Category Archives: Economics

Miscellaneous economy stuff

Golly Gee

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Hold the presses.  German Chancellor Angela Merkel says Germany will honor its commitment to spend 2% of its GDP on NATO after all.

Oh, wait.  She says Germany will keep its word

by the early 2030s.

So far off, that amounts to a promise to be kept when the German government—whichever it is in all those years—feels like it.

Merkel’s “promise” is an insult to our intelligence.  Especially since Germany’s commitment, and those of its fellow NATO nations, was made five years ago and the nations promised to meet 2% by 2024.

Great Britain’s Socialist Party

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Nominally, it’s the Labour Party, but its MFWIC, Jeremy Corbyn is moving to make it overtly socialist.  He’s jumped onto the Free Stuff, Higher Taxes, and Pay Raises for Government bandwagon with both feet. Sure, these things have been staples of Labour for generations, but Corbyn really intends to outdo his forebears. Corbyn intends to nationalize enormous sectors of the British economy:

  • fixed line network of telecoms provider BT [British Telecom] to provide free broadband
  • rail
  • water
  • mail delivery services.

Having taken over the economy, Corbyn then would raise taxes even higher than they are already, reorganize what would remain of private enterprises, and increase spending:

  • top 5% of earners would see higher taxes
  • workers would be placed on company boards
  • increased spending on health, education, and transport

A Labour victory will do no good for Great Britain, in or out of the EU’s gaol.

Socialism Strikes Baseball

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Major league baseball is moving to rid itself of its minor league teams—42 of them—in a couple of years.  Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) demurs.

Closing down minor league teams like the [Lancaster, Single-A affiliate of the Colorado Rockies] JetHawks would be a disaster for baseball fans, workers, and communities across the country.  We must protect these teams from corporate greed.

Because corporations are welfare organizations, not for-profit enterprises for the benefit of their owners, who have their money at risk.

Sanders was supported by a letter to the MLB from 100 Congressmen:

If enacted, [the elimination] would undermine the health of the minor league system that undergirds talent development and encourages fan loyalty.  It would particularly be felt in areas far from a major league team or where tickets to a major league game are cost-prohibitive.

All of that may well be true.  However, in a free market economy, that’s a decision of the business owners, and it will be supported or rejected in that market by the folks to whom those owners are truly beholden, their customers.

Never mind all that, though.  Playing baseball is a human right.  Baseball corporations are obligated to have non-major league teams.

At least in socialist economies.

Sovereignty and Economics

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The member nations of the European Union, and particularly of the euro monetary union subset of the EU, may have surrendered too much sovereignty to the EU.  The European Commission, the Executive Branch of EU governance, has decided that

eight European Union member states risk breaching the bloc’s tough fiscal rules next year by missing their debt and deficit reduction targets.

On the other hand, the EC has decided that other nations are not spending enough.

…the Commission is encouraging countries with strong finances, particularly Germany and the Netherlands, to spend more to help the eurozone economy. Both countries have been under pressure to boost spending to stimulate growth across Europe….

Because nations with economically sound budgets, governments whose men have developed and maintained those sound budgets, are not bound by their own people’s imperatives, they’re not bound by their own nation’s welfare first. No, these governments must spend their citizens’ weal propping up nations that are missing their debt and deficit reduction targets.

Even though those nations that are missing those targets are doing so deliberately and as results of carefully thought-out national economic policies. Fiscally sound nations are responsible for—and to—fiscally unsound nations, not to their own nations.

This is important because the nations of Europe are unique from each other in their cultures, their views of the role of government in men’s lives, even in their views of the purpose of money.  There can never be balance within such disparity.

This One Europe Government ideology is a vanguard of the One World Government ideology that would sacrifice all national sovereignty, that would carve all nations so as to fit one ideology’s Procrustean Bed.

Financial Transaction Tax

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The Progressive-Democratic Party Presidential candidates (with, for now, the lonely exception of Joe Biden) all want one.  Fred Hatfield, once a (Democrat) commissioner on the Commodity Futures Trading Commission, correctly identified one downside of such a thing.

The tax would be bad for farmers, whose support is critical in the Feb 3 Iowa caucuses.  Farmers manage risk by entering into futures contracts, a type of derivative. Under Mr [Progressive-Democratic Party Presidential candidate and Senator Bernie (I, VT)] Sanders’s proposal, trades of corn and soybeans futures would be taxed at a rate of 0.5 basis point [0.5%].

Even if farmers could somehow be exempted from a financial transaction tax, their cost of hedging would rise because the general cost of trading—of any sort—in commodities would rise, both from the tax and from the reduced liquidity of the derivatives as other traders eschew those markets. Such a tax could only negatively distort the market—as any tax in any market will do.

Moreover, those distortions would extend to other markets: grocery prices would rise from the increased prices faced by farmers and passed on to farm product buyers, beef and chicken prices would rise from the increased cost of feed, alternative farm produce would rise as other crops would substitute in (with their own increased demand-driven prices), and on and on.

And that’s just in agriculture.  The same cascading consequences would occur in all equity and debt markets, in all other commodity futures and forward markets—like metals: iron, aluminum, copper, in addition to “currency” metals—and on and on.

Investment in general, including for plant improvement and innovation, would be depressed by such a tax.

Sanders’, et al., financial transaction tax would have all the broadly negative impact on our economy as does any other social engineering-motivated tax.