Category Archives: Economics
Free trade only works where there is trust
All other things being equal, free trade is ultimately phenomenal for countries and individuals. Using money as a medium of exchange, I trade my finance/accounting/leadership skills and experience with people who are good at making groceries, building cars, giving dance lessons, etc. Win-win.
But the key part is about things being equal. When one party – let’s say, China – has the system rigged in their favor by world trade organizations, is manifestly corrupt and evil, steals from you, spies on you, lies to you about pandemics, abuses their citizens, has no free speech, etc., then things are obviously not equal. It would be foolish to continue to buy, say, 95% of your antibiotics from them. Keep in mind that they are so evil that NBA players, coaches and leaders will criticize Trump 24×7 but punish anyone daring to offer the mildest criticism to China.
So this was good to read: Coronavirus pressures US manufacturers to bring plants home from China:
The COVID-19 pandemic has America rethinking its reliance on China for not only key medical supplies but production capacity in general after Beijing clamped down on exports of critical items used to combat the disease. . . .
“One of the things that has happened with this pandemic is it’s revealed to everybody the limits to our digital superiority and our software and all the things that we’ve innovated in technology,” Sen. Marco Rubio, R-Fla., told FOX Business’ Maria Bartiromo. “You still have to be able to make things. You still have to have industry and industrial capacity as a country. And we’ve given a lot of it away.”
Indeed, only about 11 percent of U.S. gross domestic product comes from manufacturing today, down from almost 40 percent in 1945. . . .
Although cheaper Chinese labor remains a factor in companies’ decisions to make their products in that country, it’s not the advantage it once was, Freeman said. Instead, China lures companies with tax breaks and other incentives, as well as the appeal of its domestic market.
That’s one of the many reasons that Trump’s tax cuts were so important. When countries have lower taxes that often swings financial decisions. Back in the 90’s Compaq sent tons of business to Singapore because their tax rate was zero while the U.S. rate was 35%. That meant that even if you got free labor, buildings, machines, etc. it would still be more profitable to build in Singapore than the U.S. Our corporate tax rate doesn’t need to be zero, but keeping it lower will remain important if we want jobs back.
President Trump has repeatedly called on U.S. companies to bring their operations back home, moves that would likely provide a spark to a labor force that has over the past four weeks seen 22 million workers lose their jobs, at least temporarily.
That’s one more reason the Left will fight the obvious. Although temporarily the Democrats realized they need to have their Joe Biden Talking Doll (TM) pretend to be harder on China than Trump has been. Of all their lies, that is a grand one. Anyone paying attention knows how hard he has been on them long before Covid-19 and how Biden has been in bed them for a long time.
He believes the COVID-19 experience will cause many companies to “rethink the safety and security of reliance on global markets,” and that there will inevitably be some movement of capital-intensive — not labor intensive — production back to the U.S. . . .
The U.S. Chamber of Commerce “supports a robust commercial relationship with China,” he added, but also understands the “need for some rethinking of that relationship.
I quit trusting the Chamber of Commerce years ago. Those “Republicans” are the ones who brought us ridiculous levels of illegal immigration. The Dems get the votes and these country club Republicans got cheap labor.
Rubio agrees. He told Bartiromo that the current level of U.S. dependence on China’s industrial capacity has put our country “in a very dangerous situation.”
“I hope that one of the things that will come about now is a broad consensus in this country that we have to be able to make things in the United States,” he said.
The same goes for oil and gas. Fracking and such has been one of the greatest wins in our history, as it has provided jobs and reduced dependence on foreign oil. Guess which side fights that 24×7?
I’d gladly pay more for clothes and such knowing that it created jobs in the U.S. I hope we do bring a lot back from China.
The benefits of the tax bill keep increasing, so Leftists are getting more unhinged
The tax bill in particular and Trump’s other economic initiatives in general (such as reducing regulations) are dramatically improving the financial situation of the entire country. Nearly everyone benefits from one or more of these:
- Tax cuts that help at least 80% of the population and make it much easier to file for most people. And the few that do have to pay more are mainly the rich in Leftist states (as if you could do anything to please them anyway — and don’t they claim to like paying higher taxes?).
- The stock market gains have been phenomenal. Anyone with any sort of retirement account has to be enjoying this. And it is all because of the Republican financial moves. The stock market always looks forward, so this is all about these changes and has nothing to do with Obama.
- Many companies have raised wages and/or given bonuses, including Wal-Mart. This helps nearly everyone, because other companies will need to raise wages to keep up. That supply and demand thing has its sharp edges, but in this case it will help. And while wage increases can ultimately be inflationary, in this case the companies are using their tax savings to fund them so they won’t necessarily be raising prices. Haven’t Leftists always lamented Wal-Mart? Shouldn’t they be cheering now?
