Tag: economics

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Accountability folly political economy

Green Goes Red

Sweden, climate, pensions, economics

Well, at least they were earnest. Hopeful. Committed.

Swedes in the north part of their country channeled State pension funds — billions of kronor! — into climate-​friendly projects.

Well, I’m not sure to what degree Swedish citizens were for this ideologically driven investment portfolio, but Swedish politicians sure were!

And now those investments appear iffy. “State pension fund AP2 had invested £117.7 million in Northvolt before its collapse,” explains GBN News, out of Great Britain. “It also holds £46.8 million in Stegra, plus a further £15.6 million exposure through its investment in Al Gore’s Just Climate fund.” And both Northvolt and Stegra — “once flagship companies of the energy transition,” as Blackout News puts it — teeter at the abyss of failure.

Northvolt was once Europe’s leading Great Green Hope, an electric vehicle battery company with a commitment to sustainability; in November it filed for bankruptcy protection.

Stegra was until recently seen as Sweden’s high-​profile “green steel” leader, but now faces an £858 million funding gap.

There has been some shuffling of management, but even were the world’s most magical managers to pull these companies’ feet out of the fire — even if the endeavors can limp out of the current fire-​sale conflagration — ask yourself: does it ever make sense to leave pension funds in the hands of zealots who seek to change the world for some utopian dream? 

It makes far more sense to let private equity fund risky projects, for private fund managers have more (voluntarily given funds) on the line.

Politicians, after all, are notoriously irresponsible — always willing to bet your future on their dreams.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies regulation

Egg Prices Crisis

eggs, inflation, bird flu

“Get used to high egg prices,” The Atlantic blurbed Annie Lowry’s February 27 article, “it was a miracle they were low in the first place.” 

Titled “It’s Weird That Eggs Were Ever Cheap,” it appears to have an agenda: prepare us for yet higher prices, or worse: no eggs.

“Consumers are furious,” explains Ms. Lowry, emphasizing that eggs are a very, very popular food. “Or at least they were, until a highly pathogenic form of bird flu spread to American flocks in 2022. Today, the Department of Agriculture is tracking 36 separate outbreaks across nine states. The disease has led to the death or culling of 27 million laying hens — nearly 10 percent of the nation’s commercial flock — in the past eight weeks alone.”

The culling of flocks — and which birds are selected — could potentially be the most controversial element of the story. Donald Trump, on the campaign trail last year, complained about the cull orders and promised to bring down egg prices fast. 

But his administration’s new five point plan is no quick fix:

  • subsidize on-​farm biosecurity upgrades
  • compensation to farmers forced to cull their flocks
  • investing in bird-​flu vaccines and therapeutics
  • nixing some regulations
  • increasing foreign imports. 

That comes to $1.5 billion spending increases to lower egg prices!

But it was a jokey comment by USDA Secretary Brooke Rollins that sent Trump critics into paroxysms. “I think the silver lining in all of this is, how do we solve for something like this?” said the Department of Agriculture head. “And people are sort of looking around, thinking, ‘Maybe I could get a chicken in my backyard,’ and it’s awesome.”

Ha ha. 

But taking the joke as a serious proposal? The yolk’s on them. 

This is Common Sense. I’m Paul Jacob.

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free trade & free markets international affairs

The Real Free Trade Problem?

tariffs, international, trade, economics, TDS, Trump Derangement Syndrome

Trump Derangement Syndrome is not a mysterious disease. He triggers people for reasons. Still, there is no excuse for smart folks to fool themselves into misunderstanding his sometimes genius.

Take the subject of yesterday’s Common Sense, trade protectionism. Trump is plain speaking on this issue, and it is all-​too-​obvious that Trump harbors old autarkist notions of trade: it’s as if he resents having to pay foreigners for anything. 

His apparent resentment of benefiting others — alien others — is what’s so ultra-​right-​wingéd about him, and why leftists instinctively hate him.

And it’s why many free trade economists regard him as a complete and utter moron. His basic attitude appears to be that trade that benefits The Other must hurt us, and that’s just plain wrong.

But sometimes traders do aim to harm us.

This is where Trump’s attacks on trade with China make more sense. For when we deal with China, we don’t just make Chinese workers and businesspeople stronger, we make the Chinese State stronger — most particularly, the Chinese Communist Party. And that organization has set itself as the enemy not only of the United States but also of all competing states … and the very idea of individual freedom.

Free trade is great, because voluntary trades make both sides better off, and all sides are positively advantaged even when many participants are out-​competed and required to re-​tool, re-​group, and re-invent.

Yet, free trade with those who seek to destroy you is quite problematic. And this is not often figured into the elaborate reasoning offered by free-​market advocates.

Trump instinctively knows this, looking warily at those who would use the strength they gain from their people’s trades to transform market power into military power. There exist free traders who think this cannot happen. They are wrong. 

The point is to recognize threats and defend ourselves while also embracing the mutual benefits of trade whenever possible.

This is Common Sense. I’m Paul Jacob.

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The 51st State?!?!

Canada, United States, border, trade, economics

“What I’d like to see?” confessed the president. “Canada become our 51st state.”

Why?

