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 Richmans' Trade and Taxes Blog



Virus killing U.S. piglets probably came from China
Howard Richman, 4/28/2014

Investigators of a new pig virus that is spreading rapidly and killing many piglets are investigating whether that virus came to the U.S. from China. Here's a selection from a Reuter's story (Killer virus spreads unchecked through U.S. hog belt, pushing pork to record):

Months of forensic research so far have turned up no clear evidence of how the disease entered the United States.

The virus is nearly identical to one that infected pigs in China's Anhui province, according to a report published in the American Society of Microbiology journal mBio. Researchers also are exploring whether the widespread use of pig-blood byproducts in hog feed might have introduced the disease.

There have been outbreaks in recent years in Europe, Japan, Mexico and parts of South America, though in milder forms than seen in the U.S. and China.

Investigators may never discover the origin of the virus which first turned up in Ohio and is spreading rapidly. If it turns out that the virus did come to the U.S. from China, it probably arrived accidentally in products shipped to the U.S. from China which were used in animal feed.

The U.S. Department of Agriculture was slow to respond. They let this virus reach epidemic proportions without reacting effectively. Here is a case where meat farmers would have been served through effective federal government regulation....

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China stealing US Chicken Industry -- we're published in today's American Thinker
Howard Richman, 4/24/2014

Here is how it begins:

Last August, the U.S. won a WTO dispute about high Chinese chicken tariffs.  With U.S. corn prices low and Chinese consumers leery of eating Chinese-produced chicken due to outbreaks of Avian Flu in China, everything seemed set for a huge rise in U.S. poultry exports to China.  But that is not the case.

When the Chinese government is forced to take down tariffs, it simply puts up non-tariff barriers.  A 2010 Report to Congress on China's WTO Compliance published by the United States Trade Office explained why Chinese purchases of U.S. meat had been failing to grow despite growing consumption of meat by Chinese consumers:

To read it, go to:

http://www.americanthinker.com/2014/04/china_stealing_us_chicken_industry.html

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Franklin's The Way to Wealth
Jesse Richman, 4/24/2014

The U.S. personal savings rate spiked in the wake of the Great Recession, temporarily arresting a long downward trend.  The trend is gradually reverting toward the declining norm of recent decades -- a spend-thrift pattern.  In the recently released February estimates, the rate was 4.3 percent, down more than four percent from the post-recession high of 8.7 percent. Full data is available from the St. Louis FED

fredgraph.jpg

As a solution, I offer you Benjamin Franklin...

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China forcing U.S. chicken producers to move farms and processing plants to China and use non-U.S. corn
Howard Richman, 4/20/2014

Last August, the U.S. won a WTO dispute on Chinese chicken tariffs. With U.S. corn prices low and Chinese consumers leery of buying Chinese chicken due to outbreaks of Avian Flu in China, everything seemed set for a huge rise in U.S. poultry exports to China.

But China ignores WTO decisions against it. When forced to take down tariffs, China simply puts up non-tariff barriers. According to the March 28 outlook from  Rabobank Poultry Quarterly, there is the “potential for increased U.S. poultry exports to China, not the expectation of such an increase.

As a result, U.S. chicken producers are building new chicken farms and chicken processing plants in China, where they have to take extraordinary precautions to prevent an Avian Flu outbreak. A Mother Jones story quotes Cargill CEO David Maclennan saying:

So we are building a facility in Shuzou, Nanjing, which will have 45 farms and it's a chicken facility that will process 1.2 million chicken every week. That's 60 million chicken a year. We have a hatchery, where we hatch the eggs and one-day old chicks, DOCs, get transported to the farms. The employees live on the farm. They can't leave because then you increase the risk of disease. So you grow the chicken for 44 days. The chicken goes to the plants, get processed, might be for KFC and McDonald's, might be for retail. They can count on us because they know where every one of their chicken came from. It came from us because we're fully integrated as opposed to other companies.

At the same time, the Chinese government is making sure that American chicken producers in China don't import U.S. corn. According to an April 14 Reuters article published in the Huffington Post (China's Rejection of GMO Corn Has Cost U.S. Up to $2.9 Billion), they are keeping out U.S. corn through one of their many non-tariff barriers. Here is a selection:...

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Book Review: Paul Krugman, End This Depression Now (WWNorton, 2012)
Raymond Richman, 4/16/2014

The best part of this book is its dedication which shows Prof. Krugman’s heart is in the right place. It reads, “To the unemployed, who deserve better.” Indeed they do, but the public policies recommended by the book have not and will not help them at all! This is a book written by a Nobel prize-winner in economics. But there is not an original thought in the book. Krugman is a Keynesian circa 1950 but Keynes, had he lived to read it would not subscribe to it. Keynes showed an ability to learn from historical reality while Krugman does not.  ...

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Where Is the Economy Going? Sideways, Mostly.
Raymond Richman, 4/11/2014

As we noted on this site in January, the outlook for the economy looked bad for the economy. The number of claims for unemployment insurance unadjusted was quite high but one had to consider the much lower seasonally adjusted numbers as the table below shows. The range of the unadjusted figures for the weeks ending 12/28/13 to l/18/14 was between 411,678 and 532,698 but the seasonally adjusted figures were in a much lower range of 300,000 to 326,000. So we had to wait and see. From March 15, 2014, the unadjusted figures dropped below 300,000, quite good figures, really, and the seasonally adjusted figures were slightly higher ranging from 300,000 to 326,000. ...

