Economy


Reading through their agenda, I conclude its the same old crap. More government control, rules, and bureaucracy. And, the results will be the very results they say they are trying to fix. For example, their first issue complains about special interests and so-called the rich getting the benefits of government largess. But, any legislation or regulatory change involves the input of special interests. In fact, Democrats welcome special interests to provide expertise in writing legislation. They are the experts and that’s why they’re involved. The Democrats invite the special interests that fit their agenda to help who then tilt the legislation to their benefit. The result is more bureaucracy and more complexity in the lives of the middle class they say they are trying to help. How much record-keeping do we already have for taxes, medical care, and on and on? Well, that is the result of the very government Democrats are pushing.

How about this:

Our plan for A Better Deal starts by creating millions of good-paying, full-time jobs by directly investing in our crumbling infrastructure and prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.

How are they going to “creating millions of good-paying, full-time jobs” Well, that crumbling infrastructure is located in states that have been run by Democrats, with an occasional Republican elected such as NY, NJ, CA, IL. The fiscal problem at the state level is that government employee pensions, public education, and Medicaid have consumed their budgets, leaving little budget dollars left for infrastructure. Having the federal government spend on infrastructure relieves the state governors, legislators, and judges of being responsible for the infrastructure in their states. No real reform here.

Next, “prioritizing small business and entrepreneurs, instead of giving tax breaks to special interests.” is funny because “small business” and “entrepreneurs”, from a political perspective, are special interests. “prioritizing” means giving special treatment to special interests. Democrats just hide it from the public by burdening firms with the rules then we get ticked off at the firms for acting the way they do.

Here’s another: “We will crack down on monopolies and the concentration of economic power that has led to higher prices for consumers, workers, and small business”. The monopolies in the economy are the federal, state, and local governments. Further, firms cannot raise their prices. The prices of products and services that are rising faster then general inflation are those with heavy government involvement such as college tuition and public education.

Another problem with their approach is that all this activity interferes with the peaceful, voluntary actions of the American people interacting with each other and others across borders. That interference tilts the playing field because that is how the Democrats view everything. In Progressivism, someone must lose for someone else to win.

Next, their plan “provides new tax incentives to employers that invest in workforce training and education and make sure the rules of the economy support companies that focus on long-term growth, rather than short-term profits.” That means more paperwork, meetings, and time taken away from concentrating resources on doing the work for the customers of the firm. As well, firms have strategies for the short, medium, and long terms. They may not be completely filled out, but that is not possible because the future is unknown. The details get filled in as more information is available and more knowledge acquired. That’s why 10 or 20 years plans are nonsense.

The funny thing is, if a firm invests for the long-term, the results might pay off in government antitrust action against it, see Amazon.com. They invested for the long-term by keeping the retail prices low to build market share. But, Democrats want congressional hearings on its proposed acquisition of Whole Foods Market Inc. So the people at Amazon.com invested for the long-term and they get rewarded with congressional hearings. That makes no sense unless of course the hearings are for show and graft. Ahhh, graft. Squeeze a firm so its employees make financial contributions to the party.

And let’s not forget the mess the Democrats created in the health insurance market with Obamacare — monthly premiums higher, deductibles, higher, insurers leaving markets. So all in all, the Democrats are pulling the same stunts they always do.

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Here:

The Google engineer who wrote a highly controversial internal memo about gender differences that’s sparked an uproar in the tech industry says he’s been fired — and that he’s not going to take it lying down.

James Damore’s memo, which claims biological factors contribute to gender inequality in the tech sector, sparked a quick rebuttal from Google after it circulated widely online.

The federal government forces firms who do business with it to obtain gender, ethnicity/race (combined), military veteran status, disability. Disability can be an ailment you currently have or had but are fully recovered. And it is not always visible, i.e. does not display physical attributes.

The applicant is given the option of refusing provide the accurate answer and can choose to not provide the information. But does that affect the applicant’s chances of being hired? Who really knows. These questions are ostensibly used to assess a firm’s outreach and recruitment efforts. But so what. Why does that have to be known? It may not be used now, but it might later.

Worse, this screening prevents some people from being hired because they amount to a quota. If the firm has enough of a certain class of individual, it may look for others to fill positions.

The problem with all of this is that it make the labor market less fluid and dynamic. Look at the mess Google is in now and has to expend its resources hiring people to implement these policies and now it has to defend itself in public. How about building great products and services with great people! And deliver high ROI to the owners, i.e. shareholders!

I was recently listening to President Trump’s proposal to change U.S. immigration laws and how they would somehow help the economy.

Well, Sheldon Richman puts into words better than I could what this amounts to:

Immigration brings out the social engineers and central planners across the political establishment. We see this clearly in the debate over Donald Trump’s support for legislation that would cut legal immigration in half while tilting it toward well-educated English-speakers and against low-skilled non-English-speakers. . . .

But what is this thing they call “the economy,” which has needs? Social engineers of all parties and persuasions talk as though an economy is some kind of mechanism to be centrally fine-tuned and overhauled occasionally according to a plan. Even those who style themselves free enterprisers display the central-planning mentality when it comes to immigration.

Contrary to this establishment view, the economy is not a mechanism. It is, rather, hundreds of millions of American producers and consumers, who also happen to be embedded in a global marketplace. Why can’t they be trusted, without the direction of politicians, to decide for themselves what they need and to engage in social cooperation — that is, among other things, to trade goods and services — to obtain it?

