Essential Economics for Politicians

https://niskanencenter.org/blog/redefining-public-charge-threat-noncitizens/

FEBRUARY 10, 2017
REDEFINING “PUBLIC CHARGE” AND THE THREAT TO NONCITIZENS
BY SAMUEL HAMMOND

..Using the Census Population Survey, we estimate the number of noncitizens who arrived between 2010 and 2015 and who are using some kind of federal means-tested benefit. The CPS, like many household surveys, suffers from a response bias that tends to understate participation in public programs. Nonetheless, we find as many as 1.9 million otherwise lawful noncitizens could become deportable under a maximally inclusive definition of public charge. This includes more than 1.4 million and nearly 900,000 Medicaid and SNAP beneficiaries, respectively. These recipients are disproportionately women and households with children — the key groups partially exempt from the five year restriction on lawful alien benefit eligibility.
 
Citizen children of noncitizen parents also tend to participate in SNAP at a lower rate.

children_snap_benefits_graph.jpg
 
Wez said:
Not worried about Corporate welfare?
Click to expand...
No, I am worried about the instruments that Corporations use to protect corporate welfare programs. Dodd-Frank being one of the instruments that claim to protect the consumer. Albeit, after it protects the industry you work in.
 
Bruddah IZ said:
No, I am worried about the instruments that Corporations use to protect corporate welfare programs. Dodd-Frank being one of the instruments that claim to protect the consumer. Albeit, after it protects the industry you work in.
Click to expand...

Oh please, shoot the whole thing down because of a few flawed provisions. Most of DF protects consumers. You sound like people complaining about the ACA instead of fixing it.
 
Wez said:
Oh please, shoot the whole thing down because of a few flawed provisions. Most of DF protects consumers. You sound like people complaining about the ACA instead of fixing it.
Click to expand...
Please tell us what is "flawed" about Dodd-Frank ("DF") and for whom is it flawed?

When the administration has made an outlay unavoidable, majorities tend to feel obliged to allow it.--Ferrara
 
Ferrara was already well aware that “At the end of the day, all governments are a minority”. The downside of the representative system was that it enabled governing elites to manufacture an illusion of participation in collective choices, an illusion that greatly facilitated government spending:

The representative system is characterized by this serious flaw, that it can effortlessly become an instrument of delusion. The people is less loath to pay, when it deludes itself into believing that its taxes—as they are assented to by its representatives, whose interests are purportedly the same as its own—are for this only reason warranted by inescapable necessities. A large number of instances presented by modern history teach us how easily the good faith of peoples can be abused and reveal the covert motive that made not a few governments to reckon that, ultimately, it was in their own interest to suffer the establishment of deliberative assemblies, as a means to get rid of the odious appearance of oppressors of their own people and to enjoy the pleasure of spending large sums… When the administration has made an outlay unavoidable, majorities tend to feel obliged to allow it.

https://fee.org/articles/francesco-ferraras-19th-century-war-on-taxation/?utm_medium=popular_widget
 
Scholars in the Italian tradition tried to develop a scientific definition of taxation, distinguishing two sorts: taxation necessary for financing for a limited government, and taxation that was essentially predatory. In its “purest meaning,” the imposta (tax) would be “the price—and a slim one—of the great benefits that the social state, the organized state offers to each of us”. Given the immense utility provided by the social state (that is: by the organization of law and order in society), such a price could be understood as something that would be paid voluntarily by each taxpayer. (Like the FHA MI discount, Dodd-Frank Act, Quantitative Easing, etc.) Since “Any tax is ultimately equivalent to a prevented consumption and a prescribed one in its stead,” and so it all boils down to the question whether “the substituted consumption is more or less productive than the prevented one”. For Ferrara, the cornerstone of the problems of taxation is the economic use of taxes, the fact that government should operate in a parsimonious way.

