Tag Archives: economics

“All Stakeholders”

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Progressive-Democrats, led by Senator Elizabeth Warren (D, MA) demand absolute acceptance of and fealty to their position and elimination of any other position. The meek meekly surrender to that.

Activists blast the institution as immoral, whether because of capitalism, racism or something else. Leaders of the institution, hoping to calm passions, concede the moral point. But instead of buying political absolution, they undermine their authority and give the left more ammunition to assail them.
That has been pattern at universities, artistic groups and media companies….

Now she, and they, are after private enterprise.

Last year the [Business Roundtable] delighted liberals by ostentatiously revising its mission statement from serving shareholders to include “all stakeholders.” That’s innocuous if all they meant was trying to do right by employees, customers, and the communities in which they operate in the course of also trying to make money for shareholders.

It’s also not good enough. Warren has proposed legislation—and if the Progressive-Democrats get control of the Senate, she’ll succeed in ramming it through—that would eliminate the rights of the business’ owners, those shareholders.

Warren’s legislation would require that 40% of seats on major corporate boards be chosen by employees, which would typically mean union leaders. The companies would have to get approval of 75% of shareholders to make political contributions, which could handicap them in future anti-business campaigns. They could be sued for not pursuing the goals of local nonprofits or Black Lives Matter. Politics would control the purposes of corporate capital.

Her legislation dovetails nicely with Progressive-Democratic Party Presidential candidate Joe Biden’s promise of union jobs—and he promises only union jobs—together with his promise to do away with right-to-work laws.

That’s not all. Warren put an op-ed into Fast Company in which she required that the

Roundtable must fully commit to the principles they set out in the 2019 ‘Statement,’ act on them, and publicly report on their progress in the coming year.

This is the autocratic government favoring only the Party preferred among us—the only stakeholders of note—to which we can look forward if Biden is elected.

Nice business you got there. Be too bad if something was to happen to it.

Arms Control

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In the current arms control negotiations, the Trump administration proposed

that a future treaty cover all Russia, Chinese, and US warheads and include more-intrusive verification

Russia, through its Deputy Foreign Minister, Sergei Ryabkov, rejected the proposal out of hand.

Since Russia has shown itself not serious about arms control, perhaps we should engage in a new bout of arms control via rapid arms development and buildup. That won’t produce prompt results, but it will result in a new and stricter arms control régime just as surely as the Reagan Strategic Defense Initiative build up did with the Soviet Union.

A modification of a Reagan doctrine: we can afford it; they can’t.

Obama-Biden Economy vs Trump Economy

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Here’s the long and the short of it from the Federal Reserve’s Survey of Consumer Finances as summarized by The Wall Street Journal. These data are pre-Wuhan Virus-related shutdowns, but there’s no reason to expect different outcomes as we reopen, at least in those non-Progressive-Democrat jurisdictions are actually opening.

“[F]amilies at the top of the income and wealth distributions experienced very little, if any, growth” in net worth between 2016 and 2019 “after experiencing large gains between 2013 and 2016,” while “families near the bottom of the income and wealth distributions generally continued to experience substantial gains.”

The Progressive-Democrat-hated 1% made out like bandits, at least relative to our poor, during the last three years of Progressive-Democrat government. It was under the Trump administration that our poor started gaining income and wealth and narrowing the wealth gap.

That improvement was across demographics, too.

Net worth (assets minus debt) increased 32.5% among the lowest income quintile and 30.7% among the second lowest, while declining modestly for the upper crust. … Net worth also increased among blacks (32.1%) and Hispanics (63.6%) compared to whites (4%).

Go figure.

Interest Rates

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The Federal Reserve Board has resolved to hold interest rates artificially low—as opposed to letting them float with market demand—at least until the economy’s overall inflation rate reaches the Fed’s target rate of 2%.

There are questions concerning whether such a move reduces the Fed’s ability to deal with asset bubbles (whether the Fed should deal with bubbles at all is a separate question) and whether artificially suppressed rates encourage non-market driven levels of risk-taking.

There is, though, a reason why such suppression is simply wrong.

The Fed is (correctly) switching its policy to one of maintaining an inflation band centered on 2%, rather than holding out for a hard 2%.

Interest rates are intrinsically inflationary, though; if the Fed wants to put the economy into that band, it needs to set its benchmark rates at levels that have been historically consistent with a roughly 2% level.

Keeping rates artificially suppressed only removes that intrinsic upward pressure and makes it harder for the economy to reach its target range and stay in it.

Guaranteed Income “Experiments”

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The headline and subhead accurately summarize the article in The Wall Street Journal, which tries to segue into universal basic incomes.

Cities Experiment With Remedy for Poverty: Cash, No Strings Attached
Guaranteed income comes without work requirements; some worry about work disincentive, high cost

This, in the article’s closing paragraph, though, shows the utter irrelevance of such experiments:

[M]ost of the experiments are relatively small, temporary, and reliant on philanthropy.

In other words, they’re wholly irrelevant to the concept of a UBI. Being small, temporary, and reliant on philanthropy, they have no effect on the recipients’ long-term behavior, they have no effect on even the local economy, and they have no effect on government behavior—particularly funding the payments or handling ancillary effects of population-wide payments.

Guaranteed incomes—universal basic income, provided by Government—however, cannot accomplish anything useful, however implemented.

Price level is set by demand level relative to supply. Demand level is set by the amount of money available (not by how much people want of that supply).

Increasing demand level by increasing the amount of money available relative to supply is the definition of inflation.

All a UBI will do—and giving money to a tiny subset of the population is not a UBI—is inflate the price level to a new baseline. All that will do is depreciate the value of the UBI money along with all the other money in the economy. All that will do is return the [UBI + original money supply] buying power to the pre-UBI level, leaving no net benefit for UBI recipients.

A UBI will have, though, a strong negative effect. The money for UBI outlays must come from the private economy, either as taxes or as debt (which is either future taxes or depreciated currency). Withdrawing money from the private economy reduces R&D, reduces production, reduces money available for wages, reduces job availability—reduces economic output.

That leaves all of us worse off.