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 Richmans' Trade and Taxes Blog



The Fed and the Dollar Shortage Abroad
Jesse Richman, 10/10/2019

The US dollar has been bid up strongly of late relative to many world currencies.  In part this may reflect trade pressures.  But it goes back before Trump stepped down the escalator of Trump Tower and into politics.  In part it may reflect the gradual unwinding and disintegration of the eurodollar market (https://www.realclearmarkets.com/articles/2017/02/24/the_eurodollar_never_really_made_sense_to_begin_with_102561.html).  And if so, perhaps it should be celebrated because that market always had its problems.  But on the other hand, the appreciation of the dollar in the face of large US trade deficits calls for Fed action.  If the Federal Reserve was actively managing the US balance of trade and the value of the dollar to bring trade towards balance, then it would be pushing dollars into world financial markets...

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The rich are getting poorer, and the poor are getting richer... but you wouldn't know it from the press coverage
Jesse Richman, 10/10/2019

A recent piece on Real Clear Markets does an excellent job of taking down recent highly distorted reporting of the poverty and income growth data for 2018 that the Census Bureau recently released. 

https://www.realclearmarkets.com/articles/2019/10/10/the_economic_news_from_the_census_bureau_is_very_good_103941.html

Most of the commentary suggests inequality is increasing and Trump is to blame.  But in fact the incomes of the lower income groups are increasing faster than the incomes of high income groups. 

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The rich are getting poorer, and the poor are getting richer... but you wouldn't know it from the press coverage
Jesse Richman, 10/10/2019

A recent piece on Real Clear Markets does an excellent job of taking down recent highly distorted reporting of the poverty and income growth data for 2018 that the Census Bureau recently released. 

https://www.realclearmarkets.com/articles/2019/10/10/the_economic_news_from_the_census_bureau_is_very_good_103941.html

Most of the commentary suggests inequality is increasing and Trump is to blame.  But in fact the incomes of the lower income groups are increasing faster than the incomes of high income groups. 

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Scientists Deny Man-Made-Climate-Change
Raymond Richman, 9/13/2019

The head of the world’s foremost weather science organization, Petteri Taalas, the secretary-general of the World Meteorological Organization (WMO), told the Talouselämä magazine in Finland that he disagrees with doomsday climate extremists who call for radical action to prevent a purported apocalypse. Talaas said that establishment meteorological scientists are under increasing assault from radical climate alarmists who are attempting to move the mainstream scientific community in a radical direction. “Climate experts have been attacked by these people and they claim that we should be much more radical. They are doomsters and extremists. They make threats,” Taalas said.

The WMO is one of the two organizations that founded the Intergovernmental Panel on Climate Change (IPCC) in 1988. Since being formed, the IPCC has become the leading institution worldwide to promote the theory that human activity contributes to global warming. Talaas pointed out that climate extremists are selectively picking out facts from the IPCC reports to fit their narrative. The vast majority of the climate models the IPCC uses as the basis for its predictions have incorrectly forecast higher temperatures repeatedly. According to an analysis by the Cato Institute, 105 of the 108 models predicted a higher surface temperature for the period between 1998 and 2014 than the temperature actually recorded. The IPCC has previously admitted that climate models cannot be used to accurately predict long-term changes in the climate.

Talaas’s comments were sent to a list of 5,000 media contacts, but none have picked up the story according to Benny Peiser, the director of the Global Warming Policy Foundation in London. Peiser said. “He talks about a religious cult. He talks about people being extremists and doomsters. It’s quite staggering. The language that he uses and the signal that he’s sending out is ‘We are afraid of these extremists. They are destroying our society.”

A new study conducted by a Finnish research team has found little evidence to support the idea of man-made climate change. The results of the study were soon corroborated by researchers in Japan. ...

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Trump's Tariffs are keeping the US out of a Recession - We're published in this morning's American Thinker blog
Howard Richman, 9/9/2019

Trump's tariffs are keeping the US out of a recession

By Howard Richman, Jesse Richman and Raymond Richman

The rest of the world is experiencing an economic slowdown.  The graph below shows the world's 12 largest economies.  According to statistics for the most recent economic quarter, the only two currently growing faster than a 1% annual rate are the United States and China.  And the United States grew faster than China.

