Some Presidential Candidates Don’t Understand Economics

The Gateway Pundit posted an article today about a recent tweet by Elizabeth Warren.

This is the tweet:

The article includes the following quote from an article posted at The Heartland Institute website on September 19, 2018:

A 2015 Harvard Business School/Boston Consulting Group study estimates fracking supported 2.7 million jobs in 2014, with the potential to grow to 3.8 million jobs by 2030. Similarly, PricewaterhouseCoopers (PwC) prepared a report for the American Petroleum Institute that estimates the oil and natural gas industries supported 10.3 million jobs in 2015, an increase of about 500,00 compared to 2011.  The RAND Corporation projects the industries will support an additional 1.9 million jobs by 2035.  By the same year, a 2012 IHS Markit study estimates fracking will have created 3.5 million jobs. 

A 2016 Chamber of Commerce study projects that if the fracking revolution of the previous decade had not occurred, 4.3 million jobs would not have been created, the U.S. economy would be $500 billion smaller and residential natural gas prices would be 28 percent higher. 

There is also the matter of national security. America now has the freedom to choose its friends without worrying whether or not our oil supply will be cut off. Some of us remember the 1970’s gas lines and high price of gasoline.

The world economy (that includes America) is currently based on fossil fuels. Countries who can supply reasonable priced energy attract manufacturing and businesses which create jobs. The end the production of fossil fuel and fracking in America is to reduce America to the status of a third-world (or lower) country.

Is This The Future We Want For America?

Breitbart posted an article today about a tax crisis in Sweden. The causes are something Americans need to consider as our southern border continues to be seen as a political issue rather than a national security and economic issue.

The article reports:

A Swedish municipality that took in one of the highest numbers of asylum seekers per population faces a crisis as natives move out and decimate the local tax base.

The municipality of Filipstad took in many asylum seekers during the migrant crisis of 2015 and now are facing increasing costs as unemployment among migrants has surged and financial assistance rates have tripled, broadcaster SVT reports.

Claes Hultgren, the local municipal manager, described the situation, saying of the migrant population: “In this group, unemployment and dependency are very high, while education levels are very low. This group runs the risk of ending in an eternal alienation that is already heavily burdening the municipal economy.”

The article concludes:

While many cities across Sweden are facing housing shortages, the rate of unemployment between native Swedes and migrants is stark.

A 2018 report stated that the unemployment rate for native Swedes was a mere 3.6 per cent while the foreign-born rate was much higher at 19.9 per cent. The city of Malmo, which has a high migration-background population, was shown to have double the national unemployment average.

At some point, we need to realize that generosity has to have limits. You can only accept a certain amount of people who are dependent on others for their basic needs before those policies have a negative impact on the people who are working to meet their own basic needs. Charity is a wonderful part of life, but it has to be voluntary and it has to be within the bounds of ability. The number of immigrants coming into Europe and America who have no marketable skills and do not know the language is a burden on the economics of the countries involved. Immigration needs to be controlled, and assimilation needs to be part of immigration.

Not All Of What You Are Hearing Is True

Chicken Little is again running around yelling, “The sky is falling!” This time the attempt to induce panic in the general population is related to the fires burning in Brazil in the Amazon rain forest. The panicked extreme environmentalists cry, “The lungs of the earth.” The more rational environmentalists have a different perspective.

Yesterday John Hinderaker at Power Line Blog posted an article that reports some facts and historical perspective on the fires.

The article reports:

It isn’t entirely a fraud–there are indeed fires in the vicinity of the Amazon rain forest. But the hysteria that has been induced by those fires, which occur every year at this time, is ridiculous. Wildly exaggerated claims have been repeated uncritically in the press, and celebrity ignoramuses and politicians have avidly circulated photos of pretty much every forest fire that has occurred anywhere in the world over the last 20 or 30 years, claiming they were taken yesterday in the Amazon region.

The controversy has reached the level of high diplomacy (or rather, low comedy) as European countries have leaned heavily on Brazil to do a better job of controlling fires, threatening among other things trade sanctions, while Brazil’s president Jair Bolsonaro declined European offers of aid, while pointing out that French president Marcon wasn’t even able to prevent a foreseeable fire at Notre Dame cathedral. Relations between Brazil and France spiraled downward to the point of a Facebook comment by Bolsonaro on the relative pulchritude of the countries’ first ladies.

