Tag Archives: political economy

A Trade War

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Russia has announced that it won’t buy certain goods from certain of the nations that are sanctioning Russia over its invasion of Ukraine and its fomenting of rebellion in eastern Ukraine. This is a trade war that Russia shouldn’t be expected to win.

For one thing, Russia’s economy is the size of Italy’s and more moribund, so any trade war can only hurt Russia relatively more than it can hurt the far larger economies of the US, the EU, Australia, Canada, even Norway, who are the targets of the Russian boycott.

For another thing, here are some facts related to this boycott.

[Russia has] banned imports of meat, fish, milk and milk products, and fruit and vegetables….  The ban has been introduced for one year

[Russia] may also introduce restrictions regarding imports of planes, navy vessels, and cars…

And

Russia depends heavily on imported foodstuffs—most of it from the West—particularly in the largest and most prosperous cities such as Moscow, where imported food fills an estimated 60-70% of the market. Food and agricultural imports from the US amounted to $1.3 billion last year, according to the US Department of Agriculture, and in 2013 the EU’s agricultural exports to Russia totaled €11.8 billion ($15.8 billion). [This is against GDPs of $17.3 trillion and €13.1 trillion for the US and the EU and ₱75.8 trillion ($2.1 trillion) for Russia.]

A year, though, is plenty of time for the banned sellers to find new markets, which reduces the long-term need to sell to Russia at all. This, in turn, produces a capacity functionally to embargo Russia with respect to those goods—not by explicitly and legally refusing to sell to Russia, but by voluntarily and economically selling elsewhere instead.

A year also is plenty of time for Russia to find other sellers: Latin America, Turkey, other ex-Soviet nations, and so on. Russians won’t starve. However, the reason these other sources aren’t current suppliers is because the boycotted nations can sell into Russia at lower prices than those alternatives. These alternative sellers will, almost necessarily then, cause higher prices in Russian stores.

Entitlements and Taxes

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Dr Ben Carson had a couple thoughts a while ago; they’re still valid.

On taxes:

What we need to do is come up with something simple. And when I pick up my Bible, you know what I see? I see the fairest individual in the universe, God, and he’s given us a system. It’s called a tithe.

We don’t necessarily have to do 10% but it’s the principle. He didn’t say if your crops fail, don’t give me any tithe, or if you have a bumper crop, give me triple tithe. So there must be something inherently fair about proportionality. You make $10 billion, you put in a billion. You make $10 you put in one. Of course you’ve got to get rid of the loopholes.

On health care:

Here’s my solution: when a person is born, give him a birth certificate, an electronic medical record, and a health savings account to which money can be contributed—pretax—from the time you’re born ’til the time you die. If you die, you can pass it on to your family members, and there’s nobody talking about death panels. We can make contributions for people who are indigent. Instead of sending all this money to some bureaucracy, let’s put it in their HSAs. Now they have some control over their own health care. And very quickly they’re going to learn how to be responsible.

The only place I disagree with him is on the degree of heritability of the HSA. Given the slowness of growth of the relevant supply (of health-related services) compared with the rapidity of growth of its demand, accumulating wealth in an HSA would over just a couple of generations create too much money earmarked for health services; this money would rapidly increase health services prices. And that would price those just starting out—newborns, new immigrants, and so on—out of the health services market, just as the present system and its immediate precursor have done. Instead, let the dearly departed’s remaining HSA be passed into his estate as an ordinary asset of the estate, and let each new entrant—those newborns, new immigrants, and so on—start their own HSAs anew.

Nonetheless, The Wall Street Journal titled their article about these thoughts “Ben Carson for President.” We could do worse.

Laughingstock, Part 2

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I’ve written before about this matter. This week, Spiegel Online International, not a fortress of Conservatism, brought it up again.

John Kerry has spent months rushing from one conflict to the next, but has little show for it. His failures are symptomatic of an America that lacks a foreign policy identity—and of a country that seems uncomfortable with its role as a superpower.

And

In recent days, global diplomacy has seemed like an absurd form of theater, with John Kerry in the role of the tragic hero. He doesn’t look like the secretary of state from a world power, Haaretz jeered, but like “an alien who just disembarked his spaceship in the Mideast.”
…

The helplessness of the world’s most important foreign minister shows just how little influence the US still has in the Middle East. And with each failure, Washington’s influence in the rest of the world erodes as well. A civil war is raging in eastern Ukraine, an agreement with Iran over its nuclear program is still a long way off, Islamist terrorists now control large swaths of Iraq—and the US doesn’t appear to be in a position to do anything about it.

And

Kerry has an “incomprehensible obsession and a sense of messianism,” Defense Minister Moshe Yaalon spat at the beginning of this year. “The only thing that might save us is if John Kerry wins the Nobel Prize and leaves us be.”

Daniel Hamilton of Johns Hopkins University [said,] “What he is lacking is a strategic vision. And he is working with a president who is primarily concerned with domestic issues.”

Sadly, it just doesn’t get any better than this. Unless we take appropriate action this fall. And again in 2016. And again in 2018. And again in….

Another Government Overreach

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In a recent op-ed piece, The Wall Street Journal correctly decried the Financial Industry Regulatory Authority’s CARDS program. This program, cynically named “Comprehensive Automated Risk Data System,” is a program that wants to require all of our brokerage houses to report to FINRA massive amounts of data concerning our investment accounts, including what we’re doing in (with?) those accounts.

The op-ed correctly objected to CARDS’ massive collection of data, saying

FINRA says the ocean of data will help it spot a problem almost in real time, far earlier than if it showed up during a regular examination. …

But the financial crisis showed that more data doesn’t guarantee that regulators will know what to do with the information, and it’s as likely the data flood will overwhelm FINRA.

 

But the WSJ missed a far larger problem with CARDS (and with FINRA generally). The piece cited FINRA’s Chairman and CEO Richard Ketchum’s statement about CARDS’ purpose:

CARDS will allow us to collect and manage data from firms in such a way that we can quickly identify trends and product concentrations that are harmful to investors and take swift, responsive action.

Whose definition of “product concentrations that are harmful?” Why, Big Government’s, of course. This is the real danger of this sort of program: government usurping the free market’s role—and so, deprecating the market—in determining what is harmful. This simply makes the definition of “harmful” a political one, rather than a legitimate one.

A Precious Union

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The Metropolitan Opera singers union resumed contract talks on Monday after a two-month hiatus, but union officials said they had little hope of reaching an agreement before a threatened lockout.

And no wonder, with such an awesome sense of entitlement.

“He doesn’t want to help us maintain our instruments,” said chorus member Jean Braham, commenting on the effect [Met General Manager Peter] Gelb’s proposed high-deductible health plan could have on singers’ voices and bodies.

“We are the artists,” Ms Braham said, her voice cracking. “We are the product. The fact that he accepts no responsibility and no accountability is just incredible to me.”

They are your instruments, Ms Braham, not the Met’s. Like any worker, your tools are your own responsibility. And, no, you are not the product. Get over yourself. The entertainment that the Met produces—blending your tools with those of the major singers, those of your company’s dancers, those of the orchestra, those of your company’s stage managers, and the acoustics of the opera house stage and setting are the product.

What’s incredible to me is that your sense of entitlement has become so ingrained that you view all of this as your natural right. How precious can a union worker get?