Growth2ndQ2019.png

The United States is currently experiencing the longest economic expansion in American history, and Federal Reserve chairman Jerome Powell expects that expansion to continue.  In Zurich on Friday, he began a speech by stating:

Click here to read the post on the American Thinker website.

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Trump's Tariffs helping keep US out of a Recession
Howard Richman, 9/7/2019

The rest of the world is experiencing an economic slowdown. The graph below shows the world’s 12 largest economies. According to statistics for the most recent economic quarter, the only two whose economies are growing faster than a 1% annual rate are the United States and China.

Growth2ndQ2019.png

UK is not the only country that may have already entered a recession, usually defined as two consecutive economic quarters with negative growth. The Euro Area as a whole is growing at a miniscule 0.2%, and Germany, usually the Euro Area leader, shrank by 0.1% in the most recent quarter.

The United States is currently experiencing the longest period of economic expansion in our history, and there is no end in sight. On Friday, Federal Reserve Chairman Powell announced:...

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Climatology's startling error
Howard Richman, 9/5/2019

Lord Monckton and his team of scientists have found an error in the feedback calculations of former NASA administrator and climate change alarmist James Hanson. Monckton's calculations are based upon the standard equation of control theory, while Hansen's were based upon an overly-simplified version of that equation. Moroever, Monckton's equation allows the feedback factor to be calculated mathematically, without need for a model.

Monckton's team found that a doubling of carbon dioxide increases earth temperature by precisely 1.15 degree Celsius, not the 3.35 to 4.5 degrees claimed by global warming alarmists. When carbon dioxide in the atmosphere doubles over the next 150 years, the Earth's temperature will only go up by 1.15 degree Celsius, other things being equal. Such a small rise in temperature, when combined with the positive effect that carbon dioxide has upon plant life, will be beneficial for mankind.

Here's a YouTube video showing an interview with him which I borrowed it from this blog posting:

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The Man-Made-Trillion-Dollar-Climate Warming Hoax
Raymond Richman, 8/19/2019

Man-Made-Trillion-Dollar-Climate Warming Hoax

The following items are excerpted from two recent articles on climate change that the media and pundits alike ignored. Indeed, Pundits like Paul Krugman and US leaders like Sen.Lindsay Graham are making a push to force Pres. Trump to change his position and to enact curbs on the use of fossil fuels. Almost all of the Democratic candidates for president take the same position. Countries around the world have already spent hundreds of billions of dollars to promote wind and solar sources of energy and continue to subsidizes electric vehicles making hundreds of millionaires.

 

The source of the first is RT.com. Published 12  and 13 Jul, 2019

A new study conducted by a Finnish research team has found little evidence to support the idea of man-made climate change. The results of the study were soon corroborated by researchers in Japan. ...

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The Delusional Wall Street Journal
Howard Richman, 8/11/2019

Trump Derangement Syndrome has not only affected Democrats. It has also affected some of those on Wall Street who oppose Trump's trade-balancing agenda. On Thursday, the Wall Street Journal (A Navarro Recession?) suggested that Monday’s stock market slide heralded a recession which they blamed on White House Trade Advisor Dr. Peter Navarro's unreasonable stance on China. But later that day the stock market rose, for the third day in a row, erasing Monday's slide.

In the same editorial they claimed that China had stopped manipulating its currency in 2014. But a few days earlier the Chinese government had forced the yuan through the 7 yuan per dollar barrier, and on Monday (August 5) Secretary of Treasury Steven Mnuchin determined that they were a currency manipulator. Meanwhile the price of gold has been surging, probably because China has been accumulating gold as a byproduct of its currency manipulations.

Mnuchin's declaration showed off yet another delusion in the Wall Street Journal editorial, that Navarro is somehow isolated within the administration. To the contrary, the President has put together an economic team that is working very well together. Treasury Secretary Mnuchin wasn't the only one to act this week. On Tuesday (August 6) Commerce Secretary Wilbur Ross slapped a 230% countervailing duty on two Chinese cabinet makers. 

