Tag Archives: political economy

He Can’t Be Serious

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Can he?

Federal Reserve Chair Jerome Powell said in a speech last Wednesday that the overheated labor market needs to cool more for the Fed to be confident inflation could decrease toward its 2% goal. He said the biggest remaining barrier to taming inflation is a worker shortage, which is driving up wages and, in turn, the cost of goods and services.
“The labor market … shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2% inflation,” Powell said. “We want wages to go up strongly, but they’ve got to go up at a level that is consistent with 2% inflation over time.”

How is it business’ fault the Federal government insists, via monetary policy, on paying able-bodied workers not to work with its wealth of welfare payments?

How is it business’ fault the Fed initiated the present high inflation with its own profligate fiscal policy of injecting trillions of dollars into our economy with its artificially suppressed interest rates and its heavy Federal debt funding?

How is it business’ fault that the Federal government and the Fed insist on working at cross purposes in “managing” our economy and fighting inflation instead of letting our erstwhile free market economy—an intrinsically self-correcting economic system—run free and bring that Fed-government-caused inflation under control?

How is it business’ fault that they keep raising wages within their other inflation-caused rising costs so their employees can at least lose inflation-caused value on their wages more slowly?

Get Rid of the EV Subsidy Altogether

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Allied and friendly governments object to the Biden administration’s battery-operated car tax subsidy requirements that these vehicles be assembled substantially in the US or they’re not eligible for the subsidy. That puts battery-operated cars assembled in Europe, Japan, and the Republic of Korea at a substantial disadvantage in the competition for sales in the US.

They’re right, but for a different reason than they think.

The Biden administration should get rid of the battery-operated car subsidies altogether. If battery-operated cars truly were ready for market, they’d need no subsidy: Americans would buy them on the merits of the cars. If we don’t want them, or don’t want them in large numbers, government intervention (via subsidies here) is no more appropriate than is government intervention in any other section of our free market marketplace.

Full stop.

Why Not?

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Commerce Secretary Gina Raimondo (D) doesn’t want the US to decouple our trade or our trade relationship with the People’s Republic of China. It’s sufficient, she claims in all seriousness to safeguard [our] technology to ensure [our] economic competitiveness.

It’s important that we get the bilateral economic relationship right, not just by protecting but also by actively promoting our economic interests in trade. We are not seeking the decoupling from China.

Why not? There’s a broader concern here, that Raimondo and the Biden administration at large, carefully ignore than merely protecting our technology and technology advantages. That larger concern is our independence of action on the world stage in “competition” with a nation with the avowed goal of overtaking and supplanting the US in the world—of conquering us, whether overtly or functionally.

That goal, that threat is given concrete, measurable effect by the PRC’s

  • flooding the US with fentanyl and flooding Mexico with the components of fentanyl so that nation can flood US with fentanyl
  • our dependence on PRC for Critical Items in our supply chain
    • rare earths, which the PRC already has used in an attempt to extort Japan
    • lithium
    • cobalt
    • intermediate components in assembly of computer chips, computers, cell phones
  • overt threats against friends and allies, , Republic of China, Japan and Republic of Korea (East China Sea), nations rimming South China Sea
  • 2017 National Intelligence Law that makes every PRC company a spy for the PRC government and for the CCP
  • support for the barbarian’s invasion of Ukraine

Trade with the PRC funds their military development against that goal of replacing us.

The PRC is an enemy nation, and we should be doing nothing at all to support its economy, its economic adventurism around the world, its intelligence-gathering efforts, its own technological development, its military expansion and expansionism.

That requires decoupling altogether.

Child Tax Credit

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And other tax credits. Scott Hodge was one of the developers of the Child Tax Credit more than 25 years ago, and today he thinks the idea—well intended as it was—turns out to be bad tax and social policy (did I hear a sotto voce “unintended consequences?”).

His Monday Wall Street Journal op-ed went into detail on how the child tax credit, along with the subsequent proliferation of tax credits, turned out to be heavily counterproductive, reducing family prosperity through reducing the number of workers—who are family members—in the work force and thereby reducing overall GDP.

But the kicker of his piece was his closer.

No wonder the IRS is dysfunctional—it’s not equipped to be a social-service agency.
The “put money in people’s pockets” approach of the child tax credit might have been good politics, but 25 years’ experience shows it was bad policy. The country needs a tax agenda that promotes growth and opportunity, not handouts and redistribution.

Indeed.

The best tax agenda for growth and opportunity promotion begins with taking our tax code, and so the IRS, out of the social engineering milieu altogether. Tax collections should be limited (at the Federal level at least; although State tax codes would benefit from similar changes) to the Constitutionally mandated purposes of pay[ing] the Debts and provid[ing] for the common Defence and general Welfare of the United States. Keeping in mind, too, that the general Welfare of the United States is itself limited to the items enumerated in our Constitution’s Article I, Section 8.

That tax agenda concludes with enacting a tax code that eliminates business income taxes altogether (keeping in mind that it’s the business’ customers who pay the lion’s share of those taxes, anyway, in the form of higher prices, while the rest of us pay in the form of reduced innovation and fewer jobs). That adjustment needs to go along with setting a single flat tax rate on all personal income from any source, with no deductions, credits, subsidies, surcharges, or any of the other froo-froo currently extant in our existing byzantine and mendacious tax code.

But What is the Or Else?

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President Joe Biden (D) is right, this time, and so are Congressional politicians (assuming they actually can get anything done on this), to move to block the coming railroad strike.

But. But, but, but.

What is the or else here? What enforcement mechanism can the government use to enforce its no-strike diktat against the railroad workers? Not against the unions, but against the rail workers?

It isn’t union leadership, after all, who have rejected the just-negotiated agreements, it’s the rank-and-file, the folks who actually do the work, who’ve rejected the agreement.

How would the government deal with the rail worker equivalent of the Blue Flu?

How would the government deal with another standard union tactic: working explicitly and exactly to the letter of the relevant regulations and the letter of the law about to be imposed on the railroad businesses and labor unions, with the result of a drastic slowdown in work performance?

How would the government deal with an overt strike, where the workers of one or more of the four unions explicitly walk off the job (and the workers of the other unions walk out in solidarity or at the least refuse to cross the picket lines)?

Mass arrests in the latter case? Where would the government find the replacement workers? The rail lines still would be shut down until those replacement workers could be found and hired, assuming anyone qualified actually would be interested.

Certainly, civil action with civil—financial—penalties could be taken, but how much will those matter if the union workers themselves have already determined they have nothing to lose? Their beef, after all, isn’t about higher wages, it’s about the quality of the work environment and work benefits, canonized by the number of sick days allowed.

I’ve seen no evidence that anyone in the Federal government is thinking about a response to the possibility the workers call government’s…bluff(?).