Tag Archives: economics

Living Democracy

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I’ve written that a fractious Republican Party, compared with a monolithic Democratic Party (now a Progressive-Democratic Party), demonstrates with that fractiousness that it lives democracy while that other party merely talks about it.

Are the Conservatives in Great Britain, with their own fractiousness, demonstrating that they live democracy, too, rather than merely talking about it?

Maybe.  But there are differences between the Republicans’ internal arguments and the Tories’ internal arguments.

The Republican Party’s fractiousness centers on arguments over policy, whether immigration, health care provision and health plan provision reform, tax reform, or….  The Tories, though, their fractiousness seems more centered on personality.

Chancellor Philip Hammond must go.  It’s not that Party members disagree with his policies and they want to debate in favor of different ones, he must be removed.  Prime Minister Theresa May must resign.  Not because Party members disagree with her policies and want to argue for the Party supporting others, she must resign.  Foreign Affairs Minister Boris Johnson must be removed.  Not because Party members disagree with his policies, he’s just a boor and must be removed; there’s nothing to debate here.

That’s not a recipe for democracy or for a party’s success.  The Wall Street Journal closed its piece (at the third link above) with this:

If Conservatives think defenestrating Mr Hammond will help, that’s their choice. But they shouldn’t expect any better from a successor—on Brexit or in elections—unless the party unites behind an economic growth plan.

Indeed.  A policy debate, instead of a personal argument.

Disparate Impact

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High-tax States, principally States run by Progressive-Democrat regimes, don’t like the tax reform’s cap on State and local taxes.

The governors of New York, New Jersey, and Connecticut said on Friday that they would sue the federal government to overturn the new US tax law, saying the measure unconstitutionally discriminates against Democratic-leaning states.

This is just the raw sewage of disparate impact being spread across a tax bill—never mind that the tax reform is uniformly applied across all States, across all businesses and individual taxpayers.  Never mind, too, that if some taxpayers, if some taxing jurisdictions, are impacted differently than others, it’s solely a result of the conscious individual, business, and State and local government choices.  At least when “disparate impact” is imputed to matters of race, the alleged victims have no choice in their position in the differences alleged.

Here’s an example of the foolishness and disingenuousness of the suit:

The legal action will argue that the new tax law’s cap on state and local tax deductions infringes on states’ rights and amounts to double taxation[.]

The States have no “right” to a Federal income tax deduction.  Beyond that, the cap can’t possibly represent double taxation; the only tax here is the SALT applied by those State and local jurisdictions.  Not being able to deduct a fraction of that (or any of it, come to that) from a Federal income tax bill is no tax at all.

One hopes the Federal trial judge dismisses the suit out of hand and strongly sanctions the governments and Attorneys General of New York, New Jersey, and Connecticut for bringing such a frivolous suit.  Failing that, one hopes the Supreme Court, where the suit will end regardless of the trial court outcome, itself firmly chastises the State governments and Attorneys General.

PRC Economic Opening

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Liu He, head of the People’s Republic of China’s Office of the Central Leading Group for Financial and Economic Affairs, says,

We’ll open wider to the world across the board[.]

Liu promised that the PRC would

  • “substantially” open up the services industry, particularly the financial sector
  • let foreign securities firms own majority stakes in their Chinese ventures and…scrap foreign ownership limits on Chinese banks
  • reiterated past promises to relax restrictions on foreign companies in manufacturing, including in railway equipment, and to gradually lower tariffs on imported products such as automobiles

Even if they do these things (and that’s no certain thing: notice those past, unkept, promises), Liu’s—and Xi’s—rhetoric is just wind in the trees as long as the PRC demands that

  • foreign companies partner with domestic companies as a condition of doing business in the PRC
  • foreign companies are required to “share” technology and other intellectual property
  • foreign companies are required to give backdoors to the PRC government for the latter’s entry into those companies’ critical software and other proprietary information.

This not only is “legalized” theft, it’s backdoor protectionism.

More Jobs

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JP Morgan Chase says it’s going to spend its tax cut savings to

develop hundreds of new branches in the US, increase wages and benefits for hourly US employees, make increased small business and mortgage lending commitments, add 4,000 jobs, and increase philanthropic investments.

Nor is this a one-shot affair.  It’s a five year, $20 billion investment.  So much for pocketing the money and cutting out charity work, the loud Leftist refrain during the debates over tax reform.

As an aside, the pay raises are good and so are the additional jobs implied by the additional branches—400 of them (against an existing 5,130 branches, an 8% bump, which is also good for consumers)—openings.  But frankly, for my money, the additional jobs are more valuable than the pay raises for the existing employees.  The latter are getting a larger piece of the pie, which is good, but the former are getting their first slice—and making the pie itself bigger.

Here’s another datum.  Kim Lopdrup, Red Lobster’s CEO, is saying

Tax cuts, that’s clearly going to be stimulatory for the economy. We think that’s going to be great for the restaurant business[.]

More money left in the coffers of a small-margin business like a restaurant?  Yewbetcha.

Certainly, a couple of data points are little more than anecdotes, not a trend.  But they are promising anecdotes and well worth watching to see whether a trend develops.

This is the sort of thing, though, that the Progressive-Democratic Party opposed when they fought so hard against the just-passed tax reform bill.  It’s almost like they want Americans trapped in the Progressive-Democrat welfare cage.

Taxing and Spending in New York

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Bookending (in more than one sense of the term) California’s move to confiscate business’ tax cuts, New York’s Progressive-Democrat governor Andrew Cuomo wants to increase the taxes levied on that State’s citizens by $1 billion.  He’s claiming, in all seriousness,

You can’t possibly get anywhere near where you want to be on education and health care unless you raise revenues.  It’s just too big a deficit, and the choice of cutting education or cutting health care I don’t think is a place anyone wants to go to this year. So you have to raise revenue.

This is a false choice.  The largest cause of the State’s deficit, after all, is its spending level, not the size of its revenue.  Thus, one choice Cuomo is carefully eliding is this: the State’s government could cut spending across the board; there is, after all, more going on in New York than just education and health coverage costs.

Alternatively (which Cuomo also avoids mentioning), the State’s government could simply reallocate existing spending into education and health care.

Still another alternative unmentioned, the State’s government could fix its runaway pension funds for its public unions by using accurate projections of investment return rates and increasing the contributions union members and the unions themselves make to the funds.  Along with this, the State’s government could fix its health coverage program, replacing its version of Obamacare with market-based solutions, and freeing the citizens to buy the health plans that suit them rather than suiting Government.  Or not buy at all.

There’s simply no need for more revenue for the State’s government, no need to take even more money out of the pockets of the State’s citizens.

Unfortunately, neither the man nor his Party cronies in the legislature are emotionally capable of conceiving of actually cutting spending, or even of reallocating existing spending.