Tag Archives: economics

Well, Yeah

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Here’s Gene Sperling, Bill Clinton’s and Barack Obama’s economic advisor, on Republican Party Presidential candidate Donald Trump’s tax proposal.

If you look at how [Trump’s] tax code has been judged, almost 90% went to the top 1%. What he has doubled down on is this ‘15% solution’. That means that not only will the biggest companies pay 15%, but everybody who has any type of pass-through income. More than half of the 400 richest people in the U.S. have pass-through income[.]

And

Anybody who has any kind of business income, whether you’re a consultant, a lobbyist, a hedge fund manager, investment banker, or corporate lawyer, you would now pay 15%, lower than most middle-income families. The largest multi-national companies that people think have paid too little would pay 15%.

Never mind that Warren Buffet already, proudly, pays only a bit more than those 15% (and while he demands that everyone like him should pay more, he refuses to make a donation to the Treasury—insisting that his views be imposed on those who disagree).  Never mind, either, that with our current gerrymandered tax code, folks like those 400 are driven to the breaks and deductions that lower the investment income portion of their tax bill.

Leaving aside Sperling’s politically motivated exaggeration about those 90%, here are some actual facts.

The top 1% of Americans in income pay nearly 47% of US income taxes—even after adjusting for capital gains and other investment-related income.

The top 20% pay roughly 84%% of US income taxes.

The bottom 50% pay roughly 4% of US income taxes.

It’s obvious to anyone with a 3rd grade lesson in arithmetic that any across-the-board cut in taxes—or even any cut that merely lowers tax rates without materially affecting the tax brackets—is going to yield a bigger dollar cut for the better off.  Sperling surely has at least that level of training in arithmetic.

The Left always demands that the rich should pay their fair share, but the Left always refuses to say what that fair share is.  Except per Sperling the Left insists, tacitly, that 47% or even 84% isn’t it.

Employment

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Employers added 255,000 jobs last month while wages for private-sector workers matched their strongest annual pace of growth in seven years. More Americans joined the labor force, keeping the jobless rate steady at 4.9%.

That’s part of the best two months of hiring all year.  This is all good news, right?

Not so much.

The increase in the labor force participation rate was only a tenth of a point to 62.8%, still the lowest rate in 40-ish years—two generations.

Over the course of the year, GDP rose by all of 1%–another historically low rate, one that’s typical of our economic performance these last eight years of Democrat economic policies by abnormally low for GDP growth rates coming out of recessions over the last 70-ish years.

Businesses continue to cut their own investment, now for the third straight quarter.  That’s future growth, future employment, and future productivity growth—and future competitiveness—that won’t occur.

Don’t be fooled, either, by the week’s and the recent months’ rise in the stock market.  The stock market and our underlying economy are tied together, but the ties are very loose: either the market will fall back to the tepid level of our economy, or the economy will perk up, finally.  But neither can be expected to occur any time soon or with any accuracy in timing prediction.

More of the Same

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…from the best damn change-maker [Bill Clinton has] met in my entire life.  Indeed,

Mrs Clinton has been clear. She wants to serve as Mr. Obama’s political and policy heir, as she and he now admit. This won’t mean “change” unless the Clintons have an unusual personal definition of that word, as they do for “classified material.” A de facto third Obama term will mean the status quo, only more of it.

Here’s what Obama has accomplished with his policies, and Clinton has made no bones about wanting to do even more of it.

The slowest recovery from a recession since WWII—a period that encompasses a dozen recessions, culminating in the Panic of 2008.

  • labor force participation rate is at a 40 year low
  • median real household income remains lower than it was before the Panic
  • unemployment rate, even accounting for that greatly depressed labor force participation rate, didn’t recover even nominally until 5-6 years after the official end of the Panic against a normal interval of 2-3 years after the end of a recession
  • the national debt has been doubled and is growing because
  • the budget deficit, exploded in the years immediately following the Panic and dropping for a time after that has begun growing again

Rapid retreat from the world

  • Russia now occupies a partitioned Georgia and Ukraine (yes, Russia had invaded Georgia prior to this administration’s accession, but Obama has accepted the resulting partition)
  • Russia has attacked with impunity the Baltic States and Poland with cyber war
  • Russia threatens nuclear war against any European nation that builds is military defenses beyond what Russia would permit with this administration’s silence on the matter
  • abrogation of commitments to Poland and Czech Republic to deploy missile defense systems on the demand of Russia. We have yet to see whether this administration will follow through on a new commitment to Romania
  • People’s Republic of China occupation of the South China Sea
  • PRC repudiation of the International Court’s ruling against the PRC regarding the South China Sea, answered with US…silence
  • conclusion of an agreement with Iran that not only permits it to develop nuclear weapons, codifies that “right”
  • weakening of our ties with Israel
  • weakening of our ties with Great Britain, including Obama’s economic threat that if Great Britain leaves the EU, they will be pushed to the back of the bus queue on any trade deals with us

Here’s how Clinton wants to extend the domestic same old-same old, acceding to the demands of Independent Socialist Senator Sanders (I—he walked away from the D as soon as that no longer was convenient—VT).  We can’t afford four more years of no change, especially from a change-maker who’s promising unchanged-making.

