Tag Archives: economics

US Corn Exports

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The Trump administration is working on a deal with the People’s Republic of China to reduce the trade imbalance we have with them (whether the trade imbalance really is a bad thing and whether the PRC is working the deal as hard as the Trump administration are questions outside this post).  American farmers would have trouble producing enough to meet their part of the goal, were the deal to go through.

US corn exports could jump from $150 million to about $10 billion annually within a few years if China vastly expanded its quotas and reduced its duties that are as high as 65%, according to one estimate.

The farmers—particularly corn farmers—would get a great deal of help in ramping up their exports if they weren’t…encouraged…to divert significant fractions of their crop to ethanol production.  This is another consequence of ethanol mandates and another reason to get rid of them.

Update: In 2016, the US diverted 5.28 billion bushels of corn to ethanol production, or 36% of our total corn production that year. At roughly $3.45/bushel, that works out to $18.2 billion of corn production that was diverted.  Simply eliminating this useless diversion would seem to cover that production jump cited in the quote above.  It also would seem to leave $8 billion of production to mitigate food costs that are inflated by the diversion.  This, in turn, would help our poor and mitigate the need for food stamps and therewith reduce the tap on taxpayer pocketbooks.

It’s Not Your Company

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Seattle wants to charge a head tax on businesses operating in the city, a tax whose amount would be just what it sounds like—a tax based on the number of hours worked by each employee the business has on its payroll.

In response to the proposal, Jeff Bezos, Amazon CEO, paused construction on a 17-story office tower in downtown Seattle.

In response to Amazon, the Left in Seattle, spearheaded by the Service Employees International Union-backed activist gang—Working Washington—wants Amazon charged with a felony.

Amazon, after all, doesn’t belong to its investors, and it’s not run by Bezos.  No, the activists, the SEIU, and the city’s governing machine that wants the tax, all insist that Amazon is public property, and it must do what they demand, not what its owners want.

Because those owners don’t own that.  They only hold it in conditional fee from these city Know Betters.

Is Seattle as much a harbinger of future Progressive-Democrat demands as is Jerry Brown’s California?

Update: The Seattle City Council on Tuesday voted 9-0 to impose the head tax, although rather than being based on hours worked per employee, it’s a flat head tax: $275 per employee per year.

Budget Commitments

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Recall the hoo-raw raised when President Donald Trump signed a Republican-authored budget-busting budget [sic] earlier this year.  Now he wants to send up some rescissions to an earlier budget, with indications that he’ll submit further rescissions to the just-signed thing.

There’s a kerfuffle brewing in the Senate, and it’s not from the Progressive-Democrats there.

…[Senator Mitch (R, KY)] McConnell, who told Fox News that rescission would jeopardize future budget negotiations with Democrats: “You can’t make an agreement one month and say, “OK, we really didn’t mean it.'”

He’s right on this. The prior agreement was Congress passing, in 1974, the law that allows rescission. McConnell needs to keep that agreement.  Unless he “really didn’t mean it.”

Fiduciary Duty

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State and local governments are at it again.  Or still.

The value of investments by public pension funds declined last quarter, widening the gap between what these funds say they will earn and what they actually earn.  Pension fund managers—especially government pension fund managers—must make annual “estimates” (they’re actually politically self-serving pie-in-the-sky claims) of the market returns they expect to make on the funds under their nominal care.  These WAGs determine the amount of money “the government that is affiliated with the pension fund must pay into it”.

(Aside: notice the directionality of that emphasis.  The state or local government (and the Federal government with its own public pension funds) is an affiliate of the fund; the fund is not a benefit provided by the government.  Which controls what, now?)

But these fiduciary money managers have been off, and not just occasionally.  They’ve consistently overstated the returns they claim they’ll get compared to the returns they actually get.  Currently, these worthies are claiming they’ll get a return of 7.25% on the taxpayers’ monies with which they’re entrusted and from which they’re promising the funds’ beneficiaries retirement payouts.  The reality is that these worthies have only been able to get 6.49% on average over the last 20 years.

That difference—0.0076%–that’s just chump change; who cares?  Us taxpayers should, and so should the funds’ retirees.  On a $1 million investment—a tiny fraction of many of state-level pension funds, but a significant part of most county- and city-level pension funds, the three-quarters of one per cent difference over those 20 years works out to a more than $4 million dollar difference.

Where’s the money?

How is this not a violation of fiduciary duty?

Taxes and Deduction Caps

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New York thinks it’s found a way around the tax reform act that cut Federal income taxes and capped the deduction taxpayers can take for State and Local Taxes (vis., State income and property taxes).

The idea, which became law last month, creates a new optional payroll tax that shifts the state and local tax deduction from individuals who can no longer fully take it to businesses that can.

However,

Employers are worried about compliance costs, interactions with union contracts, complexity across state lines, and the difficulty of explaining to workers how a plan that might lead to smaller pay raises still puts more money in their pockets.

In response,

The Wall Street Journal asked the 10 largest private employers in the state and in New York City, along with all Fortune 100 companies based in New York state, whether they would opt for the new payroll tax. None that responded said they would do so

Hmm….

Here’s an alternative idea; work with me on it, it’s simple and not very nuanced.  The State jurisdictions should simply lower their income and property tax rates.  That would bypass the SALT cap by making it less important (and as a happy side effect it would leave more money in the hands of the State’s citizens).