Tag Archives: economics

Why Would Anyone Want To?

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New York’s legislature has passed the Mamdani Pied-a-Terre tax; it’s the Progressive-Democratic Party’s latest attack on those Evil Rich.

The pied-à-terre tax, which was passed on Wednesday as part of the state’s budget, takes aim at second homes valued at $5 million or more and is expected to generate as much as $500 million annually in new revenue. It goes into effect July 1 and could add hundreds of thousands of dollars each year to the tax bills of some high-end condo owners.

New York City imposes some of the nation’s highest taxes on people and businesses domiciled there; now it’s going after those only resident there (I’d hardly call it living there) part time.

I wonder: why would anyone with the fiscal wherewithal to leave want to stay in NYC, much less be there even parttime? It’s rapidly losing its status as the financial center, with areas like Dallas and San Antonio growing in that industry, even places like San Francisco and Chicago supplanting various aspects of financial-ness. Regarding cultural attractions, those in DC and, yes, Dallas again, along with San Antonio and Austin, and San Fran, again, and Chicago have attractions to rival anything in NYC.

To the extent folks want to be in the city parttime, New Jersey, Connecticut, Massachusetts all are right nearby as places to hang a hat; they’re each easy enough commutes into town.

A bottom, though, why maintain even a sometime abode in a city that hates you so much, whose ultimate idea of “fair share” is all you got?

Gold-Backed Dollars

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Murray Sabrin, a proud PhD holder and equally proud Associated Scholar at the Mises Institute, wants us to go back to a gold-backed dollar.

A sustainable path forward requires a gold-backed dollar….

This is risible on its face. Gold-backed dollars, or silver-backed, or whathaveyou-backed dollars are every bit as fiat currency as are floating dollars.

Franklin Roosevelt demonstrated this when he confiscated everybody’s privately held gold and then revalued the gold in dollar terms.

A metal-backed dollar is worth what a government says it is. A floating dollar is worth what the market says it is. The latter is sound(er) currency.

ARPA 2.0

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The Federal government has taken equity stakes in some rare earth development and production companies as supply chain control moves. Now the government is taking equity stakes in a few companies nascent and still doing basic research that’s becoming increasingly engineering-to-production in a critical industry—quantum computing.

The Trump administration is awarding $2 billion in grants to nine quantum-computing companies in deals that include US government equity stakes, the Commerce Department said.

In the middle of the last century, the Federal government started the Advanced Research Projects Agency in response to the USSR’s successful launch of a Sputnik satellite, soundly beating us into space. ARPA’s mission, ultimately, was centered on high risk, high gain R&D projects that were too expensive for private enterprise to start, but which private enterprise could develop into thriving businesses once that initial hurdle was overcome.

Quantum computing is a Critical Item industry which neither Russia nor the People’s Republic of China has beaten us at, but their progress threatens to gain critical leads in. The output of those ARPA projects, however, did not encompass the government taking equity stakes in the companies that ultimately went into production with those outputs. The government’s current moves are shades of that earlier ARPA approach, with government stakes thrown in.

And this:

[A] senior Commerce official said the agency did so many different deals to spread out its bets, acknowledging that it could take years for them to pan out.

This is a government version of a long-standing investment tactic, gorilla investing. The idea as implemented by private investors is to shotgun investments into a collection of companies in a new(er) industry, and then as they develop, or not, begin selling off the nots, while keeping those still promising or beginning to achieve success, repeating the process until the investor is left with the one or two that are actually taking off and the gains from which vastly outpace those prior losses. The technique often works.

Quantum computing, other nascent technologies, even the established areas like rare earths, though, may well benefit even more without the government ownership but with increased reduction in the regulatory environment within which those areas are being developed.

“Politically Viable Tax”

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That’s what New York City’s Progressive-Democratic Party and Democratic Socialists of America Party mayor Zohran Mamdani is looking for in order to address the city’s budget shortfall.

This is yet another installment in Party politicians’ cynical (I say) effort to raise ever more taxes in order to cover ever more spending, or as so often is the case with Party’s resolutely profligate spending, to “chip away” at the budget deficits and resulting debts that Party’s habits create.

It’s instructive that Mamdani wants to raise taxes in whatever way he can get away with. It’s further instructive that he can’t—no Party politician can, it seems—conceive of cutting spending, if not overall, at least in those areas not part of his social(ist) program, in order to free up non-deficit and -debt inducing spending for his goals. Mamdani can’t even conceive of simply reallocating existing spending goals to achieve his social(ist) goals.

This ever-increasing taxing is what New York City voters affirmatively chose to inflict on themselves, and it’s a threat the rest of us face if we don’t choose more wisely in our own coming elections, from the national level on down to our city and village levels.

Don’t Mention Cutting Spending

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Don’t you dare. The newly proposed Australian budget contains some tax cuts here, some tax structural changes nearby, and some tax increases there.

The tax cuts and structural changes are small steps in the right direction. The tax increases, though, are rationalized in this way: Saul Eslake, ex-Chief Economist at Merrill Lynch in Australia is claiming, as paraphrased by the WSJ:

If the process of reform is to be extended from here, policy makers should consider increasing and/or broadening the country’s goods-and-services tax to repair the revenue side of the federal budget and help ease the significant tax burden faced by wage earners and companies[.]

“Repair the revenue side?” What’s to repair? It isn’t the government’s money; it belongs to the good citizens of Australia. Their government only takes the money away from them; any seeming shortfalls in collections are nothing less than more money in those citizens’ hands.

And this from Shane Oliver, AMP Ltd‘s Head of Investment Strategy and Chief Economist:

If you do one reform without looking at income tax, then you miss the bigger picture[.]

There are two things wrong with these criticisms. One is the utter lack of justification for the amount of money the government collects through its taxing regime, whether current or as proposed. That “need” is simply assumed as received wisdom. The other is the equally utter lack of consideration of government spending cuts. The supposed necessity of current (or increased) spending levels also is simply assumed as received wisdom, albeit the spending is occasionally weasel-wordedly justified by announced social need—but even that isn’t seriously justified, merely announced from on high.

If Australia—and others, including us—want serious, durable prosperity, it’s necessary to cut taxes and cut spending further. That’s not austerity, no matter how hysterically the Left generally proclaims it to be. Leaving more money in the hands of the citizens is not austerity being inflicted on them, it’s their prosperity being restored to them. And that’s the bigger picture that Oliver is missing.