Category Archives: Economics

Miscellaneous economy stuff

A Continued Power Grab

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The People’s Republic of China objects to the sale of defensive weapons to the Republic of China.

China will sanction US firms that participate in arms sales to Taiwan [The Wall Street Journal‘s conflation of the island with the nation that sits on the island], after Washington approved sales of $2.2 billion in tanks, missiles and related military hardware, Beijing said.

The PRC’s Foreign Ministry has justified the threat with this:

the arms sales “harmed China’s sovereignty and national security”

Of course, it does no harm to the PRC’ sovereignty to sell weapons to a sovereign nation.  Of course it does no harm to the PRC’s national security to sell defensive weapons to a sovereign nation that’s so much smaller than the PRC.

All the sale does is increase a sovereign nation’s ability to defend itself against the aggression, the threats of invasion, which the PRC has so repeatedly leveled against that sovereign nation.  If the PRC has no such aggressive intent, it has nothing to fear from the sale.

The PRC’s moves would be nonsensical, did they not amount to such a cynical and naked and continued grab for power.

Distortions and Misguided Solutions

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Wrong answers:

The International Organization for Migration (IOM) and UN Refugee Agency (UNHCR) have called on the EU to implement a series of measures aimed at assisting people trapped in Libya or at risk of dying on the Mediterranean Sea. The suggestions include restarting a program of organized sea rescues.
In the past European State vessels conducting search and rescue operations saved thousands of lives, including through disembarkations in safe ports,” the IOM and UNHCR noted in a statement on Thursday. “They should resume this vital work….”

Why is there no effort, though, no euro—not a single cent—committed to helping these people at the source?  Certainly, it would be very difficult to help Libya, Sudan, Niger, et al. improve and correct their situation, political and economic, so that their citizens wouldn’t feel constrained to leave.  But “hard” means “possible,” and France has shown some of that possible in Chad, and Niger has made progress on its own with very damn little—too little—help from outside.

But it’s cheaper in the short-term and easier to focus on rescues at sea and “disembarkations in safe ports” than it is to do the hard work of a long-term solution.

But were such long-term efforts brought about, the flow of refugees would fall off markedly, and sea rescues and relocations would become much more feasible.

Of course, at that point, the virtue signalers would need to find something else with which to signal their…virtue.

And now the distortion: the IOM and UNHCR pronounced in a joint statement

NGO boats…must not be penalized for saving lives at sea.

DW contributed to the distortion:

Independent rescue operations such as Sea-Eye…which rescued 44 people near Libya earlier this week [as of 12 Jul], have attempted to fill the void left after earnest EU efforts ceased, but non-government organizations face increasing persecution from governments such as Italy’s, which has tried to frame their efforts as criminal.

Italy has done no such thing. Italy has said nothing about rescue operations; it only has enforced its laws concerning entering Italian territorial waters, even Italian ports, without permission—these are criminal acts, no framing required.

The situation concerning the refugees is not helped by such shenanigans.

A Thought on Tariffs

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The tariffs as used by President Donald Trump are viewed by many as having no impact on our overall trade deficit, and much is made of Trump’s disdain for trade deficits.

Thirty months into the Trump Presidency, the US economy continues to import more than it exports. This isn’t a problem, since the trade deficit is of no great consequence as an economic measure.  But in President Trump’s telling this is a clear and present danger….

Suppose something else, though.

Mr Trump has imposed 25% tariffs on $200 billion of Chinese goods, and he’s threatened a duty on another $300 billion. This has narrowed the US-China bilateral goods trade gap in recent months, but the total US trade deficit reached a record high in 2018. … Producers are leaving China, but not for America.
While Chinese goods exports to the US fell 12.3% year-over-year from January through May, Vietnam saw a 36.4% increase, according to US Census data. Taiwan had a nearly 22.5% year-over-year increase in the same five months, more than triple the increase from 2017-18. South Korean exports to the US increased 12.4% over the period.

Recall one of Trump’s other reasons for disdaining the trade deficit: the People’s Republic of China declines to play by international trade rules, and it steals or extorts other nations’ (ours in particular as one of the, if not the, leader in) technology and intellectual property, along with merely proprietary materials.

If the PRC doesn’t want to play by the same rules as the rest of us, it doesn’t need to trade with the rest of us.

Thus: if the tariffs aren’t realizing their first secondary purpose, moving production back to the US, they are gaining their primary purpose: moving production, and associated export, out of the PRC.

That’s not all bad.

Hypocrisy of the British Left

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Yes, ex-Prime Minister John Major claims himself a Conservative, but he’s acting more and more Left.  Boris Johnson, British Prime Minister wannabe and front-runner to replace the resigned Theresa May, has said that if needs be, he’ll prorogue Parliament to block an anti-no-deal Brexit vote, if a no-deal departure is necessary.

Prorogue: a temporary suspension of Parliament following petition of the Queen by her first minister—the Prime Minister—for permission to suspend Parliament and her granting that permission.  This use is unusual; prorogation is normally used for normal terminations of Parliamentary sessions; the term also describes the interval between that termination and the normal opening of the next session.

The former British Prime Minister John Major on Wednesday warned he would personally take legal action to stop any leader using a suspension of parliament to deliver a “no-deal” Brexit.

And yet, he threatens:

In order to close down parliament the prime minister would have to go to her Majesty the Queen and ask for her permission to prorogue. If her first minister asks for that permission, it is almost inconceivable that the queen will do anything other than grant it.
She is then in the midst of a constitutional controversy that no serious politician should put the queen in the middle of[.]

Thus, the hypocrisy: Major says he personally will precipitate that constitutional crisis with his own lawsuit to stop the process.

I for one would be prepared to go and seek judicial review.

Never mind that his case can only lose: as part of the Queen’s (any British monarch’s) Royal Prerogative, the power and the authority to prorogue belongs only to the monarch.  No British court can overrule her.

Hmm….

Progressive-Democrats’ Minimum Wage Push

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Progressive-Democrats want to raise the national minimum wage to $15/hr.  Here are some back of the envelope numbers that could result.

The CBO says that the new minimum would cost 1.3 million Americans their jobs (in the optimistic scenario; their more pessimistic scenario had 3.7 million Americans put out of work): their current wage would go from $10.10/hr (CBO’s 2014 minimum wage which formed the core of their that-year outcome analysis) to $0.00/hr. The CBO also says that the $15/hr minimum wage would lift 1.3 million American workers out of poverty.

So, 1.3 million, or many more, Americans would lose their jobs so 1.3 million, at best, could get above poverty.

There’s more to it than that, though.

Based on that same $10.10/hr prior minimum that the Progressive-Democrats tried for just five years ago, the currently proposed job losses would result in a bit over $26.25 billion dollars lost to our economy per year through lost wages.  That’s based on only 1.3 million American workers being fired, mind you.  Balancing that would be that $4.9/hr raise (because, by CBO assumption, $15/hr is a non-poverty wage) for the lucky 1.3 million, or a skosh under $12.75 billion inserted into our economy each year.  That’s a net loss to our economy of some $13.5 billion per year.

If we adjust all of that for the actually extant minimum wage of $7.25/hr, the numbers shift to $19.5 billion per year lost to our economy in lost wages from those 1.3 million being fired, and a gain for the lucky ones of $20.2 billion per year.

That makes the Progressive-Democrats’ latest proposal a wash on wages in our economy.  Tell that wash business to the fired workers, though, and hear what they think of break-even.  Oh, and what was that, again, about “livable wages?”