In the words of Sundance at the Conservative Treehouse, President Trump has put together "an incredible team, delivering astonishing results." In fact, the U.S. economy is now in the midst of our longest period of expansion ever, largely due to three of Trump's actions:

  1. Business income tax cuts that make it less expensive to produce in the United States.
  2. Cuts in costly business regulations.
  3. Tariffs, tariff threats, and negotiated trade agreements which have encouraged growth-producing business investment in the United States.

Because Navarro has been in the WSJ crossfires this week, he has been interviewed frequently. Unfortunately, his interviewers have tended to interrupt him constantly. Here's the rare interview in which he was given a chance to lay out the administration's reasonable goals in its negotiations with China:...

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Trade Deficits Are Taxes on American Workers Levied by Foreign Countries
Raymond Richman, 6/18/2019

The media are all trumping that Pres. Trump’s tariffs are a tax on American consumers and favor free trade. They are telling less than half the story. The chronic trade deficits are also a tax on American workers. The chronic trade deficits tells us that foreign countries are shipping to us more goods at current exchange rates than we are shipping to them. They are accumulating the difference in US cash, bonds or notes or existing productive assets like real estate or private securities. They are not buying newly produced goods or services which require labor to produce. The workers who lose their jobs have to seek lower paying jobs in the US domestic market.

The American consumers are for the most part salary and wage workers. The trade deficits eliminated the jobs of millions of American manufacturing workers who found continued employment only in lower wage domestic jobs. Many multinationals have been producing products abroad and selling most of their output in the US producing huge deficits with China, Germany, Japan, Mexico, S. Korea, and others. Santa Monica, California once had hundreds of manufacturing jobs creating products for Apple Corp. Its principle product now is produced by Foxconn, a Chinese company, in China.

It is true that the laid off workers found jobs eventually but at much lower wages. This is the excuse for the widespread economic belief that trade deficits do not cause permanent unemployment. The difference between the wages before and after a trade deficit has all the characteristics of an income tax, leaving the worker-taxpayer with less after-tax income to consume or save. Chronic trade deficits may not cause unemployment in the long-run as many economists argue but millions of manufacturing workers lost well-paid jobs as a result of the trade deficits and ended up considerably poorer. ...

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Trade Agreements Are "Entangling Alliances" That Are Difficult to Exit Once They Are Approved.
Raymond Richman, 6/2/2019

Pres. Thomas Jefferson, in his inaugural address, declared his devotion to "peace, commerce, and honest friendship with all nations, entangling alliances with none", using a phrase which is often attributed to Pres. Washington. warned against entangling alliances. He thought they could involve us in wars that we did not want to fight. e thoushht An exTple of an entangling alliance is the European Union and the difficulty the UK is experiencing to make a British exit from it. Multil­ateral trade agreements are eThe USA took advantage of its success in breaking up the USSR by getting some former members of the USSR to join the North Atlantic Treaty organization (NATO). It waged war against Yugoslavia and got Albania, Croatia, and Slovenia to join the European Union and NATO. ntangling alliances which become the law of the land even superseding the Constitution. The General Agreement on Tariffs and Trade created the World Trade Organization. The GATT agreement that it administers has a provision that members shall not require the country of origin to appear on the sales of imported products. The U.S. Congress passed a law requiring labeling meat products with the country of origin. The WTO warned the U.S. Congress that that was in violation of the treaty. The U.S. Congress dutifully rescinded the labeling requirement.

It is amusing to observe the leaders of theThom Democratic Party pretend to be upset about an alleged Russian interference in the 2016 USA presidential election and argue that it smacks of collusion. They object not at all to USA intervention in Venezuela or to the inclusion in NATO of former Russian dominated countries, ...

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Politics and the Trade War
Jesse Richman, 5/27/2019

Samuel Rines has a good piece on the broader political moment of which the trade war is only a part.  https://nationalinterest.org/feature/trade-war-not-only-about-trade-58822. It misses two or three things though.  First, China's rise was facilitated by the US failure to counter it's mercantilism until it was much too late.  Second, the state capitalism model has many anticedants. Finally, the challenge of global economy versus state regulations needs more attention.

 

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Regulation to Address Undervalued Currencies
Jesse Richman, 5/24/2019

The Trump administration appears to  be moving forward with regulations that will allow the Commerce Department to impose countervailing duties against countries found to have undervalued currencies.  Currency manipulation and undervaluation have long been a prime tactic of mercantilists, and so this regulation is a welcome move that will expand the capacity of U.S. companies to respond to subsidized competition from abroad.  A comment period is now open on the proposed regulations. 

