Tag Archives: political economy

Nationalizing Private Enterprise

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OK, State-ifying private enterprise, for now, if this proposal goes through. Some California Progressive-Democratic Party legislators are setting up legislation that would have California pay unemployment benefits to strikers. The move also would put businesses and workers, both, at some risk from Government control, but never mind that.

A group of California Democrats are expected to propose handing out unemployment benefits to striking workers.
Language expected to be released in the coming days or weeks to provide striking workers with benefits from California’s unemployment insurance program that is $18 billion in debt. The move comes amid historic strikes by both screenwriters and actors, forcing many movies and TV shows to halt production.

This move would lessen the incentive for workers and their unions to build up strike funds. Uncle Sugar—or for now Daddy Gavin—will pick up increasing portions of the strike tab.

But this move is more dangerous than that in the longer term. This is an active assault on the free enterprise system that’s at the center of our economy, whether that’s the intention of this move or not.

Workers pay each other during strikes. That’s what a significant fraction of their union dues are for: setting up a strike fund so while workers are on strike, and so not being paid by their employer, still have money coming in to cover their critical expenses. The bigger the strike fund, the longer the strike can last, and the more the business(es) being struck can be damaged. It’s hard to find a bigger strike fund than Government’s control of its citizens’ tax remittals, which under this proposal would supplant union dues.

This move, if realized, would lead to Government saying to any business, individually or collectively, “Nice business you got there. Be too bad if your employees didn’t come to work for a while.”

This move also would put the labor force at risk of government control. With strike funding coming from Government under the guise of unemployment benefits, Government would be in a position to reward workers for not working striking, when Government wants to use them to pressure a Government-disfavored business. On the other hand, Government would be in a position to punish withhold benefits from workers who don’t strike this time from those who do strike on their own initiative at a later time, or who strike without Government’s prior permission.

A Thought on SALT Deductions

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New York Republican Congressman John Tamny had an op-ed in the Wall Street Journal early last week in which he advocated enthusiastically for raising the ceiling on the deduction of State and Local Taxes from Federal income taxes. That deduction currently is capped at $10,000, and Tamny worries that that works a hardship on his constituents, since despite their high incomes, those folks aren’t really all that rich. New York’s high taxes and prices already work to reduce those folks’ relative wealth.

A WSJ reader responded in WSJ‘s Sunday Letters section.

The five New York Republicans in Congress take a page from the Democratic playbook to defend changing the SALT cap (Letters, Aug. 15), “especially since New York continues to be a donor state, paying more in federal taxes than it receives from Washington.”
When did that become the objective? They make it sound like the role of the federal government is to redistribute all funds in a fair and equitable manner. Sorry guys, we send our tax dollars to Washington to pay for essential services like national defense, not to have it parceled out again to the states in equal portions.

It’s true enough that Tamny and his fellow New York Republican Congressmen (all Congressmen, come to that) have to represent his—their—constituents first, and even as Federal Congressmen, our nation second. But as Federal Congressmen, they do have to represent all of us at some stage.

That tension makes the Congressional Tamnys’ collective and individual jobs hard, but if they wanted cushy jobs, they should have taken positions as mattress demonstrators.

That’s not all. Another Letter writer disagreed with Tamny in a different direction.

The New York lawmakers’ argument bears considerable similarities to Mayor Eric Adams’s demands for federal assistance to take care of the illegal immigrants his city invited. Talk about moral hazard. Both amount to pleas from politicians for federal relief from the consequences of their own state or local governments’ policies and, as such, should be summarily denied.

What the letter writers said is spot on, and their words carry national, and moral, weight.

Inflation

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The learned Emeritus Profess (Roanoke College) Robert Stauffer, in his Sunday letter to The Wall Street Journal‘s Letters section objects to the inclusion of “owner equivalent rent” (OER) in standard inflation measures on the grounds that “real” inflation is much lower than it’s represented to be, and this exclusion would make the measures more reasonable. (Oh, and no one pays that rent anyway.)

Stauffer’s beef is irrelevant.

Stauffer worries about OER, but he studiously ignores energy and food, whose inflation numbers are excised from those standard measures to leave so-called core inflation on the rationalization that food and energy pricing is so volatile.

However, real consumers, us ordinary Americans, pay actual dollars for that food and energy, and the prices we pay keep on going up, however variably from time to time, and those price increases, smoothed over a few periods, remain higher than “core” inflation, and especially so regarding Stauffer’s “corrected” inflation.

