Tag Archives: economics

Foolishness

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Russia and Ukraine have agreed a new natural gas transit arrangement to facilitate Russian natural gas through Ukraine to Europe.  The EU was in on the negotiations, and it’s pleased.  Maros Sefcovic, who was Vice-President of the European Commission for the Energy Union until last January and who then transitioned to Vice-President of the European Commission for Interinstitutional Relations and Foresight, led the EU’s part of the negotiations.  He now says,

Russia remains a reliable supplier to European markets and Ukraine maintains its role as a strategic transit country.

Never mind that this reliable supplier has already used Ukrainian transit pipelines to blackmail both Ukraine (over unpaid bills) and the EU (over Russia’s demand that the EU do what Russia wants).  The same Russian government personnel who led those blackmails remain in place in the Russian government.

An Appeal

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Bayer is appealing a District court judgment against it and its Roundup product which has glyphosate as an important ingredient. The judgment is for $25 million, and Bayer thinks it’s a wrong judgment.

The German company’s main argument is that US federal agencies have determined its product is safe and not a carcinogen.

Bayer noted that the

verdict defies both expert regulatory judgment and sound science.

And

Because the EPA has consistently approved the sale of glyphosate without a cancer warning and has stated that including such a warning on the label would render the product misbranded, any state-imposed cancer warning is expressly preempted

Wow. Truth as defense.  What a concept.

Another Welfare Cliff Example

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A small business owner having direct experience with employees, hiring, and welfare schema, wrote in his Letter in a recent Wall Street Journal:

We are seeing a segment of the workforce, usually single mothers, who want to work but can’t work too many hours because they would lose their federal, state and local subsidies.

This is by the design of the Progressive-Democrats: their goal is to keep these unfortunates trapped in their welfare cage, dependent on Progressive-Democrat politicians’ handouts because…votes.

The letter-writer went on:

Government assistance programs should be designed to allow people to make progress, earning more and building up savings so they can eventually be financially independent. Instead, many of these capable people are locked into a cycle of dependence.

Of course assistance programs should be structured that way rather than locking capable people…into a cycle of dependence. However, letting those people out of the cage would be a reduction of Progressive-Democrat political power.

Minimum Wage Mandate Outcomes

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A National Bureau of Economic Research-sponsored Georgia Institute of Technology study by Sudheer Chava, Alexander Oettl, and Manpreet Singh tells a tale.

For each $1 increase in the minimum wage, the authors estimate that loan amounts dropped 9% more in the affected states. The risk of default was 12% higher. The average credit score for small companies in those states showed “a sharp decline.” Business entries fell 4% in the year the minimum wage went up. A year later, business exits rose 5%.
These results, the authors say, hold throughout various statistical analyses, such as while controlling for local economic conditions. The effects are stronger in businesses like restaurants and retail, which rely on low-skilled labor. Smaller and younger companies are more severely affected as well. In short, the authors conclude: “We find that increases in the federal minimum wage worsen the financial health of small businesses in the affected states.”

It’s not only the loss of jobs and harder-to-get loans, though; a minimum wage increase has more broadly reaching outcomes.

It’s also the loss of job opportunity, the loss of entry-level experience as a necessary item for moving up, the loss of spending money and/or a taste of college money for teenagers.

It’s the loss of a second income for a family that needs—or just wants the flexibility of—a second income.

It’s an increase of welfare cost to Federal and State governments as those additional unemployables—now due to Government mandate—are driven out of the labor force and into the welfare force.

But, hey—future votes to be harvested from that last bit’s crop planting.

 

The study can be seen here (paywall for the whole article; the abstract is freely available).

That Was The Point

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The subheadline on a Sunday Wall Street Journal article says it all.

European voters have viewed the process so negatively that even EU-skeptic parties have mostly dropped talk of leaving the bloc or the euro

That was the entire motive for Brussels’ extended bad faith pseudo-negotiations with Great Britain after those uppity citizens voted to go out from the European Union. To be sure, Brit politicians, who insisted they Knew Better than their subordinate citizens, contributed to the mess with their own combination of arrogance and incompetent negotiating, but they just played into Brussels’ hands, they did not create the chaos.

Brussels, with its antics, has successfully cowed other nations that were restive and contemplating leaving into sitting down and shutting up.

That could change if the UK secures a trade deal with the EU that gives it greater national sovereignty without hurting its economy and Brexit comes to be seen as a success for Britain.

What the new government in the UK needs to internalize and then keep uppermost in its collective mind, though, is that the nation doesn’t need much of a trade deal with the EU, especially if that deal does not acknowledge the national sovereignty of a newly freed Great Britain.

Great Britain is in a position to cut a good trade deal with the US and to cut another one with the member nations of its global Commonwealth—either bilaterally or with the group as a whole.  The success of those deals could well revive sentiment of those currently cowed EU-skeptic nations.