Tag Archives: political economy

Why the PRC Cannot Succeed Economically

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…and why it’s feeling the need to go out from the Center of Heaven and seize the East and South China Seas, to expand into the Siberian oil and mineral fields (this time peacefully, but no less to the detriment of Russia), why it steals intellectual property.

One interview with an environmental engineering student at Tsinghua University stuck with me. His parents grew wealthy by building companies that made shoes and water pumps. But he had no desire to follow in their footsteps—and they didn’t want him to either. Better that he work for the state, they told him: the work was more secure, and perhaps he could wind up in a government position that could help the family business.

There’s more in the article, but this pretty much is the sum and total of it.

A Tax Implication of Obama’s Immigration

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Via The Daily Caller comes this ugly thought. Illegal aliens, under President Barack Obama’s immigration diktat, will get work permits and be eligible for social security payments in their dotage. They’ll also be required to pay taxes, including their Social Security and Medicare payroll taxes. Never mind that their employers’ cost of labor just went up because they’ll no longer be able to avoid paying their own payroll taxes on those workers (to be clear, they should have been paying all along, but since they were breaking the law hiring these folks, they could hardly be expected to give themselves up by paying up).

Here’s the kicker, though. The number of illegal alien families living under the Federal Poverty Guideline is roughly double the number for the nation at large. Thus,

…asked if the illegals would get annual payments under the Earned Income Tax Credit program[,]

“They are subject to our tax law,” [Cecilia Munoz, White House Domestic Policy Council Director] said….

And for other welfare benefits, now that they’ll be in the system, at least for as long as Obama’s illegal diktat lasts.

Economics and the AP

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The backdrop is this: last spring, Japan enacted a tax hike in an effort to start covering its public debt and bring that under control for the benefit of the Japanese economy and the Japanese citizen. The country promptly fell into recession as even more money was taken out of the citizens’ hands, removed from the private sector of the economy. As a result of this, Prime Minister “Shinzo Abe called a snap election for December and put off a sales tax hike planned for next year until 2017.”

Here’s the AP’s lack of understanding of basic economics, as demonstrated on the other side of the link above.

Japan needs more tax hikes to get its swollen government debt under control, but the April tax increase, to 8% from 5%, crushed consumer and business spending.

Their own statement ignores both the nature of debt and reason the current Japanese national debt is so far out of hand (an error the present American administration has been making for these last six years). Debt is created by borrowing, which is the result of spending more than income. Certainly one way to address that is by increasing income: in (the Japanese) government’s case, by raising taxes. That well, though, can only be gone to so much, as the AP illustrates without understanding. Raising taxes takes money away from the employers and employees—the folks who power any economy by buying stuff and so creating demand for producers of stuff, who produce more stuff, and so hire more folks, and so…. After a point, too much money is taken out of the economy through taxes, and the thing stalls—as Japan’s economy has just done, from last spring’s tax bump.

The other way to address national debt, though, is to stop borrowing by stopping spending so much. This is the step the AP has demonstrated, via that quote above, that it does not understand.

If Japan wants to get its government under control, if Abe and his Liberal Democrats want to break Japan out of its new recession and its decades-long stagnation, they need to reduce spending below current revenues, not attempt to raise revenues above current spending. This is necessary for two reasons. One is that the latter is open-ended: there is no incentive to cap spending; spending always will rise, necessitating ever increasing taxes.

The other reason is one I keep harping on. Taking money out of the private sector, out of the hands of the drivers of economies, stunts the economy. Taking money out of the private sector and using government to spend it creates a vicious circle: it crowds out the private economy and, keeping the money out of the private economy, government spending shrinks the private economy even further.

And this claim by the AP:

Eventually, Japan must boost taxes to cover rising costs for health and elder care in this aging society.

No. Japan must reduce taxes and reduce spending even further, thereby letting the resulting robust and growing economy generate the money to cover those costs.

One last bit of understanding lack, this time by Abe, but a thing about which the AP writes approvingly is this:

Abe reportedly plans to announce tens of billions of dollars in new stimulus….

This is just more spending and borrowing, though. Look for it to fail as completely as have the repeated spendulus episodes our own administration has inflicted on us these last six years.

Obamacare, Take Two

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…aspirin, and call your doctor in the morning. If you can find one.

Actually, this Take Two is an Obamacare second year look. I went to healthcare.gov to see what was what, after I’d done a couple of comparisons last year.

The good news is that the Web site works much more smoothly now. The bad news is that the Web site works much more smoothly now.

Taking advantage of that smoothness, I looked at some Gold plans offered in my area. As before, I selected Gold because that coverage comes closest to what I get through my wife’s employer. The failures of these plans still exist: coverages I don’t want and don’t need are forced on me (I told my doctor at my last annual that I wanted my IUD. I was paying for it, and I wanted what I was paying for. I told her that it didn’t matter where she stuck it, it was likely to fail, and I’d be back in a couple of weeks for a replacement. She chuckled over that.)

Every Gold plan offered—all seven of them—had premiums plus deductible plus out-of-pocket caps totaling in the neighborhood of $17k per year. Every year. I’d pay all of premiums and deductibles before any plan paid a single penny of my expenses, and I’d still have those caps. Certainly, that’s down from last year’s nearly 27 stacks, but still…. Those costs also are for only one person, even though I’d told ObamaMart that I was looking for coverage for two.

I can’t get a Catastrophic plan in my area anymore. Recall that last year, I could get one that—after premiums plus deductible plus out-of-pocket caps—would generously pay 60% of my costs. No more.

I looked at the down-rated Silver plans, too; there are 11 offered in my area now. Total costs ran from $19k to $23k. For coverage of one person.

There are 7 Bronze plans for me; these cost in the neighborhood of $20k. ‘Course, the folks buying these are likely to be subsidized, so they won’t be paying those 20 stacks. You and I will. In addition to the $17k-$23k (depending on our plan) we’ll pay for our own coverage.

It just doesn’t get any better than this. At least while Obamacare is in the way.