Also, while we don’t have a wall yet, illegal immigration is down and that will provide more jobs to citizens and help increase wages. And the tax bill gutted Obamacare by eliminating the individual mandate.
This is all so spectacularly good for everyone — except the radical Leftists who hate Trump so much that they’d deny these amazing benefits to the people they claim to care about.
The Left will go on hating Trump and get even more unhinged, but how do you think all those people getting tax cuts, pay raises and fatter retirement accounts will feel? Hopefully they’ll realize that Republicans have always been the adults in the room on economics. and that the Left has not only been lying to them but that they never really cared about them to begin with. The Republicans can campaign on having kept some major promises.
Pass the popcorn.
Fact: Illegal aliens steal jobs and suppress the wages of remaining jobs
And they destroy the communities they are poured into — which, of course, aren’t the communities of the elitist virtue-signaling whites who push for open borders.
The title is such a Captain Obvious kind of economic statement, founded on the simple and timeless impact of the law of supply and demand, that it should go without saying. But because Leftists literally fail at basic economic concepts and throw low economic status minorities under the bus to pander to illegal aliens, it needs to be repeated over and over.
The Left pretends that the only jobs that illegal aliens take are those of picking crops and such (as if that would justify them breaking the law). But here’s a recent example that I heard about in detail from an accounting executive of a company in the U.S. (I’m not being overly specific here because of confidentiality issues).
- A couple hundred illegal aliens who performed semi-skilled labor walked off the job at a U.S. manufacturing company because they heard that Immigration and Customs Enforcement (ICE) was going to do a raid. (It wasn’t clear whether the company knew they were illegal aliens or not.)
- The company was understandably desperate to fulfill their customer orders, so they went to the market to replace the employees. When they did so they realized that they had to pay fifty percent more in wages. Fifty percent!
- The remaining employees who were citizens got a huge raise.
- The new employees got market wages.
- These jobs were ideal for those without college educations or formal training. They require some skill, but it can be learned on the job.
Simple and valuable lessons:
- Illegal aliens took jobs of U.S. citizens, because they were willing to work for so much less.
- Illegal aliens significantly suppressed the wages of the remaining jobs, because they were willing to work for so much less.
- Law enforcement works! What a concept, eh? We still need a wall and/or much better border control, like any sane country would have. But in the mean time merely enforcing some of our existing laws has a huge benefit for our citizens. If companies know they’ll get caught and fined they won’t hire illegal alien labor to begin with. And the honest companies won’t be at a competitive disadvantage for doing the right thing.
- Getting citizens off unemployment / welfare reduces the burden on society and has more people paying into the system.
- The Left — including the “Christian” Left — pretends to care about low income blacks while acting against their best interests 24×7. They pander to illegals to get votes so they can stay in power and reap the benefits of crony capitalism, but that means the low income minorities stay on the Democrats’ plantation.
- Obama & Co. pretended to care about blacks, but what did they have to show for it after 8 years besides higher unemployment, destroyed towns like Ferguson and the worst race relations in half a century? The Left has to constantly play the race card on Trump because he is actually helping blacks get jobs.
- This doesn’t even include the huge tax burden of millions of illegal aliens consuming educational, welfare and other resources.
- It doesn’t include how many jobs are now unattainable for blacks because they require bi-lingual skills.
- When the “Christian” Left tries to claim that Jesus was an illegal alien, remind them that their claim is historically false, we don’t live in an Israelite theocracy, and people who repeat that nonsense to promote open borders just for the U.S. are some combination of ignorance, malice and treason.
The working poor – which have a disproportionate amount of minorities – are already benefiting by the reduction of illegal aliens entering the country.
And, ironically, they have President Trump to thank for it.
The tax bill: Could have been better, but it is still great. Really great.
I’m so glad to see the tax bill. This appears to be the final version. I was at a meeting with our auditors (a Big 4 firm) last week and got to hear from their chief economist, a tax partner and a former U.S. Representative. They had similar takes on how this will play out. Here are my thoughts as a finance executive / CPA who has spent a “little” time on analyses that determined what country would build certain products.
The best thing is the corporate rate reduction from 35% to 21%. I wish it would have been 20%, even just for optics, but the improvement is huge. I know that alone will bring a lot of jobs back to the U.S. It is so simple that even Leftists should understand it – but either won’t, because they fail at basic economics, or will understand it but will lie about it because they know it will help minorities and the poor.
