Tag Archives: political economy

An Elizabeth Warren Demand

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Progressive-Democratic Party Presidential candidate and Senator Elizabeth Warren (D, MA) has begun issuing her orders to our private business executives.  And she’s not even the Progressive-Democratic Party nominee for the office, much less the President [bold face emphasis added].

I write in regard to the Business Roundtable’s (BRT) new Statement on the Purpose of a Corporation issued on August 19, 2019. … I write for information about the tangible actions you intend to take to implement the principles, including whether, to make good on your commitment, you will implement the steps laid out in the Accountable Capitalism Act I plan to reintroduce in the coming weeks.

And

If you, and the other 181 corporate executives who signed the BRT’s new Statement on the Purpose of a Corporation, plan to live up to the promises you made, I expect that you will endorse and wholeheartedly support the reforms laid out in the Accountable Capitalism Act to meet the principles you endorse.

And so on.

A key part (among several key parts) of Warren’s Accountable Capitalism Act is her requirement that all businesses above a minimum size must get Federal—not State—charters to continue to operate.

Do what I tell you to do with the corporations you run in my Government’s name, if you know what’s good for you.

This is the core aspect of socialism: Government ownership of an economy’s means of production—the businesses operating in that economy—or Government direction of what nominally privately owned businesses will be permitted to do.

Warren’s letter to those executives can be read here.

WTO, Tariffs, and the EU

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The WTO ruled in favor of the US regarding a 15-yr-old dispute over French subsidies of Airbus that directly harmed The Boeing Company, to the tune of $7.5 billion.  The ruling allows the US to impose those $7.5 billion as tariffs, and the Office of the US Trade Representative says that we’ll apply

a 10% tariff on aircraft imported from Europe and apply a 25% import tax on other agricultural and industrial items on October 18….

France says they’ll respond with retaliatory tariffs if we go through with this.  French Finance Minister Bruno Le Maire:

If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions[.]

EU Trade Commissioner Cecilia Malmstrom agrees with Le Maire:

If the US decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same[.]

Couple things about that.  One is that the US has already proposed both no-tariff-at-all and no-tariffs-on-autos trade régimes, but the EU has refused to discuss either, despite then-European Commission President Jean-Claude Juncker’s promise to take the matters up.

The other thing is that, under WTO rules, it’s illegal to apply retaliatory tariffs in response to tariffs applied pursuant to a WTO judgment.  The French and EU threats regarding the WTO-permitted tariffs on the Airbus affair clearly demonstrate EU (and French) bad faith by themselves. Coupled, though, with the Eu’s refusal to discuss the no-tariff offers already on the table, it’s clear that the EU has no intention at all in dealing honestly with us on trade.

Our own effort at good-faith negotiation is just as clear:

The WTO had approved up to 100% tariffs, but the US decided to limit the tax.

Raise the Price

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…of a product, and with that, lower demand for it.  This is the sort of thing taught in high school introductory economics courses.  One way to raise the price is to raise taxes related to it, and to reduce tax deductions related to it.

The Manhattan real estate market [a generally hgh-end market] stumbled in the third quarter of 2019, new reports show, as prices plunged and fewer buyers were willing to purchase higher-priced properties in the wake of two recent tax increases.
The median sales price for properties fell 17% from the same quarter last year…. The average sales price dropped 12%….
Condo sales fell 8%….

Maybe this had something to do with it:

In July, New York City increased its mansion tax—a progressive tax that applies to home sales of more than $1 million—to a maximum of 3.9%, up from a flat-rate of 1%. The tax rates vary from 1.25% for $2 million sales, to 3.9% for sales of $25 million and higher. The city also increased a one-time charge on properties worth more than $2 million—known as the transfer tax.

And maybe the $10,000 cap on state and local tax (SALT) imposed by the 2017 tax reform bill is having an impact.

In Which Alphabet may be Getting One Thing Right

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Alphabet’s Google subsidiary is developing a new Internet protocol, and competitors are worried that the protocol would mak[e] it harder for others to access consumer data. Some thoughts on that below.  Congress is concerned, too, and its “antitrust investigators” are looking into the matter.

The new standard modernizes a fundamental building block of the internet known as the domain name system, or DNS. This software takes a user’s electronic request for a website name such as wsj.com and, much like a telephone book, provides the series of internet protocol address numbers used by computers [to provide user access the website].
Google and another browser maker, Mozilla Corp, want to encrypt DNS. Doing so could help prevent hackers from spoofing or snooping on the websites that users visit, for example. Such a move could complicate government agencies’ efforts to spy on Internet traffic. But it could prevent service providers who don’t support the new standard from observing user behavior in gathering data.

Alphabet, via Google, also runs its own DNS service, Google Public DNS, which lends credence to monopoly abuse concerns.  Alphabet also pointed out, in its proposal, that the new standard would

improve users’ security and privacy and that its browser changes will leave consumers in charge of who shares their Internet surfing data.

My thoughts are these:

  • There’s nothing wrong with Alphabet developing any new Internet nav protocol, including this one. I’d expect them to be required to license it, though, much like chip makers are required to license their tech.
  • There’s nothing wrong with alter[ing] the internet’s competitive landscape as the article put some of the concerns. Product and tech development and innovation always alter the existing competitive landscape. That’s to the good.
  • They [cable and wireless providers] fear being shut out from much of user data.… That’s a bit of too bad. They’re not the providers’ data; they belong to the user. It’s exclusively (or should be) the user’s call whether to share his data with any provider or other vendor.

And this:

Mozilla…will move most consumers—but not corporate users who use providers such as Akamai—to the new standard automatically, even if the change involves switching their DNS service providers.

Users better be able to override that switch. Otherwise, this may resume the browser wars between Mozilla/Netscape and Microsoft.  To Alphabet’s credit, if they can be believed, its Google subordinate has no plans to ape Mozilla and compel a change in DNS providers.

Given licensing, the only real concern is this:

[T]he new system could harm security by bypassing parental controls and filters that have been developed under the current, unencrypted system.

That’s fairly straightforward to restore, though.

Median Incomes on the Rise

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Some statistics:

Real median household income—the amount earned by those in the very middle—hit $65,084 (in 2019 dollars) for the 12 months ending in July. That’s the highest level ever and a gain of $4,144, or 6.8%, since Mr Trump took office. By comparison, during 7½ years under President Obama—starting from the end of the recession in June 2009 through January 2017—the median household income rose by only about $1,000.

These data predate the Trump partial tax reform (partial, because the individual income tax rate reductions still need to be made permanent, an act the Progressive-Democrats in Congress are loath to support). That reform has added an additional $1,400 to the average (not median—mixing apples and salt, to an extent) household, $2,900 per MFJ with two kids household.

This graph puts the matter visually and clearly:

Both rises, though, are faster than anything possible under any of the proposals of any of the current crop of Progressive-Democratic Party Presidential candidates.