“We give them military protection,” he offered. 

Then things got weird.

“We don’t need them to build our cars,” Donald Trump added. “We don’t need their lumber. We don’t need them for anything.”

Shocking? Yes. But not just for the disrespect shown to our northern neighbors. 

What’s most shocking is our president’s ignorance of economics. While we don’t “need” Canada for any of the things Trump mentioned, we’re better off trading with Canada than not. The sending of “billions of dollars” up north is neither charity nor waste; the gains both sides make are apparent in the voluntary trades themselves. 

It’s as if he thinks if “we” must pay anyone, it should be to ourselves, that is, to our fellow countrymen.

Behind this is that old crank notion, protectionism: “we have big deficits with Canada, like we have with all countries.”

Now, it’s true that Canadians send more raw materials to the U.S. than we send to them, and that we send them more dollars than they send us theirs: that’s what “trade deficit” means. 

But how is this bad for us? 

Trump doesn’t explain. “I look at some of the deals made and I say, ‘Who the hell made these deals?’ They’re so bad.”

Mr. Trump identifies no specific trade rules or agreement; he doesn’t say which are unfair, or why; nor does he say who made them. But the trades that pile up to that overall deficit, each was made by Americans and Canadians who thought the deal best for them.

Trump’s seemingly goofy idea of adding Canadian provinces to the U.S. as new states would have one great benefit: more trades with these good people than ever. This belies Trump’s far, far more troublesome notion that we need nothing from Canada. We need everything. As Canadians do.

That is, freedom.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies

Commie Kamala?

Kamala Harris, communism, socialism, media, economics

“It’s hard to exaggerate how bad this policy is,” Washington Post columnist Catherine Rampell wrote last week. 

“It is, in all but name, a sweeping set of government-​enforced price controls across every industry, not only food,” explaining Democrat nominee Kamala Harris’s economic program. “Supply and demand would no longer determine prices or profit levels. Far-​off Washington bureaucrats would. The FTC [Federal Trade Commission] would be able to tell, say, a Kroger in Ohio the acceptable price it can charge for milk.”

Rampell, certainly no conservative, concluded by suggesting to the Vice-​President, “If your opponent claims you’re a ‘communist,’ maybe don’t start with an economic agenda that can (accurately) be labeled as federal price controls.”

The Post’s editorial board also noted that “every campaign makes expensive promises” but “[e]ven adjusting for the pandering standards of campaign economics” her speech “ranks as a disappointment.”

But as destructive as price controls would be, the Post’s Aaron Blake points out that, according to various polls, blaming big corporations for price gouging appears to strike a chord with the public.*

“It’s not just a potent boogeyman,” Blake explains, “it’s a potent boogeyman that deflects blame from the administration that has been in charge these past 3½ years.”

So is Vice-​President Harris really a communist or just a run-​of-​mill blame-​shifting politician?

Well, sadly, those two things are not mutually exclusive. She could be [shudder] both.

So, if you are scared that former President Trump will usher in authoritarianism, should he prevail this November, you now know that, instead, you can choose communism.

That is, the Democrats’ excuse-​making, blame-​shifting, market-​killing standard bearer.

This is Common Sense. I’m Paul Jacob.

* Though, the polling shows the public views “increasing oil production” as more effective in bringing prices down. Don’t hold your breath for Ms. Harris and Democrats to endorse that.

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free trade & free markets regulation

Dining Out on Cause and Effect

California, minimum wage, hamburgers, economics, wages, jobs

Could a barren, charred, devastated landscape be the actual intended goal?

In California as in Washington, lawmakers and chief executives apparently have a long list of nice things to destroy and are crossing them off one by one, as if on the payroll of aliens from outer space wanting to conquer earth without doing very much conquest-​work themselves.

Part 99‑C of the plan is to price entry-​level labor and entry-​level restaurant dining out of the market by hiking the minimum wage of fast-​food workers even further beyond the market rate for the labor and its actual productive value to employers: now to $20 an hour.

Already, prices for restaurant meals are going up, and restaurant workers are being laid off.

The $20 minimum is a compromise that restaurant owners accepted in lieu of probably paying a $22 per hour minimum. Like letting burglars take only most of the silverware and letting them return at will.

Even more looting of employers is to come, if employee and activist Angelica Hernandez has her way. “We’re going to have to keep speaking up and striking to make sure we are heard.” She wants her dough and doesn’t care about the consequences for others. Policymakers rush to appease her and those like her.

So is omni-​destruction the actual intended goal?

Or is it that the mental powers of the crusaders and politicians and too many voters don’t extend so far as the relationship between cause and effect?

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political economy

Shrinkflation, Shrunk Nation

Joe Biden, inflation, ice cream, economics

In another pathetic pre-​recorded speech, played before Sunday’s Super Bowl, President Joe Biden lambasted America’s corporations for “shrinkflation.” 

“As an ice cream lover,” he explained in the vid, “what makes me the most angry is that ice cream cartons have actually shrunk in size but not in price.”

The Guardian expands upon the president’s gripe: “Inflation dropped to 3.1% in December but some companies are thought to have responded to rising costs by marginally shrinking the size of products — shrinkflation — as well as changing recipes to reduce the amount of more expensive ingredients — sometimes known as ‘skimpflation.’”

