Tag Archives: political economy

There are Tax Cuts, and There are Tax Cuts

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Some are tiny, but useful first steps. Some are serious and useful in their own right. Georgia Republicans are proposing the latter.

The State currently has a graduated income tax with a top rate of 5.5% on income above $10,000 (except singles; they pay 5.5% on income above $7,000) and standard income tax deductions of $4,600 for single filers, $3,000 each for married filing separately, and $6,000 for married filing jointly.

The proposal, led by State House Ways & Means Chair Shaw Blackmon (R-Bonaire), envisions serious changes. It reduces and simplifies the State’s income tax rate to a single 5.25% rate regardless of income level. It increases the standard income tax deductions to $12,000 for single filers and $24,000 for married couples, a move that appears also to eliminate the marriage penalty inherent in the current deduction. [A] family of four would not pay state income tax on their first $30,000 of income compared with the present first $500 to $1,000 of income, depending on filing status.

Now that’s a tax cut that a mother can love. And fathers and singles.

That’s Nice

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JPMorgan thinks the current suite of economic sanctions against Russia could shrink its economy by 20% quarter-on-quarter and by 3.5% on the year. JPM also admits that these estimates may badly overestimate the downward movement. Also,

In conjunction and cooperation with the European Union, Japan, the UK, Canada, and others, the United States has effectively frozen financial transactions of Russian central bank assets held by Americans, a senior administration official told reporters during a briefing on Monday.
The intended effect is to cripple the Russian economy and use up the country’s “rainy day fund” as its currency, the ruble, plummets in value, the official said.

However, these sanctions carefully and deliberately leave untouched the bulk of Russia’s income—its foreign sales of oil and natural gas, with Russia our second largest source of imported oil as of last August.

The European Commission, France, Germany, Italy, United Kingdom, Canada, and the United States issued a joint statement on Saturday that “selected” Russian banks would be removed from the SWIFT financial system.

Except for the Central Bank of Russia, its central bank, and those oil and gas transactions.

Commerce Department unveiled…export controls [that] include semiconductors, computers, telecommunications, information security equipment, lasers and sensors. In addition, BIS’s [Bank of International Settlement, the bank of nations’ central banks] rule imposes stringent controls on 49 Russian military end users, which have been added to its entity list.
The European Union, Japan, Australia, United Kingdom, Canada and New Zealand announced that they would implement “substantially similar restrictions.”

Export controls aren’t export bans….

Some ladies from the South might say, “That’s nice,” regarding these economic moves, or even “Bless their hearts” regarding the persons making them.

However.

How many divisions, much less bullets, do those sanctions provide Ukraine in the here and now, as women and children are butchered by Putin’s barbarians as his invading horde begins increasingly to target apartment buildings and residential neighborhoods? How many divisions do those sanctions cause Putin to withdraw from Ukraine as his military prepares a Stalingrad-esque starvation siege of Kyiv or a Grozny-esque destruction of it, and begins its Grozny-esque burning of Kharkiv to the ground?

The economic sanctions actually are a good start, and they should continue in effect until Putin, his oligarch syndicate cronies, their deputies and assistants and lower down made men, and the members of the Duma are long gone from the Russian government and economy. But those sanctions are wholly inadequate alone. Ukraine will lie in ashes, its survivors existing in Russian serfdom, long before those sanctions take material effect.

Ukraine needs lethal weapons—antitank, antiaircraft, antimissile, along with anti-infantry and small arms—and those lethal weapons need to include, also, offensive weapons with which to drive Putin’s barbaric military out of Ukraine altogether. Ukraine needs tons of ammunition for those weapons and training in the use of many of them.

Ukraine needs food and medical supplies for Kyiv, Kharkiv, Odessa, Kherson, Mariupol, and on and on.

Yet Another Reason

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…to adjust our supply chains, especially the beginning points of them in this case.

Palladium and neon gas are seriously needed for chip production, and Russia’s invasion and attempt to conquer or destroy Ukraine is about to have a major effect on the supply of those items if nations and businesses don’t make the required adjustments.

Russia and Ukraine produce 40% to 50% of semiconductor-grade neon, according to market-research firm Techcet CA LLC. Largely derived from steel manufacturing, neon gas is used in lasers that help in the design of semiconductors.
Approximately 37% of the world’s palladium production comes from Russian mines, according to Techcet, and the metal is used in sensor chips and certain types of computing memory.

As a follow-on, palladium at least might be sourced from the People’s Republic of China, expanding that nation’s influence over the economies and national security of the US and the nations of Europe.

However expensive the shift will be, changing to other sources are critical to security. The PRC notwithstanding, South Africa is nearly as large a palladium producer as Russia. The US can produce our own neon gas either directly, or as a byproduct of steel production with further refinement for use in chip production.

It’s not only production of palladium and neon that matters, though. Currently, the PRC is the major producer of finished chip components and of finished chips themselves. That, also, needs to change, and other producers of chips and components need to be found, and producers need to be developed domestically.

In any event, there’s also little reason to go back to buying either of these from Russia, even if it is driven out of Ukraine. So long as the current men and women of the Russian government—at all levels—remain in place, that nation cannot be trusted with anything.

Business and Climate Risk

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The Securities and Exchange Commission wants information from our businesses

about their climate risks as it gears up to propose new disclosure requirements on the topic.

In particular (so far):

The SEC requested information from the companies [43 or more US public companies] about significant risks related to climate change. The risks ranged from physical effects such as severe weather to litigation and regulatory compliance costs.

However, the only real risks American businesses face from the claimed climate situation are two. One is from Government regulations as Government men and women overreact to claims of dire climate evolution. Examples of this risk are that litigation and regulatory compliance cost bit and this:

The Biden administration and the SEC under Chairman Gary Gensler have made combating climate change and nudging investors to deploy more capital toward greener businesses a priority.

The other risk is from Government men and women using claims of dire consequences of climate evolution to expand bureaucratic power. The SEC’s demands for “climate risk decision-making” data preparatory to issuing related disclosure regulations is an example of this.

This is Just Dumb

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President Joe Biden (D) says there are only two alternatives vis-à-vis Russia’s invasion of Ukraine.

You have two options. Start a Third World War, go to war with Russia physically. Or two, make sure that a country that acts so contrary to international law ends up paying a price for having done it[.]

Biden-Harris went on to admit that sanctions can have no immediate effect.

Leave aside the simple fact that Russian President Vladimir Putin is perfectly willing to “pay a price;” he’ll still have Ukraine after ponying up.

No, the problems here are two. One is that effects of sanctions that take effect (maybe) at some time in a nebulous future do Ukraine no good in the present with Ukrainian men, women, and children dying now. Ukraine—soldiers and civilians alike—is fighting for its survival against Russia as the latter’s soldiers invade and kill now. Biden knows this.

The other problem is that there is at least one additional alternative: sending serious arms, ammunition, and training in serious quantities to the Ukrainian military. So far, what Biden—and the weak European government men and women—are delivering is insultingly limited quantities: the ammunition amounts, for instance, that they deign transfer are good only for a few days.

A bonus alternative: cyber attacks against Russian government-military communications. Hacks into Russian financial facilities to completely drain (or simply to completely corrupt) the financial holdings of Putin and his oligarch cronies and of the officers and their civilian counterparts of the General Staff of the Russian Defense Ministry.

Interested readers can think of more. It’s appalling that Biden-Harris cannot. Or chooses not to.