Tag Archives: economics

A Thought on Trump and Fiorina

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I report, you decide. Donald Trump has suggested that Carly Fiorina doesn’t have the face of an American President. He doesn’t comment, though, on whether he has the hair of an American President.

More importantly, though, Trump also has insisted, of his four business bankruptcies, that they were just

routine corporate deals allowed by law and repeated by “many, many others on top of the business world.”

I anticipate that, in tonight’s debate, he’ll attack Fiorina’s record at Hewlett-Packard (yes, the debate is expected to center on foreign policy. For good or ill, Trump has never stayed on script). What he’ll carefully not mention though, is that HP didn’t go bankrupt—it prospered heavily during an economic downturn—while Fiorina led the company. HP has never gone bankrupt.

Neither Fiorina’s HP nor any other stage of HP’s history has the corporation even had to hide behind the euphemism of “routine corporate deals.” Fiorina’s HP is not one of those “many, many others on top of the business world.”

Our country can’t afford to go bankrupt* once, much less four times.

 

*Yes, yes, I know the nation can’t go bankrupt in a legal sense, it can print dollars to its heart’s content. But doing so is an admission of functional bankruptcy even if not of legal bankruptcy.

Walker and Unions

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Governor Scott Walker has some plans for unions, if he’s elected President. Walker says he would

eliminate the National Labor Relations Board, prohibit federal employee unions; institute right-to-work laws nationwide; and repeal the Davis-Bacon Act of 1931, which requires the payment of local prevailing wages to workers on federal construction projects, often boosting pay and project costs.

There’s much to like here. All of these boost competition and lower costs to American consumers, which in turn will be highly stimulative of our economy.

The only one I disagree with is the elimination of federal employee unions. Unions greatly simplify contract negotiations, and that can lower costs, even for a government employer. However. The right-to-work position applied to federal unions, and as Walker applied to Wisconsin government unions, is a good move. What Walker did in Wisconsin was to take away the unions’ privilege of collecting union dues from non-union members as a condition of working at all. He also took away the privilege of state government unions to direct a portion of member dues to political purposes unless the member agreed to the diversion. He also took away the privilege of state unions to strike. These all are worthy of application at the Federal level.

On his right-to-work proposal as a Federal law: it’s not a blanket right; Walker fully respects the 10th Amendment. Accordingly his proposal is structured to make right-to-work the baseline, but individual states can vote themselves as union shops if they wish.

Of course, if these proposals look like they’re taking off, we can expect very vociferous misbehavior by unions and their Democratic Party pets as they try to intimidate the proposals into defeat. It’s only necessary to review union and Democrats’ thuggery in Wisconsin as Walker worked his will there a few short years ago. Here, for instance. And here. And here.

Most of these are sound ideas, regardless of union fireworks and threats and actions, and they should be supported by whomever gets the Republican nomination for President, and they should be pressed for in Congress should that candidate be elected. That President, too, should go over Congress’ heads to their—and his—boss, us American citizens if Congress hesitates. That President should identify, clearly and by name, those Representatives and Senators who remain in union pockets.

The Fed, Everybody Else, and Interest Rates

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Will the Fed start raising benchmark interest rates this week? Lots of folks, including folks in the Fed are getting wobbly. I’ve written before about being wobbly in an economy.

Harriet Torry and Jon Hilsenrath, in a Wall Street Journal piece, were careful to point out that central banks raising rates doesn’t work very well:

In the seven years since the world’s central banks responded to the financial crisis by slashing interest rates, more than a dozen banks in the advanced world have tried to raise them again. All have been forced to retreat.

No, they weren’t. They all chose to retreat. That’s the minor point, though. The larger point is a big so what? Those economies named by Torry and Hilsenrath (generally European, Asian, and Australia) aren’t ours. They’re not as large, they’re not structured the way ours is, and none of them have the same imperatives ours does. Their economies, too, are largely influenced by our economy; ours is that large and globally dominant.

That other central banks do this or don’t do that is wholly irrelevant to what our central bank does or doesn’t do. There’s no symmetry here; it really is a one-way street.

Independently of all of that, the Fed has for a number of sound reasons set 2% as its inflation goal, and our economy hasn’t approached that rate in years. If the Fed wants 2%, it’s going to have to let interest rates rise to levels consistent with that inflation rate.

The Fed needs to start raising its rates this week as more or less scheduled. No waffling. No wobbling. No timing the thing. Just do it. Full stop.

Price Supports

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It seems there’s a glut of milk (among other farm produce) in the European markets, and milk prices are falling.

Milk producers want EU governments to prop up prices by giving more money to farmers who voluntarily cut production.

Social Democrat countries like France, Spain, Portugal, and Italy actually think this is a good idea.

What those good folks carefully decline to discuss, though, is their rationale for requiring consumers to pay artificially higher prices, instead of letting market forces take those prices to an equilibrium empirically agreed between the farmers and the consumers—without government as intervening middleman.

Oh, wait….

More Big Government

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And more interference from that Big Government.

President Barack Obama has signed is going to sign—and do his usual bragging about signing—an Executive Order requiring all government contractors to give their employees paid sick leave.

On top of that,

The White House wouldn’t specify the cost to federal contractors to implement the executive order, which Obama was to address at a major union rally and breakfast in Boston. The Labor Department said any costs would be offset by savings that contractors would see as a result of lower attrition rates and increased worker loyalty, but produced nothing to back that up.

Neither Obama nor Labor Secretary Thomas Perez produced any data to support their bald claim because they don’t have any. Their position is based solely on the arrogance of “We’re Big Government. We Know Best.”

There is, too, that Democratic Party ethos. Perez said

The Republican Party is out of step with similar conservative governments around the world.

Yeah. Someone else is doing it; therefore, it’s the right thing to do. The rightness or wrongness of the thing isn’t at all inherent in the thing. Popularity creates right. I’ll ignore the fact that Perez’ “around the world” is Europe, and that there aren’t any conservative governments in Europe.

It’s certainly true that paid sick leave has merit. However, the decision about paid sick leave is best left in the hands of the employer and his employees and prospective employees. What other countries, what other domestic companies are doing, has nothing to do with it.

It’s not at all true that every good idea must be turned into a government edict that everyone must follow. Including when the costs of this or that good idea will vary from time to time, situation to situation, company to company, industry to industry.

Especially since Americans are fully capable of acting on their own choices. We’re not as stupid as Big Government assumes us to be.