Tag Archives: political economy

“Retail Investor”

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The Left’s new obfuscatory synonym for “dumb Americans.”

US securities regulators, under pressure to demonstrate they have a handle on potential risks in the asset-management industry, are about to crack down on the use of derivatives in certain funds sold to the public, worried that some products are too precarious for retail investors.

Because us dumb Americans are just too ignorant to make our own investment decisions. We need the Progressive Know Betters to tell us how we should make some investments, and to deny us access to other investments.

[U]nder pressure to demonstrate they have a handle on potential risks in the asset-management industry: this is actually the problem. The securities regulators, themselves, have no idea of the risks of derivatives. They showed this risk all through the Panic of 2008, and they’ve done nothing substantive to correct their failure.

If these regulators were serious about the precariousness of (some) derivatives, they’d require the chaining of them and the arithmetic underlying them to be made public so that all investors—institutional and dumb Americans retail alike—could make our own assessments. Without Big Government Know Better interference.

National Sovereignty

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There’s sovereignty, and there’s sovereignty. Michael Graetz, in Thursday’s Wall Street Journal, talked about the European Union’s extra-legal tax crime creation and its retroactive application of its newly minted crime to a number of multinational corporations. Interestingly, the “felonious” multinationals are American, so far.

These companies’ offenses? Tax agreements they entered into with the governments of Luxembourg and the Netherlands (and with Ireland…).

Graetz went into considerable detail about the nature of the so-called crimes in his piece. What’s interesting to me, though, is that these agreements were entered into in good faith on both sides: the multinationals on the one side and supposedly sovereign nations’ governments on the other side. However, the European Commission says it’s sovereign over these nations, and their solemn agreements cannot be allowed to stand.

This is the price of doing business—or trying to do business in good faith—with a fundamentally socialist polity—even if that polity has not the sovereign superiority it purports to arrogate to itself. On the other hand, this is the damage done by erstwhile sovereign nations surrendering even a part of their sovereignty to a supra-national construct.

Private Property Rights and Asteroid Mining

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The US Commercial Space Launch Competitiveness Act (the Space Act), which President Barack Obama signed shortly before Thanksgiving, acknowledges certain critical things regarding private enterprise and solar system resources. One of those critical things is this:

Any asteroid resources obtained in outer space are the property of the entity that obtained them, which shall be entitled to all property rights to them, consistent with applicable federal law and existing international obligations.

Naturally, others who lack the capacity to reach the asteroids (our own capacity, so far, is limited; the law was enacted in the expectation that our capacity would expand in the reasonably nearby future), demur from our new law: it violates international law, they claim. Sa’id Mosteshar, a Board Member of the London Institute of Space Policy and Law, is one such:

It is my opinion that any US entity obtaining asteroid resources would be in contravention of international law, as would the government for permitting it. The Treaties governing space activities do not give the US that right, and the US government cannot assign to its citizens rights that it does not have.

Indeed, he argues that the asteroids are

not subject to national appropriation.

Mosteshar is right, but he plainly doesn’t understand how wrong that makes him.

It isn’t government enterprise that would be doing the exploration and exploitation governed by the Space Act. It’s private enterprise.

We’ve understood since Locke articulated the concept all that time ago that governments don’t have rights to give or withhold. Already endowed in each individual one of us by dint of our existence is a set of rights. We then grant certain lesser rights, authorities, and privileges to our governments in order that those governments can do what they were created to do: protect those larger rights that are our endowment.

One of those rights is our property in our own bodies and the ownership that gives us—each of us as individuals—in the fruits of our labor. Hence Mosteshar’s correctness, which makes him so wrong. Private property rights are not governments’ to give; of course, the US government cannot assign to its citizens that right: we already have it. Private enterprise exploration and exploitation are not subject to national appropriation because it isn’t national at all: it’s…private. Private exploration and exploitation of off-Earth resources—the asteroids, for instance—in no way establishes a national claim on those resources or the results of their exploitation. It just obligates the nation to move to protect those private property rights, held by its citizens, against interference by others.

Hillary Clinton’s Tax Proposals

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And she has lots of them. I’ll list her tax credit proposals here.

  • $1,200 to offset the costs incurred by a family member caring for an aging parent
  • $5,000, refundable (it’s paid even to those who aren’t paying any income tax), for out of pocket health costs
  • $1,500 “apprenticeship” for businesses who hire entry-level workers, per such hire
  • 15% of the value of bonuses paid out if businesses create employee cost-sharing programs, paid to those businesses
  • Unspecified amounts for low-income homeowners who install solar panels

She also wants to expand these extant wealth redistributing credits:

  • Child and Dependent Care Tax Credit
  • Work Opportunity Tax Credit
  • New Markets Tax Credit
  • American Opportunity Tax Credit
  • Wind, solar, ethanol tax credits

We don’t have enough pages to our tax code rules, you see, and we don’t have enough special exceptions to our tax rules and who pays—and who gets.

Never mind that none of this tax gerrymandering, none of this redistribution of OPM according to Progressive rules rather than the needs and wishes of those doing the earning, would be necessary with a low, flat rate tax code that admitted of no exceptions, no deductions, no credits, no loopholes, no gerrymandering; a tax code that would be used to fund government and not be abused for social engineering in accordance with Progressive demands.

This is Backwards

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The IMF is likely to announce Monday (tomorrow as I wrote this, yesterday as you read it) that it will add the PRC’s renminbi to its basket of reserve currencies alongside the US dollar, the British pound, the Japanese yen, and the eurozone euro. As a result of this, the renminbi will be more tightly scrutinized, and the IMF’s hope expectation is that the PRC will become much more open in its handling of the renminbi. As The Wall Street Journal put it Saturday,

Inclusion would also put pressure on the central bank to offer the same degree of clarity and transparency that the US Federal Reserve, the European Central Bank, and other vital institutions strive for.

Here, too, is Sheng Songcheng, Director of the Statistics Division of the People’s Bank of China:

We will have to build up confidence in renminbi assets from investors both at home and abroad and at the same time, prevent the financial risks associated with a more global currency. That calls for carrying out various financial reforms in a coordinated way.

A couple things: Sheng is not the top official of the PRC’s central bank; he’s just the guy in charge of one of the bank’s departments.

More importantly, though, is that this order of events is backwards. The central banks of the US, Great Britain, the EU, and Japan were open, transparent, and generally free of government manipulation before they became global reserve currencies.

So should it (have been) a requirement for the PRC, the PBOC, and the renminbi. The promises and predictions of a lower level functionary of the PRC government have little value.

An aside and a short lesson, courtesy of a friend of mine: the terms “renminbi” and “yuan” very often are used interchangeably; this is incorrect. “Renminbi” refers to the national currency, just as “dollar” and “pound” (or “British pound” where the distinction matters) refer to national currencies. However, unlike in the US and Great Britain, where “dollar” and “pound” refer also to units of the national currency, the unit of the PRC’s national currency is “yuan:” that thing in the window costs five dollars, or it costs five pounds, or it costs five yuan—not five renminbi.