Thursday, September 29, 2016

Top Trump Adviser: There Will Be No Real Tax Cuts in a Trump Administration

Billionaire vulture investor, Wilbur Ross, who is considered a candidate for the Treasury Secretary position in a Donald Trump Administration, has released along with the free trade-hating economist Peter Navarro an analysis of Trump's economic plan.

Here's the money quote:
When evaluated as a single integrated whole, the Trump plan is revenue neutral...
Got that? Tax revenue is not going to go down in a Trump administration. The points of taxation will just be shifted around. To be sure, the Trump plan has some typical crazed political economic growth projections that suggest that tax rates will be lower because of higher profits and worker income, but don't count on it. Count on the revenue neutral tax plan, that is, shifting taxes around but overall the same tax grab by the government as now. In fact, I wouldn't be surprised if the total tax burden climbed during a Trump administration.

-RW


Federal Government Shutdown is Averted after Congress Passes Spending Bill

No surprise here.

The House voted Wednesday night to extend government funding until Dec. 9, avoiding a government shutdown this weekend by sending the measure to President Obama. The Senate passed the bill earlier in the day, and Congress is now set to recess until after the Nov. 8 election.

The spending shall continue. Crony America will sleep well tonight.

 -RW

Wednesday, September 28, 2016

Fed Chair Yellen Doesn’t Know What The Current Labor Force Participation Rate Is



  -RW

HOT HOT OPEC Agrees to Production Cuts

This is a developing story return to this post for updates.

UPDATE 1

OPEC has reached an understanding at a meeting in Algiers to cut crude-oil-production cut but they will wait until November to set the exact level of cuts.

UPDATE 2

According to The Wall Street Journal, a consensus was reached after a 4 1/2 hour meeting. OPEC, the 14-nation cartel that controls over a third of world oil output, has been producing at record levels.

A person familiar with the matter said the cartel was considering cutting production to between 32.5 million barrels a day and 33 million barrels a day—down from August levels of 33.2 million barrels a day.

Exactly how the production cuts would be achieved is unclear. The person said a committee would be formed to study how to carry out the cuts and then report to the cartel at its next meeting on Nov. 30 in Vienna.

UPDATE 3

“Today, an exceptional decision was made at OPEC,” Iran’s oil minister, Bijan Zanganeh, told reporters after the meeting, according to Iranian state media service Shana.

UPDATE 4

Oil climbed more than 4.5% after the news.


Krugman: Obamacare is Starting to Unravel

How severe of a problem is Obamacare beginning to develop into?

Paul Krugperson who has championed Obamacare as a major success now says it is beginning to unravel:




-RW

CNN Goes Into Totally Absurd Full Propaganda Mode to Protect the Federal Reserve

Just listen to the below howler of a propaganda piece from Christine Romans at CNN after Trump, during Monday's debate, accused Janet Yellen of being political.



This Fed "expert" majored in French, journalism and mass communication at Iowa State University.

Her claim is that the Fed isn't influenced by politics. I'm willing to bet she got the talking points for this piece directly from a Fed PR agent because, apparently, they didn't teach Fed history in her French classes at Iowa State. Although she claims the Fed has always been as pure as the virgin snow, she has missed a few things

Here's Burton Abrams in The Journal of Economic PerspectivesVolume 20, Number 4—Fall 2006:
The fact that President Nixon pressured [Federal Resrve chairman] Arthur Burns to run an expansionary monetary policy in the run-up to the 1972 election is well-known (for example, Tufte, 1978, pp. 45–50). As another example, John Ehrlichman (1982, pp. 248 – 49) describes a meeting between Nixon and Burns on October 23, 1969, just after Burns’s nomination to the Fed had been announced.
Kevin Phillips, a political and economic commentator for more than three decades and onetime Nixon strategist, reports that President Richard Nixon asked his Federal Reserve chairman, Arthur Burns, to concoct a new inflation number that would be split off from traditional headline CPI, dubbed “core” inflation—and thus make inflation look less threatening.

