Category Archives: Economics

Miscellaneous economy stuff

American Education

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Our public school establishment has grown enormously over the last two-and-a-half generations, even as the public school student population has grown not so much, and public school performance as measured by student testing performance has not improved a single minim. The graph gives, as of 2017, the total change of the indicated personnel and student populations; you can see the changes year-by-year here [there’s a replay button at the top of that graph].

Mark Perry put his conclusion succinctly:

Bottom Line: Despite the significant increase between 1970 and 2017 in the number of public school teachers (57%) and non-teaching staff (151%) relative to the 10.4% increase in students, the significant 30% decrease in the pupil-to-[teacher] ratio in public schools and the significant 154% increase in inflation-adjusted spending per pupil attending public schools over that period, there was basically no change in academic achievement. More spending + more teachers + more administrators + no change in education outcomes = a failing public school monopoly that benefits entrenched unionized teachers who vigorously try to squash competition from charter schools and educational choice at the expense of taxpayers, parents, and students.

What he said.

Which puts a premium on two distinct, but each necessary, actions: defanging the teachers unions and expanding parental access to schooling alternatives like voucher schools and charter schools.

Critical to that second item is this: per-student school funding via taxpayer monies needs to stop being school funding and be transformed into student funding: the monies need to accompany the student to the school the parents select for him. If the parents choose home-schooling as their alternative, they should get, in lieu of full-up per-student funding, an allowance to cover teaching material and supply expenses. And, conditioned on performance on State-mandated testing, a serious honorarium for their teacher labor, with the allowance plus honorarium not exceeding the per-student funding rate.

The Biden Tax Plan

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Progressive-Democratic Party Presidential candidate Joe Biden thinks American businesses don’t pay enough taxes into Government’s coffers.

“Vice President Biden has been clear that it’s absolutely unacceptable for some of the biggest companies in America, like Amazon, to pay next to nothing in taxes,” Michael Gwin, a campaign spokesman, said.

This is a carefully misleading claim that Biden is making through his spokesman. Some of the biggest companies in America actually pay billions of dollars in taxes for all that each of those companies pay a net amount of close to zero. That, though, is an outcome of our byzantine tax code that lets companies—big and small; although it’s the biggest that are able to make the most of it—balance a tax bite here with a subsidy, write-off, credit, or what-have-you there in order to achieve low/zero overall liability while paying those individual billions.

Biden knows this full well. It is, after all, his Senate and his Obama-Biden administration (and far too many Republican Senates and administrations) that have set up our present tax system.

That aside, though, the real, underlying, problem is that business taxes hurt consumers and our economic performance, and higher taxes would damage us and our economy even more.

Nevertheless, Biden wants to eliminate those tax breaks and impose higher rates. And more: Biden wants to

impose a 15% minimum tax on profits reported to investors….

That alone would raise somewhere between $166 billion and $400 billion over the next 10 years. Another way to look at it is that this minimum tax would take between $166 billion and $400 billion out of our companies’ treasuries and consumers’ pockets over the next 10 years.

Money taken from a business reduces its ability to fund R&D, market research, improve physical plant, and pay workers more or pay more workers.

Compliance with business tax requirements is an additional cost imposed on each business, not naturally by market imperatives, but artificially by Government fiat—that tax code.

In the end, businesses don’t pay those taxes or compliance costs anyway. We taxpayers pay for the offsets—money out of our pockets—and we customer/consumers pay the taxes not completely covered by the myriad offsets, as well as those compliance costs, in the form of the higher prices businesses charge.

Even a simple Just Gimme the Damn Money tax code that Progressive-Democrats seem so badly to want would only reduce compliance costs (maybe—they’d demand their own proofs of compliance and of revenue). It would not reduce the money taken out of businesses’—or consumers’—pockets.

Progressive-Democrats and Economic Recovery

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Progressive-Democrats don’t seem to care about economic recovery, only about using the current Wuhan Virus situation and the economic dislocation the virus has spurred for their own political power gain.

This is made plain by House Speaker Nancy Pelosi (D, CA) in an interview she gave to CBS News‘ Face the Nation Sunday.

…what we will not support is the following. What they’re saying to essential workers, you have to go to work because you’re essential. We’ve place no responsibility on your employer to make that workplace safe and if you get sick, you have no recourse because we’ve given your employer protection.

This is completely disingenuous. There already exist a plethora of labor law making employers explicitly liable for the existence of workplace negligence as well as any injuries resulting from that negligence. There already is responsibility on your employer to make that workplace safe.