Yesterday The Tennessee Star posted an article about the fires.

The Tennessee Star reports:

The origin of this Amazon fire crisis traces back to the beginning of August, when Bolsonaro sacked his Space Institute minister for publishing worrisome data about the 2019 fire season. The dry season in Brazil typically runs from August to November, as farmers use these months to burn dried-out timber previously cut during land clearing operations. Ranchers also prepare the land for cattle grazing.

An important point to remember about these fires, however, is that the rainforests themselves are not entirely or uncontrollably ablaze. Natural fire does not typically occur in these tropical forests due to suffocating humidity, wet dense foliage, and daily thunderstorms. What is burning right now is land near the forests where farmers and ranchers have cleared hundreds and hundreds of acres of trees. This is easily seen in satellite imagery, which scientists finally examined and compared to the past two decades.

The New York Times pumped the brakes on the misinformation and published a highly informative map showing the location of the fires on previously cleared land obviously related to farmers and ranchers.

The Brazilian state of Mato Grasso has been transformed into an “ocean of soybeans” the size of Iowa. On the periphery, the land is cleared at the rate of 2,500-square-miles annually.

This deforestation peaked in the 1990s but lessened significantly over the past 10 years. There is evidence, however, to suggest Bolsonaro’s government had cut back on enforcement measures against illegal fires and land-clearing activities. The initial reports about the beginning of fire season sent the international community into a panic, led by the Europeans.

The number of fires and cumulative area burned so far in 2019, on the other hand, is on par with previous years and described as “near average” by NASA.

The farmers are clearing their land for their soybean crops. According to a Reuters article from May 2019:

Soybean trading in Brazil has gained momentum in recent days, driven by a wave of Chinese demand, boosting prices and premiums paid at ports amid a weakening of the Brazilian currency, according to analysts.

An estimated 5.5 million tonnes of soybeans have traded over the past few days, and are slated to leave Brazilian ports in June, July and August, according to estimates by the Center for Advanced Studies in Applied Economics (Cepea) issued on Friday.

The boost in trading has been driven by the failure of the Washington and Beijing to resolve their longstanding trade dispute, which made China turn to Brazil for soybean supplies, the analysts said.

The fires are not extraordinary when viewed through the lens of history. The farmers are clearing their land in order to plant soybeans and graze cattle. The hysteria is unfounded and unproductive.

Karma Anyone?

A lot of elected officials have never worked in the private sector. This impacts their view of economics and how it works. Often people who support liberal ideas have not had enough economic experience to understand that ideas that may sound wonderful may not work out as planned.  A recent example of this is a bookstore owner in New York City.

Yesterday Steven Hayward posted an article on Power Line Blog about Chris Doeblin, the owner of Book Culture, a four-location independent bookseller in New York City. The bookstore has a reputation of being a progressive bookstore.

The owner of the bookstore is quoted in the article:

“Our four stores are in danger of closing soon and we need financial assistance or investment on an interim basis to help us find our footing. This is true in spite of the fact that business has been good and we are widely supported and appreciated,” [owner Chris Doeblin] wrote. “In the last 30 months the payroll costs for Book Culture have risen by 50% and it has been difficult to adapt quickly enough. We have now made the structural changes to our company and the cuts that will allow us to move ahead profitably once we find the financial resources we need.”

The operative statement in that quote is that the payroll costs have risen by 50%. The article explains:

Doeblin blamed payroll cost increases on the city’s minimum wage raise, which he says increased hourly wages for his employees “from $10 to $15.25 since December 2016” and forced him to initiate layoffs and reorganizing.

Now Doeblin has a solution for the problem, which further confirms his lack of understanding of how economics and the free market work:

Doeblin explained to Gothamist what he believes the business needs to survive, and his larger ambitions to try to help other small businesses stay alive in an ever-changing city: “I think we need at least $500K in a term loan but I hope to find $750K to a $1M,” he said. “I would like the city to immediately [guarantee] such a loan and then embark on a serious plan to improve the odds of small business in New York. I would like to be on that panel too, because there is a lack of creative optimistic thinking and action.”