Writes Phillips:
Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed albeit unsuccessfully—that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns,to develop what became an ultimately famous division between "core" inflation and headline inflation. It the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of "volatility," categories that happened to he troublesome: at that time, food and energy. Core inflation could he spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called "inflation ex-inflation"—i.e., inflation after the inflation has been excluded.)
 In his memoir, Arthur Burns tells us what he once told President Nixon:
I informed the President as follows : (1) that his friendship was one of the three that has counted most in my life and that I wanted to keep it if I possibly could; (2) that I took the present post [Fed chairman] to repay the debt of an immigrant boy to a nation that had given him the opportunity to develop and use his brain constructively; (3) that there was never the slightest conflict between my doing what was right for the economy and my doing what served the political interests of RN.
  -RW

UPDATE

Via The FinancialTimes:

Janet Yellen was forced to fend off new questions about the Federal Reserve’s political independence on Tuesday as a Republican lawmaker asked her if one of the central bank’s governors was too close to Hillary Clinton’s campaign.

The Fed chair was challenged by Scott Garrett, a Republican from New Jersey, over donations that Fed governor Lael Brainard has made to the Clinton campaign and over unconfirmed media reports that Ms Brainard is a contender for a senior job in a potential Clinton administration.

The exchanges came only two days after Donald Trump, the Republican presidential candidate, claimed in his debate with Mrs Clinton that the Fed has been keeping short-term interest rates low to help the Obama administration and was sustaining a “big, fat, ugly bubble” in the stock market....

After a false start and cross talk between lawmakers seeking to end Mr Garrett’s questioning, the Fed chair said: “I would have to consult my counsel. I’m not aware that that’s a conflict, but I would …” Then she was herself cut off by the committee chair.

Shortly beforehand Ms Yellen said she had “absolutely no awareness” of Ms Brainard being in touch with the Clinton camp about a job.

Pressed on $2,700 in donations that Ms Brainard has made to Mrs Clinton’s campaign, the maximum permitted for individual contributions in a primary election cycle, Ms Yellen noted that the Hatch Act does not prohibit political contributions by Fed governors...

Mr Garrett told the Fed chair: “As the saying goes, perception is reality. Whether you like it or not, the public increasingly believes that Fed independence is nothing more than a myth. The Fed has an unacceptable cosy relationship with the Obama administration and with higher ups in the Democratic party.”

Asked if she had ever asked Ms Brainard to recuse herself from monetary policymaking due to her “close involvement” with the campaign, Ms Yellen said: “She’s acting in a way that is permitted by the rules we are subject to. Each one of us has to decide for ourselves.”

Venezuela Crisis: I Flew to U.S. to Buy Toilet Paper

CNN reports:

Carmen Mendoza came to New York to visit her daughter Anabella -- and also to buy toilet paper, soap, toothpaste, beans, corn flour, tuna fish, mayonnaise and aspirin.

Mendoza, 66, can't find these basic goods in her home country: Venezuela....

About half a million Venezuelans visited the United States last year. Increasingly, Venezuelans living in the U.S. say their friends and family who can afford it are coming to America to buy basics.

"It's just a testament to how badly the country is being managed," says Beatriz Ramos, a Venezuelan tech entrepreneur, who lives in New York. Ramos has hosted six friends from Venezuela this year: "It's been steadily getting worse and worse and worse."

  -RW

Krugman on Trump's Debate Trade Comments

You have to look hard but you can occasionally find sound comments from Paul Krugman, especially when truth is the best way for him to shill for Hillary Clinton.

