investments—which will badly hit our 401(k)s and IRAs. It’s true enough that taxes on investments inside those instruments go tax deferred until withdrawn, and then they’re taxed at ordinary income tax rates, which might make capital gains tax increases irrelevant. However, there are lots of stock investments outside of those tax deferred instruments, and that cap gains tax hike will deprecate those investment targets—which will deprecate the identical investment targets in otherwise tax deferred accounts.

Broadened health care coverage is the Medicare for All promise he made during the Progressive-Democrat primaries, which he now claims he doesn’t want, but which he signed up to in his Biden-Sanders Unity Platform. Even the watered down version that he now claims would, like his Medicare for All plan, throw millions of Americans off the private- or employer-provided health coverage plans that they currently have and prefer to have. Whether we want that or not. Keep in mind, too, the health care rationing and the loss of usefully timed access to specialized care that centrally controlled national health care systems universally devolve into.

Student loan forgiveness will just drive up the cost of future student loans as lenders are left high and dry. Unless they’re made whole from the forgiveness by…us taxpayers in the form of Federal make-whole payments—which is another tax on all of us, including those of us who make less than $400,000.

This makes Republican control of the Senate a Critical Item, and that control is by no means a done deal, for two reasons. Or maybe one-and-a-half reasons….

One reason is that North Carolina Senator Thom Tillis (R) only holds a 95,600 vote lead over the Progressive-Democrat rival in a race too close to call (as of Sunday). The two Georgia Senate races are going to a 5 Jan run-off, and the two Progressive-Democrat candidates are well positioned to pull out victories. Three wins would flip the Senate outright to Progressive-Democrat control. Two wins would flip the Senate to Progressive-Democrat control via the tie-breaking vote of the Progressive-Democrat Vice President.

The half reason is this: two Republican wins would leave the Senate with a Republican nominal majority of 51-49. Nominal because that would leave Utah Senator Mitt Romney (R) in a too-important position. While he’s usually a Republican vote, his animus toward President Donald Trump is such that he’ll be an unreliable Republican vote on Progressive-Democrat matters that would undermine or altogether undo a Trump policy.