Essential Economics for Politicians

I’ll Never Sneer at Budweiser Again

https://fee.org/articles/i-ll-never-sneer-at-budweiser-again/

Beer and Snobbery Don’t Mix

I trace my transition to rationality from that moment. Serendipitously, a friend showed up the next night with a beer for me. It was a Budweiser. I quickly explained my principle on that matter and rejected it. But he was persistent.

“Give it a try. It only has 140 calories, it is low in alcohol so it doesn’t drag you down, and it has a pretty good flavor.”

Here was the classic "green eggs and ham" moment: a credible source telling me that something is true that I thought I knew was false.

I’m nice and didn’t want to hurt his feelings. So I cracked it open and poured it into a glass (of course). It had a pretty look and a nice head. I lifted it to my lips and drank. Wow. It was cold and refreshing. Then I realized something: it was actually delicious.

It took me a few minutes to adapt. I could feel what was happening. My whole sense of how the world works was falling apart. I had been wrong – desperately wrong, fundamentally wrong – for as long as I can remember.

A lifetime of turning up my nose while walking past the mainstream beer section at the convenience store was now in question. Then I realized my mistake. Beer shouldn’t be a rarified and hard thing. It shouldn’t have class implications. It need not be treated as some exclusionist prop to shore up some fanciful social hierarchy. It is a drink for everyone, every day. It is part of life, not some exceptionalized experience.

Down with Snobbery

Why does this keep happening to me? I keep having to learn that the market is wise. There is a reason for the place of this beer in our culture. I used to be a snob about pop music. I was wrong. I was a snob about thrift stores. I was wrong. I was a snob about wine. I was wrong. As it turns out, I was wrong about beer too. Another principle bites the dust.
 
"Unforgiven" Explores Guns, Government, and Non-Aggression

https://fee.org/articles/unforgiven-explores-guns-government-and-non-aggression/

The inability of the disarmed population of Big Whiskey to use violence when necessary is deceptively key to the plot. If history has anything to teach us, it is that when things become illegal, they become profitable. Had the town been armed, the prostitutes have had much cheaper and faster alternatives to pursue the justice they felt they had been denied. It's also likely that the attack would never have occurred in the first place. The brothel owner, the citizens of Big Whiskey, and especially the prostitutes themselves all have strong incentives to prevent such attacks. Were it not for the town's ban on guns, they would have had much more effective means to do so.

When another character, English Bob is forcibly disarmed by Little Bill and his goons, he remarks that without his weapon, he would be at the mercy of his enemies. Given the amount of power that Little Bill has acquired as a result of banning firearms, one has to wonder whether that vulnerability and the consequent need for a strong protector is a feature, rather than a bug, of weapons bans.
 
fathom-the-hypocrisy-of-a-government-that-requires-every-citizen-8970665.png
 
Newly published data from the U.S. Treasury shows that the federal government has amassed $84.3 trillion in debts, liabilities, and unfunded Social Security and Medicare obligations. This amounts to $670,000 for every household in the U.S., a fiscal burden that equals 93% of the nation’s private wealth, including the combined value of every American’s assets in real estate, corporate stocks, small businesses, bonds, savings accounts, cash, and personal goods like automobiles and furniture.

Federal law requires the U.S. Treasury and White House to produce an annual report on the “overall financial position” of the federal government. The law also requires the Government Accountability Office to audit this data, which is then published in the Financial Report of the United States Government.

Despite the important and shocking nature of this report, a search of Google News shows no results for it, even though it has been almost a week since it was published.

https://fee.org/articles/federal-shortfall-equals-670k-per-household/
 
An important purpose of the Financial Report is to help citizens understand current fiscal policy and the importance and magnitude of policy reforms necessary to make it sustainable. A sustainable policy is one where the debt-to-GDP ratio is stable or declining over the long term.

To determine if current fiscal policies are sustainable, the projections of the deficit and debt discussed here assume current policy (i.e., current law, with certain adjustments, such as extension of expiring policies that are expected to continue)28 will continue indefinitely and draw out the implications for the growth of debt held by the public as a share of GDP. The projections are therefore neither forecasts nor predictions. As policy changes are enacted, actual financial outcomes will be different than those projected.

The projections in this Financial Report indicate that current policy is not sustainable. As discussed below, if current policy is left unchanged, the debt-to-GDP ratio is projected to fall about 6 percentage points by 2024 before commencing a steady rise to 252 percent in 2091 and is projected to rise continuously thereafter. Preventing the debt-to-GDP ratio from rising over the next 75 years is estimated to require some combination of spending reductions and revenue increases that amount to 1.6 percent of GDP over the period. While this estimate of the “75-year fiscal gap” is highly uncertain, it is nevertheless nearly certain that current fiscal policies cannot be sustained indefinitely.

https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/16frusg/01112017FR_(Final).pdf


So you snowflakes know that when Trump cuts funding to PP, FHA for Mortgage Insurance, freezes all federal hiring, etc., it's because "current fiscal policies cannot be sustained indefinitely. "
 
Make the Bouquet... Or Else!

To see how little is left of one of our most important rights, the freedom of association, look no further than to today’s unanimous decision by the Washington State Supreme Court upholding a lower court’s ruling that florist Baronelle Stutzman was guilty of violating the Washington Law Against Discrimination (WLAD) when she declined, on religious grounds, to provide floral arrangements for one of her regular customer’s same-sex wedding. The lower court had found Stutzman personally liable and had awarded the plaintiffs permanent injunctive relief, actual monetary damages, attorneys’ fees, and costs.

This breathtaking part of the Supreme Court’s conclusion is worth quoting in full:

We also hold that the WLAD may be enforced against Stutzman because it does not infringe any constitutional protection. As applied in this case, the WLAD does not compel speech or association. And assuming that it substantially burdens Stutzman’s religious free exercise, the WLAD does not violate her right to religious free exercise under either the First Amendment or article I, section 11 because it is a neutral, generally applicable law that serves our state government’s compelling interest in eradicating discrimination in public accommodations.

We have here yet another striking example of how modern state statutory anti-discrimination law has come to trump a host of federal constitutional rights, including speech, association, and religious free exercise. It’s not too much to say that the Constitution’s Faustian accommodation of slavery is today consuming the Constitution itself.

https://fee.org/articles/make-the-bouquet-or-else/
 
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.
 
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
 
You must log in or register to reply here.
Back
Top