After the debate, he wrote this in The New York Times, which is correct:
[I]t seems to be conventional wisdom that Trump did well in the first 15 minutes. And I guess he did if you are impressed by someone talking loudly and confidently about a subject he really doesn’t understand. But really: Trump on trade was ignorance all the way.
There were specifics: China is “devaluing” (not so — it was holding down the yuan five years ago, but these days it’s intervening to keep the yuan up, not down.) There was this, on Mexico:
Let me give you the example of Mexico. They have a VAT tax. We’re on a different system. When we sell into Mexico, there’s a tax. When they sell in — automatic, 16 percent, approximately. When they sell into us, there’s no tax. It’s a defective agreement. It’s been defective for a long time, many years, but the politicians haven’t done anything about it.
Gah. A VAT is basically a sales tax. It is levied on both domestic and imported goods, so that it doesn’t protect against imports — which is why it’s allowed under international trade rules, and not considered a protectionist trade policy. I get that Trump is not an economist — hoo boy, is he not an economist — but this is one of his signature issues, so you might have expected him to learn a few facts.
He followed up with this:
I’ve been writing about Donald Trump’s claim that Mexico’s value-added tax is an unfair trade policy, which is just really bad economics. Here’s Joel Slemrod explaining that a VAT has the same effects as a sales tax. Now, nobody thinks that sales taxes are an unfair trade practice. New York has fairly high sales taxes; Delaware has no such tax. Does anyone think that this gives New York an unfair advantage in interstate competition?
But it turns out that Trump wasn’t saying ignorant things off the top of his head: he was saying ignorant things fed to him by his incompetent economic advisers. Here’s the campaign white paper on economics. The VAT discussion is on pages 12-13 — and it’s utterly uninformed.
And it’s not the worst thing: there’s lots of terrible stuff in the white paper, at every level.
Should we be reassured that Trump wasn’t actually winging it here, just taking really bad advice? Not at all. This says that if he somehow becomes president, and decides to take the job seriously, it won’t help — because his judgment in advisers, his notion of who constitutes an expert, is as bad as his judgment on the fly.

Which is not to say that Hillary's economic thinking is any sounder, only that Krugman Krugperson won't tell you that.

-RW

United Nations: U.S. Owes Black People Reparations for a History of ‘Racial Terrorism’

Social justice warriors are going stark raving mad.

The history of slavery in the United States justifies reparations for African Americans, argues a recent report by a U.N.-affiliated group based in Geneva, reports The Washington Post.

This conclusion was part of a study by the United Nations' Working Group of Experts on People of African Descent, a body that reports to the international organization's High Commissioner on Human Rights.

"In particular, the legacy of colonial history, enslavement, racial subordination and segregation, racial terrorism and racial inequality in the United States remains a serious challenge, as there has been no real commitment to reparations and to truth and reconciliation for people of African descent," the report stated. "Contemporary police killings and the trauma that they create are reminiscent of the past racial terror of lynching."

Since we are apparently playing this game of back to the future based on classes where many individual members of the class that is demanded reparations from, namely non-African Americans, had nothing do with slavery etc. (zero), perhaps we should look at the most evil class on the planet, government employees. More people have been killed, been tortured, and otherwise ruined, at the hands of government employees than by any other class, See Death By Government.

Since the United Nation is an organization of governments, those working for it should be considered high-powered government employees. As a first step, I urge therefore the members of the United Nations' Working Group of Experts, based on their back to the future "logic," to divest themselves of all their material wealth by distributing is to us in the non-government class, who have suffered for centuries at the hands of government employees.

This would be a good start if these experts really believe in their argument.

-RW

Tuesday, September 27, 2016

The Most Alarming Thing Hillary Clinton Said at the Debate

While neither Donald Trump or Hillary Clinton are going to get awards for fundamental economic understanding  based upon the comments made during the presidential debate last night, the award for most brain-crashing economic comment has to go to Hillary.

She said this at one point:
 I also want to see more companies do profit-sharing. If you help create the profits, you should be able to share in them, not just the executives at the top.
It's really hard to know if she really believes this, it might have been said just to shore up support with Bernie's socialists, but Trump acted like a beached whale after the comment was made, when it was juicy plankton that Hillary left in the open sea for him.

This notion that there needs to be "more" sharing of profit comes right out of Karl Marx, by which I mean the comments signals a remarkable failure to understand the nature of

1.labor
2.capital
3.profit
4.entreprenurship
5.risk
6.central planning vs free markets

Just who the hell is Hillary to decide how much profit sharing should be going on between individual firms and workers, if any?

Many, many people just want a solid steady paycheck not based on the whims of profits. Taking the idea one step further, as the philosopher David Gordon said to me while discussing Hillary's comment, "Does this mean workers will have to participate in losses also?"

She, of course, meant no such loss participation. Share in profits let the capitalists take the hit on any losses is her game plan. Does she really think this is going to encourage capitalists to take more risks and hire more labor? Hillary definitely has some wires crossed with this kind of thinking, no expensive Obamacare paid for cranial CAT scan needed to detect this.