My, oh my, so businesses must adjust to inflationary pressures as well. 

When the costs of their inputs go up, they do not automatically become charities. Knowing that consumers do not sport infinite incomes and demand schedules utterly “inelastic” — buying the same goods in the same quantities even at higher prices — they often adjust by reducing quality or quantity.

It is one of many ways that inflation hurts us.

Inflation has even been referred to as the sneakiest of all taxes, taking from the masses and giving to the insider class, those closest to government (those who receive newly-​created money first).

Biden calls “shrinkflation” a “rip-​off” and insists that “the American public is tired of being played as suckers.”

Well, that will prove true only if the American public rejects those politicians who push the policies that led to the inflation — politicians like those in the 116th and 117th Congresses, Donald Trump, and Joe Biden himself.

This is Common Sense. I’m Paul Jacob. 

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crime and punishment subsidy

Taken for Billions and Billions

Congress, clowns, wizards

The U.S. Small Business Administration’s (SBA) pandemic assistance loan programs didn’t go off sans hitch. 

“Over the course of the Coronavirus Disease 2019 (COVID-​19) pandemic, SBA disbursed approximately $1.2 trillion of COVID-​19 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) funds,” explains a report from the SBA’s Office of Inspector General. “The economic assistance was intended to help eligible small business owners and entrepreneurs adversely affected by the crisis.” 

You might think that $1.2 trillion would do the job, if anything could.

But of course there was “a hitch” — it’s the thing in government we are never “without.”

The hitch was fraud.

“So far,” writes Eric Boehm at Reason, “investigations into COVID-​related fraud have netted 1,011 indictments, 803 arrests, and 529 convictions. The joint efforts of the SBA, U.S. Secret Service, and other federal agencies have resulted in nearly $30 billion in COVID funds being seized or returned to SBA.…”

But that’s not even a quarter of it. The Inspector General’s report indicates that the SBA made 4.5 million loans to fraudulent recipients, and the full estimate of their loot is $200 billion — more than 15 percent of the total. 

No mystery, though. “It is noteworthy that SBA executed over 14 years’ worth of lending within 14 days, and this was just the beginning.”

Politicians’ make-​believe would have us thinking they can just command things to happen and they do. “Everything is possible.” Because, well, “government.” Or “willpower.” Or what-have-you.

Well, losing hundreds of billions is always on the table.

This is Common Sense. I’m Paul Jacob.

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media and media people national politics & policies tax policy

Decreases & Increases & Krugman

Paul Krugman, taxes, Social Security

Social Security was never designed for sustainability. The “Ponzi” element was there at the beginning: early recipients received HUGE benefits over their contributions, but as the population matured, that ratio of what working taxpayers put in compared to what they received in benefits decreased. 

Further, because there never was a “lock box” much less any investment of funds — it was always a transfer scheme — as the system matured it hit the point of financial default. Back in the 80s this was fixed by raising the taxes on working people.

And then the kicker: with the rate of reproduction in the U.S. falling like Sisyphus’s rolling stone, the ratio of taxpayers to subsidized retirees went in the wrong direction. The folks assigned to keep track of the system’s finances predict that a major insolvency moment occurs about a decade from now, a few years ahead of earlier predictions.

So what does Nobel-​winning economist Paul Krugman, of The New York Times opinion page, advise?

While we fret about the devastation that benefit cuts and tax hikes would cause, Reason’s Eric Boehm notes that Krugman doesn’t think the cuts are necessary. “First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.”

Hope over reason! And the progressive’s blithe acceptance of always-​increasing tax burdens.

Serious people should confront facts … and avoid Krugman.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

Do More Than Baby Steps

baby formula, inflation, economics

Major disruptions such as pandemic policy in China and the Russian invasion of Ukraine obviously crimp trade and supply chains. But given such impacts, should governments here in the United States be making things better or making things worse?

Oil is one example of a good that would be more abundant and cheaper had the government left it alone — stopped blocking domestic production and the flow of oil from Canada.

Now parents are having trouble getting baby food.

A proximate cause of the shortage is the closure of a single major factory producing baby formula. But Kevin Ketels, a professor who studies the global supply chain, argues that restrictions on production had set things up so that a blow like this would be crippling.

For one thing, only a few companies, Abbott, Reckitt, and Nestlé, are allowed to participate in a government program to provide baby formula to low-​income families. This is not a minor program. The federal government provides substantial grants to the states to fund it.

More importantly, only a few manufacturing facilities are allowed to produce baby formula, and “startups don’t have the volume required to produce in these facilities.”

High tariffs on baby-​food imports have also reduced supply.

You would think, then, that the first thing to do would be to remove governmental barriers to production and imports.

And all, not just some.

So why isn’t that what we are hearing about now?

Well, politicians do not gain their power, prestige, and insider trading advantages by leaving well enough alone. Admitting that their stock in trade — regulation and tariffs and the like — is the cause of this problem might suggest to distracted minds that it is the cause of most, if not all, our problems.

This is Common Sense. I’m Paul Jacob.

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