Category Archives: Economics

Miscellaneous economy stuff

Protectionism and Protectionism

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Yukon Huang and David Stack, in their National Interest piece, worry about a trade war with the People’s Republic of China—it would be borne of American protectionism, don’t you know.

The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.

Plainly, they have no understanding of protectionism, of which damaging tariffs are only one aspect, and none of the type or protectionism practiced by the People’s Republic of China.

The PRC’s protectionism begins with its demand that foreign companies seeking to do business inside the PRC take on a domestic partner that will have a significant, if not majority, ownership of the joint enterprise as it operates inside the PRC.  The PRC’s protectionism continues with the government’s demand that, as part of that joint ownership, the foreign company transfer much of its proprietary technology to that partner—as a condition of forming the partnership.  The PRC’s protectionism goes further: the PRC government demands a backdoor into the foreign company’s software so that the government can “monitor” the foreign company for “compliance.”

Rather than focusing on trade frictions, America’s interests should be on strengthening investment relations by concluding a bilateral investment treaty (BIT). The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.

Perhaps a BIT could be useful, however, the bit about increasing productivity is a complete non sequitur.  Increasing our labor force’s productivity would be a general good in its own right; that has nothing to do with optimal trade relations.

Beyond that, the only way a BIT—or any multilateral trade agreement involving the PRC—would be beneficial to us (or to the PRC’s citizenry, come to that) would be if, just as a start, those PRC protectionisms were corrected.

Filibusters

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Since the Progressive-Democrats in the Senate are dead set on shutting down the Federal government (I won’t argue the utility of the government being shut down or by how much it actually would be) for the sake of their own petty political egos, it’s time to get rid of the filibuster on all matters relating to the budget, spending, and revenues.

It’s time to put an end to the obstructionism of these Precious Ones.

Full stop.

Budget Cuts

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Because it isn’t possible to get the same bang for fewer bucks by using the smaller amount more efficiently.  No, just keep throwing money at the thing; if a single dollar sticks, it’s sufficient.

That’s the apparent position of folks on the left like Bill Nye, the guy with a Master’s degree in Engineering who represents himself as “The Science Guy.”

Nye, who served as an honorary co-chair for the March for Science, chided lawmakers who ignore scientific research in areas like climate change and railed against the Trump administration’s proposed budget cuts.

I’ll leave the irony of a climatista chiding others for ignoring scientific research to others.  The question here is the budget cut proposals that so confound the engineer.

It’s possible, and it’s necessary, to spend our tax dollars much more efficiently, but this is a fact as lost on pseudo-scientists as it is on most any Progressive-Democrat.

The Congressman Misunderstands

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What he misunderstands, though is a very expensive thing to misunderstand: basic economics.  Congressman Joe Crowley (D, NY), Vice Chairman of the House Democratic Caucus and member of the House Ways and Means Committee said in an interview with PJMedia‘s Nicholas Ballasy that he’s willing to “experiment” with a VAT in the US, “what effect that will have.”  And

PJM: … A traditional VAT tax that works in other countries or that other countries have, at least, do you think that could work in the United States?
CROWLEY: Well, it’s been something that we haven’t necessarily gone to in terms of—sales tax, for instance, is typically a states’ issue, you know, states have used that nominally in terms of tax purposes in terms of the impact. A VAT would be usurping that, taking for the federal government as opposed to state, and I think we’re open to talking about that and seeing what effect that will have because I do think that bringing our overall [corporate tax] rate down does make us more competitive, a more attractive place.  …   So I don’t think we have to go to 12% or to 20% per se; getting that right down is what we’re attempting to do and doing it in a way which is the least invasive or hurtful to the average working man in this country.

First, there’s a hint there: that “States’ issue” bit.  Other countries that use a VAT (which taxes an item sold at every stage of its production—at every stage at which value—as defined by the taxing government—is added to the product in production—so that by the time the end user buys the item is paying mostly tax value and not product value) are not federal republics like the US is, where the States in the federation are on an equal plain, at least nominally, with the central government in most national domestic areas, like taxing.

Second, it does no good to an economy to lower tax rates in just one area while other tax rates are increased in other areas (vis., the imposition of a VAT) to make up for it.  Total, overall taxes must be lowered, all tax rates must be reduced.  It’s the increased retention of money in the hands of citizens who work and who own businesses—shareholders—that spur economies, not the transfer of that revenue to government for spending.

Third, it’s not at all least evasive or unhurtful to force the average working man to pay a VAT-inflated price for everything he wants to buy or must buy.

Then this tidbit:

PJM: We’ll see. It’s going to be a quite a debate.
CROWLEY: It will be. There is a reason why neither healthcare nor tax reform was suggested by Democrats after the election as things we could work on right away—it was infrastructure. We did that for a reason—for some reason, that seems to have been lost on everyone.

Yewbetcha.  The Progressive-Democratic Party standard plan: get spending locked in first, then see about taxing to pay for it.

Refusal

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Then Senate Majority Leader Harry Reid (D, NV) said he would never work with a President Mitt Romney.

Mitt Romney’s fantasy that Senate Democrats will work with him to pass his “severely conservative” agenda is laughable[.]

Then Senate Minority Leader Chuck Schumer (D, NY) stated his refusal to work with President Donald Trump:

He moved so far over to the right that it’s virtually impossible to work with him[.]

If that wasn’t clear, the Progressive-Democrats have made it so:

Senate Minority Leader Chuck Schumer (D, NY) said congressional leaders can reach an agreement on spending, but only if the White House stays out of negotiations.

The Party of Obstruction is making another thing possible: maybe it’s time to eliminate procedural filibusters in the Senate on all matters related to spending and revenue.  Force the opposition to filibuster the old fashioned way, actually taking to the floor and speaking, instead of hiding in the comfort of the sidelines with a vote.