Tag: economics

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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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deficits and debt free trade & free markets national politics & policies too much government

Inflation Evasion…Depression

consumer price index, inflation

Going into the lockdowns and bailouts, a consensus of politicians and their court wizards, the economists, had belittled the specter of inflation.

Nowadays, when folks use the term “inflation,” they really mean upward movement on the consumer price index (CPI). Some economists, who have a sense of history,* reserve the word not for price level increases, but for increases in the supply of money. And the two concepts are tightly linked. 

But a whole lot of people seek to blame CPI rate increases on anything but monetary policy, as Veronique de Rugy notes in an article at The American Spectator.

“Theories for why we shouldn’t worry abounded,” de Rugy writes. “It was caused by a base-effect price increase, supply-chain restraints, a drought in Taiwan — everything but the Fed’s expansionary policies and Congress’ overspending, in part because some of these experts had cheered for these actions all along.”

And then inflation came back.

Big time.

While expressing some humility and an unwillingness to make predictions, de Rugy insists that “the amount of money printed, borrowed, and spent during the last few years led to a one-time price level rise, and we may have a way to go until we are done.” 

She also insists that the Pollyanna phrase “transitory inflation” is no comfort: “inflation was always going to be transitory. Even the inflation of the 1970s ended in the ’80s. What mattered is whether transitory inflation meant a few weeks, months, or years.”

And, I cautiously add, how de-stabilizing it is. Consumers rightly worry about rising prices, but inflation doesn’t hit all sectors the same. Credit expansion leads to imbalances that are hard to correct. 

And the correction is “depression.”

This is Common Sense. I’m Paul Jacob.

* Including the history of their own discipline. Readers of Austrian economists such asF.A. Hayek get a better sense of past debates than from other economists.

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