Category Archives: Economics

Miscellaneous economy stuff

Arizona Has a Chance to Lead the Way

Posted on by
Reply

This fall, the good citizens of Arizona will be voting on, among other things, a State constitutional amendment that would make it more difficult to increase State taxes.

If passed it would amend the state constitution to require a 60% majority to raise taxes through any future referendum. Current law requires a two-thirds majority to raise taxes through legislation but only a simple majority to do so by plebiscite.

State Representative Tim Dunn (R), who led the effort to get this onto November’s ballot:

When you have something that you can’t change without going back to the voters, I think we should have overwhelming support.

Yewbetcha.

As The Wall Street Journal put it,

A 60% threshold ensures broad consensus before rates can be raised by referendum.
…
The point is to make it harder for Arizona to join states that raise taxes as a first fiscal resort rather than examine spending.

Racist Banks

Posted on by
Reply

Bank of America is trying out a new program.

Bank of America announced August 30 that it is launching a trial program, called the Community Affordable Loan Solution, offering mortgages that do not require closing costs, down payments, or minimum credit scores. People in predominantly Hispanic or Black neighborhoods in Charlotte, North Carolina; Dallas; Detroit; Los Angeles; and Miami that meet specific income requirements will have access to the program.

JPMorgan Chase is following BAC down that walk of shame.

…expanded its grant program in February 2021 to offer $5,000 for closing costs and down payments to homebuyers purchasing homes in predominantly minority neighborhoods.

But other groups of Americans in other inner-city sections need not apply.

It’s not actually income that’s the determining criterion. It’s skin color.

These banks are behaving insultingly, too. BAC and JPM are telling blacks and Hispanics that they think blacks and Hispanics are incapable of competing, much less getting ahead, on their own capabilities, their own intelligence: blacks and Hispanics need special treatment from institutions.

Echoes of Democrat Woodrow Wilson’s infamous claim that blacks should be grateful for the protections of segregation.

These are two banks with which I will never do business.

A Burgeoning Economy

Posted on by
Reply

According to President Joe Biden (D) and his Treasury Secretary, Janet Yellen (D), our economy is burgeoning, prosperous, a Valhalla of growth, fairness, and optimism.

This is what the Progressive-Democrats’ Valhalla looks like in the real world:

  • US inflation reached 7.9% by February 2022 and had been…burgeoning…since fall 2021
  • US inflation currently is above 8%
  • before the pandemic, inequality was falling as wages rose faster for low-income workers than they did for the affluent amid healthy growth [note that after the pandemic has been the Biden reign]
  • the US economy contracted by about 1% of GDP in the first six months of this year, even as real wages were falling
  • real average hourly earnings declined 3% over the 12 months through July
  • real average weekly earnings declined by 3.6%
  • real average earnings have fallen 4.2% since Mr Biden took office

But wait—aren’t gasoline prices falling now? Sure they are, but they’re still very much higher than before Biden took office, and they’re falling because demand is falling: we can’t afford to drive as much as we did pre-Biden reign.

For Biden to call this terrific is for him to expound from his Newspeak Dictionary.

Windfall Taxes

Posted on by
Reply

With rising (finally) interest rates in Europe, European governments are starting to hatch what they’re pleased to call windfall tax plans.

European banks have started to reap higher profits from rising interest rates—and governments are already starting to clamp down on them.
In Spain, the government has laid out plans to tax lenders on their rising income and use the money to alleviate higher living costs for the population. Hungary has imposed a similar measure, and the Czech Republic, where inflation is above 17%, is also considering such a move. In Poland, where mortgages carry variable rates that are quickly rising, the government placed a moratorium on repayments to help borrowers.

Nor is this tax hatch limited to banks.

In other areas too, European governments are acting quickly when judging companies to be earning abnormally large profits. The UK has said it would introduce a windfall tax on energy companies, and Spain is imposing a similar levy as well as the new tax on banks.

Usw.

As usual, I have questions.

Define “windfall.” No glittering generalities, what constitutes a windfall profit, and based on what economic theory?

When does a windfall profit stop being windfall and becomes the normal level of profit? Again, no glittering generalities; be specific.

Related to that: discriminate between the new, reasonably steady state level of profit and “excess profit.” To do this discrimination it is, of course, necessary to define “excess profit,” with that definition devoid of glittering generalities and supported by clearly identified economic theory.

Back to windfall profit becoming the normal profit level. Does that recognition necessarily mean the prior “windfall” assessment was mistaken? If so, would that mean that the money collected as windfall taxes were mistakenly collected and a refund owed?

And finally, how many politicians will confront those questions? How many of those actually will offer concrete, measurable answers?

Will the West Proceed?

Posted on by
Reply

In the face of the Group of Seven Club’s moves to impose a price cap on Russian crude exports globally, Russian President Vladimir Putin now threatens

to curtail the export of grain from Ukraine and said Moscow was ready to extend its rationing of natural-gas exports and cut off oil and refined products if the West went ahead….

And

Mr Putin said Wednesday that Russia had contractual obligations on energy deliveries but would reconsider them if a price cap were imposed.
“We simply will not fulfill [our contracts]. In general, we will not deliver anything if it contradicts our interests,” he told an audience of officials and business leaders. “We will not deliver gas, nor oil, nor coal, nor heating fuel. We will not deliver anything.”

This would result in temporary near-term pain for the West, to be sure, with winter a few months away. But it would result in permanent and disastrous pain for Russia.

Near-term for the West: that winter (which so far looks to be relatively mild, but weather forecasts…), and tight supplies of natural gas being squirreled away, along with iffy potentials for bringing recently shut down nuclear power plants back on line and keeping others scheduled for closure on line.

Temporary: Europe can find other sources of natural gas, oil, and coal (including, regarding the first two, plussing up North Sea production and building additional pipelines) for their power production plants and move away from Russian sources altogether and permanently. Especially if the West can get President Joe Biden (D) out of the way of American oil and natural gas production and export.

Long-term pain for Putin: he needs a minimum of $70-$80 oil in order to pay for his war against Ukraine—replacing equipment combat losses, providing food, fuel, ammunition, and other consumables for his surviving forces—along with the rest of his economy, which is almost entirely extractive, which potentiates his long-term vulnerability.

Permanent: he’ll have lost permanently his Western markets, leaving him with selling into the People’s Republic of China—and President Xi Jining will be forcing his own purchase price on Putin, a price made the firmer by the PRC’s own current economic strait. Further, those sales will require PRC assistance to develop: new Siberian oil and natural gas wells and pipelines (presently nearly non-existent) to deliver well output to the PRC. All of which will exacerbate Russia’s subordination to the PRC.

Aside: it’s true that Putin has markets in India and Turkey, but with Turkey, drastic as that nation’s needs are, its economy is too small to take up much of Putin’s oil. India has too ready access to too many alternative markets to be taken for much of a ride by Putin.

The salient question is whether the West has the stomach for what it takes to achieve victory. The jury is still out on that. Especially given who’s the nominal leader of the West.