Category Archives: political economy

There’s Another Way, Also

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Environmental Protection Agency Administrator Lee Zeldin has submitted to Congress a number of California “climate” waivers for repeal under the Clean Air Act. This is a necessary step, and the Republicans in the House and Senate need to find the personal courage to take them up without delay and rescind them, an action that’s straightforwardly doable with simple majority votes in both houses and the President’s signature.

There’s another way, a parallel path, though, and it’s the responsibility of We the People and our businesses and enterprises.

One EPA waiver lets California mandate “zero emission” commercial vessels, including ferries and whale-watching boats. Another allows California to require that container ships and oil tankers docked at California ports plug into the state’s electrical grid or install technology to capture their emissions.

And

Another EPA permit lets California mandate that new lawn mowers, leaf blowers, chain saws, and other “small off-road engines” sold in the state must be electric.

And

[An EPA] waiver approved by the Obama team…allowed California to impose EV quotas through 2025.

It’s straightforward, also, for our private enterprises to adjust their supply chains and sales paradigms to avoid doing business in California altogether. These businesses need to do so promptly and broadly.

One More Pitch

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In their editorial about the success of the Republican reform of the Federal Food Stamp program, the WSJ editors had this remark toward the end:

Congress ought to reduce the 90% federal payment match for the ObamaCare expansion population on Medicaid….

That would be a small first step, though useful in its way, and it prompts me to push again for something I’ve touted over the years: make Federal transfers to the States, not just for Medicaid, but all Federal transfers, block grants on a declining basis.

Designate the year of enactment as Year0, and tot up the total of all transfers to each State in that year. In Year1, send that amount to each State as a single, no strings attached, block grant. In each year of the interval Year2-Year11, reduce the size of the block grant by 10% of Year1, so that from Year11 on, there are no more Federal funds—which are the tax remittances of all of us American citizens—being sent to the States.

The citizens of each State should not be required to fund the profligacy of other States; those taxes sent to the Federal government should be for the sole purpose of funding the constitutionally mandated expenditures of the Federal government, those expenditures enumerated in Article I, Section 8. Each State’s governing politicians should be required to justify the tax levels and expenditures they want directly to their own constituents.

Of course, there’s one exception to this end of Federal transfers. In the event of a natural disaster that’s beyond the capacity of a State or a region to handle from its own resources, Federal transfers to the State or region would be justified. To hold down the incidence of manufactured emergencies (for instance, excessive spending leading to a risk of fiscal failure), a significant fraction of the transfer, or all of it, should be in the form of loans due in full within, say, five years of the onset of the claimed disaster.

They Know the Answer to This

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There is a growing recognition around the world of the economic dangers posed by the People’s Republic of China’s export dominance, achieved as it has been through its domestic overproduction and overseas sales at below-cost prices of that overproduction, with the losses to the PRC’s businesses made good by PRC government subsidies.

A Group of 20 statement implicitly criticizing Beijing for its overreliance on exports for growth marks a new stage in international pressure. The statement, issued Tuesday at the G-20 meeting of finance ministers and central-bank chiefs in Asheville, NC, was a striking example of agreement in an otherwise-fractious affair that featured disputes over Russia and President Trump’s policy toward Canada.
Countries across Europe and Asia worry domestic industries in areas such as autos, electronics, and heavy machinery won’t survive China’s push to export its way out of domestic economic troubles.

The US Treasury issued a statement summarizing the matter, although Treasury Secretary Scott Bessent shied away from mentioning the PRC by name.

It said “countries with excessive and persistent external surpluses” should end policies that “result in an overreliance on exports for growth” and cause harmful spillovers around the globe.
Those countries should “eliminate nonmarket policies” and “remove distortions that constrain domestic consumption….”

Of course all of the G-20 players know full well that the PRC won’t do anything of the sort. Those exports are too important an economic weapon for the PRC to lay them down.

Last year, China responded to American tariffs by restricting the export of rare earths to every country, pummeling global manufacturers. Beijing also cut off certain mineral exports to Japan after a spat over Taiwan.

These world “leaders” know this weaponization. They just need to stop importing from the PRC, whether by serious tariffs, or complete refusal to buy PRC products. The doing would correct the economic damage, and from that, greatly reduce the political risk to their national sovereignty (a risk those “leaders” still don’t seem to see). The doing in the longer run also would more than pay for the disruption of shifting their supply chains. They just lack the courage to do it, satisfying themselves, instead, with yapping about it from the safety of their porches, and so they’re failing their people.

Progressive-Democrats as Taxmen

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There is a way for the Evil Rich to provide for their heirs in a remarkably tax favored, if not tax-free, way—private-placement life insurance, a customizable insurance contract that allows unlimited investments to grow tax-free. The contents would go to the beneficiary(s) on the account creator’s death as a death benefit, and so be free of income taxes at that point, also. These accounts were designed that way explicitly to encourage folks to provide for their dependents. The tradeoff is that the account must be under the control of an independent account trustee of some sort; the account creator cannot have even influence over how his money is invested within that contract. The mechanics of how this works isn’t relevant to this post. The outcome, though, is.

In one relatively extreme case, one Rich Person’s account, set up in this way,

could [could, mind you; the account’s manager may make bad or unlucky investment decisions] one day be worth hundreds of millions of dollars, and he won’t have paid a dime in ordinary-income or capital-gains taxes on their growth. He can take withdrawals or loans against the policy’s cash value but generally doesn’t expect to tap the proceeds. When he dies those will go to beneficiaries income-tax-free in the form of a death benefit.

Enter Progressive-Democrats with their hatred of the wealthy and their jealousy of the wealthy’s success and their demand to confiscate other people’s money, especially that of the so hated rich.

Senator Ron Wyden (D, OR) has introduced legislation that would separate these insurance policies from traditional life insurance, making those earnings and losses taxable to the policyholder as they are earned each year.
“We cannot have a bunch of ultrarich tax dodgers abusing its special tax treatment to set up tax-free hedge funds and shelter mountains of cash[.]”

It’s abuse to follow tax law? And: why can’t we have successful people take advantage of the government’s tax law to take care of their families? Never mind that. The Evil Rich Man cannot be allowed to pass his good luck on to his dependents. He owes Government and must pay the Progressive-Democrat government’s vig.

“Sophisticated Free-Market Pricing”

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That’s how a letter-writer in Wednesday’s WSJ Letters section, a university professor who should know better, characterizes campus economies.

Whether the general campus environment fosters particular political or economic attitudes is a legitimate question, but the pricing of campus amenities isn’t evidence of socialism. If anything, it is evidence of sophisticated, free-market pricing.

If it’s a matter of free-market pricing, then since tuition and fees cover all of that extra, colleges and universities have no need of Federal funding or of student loan guarantees.

Research conducted at colleges and universities is a separate matter, and Federal funds, if any, should be carefully controlled. All outcomes from programs partially or fully funded by the government should be strictly in the public arena and beyond the ability of school researchers to patent or otherwise personally profit from them.