Category Archives: political economy

Who Owns our Economy?

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Greg Ip, a writer for The Wall Street Journal, says those of us older than 65 do.

As of the third quarter of last year, people 70 and over controlled roughly 39% of all equities and mutual funds owned by households, compared with 22% in 2007, according to Federal Reserve data. Their share of net worth—assets minus debts—was 32%, up from 20% two decades earlier.

And

Wealth accumulates with age, so people at retirement tend to have much more than younger generations, a pattern evident in Fed surveys back to 1989.

And so on.

Even were that true, it’s only a temporary ownership. What Ip missed is this truism: we can’t take the economy, or our wealth, with us when we relocate to Dirt Nap Acres. We leave that wealth to those younger generations, our children, and to a variety of charities and endowments, all of which benefit those younger generations.

All that means that tomorrow, those younger generations will own our economy, starting well before they become the next geezer owners of the economy.

It’s a generational cycle, and that background is the framework within which the economy’s business and political cycles play out.

California Teacher Strikes

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More accurately, teacher union strikes in California.

A wave of teacher contracts is up for renegotiation now, thanks to a strategy the unions implemented a few years ago to synchronize expiration dates. Dozens of California school districts are in talks, with some already at an impasse or in mediation.
…
By coordinating negotiations across the state with the threat of strikes, the unions aim to escalate funding battles from local school boards to the state legislature, said David Goldberg, president of the California Teachers Association, a union representing more than 300,000 educators. …
“This resets the power dynamic,” Goldberg said.

There’s this, too:

Total enrollment in the district has fallen by about 37% since 2018-19 to just over 390,000 students, officials say. Over that span, the number of teachers has held steady at around 25,500 while overall staffing has increased 15%.

Can you say “featherbedding,” boys and girls?

Kids’ public school education would suffer from a strike prolonged by school boards’ refusal to deal with unions “negotiating” in blatantly bad faith? How would anyone tell the difference? Kids in California already are afflicted by an education regime in those public school environments that’s so bad as to border on child abuse.

School boards need to screw their collective courage to the sticking post and tell the unions and their baldly excessive demands to go…pound sand.

The Left’s Mantra

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And I offer an equally oft-repeated alternative.

The Left wants to ever more heavily tax the rich, and their Progressive-Democratic Party politicians can’t conceive of any taxing or spending alternative. Conservatives want to lower taxes and cut government spending. A current example of the former is playing out in California.

Federal cuts to the state’s Medicaid program will leave its health system short of billions of dollars. A California healthcare union wants an emergency, one-time 5% levy on the wealth of any resident worth over $1 billion to plug the hole.

Those Federal cuts are a small and rare spending cut victory. Raising taxes on the rich (for those who truly think that 5% tax is a one-off, I might have some beachfront property north of Santa Fe that might interest you) is the only answer Progressive-Democrats and rent-seeking union managers can think of.

The Wall Street Journal‘s news writer is cut from the same cloth. She opened her piece with this:

The risk is that the US economy becomes increasingly dependent on a narrow group of very rich households, whose spending is tied to the performance of the stock market. This could mean the entire economy pays a steep price in the next market correction.

It’s inconceivable to the denizens of the Left that alternatives exist. There are two—closely intertwined—that come readily to mind. In no particular order, they are cutting tax rates and cutting government spending.

Don’t just willy-nilly do allegedly targeted tax cuts, instead, lower the tax rates on the bottom 80% of us tax payers to the level paid by the top 20%. An easy, but all too difficult politically, way to do this is simply to reform our tax code to charge a single low flat rate on all income regardless of source—a rate in the range of 10%-15% on the sum of an individual’s income from all sources. Of course, that would include the market value of stock options on the date of an award’s vesting and other such moves to transfer income from W-2 forms into other venues. That guarantees all of us are paying the same rates and it eliminates the news writer’s plaint: that claimed dependency of the government on tax revenue from the rich.

The other component of the intertwining is to reduce government spending. Exercise true fiscal discipline, and spend taxpayers’ money only on those things truly, critically needed; stop spending on the nice-to-have goodies.

A wealth gap will still exist, but that’s neither good nor bad in itself. The gap—especially under the more equitable tax regime—is, and would be, the result of differences in luck, work ethic, and innate talent. The increased economic mobility that would obtain also would have folks on the lower rungs moving up the economic ladder as their fortune, ethic, and talent have it, and folks on the upper rungs moving down as their fortune, ethic, and talent have it.

New Trick for Old Dogs

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The old dogs being, in this case, old(er) jet engines and more-or-less purpose-built jet engines.

There is a move afoot to convert commercial aircraft jet engines to produce electricity for AI-centered data centers. The conversion is relatively straightforward: replacing the fuel nozzles to utilize natural gas instead of jet fuel, and replacing the large fan on the front of the flight engine with a much smaller fan that is better suited for power generation.

FTAI has said it expects to be able to deliver about 100 turbines, or 2.5 gigawatts, a year. Boom Supersonic said its goal is to have 4GW of manufacturing capacity or more annually by 2030.

If jet engines can do this—and they can—they also can be used, or ganged together to be used, as electricity generators for localized needs other than AI centers in much the same way small modular reactors are planned for localized electricity needs.

One GW is enough electricity to power a city with a population of 1.8 million people. That works out to enough electricity for towns of 18,000 for each of FTAI’s turbines. They’ll gang together and scale for this, just as they will for AI centers, and just as SMRs will for either purpose.

Trumpian Tariffs, Who Pays Them, And So What?

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The Federal Reserve now is saying that us Americans are paying 90% of the tariffs put in place by President Donald Trump (R).

In an analysis on the [Federal Reserve] bank’s website, four researchers write that last year “nearly 90 percent of the tariffs’ economic burden fell on US firms and consumers.”
They reach that conclusion by examining import data, to see whether foreign suppliers cut their prices in response to Mr Trump’s added tariff costs. Over the first eight months of 2025, “94 percent of the tariff incidence was borne by the US,” the analysis says, meaning “a 10 percent tariff caused only a 0.6 percentage point decline in foreign export prices.”

Say that’s accurate—and, frankly, I have no reason to dispute it—it seems that the tariffs’ impact on the prices us American consumers face has been effected already, that impact is minimal inflation, and that inflation seems to be coming under control. That’s the case even as individual items—furniture, for instance—do seem to have ongoing price increases that are more closely related to tariff rates.

Overall, that leaves other causes also impacting inflation at least as much, if not more, than tariffs: supply chains dependent on distant foreign nations with the attendant shipping costs, those shipping costs themselves dependent on container rates and fuel costs, and especially our dependency on critical items like rare earth ores and refined rare earths that are controlled by an enemy nation that already is squeezing our economy with greatly reduced and heavily controlled exports to us. Even those rising furniture prices are, in addition to tariffs, strongly impacted by Canadian charges for exporting timber to the US—which costs impact house construction costs as well as costs for the furniture to put into them.