Under the regulations, the Commerce Department in conjunction with the Treasury Department will determine whether the currency has been undervalued.  Specifically:

"We will seek and to defer to the Department of the Treasury’s (Treasury’s) evaluation and conclusion as
to whether government action on the exchange rate has resulted in currency undervaluation,
unless we have good reason to believe otherwise, based on the record as a whole, in which case
we will provide Treasury an opportunity to review and rebut the contrary reasoning....

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Trump's China Tariffs will Succeed -- we're published in today's American Thinker
Howard Richman, 5/15/2019

Here's how we begin:

For the last four decades, the United States has often engaged in trading away its future by running up debt and selling assets instead of products. This brought about the stagnant living standards and incomes experienced by the U.S. middle class during the presidencies preceding Trump.

The countries with which the U.S. had the largest trade deficits (goods and services) in 2018 were:

  1. China - $379 billion
  2. Mexico - $78 billion
  3. Germany - $67 billion
  4. Japan - $58 billion

These countries accounted for 93% of the total, with China, by itself, accounting for 61% of the U.S. trade deficit. Donald Trump was elected by the people who have borne the brunt of this policy failure, with a mandate to fix it.

On Friday, President Donald Trump took a huge step toward doing just that. He raised the U.S. tariff rate from 10% to 25% on $200 billion per year worth of Chinese goods that were being imported into the United States. Back in July, when Trump had initially imposed the 10% tariffs on Chinese imports, China responded by imposing tariffs on $110 billion of U.S. exports to China.

Trump also threatened to place tariffs on the other Chinese goods being imported each year into the United States. This gives the U.S. leverage that China can’t match. As a result of its mercantilist strategy, China exported $540 billion worth of goods to the U.S. but only let $121 billion worth of U.S. goods into China in 2018. (Mercantilism is the “beggar-thy-neighbor” economic strategy of maximizing exports and minimizing imports in order to grow at one’s trading partners’ expense.)...

To read the rest, go to:

https://www.americanthinker.com/articles/2019/05/trumps_china_tariffs_will_succeed.html

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Bring on the Trade War -- Why the US must, can, and will win a more balanced trading relationship with China
Jesse Richman, 5/8/2019

The liberal trade world that was built after World War II is on the verge of collapse.  And the only politician who can save it is Donald Trump.  And the only way to save it is to win the trade war with China. 

Donald Trump was elected president in part because he recognized the bankruptcy of US trade policy and promised to do something about it.  As negotiations with China enter a difficult and vital phase, America is very lucky to have a president with the gumption and determination to see this fight through.  The trade war with China is one that the US must, can, and will win.  And when it comes to the tariffs proposed so far, the US has not yet begun to fight. China should change course, stop reneging on its negotiated promises, and become a normal capitalist nation.  But if China prefers to remain mercantilist, totalitarian, autocratic, illiberal, and despotic, the US must treat it as it deserves -- to a healthy course of isolation, disinvestment, and containment. 

For decades the United States has been played for a sucker by China's totalitarian masters... 

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Tariffs Raise Costs on Dryers (Without Dryers Being Taxed?!?)
Jesse Richman, 5/6/2019

A few weeks ago a working paper by Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot got a great deal of attention.  The headline treatment in many publications was along the lines Mark Perry at AEI gave it: "Trump’s washing machine tariffs created 1,800 US jobs, but at a YUGE cost to consumers of $820,000/job." The Washington Examiner opined that this study showed "Why protectionism fails."

But there are some strange things going on in the analysis of the paper.  The authors acknowledge one such flaw in the abstract when they write: "We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount."  

Come again?  Let's lay this out for a moment and pause to think about it objectively.   

The evidence:

1. Tariffs were placed on washers.  Washer prices went up by about 12 percent. 

2. Tariffs were NOT placed on dryers.  Dryer prices went up by about 12 percent. 

Now let's apply some basic logical reasoning.  Mill's method of agreement implies that if a cause produced an effect, then the cause must be present in both cases.  Clearly the effect happened in both cases but the tariff was applied in only one case.  Hence, the tariff cannot have caused the increase in price of the goods... 