  • subsidies ages 0 to 5
  • spending allegedly earmarked for public works (read, her crony capitalists)
  • wage controls for higher federal minimum
  • a right to child care
  • free college; a Medicare-like public health insurance option and administrative prices for new drugs;

With all of this paid for by even higher taxes, including a nearly doubling of the top tax rate on long-term capital gains to 43.4% from 23.8%, which is about as anti-investment and job-killing as it’s possible to get.

Another Out of Control Agency

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…that’s overcome with its own self-importance.  I’ve written before about how the Securities and Exchange System abuses its own system of in-house judges for SEC purposes rather than for the public’s interest.

The Federal Trade Commission is another such agency that’s showing it’s outlived its usefulness and for the same reason.  In 2008, LabMD was “found” to have inadvertently exposed a file containing personally identifiable patient information.  I write “found” because the company that “found” the exposure then tried to use their discovery to peddle its data security services to LabMD.  The FTC brought a case against LabMD over the exposure, but last year an FTC in-house judge ruled against the FTC and tossed the case.

That judge, D Michael Chapell, tossed the FTC’s case last year because the commission could not identify any consumers who’d been harmed by LabMD’s allegedly weak security practices. Because no one had been harmed in the seven years since the patient file was exposed, it was unlikely that anyone would be harmed in the future, Judge Chappell concluded.

Wrong answer, Judge.

The FTC, which has the authority to review the rulings issued by its administrative court, said Friday the judge used an incorrect legal standard that was too stringent.

The ruling, being inconvenient to the FTC’s narrative, was rejected out of hand.

Here is the usefulness of an in-house system of judges.

Progress

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James Pethokoukis, at AEIdeas, recounted part of a response by Bill Gates to economist Robert Gordon’s view that we’re in a period of economic stagnation.  Gordon sees the period from 1870-1970 as a special century during which

Economic growth really picked up after glacial advancement since pretty much forever. This had never happened before. Big thanks here to electricity, the internal combustion engine, and public sanitation. Second, things haven’t been so special since.

Indeed,

We’ve had plenty of inventions since 1970 but it’s been focused on the narrow sphere of entertainment, information, and communications technology. …Those innovations are everything that we talk about today, but in perspective they’re just a small slice of what human beings care about.

Gates’ response was, essentially, “No, it’s not.  The digital revolution is much more than that.”

My own take on the matter, posted there, is reproduced in part here.  Gates said,

How buyers and sellers find each other, how we amass information, how we can create models to simulate things before building them, how scientists collaborate across continents, how we learn new things—all of this has changed dramatically thanks to digital innovation.

All of these things, though, only represent engineering improvements, they’re not fundamentally new things, or new energy sources to help produce newly conceived things, the way the outset of the industrial and scientific revolution generated fundamentally new things and the energy sources with which to produce them in useful quantities.

Useful quantities: that brings me to my next point, introduced by Gates further to his response to Gordon.

How do you calculate the value of millions of pages of free information at your fingertips?

That’s not so hard. What’s the value of all the millions of dollars someone has in his bank account? Or the value of all the hundreds—or tens—of dollars an ordinary man has in his bank account? The answer here is that those dollars have no value at all until they’re converted into something useful by spending them. So it is that all of those millions of pages of free information have no value until they’re turned into something useful. The difference between dollars and information, though, is that our brains can only process so much information at a time—even with computers to help.

However.  Gates added to his response to Gordon:

Implicit in Gordon’s analysis is that nearly all the big problems have been solved, and any improvements over the coming decades will be at the margins.

If I understand Gates’ disagreement here, I think he’s right. We haven’t solved all the big problems, only those that we conceive as problems. A man once said that if a thing has no solution, it’s not a problem, it’s an aspect of the universe in which we live. There’s a hint there.

I think the current economic stagnation—which in this context is a productivity/technological stagnation—is not the end, but an interruption during which we consolidate the progress we’ve made before we enter another period of explosive growth and development, another special century.  And the start of that century may not be so far off.  The pace of technology and productivity development has been enormously accelerated, so too has been intervening consolidation.  Those computers, at the least, have made us faster than printing presses and…telephones.