The comment from Hillary should have brought on more discussion from the talking heads post-debate then if Hillary had experienced a combo coughing fit and the shakes on stage after receiving a Lester Holt softball question. Yet, no such discussion occurred. Not one of them had an antenna that could detect Marxian mumbo jumbo from a United States presidential candidate. Is there any wonder why the country is in the mess it is in?

If a good portion of the populace understood the fundamentals of economics and the nature of freedom, I'm convinced that rather than being on a presidential debate stage, Hillary would be back in Arkansas with a job as a second rate bikini shaver in a high class joint.

 -RW

The Immorality of the Latest Michael Bloomberg Soda Tax Advocacy

 Lawrence J. McQuillan writes:
Former New York City Mayor Michael Bloomberg is helping to bankroll a television-commercial campaign in favor of proposed soda taxes in Oakland and San Francisco, known as Measure HH and Proposition V, respectively, both of which will appear on the November ballot. You can’t miss the commercial if you live in the Bay Area, as it seems to air a thousand times a day on local TV stations...

The Oakland and San Francisco soda taxes would charge distributors an additional one cent per ounce of soda they sell (or $2.88 per case). The tax would also apply to other sugar-sweetened drinks.



As McQuillan notes, this could very easily end up as a tax on consumers despite the tax being applied at the distributor level:
There’s an important difference between the “imposition of a tax,” on the one hand, and the “incidence of a tax,” on the other hand. Imposition is where the tax is technically levied. Incidence refers to who really pays the tax (the tax burden), which is one of the most important questions regarding any tax. Every microeconomics principles textbook covers this topic.
It really depends on the cost structures of the firms involved and the elasticity of demand for the product at the consumer level. Bloomberg knows this since the Bloomberg ad makes the implication, which is likely accurate, that the tax will impact consumers directly since it supposedly is going to fight childhood obesity and type two diabetes by raising the cost of soda at the consumer level.

In other words, as McQuillan correctly concludes:
The soda tax is also akin to telling your child this: “Your classmate Lawrence is not drinking what we think he should. So it’s ok to steal money from Lawrence and all his classmates until Lawrence stops drinking bad things.” Hopefully no parent would tell their child this. Neither should this immoral and flawed logic be the basis of public policy. But it’s the logic behind Measure HH and Prop V. The lesson being taught by the pro-tax side is “It’s ok to steal, as long as you think you’re doing right by it.” Taxation is always theft; “legal” theft, but theft nevertheless. It’s taking money by force from others.
Didn’t anyone tell soda-tax advocates it’s not nice to steal and lie?

