Tag Archives: economics

German Defense Spending

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Recall that at the just-concluded summit between President Donald Trump and German Chancellor Angela Merkel, Trump urged Merkel to increase Germany’s defense spending.  Recall further Secretary of State Mike Pompeo’s subsequent meeting with NATO bigwigs in which he urged NATO members generally to increase their defense spending.

This table illustrates why Germany really needs to plus up its defense spending.

And this:

In February, the newspaper Rheinische Post cited an internal Bundeswehr paper stating that the army lacked the necessary basic equipment for its deployment in a NATO rapid reaction force.

Basic equipment: really basic, like tents for winter shelter, winter clothing, even combat basics like protective vests.

Germany’s Defense Minister has said she wants €12 billion ($14.6 billion) more than currently allocated to begin to bring the nation’s military establishment to a higher state of capability.  That’s barely a third of one per cent of Germany’s €3.4 trillion ($4.2 trillion) GDP.

I have to ask: is Germany serious about its own defense? Or does it really intend to continue to freeload off other NATO members—not only the US?

A Misunderstood Premise

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Greg Ip is worried about financial deregulation.  He opened his Wednesday piece with this statement:

Deep into an economic boom with asset prices near records is when you’d expect the US financial system’s guardians to tamp down risk-taking. Instead, federal regulators and legislators are doing the opposite—watering down, narrowing or declining to enforce rules passed after the financial crisis.

That’s his misunderstanding.  Government shouldn’t be interfering in any way with the business decisions of private enterprises operating in a free market economy.  Beyond that, while declining to enforce is a bad move for any reason other than enforcement resource allocation, there’s no bad time to reduce the burden of regulation when regulatory bodies have gotten out of control, as the CFPB (among others) has done, and when regulations themselves have gone beyond what is truly necessary, as 80,000 pages in the Federal Register indicates.

His concern?

They will stimulate lending and risk-taking at a time when the industry is lowering its own standards amid a near-record economic expansion.

Again, this isn’t Government’s job.  A free market, unfettered by excessive Government diktats, will do a fine job of “regulating” businesses whose risk-taking goes too far.  And the free market will do it in real time, not the weeks or months required to write a regulation or to complete an enforcement action within an existing regulation.

False Choice

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Consider the kerfuffle involving corm farmer subsidies in the form of ethanol mandates and the required use of ethanol by oil refiners as they produce vehicle fuels.  The argument is being presented as a choice forced on President Donald Trump in that he “must choose” between the corn farmers and the oil companies as the kerfuffle is solved.

Oil refineries want out of a costly requirement to blend ethanol into the gasoline they produce. Corn growers say the requirement diversifies the US fuel supply, and insist Mr Trump fulfill promises to at least hold the ethanol mandate.

This is wrong, because the choice is irrelevant.  What’s good for our economy is to get government to stop distorting the market and let producers and consumers decide for themselves what they want.  The situation as it stands elevates the cost of gasoline for wholly social engineering causes having nothing to do with free choices, it elevates the cost of automobile maintenance, and it elevates the cost of food—all for reasons having nothing to do with free choices and wholly for the sake of the social engineering demands of one group.

Trump needs to get rid of the ethanol mandate.  If there’s a market for ethanol in fuel, folks will buy it.  If the non-economic argument for ethanol additives truly is valid, let the social engineers make the case for it in the public square and show why folks should pay higher prices for the additives.

A Teachers Union Strike

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There have been teachers union strikes in Oklahoma, Kentucky, and West Virginia, and now there’s one set to go off later this week in Arizona.  Readers know my disdain for union strikes generally: they’re nothing but legalized extortion—”nice business you got here.  Be too bad if something were to happen to it.  Like, say, it’s destroyed because nobody works here anymore.”  It isn’t possible to negotiate when the other party is sticking a gun in your ear—even if it’s “just” a metaphorical gun.

But it’s especially despicable when it’s a teachers union strike.  These persons are using children as hostages to back up their extortion.  And the Arizona one is all about ego and hurt feelings.

Lynn White, a high school biology teacher in Gilbert, AZ:

People feel like the state doesn’t respect the job we do as public school teachers[.]

Never mind that respect comes the way any honest American gets it: by earning it with actual deeds.  It certainly doesn’t come because this or that person, or collection of them—think they’re special.  And in the case of public school teachers, those deeds are how well they teach, as demonstrated by the quality of their graduated students.  And that’s not very high (scroll down the table at the link to see Arizona’s bad and worsening performance in 4th grade math).

Arizona should replace the strikers en masse with substitutes and insist on actual teaching performance.

It Still Is

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The Supreme Court is hearing a case, South Dakota v Wayfair Inc, wherein South Dakota is looking to overturn a generation-old ruling that exempts out of state retailers from State sales taxes unless the retailers also have a physical presence in the State.  I wrote about one aspect of the matter here among other places.

Here’s another, more critical aspect of the matter [emphasis added].

In a 1992 mail-order catalog case [Quill Corp v North Dakota], the court held that, absent congressional approval, states could impose tax-collection duties only on retailers with a “physical presence” within their borders. Congress, with its constitutional power to regulate interstate commerce, was the place to balance state revenue needs with burdens on business, the court said at the time.

Congress still is the place for such a decision.  This is a political matter, not a judicial one, and the Supremes, by overturning their “precedent”—which was nothing more than a recognition of who has law-making authority and who has only law-applying authority—would be usurping law-making authority to themselves.

Unfortunately, it doesn’t end there.  South Dakota’s Attorney General, Marty Jackley, argued with a straight face that

the states—45 impose sales taxes, and nearly all support South Dakota’s case—wouldn’t make draconian demands of remote sellers….

Never mind that it’s already draconian to demand that retailers pay taxes they don’t owe.

And this from our favorite Living Constitution Justice, Ruth Bader Ginsburg:

If time and changing conditions have rendered it obsolete, why should the court, which created the doctrine say, “Well, we’ll let Congress fix up what turns out to be our obsolete precedent?”

Except for the small matter that the Court didn’t create this “doctrine,” our Constitution did.  That document says, in so many words, that all law-making authority resides in the Congress and nowhere else, and it says further that regulation of interstate commerce is one of the enumerated tasks of that same Congress and not any business of the judiciary.