The End of Free Trade? - WSJ.com: "
What's missing from this discussion?
1. The expanded money supply in the US is moving out of the US. It's not helping the US economy because of the insidious fiscal, tax and redistributionist policies of the government.
There have been many good discussions of how the dollars printed in America go outside of America to earn a better return.
2. As for tariffs impacting trade, clearly the US has raised immigration barriers, which, in an information society are far more pernicious.
There is clearly a huge swath of the American public that wants a job but can't get one. The barriers to bringing and creating those jobs in America increase by the day; but, few want to talk about the problem because too many sacred cows will be gored - starting with too much government and too many transfer payments which necessitate taxes driving business offshore.
It is clearly more favorable to a business to outsource as much of their production and even R&D into countries where the pressures of unions, anti-business regulation, high taxes, etc. aren't there.
As in the 1930's, per Art Laffer, high taxes had perhaps the most pernicious impact on economic growth.
What is sad is there is so much that could be done to produce jobs in the US - but, the government can't even bare to consider the options.
- Sent using Google Toolbar"
Saturday, October 9, 2010
California Finally Passes New Budget - WSJ.com
AN UNTREATED ILLNESS: California Finally Passes New Budget - WSJ.com:
"Sure sounds like the smoke and mirrors of Obama and evidences a total failure to address the fact that too much is being taken out of the economy for social consumption to allow the economy to grow. Stunted growth effectively means no-growth and is a downward spiral.
But, you can't convince a Democrat that growth takes capital and that social consumption needs to be cut back.
As said many times, this is a third inning budget in a nine-inning game and the pain to make changes is just put off. Like an untreated illness, it may all sound good - i.e. the state has a budget - but the continuing failure to treat the spending disease will only make the eventual adjustments that much more difficult.
- Sent using Google Toolbar"
"Sure sounds like the smoke and mirrors of Obama and evidences a total failure to address the fact that too much is being taken out of the economy for social consumption to allow the economy to grow. Stunted growth effectively means no-growth and is a downward spiral.
But, you can't convince a Democrat that growth takes capital and that social consumption needs to be cut back.
As said many times, this is a third inning budget in a nine-inning game and the pain to make changes is just put off. Like an untreated illness, it may all sound good - i.e. the state has a budget - but the continuing failure to treat the spending disease will only make the eventual adjustments that much more difficult.
- Sent using Google Toolbar"
Thursday, October 7, 2010
Higher Yuan May Not Mean More U.S. Jobs - WSJ.com
Higher Yuan May Not Mean More U.S. Jobs - WSJ.com: "
High paid jobs for those who likely didn't even get out of high school to compete with foreign made goods in Walmart is a non-starter!
It's sad how the US is allowing itself to focus on old-line union jobs when it could be having so much brighter a future - albeit with lower taxes to spur investment in the wealth of new economy jobs, a greater emphasis on education (e.g. break up the teachers unions), and less US productivity going to people on welfare and too early retirement.
But, will any of these positive things happen? One does doubt it!
- Sent using Google Toolbar"
High paid jobs for those who likely didn't even get out of high school to compete with foreign made goods in Walmart is a non-starter!
It's sad how the US is allowing itself to focus on old-line union jobs when it could be having so much brighter a future - albeit with lower taxes to spur investment in the wealth of new economy jobs, a greater emphasis on education (e.g. break up the teachers unions), and less US productivity going to people on welfare and too early retirement.
But, will any of these positive things happen? One does doubt it!
- Sent using Google Toolbar"
Wednesday, October 6, 2010
IMF Cuts 2011 Global Growth Prospects - WSJ.com
CREDIT CARD MENTALITY: IMF Cuts 2011 Global Growth Prospects - WSJ.com: "What is the IMF not saying?
Clearly the IMF doesn't want to address the 'entitlement, credit card mentality' of the developed countries. It also doesn't want to confront or address the economic-utility function.
In terms of the entitlement, credit card mentality, the analogy would appear to be the family that thinks its income is sufficient to provide its living standard but is supplementing its income with credit card borrowing. Eventually, if the income doesn't go up a lot or the lifestyle go way down, the family has to go bankrupt. Is there any indication that overspending and overtaxed countries have any hope of either cutting back entitlements or growing their economies? Evidence of a positive outcome would appear to be lacking - they want to raise taxes and, at best, effect the most modest curbs on unions salaries and benefits.
In terms of economic utility, much of the world raises lots of direct and indirect taxes that hold down wages payable to workers - thus the workers have less spendable income on one hand (some say it costs an employer 4-5 $ or euros for every $ or euro paid in salary). Then the governments have sales and VAT taxes which raise the economic costs of goods.
Thus, the economic wherewithall goes down and the economic costs go up - totally shifting the utility function. An example is Portugal where with taxes a car costs about twice what the same vehicle would cost in the US. However salaries are much less. As a result, fewer cars are sold - and, with people changing their cars much less often, the total revenue to the government is substantially less, the economic activity is substantially less than it would be with less up front taxes. But, the government can wean itself from what will now be a 23% VAT on top of an approximate 20% special car tax.
- Sent using Google Toolbar"
Clearly the IMF doesn't want to address the 'entitlement, credit card mentality' of the developed countries. It also doesn't want to confront or address the economic-utility function.
In terms of the entitlement, credit card mentality, the analogy would appear to be the family that thinks its income is sufficient to provide its living standard but is supplementing its income with credit card borrowing. Eventually, if the income doesn't go up a lot or the lifestyle go way down, the family has to go bankrupt. Is there any indication that overspending and overtaxed countries have any hope of either cutting back entitlements or growing their economies? Evidence of a positive outcome would appear to be lacking - they want to raise taxes and, at best, effect the most modest curbs on unions salaries and benefits.
