Tag Archives: political economy

False Choice

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Consider the kerfuffle involving corm farmer subsidies in the form of ethanol mandates and the required use of ethanol by oil refiners as they produce vehicle fuels.  The argument is being presented as a choice forced on President Donald Trump in that he “must choose” between the corn farmers and the oil companies as the kerfuffle is solved.

Oil refineries want out of a costly requirement to blend ethanol into the gasoline they produce. Corn growers say the requirement diversifies the US fuel supply, and insist Mr Trump fulfill promises to at least hold the ethanol mandate.

This is wrong, because the choice is irrelevant.  What’s good for our economy is to get government to stop distorting the market and let producers and consumers decide for themselves what they want.  The situation as it stands elevates the cost of gasoline for wholly social engineering causes having nothing to do with free choices, it elevates the cost of automobile maintenance, and it elevates the cost of food—all for reasons having nothing to do with free choices and wholly for the sake of the social engineering demands of one group.

Trump needs to get rid of the ethanol mandate.  If there’s a market for ethanol in fuel, folks will buy it.  If the non-economic argument for ethanol additives truly is valid, let the social engineers make the case for it in the public square and show why folks should pay higher prices for the additives.

It Still Is

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The Supreme Court is hearing a case, South Dakota v Wayfair Inc, wherein South Dakota is looking to overturn a generation-old ruling that exempts out of state retailers from State sales taxes unless the retailers also have a physical presence in the State.  I wrote about one aspect of the matter here among other places.

Here’s another, more critical aspect of the matter [emphasis added].

In a 1992 mail-order catalog case [Quill Corp v North Dakota], the court held that, absent congressional approval, states could impose tax-collection duties only on retailers with a “physical presence” within their borders. Congress, with its constitutional power to regulate interstate commerce, was the place to balance state revenue needs with burdens on business, the court said at the time.

Congress still is the place for such a decision.  This is a political matter, not a judicial one, and the Supremes, by overturning their “precedent”—which was nothing more than a recognition of who has law-making authority and who has only law-applying authority—would be usurping law-making authority to themselves.

Unfortunately, it doesn’t end there.  South Dakota’s Attorney General, Marty Jackley, argued with a straight face that

the states—45 impose sales taxes, and nearly all support South Dakota’s case—wouldn’t make draconian demands of remote sellers….

Never mind that it’s already draconian to demand that retailers pay taxes they don’t owe.

And this from our favorite Living Constitution Justice, Ruth Bader Ginsburg:

If time and changing conditions have rendered it obsolete, why should the court, which created the doctrine say, “Well, we’ll let Congress fix up what turns out to be our obsolete precedent?”

Except for the small matter that the Court didn’t create this “doctrine,” our Constitution did.  That document says, in so many words, that all law-making authority resides in the Congress and nowhere else, and it says further that regulation of interstate commerce is one of the enumerated tasks of that same Congress and not any business of the judiciary.

Nonsense

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Germany wants to be excused from American sanctions against Russia, sanctions that were imposed over Russia’s misbehaviors.  The misbehaviors include meddling in our elections, and Russia’s continued efforts to meddle in our upcoming elections.

Germany does a lot of business with Russia. Trade between the two countries rose to €54.5 billion ($67.4 billion) last year from €45 billion in 2016, despite increasingly stringent sanctions, and German companies have invested more than €20 billion in Russia in recent years.

This is nonsense.  And Germany plainly has been sidestepping existing sanctions right along.  The desire to be excused stems more from Germany’s choosing to be hostage to Russian oil and natural gas supplies than anything else.  Germany’s voluntary hostage status is accelerating through its support for a natural gas pipeline under the Baltic Sea that would run directly from Russia to Germany.

No, the sanctions are intended to hold Russia to account for its misbehaviors, to punish Russia for them.  No punishment occurs if exceptions are given out over this or that excuse or for any reason at all.  Sanctions may well be inconvenient for some entities other than the target, and that’s unfortunate.  Nevertheless, Germany needs to shape up and stop masquerading itself as victim.

Two Birds

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I’ve often argued against government spending on matters unrelated to the Constitutionally mandated payment of government debt, providing for the national defense, and seeing to the general Welfare (as defined by the clauses of Article I, Section 8).  I’ve also argued for privatizing the major social welfare programs of Social Security and Medicare.

Now Oklahoma illustrates the failure to limit the one and do the other at the State level, with Medicaid standing in for Medicare.

Following the nationwide trend, Medicaid has taken a growing toll on Oklahoma’s budget. In 2017 the health-care program that is supposedly for the poor consumed nearly 25% of the state’s general fund, up from 14% in 2008, as nearly 200,000 more people enrolled. Lawmakers are left with less money for everything else, not least education.

Which also means crowding out spending on voucher and charter schools, which means crowding out school choice and competition-improved schools—including public schools.

All that spending on Medicaid, too, instead of the State privatizing that—to an extent; this program, after all, is intended to help the poor, so their contributions can’t cover all their medical costs—means Oklahoma’s citizens have less money to spend on their own needs and wants, which depresses economic activity, which reduces revenues to the State, which reduces monies available for programs like Medicaid….  And this chain doesn’t even address the addition of those 200,000 folks since 2008.  That was the year the Panic began, and it may be that most of those added to the Medicaid rolls then truly should have been—but do all of them need to be on the rolls today, or is it time to re-tighten the eligibility criteria?

State Taxation of Internet Businesses

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The Supreme Court is hearing a case, South Dakota v Wayfair Inc, that seeks to overturn an older precedent that prevents States from taxing businesses doing business in the State that don’t have a physical presence there.  South Dakota is claiming that

…the 1992 precedent harms state treasuries and disadvantages taxpaying home-grown businesses.

That argument might hold water if the States were powerless. They’re not. There’s nothing at all preventing them from lowering the tax rates they impose on the brick-and-mortar and home-grown businesses resident in those States so they can compete. There’s nothing at all preventing the States from lowering their spending rates and thereby protecting their treasuries.

There’s nothing at all preventing the States from taking advantage of the increased economic activity that would result.