Category Archives: Economics

Miscellaneous economy stuff

Why Not All of Them?

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President Donald Trump wants Congress—which is to say, Republicans, since the Progressive-Democrats in Congress want nothing to do with any Trump or Republican generally proposal—to take up welfare reform as the next major Government revamp after tax reform goes through (assuming, of course, a few Republican ego-riven snowflakes don’t blow that up).  However, Louise Radnofsky, who wrote the WSJ piece at the link, seems not to understand the scope of the problem.  Commenting on a speech concerning the matter that Trump gave in Missouri a bit ago, Radnofsky wrote this:

The president didn’t offer specifics about which of the dozens of welfare programs he was seeking to change….

How about all of them, Madam?

As Trump put it in that speech,

I know people that work three jobs and they live next to somebody who doesn’t work at all.  And the person who is not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off….

Now, it’s certainly true that there are welfare queens who are too lazy or too greedy to do actual work when they can get OPM for free.  They’re a small majority, though; most folks have enough self respect to want to work for their living and earn their way.  However, it far too often makes no economic sense whatsoever for them to do so.

Too many folks are trapped in the Progressive-Democrat welfare cage because they don’t have the skill sets needed to get jobs that pay as well as their aggregated welfare checks—and those that would work anyway are steadily being priced out of the low-skill jobs they would take by spreading minimum wage laws that require employers to pay more than the work available is worth.

Then there’s the welfare cliff.  Far too often, getting a job or a better job than the one currently held, or even simply accepting a pay raise, would put the person into a high(er) income bracket that would result in a cut in welfare payments greater than the value of the job, the better job, or the pay raise.  This net reduction in income would be lunacy, except for its effect on keeping folks trapped and voting for the politicians who control the handouts.

Reform all of the welfare programs, reform our welfare system as a system, and reform it extensively.  Go down, Trump and Congress, and let these people go.

That’s the Point

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Six months after it went into force, China’s tough new cybersecurity law is still troubling US technology executives who fear that it will put the intellectual property of their companies and the data they collect in jeopardy.

And

…while the law went into effect June 1, the Chinese government is still drafting specific implementation rules.

And

Company and trade-group representatives are also concerned that the network-equipment security reviews could expose proprietary source code, jeopardizing their trade secrets[.]

The People’s Republic of China wants other nations’ intellectual and technology property, and it’s willing to steal it in any way it can.  Especially targeted are businesses the PRC considers “critical information infrastructure:” computer-network operations in telecommunications, energy, transportation, information services, and finance.

Notice that.  These technologies also are critical to the other nations’ security. But that’s why the PRC demands the accesses and is so…hazy…about its rules facilitating getting those accesses.

One more reason to restrict the amount and nature of any business dealings with the mainland.

How Close Are the House and Senate Tax Reform Bills?

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See the table below, from The Wall Street Journal.  While the Left and its NLMSM emphasize the differences, and the Progressive-Democratic Party denizens rail at the claimed iniquities in their manufactured dudgeon, the tax reform bills on offer from the House and the Senate are remarkably similar.  The agree right down the line on the goals of tax reform, and they agree right down that same line on the means of achieving those goals.  The differences between the two bills are matters of degree, details bordering on trivial.

Tax rates and brackets differ only slightly, even the Senate’s seven brackets only amount to a finer parsing of income.  In both bills, the death tax disappears for at least eight years—four House election cycles, a Senate election cycle, and two Presidential election cycles.  It’ll be tough, even for the Progressive-Democratic Party, to let the death tax reappear after that amount of time, and the same difficulty will exist for letting the individual tax cuts disappear.

The biggest difference is with the Medical Expense deduction, but that effect on our general taxes or on Federal revenues flowing from the tax code reform is minor; settling it entirely in favor of one house or the other, without compromise, should be easily doable.

The House-Senate Conference should be able to settle these minor differences quickly.  Whether the Conference Bill passes both houses then will depend in large part on the egos of a very few snowflake Republican Senators.  Keep their votes in mind come primary season.

Tax Reform and SALT

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The Wall Street Journal Friday opined that a House-Senate conference on the tax reform bills passed by the House and then-on offer by the Senate (since passed, with some changes to the on-offer version) could improve on the two bills and produce a better one for final passage and President’s signature.  The Editorial Board is right as far as it goes.