In terms of economic utility, much of the world raises lots of direct and indirect taxes that hold down wages payable to workers - thus the workers have less spendable income on one hand (some say it costs an employer 4-5 $ or euros for every $ or euro paid in salary). Then the governments have sales and VAT taxes which raise the economic costs of goods.
Thus, the economic wherewithall goes down and the economic costs go up - totally shifting the utility function. An example is Portugal where with taxes a car costs about twice what the same vehicle would cost in the US. However salaries are much less. As a result, fewer cars are sold - and, with people changing their cars much less often, the total revenue to the government is substantially less, the economic activity is substantially less than it would be with less up front taxes. But, the government can wean itself from what will now be a 23% VAT on top of an approximate 20% special car tax.
- Sent using Google Toolbar"
Monday, October 4, 2010
Donald Luskin: The Trade and Tax Doomsday Clocks - WSJ.com
THE OLD THIS TIME IT'S DIFFERENT: Donald Luskin: The Trade and Tax Doomsday Clocks - WSJ.com:
"It seems clear from many of the comments to articles in this newspaper that a great many otherwise apparently literate people have no understanding of economics.
They've certainly never heard about 'regression to the mean', 'economic utility', etc.
It doesn't take a genius to see that those countries with too many taxes and too many social benefits are those not thriving or bouncing back out of this recession.
Anyone reading about all of the scientific advances we have in science blogs must wonder why more of them aren't being followed up on to create new jobs.
But then again, as this article points out, society can choose - support what could provide jobs or bleed the wealth of society to support social transfer payments and overpaid union members and entitlement benefits.
Clearly the Dems are among those who believe the same high tax, anti-investment, anti-business attitudes will produce a different result 'this time'.
- Sent using Google Toolbar"
"It seems clear from many of the comments to articles in this newspaper that a great many otherwise apparently literate people have no understanding of economics.
They've certainly never heard about 'regression to the mean', 'economic utility', etc.
It doesn't take a genius to see that those countries with too many taxes and too many social benefits are those not thriving or bouncing back out of this recession.
Anyone reading about all of the scientific advances we have in science blogs must wonder why more of them aren't being followed up on to create new jobs.
But then again, as this article points out, society can choose - support what could provide jobs or bleed the wealth of society to support social transfer payments and overpaid union members and entitlement benefits.
Clearly the Dems are among those who believe the same high tax, anti-investment, anti-business attitudes will produce a different result 'this time'.
- Sent using Google Toolbar"
Saturday, October 2, 2010
Balancing Act - Barrons.com
HONEST NUMBERS AND DISCOUNTING BACK: Balancing Act - Barrons.com: "- Sent using Google Toolbar"
Sitting here in one of the highly overtaxed countries of Europe where the thought or real economic growth or vitality is totally tax constrained, one does wonder whether the old real estate valuation formula might not also be a required part of budgeting?
In other words, to simplify, take a 10-year present value calculation of income (tax receipt) growth, based on the in effect fiscal policies of the country, and discount them back.
For example, the idea of getting Obama's 700 billion from the rich by letting the Bush tax cuts expire is beyond wishful thinking.
Europe is trying to get government deficits down to 3% of GDP - assuming their economies will grow at this rate. Which again is like expecting a prostitute to be a virgin, year-after-year.
To balance the budget you can either have income discounted back from a growing economy or tax the bejesus out of the economy today and forget having anything to add in from the future.
Clearly, the US is going for the Europe route - head-in-the-sand big deficits and no growth.
Sitting here in one of the highly overtaxed countries of Europe where the thought or real economic growth or vitality is totally tax constrained, one does wonder whether the old real estate valuation formula might not also be a required part of budgeting?
In other words, to simplify, take a 10-year present value calculation of income (tax receipt) growth, based on the in effect fiscal policies of the country, and discount them back.
For example, the idea of getting Obama's 700 billion from the rich by letting the Bush tax cuts expire is beyond wishful thinking.
Europe is trying to get government deficits down to 3% of GDP - assuming their economies will grow at this rate. Which again is like expecting a prostitute to be a virgin, year-after-year.
To balance the budget you can either have income discounted back from a growing economy or tax the bejesus out of the economy today and forget having anything to add in from the future.
Clearly, the US is going for the Europe route - head-in-the-sand big deficits and no growth.
Friday, October 1, 2010
The Risks of a Currency War Become Widely Recognized - Barrons.com
GROWTH OPTIONS: The Risks of a Currency War Become Widely Recognized - Barrons.com: "- Sent using Google Toolbar"
Plus of course the lesson from the 30's (see Art Laffer) that higher taxes at the upper income levels also cripple growth has not been learned.
It becomes clearer everyday that one reads a science blog or similar, that the ideas to power this economy forward (i.e. to really grow this economy) are there.
So, the question has to be what is holding it back. This is where everyone has a different point of view.
But, as with Reagan changing the playing field in the 1980's, the "no-growth-possible" philosophy was replaced with a rapidly growing economy. Tax cuts, not increases, were part of this.
Plus of course the lesson from the 30's (see Art Laffer) that higher taxes at the upper income levels also cripple growth has not been learned.
It becomes clearer everyday that one reads a science blog or similar, that the ideas to power this economy forward (i.e. to really grow this economy) are there.
So, the question has to be what is holding it back. This is where everyone has a different point of view.
But, as with Reagan changing the playing field in the 1980's, the "no-growth-possible" philosophy was replaced with a rapidly growing economy. Tax cuts, not increases, were part of this.
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