 -RW

Trump or Clinton: A Lose-Lose Proposition

By Jeff Deist



All world history … presents … a contest … between the economic and the political means. …The state is an organization of the political means … forced by a victorious group of men on a defeated group, with the sole purpose of regulating the dominion of the victorious group over the vanquished. — Franz Oppenheimer
Hillary and Trump are not the only people waging Fall Campaigns.
If you watched the presidential debate Monday evening, you may despair that any libertarian perspective was entirely missing. And you justifiably fear that the outcome of November’s election will not be pretty, regardless of who prevails.
If you were waiting for Trump or Hillary to talk about significantly limiting state power, respecting state and local decision-making, restoring civil liberties, rolling back the regulatory leviathan, or getting out of the Middle East altogether, you’re still waiting. Because if political candidates excel at anything, it is hubris. Their pretense of knowledge gives way to the great mass delusion of our time, one shared by far too many Americans: that government is somehow omniscient.
That’s why the Mises Institute needs your support: to make the case against the dominant, i.e., political, narrative of our time. Our Fall Campaign, held all this week in honor of Mises’s September 29th birthday, is a chance for you to vote against politics and for liberty. It is your chance to vote for “None of the above.” And even $5 every month can make a difference.
It’s tempting to dismiss Hillary simply as deeply unlikeable and amoral. But her toxic brand of Wall Street cronyism, war cheerleading, and leftist social engineering represents the core of modern politics. Her absolute goal is to silence, even criminalize, voices that oppose the march of progressivism and globalism.
It’s also easy, and facile, for libertarians to dismiss Trump. As a populist he is ideologically unmoored, and prepared to use state power at will. While he almost single-handedly exposed Conservatism, Inc. as a fraudulent gravy train that fails to conserve anything, he is temperamentally wired for action, not forbearance — a dangerous quality in a politician.
Certainly we — as liberty-minded individuals — should have learned our lesson by now. Divisiveness is not a byproduct of politics, it’s a feature. Politics is designed to create hatred and unrest, as a prelude to justifying more and more state power over our lives.
After all, politics is war by other means. And war claims victims. War has winners and losers. Most of all, war has profiteers: namely the political class and its many clients, both in government and the nominally private sector.
Power is at the heart of all political action, no matter how many platitudes are offered by the candidates. And make no mistake: political power is personal power, a short cut to wealth and status for untold numbers of mediocrities at all levels of government.
There’s another way: real liberalism, the kind Ludwig von Mises exalted. Real liberalism boldly cedes power to the individual, to families, and to civil society. Real liberalism eschews force and state coercion. It is the antidote to power, the only moral and practical choice between what Oppenheimer termed “political means” and “economic means.”
Mises stood always for the latter. Born in 1881, he was raised in the magnificent culture that Donald Rumsfeld derided as “Old Europe.” But he saw the conflagration caused by Soviet Communism, Nazism, and two World Wars — all collectivist endeavors. And while Mises certainly believed the state had a limited role to play in protecting property and individual rights, one doubts whether he would see any redeeming value in today’s technocratic superstates. Surely he would find little to celebrate in the current political landscape.
The Mises Institute exists to carry forward the important work of Mises and other Austrian economists, but also to advance their vision of political liberty. And we need your help. While millions of dollars pour into political campaigns and DC think tanks, the Mises Institute is supported entirely by donors like you. More than 5 million people are on pace to visit mises.org in 2016. If each of them gave just $1, our fundraising would be simple! Won’t you please make your most generous donation to our Fall Campaign today?
If we embrace politics, willingly or reluctantly, we must accept the unholy consolidation of power in the hands of a few — the worst few. Oligarchy is not some anomaly, but rather the predictable result of our willingness to devolve power to Washington DC.
Politics and government won’t go away anytime soon. But the system is breaking down, and that affords us an opportunity to make the case for a better world: one organized more around markets and civil society, and less around the state.
Jeff Deist is the president of the Mises Institute. 
The above originall appeared at Mises.org.

Economic Ideas: Plato, Aristotle, and the Ancient Greeks, Part 2

Richard Ebeling emails:

Dear Bob,

I have a new article on the Future of Freedom Foundation (FFF) website on, “Economic Ideas: Plato, Aristotle, and the Ancient Greeks, Part 2.”

When we turn to Aristotle, we find little of Plato’s advocacy of collectivism. Indeed, Aristotle rejects collective ownership of land, saying that it is inconsistent with human nature, and breaks the close bond between work and reward that comes with private property, out of which comes incentives and a healthy work ethic.

Aristotle also considered successful use of private property and the wealth-creation that may come with it as a source and basis of human generosity and benevolence desirable in a good society. But nonetheless, like his teacher, Plato, he considers that the interests and purposes of the State come before that of the individual, since man is a “political animal.”

Aristotle attempted to grapple with issues related to economics, but drew peculiar and misdirected distinctions between “natural” and “unnatural” trade, commerce and exchange, which led him to heavily criticize professional merchants, traders, and middlemen as corrupting members of society. And he fails to understand or offer solutions to explain the basis upon which goods are exchanged for each other, a faulty analysis that leads him to condemn the taking of interest on loans.

Nonetheless, Aristotle represents an important step in the establishment of a sound appreciation of property, production and personal incentives, and at least tries to deal with the nature of a market system of human association.

http://www.fff.org/explore-freedom/article/economic-ideas-plato-aristotle-ancient-greeks-part-2/

Best,
Richard

The Economics of Hillary Clinton

By William L. Anderson

In a recent Labor Day speech to union workers in Illinois, Hillary Clinton declared that if she is elected president of the United States, she would make sure that “some employers go to jail for wage theft and all the other abuses they engage in.” Her incendiary comments were obvious “red meat” for the audience, but it also helped to clarify her own economic views and how she would govern if elected.