Category Archives

Archive of posts published in the category: Economics

Corporatism is not Capitalism

Keynes suggested the use of government to make more efficient allocations of capital but was often critical of the incompetence of government officials.  He seems to unknowingly refute himself.  The weak accountability in government action is what distinguishes it from market solutions.  The worst solution is the pairing of select firms to partner with government actors.  When the results fail capitalism is faulted, bur corporatism is not capitalism.

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The Longest Bull

The tariffs and the growing debt are threats, but bull markets do not require perfection. They just require sound fundamentals and a dearth of alternative investments.  

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Failure is Progress

“What can’t be stressed enough about what happened in 2008 is that for economies to grow and markets to rise, it’s necessary that the mediocre and lousy constantly be replaced by the good and brilliant. “

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Elizabeth Warren’s Lunacy

Warren shows no understanding of what profit is.  It is the signal that determines the best allocation of resources.  The better ideas attract the most capital through the profit incentive. Profit is a byproduct of innovation and ideas.  Ms. Warren would substitute this with a government bureaucracy who will determine the proper allocation of resources.  The would not only squelch economic growth and innovation, it would increase corruption exponentially as businesses curried political rather than consumer approval.  Startups would head overseas.

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Is Capitalism Natural?

By acknowledging human flaws and addressing them, conservatives permit human potential to flourish.  By seeking a non existent perfection socialists require central control and power that frustrates human potential and growth.

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Marketization

“What do you imagine would happen to the price of a Honda Civic if the federal government gave every young person in the country ten grand and a subsidized loan that could only be used for the purchase of a Honda Civic? “

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Corruption and Tariffs

“The larger the state is, the more capable it is of picking winners and losers, and the more aggressively it will be lobbied to do so in a particular way. And while it is easily misunderstood in this age of the modern regulatory state, the tariff is perhaps the earliest example of big government — the state intervenes in otherwise free markets to bring about a result it finds socially or economically desirable. “

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The Fatal Conceit of a Trade War

“China targeted pistachios to inflict pain in a region where Republicans are politically vulnerable. About 99% of American pistachios are grown in California’s San Joaquin Valley, home of GOP Reps. David Valadao, Jeff Denham and Devin Nunes.”

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Venezuela Meets Hayek

But repression on the Venezuelan model is not extraneous to socialism — it is baked into the socialist cake. Lenin, Stalin, Mao, Castro (and Castro!), Chàvez, Maduro, Honecker, Ho Chi Minh, Pol Pot, the Kim dynasty, Shining Path: No ideology is that unlucky. “

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Internet Sales Tax Ruling

Many small businesses that ship online will be hurt by this ruling. Complying with the tax codes for 48 states that charge sales tax will be crippling for many of them.  There will be a need for a third party to manage the sales tax issue for thousands of small online businesses. This will likely serve to make Amazon and other large online retailers bigger and more powerful in the internet sales arena. 

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The Seduction of Hidden Costs

“There are no solutions, only tradeoffs.” Could the tax credits granted to the wealthy for historical renovation serve us better if it was used to provide health care for the poor? Could it be better served invested in a productive enterprise innovating new products, generating economic growth and dividends which will provide additional tax revenue instead of less?

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Handouts for the Wealthy

“The working classes get riled up when they see someone at the grocery store flipping out their food stamps to buy a T-bone. They have no idea that a nice family on the other side of town is walking away with $100,000 for flipping their house.”

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The Limits of the Meritocracy

The meritocracy sounds good but like all centralized policy is subject to overemphasize some objectives and disregard ingredients that have more influence than they realize.  Intelligence may be an important attribute but there are other character traits that may be  responsible for the outcome we attribute to intelligence. Steve Jobs was not the result of an IQ test.

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A Checklist of Priorities

Pragmatism is considered the antithesis of ideology but fails to recognize that it has become an ideology.  Ideological is not the same as dogmatic.  Ideology according to Goldberg is checklist of priorities. 

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My Political Priorities

But we can not blame Trump for the intolerance of free speech on our college campuses, the intolerance for diverse opinions in many corporations and in the media, and the stupidity of much of the resistance.

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Humble Capitalism- Observation on the Berkshire Hathaway Meeting

Patience is a virtue and a vice for Americans.  We can be suckers for simplistic formulas, excess leverage, and delusions of certainty. Buffet and Munger avoid these traps.  Our obsession with finance distracts from the effective and efficient production of goods and services, engagement with the customer, and the patience and faith to adhere to sound principles.

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It’s the Entitlements, Stupid

“The long run budget problem has essentially nothing to do with the Trump tax cut. It has been brewing under Bush, Obama, and Trump. It fundamentally comes from growth in entitlements an order of magnitude larger. “

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Tax Math Reality

“A key principle here is that the overall marginal tax rate matters.  There is a tendency, especially on the left, to quote only the top Federal marginal rate of about 40%, and to say therefore that high income Americans pays less taxes than most of Europe. But that argument forgets we also pay state and sometimes local taxes.”

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The Borking of Kevin Williamson

The left has become so illiberal that they not only reject ideas, but they reject the rights of free expression to those who hold those ideas. Their strategy to win an argument is to deny that the argument even exists. By demonizing the opposition as racists, misogynists, bigots or hate-speech, they can dismiss them as unworthy of debate and deny them any platform for expression. The accusations do not have to be true to be effective.

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Bastiat and Trump

When Mnuchin claims that the steel and aluminum tariffs will only add a few cents to a beer can or a few dollars to an auto he displays as much ignorance as Nancy Pelosi who contends that a raise of only $20 a week is crumbs.  It is the classic broken window fallacy of Bastiat, the inability to understand and acknowledge what is unseen.

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