Category Archives

Archive of posts published in the category: Economics

Trump Builds only Half a Bridge

Treasury Secretary Steve Mnuchin has expressed approval for a weaker dollar.  Trump is promising higher tariffs.  These moves threaten to undo the benefits of his work on tax cuts and regulations.

Read More

Health Care is an Economic, not a Political Problem

The health care problem, like so many others, is the result of making an economic problem a political problem. Our elected officials make promises in exchange for votes and power without paying for them. They hide the cost in cross subsidies, mandates, regulation, demonization, and wishful thinking.

Read More

Correlation is Still Useful

The problem in political policy is that once a decision is reached, a policy enacted, and a bureaucracy created we get married to the solution and refuse to correct previous analysis and assumptions. Tools that are successful in analyzing are often not so successful in predicting. The problem with government analysis is not their imperfection but their resistance to correction.

Read More

Capitalizing the Great Recession

“The extraordinary postcrash prosperity of the precrash superrich is altogether new in our history. Near-zero interest rates are a godsend to the wealthy, inflating their real estate, stock portfolios, bond portfolios, private equity holdings, and art collections. Middle-class and blue-collar Americans, meanwhile, haven’t made much progress, and many are worse off. Inequality has increased.”

Read More

Immigration Reality Check

The tax cut and the realignment of our tax policy for international business, including the repatriation of overseas earning, is quickly resulting in domestic investment and capital spending. There is also a willingness to support a weaker dollar and impose tariffs on competitive imports, which could stimulate more production short term.  This is a lot of stimulus at once at a time when unemployment is at a record low. This could impede the productivity growth that should be a priority. We need productive immigrants even more.

Read More

The Great Equalizer Surprise

from The Wall Street Journal by Gregory Clark
“As a bizarre consequence of this pattern, African-Americans, who have low levels of net worth on average, are the social group for which inherited wealth represents the largest share of their net worth. Another odd implication is that inheritances tend to make overall wealth-holding more equal. Were inherited wealth to be completely abolished, the wealth of the poor would decline more than that of the rich. Inherited wealth is the great equalizer. Who knew?”

Read More

Leveraging the Free Minds of the World

America’s success is a combination of constitutional liberty, heterogeneous culture that has a healthy disrespect for authority, solid protection of property rights, a respect for the common man and a classless society, and willingness to risk and fail. There are certainly hundreds of other attributes, but the combination is uniquely American.  Government’s function is to foster and protect the elements of our productive society. 

Read More

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.

Read More

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.

Read More

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?

Read More

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.)”

Read More

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.

Read More

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.

Read More

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.

Read More

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.

Read More

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.

Read More

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. “

Read More

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.

Read More

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. “

Read More

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. “

Read More