Tag Archives: political economy

The Bernie Sanders Economy

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Lots of folks say Bernie Sanders, Democratic Presidential candidate and Socialist Senator from Vermont, wants the American economy to look like social democrat Europe.

Wrong. Look closer to home for the logical outcome of Sanders’ economic policies. Here’s Puerto Rico‘s “economy:”

Government debt has increased by two thirds since 2006…and exceeds 100% of gross national product. … The sales tax increased to 11.5% this year from 7% and next year will turn into a value-added tax. Since 2013 the tax on petroleum—the island’s primary fuel for generating electricity—has quintupled to $15.50 per barrel.

And

Employment laws, such as mandatory 15 days of paid vacation, and stringent job protections provide disincentives to hire. Generous welfare, housing, food stamp and health benefits discourage work. Nearly half of island residents are on Medicaid. A household can rake in 50% more in government assistance than the take-home monthly minimum wage.

The island’s 12.5% unemployment rate is misleading, coming as it does against a labor force participation rate of 40% [sic].

There’s more—lots more—but this is where President Bernie Sanders will take us, and it’s far enough.

Two Babies

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Thirty-five years ago (nearly two generations ago), the People’s Republic of China government decreed that families in the PRC could have only one child. Ostensibly, this was to reduce population pressures on the country’s ability to feed itself. It’s also had, though, other consequences. One of them is this:

China has the world’s largest population at 1.37 billion, but its working-age population—those aged 15 to 64—is shrinking. The United Nations projects the number of Chinese people over the age of 65 will jump 85% to 243 million by 2030, up from 131 million this year.

That’s a doubling of the old-age population in just the 15 years it’ll take this year’s newly born babies to reach working age. Is the raise in the number of permitted babies per family to two sufficient to alleviate the problems brought on by the shrinking work force, with its reduced ability to produce goods and services, and food; or the problems brought on by a shrinking work force’s ability to pay for, in any way, the growing (relative to the working population as well as in absolute terms) population of elderly?

Many Chinese couples say the cost of having children is prohibitive, and some will opt to have only one child. A previous relaxation of China’s one-child policy did not lead to a significant increase in baby numbers.

“Many” is more than it sounds; it’s a significant fraction of today’s couples.

On top of that, though, most demographers say it takes 2.1 babies per woman (not just to women in marriages) just to maintain a population at a given level for developed nations. That minimum rate rises in less developed nations, as infant mortality rates rise. The PRC’s new limit of 2 babies per family (not all women) doesn’t reach the replacement rate.

Probably the raise in the limit on the number of permitted babies is insufficient.

Government’s Gotta Regulate What A Man’s Gotta Do

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It is taking home buyers longer to get a mortgage, which some in the real-estate industry say is the result of new federal rules meant to make mortgage terms easier to understand.

It wasn’t broke, and mortgages were moving as much apace as this Obama Recovery permitted, but it also wasn’t regulated. Government abhors a control vacuum.

Mortgages took an average of 49 days to close in November…the longest closing time since February 2013….

That’s only a three day increase over October, but it’s an entirely unnecessary and a completely government caused delay.

The rules…require lenders to give borrowers final terms of a loan at least three business days before closing to ensure they have time to understand the agreement.

Never mind that consumers already can walk away from any purchase contract, including mortgage contracts, within three days after signing—the “cooling off” period.

Advocates for the changes say they are a common-sense response to the housing crisis, during which it became apparent that many borrowers didn’t understand the ramifications of terms such as teaser rates or growing principal balances.

Of course a Liberal will say it’s common sense to regulate. It couldn’t possibly be common sense to educate instead.

The outcome of this demand to regulate anything and everything is more than just a delay in closing. Sales of existing homes have fallen sharply, 10.5% in November, the first month these wonderful new regulations have been in place, compared to October.

For the Children

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Liberals love their programs “for the children;” albeit they’re carefully paid for with OPM. Take, for instance Michelle Obama’s school lunch program, which has become a Federal government mandate—carefully paid for by the States and the school districts. But never mind, it’s for the children.

Now we get this. A food service worker in the Irving Middle School in Pocatello, ID, gave a lunch to a 12-yr-old girl who had no money to pay for it. The lunch cost all of $1.70, and the food service worker offered to pay the bill for the child.

No dice, said District 25 Director of Human Resources, Susan Petit. You’re fired, she said in her letter telling the worker that she’d been fired.

It’s for the children.

Update: The Pocatello/Chubbuck School District No 25 has apparently released a statement (it’s not available on the District’s Web site as I write this) that offers the food service worker her job back.  Buried at the bottom of the 600+ word statement was this sentence:

The District has been in communication with Ms. Bowden extending an opportunity for her to return to employment with the District.

However, as of last night, the food service worker hadn’t actually heard anything from the District, much less anything about the details of this “opportunity.”

Maybe It’s Time

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I’ve written before about the…suboptimality…of the SEC using its own “court” system (in quotes because it’s more of a kangaroo court system, with the SEC serving as accuser, prosecutor, judge (no jury), punisher, and appellate “court”). The SEC has even pretended to be changing its ways.

Now, this.

After five years, four judges, three rulings, two appeals and the loss of their careers, John Flannery and James Hopkins this month won their legal battle against the Securities and Exchange Commission.

The former State Street Corp executives’ long legal fight took place almost entirely in the SEC’s in-house court system, which agency officials have lauded as offering a fast-track alternative to federal court.

Their problem is all too typical of this SEC.

Since Mary Jo White became SEC chairman in April 2013, the median time for the agency to decide appeals of its in-house judges’ decisions has increased to 19 months….

Then there’s the excuse.

A key part of the agency’s argument has been that the internal tribunal is more efficient.

You bet it is. The conviction and upholding rate is through the roof compared with the rates from those cases that make it out of the SEC and into an actual Federal court.

Since the bureaucrats at the SEC place their own imperatives ahead of their job, maybe it’s time to disband the SEC and replace it with a securities industry overseer that will place its job ahead of the imperatives of the new, fresh personnel who will populate it.

Alternatively, maybe it’d be sufficient to replace the head bureaucrat with someone who understands for whom she works.