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Trump's 3.2% economic growth puts Bush and Obama to shame - we're published in the American Thinker Blog this morning
Howard Richman, 4/29/2019

[Here's the text of our post. You can also read it on the American Thinker website at this URL.]

by Howard Richman, Raymond Richman and Jesse Richman

The 3.2% economic growth rate for the first quarter, reported as the “advanced estimate” by the Bureau of Economic Analysis on Friday, caught everyone by surprise. During both the George W. Bush and Obama administrations, the average quarterly economic growth rate was only 1.9% per year. But during the 9 quarters that Trump has been president, the economic growth rate has averaged 2.8% per year, almost a full percentage point higher. 

Anybody who wants to know how the American economy would look today if someone espousing policies like Obama’s were still president only need peek over our northern border. Canadian Prime Minister Justin Trudeau stayed in Obama’s Trans Pacific Partnership trade agreement and in Obama’s Paris Climate Accord, despite Trump pulling the US out of both agreements. And, how has Canada been doing? Just 1.6% GDP growth over the latest year and 0.1% growth during the latest quarter!

Middle Class Income

Whenever GDP grows, American income grows at about the same rate. But income growth is not evenly distributed. At the end of the Bush presidency, median household income (after subtracting for inflation) was at about the same level as before Bush took office.

When running for office in 2008, Obama correctly claimed that the rich were getting richer, but those in the middle class were not benefiting. So how did the middle class do under Obama? Again, median household income failed to grow!

In January 2017, after the presidencies of both Bush and Obama, median household income (after subtracting for inflation) was actually 1.3% lower than it had been in January 2000. (Our statistics for median household income come from Sentier Research, which has been calculating and graphing household income as it unfolds.)

How is Trump doing with middle class income? Pretty well! Median household income has risen at a 2.5% annual clip since Trump became president, approximately the same rate that GDP has been growing. In fact, median household income is now higher than ever before! How is Trump doing it?...

 

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Reciprocal Trade Act
Jesse Richman, 4/2/2019

Here is a press release from the Coalition for a Prosperous America concerning a new bill introduced in Congress.  The press release can be accessed at: https://www.prosperousamerica.org/cpa_endorses_reciprocal_trade_act_hr_764 

CPA Endorses Reciprocal Trade Act, HR. 764

Sees legislation as key to addressing trade barriers

Washington. The Coalition for a Prosperous America (CPA) has endorsed H.R. 764, the Reciprocal Trade Act (RTA) recently introduced by Rep. Sean Duffy (R-WI). The RTA would expand the president’s ability to defend domestic US manufacturers and agricultural producers against foreign protectionism by raising individual product tariffs to match foreign tariff and non-tariff barriers.


“We are pleased to support the efforts of Rep. Duffy and the Members of Congress who have co-sponsored this important legislation,” said CPA Chairman Dan DiMicco. “The Reciprocal Trade Act will provide much-needed leverage for President Trump as he confronts unfair trade. Congress should move swiftly to pass this bill.”

....

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The Archaeological Evidence of the Purim Battle
Howard Richman, 3/16/2019

According to the Book of Esther, two decrees were issued by Persian King Ahasuerus (Greek name: Xerxes; Hebrew name: Achashveirosh) within a short period of time. The first, written by Haman, gave people permission to kill and loot Jews. The second, written by Mordechai, gave Jews permission to defend themselves. Here is how the Book of Esther describes the fighting that took place in the provinces of the Persian empire:

And the other Jews that were in the king's provinces gathered themselves together, and stood for their lives, and had rest from their enemies, and slew of them that hated them seventy and five thousand – but on the spoil they laid not their hand  – on the thirteenth day of the month Adar, and on the fourteenth day of the same they rested, and made it a day of fasting and gladness. (Esther 9: 16-19)

The archaeological evidence for the fighting comes from a dig at Shechem (Tel Balâtah), a Biblical town near present day Nablus located about half way between Samaria, the Samaritan capital, and Jerusalem, the Jewish capital. A paper by archaeologist Nancy Lapp dated the fire and temporary abandonment of Shechem precisely, based upon the imported Greek pottery that had been burned in the conflagration. She wrote:

The latest example of figured ware, No. 9, dates ca. 480 B.C. Allowing time for its importation into Palestine and consideration for its value, a conservative terminus for the end of Stratum V at Balâtah would be the end of the first quarter of the 5th century B.C. or ca. 475 B.C.