This illustrates the reason we need to teach economics and the principles of the free market in high schools and colleges.

Wise Words From An Economic Professor

Walter E. Williams is a professor of economics at George Mason University. I heard him speak many years ago when one of my daughters received a degree from Northern Virginia Community College. He is a brilliant man. On March 16th, Professor Williams posted an article at the Daily Wire. The article deals with the idea of redistributing wealth.

The article states:

In a free society, people earn income by serving their fellow man. Here’s an example: I mow your lawn, and you pay me $40. Then I go to my grocer and demand two six-packs of beer and 3 pounds of steak. In effect, the grocer says, “Williams, you are asking your fellow man to serve you by giving you beer and steak. What did you do to serve your fellow man?” My response is, “I mowed his lawn.” The grocer says, “Prove it.” That’s when I produce the $40. We can think of the, say, two $20 bills as certificates of performance — proof that I served my fellow man.

A system that requires that one serve his fellow man to have a claim on what he produces is far more moral than a system without such a requirement. For example, Congress can tell me, “Williams, you don’t have to get out in that hot sun to mow a lawn to have a claim on what your fellow man produces. Just vote for me, and through the tax code, I will take some of what your fellow man produces and give it to you.”

The last example shouldn’t even be legal.

The article also comments on the idea of ‘making enough money”:

Let’s look at a few multibillionaires to see whether they have served their fellow man well. Bill Gates, co-founder of Microsoft, with a net worth over $90 billion, is the second-richest person in the world. He didn’t acquire that wealth through violence. Millions of people around the world voluntarily plunked down money to buy Microsoft products. That explains the great wealth of people such as Gates. They discovered what their fellow man wanted and didn’t have, and they found out ways to effectively produce it. Their fellow man voluntarily gave them dollars. If Gates and others had followed President Obama’s advice that “at a certain point” they’d “made enough money” and shut down their companies when they had earned their first billion or two, mankind wouldn’t have most of the technological development we enjoy today.

The article concludes:

Take a look at the website Billionaire Mailing List’s list of current billionaires. On it, you will find people who have made great contributions to society. Way down on the list is Gordon Earle Moore — co-founder of Intel. He has a net worth of $6 billion. In 1968, Moore developed and marketed the integrated circuit, or microchip, which is responsible for thousands of today’s innovations, such as MRIs, advances in satellite technology and your desktop computer. Though Moore has benefited immensely from his development and marketing of the microchip, his benefit pales in comparison with how our nation and the world have benefited in terms of lives improved and saved by the host of technological innovations made possible by the microchip.

The only people who benefit from class warfare are politicians and the elite; they get our money and control our lives. Plus, we just might ask ourselves: Where is a society headed that holds its most productive members up to ridicule and scorn and makes mascots out of its least productive and most parasitic members?

If you want to be a millionaire, find a need and fill it. That is the proven method.

The Problem With Taxes In America

Walter Williams, a professor of economics at George Mason University, posted an article at The Daily Wire today about taxes.

Professor Williams noted a few things about taxes in America:

The argument that tax cuts reduce federal revenues can be disposed of quite easily. According to the Congressional Budget Office, revenues from federal income taxes were $76 billion higher in the first half of this year than they were in the first half of 2017. The Treasury Department says it expects that federal revenues will continue to exceed last year’s for the rest of 2018. Despite record federal revenues, 2018 will see a massive deficit, perhaps topping $1 trillion. Our massive deficit is a result not of tax cuts but of profligate congressional spending that outruns rising tax revenues. Grossly false statements about tax cuts’ reducing revenue should be put to rest in the wake of federal revenue increases seen with tax cuts during the Kennedy, Reagan and Trump administrations.

A very disturbing and mostly ignored issue is how absence of skin in the game negatively impacts the political arena. It turns out that 45 percent of American households, nearly 78 million individuals, have no federal income tax obligation. That poses a serious political problem. Americans with no federal income tax obligation become natural constituencies for big-spending politicians. After all, if one doesn’t pay federal income taxes, what does he care about big spending? Also, if one doesn’t pay federal taxes, why should he be happy about a tax cut? What’s in it for him? In fact, those with no skin in the game might see tax cuts as a threat to their handout programs.  (The underline is mine.)