Here’s an example: Assume that you live near the border of two states and you are going to open a manufacturing plant, and all other things are equal (e.g., labor market, accessibility, etc.) except that one state has a tax rate of 35% and the other a rate of 21%. Guess where even a Leftist will build his plant? (There is a reason that people like John Kerry put their yachts in one state versus another, why people in North Carolina living near the border of South Carolina drive a few extra miles to buy gas, etc.).
Now simply expand that to countries. You are much more likely to build in the U.S. now because of the lower rate. That means more jobs for minorities / the poor. And those people will pay taxes instead of collecting unemployment and welfare. We’ll get a big double benefit.
Other stuff, all of which the Left will hate because it will actually help the U.S.:
- It repeals the Individual Mandate of Obamacare! I would have preferred a full repeal, but it is a big accomplishment and the Republicans can campaign on fulfilling part of their promise.
- The marginal rates are down a bit across the board, which should help everyone.
- The cap on state and local deductions will cost me and I don’t like the idea of having to pay federal taxes on the same income I used to pay state and local taxes. But that might put downward pressure on home prices in, say, California (shouldn’t Leftists like that?) and might make the state and local taxes hard to foist on people.
- The Left should like the limitation on the deduction of mortgage interest, but Senator Diane Feinstein was already grumbling about it. Uh, what happened to their desire to soak the rich? At least it only applies to new mortgages.
- Estate taxes should have gone to zero. They are ghoulish. What fool would want the government to profit when you die? Oh, right, the ones who favor estate taxes tend to be the people who profit when families are forced to sell businesses (e.g., Warren Buffet, who isn’t as generous as he makes himself out to be) and those who covet the success and wealth of others.
- While the tax code will still be too complicated, it will definitely be simpler for countless people. That’s a huge win.
- Congress will have less money to pay off their sexual assault victims.
- And for dessert, consider how much this will hurt the Democrats. Not one of them will have voted for it, yet it will have a dramatic positive impact on the country. So many new jobs! More after-tax pay for countless people! And all thanks to Donald Trump and the Republicans. Just think of how much mileage he’ll get from pointing out how many minorities got jobs!
Who is better at economics, Leftists or my dogs?
And which group, Leftists or conservatives, truly has the best interests of the poor at heart?
Given that the tax bill is about to (hopefully) pass and the Left is in full pants-wetting mode over it, one might ask a couple questions about Leftists, and especially “Christian” Leftists:
- Are they qualified to opine on economic matters?
- Even if they were qualified to understand basic economic concepts, do they really want conservatives — and the poor! – to be successful?
I’ll answer the second question first: No. They hate Trump and conservatives with the heat of a thousand suns and they have shown no reason to believe that they actually want to help the poor. They could tell just by the stock market reaction just how successful this will be. Just one example: Having a sale on taxes, so to speak, and letting corporations bring back literally trillions of dollars in profits at much lower tax rates means that we’ll reap billions in taxes that we never would have received otherwise, and that the money will be invested in the U.S. That means lots of tax $$ and lots of jobs. What’s not to like – unless you are an America-hating Leftist?
And if they really wanted to help poor blacks, for example, they’d stop their open borders policies which allow illegals to take jobs and suppress the wages of remaining jobs. They have had monopolies on education, politics, media and entertainment in inner cities for half a century and yet things keep getting worse for those residents.
A bunch of “Christian” Left drama queens got themselves arrested for an illegal protest and pretended it was because they were reading Bible verses about giving. Right. And the verses they read outed them for the frauds that they are, referencing, for example, how Jesus said to lay up treasures in Heaven by giving. Yes, He said that, but no, He obviously didn’t mean that it involved petitioning Caesar to take from your neighbors by force to redistribute to others via counterproductive social programs. He said to give your money. Did I actually have to type that?! Apparently so. But wolves like Jim “the Gospel is all about wealth redistribution” Wallis pretended that Jesus really wants us to look to their government god and that the bill is bring brought by a bunch of big meanies trying to hurt the poor. Uh, yeah, because we make so much money off of jobless poor people or something. (This is also a good time to remind them that conservatives give more time, money and even blood than Leftists.)
The Left knows they’ll lose power, influence and votes when the tax changes actually help the poor and middle class, so why would they want that? And before you accuse me of being cynical, keep in mind that the people most likely to cite the Matthew 25 “least of these” passage out of context aggressively advocate for taxpayer-funded abortions to the child’s first breath. Because compassion. And giving. And patriarchy. And Molech.
And did you notice how Nancy Pelosi, Cokie Roberts and other political and media Leftists have helped cover up sexual predators for decades while insisting that conservatives were waging a war on women? Why would anyone trust them on anything?