Private Enterprises as Government Jobs Welfare Programs

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That’s the position of the Pennsylvania Progressive-Democratic Party’s Representative G Roni Green. She’s proposing, with an absolutely straight face, a State law that would require businesses with 500 or more employees to cut their employees’ 5-day, 40-hour work week to 4-day, 32-hour work weeks—with no change in pay. That’s a government-mandated 25% pay raise.

Jobs welfare doesn’t get much better than that.

Green’s rationalization centers on two premises. One is that society looks and operates differently than it once did in 1938 (when the government-mandated 40-hour work week was enacted). That’s true enough. Society has grown more complex, more technologically capable, and consumers’ needs (consumers being, after all, at the core of society) have grown quite a bit.

All of that, though, requires continued and increasing employee productivity to enable us Americans to continue, and continue to improve, our standard of living. That growing productivity isn’t possible with the proposed 25% reduction in hours of productivity Green is proposing.

That last brings us to Green’s second rationalization.

Technological advancement alone have [sic] significantly increased the productivity of workers allowing more work to be accomplished in less time.

That’s also true. Indeed, technological advancements have advanced to the point that entire worker jobs have been replaced. Technology does a lot of things that employees currently do at least in part. One result of Green’s move, were it to become law, likely would be a further reduction in employee hours, this time on business’ initiative: to substantially less than 32 hours, converting full-time employees to part-time, with commensurate reduction in pay and in most cases reduction or outright elimination of benefits. The eliminated hours of work would be done by robots…technology.

Green further claims (as cited by Fox Business) research [that] has shown that companies have been able to adopt a shorter workweek without compromising productivity. What isn’t looked at in such “research” is the degree to which such a shorter work week caps productivity growth so that there is no longer any improvement, merely maintenance. So much for keeping up with “society’s” increasing complexity and consumer needs.

Technological advancements—spurred by this government interference—will accelerate this trend in reducing human employment and reducing human income.

Do your own Work

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As the US begins, however tentatively, to start severing scientific ties with the People’s Republic of China, some American scientists are manufacturing an alarm and sounding off about it.

China has built itself into a powerful engine of scientific discovery in recent decades, partly with American help, and many in Washington fear that China could gain a security and military advantage unless the US takes decisive steps to cut off cooperation in scientific research.
Many scientists warn, however, that Washington would be severing ties as China is making its greatest contributions to scientific advancements, and cutting it off risks slowing American progress in critical areas such as biotechnology, clean energy, and telecommunications.

Never mind that those scientific achievements have been done with an American help that includes a very large fraction via intellectual property theft, IP gained through economic extortion (give it over, or you can’t do business in the PRC), and outright espionage.

Never mind, either, that other nation’s scientists—those of Canada, Israel, Germany, Great Britain, France, Ukraine(!), and on and on—are every bit as good as the PRC’s, if not better, from the greater freedom of those nations’ economic, political, and research environments. A disruption while the collaborations transition would only be transient.

There’s this aspect of the US-PRC science relationship, too:

The US depends more heavily on China than China does on the US in some strategic areas, according to an analysis by Clarivate [a specialist in science analytics] of studies in respected journals shared exclusively with The Wall Street Journal. Between 2017 and 2021, US-China collaborations accounted for 27% of US-based scientists’ high-quality research in nanoscience, for example, but only 13% of China-based scientists’. The gap in telecommunications was even wider, with collaborations accounting for 10% of China’s output but more than 33% of the US’s.

The science complainers do not see this threat? I’m not sanguine about degree of their…naivete. Regardless, it’s time to end that dependence.

Some of the plaints are just petty, though.

[Tian] Xia, the professor of medicine at UCLA, said he has stopped his research on birth defects because he doesn’t know how to work with embryonic stem cells. That was the expertise of his Chinese collaborators.

A grown man sulking like a toddler. It’s a pity. It’s not that difficult to find experts in embryonic stem cells; that general technology has been around for decades, and there are experts with birth defect-related skills outside of the PRC. Xia just seems upset because he doesn’t get to work with his buds in the PRC as easily as he wants.

Our scientists need to do their own work or collaborate with other scientists in the US and in our friends’ and allies’ nations, and stop sharing our secrets with our enemies.

It’s almost as if these complaining scientists consider their personal careers and researches more important than the security of the nation that encourages and fosters their researches and whose economic, political, and research environment facilitates the flourishing of their research programs, and of their careers.