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Why Economists Failed to Promote Recovery from the Great Recession 2008-2014
Raymond Richman, 4/8/2014

Pres. Obama had some stellar economists serving as his advisers but they ended up giving him and his staffers bad advice as to how to promote an economic recovery  from the 2008-14 recession. (Most economists consider a recession to be taking place while economic growth is negative. We do not consider it ended until full-employment is regained.) Consider who they were. Prof. Lawrence Summer of Harvard was head of the National Economic Council, Prof. Ben Bernanke of Princeton was head of the Federal Reserve and had been Chairman of the Council of Economic Advisors in 2005-6, Prof. Christina Romer of Obama’s first Council of Economic Advisors (2009-10) was a professor of economics at Univerity of California at Berkeley. She was succeeded at the CEA by Prof. Austan Goolsbee (2010-11), of Chicago’s Booth School who received his Ph.D. in Economics at MIT. He was succeeded by another Princeton Professor, labor economist, Alan Krueger (2011-13). During the George W. Bush administration when the recession began, Prof. Edward Lazear, who had been a professor of Human Resources Management at Stanford University and chairman of the CEA from 2006-2009 and succeeded Ben Bernanke as chairman of the CEA. About Bush’s anti-cyclical policies, nothing good can be stated. Bernanke deserves double mention because he helped inflate the housing bubble and did nothing to prevent it during his tenure at the CEA nor during his tenure at the Fed beginning in 2007.

Bernanke’s predecessor at the Fed, Alan Greenspan who served as the chairman of the Federal Reserve Board from 1987 to 2006 must be deemed to have been the economist most responsible for the housing bubble. Greenspan’s great mistake was in continuing the inconsistent role of the Fed under the Community Investment Act of 1977. The Act was intended to ensure that black and poor neighborhoods were not discriminated against by the banks and put the Federal Reserve System in charge of administering the program. The Fed lowered the standards for making housing loans so much that it ended up contributing to the housing bubble that burst in 2006 ushering in the Great Recession from which we have not yet recovered. The huge number of subprime loans that defaulted is a convincing demonstration of the Fed's failure to perform its duty to prevent the banks from making sub-standard loans.

This tells us that economists at the top of the profession did little to prevent the recession and little to promote a recovery. They were rewarded handsomely in honors and funds in academia and by government and international agencies. The millions still unemployed after six years, employed part-time, or forced to drop out of the labor force were betrayed by what masquerades as a science.  ...

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A Mixed Socialist-Capitalist Economic System Does Not Work, Either
Raymond Richman, 4/7/2014

One does not have to point to the fall of the Union of Soviet Socialist Republics or to the failure of Labor Party policies in the U.K. to justify the conclusion that governments are incapable of efficiently producing goods and services although there are some few exceptions, principally in areas that economists call “natural monopolies” for example. The problem that popularly elected governments have is that democratic politics interferes with the essential efficiency force, competition.

The history of the U.S. with financial institutions is especially egregious as have been its efforts to provide public housing, subsidize higher education, and promote alternative green energy sources. Indeed, Wagner’s law of increasing government explains why there is no limit to government inefficiency. Governments do not compete with themselves.

Government enterprises have had some success in the production of electric power when it is a natural monopoly especially in the distribution of energy but its subsidies to energy-producing enterprises has been a failure regardless of what criteria you want to apply. We prefer economic efficiency. That requires the measurement of social costs and benefits. Unfortunately, the measurement of social benefits and costs is a political calculation and subject to the same difficulties as we have with running government enterprises....

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Democrats Condemn Blacks to Live in Urban Ghettos
Raymond Richman, 4/3/2014

During the Depression of the 1930s, Democrats created temporary government jobs in the Works Progress Administration (WPA) and Public Works Administration (PWA) but did little to encourage private sector jobs. In the current administration, Pres. Obama did even less. He spent nearly all of his first administration from 2009-2013, on enacting Obamacare, a health plan that actually discouraged hiring in the private sector. His economic stimulus plan of 2009 consisted almost entirely of pork, transfers to the states, and financing unproductive environmental programs. Pres. Franklin Roosevelt likewise spent most of his first two terms on a giant public program, the Social Security System, not a job-creating program, unproductive anti-competitive price-increasing policies, the NRA, and in 1937, he signed the Wagner-Steagall Act which provided for subsidies to local public housing.

This was followed by the creation of the Public Housing Administration, the U.S. Housing Authority, and the House and Home Financing Agency which Lyndon Johnson combined the into a new Department of Housing and Urban Development. We find no federal authority for such an agency. In any case, the record is filled with failures, high costs, new urban slums, and the bankruptcy of many cities, most recently the city of Detroit.

We know the record of the demolitions of huge public housing complexes in Chicago and a number of other cities, including the immense Pruitt-Igoe public housing development in St. Louis, and as recently as two years ago, the demolition of two high-rise public housing buildings in Pittsburgh. Despite this continuous record of the failure of public housing, the Department continues to exist.

 ...

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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]