Category Archives: Economics

Miscellaneous economy stuff

Ending Subsidies

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President Joe Biden wants to end fossil fuel subsidies, per his budget offering.

I actually partly agree with him on this. But only partly, because he’s only partly ending subsidies—those for fossil fuels. He needs to end—or propose ending; it’s Congress that has to do the deed—all subsidies for any purpose in any industry.

Still he could make a major step forward were he to produce a favorable answer to my question:

Will Biden also end the “green” energy subsidies, or will the Progressive-Democrat continue to insist on picking industrial winners and attacking those industries of which he personally disapproves?

Guess.

A Strong Economy

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Stipulate, arguendo, that we actually have one of those going on. Federal Reserve Chairman Jerome Powell wants to cool it down hard.

The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.

That is the Fed’s standard answer for dealing with inflation, manipulating interest rates are its primary tool, and it’s not an entirely wrong answer. Burgeoning economic activity that has demand for goods and services overwhelming the ability of producers to deliver the goods and services is a major driver of inflation, and that inflation hammers us average Americans by badly devaluing our incomes. Dampening demand is a way to deal with inflation.

However.

Consumer demand isn’t the only component of overall economic demand: Federal spending is another major player, and the Federal government creates completely artificial demand with its spending.

Repeat my opening stipulation. If our economy is strong, we don’t need nearly so much Federal spending. The Biden administration—and any following series of administrations—need to cut out the stimulus spending, cut back on “baseline” spending, and get out of the way of the private economy. Absent Federal…interference…in our economy, spending and supply will align quickly as us Americans decide for ourselves what we will buy, what we will produce, and the price levels at which we will carry out the relevant exchanges.

Take note, also: that puts a premium on the Republican House and Senate caucuses standing firm on requiring spending cuts beginning next fiscal year and continuing into the out years as a quid pro quo for raising the debt ceiling this year.

Needs

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In an editorial centered on the travails of a small pharmaceutical company, Novavax Inc, in developing medicines—here, particularly, Novavax’ Wuhan Virus vaccine in alternative to Pfizer’s and Moderna’s—there were these claims by then-NAIAD head Anthony Fauci in explaining the apparently deliberate regulatory delay in getting FDA approval:

We don’t need another vaccine.

And

It just seems rather unusual that people are waiting for something else when you have vaccines that have been given to now nine billion people[.]

This is another instance of Government presuming to dictate to us average Americans what our needs are instead of accepting that we know our needs and how to satisfy them much better than any Government bureaucrat.

Novavax’ alternative vaccine was 90.4% effective against symptomatic infection and offered 100% protection against moderate and severe illness, and now the company is on the verge of bankruptcy due to this governmental arrogance.

So much for medicine innovation.

Rules for Investing in the People’s Republic of China

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The Biden administration is starting to pay lip service to setting rules for American businesses’ investing in the People’s Republic of China. It’s

preparing a new program that could prohibit US investment in certain sectors in China, a new step to guard US technology advantages during a growing competition between the world’s two largest economies.

And, of course, the effort will need new taxpayer money.

Treasury and Commerce departments said they expected to finalize their policy on the issue in the near future. Both agencies said they expected to seek additional resources for the investment program in the White House budget, which will be released next week.

Naturally, the administration isn’t prepared to specify which sectors would be included, or how these departments propose to enforce their rules. Just give them money.

Since the Federal government is in the business of regulating American business’ investing in enemy nations, I have my own proposal for a rule for investing in the PRC: No. No investments in the PRC, and those businesses with investments there have two years in which to wind down those investments and withdraw from the PRC.

That won’t cost nearly as much. Just require public companies to report their investments in their quarterly SEC filings, and private companies to report same in their Federal tax filings—which would easily fall within the requirement, with only the smallest adjustment, to report on accounts held in foreign nations. Require those particular reporting subjects to be available to the public via FOIA requests. These requirements would come close to paying for themselves in the early years by assessing fines equal to the size of the investments not reported or inaccurately reported.

I have an alternative rule proposal: for every dollar an American business wishes to invest in the PRC, it must invest three dollars in the Republic of China. If the RoC can’t absorb all of the investment, then the business cannot invest at all in the PRC. This alternative would carry the same reporting requirements and penalties as my first proposal.

A final alternative: spread those three dollars among any number, greater than one, of the nations rimming the South China Sea in addition to the RoC. Again, with the same reporting requirements and penalties.

What He Said

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Rick Wallace has the right of it—and exactly so—in his Letter in The Wall Street Journal‘s Tuesday Letters section:

The Republicans should be sending one message to the American people loud and clear: The Democrats want to cut your Social Security benefits by 26% in 10 years. There is no other pertinent debating point. If the GOP is going to be vilified for trying to save the program with responsible alterations, the alternative should be made clear. Should the Democrats have their way, the program will collapse, and everyone will face major cuts to their benefits. That’s their Plan A. The GOP offers Plan B.

Those 26% are the size of the reduction in Social Security payouts to then-existing retirees when the Social Security Trust Fund runs out of money in those 10 years, and payouts after that come solely from incoming payroll tax collections.

The Progressive-Democratic Party politicians in both houses plainly don’t care about that damage to our retirees, preferring instead to keep the threat of reduction as an active cudgel with which to attack their political opponents. That’s why they react to loudly against any effort by Republicans and Conservatives to adjust Social Security in order to save it and avoid that 26% cut in benefits.

The Republicans and their Conservative allies, though, do need to stop cowering behind glittering generalities and instead be explicit in their solution, how it will work, and when/over what schedule it will be implemented.