There’s also this exchange between FTN‘s Margaret Brennan and Pelosi regarding the Federal addendum to unemployment insurance payments:

MARGARET BRENNAN: Well- but specifically on what has just expired, that- that boost of $600 to federal unemployment. Republicans and the White House are saying that they want to keep some money going, but bring it down to about 70 percent of prior wages. Is that something you can accept?
SPEAKER PELOSI: Well, let me just say this. The reason we had $600 was its simplicity.
MARGARET BRENNAN: Right.
SPEAKER PELOSI: And figuring out 70 percent of somebody’s wages. People don’t all make a salary. Maybe they do. They make wages and they sometimes have it vary. So why don’t we just keep it simple? Unemployment benefits and the- the enhancement, which is so essential right now and that’s really where we are starting and–

Seventy per cent of somebody’s wages might be a little bit more complex than a flat rate, but the arithmetic is something any third grader can do. And we have these neat, new machines—the technology for which was first developed almost 100 years ago and constantly, rapidly improved since—even the Federal government has them, computers, that can do the mass calculations and record keeping necessary.

No, this is just an excuse to justify another piece of Progressive-Democrat obstructionism.

And this:

MARGARET BRENNAN: Will you stay in session until a deal is negotiated?
SPEAKER PELOSI: We can’t go home without it.

After months of hiding out in their several basements instead of convening to conduct the nation’s business—which the Senate has been doing all along, in person, in the Senate chambers. Pelosi is just cynically virtue-signaling with that.

Pelosi and the Progressive-Democrats she leads are simply raising all of this obstruction because they do not want serious support for our economy, for getting businesses back into production, workers back to work, consumers back to spending and saving, our economy back to thriving.

Economic chaos works for the Left. Prosperity works for everyone else.

Government and Student Debt

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In an article on the possibility of the Federal government extending its current moratorium on student debt repayment, The Wall Street Journal posed a question to its readers.

How should Congress address the backlog of student-loan payments borrowers will owe after Sept 30?

I say, mostly by leaving it alone. The loans are strictly business arrangements between the borrower and the lender.

In a free market economy, government has no role here, other than to allow student debt to be discharged through bankruptcy like most other debt. Such bankruptcies then must flow with all the ramifications they entail for both the lenders and the borrowers.

Government also should stop guaranteeing student loans. If there needs to be a guarantor in order to have a student debt market at all, let the colleges and universities be the guarantors, either individually or via a consortium. It is, after all, the colleges’ and universities’ high prices and non-marketable or low-income-producing majors that drive the difficulties graduates have with their student debts.

Internet Security

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There is a move afoot—and it’s making significant progress—to develop and deploy a quantum computing Internet.

A group led by the US Department of Energy and the University of Chicago plans to develop a nationwide quantum internet that could be functional in about a decade and with the potential to securely transmit sensitive information related to national security and financial services.
“What we’re moving forward on is building out quantum networks [to] someday…turn into a full second internet, a parallel internet to the digital internet,” said Paul Dabbar, the Energy Department’s Under Secretary for Science.

That would be terrific if it actually comes to fruition. Especially this part:

“Literally anything that would be transmitted encrypted today would be suitable for the quantum internet in the future,” Mr [JPMorgan Chase & Co’s Managing Director, Head of Research and Engineering, Marco] Pistoia said in an email.

Of course, that includes the personal and business correspondence of US citizens.

A problem I have with such a development, though, is this:

“A quantum network, because of physics, is by definition completely secure,” Mr Dabbar said.

No. A quantum network is not the network to end all networks. Such a network is not because of physics…by definition completely secure.

A quantum network is completely secure because of physics as we understand physics today. Security is, and always will be, an arms race between the cryptographers and their evolutions on the one hand, and the hackers and their evolutions on the other.

The biggest threat to security is just this sort of complacency.

There are other problems, and they are not unique to quantum networks, either. One such is a basic denial of service attack, where the hacker doesn’t care a single bit about encryption—at least not directly—but only in denying user access to the network or any node on it. The motive for that denial may be petty vandalism, “protest,” extortion—give me that document you’ve got encrypted on your quantum subnet (so much for quantum encryption)—to any number of other not yet imagined reasons.

Another is the phishing expedition wherein an employee is suckered into taking some action that grants the hacker access to the network.

Then there’s that personal communication secrecy—a citizen’s wish to keep his private communications private, including from the prying eyes of Government. Quantum network use would extend the tension between a citizen’s right to keep private things private and Government’s often entirely legitimate, even urgent, need to know. That, though, is just part of the noise of republican democracy.

By all means, develop and deploy the quantum Internet; it would be a huge step forward in data protection. Sooner is better.

But don’t be complacent about its security. And don’t let up on the need to protect against other forms of attack.