In a 1987 journal article, William H. Shea compared the date found by Lapp with the date specified in the Book of Esther and found that they were nearly identical:

Esther 9:16 dates the fighting that broke out “in the provinces of the king” to Adar of Xerxes' twelfth year, or March, 473. (p. 244)

So how did the enmity between the Samaritans and the Jews begin? Ezra wrote that it began during the reign of Persian King Cyrus, about 70 years before this fighting took place, when the Jewish leaders refused a Samaritan offer to help rebuild the Jerusalem temple, saying: ...

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There Is Less Inequality Now Than Ever Before in History
Raymond Richman, 2/12/2019

There is less inequality today than at any time in our history. There is less wealth inequality now and there is less income inequality now than at any time in our history. Those who argue that wealth is more unequal now or that income is more unequal now are using a very narrow definition of wealth and income. They exclude, for example all public goods like public education, public parks, museums, swimming pools, beaches, police and fire departments, international security, water and sewage, streets, legal courts, etc. They do not include ownership of real estate and personal property including autos, boats, clothing, and recreational vehicles. They do not include hospitals, churches, colleges and universities, clubs, voluntary associations, etc. They do not include recreation and entertainment.Baseball, football, soccer, hockey games and other mass entertainments such as movies and television exist for the masses not billionaires. ...

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There Is Less Inequality Now Than Ever Before in History
Raymond Richman, 2/12/2019

There is less inequality today than at any time in our history. There is less wealth inequality now and there is less income inequality now than at any time in our history. Those who argue that wealth is more unequal now or that income is more unequal now are using a very narrow definition of wealth and income. They exclude, for example all public goods like public education, public parks, museums, swimming pools, beaches, police and fire departments, international security, water and sewage, streets, legal courts, etc. They do not include ownership of real estate and personal property including autos, boats, clothing, and recreational vehicles. They do not include hospitals, churches, colleges and universities, clubs, voluntary associations, etc. They do not include recreation and entertainment.Baseball, football, soccer, hockey games and other mass entertainments such as movies and television exist for the masses not billionaires. ...

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Unpaid Family Leave - A Bad Idea Whose Time Has Come
Howard Richman, 2/11/2019

In his State of the Union speech last week, President Trump came out for paid family leave. He said:

 I am also proud to be the first President to include in my budget a plan for nationwide paid family leave — so that every new parent has the chance to bond with their newborn child.

I'm assuming that he would support a mandate that would require employers to pay parents for time that they would not work. That very mandate has been a disaster in many parts of the world, including South Korea whose birth rate per woman has fallen to 1.17 in 2016, compared to 1.80 per woman in the United States.

Seemingly innocuous laws can have terrible unintended consequences.  In South Korea this government mandate that was designed to help married women, ended up hurting them. Employers don't like to pay people who don't work. So, given a choice, they hire single women, not married women. So South Korean women on career paths stopped getting married. The same could happen in the United States. ...

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National Capitalism, Rather than Mixed Economy or Socialism, Best Describes Economic System
Raymond Richman, 2/11/2019

Norman S. B. Gras, Professor of Business History at Harvard in 1940, described  FDR’s New Deal as an example of "national capitalism" similar to that in Fascist Italy and Nazi Germany in an article published in the Harvard Business Review. National capitalism is "a system of business based upon private enterprise publicly controlled." Because Nazism and Fascism used totalitarian methods and ruthlessly killed so many people, the term “national capitalism” should be used instead of fascism to accommodate economic systems that are more democratic and avoid the use of brute force. Gras’s description of the system as national capitalism ought to have been widely adopted by economists and business majors as well as the general public.

