Tag Archives: economics

A Good Start

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But it’s only a start. The Trump administration is working with companies including Microsoft, Dell, and AT&T to develop 5G software in an attempt to break Huawei’s current dominance of the 5G market and to supplant it.

The plan would build on efforts by some US telecom and technology companies to agree on common engineering standards that would allow 5G software developers to run code atop machines that come from nearly any hardware manufacturer.

Software isn’t the only source or solution, though; we need to push hardware development, too. It’s too easy to bury malware in hardware’s ROM/PROM/EPROM chips; Huawei’s hardware will need to be excised as well.

Partially Right

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India has decided that the way out of its current economic doldrum is to cut its tax rates.

Oh, and to raise its government spending, too.

On Saturday the government unveiled a long list of measures to energize consumption and investment. It lowered income taxes and some corporate taxes and pledged more investment in infrastructure, rural development, education and health care.
To accommodate the spending, India decided to miss its own budget-deficit target.

Cutting taxes almost always is good—only almost because a government does need a minimum level of revenue in order to accomplish the goals set for it by the citizens employing it. Cutting taxes—and even given that threshold, there’s room for major cuts in India—leaves more money in the hands of private citizens. Those citizens will more accurately spend their money because their spending is tailored to their needs and wants; it’s not spending on one-size-fits-all goals or government-determined goals.

On the flip side, India needs to cut spending to fit within the revenues generated from those lower taxes, not increase it. Deficit spending only increases overall national debt. That national debt always and everywhere represents higher taxes.  Those higher taxes either will come as explicit taxes designed to raise revenues for paying the debt or as inflation to devalue the debt.

Beyond that, government spending competes with the spending of those private citizens and their enterprises for goods and services and the resources needed to produce them. That only reduces the resources available to the private economy, and it drives up prices, not just for those resources, but for the competed-for goods and services, also.

Doing that will drive economic activity, which will yield a net increase in revenues to the government within those lowered tax rates. That increase revenue will enable the government to spend more on infrastructure, rural development, education, and health care—the goals the Indian government claims.

A Cost of Impeachment

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It seems the Progressive-Democrats’ attempt to impeach President Donald Trump was not all that fiscally expensive as such things go.

According to an estimate from the Heritage Foundation in December, the [Progressive-]Democrat-led House of Representatives inquiry, and eventual impeachment of Trump for abuse of power and obstruction of Congress on December 18, cost taxpayers an estimated $3.06 million.

That compares with the effort against ex-President Bill Clinton (D):

According to CNN, the independent probe into Clinton cost taxpayers $80 million in 1994.

That bill includes the Senate trial, while the Heritage Foundation estimate doesn’t include the Senate’s in-progress impeachment trial, but it’s unlikely that the Senate trial will cost $77 million.

It should be no surprise, though, that the House’s seemingly slapdash effort was done on the cheap. The present effort has never been about actual impeachment and removal; it has been solely an effort to conduct a prolonged smear campaign and with that to prejudice the 2020 election.

Green Card Residency

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The Supreme Court, in a 5-4 vote (I’m tempted to say “party line vote,” but CJ Roberts might demur were he not otherwise occupied at the moment), lifted a district court’s stay blocking implementation of the Trump administration’s public charge immigration rule. The rule blocks permanent residency and allows for denial of entry visas in the first place for those in our nation or entering it if they are considered likely to rely on our welfare programs. The stay removal allows the rule to be enforced while the underlying case wends its way through the courts.

Europe, exemplified by Deutsche Welle, is dismayed (even as many of the EU’s members demur from accepting immigrants making their passage from northern Africa).  It’s a harsher immigration law.  It significantly expands the criteria for denying legal residency. It disproportionately put[s] permanent residency out of reach for low-income applicants from developing countries.

The stay-issuing district judge, George Daniels, is in a high dudgeon, too. He wrote in his ruling that the rule was repugnant to the American Dream, and was a policy of exclusion in search of justification.

Last things first. The district judge was—and is—completely out of line in his ruling. His task, his duty as an American judge, is to find the law underlying the rule, or the rule itself, unconstitutional or, failing that, to apply the underlying law and the rule as they are written. Full stop.

Our Constitution and the judge’s oath of office, which enjoins him to uphold our Constitution, bar him from implementing his personal opinion or his personal view of what’s good or bad for our society.

Regarding the alleged disproportional impact on the poor or on third-world applicants, that may or may not be true. However, as is the case with all nations, those entering ours are expected to be beneficial to our nation, not drains on it.

On the beef that the rule makes it harder for an entrant to gain legal residency, that’s the point of borders. No one has an inherent right to come into another nation without that nation’s prior permission. No nation has an inherent obligation to grant that permission. Entry requirements and entrants are solely at the discretion of that nation.

Nor have we any obligation to extend the benefits of our already overstretched (and too inefficiently run) welfare programs to noncitizens. Such an extended overstretch can only work to the detriment of our citizens.

Ultrafast Trading Costs

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British regulators have studied the “tax” imposed on ordinary traders by ultrafast traders. The latter use high speed computers and powerful algorithms to

“latency arbitrage,” in which ultrafast traders seek to react to fresh, market-moving information more quickly than others can.

The latency is the ultrafast traders’ ability to act on slightly out-of-date prices that are inaccessible to the bulk of us traders because we don’t have those fancy computers running those algorithms. The “tax” metaphor is the difference between those (very—a matter of microseconds) slightly dated prices and the prices available to us in more real time.

The “tax” amounts to some $5 billion gained globally by the ultrafast compared to the rest of us. That seems like a large number, but put it in perspective.

The value of the aggregated global stock markets was around $86 trillion in 2019. The “tax” from the ultrafast’s computing/time advantage amounts to a bit under 0.006%.

That’s not to say the artificial arbitrage shouldn’t be addressed, but it does suggest that the urgency isn’t great. We have time figure out how to level this tiny bump in the playing field without moving, for purely noneconomic reasons, to restrict some traders to the advantage of others.