But if taxation can be theoretically understood as a fee, Ferrara was fully aware that historical evidence pointed in another direction:

In its philosophical concept, the organized state is the great reason that exalts the notion of taxation; in its historical understanding, however, taxation is the great secret that organizes tyranny… And if in its philosophical understanding the term “contribution” does appears to be truer and worthier, in its historical understanding I invite you to change it, but only to call it “scourge.” Looking realistically at the dry facts of history, one sees taxation as the propellant of arbitrary government:

Would you like to fathom how a swarm of parasites and harlots can exist in the royal courts? Why ignorance and intrigue are exalted and knowledge and virtue are rejected and derided? How comes it that in a temperate government a bad minister can make the houses of parliament to be in thrall of his will? And representatives and newspapers can be found to conceal his faults and incompetence? Taxation contains and explains the whole riddle. Taxation is the great source of everything a corrupt government can devise to the detriment of the peoples. Taxation supports the spy, encourages the faction, dictates the content of newspapers.


I can see the responses now:

1. Post office
2. roads
3. public this and that
 
is from pages 88-89 of Arnold Kling’s splendid 2016 book, Specialization and Trade: A Re-introduction to Economics:


[Jesse] Ausubel points out that even as farm output and overall population have increased, use of water in the United States has actually declined since 1970. That change reflects greater efficiency in farming. (Ask your friends who proudly “buy local” whether they know how much water their local farmers used compared with the distant farmers from the supermarket imports produce.)

….

Generally speaking, in a market economy, the combination of incentives and human ingenuity has permitted the human population to grow with a reduction in the rate of resource use. By selling books in digital format, online retailer Amazon is letting us read more while using less paper; Airbnb is giving us more places to sleep without building hotels; and iTunes is allowing us to listen to more music without manufacturing records. We are not only leaving future generations with more know-how and more tools of production, we are also leaving them with more wilderness, more forest, and more vegetation.


I haven't read the book yet. But I'm sure it addresses the fact that as the world gets richer we are having less kids too.
 
prices2-1.png


Consider each product or service shown. College is heavily subsidized, regulated, and exclusionary, and the costs are soaring. The textbook industry is hobbled by extreme copyright regulation, and can depend on captive buyers. Childcare is one of the most regulated industries in the country. Not just anyone can enter. Every aspect of childcare provision is controlled by the state.

On the other hand, software, wireless service, toys and and TVs (see: free trade) exist in relatively freer market settings. The price pressure is down.

It's not that complicated, folks. If you want good services, good products, innovative ideas, and low prices, you need competitive markets. The more you control, the higher the prices and the worse the results.
 
Republicans Are Already Trying to Raise Taxes

Steve Forbes
Wednesday, February 15, 2017


Here’s how, in essence, this sneaky, anti-consumer tax works. Importers will no longer be allowed to deduct an item as a business expense. To simplify things, let's say a store imports a pair of sneakers for $40 and then sells them for $50, making a $10 profit on which it would owe taxes. Under the Republican plan, however, the retailer wouldn't be able to deduct the $40 it paid for the sneakers. In fact, it would owe taxes on the entire $50! And who, ultimately, pays this tax? You, the consumer, in the form of higher prices or fewer choices of where you can shop. Retailers and their customers will be hit.

Many oil refiners import crude oil to turn into gasoline. This new tax will sharply raise their costs, which will spell pain when you fill up your tank. Worse, some could be forced out of business or have to sharply curtail operations, as drivers cut back on buying the suddenly more expensive fuel.

Companies like BMW, Toyota, Mercedes, Honda, Nissan and Hyundai have major manufacturing operations in the U.S. that employ tens of thousands of workers in good-paying jobs. These companies’ costs will soar because they import numerous parts for the vehicles their workers assemble.


 
Behind this mirage of restored American “greatness,” American workers and consumers will be poorer than they have to be.
 
No one has perfect knowledge. We all act on what we know or believe at the time a transaction is entered into. And sometimes we conclude that a trade, after the fact, was not as advantageous as we hoped for or had wished. But it would require a large amount of arrogance on the part of anyone else to presume that they know more than we do about what is better for us in our everyday market exchanges. The knowledge on which the presumptuous political paternalist asserts a right to control and interfere is at least as imperfect and limited as that possessed by the rest of us. Rich Ebeling
 
“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers . . .

“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better to buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage . . .

“It is certainly not employed to the greatest advantage when it is directed towards an object which it can buy cheaper than it can make it . . . The industry of a country, therefore, is thus turned away from a more, to a less advantageous employment, and the exchangeable value of its annual produce, instead of being increased, according to the intention of the lawgiver, must necessarily be diminished by every such regulation.”--Adam Smith
 
Trade Retaliations Make Your Own Country Worse Off

But what about other countries that impose import tariffs against our goods to “protect” their own industries and employments? Should we not respond with retaliatory tariffs and related import restrictions to teach them a lesson? If we do we only injure ourselves, in so responding to the trade barriers erected by other countries.

A British economist, Henry Dunning MacLeod, gave a vivid reply to the argument for a retaliatory tariff back in 1896. He said:

“By the method of retaliatory duties, when the [other country] smites us on one cheek, we immediately hit ourselves an extremely hard slap on the other. [The other country by its import duties] does us an injury, and we, by retaliating, immediately do ourselves a great deal more. The true way to fight hostile tariffs is by free trade.”

Retaliating with counter tariffs merely makes the goods previously purchased from the foreign country more expensive for the consumers of your own country, lowering their standard of living through higher prices and a smaller variety of goods from which to choose. And by reducing the sales earned by the foreign producer in your country, he has less revenue from which to buy your country’s exports, with a negative effect on those sectors of your own economy.
 
Donald Trump Refuted by a South Carolinian – in 1830!

I earlier quoted from President Trump’s remarks during his recent visit to Charleston, South Carolina. Let me quote a South Carolina economist, Thomas Cooper (1759-1839), who published the following words in his 1830 Lectures on the Elements of Political Economy, in what became one of the most widely used economic textbooks at that time in the United States. Dr. Cooper was a president of South Carolina College and a Professor of Chemistry and Political Economy. He said:

“The whole use of foreign trade is to import commodities that are wanted, at less cost, than they are produced at home. This is the very basis and essential character of it. Hence, the principle of restrictions and prohibitory imposts [tariffs], forbidding an article into being introduced from abroad because it can be had cheaper from abroad – goes to the utter annihilation of all foreign commerce . . .

“The restrictive system tells us in fact, that we shall greatly profit by being confined as prisoners within our own houses, without intercourse out of doors; that is it our duty to let our domestic neighbor grow rich on our credulity, and persuade us to buy from him an inferior article, at a higher price . . .

For [this] principle being adopted, where is it to stop? To talk after this, of our being the most enlightened nation upon earth, is a satire upon ourselves more bitter than our own enemies have it in their power to utter. To be governed by such ignorance, is indeed a national disgrace.”
 
Mexico currently sends more than 80 percent of its exports to the United States: cars, auto parts, machinery, electrical equipment, medical instruments, oil, and fresh and processed fruits and vegetables, among other goods. In all, Mexico exported more than $316 billion in goods and services to the United States in 2015, the Office of the U.S. Trade Representative reported.

A 20 percent tariff would crush some of these industries.
 
The United States would suffer, too. Mexico is our third-largest trading partner, importing more than $267 billion in U.S. goods and services in 2015. Even if Mexico does not reciprocate with tariffs of its own, the United States would also be hurt. Just not as much as Mexico, since U.S. exports to Mexico account for only about 13 percent of total U.S. exports — not 80 percent.

The threatened 20 percent tariff is huge. By comparison, the simple average tariff rate on Mexican goods was around 4 percent prior to implementation of the North American Free Trade Agreement (NAFTA); it has declined to about 0.5 percent today.

Since the recent great recession, the Mexican economy has expanded at an average rate of 3.2 percent per year. The U.S. economy, by comparison, has grown an average of 2.1 percent per year.

The growing Mexican economy increased job opportunities, pushing the unemployment rate down to 3.4 percent in December 2016. It also triggered a period of reverse migration, as tens of thousands of Mexicans living in the United States returned home.

Since 2009, in fact, the number of Mexicans returning home exceeded the number of Mexicans entering the United States by approximately 140,000, according to the Pew Research Center.

A 20 percent tariff would put the brakes on Mexico’s expansion and likely reverse the migratory trend, as Mexicans, both legally and illegally, seek economic opportunities in the United States.
 
You must log in or register to reply here.
Back
Top