Tag Archives: economics

Another Outcome of Supreme Court’s Abuse of the Takings Clause

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Recall the Takings Clause of our 5th Amendment:

nor shall private property be taken for public use, without just compensation.

Now recall three critical Takings cases decided by the Supreme Court.  Berman v Parker was a 1954 case in which the Supremes explicitly rewrote that clause to say for public purpose, not use.  Hawaii Housing Authority v Midkiff was a 1984 case in which the Supremes ruled that it was perfectly fine for a State government to take private property away from a private enterprise and give it to private citizens who leased the property from the business.  Kelo v City of New London was a 2005 case in which the Supremes said it was jake for a State government to seize a private citizen’s property and give it to a private business for that business’ purposes.

That last shameful ruling led to a large number of States passing their own laws or State Constitutional amendments severely restricting the conditions under which eminent domain can be used.  The Federal government’s power as distorted by the Supremes in that trio of cases, however, remains the law.

This brings me to New York and New York City and amazon.com’s HQ2 move into the city.

In their bid for Amazon.com Inc’s second headquarters, New York City and state officials dangled prime real estate at the tech giant and offered to use eminent domain to scoop up any necessary properties for a campus, newly disclosed documents revealed Monday night.

These worthies planned the theft confiscation eminent domain seizures in four areas: Midtown West, lower Manhattan, along the Brooklyn waterfront, and Long Island City.

Such an offer wouldn’t have been possible except in the aftermath of Berman, Midkiff, and Kelo.  This is the extent of the destruction of private property the Supremes have wrought.

Union to Management:

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“Nice little company you have here.  Be too bad if something was to happen to it.”

That’s what the railroad union EVG said to Germany’s major railroad company, Deutsche Bahn, last Monday as it took its workers off the line, shutting it down, during the rush hour period—a timing intended to inflict maximum damage to DB.  It’s not just the railroad this union extortion strike affected, either.

The strikes also caused major disruption on the roads. Germany’s most populous state, and one of the worst affected by the strike, North Rhine-Westphalia, saw a combined 450 kilometers (280 miles) of tailbacks [backed up traffic from traffic jams], according to regional broadcaster WDR.

The union’s beef?  It wants higher pay for its workers, which is not, in principle, a bad thing.

However.

DB management had offered the union’s workers a pay raise of 5.1% in two increments and a “signing bonus” of €500 ($569).  The union, though, is demanding a 7.5% pay raise and the option for individual workers to decline that in favor of more time off or shorter hours.  Never mind the labor scheduling mess and associated increased cost that would create.

This comes, too, in the face of the fact that Germany’s inflation rate this year works out to just a skosh over 1.9%; it was roughly 1.65% each of the prior two years, essentially flat in 2014-2015, since 1995 it’s been above 2.5% exactly once (~3.2% in 2007, just before the Panic of 2008); and DB having raised its ticket rates this year by 1.9% just to cover the current year’s inflation.

The workers are being offered a handsome pay increment in real terms.  The union is demanding more just because it can.

Nice little company….

Brexit Botch

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British Prime Minister Theresa May yesterday pulled today’s planned Parliament vote on her Brexit deal with Brussels when it became clear that not even her fellow Tories supported the deal in sufficient numbers to pass.  What’s more, she’s not suggested a new date for the vote, even though something is required to be presented to Parliament by 21 Jan 2019.

The deal as it stands is a terrible one, worse IMNSHO than a plain, unadorned breakout from the European Union.  It represented May’s meek submission to Brussels on nearly every one of their demands—including functional retention of EU immigration “rights” and EU court rulings within what used to be sovereign Great Britain for several years after the British nominal departure.

Nevertheless, May’s failure before Parliament represents further damage to Great Britain.

And this:

[May] will tour European capitals and then go back to Brussels to try to secure sweeteners that might buy off huge opposition to the package.
She insisted her blueprint was still the “best deal negotiable”, and said she still planned to put it to a vote once “reassurances” had been secured on the Irish border backstop.

Never mind that the Brussels “negotiators” have already said the present deal is a done deal and there will be no further negotiations on the matter.  There can be no sweeteners, as a result, nor can there be any reassurances: in particular, Brussels has already given all the assurances on the Irish border matter that they intend to putter around with.

Stand by for further May surrender to Brussels.

Bring It

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With President Donald Trump’s formal notice to Russia that the US will pull out of the Treaty on Intermediate-range Nuclear Force, Russian President Vladimir Putin threatened an arms race.

Our American partners apparently believe that the situation has changed to such an extent that the US should have such weapons.
What answer will they have from our side? It’s simple: we’ll do it too.

In addition to that,

The head of the Russian armed forces warned that if the deal collapses, the targets of subsequent military exchanges would be US missile sites hosted by allies within striking distance of Russia rather than American soil.

Well, of course they will.  That’s what they’ve been threatening for some time with their deployment of tactical nuclear missiles in Kaliningrad, their redeployment of their tactical nuclear forces toward their western border—and their development and testing of the treaty-prohibited IRBMs.

If Putin wants an arms race, let him bring it. The last one these guys had with us didn’t end well for them, and Russia’s economy is in worse shape than was the Soviet Union’s.

Still a Foolish Tax

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The EU’s usurious digital tax on international tech companies that they had proposed has met with sufficient resistance from low-tax member nations—Ireland and several northern European nations—that France and Germany, the drivers of the proposal, have offered a modified version.  This new effort would

  • limit the tax to a 3% levy on online advertising revenues rather than all online revenues
  • effectively exempt Amazon, AirBnB, and Spotify—a sop to non-EU administrations, especially Trump
  • run until 2025

The beef underlying this drive to tax techs centers on tech firms paying less tax than putatively traditional firms on their EU earnings.

The European Commission estimates traditional companies pay 23% tax on profits—compared to just 8 to 9% for internet firms, with some paying effectively none.

Given that low tax rate nations like Ireland and Luxembourg are attractive to businesses, including tech firms, the foolishness of this new proposal is exposed.  It tries to get a common, high, tax imposed on tech firms at least.

Maybe not foolishness, so much as cynicism.  It remains inconceivable to the EU to lower its overall taxes to competitive levels rather than trying to suck those low-tax members into raising theirs to uncompetitive levels.