So the answer to the second question is a resounding no. And to answer the first question: Also no. Here’s one of my all-time favorite posts explaining why.
Note: The message here is more important than the title indicates. I’ll eventually share how Leftists literally fail at basic economic concepts and how that has enormous implications for every aspect of society.
I am not making this up: My dog once submitted a college test in Economics and passed.
OK, there is a little more to the story.
When my youngest daughter home-schooled her last two years of high school, the dogs would hang out with her all day. Once when she was in the middle of an online Economics test one of them jumped on the bed, landed on the keyboard and submitted the partially completed test. And he passed! Fortunately, the folks at the school were good sports about the high-tech version of “the dog really ate my homework” story and re-opened the system so the that real student could complete the test (she got her usual 99% or so).
But I offer that as a segue to remind people of an extremely important fact about basic economic principles, namely that those on the Left literally fail at them. They aren’t just a little worse than Conservatives, they fail horribly and it drives their ideology. The details are here, but note the results of a simple eight question economics test given to those across the political spectrum (and especially note how my dog fared):
Got that? Progressives / very Liberal people only get a third of the questions right. They could double their scores and still only get a D. But the more conservative people are the better they do, with very Conservative people achieving a solid B.
Here’s an example of one of the questions:
Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.
Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.
In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.
To recap that example, 2/3 of Leftists don’t know that restrictions — regardless of their merit — always increase costs. How can they possibly make wise economic decisions?
Do not let the handsome canine below cause you to miss the key takeaways:
- Understanding these basic economics concepts is crucial to leading properly. Therefore, Leftists should not be in charge of government. Or economics. Or much of anything else. If you can’t get the basic building blocks of society right then all you will do is create more problems.
- As the good folks at Freaknomics will tell you, Economics isn’t just about seemingly arcane financial metrics. It is about behavior and incentives. If you don’t understand how the basics of human nature work then your worldview is doomed to poor decision making.
- The Law of Unintended Consequences will bite you far worse than my dog ever would (Italian Greyhounds are amazingly friendly) but the truth is that most consequences of Leftist policies are easy to anticipate. The “War on Poverty” is a perfect example. It wasn’t just a colossal flop, it was a completely predictable colossal flop. It has deeply harmed tens of millions of people. We need to undo it as quickly as possible. Leftists don’t realize or ignore that you get more of whatever you subsidize. They subsidized single motherhood and got lots more of it, with the inescapable crime and poverty that comes with it.
- This issue carries over to religion as well. It is no surprise that Leftist Christian groups do much more harm than good. False teachers don’t understand economics any better than they do the Bible.
- All schools should host Junior Achievement classes. These are proven to increase graduation rates and they teach critical life skills about budgeting, economics and more. I taught them for 12 years and was continually impressed with their program. You don’t need a PhD in Economics to understand the most important concepts. Give me 30 minutes with a bunch of 7th graders and I will have them more fluent in basic economic principles like supply and demand than Congressional Democrats are. And that isn’t an exaggeration.
The way people understand basic economic principles has an enormous influence on how well they will govern. You should vote accordingly. And if you love God and neighbor you won’t ignore how He wired the world.
Economist Dog (TM), the hero of this story, could not be reached for comment. He was on a conference call discussing how the demand for dog food is completely inelastic. Also, he died last year. We miss this special little guy! He and his mate (pictured below) brought us countless blessings and good times and we thank God for that.
He also understood intellectual property rights and helped us earn a few $$ when this picture was used on a t-shirt sold by a large retailer. But mostly he just chased squirrels and then sat on my lap and slept. Backup Dog (TM) was equally loved but not quite as active.
She was as cerebral as she looks here.
This article explains the extra tax benefits of donating stocks that have gone up in value rather than selling them first and then donating: Give Like a Smarty.
That is a wise way to give. But you can make it simpler and better by opening a Vanguard Charitable fund, where you donate directly to a fund in which you basically have complete control over the donations that come out. Schwab, etc. have similar programs. I’m just a big Vanguard fan because of their extremely low management expenses.
You can review whatever stocks or mutual funds you have and make transfers from the investments with the highest % gains to maximize your tax benefits. Why pay capital gains taxes and then donate?
The online tools make it easy to have checks sent directly from your fund to your designated charities. If you keep a minimum balance there are no fees.
Leave a comment if you have questions about this. It may sound complicated at first but once it is set up it is easy to administer.
