Tag Archives: political economy

Because More of the Same

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…will correct the failures of that same.

[T]he International Monetary Fund on Thursday issued an “urgent” call for the world’s largest economies to roll out more growth-boosting policies.

Those growth-boosting policies already in place these last eight years since the Panic of 2008 have worked so well.  The easy money from the various central banks have done so well to spur growth.  Regulation from the center has done so well to spark national economies.

Yeah, that’s why there’s this “urgent need” for more.

With experts like these, who needs the amateurs of free markets?

But That’s The Point

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Bill Baer, Assistant Attorney General for the United States Department of Justice Antitrust Division, on the proposed mergers between Anthem Inc and Cigna Corp and between Aetna Inc and Humana Inc, called them “game-changers” and added that it was necessary for Government to interfere with the mergers

to make sure we aren’t making a mistake in which shareholders benefit and the consumers pay the cost.

It’s certainly true that consumers should be protected from fraudulent behaviors and from price gouging.  However, it is those consumers who, as customers, pay for the goods and services companies provide—which ultimately pays those shareholders, too—else the companies don’t survive, and the consumer/customer has no good or service available to buy.

And that’s true whether consumers operate in a free market or in a corporate fascist or any other socialist market.  Consumers either pay directly, based on their own choice (including their choice not to buy at all), or every consumer pays (with no choice at all) for the one, in the form of taxes which government uses to prop up the companies it’s found suitable to exist.

In a free market, too, the company’s owners should be the ones who benefit; indeed, our laws recognize that: a company’s managers owe their fiduciary duty to their employers—those shareholders.

But with this administration, Government Knows Better.

At Least He’s Consistent

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Recall that President Barack Obama (D) touts his Stimulus Bill, with its explosion in national debt (which is still growing these 7+ years later), as good for our economy.  That it’s an economy still mired, these 7+ years later, in a pseudo-recovery that’s the slowest since WWII and that has a smaller per centage of Americans in the labor force than at any time since the Jimmie Carter (D) years is lost on, or ignored by, him.

Now he’s making the same claim about our nation’s exploding student debt, a pile of markers reaching $1.3 trillion, a pile that has doubled in total size, and a pile that has seen a doubling of per-graduated student debt, all over these same 7+ years of Obama and his administration.  This growing pile is good for our economy, he says.

Maybe not.  That growing debt represents a number of drags on our economy beyond the broader national debt.

It drives up the cost of borrowing for the rest of us by competing for the supply of loanable funds, whether from government or from banks.

That’s fairly minor.  More importantly, money spent on debt repayment is money not spent on

  • consumption or on saving for the borrower’s emergency money needs (at least one such emergency is virtually inevitable over the course of a lifetime)
  • future retirement (which results in an increased reliance on a bankrupt, or nearly so, Social Security and Medicare public retirement system)
  • big ticket items like housing and cars (certainly these are routinely borrowed for, but added debt?)

And there’s this: money not spent on student debt repayment because the student (now adult) borrower has defaulted on his debt represents two more drags on our economy: increased general borrowing costs in order to cover the lenders’ costs of absorbing those bad loans, and increased taxes (which, among other drags, is money withdrawn from the private economy) to cover government-guaranteed privately extended student loans.

All of those drags represent reduced overall private demand and so lower business prosperity and so fewer jobs.  All those drags also represent higher taxes tomorrow or increased (yet again) borrowing tomorrow—and so higher taxes the day after tomorrow.

This is the level of understanding of basic economics held by Obama and the Democratic Party.

EU, Great Britain, and Taxes

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Some…suggestions…from continental leaders regarding Great Britain’s departure from the EU and the Exchequer’s suggestions of British corporate tax rate reductions, via The Wall Street Journal:

  • German Finance Minister Wolfgang Schäuble: we can’t have a “race to the bottom, now can we?”

Why not, I ask—what are you so terrified might result from letting those who earned the money keep more of it?

  • Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs: let’s not have any of this “exacerbated(?) fiscal competition between ourselves” nonsense.

I ask—why not?  What’s so terrible about competition, which spurs innovation, holds down costs for the citizenry, limits government power.  Oh, wait….

  • French Finance Minister Michel Sapin: “Whether you’re in the union or yo’’re out, we should all adopt a friendly attitude.” Or else.

So I ask—when are you going to adopt that friendly attitude, M Sapin?

Cut the taxes, guys.  If the continent want to run, screaming, away from the terror of competition, you’ll still have the Irish and the Icelanders with whom to play.  And a whole, wide world outside the European continent and its special snowflakes.

The Other Supreme Court That’s in the Election Balance

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This one is the National Labor Relations Board, a Democrat/union-dominated entity that is nearly the last word on what employers are allowed and required to do.

It’s the NLRB that threatened Boeing with labor unrest expensive lawsuits for its effrontery in wanting to build an aircraft manufacturing plant in the right-to-work state of South Carolina and forced Boeing to keep primary manufacturing in the union state of Washington.

It’s the NLRB that decided that franchise employees actually are jointly employed by the franchise—a McDonald’s burger joint, for instance—and the franchisor—McDonald’s corporate headquarters, for instance—a complete rewrite of the prior NLRB view of franchise employment.

It’s the NLRB that keeps pushing for card-checks at union elections whose purpose is to have the employees decide whether they want a union to represent them, a move designed solely to eliminate heretofore secret ballots in those elections.

It’s the NLRB that has pushed through, regarding those elections, the right of unions to demand an election within 30 days of the start of their public efforts to “organize” a company but without the company’s opportunity to respond in those 30 days—or even to begin to respond to the unions’ non-public efforts to organize.

It’s the NLRB that pushed through its “Persuader” Rule which requires employers to identify publicly all sources of consultation or advice the employer might have contacted—however peripherally—for thoughts on how to deal with unions.

The list goes on.  And on.

The NLRB already is dominated by a Democrat/union majority, and it will only get worse with a Democratic Party President and a Democratic Party-owned Senate making the appointments to the five-member board.