Tag Archives: political economy

Uncertainty?

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A Wall Street Journal article centered on one American company’s claimed uncertainty regarding adjusting its supply chain to no longer be in the People’s Republic of China cited this:

American Outdoor Brands spent months coming up with a plan to minimize the pain of tariffs. Now it is stuck waiting to see where to go.
Most of American Outdoor Brands’ products, which range from fishing tools to hunting gear and pizza ovens, come from China. Executives were prepared to reposition the company’s supply chain ahead of July 9, when the so-called reciprocal tariffs were set to take effect, betting that it could move quickly to reduce any pain points once the new levies kicked in.
But President Trump’s decision last week to extend the deadline for trade deal negotiations to August 1 has prolonged the uncertainty for many companies. That means American Outdoor Brands’ supply-chain reshuffling plan remains on ice.

Why? Where’s the uncertainty? These companies—not just American Outdoor Brands—still know they need to move their supply chains out of the PRC. At worst, they just have more time in which to do so.

American Outdoor Brands’ CFO Andy Fulmer:

We’re very comfortable that we’ve done all the upfront work on where we’d go by product category. We’re just kind of waiting for those firm rates to come out.

Stop dithering, then, and execute. The likely range of tariffs already is well-known, and they’re unlikely to be raised in the face of intransigence; they’ll just go into effect on the deadline, or be delayed again.

In the meantime, there are a myriad other places from which to source intermediate components and—in American Outdoor Brands’ and others similarly situated—final products. Bangladesh, comes to mind, as does Jordan. And manufacturing-experienced Vietnam, Republic of Korea, Japan, Philippines. It would be easy enough in those latter cases to contractually require components not come from the PRC directly or indirectly.

Even move the supply chains to…the United States.

A Tax False Premise

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A letter writer in Saturday’s Wall Street Journal‘s Letters section offered an alternative to the provider tax so many States assess. The provider tax is a tax States levy on hospitals that, in the depths of the scam, the States use to get a larger allocation of Federal fund transfers into their Medicaid programs, which then reimburse those hospitals for their provider tax remittances to the State.

The letter writer suggests

If states collected taxes from other sources, channeled the revenue into their Medicaid programs and continued to provide the same services, they would be entitled to the same federal matching as they are today. Nothing would need to change.

The false premise from which this letter writer proceeds is this: the need for those tax dollars in the first place is not at all established. On the contrary: Medicaid is a State-run program and its payouts are entirely controlled by that State. As such, each State’s Medicaid program should be funded entirely and exclusively by the citizens of that State. There is no need for the Federal government to transfer the tax remittals of the citizens of any other State (much less all of them) to any State for its Medicaid program.

Indeed, were each State to retain those tax dollars rather than sending them to the Federal government, the citizens of each State would be better able to fund their State’s Medicaid program.

No, It Won’t

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This time, it’s an op-ed writer in The Wall Street Journal who is making misleading claims. In his piece regarding the likelihood of wealth flight from a Zohran Mamdani-run New York City, their subheadline reads

The state will lose wealthy taxpayers, and the federal government will have to cough up more aid.

The opinion-writer ties the weal of our nation to the weal of New York, and the article fails utterly on the false premise of a necessary Federal bailout.

No, the Federal government will not have to cough up more aid. New York’s political machinations, including its drumbeat attacks on successful Americans and on businesses domiciled there, would be coming to a head under a socialist Mamdani city administration, and that outcome is solely that New York State’s responsibility.

The good citizens of States running from Maine through New Jersey, Illinois, Texas, Wyoming, Nevada, on to California, Alaska, and Hawaii have absolutely no obligation to bail out a fiscally and regulatorily irresponsible New York City or State. The Federal government has no business forcing the rest of the nation’s citizens to do so.

The other side of the matter: only if New York—city and State—are left to stew in their own fetid spending, taxing, and regulation messes will either have any chance of mending its ways. In that way, the weal of the nation is impacted by the weal of New York State: a healthy State, not dependent of Federal funding, would be an unalloyed good for our nation.

Where Have We Heard This Before?

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The Wall Street Journal editors opined regarding the Progressive-Democratic Party’s “abundance” campaign in contrast with Party’s New York City mayoral candidate Zohran Mamdani’s campaign of paucity:

…higher taxes on the rich, greater income redistribution, and expanding government control over private business—or, as he put it in 2021, “seizing the means of production.”

Then they wrote this:

Despite the tension between the two camps, both believe government should re-engineer the economy and society to their desired liberal ends.

They seem surprised by this. But. But, but, but. Progressive-Democratic Party leaders have sung this song before, and we’ve heard Party’s singing.

Then-Progressive-Democratic Party Presidential candidate Barack Obama, on the eve of his election bragged that he was just days away from fundamentally transforming America. In his first address to Congress, the then-Progressive-Democrat President Joe Biden announced his intention to fundamentally transform our national economy.

Mamdani should come as no surprise at all, and New Yorkers would be well to heed this and elect accordingly.

Another Reason

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The Straits Times, a Singapore-based e-newspaper, has an interesting piece regarding Europe and exit taxes. The lede bullets include these two items:

  • European countries like Germany, Norway, and Belgium are increasing exit taxes to retain wealthy residents and collect revenue on unrealised capital gains
  • These taxes, levied on individuals leaving with significant assets (e.g., over €500,000 in Germany)…

The e-newspaper is of unknown provenance and reliability, at least to me, so take this with a grain of salt. The claims are entirely plausible, though, given the European nations’ broad range of taxes and high tax rates, and the states’ basic assumption that the money citizens earn is for the state to tax and not actually for the citizens to earn and remit a portion.

If the description is true, though, this is just one more reason for successful folks (not just the wealthy: Germany’s Purchasing Power Parity per capita GDP is €61,800. Those €500,000 in assets is upper middle class) to push the pace on leaving Europe before doing so gets even more financially difficult. The Soviet Union erected an Iron Curtain—literally in some places—in order to keep folks from leaving, so as to keep them working for the state. It looks like Europe is erecting a Euro Wall to keep the folks who earn money from leaving, so as to keep them earning money for the state. How long before they erect a 100% tax Euro Wall?