Category Archives

Archive of posts published in the category: Economics

The FANGs are Old News

Great moves forward, disruptive ground changing innovations do not happen consistently. They do not adhere to a plan or a budget.  The best we can do is create an environment that does not stifle them,  that attracts the bright and the motivated, but we do not know if they come from great tax policies, cultural collusion, ethnic diversity, great education, or just an environment of free thinkers.

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The Hong Kong Experiment

He avoided the accumulation of economic data, believing the cost of accumulating outweighed its value. He felt such data was used to enable economic planning which he opposed, and because it instilled a false sense of certainty about outcomes.  Cowperthwaite governed from principles, not data.

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Sanity Reconsidered

Obama was cool, calm, engaging, charismatic and measured in his responses.  His charm also obscured his record which was disappointing,  an intentional understatement.  Are we so enamored with style and personality that we ignore the policy successes and failures? The media may be, but the public may have more depth on the subject that we allow.

What if sanity was questioned based on substance instead of style?

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Tax Cut Fallacies

from John Cochrane
“The larger economic point: In the end, investment in the whole economy has nothing to do with the financial decisions of individual companies. Investment will increase if the marginal, after-tax, return to investment increases. Lowering the corporate tax rate operates on that marginal incentive to new investments. It does not operate by “giving companies cash” which they may use, individually, to buy new forklifts, or to send to investors. Thinking about the cash, and not the marginal incentive, is a central mistake. (It’s a mistake endemic to Keynesian economics, but the case here is supply-side, incentive oriented.)”

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It’s the Productivity, Stupid

Critics of the tax cuts do not trust the corporations to spend their cuts wisely.  This is the tragic flaw of progressivism.  We are supposed to trust the infinite wisdom and political interests of the state to spend our money, but always suspect the same money in private hands.

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Growth Elements are Now in Place

Deficits do matter, but like the stimulus it also matters how they are spent.  Stimulating demand is less effective than stimulating investment.  Demand stimulus is only effective briefly under certain conditions. Stimulating investment pays dividends (pun intended) much longer.

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The Trickle-Down Calumny

‘Trickle down’ is meaningless and ignorant and does not withstand minimal scrutiny. It hides the greater issues of the size, scope, and expense of government; and whether consumers and investors can allocate resources better than bureaucrats.

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The Counterproductive Estate Tax

by Henry Oliner
The estate tax is less of a transfer from the rich to the poor than it is a transfer from one group of wealthy to other wealthy special interests.  The great beneficiaries of estate taxes are tax lawyers and accountants, insurance companies, and wealthier businesses who use the pressure of the estate taxes to acquire other firms and grow larger.

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How the Modern Economy Mutes Keynes

by Henry Oliner
The obsessive focus on demand also proved misplaced.   Demand and supply ebb and flow in ways far too organic to be managed by central planning. Periods of innovation create new demands.  New products precede their demand and subsequent manufacturing technology continuously turns luxuries into commodities.

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ACA’s Death Toll

from the WSJ
“But new data shows that mortality rates have also increased, suggesting the policy may contribute each year to 5,400 premature deaths of Medicare patients with serious heart conditions. “

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Tax Thoughts 2017 12 21

The Democrats must be in a catch 22 with this bill; the limitation of state income and property taxes will more than offset the lower STATUTORY rates and many of the wealthiest will see an EFFECTIVE tax increase. Most of the benefits go to the middle and lower tax brackets.

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Entitlements for the Non Poor

“The data reveal just how far entitlements have departed from their original purpose of providing a measure of security from economic destitution among the elderly, the disabled, and the unemployed and to alleviate poverty among the general population. In 2015, 62 percent of recipient households, encompassing over 100 million U.S. residents, had incomes that were above the poverty line prior to the receipt of assistance. “

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Freedom and Equality

“Nature smiles at the union of freedom and equality in our utopias. For freedom and equality are sworn and everlasting enemies, and when one prevails the other dies. “

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Benign Neglect

Kevin Williamson at National Review- “A great deal of what’s best about the modern world is the result of nerds messing around in their garages: Google, the modern automobile business, rock ’n’ roll. Thank goodness nobody took it seriously enough to try to regulate it, manage it, and direct it — which would only have deformed it.”

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The Other Friction Costs

While tax relief is in the spotlight, we have underestimated the other friction costs, the regulatory growth that wastes valuable economy growing and job creating resources. The stock market boom happened because the beating stopped.

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The New Challenge of a Growing Economy

Most do not realize that we have not yet paid the bill for the recession and the Obama spending. Obama depended on the Keynesian multiplier to stimulate the economy. It failed because too many other friction costs counteracted it; including higher taxes, increased regulations, and a generally unfriendly business climate in DC. Even without these friction costs, the benefit of the multiplier is limited. 

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The High Cost of Good Intentions – A Book Review

The result of this history is that entitlements have expanded far beyond assisting the poor. Many of the benefits go to beneficiaries far above the poverty line. Congress has proven totally untrustworthy in managing surpluses or trust funds or maintaining a sound financial basis.   The explosion in entitlements is the primary driver of the post-World War II debts.

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The Deficit- Everyone Wants to Go to Heaven, Nobody Wants to Die

from Jonah Goldberg at National Review, How to Tell When Deficits are Bad As a matter of economic policy, conservatives believe that the people themselves are better at spending their money than the government is. Cutting taxes and regulations drives economic…

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The Difficulty of Entitlement Reform

by Henry Oliner I have begun reading The High Cost of Good Intentions-  A History of U.S. Federal Entitlement Programs by John F. Cogan.  It is an impressive look at the problem. Entitlements go back to the Revolutionary War. Limited…

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Economic Superstition

Presidents get too much credit and blame for an economy as if it turns on a dime the moment they are elected.  The right want to credit Trump for the sharp rise since he was elected, but attributes no credit…

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