Tag Archives: economics

EU Counterproductive Meddling

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Italy is standing tall on its budget for the next fiscal year, despite the European Union’s disapproval of it.

The EU Commission has again rejected Italy’s proposed budget on Wednesday, paving the way for financial sanctions to be applied in the next few months.

The specific bone of contention centers, mostly, on projected budget deficits as a per cent of GDP.  The Italian budget deficit works out to 2.4% of GDP, the Italians say, which is well within the 3.0% EU limit; however, the EU Knows Better: the Commission claims the deficit will exceed 3.0% by 2020.  Whom to believe….

One indication of integrity is this.  Italy’s debt-to-GDP ratio currently stands at 130% of GDP, which is well above the EU-recommended upper bound of 60%.  In the Commission’s view, though, that recommendation is an EU mandate, and it’s demanding that Italy also act to reduce its debt-to-GDP ratio.

Or there will be consequences.

 [I]f Italy still fails to comply [on the budget deficit matter], the Commission can apply financial sanctions, which can include fines up to 0.2% of GDP….

Another indication. The EU thinks the Italian government is spending too much, so it will punish the nation by making the Italian government spend even more.

Other member nations need to take notice as they contemplate their own future in the EU.

Bullying

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You can’t wear the clothes you can afford to buy, that are good quality, and that look nice without being ostentatious (you can’t wear your ostentatious rags, either, come to that).  That’s bullying, don’t you know.

That’s the attitude of the Church of England’s Woodchurch High School in northwestern England (it’s across the Mersey from Liverpool—yes, that Mersey).  They’re pretending to “poverty proof” their school, so they sent a letter to their students’ significant overseers (the institution actually refered to “parents/carers”:

As you are all aware from an email that was sent out yesterday, pupils will not be permitted to bring in Canadian (sic) Goose and Monclair (sic) coats after the Christmas break.

In the name of anti-bullying, then, this school’s management is going to bully a different group of kids.  Because clothes make the child, not what he’s taught about character.

Their hypocrisy stinks.

There Goes the Neighborhood

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The EU has decided to put a lid on the cost of phone calls.

The European Parliament has approved new telecommunications rules that will cap prices of intra-EU phone calls….

And those Parliamentarians are proud of themselves for this.  MEP Constanze Krehl, who speaks for the German Social Democratic Party on matters related to telecommunications:

It was high time to cap the sometimes outrageous prices for international calls in the EU[.]

Just like rent controls, though, this will serve only to stifle maintenance and improvement.  Quality will lag and eventually go outright downhill as the cost of providing the service eats more and more into the revenue—now maxed out—gained from providing it.

Ultimately profits will shrink to the point that too few providers will exist and more than just price will be capped, so will capacity be capped.  Just like housing in rent-controlled areas.

No Nation is an Island

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That’s the concern of The Wall Street Journal in one of its Thursday editorials.

President Trump’s biggest achievement has been the revival of faster US economic growth, but past performance is no guarantee of future results. The White House should be worried about growing economic strains in the rest of the world, and policy makers need to prepare. The US is not an island.

The WSJ went on to note that the Germany economy shrank 0.2% in the last quarter, the Japanese economy shrank by 0.3% in the same quarter, and the PRC’s economy “only” grew by 6.5% year-on-year in the same quarter.  The WSJ particularly worried about the German auto industry.

However.

It’s true enough that the US is not an economic island, but there are many, and serious, factors that are beyond our control and that the WSJ chose to be silent about.

Take Germany, for instance. Its labor laws are almost as draconian as the French and, together with German regulations, leave that economy much less nimble in changing conditions than it needs to be.  And even though the German auto industry wants a zero-tariff trading regime, at least with its products, the German government has shown its disinterest with its lack of action at the EU level.

The Japanese economy also is heavily regulated and inflexible, for all that it’s not a centrally planned one.  There’s no economic flexibility there.

That’s especially true with the especially heavily regulated and overtly, deliberately centrally planned economy of the PRC.

Our other trading partners? The EU as a whole has rejected any concept of a tariff-free environment with the US, it routinely attacks our companies’ competitive success across Europe, it constantly seeks to raise taxes on our companies rather than lowering their own to competitive levels, and on and on.

There’s only so much we can do with trading partners whose government denizens are more interested in their personal political and fiscal powers than they are in the welfare of their citizens.

A Thought on Amazon’s Choices

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Amazon.com has made its selection (-s, plural as it turns out) for its alternate corporate headquarters: Arlington County, VA’s Crystal City and New York’s Long Island City, with a booby consolation prize—or a scrap bone—tossed to Nashville, TN.

I have a couple of thoughts about this.

San Antonio, in Texas, had misgivings and declined to play Amazon’s game.

“Blindly giving away the farm isn’t our style,” wrote San Antonio officials in an open letter to Mr Bezos.

Others openly groveled and kissed the ground on which Amazon officials walked when those worthies deigned visit.

In Los Angeles, Amazon executives notified officials on a Tuesday they would be visiting the following Monday. Local officials had to juggle a major clean-technology conference scheduled for that day because Amazon executives insisted they couldn’t change their plans. The message was clear: Amazon had to take priority.

That should have been a crystalline hint, and Los Angeles’ pseudo-leadership should have told Amazon to take a hike.  Instead, they bent over their desks and….

Crystal City and Long Island City—and Virginia and New York at large—will pay a heavy price for their kowtowing.  Nashville may get off more lightly, but I’m not holding my breath.

San Antonio made out like a bandit (so did Dallas, TX, one of the non-selected finalists; although they will take a while to realize it).