 

Phil Gramm and Micheal Solon:

But it wasn’t only the tax cuts, and it wasn’t only Reagan. To his credit, President Carter led the most significant deregulatory effort in the postwar era, reducing the regulatory burden on truckers, railroads, airlines and telecommunications, along with the interest rates paid by financial institutions. Reagan built on this Carter legacy by eliminating price controls on domestic oil and natural gas. These actions enhanced overall economic efficiency and amplified the effects of the 1981 tax cut and the 1986 tax reform.

But then they end with a too-partisan conclusion:

Economic growth faded as President Obama raised taxes and smothered the economy with unprecedented regulatory burdens.

They conveniently ignore President Bush (43) regulatory and spending smothering. It helped to build the deep state and bureaucracy just as the Obama years did, and from which we are struggling to emerge.

 

 

From BET via Glenn Reynolds:

It is no surprise that Black teens, 16- to 19-years old, are disproportionately unemployed. At the Great Recession’s bottom, African-American teens had an unemployment rate of nearly 50 percent while the rate for all teens was 27.1 percent. In the weak post-Recession, many teens compete for jobs against down-sized adults with college degrees.

And economists William Even from Miami University and David Macpherson from Trinity University report that when a state, or the federal government, increases the minimum wage, Black teens are more likely to be laid off. The duo analyzed 600,000 data points, which the Employment Policies Institute says included “a robust sample of minority young adults unprecedented in previous studies on the minimum wage.”

The report focused on 16-to 24-year-old males without a high school diploma and found that for each 10 percent increase in the federal or state minimum wage employment for young Black males decreased 6.5 percent. By contrast, after the same wage boost, employment for white and Hispanic males fell respectively just 2.5 percent and 1.2 percent.

Reynolds’ conclusion: Like so many things pushed by unions, the minimum wage is a racist barrier to entry.

A. Barton Hinkle:

Last weekend, president Nicolas Maduro used a sham election to consolidate power, and by Tuesday armed thugs were rounding up opposition leaders. This is the all but inevitable outcome of the Venezuelan government’s economic policies, which have driven the richest nation in Latin America — a country with more oil than Saudi Arabia — into shocking destitution.

And Darío Paya, former Chilean ambassador to the Organization of American States:

“Populists and socialists destroy their societies in predictable ways. It’s not like one day a populist gets up and says, ‘I’m going to ruin this country.’ Rather, he starts out wanting to spread the wealth and finds that the easiest way to hand out cash is by simply printing lots of it. Which creates a new problem: As the currency weakens, prices rise. But the populist finds there’s an answer for that too. If bread is getting expensive, he can fix its price, and he gets to vilify the baker as a greedy capitalist.

 

“But then the baker stops producing bread because he can’t afford to make it, what with the rising price of flour. And so what does the populist do next? He fixes the prices of flour. When that doesn’t work, the politically expedient thing to do will be to take over the bakery and the farms and hand them to the folks in the party’s local committees, who prove to be rather less apt at farming and baking. …

 

“And if violence does erupt, it can be denounced as the doing of enemies of the state and used as a pretext for renewed crackdowns: ‘We’re going to tell the imperialism and the international right that the people are present, with their farm instruments in one hand and a gun in the other,’ Maduro told a Caracas crowd. And soon, Mr. Populist finds himself with a good reason to suspend the country’s constitution. Thus does a tyrannical attitude toward the shop-owner selling bread lead to a tyranny over a whole nation.”

 

 

 

Its happening again. A firm grows from a darling, often mentioned glowingly in the media, that benefits consumers into a large corporation that is harming employees and communities, etc. If you want a lower standard of living, stagnant economy, no new jobs, and no new products then have the government try to fix the problem. It will stifle the dynamism a prosperous society needs.

Some critics call low pricing ‘predatory pricing’, supposedly to conjure scary images of a ravenous wild animal looking for its next prey.

Take this article by a writer who trades for a living.

New firms often use low prices to build market share and to get their products into more hands. They burn through investor’s cash, pay their employees with some cash and either shares of stock or products or some other way to save the cash for investing in business growth. Amazon never changed course.

People made a similar case against Walmart years ago when it was taking market share from other retailers: its harming other retailers, killing jobs, putting mom-and-pop shops out of business, etc.

Well guess what? Now Walmart is competing against Amazon and other brick-and-mortar retailers and other e-commerce sites. No government action against Walmart was needed. Indeed, it would have been harmful to consumers, its suppliers, and its employees.

The people who work at Walmart and now Amazon are doing something extraordinarily well. They have a successful strategy and business model and are executing. Don’t get in the way. Its up to others to figure out how to leap-frog over them in the marketplace. Other business models and strategies will emerge even though we cannot foresee what that will be. In fact, that success only becomes known after the fact because the growth of the firm will make the news. It will have survived the initial response by Amazon, Walmart and other competitors.

Yet we benefit from their low prices. It makes our family budgets go farther. The employees of the firms harmed by these super successful firms need to turn inward to management to demand they get their act together, or welcome outside investors to maybe buy the firm and install new management with new ideas. Its new ideas, new management, new/outside capital, new strategy, new business model that leads to dynamic growth.

Now, if Amazon is using the government to enact specific laws that benefit it, like, say, Net Neutrality, then that law or regulation should be eliminated.

If you want to help these firms, stop encouraging politicians and regulators to take sides and trying  to solve this problem. Its not a solve-able problem and government is a poor mechanism to solve problems.

UPDATE: Amazon May Be the Next Tech Giant Muscling Into Health Care. That’s what American health care needs. Smart, successful people in the private sector to figure out how to improve a highly government-controlled industry.

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