Category Archives: political economy

Not an Iron Curtain

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But it is intended to be a chain-link fence.  It’s not intended to keep folks out, though, but like its Big Brother, it is intended to “encourage” folks to stay in.

Connecticut has expanded its mansion tax on homes.  Here’s how it works.  On sale, Connecticut taxmen will exact from the seller a 2.25% tax on the value of the sale that exceeds $2.5 million.  This is an increase from the already existing “conveyance tax” of 1.25%, but it adds a fillip: if the seller stays in the State for a suitably long time after the sale (“suitable” being defined by the State’s politicians), he’ll get the money back as a tax credit.  If he leaves Connecticut for greener and friendlier pastures too soon to suit those politicians, too bad—he loses those 2.25%.

Governor Ned Lamont (D) made the nature of his chain-link fence explicit. He said that the tax is a

penalty when people whose homes are valued over $2.5 million sell their homes and leave the state.

There’s also a related question: with Connecticut making it so hard to leave, why would anyone want to go there in the first place?

It’s not all bad, though.  The center of Connecticut is only 35 miles from Massachusetts and only 55 miles from Rhode Island and New York.  To the extent there are jobs at all in Connecticut, those are easy commutes, as any Angelino, Metroplex resident, or New Jersey-ite knows.

The Land of the Free

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Free Stuff, that is.  Here’s the latest from Senator and Progressive-Democratic Party Presidential candidate Elizabeth Warren (D, MA).  In addition to all the other free stuff she wants us to have, now she wants free child care.

[F]amilies living below the 200% poverty threshold (roughly $51,500 for a family of four) would get free access to child care and early education….

With this, Warren wants folks who, by her own definition, are not poverty-ridden to get free child care.  Notice, too, she’s lumped in with child care her “early education”—that’s her tacit admission that our public schools no longer provide actual education; they’re just child care facilities.

More importantly than that, though, is how she would pay for all of this.

Warren proposed using money from the ultra-millionaire tax that she announced at the end of January. Under the tax, anyone with more than $50 million in assets would pay a 2% tax. For those who have assets valued at $1 billion or higher, it would be a 3% tax.

That might—might—cover expenses for the first few years.  But Warren has no clue of what to do next (beyond, I assume, the usual Progressive-Democrat “solution” of raise taxes some more).  Warren has no clue where to get the money for all this free stuff (recall that she’s using her tax on the evil rich for other spending, too) when we don’t have any more rich because they’ve been taxed out of existence, no one aspires to be rich anymore (with the associated loss of economic activity and steady impoverishment of our population as a whole), the few remaining rich have moved their money overseas (and perhaps joined their money).

But hey—it’s Free Stuff today.  It’s votes today.

More important even than all of that is the moral damage she proposes to do to us Americans.  No longer are we to be responsible individuals, we’re just to be come wards of the State.  Her State.  Her State will supplant our individual morality with her own version; her State will strip us of our individual responsibilities, our individual duties.  Her State will do those.

Elizabeth Warren’s State is a socialist State.  John Adams wrote more than one hundred years ago that the nation of our Constitution required a virtuous, moral people to run it.  That’s not Elizabeth Warren’s State.

You’ve Made Enough Money

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The New Jersey governor says so, and he wants to raise the income tax on the rich and the not-yet rich—those making more than $1 million per annual year*—by almost a full per centage point, to 10.75%.

Because, he argues.

So far, even the Progressive-Democrat-run legislature is demurring from that move, but the governor seems poised to veto a budget that doesn’t have the tax increase.

Give it up, the Progressive-Democrat governor says. I have better uses for your money than you do, the Progressive-Democrat governor says.

 

*Think $1 million is a lot?  It is, but not so much in Trenton.  On a cost of living basis, that would be worth $1.4 million in northern Texas.

The Progressive-Democratic Party

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…in microcosm.  Progressive-Democratic Party candidate for a Denver, CO, city council seat says openly that she wants to replace our capitalist economy and “usher in” “community ownership” of all property by any means necessary.

The Progressive-Democratic Party is silent on her goal, and by that silence demonstrates quite clearly that Party favors this push.

Keep this in mind in November 2020.

The Fed’s Market-Chasing

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They’re at it again, or talking like it.

Federal Reserve officials meet Tuesday recognizing they may need to cut interest rates should the economic outlook darken. The question is whether that moment has arrived or if they need more information before deciding.
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The choices…are between cutting rates now if they see the economic outlook worsening or holding off and cutting next month if the picture grows darker.

No, the question proceeds from the false premise that the Fed should cut rates, with its partially false alternative that the Fed should hold rates steady for a time.

The Fed is compounding its error:

Policy makers are considering whether their short-term benchmark rate, which has been in a range of 2.25% to 2.5% this year, is curbing economic growth more than they expected, especially if uncertainty over US trade policy chills business investment and weakens corporate profits.

The Fed is chasing the market and moving too far inside the underlying economy’s cycle. There’s no reason for the Fed to cut its benchmark rate, and not yet any reason to hold its rates steady. The Fed’s mandate is to hold prices stable (its second mandate of full employment is a natural outcome of the strong and growing economy that results from stable prices and need not be considered here).  There’s nothing in there about any obligation to take steps to “manage” the economy’s growth; indeed, that’s a political decision from fiscal policy (even assuming an economy should be managed by any aspect of government) and beyond the ken of any central bank.

On the contrary, the Fed has defined a stable price regime as one with 2% inflation, more or less (the particular rate, within limits, is of little importance). Accordingly, the Fed needs to set its benchmark rates at levels consistent with that inflation rate; the Fed isn’t there, yet—hence no rate cuts would be useful. Once arriving at those historic rates, then the Fed should hold them steady, and then (again I say) sit down and be quiet.