Free and valuable advice to any business: Stay out of the culture wars and don’t give into Leftist bullies
And yet another foolish business gets involved in the culture wars and supports Planned Parenthood. This time it was Chili’s — though I heard they stopped the promotion (after the damage was already done). I left this note at their site:
Hi — I’ve always enjoyed Chili’s but now every time I see one I will think of how you support the largest child-killers in the country, and perhaps the world: Planned Parenthood. They kill children, sell their body parts, protect rapists & sex traffickers, lie about doing prenatal care, and so much more. You used bad judgment.
I realize you can’t boycott everything or you’d starve, but I do avoid business that are more in-your-face with their radical Leftism, such as Target (Motto: “We hate you Christians because you are intolerant bigots who know the difference between men and women, so please spend lots of money here!”).
Another company, which I won’t mention because I don’t want to give them free advertising, thought it would be smart to brag about their support for Planned Parenthood. They sell cosmetics to women and assumed that the post-
#womensmarch #abortionmarch timing would be great. But it turns out that many loyal customers, including Mrs. Eternity Matters, said, “Buh-bye!” Most of their Facebook comments were negative, and the business got caught having employees pretending to be customers and offering positive support. They tried to backtrack and say that they’d planned to rotate the giving to other organizations in the future, but the original post made no mention of that. And as they doubled-down with one defensive comment after another the opportunity for grace was gone.
The cost of losing customers for life is enormous. My advice to any Board of Directors and senior management is to never give in to the LGBTQX, Planned Parenthood or other Leftist bullies. Remember PP’s scorched earth campaign against Komen – a breast cancer charity! – when they tried to part ways. Do not pick up those snakes. Just tell them you stay out of the culture wars and move on. They may threaten you, but don’t give in. If your competitors give in and you don’t then you may reap the benefits!
Sojourners’ demonstrates “Christian” Left’s ignorance of basic economic principles
Leftists literally fail at basic economics*, and it has far-reaching negative consequences for society. For today’s example, look at that Tweet by Jim “the Gospel is all about wealth redistribution” Wallis’ Sojourners group. They call making money from prisons, education and sick people an abomination.
I assume they are referring to for-profit prisons (which, of course, need proper oversight), those who make student loans and insurance companies. Everyone needs a good scapegoat — it is right out of Leviticus 16! — and those evil people providing goods and services that no one is forced to buy (uh, except for the last one via Obamacare) sure make good enemies for the “Christian” Left.
But look at what they miss: Using their logic, prison guards, wardens, etc. are abominations for making their living off of prisons.
All teachers, principals, etc. are abominations for making their living off of students.
Doctors, nurses, hospitals, etc. are abominations for making their living from providing health care.
Their childish, naive, foolish argument proves far more than they wanted, and they probably don’t even realize it.
Gee, how many people will want to spend $500,000 for 8 hard years of school and then work long hours to give these Leftists free medical care?
And those precious teachers’ unions, which take turns with politicians in giving each other your money, may not be too excited about working for free.
And I’m sure you can run secure prisons by forcing people to build and operate them for free.
And isn’t abomination a rather strong word? Seems kinda judgmental of the tolerant, loving Left.
All that said, I’m glad that the author’s son had his opioid problem cured, though from the picture it looks like he was addicted to jelly beans.
Run, don’t walk, from the intellectually bankrupt economic lessons of the “Christian” Left. They understand the free market as well as they do the Bible.
*My dog did better on an economics test than Leftists. Seriously. Sort of.
Leftist double-fail on economics
It is bad enough that most Leftists literally fail at basic economics, but to make it worse they deliberately implement counterproductive policies even on the rare occasions when they do understand a simple economic concept. Via Leaked Podesta Emails Show Clinton and Co. Knew But Didn’t Care That They Would Hurt the Economy:
The head of the liberal Center for American Progress privately warned Democratic presidential nominee Hillary Clinton’s campaign staff against endorsing a $15-an-hour minimum wage, saying that it would be bad for the economy.Despite that, both the Clinton campaign and the center have since promoted state and local activists’ efforts to push a $15 rate, and Clinton has even said she would sign $15 federal legislation.
Go read it all. It gets worse.
So the Leftist leaders promote causes to benefit themselves knowing that it will hurt those they claim to care about. Because love and tolerance or something.
This is just like Obama dismissing capital gains tax cuts because they didn’t appear to be “fair,” even though they are known to increase tax revenues. Even John Kennedy, that notorious right-wing extremist, understood simple concepts like that.
- Tests show that Leftists literally fail at understanding basic economic concepts, and it drives their terrible policies.
- Even when the proverbial blind squirrel finds a nut and the politicians do understand a simple economic concept, they legislate against it because they know that their followers are economically ignorant (hello, government schools!) and they’d rather have votes than actually help the people they claim to care about.