Economists are fond of describing economic systems as “capitalist”, “socialist”, “free enterprise”, “private enterprise”, etc. but they tend to avoid calling a system “fascist”, which is to be expected because of the odious character of the Hitler regime and Mussolini’s alliance with Germany. They avoid calling attention to the Japanese economy at all although historically it was equally odious and the Japanese government still plays a substantial role in directing and controlling the economy. The post-WWII American domination of the world has eliminated most attempts to distinguish between economic systems although the Cuban and North Korean economy are often represented as “communist”   

Look about you. There are hundreds of thousands of objects in the room you find yourself, where you live, where you work, where you travel, for sale in retail stores and on line and throughout the world. Who invented these objects? Who manufactured them? Whom are they made for? Nearly all of them were invented and produced by private persons without government assistance. Socialists tend to criticize capitalism as greedy. But as Adam Smith noted in the 18th century, everyone acting in his own interest in a capitalist economy ends up acting in the interest of all....

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How to end the shutdown
Jesse Richman, 1/14/2019

Shortly before Christmas, with negotiations between the White House and Congressional leadership at a stalemate, congressional authority for spending in a number of federal agencies ran out.  As a result, these agencies lost the ability to spend money.  Essential workers are being required to work without pay, and non-essential workers are being required to not work.  Democrats recently passed bills to reopen the closed agencies (https://www.cnbc.com/2019/01/04/house-passes-bill-to-end-government-shutdown-without-border-wall-money.html) but the Senate declined to take up the bills because of the threatened presidential veto.  

The Senate unwillingness to take up the bills highlights a key challenge for the Democrats' strategy in the shutdown which seems to be to crank up the pressure on moderate Republicans to the point where they are willing to abandon Trump and join veto-proof majorities to override a Trump veto.   Because the Senate majority leader has major influence over whether bills are considered on the Senate floor, such a strategy would -- to succeed -- have to win over Senate Majority Leader Mitch McConnell.  He is a long way from being won over now, as this Washington Post story discusses:  https://www.washingtonpost.com/politics/2019/01/11/mitch-mcconnell-could-end-shutdown-hes-sitting-this-one-out/?noredirect=on&utm_term=.05bf1e8b773d.  Democrats seem determined to relearn what Republicans found repeatedly during their period from 2011 through 2014: with control of the House but not the Senate, it is really really hard to get sharply partisan legislation onto the president's desk because you don't control the Senate agenda.  Back then Democrats mocked Republicans many efforts to pass a bill repealing Obamacare.  Today Democrats seem equally determined to beat their heads against a similar wall.

So what is the alternative path out of the shutdown?  Some shutdowns are over major issues of significant national import.  If this one was such a shutdown, then Democrats and Republicans might be justified in continuing it. Other shutdowns are over trivialities.  This one must rank nearly at the very top of the list of shutdowns over trivialities.  Whether or not the wall is a good policy idea, it is a minor one.  At stake is five billion in funding out of a Federal budget numbered in trillions.  To shut down the government, even part of it, with all of the chaos and costs that entails over an unwillingness to provide such funds so that the president can make a down payment on a signature campaign promise reflects a Washington in which partisan tribalism trumps policy sense.  And so, arguably, does shutting down the government in order to get such funds.

The solution then must provide a way for one tribe or the other to back down. Here's an idea -- a secret ballot...  

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Letter to Prof. Martin Feldstein of Harvard U
Raymond Richman, 1/4/2019

I’ve been an admirer of Prof Martin Feldstein for many years but his op-ed in the Wall Street Journal, “Tariffs Should Target Chinese Lawlessness, Not the Trade Deficit” (12//28/2018) has got it exactly backwards. Tariffs should not be used as punishment for lawless economic behavior. Although economists believe in the benefits of trade, they know, as John Maynard Keynes did, that “beggar-thy-neighbor” trade policies that result in job-losing trade deficits for the U.K. had to be fought with counter-measures. In the absence of a common currency, the preferred policy is a single-country-variable-tariff (our invention) whose rate increases   as the trade deficit widens and falls as trade is brought into balance.

Of course, trade need not be balanced with every nation but should be balanced  with the world of nations. Since the General Agreement on Tariffs and Trade was signed in 1994, the USA has had huge deficits with Japan, Germany and the European Union, and China, which amounted to $562 billion in 2016 of a total of $734 billion. This resulted in booming economies in those countries and relatively stagnant growth in the USA accompanied by the loss of millions of high-paying jobs in USA manufacturing. Free trade is possible but not with predators.

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