Notably in the context of their piece and this post, one of those changes to the Senate’s version that was included in what finally was passed was a change to their complete removal of State and local taxes: the Senate-passed version now includes the House’s deductibility of up to $10,000 in property taxes paid.

But the Editorial Board included this in their piece:

…the bill’s biggest flaw, which is a lousy individual tax reform that raises taxes on many Americans in high-tax states. Eliminating the state-and-local income tax deduction, as both bills do, is sound policy. But the bills don’t offset that with a corresponding reduction in the top marginal tax rate.

This is disingenuous because the editorialists know better. It’s certainly true that, with SALT deductions severely restricted (only that $10k max deduction), citizens of Progressive-Democratic Party-run States likely will pay more in State and local taxes. But to call this a raise in taxes on those Americans is obviously false. Those (excessively) high State and local taxes were already in place, and the House and Senate tax reform bills do not, cannot, touch them.

The “offset” needed is not a “reduction in the top [Federal] marginal tax rate;” although such a reduction would be optimal in its own right.  No, the offset actually needed is for State and local politicians, with encouragement from those States’ Congressional delegations, to reform their own tax codes and reduce their own States’ spending.

It would seem that some members of the “Editorial Board” reside in New York and New Jersey while others phone it in from California.

Showcase Potential

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Brussels is worried, and we should be, too, but for different reasons.  The People’s Republic of China is gaining influence in eastern Europe, and it’s doing it with one of my favorite tactics: international trade as a national policy tool.

In Hungary it is hailed as the “Eastward Opening.” Serbian authorities see it as the glue in a “reliable friendship”, while the Polish government describes it as a “tremendous opportunity.” Yet the 16+1, a grouping of 16 central and eastern European countries led by China, receives more caustic reviews in leading EU capitals, with diplomats fearing it could be exploited by Beijing to undermine union rules and take advantage of growing east-west tensions in the pact itself.

The catalyst for the group is China’s ability to finance and build the roads, railways, power stations and other infrastructure that some poorer central and eastern European countries need. But the scope of its operations has spilled over into overtly political and strategic areas, breeding mistrust among some of the western European powers that dominate the EU’s agenda.

The Financial Times piece at the first link is well worth the read, but the quoted paragraphs are the sum of it.

We should be worried, but not because Europe—the EU—is beginning to lose the contest for the hearts and minds of central and eastern Europe to the PRC, even as it’s beginning to lose the contest for the geography to an aggressively acquisitive Russia.   We should be worried because we’re not taking advantage of the opportunity the People’s Republic of China’s moves in eastern Europe presents us.   This is a contest we cannot lose, were we to enter it at all.

The way we should enter this contest is two-fold, and one of those folds also would serve to counter, and to roll back, the gains being made by that empire-seeking, domineering Russia.  One fold is to engage with eastern Europe—all of those 16, but not the +1—economically through international trade.  We should be busily pursuing free trade agreements with those 16—and contra President Donald Trump, we should be working toward a regional free trade agreement involving the 16 nations.  And Great Britain.  True enough, central Europe also is the heart of the EU, and that would complicate trade agreements, but that shouldn’t stop us from pursuing, separately and in parallel, such arrangements with the nations of eastern Europe.

There’s nothing like free market competition to increase the prosperity of the citizens involved, and so the nations involved, and from that, showcasing—again—both the fatal weaknesses of centrally planned economies in contrast with free markets, and the power of individual liberties and responsibilities for each citizen compared to the stultifying “security” of Big Government doing for the citizens, while firmly controlling what Big Government will allow those same citizens to do on their own.

The other fold is a mutual defense arrangement, much like NATO although separate from and in addition to it, with certain nations of eastern Europe.  As a first stage in setting this up, the treaty nations should include us, Great Britain, each of the Baltic States, Poland, Czech Republic, Slovakia, Hungary, and Romania.  This arrangement would profit from a second stage that would include Finland, Sweden, Norway, and Denmark.  In addition to the ties generated by trade, the mutual defense imperatives would both move toward a strong barrier to Russian expansionism, and it would spur economic development as a happy side effect—to both the nations’ benefit and further to resist PRC inroads.