Down on Hillary, Up in the Air to Cuba, Out with Rousseff, The Donald in Mexico

A record number of Americans dislike Democratic presidential nominee Hillary Clinton. Her and The Donald are trying to outdo each other in this category.

“The U.S. government on Wednesday granted eight U.S. airlines permission to begin scheduled commercial flights to Havana starting as early as this fall.” Fly the skys on American Airlines, JetBlue, and Delta. Here.

Libertarian activist group Free Brazil Movement helped to get Brazilian President Dilma Rousseff impeached. Score one for good government. Here.

Donald Trump visited Mexico and met with President Enrique Peña Nieto to discuss building walls, immigration, drug smuggling, human smuggling. I’d rather they build bridges for better relations with both countries. Here.



Centrist Classical Liberalism ’round the World

In the US, Libertarian party presidential candidate Gary Johnson and his running mate Bill Weld are hewing to a centrist message of socially liberal and fiscally conservative. Walter Olson has a piece here. Check this for the next section of this post.

In Europe liberal parties, often seen as the nearest analogue of libertarian, are often perceived in just this way as occupying centrist/middle positions between labor or revolutionary parties on the left and blood-and-soil or religious parties on the right. European liberal tendencies vary but often they’re secular, business oriented, pro-trade, modern, internationalist but not militarist, and interested in meliorist reform rather than street politics or national crusades. Sound familiar?


In France, Economy Minister Emmanuel Macron is described in the video towards the bottom of this piece as a social and economic liberal (in the classical meaning of the word, not the statist, corrupted meaning in the US.

French Economy Minister Emmanuel Macron has resigned from the government ahead of an expected centrist bid for the presidency in next year’s election.


Mylan’s EpiPen Injector for Epinephrine

Mrs. Clinton Tweeted out her displeasure about the price of this medical device. Here’s my take.

The EpiPen device has the high price, not the medication. Epinephrine has been around for more than 100 years and is easy to produce.

The FDA has a complicated and ambiguous process for approval of the EpiPen, and that is is inhibiting competition. Sanofi withdrew an EpiPen after 26 cases in which it delivered an inaccurate dose. In February the FDA rejected Teva’s generic EpiPen application. In June the FDA required Adamis to expand trials and reliability studies for *another* firm’s auto-injector.

The price of a product or service carries valuable information about the security.

In this case the higher price for EpiPen carries information about the relative scarcity of it. In general, high prices draws in producers but in this case the producers of other EpiPens such as Sanofi and Teva are unable to enter the market because of the FDA’s approval process.

It isn’t something nefarious by Mylan’s employees but the absence of competition that is not spurring them to change anything.

If Mrs Clinton, wanted to help she should start a program with the Clinton Foundation to buy EpiPens from Mylan and distribute them. And as President, she could commit to streamline the approval process at the FDA. She’d be a hero to many families and reform a government agency. But so far, her campaign took the nasty, authoritarian, exploitative role.


States face pension fund gap approaching $1 trillion

After years of not setting aside enough money, state pension funds are looking at a $1 trillion shortfall in what they owe workers in benefits, according to a new analysis from The Pew Charitable Trusts.

Question. Why give politicians, bureaucrats, and government in general at all levels more power? They have not shown the ability to manage the responsibilities they already have.

Government at all levels is susceptible to special interests to bend the government to their benefit.


The Economics of Trade: Trade Deficits

In this post, Alan Reynolds takes issue with Billionaire investor Wilbur Ross, a supporter of Donald Trump, for making the following comment:

“It’s Econ 101 that GDP equals the sum of domestic economic activity plus “net exports,” i.e., exports minus imports.  Therefore, when we run massive and chronic trade deficits, it weakens our economy.”

In reality, the last sentence –beginning with “Therefore”– does not follow from the first.

By that logic, we should expect to see the economy weaken when trade deficits get larger and strengthen when trade deficits shrink or become surpluses. The data show the exact opposite (see chart and text here).

The main reason trade deficits are inversely related economic growth, contrary to elementary accounting, is that U.S. industry needs more imported parts and raw materials when the economy expands, and consumers can afford more imported luxuries when their incomes and investments are rising. A secondary reason is that whenever the United States is growing faster than the economies of major trading partners (such as Japan, EU, Canada), their demand for U.S. exports is likely to lag our demand for their exports.

Thanks for clearing that up.

How Politics Screw up the Economy

Here’s an example of how politicians screw up the economy.

The steel producing industry is part of the primary metal manufacturing which includes nonferrous metals, such as copper, aluminum, magnesium, lead, tin, silver, and gold. Value added for that entire industry totaled $59.7 billion and employed 400,000 people in 2014. The steel industry employs somewhere in the range of 100,000 – 150,000 people.

By contrast, downstream industries that use steel as an input generate value added of $990 billion and employed 6.5 million people in 2014. Think cars, home appliances, things you as a consumer buy.

By “protecting” the steel-producing industry the government is harming the much larger steel-consuming industries and its customers. A bad deal.