The above information might explain why Democrats keep getting elected despite their overtaxation and reckless spending (yes, I know the Republicans also overspend).

The article concludes:

Another part of the Trump tax cuts was with corporate income — lowering the rate from 35 percent to 21 percent. That, too, has been condemned by the left as a tax cut for the rich. But corporations do not pay taxes. Why? Corporations are legal fictions. Only people pay taxes. If a tax is levied on a corporation, it will have one or more of the following responses in order to remain in business. It will raise the price of its product, lower its dividends to shareholders and/or lay off workers. Thus, only flesh-and-blood people pay taxes. We can think of corporations as tax collectors. Politicians love our ignorance about this. They suggest that corporations, not people, will be taxed. Here’s how to see through this charade: Suppose a politician told you, as a homeowner, “I’m not going to tax you. I’m going to tax your land.” I hope you wouldn’t fall for that jive. Land doesn’t pay taxes.

Getting back to skin in the game, sometimes I wonder whether one should be allowed in the game if he doesn’t have any skin in it.

It’s time to insure that everyone has some tax burden so that they will consider that burden when they vote.

Economic Growth For The Second Quarter

The Conservative Treehouse posted an article today about the revised economic figures for the second quarter. It is always amazing to me that under a Republican President when the revisions come, they are higher than the original estimates and under a Democrat President when the revisions come, they are lower than the original estimates, but I guess that’s the way it is.

At any rate, this is the chart of growth from the article:

The article had some further observations about the current economy:

1) The upward revision to nonresidential fixed investment was mostly accounted for by investment in software. (2) Imports, which are a subtraction in the calculation of GDP, were revised down. Within goods, the downward revision was widespread, the largest contributor was petroleum.

In addition to presenting revised estimates for the second quarter, today’s release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance. Wages and salaries are now estimated to have increased $122.5 billion in the first quarter of 2018, an upward revision of $0.4 billion.  (source data)

The article also notes that President Trump’s economic policies have benefited Main Street as well as Wall Street.

The article concludes:

The economic models of the entire last generation+ are based on the assumptions of continuing globalist economics which advances, and has advanced, the interest of Wall Street over Main Street. They were driving a “service-driven economy” message.

Simultaneous to domestic capital investment inside the U.S., the ability of our nation to provide goods and services to meet the economic expansion, means less reliance on imported materials, goods and/or services. We are making more of our own stuff; exporting at a larger rate; and importing less – specifically due to the energy independence strategy within the larger Trump policy.

Every granular policy is like a small part in a larger machine. Each individual part of the MAGAnomic policy is working to compliment the larger objective.

We needed a businessman in the White House. Our current politicians don’t seem to understand economics.

The Economic Impact Of Tax Cuts

First of all, let’s take a short walk down memory lane to a Washington Post article from November 20, 2017.

The article explains how the Democrats plan to use the tax cut plan in the 2018 mid-term elections:

The goal of the ads will be to hit two messages. The first is that the GOP changes to the tax code themselves would be enormously regressive, showering most of their benefits on the wealthy while giving crumbs to working- and middle-class Americans or even raising their taxes. The second is that these tax cuts would necessitate big cuts to the safety net later — the ad references $25 billion in Medicare cuts that could be triggered by the GOP plan’s deficit busting — further compounding the GOP agenda’s regressiveness down the line.

Geoff Garin, a pollster for the Democratic super PAC Priorities USA, tells me that his polling shows that this combination alienates working-class whites, particularly Obama-Trump voters. “They are fundamentally populist in their economic views, and they find big breaks to corporations and the wealthy especially heinous when the flip side of that means cutting Medicare and Medicaid,” Garin said.

That was the original plan. Now lets look at an article posted yesterday in The New York Post about the results of the tax cut plan.

The New York Post reports:

We are already starting to see a fiscal dividend from Trump’s pro-business tax, energy and regulatory policies. The Congressional Budget Office reports that tax revenues in April — which is by far the biggest month of the year for tax collections because of the April 15 filing deadline — totaled $515 billion. That was good for a robust 13 percent rise in receipts over last year. ‎

…But there’s another lesson, and it’s about how wrong the bean counters were in Congress who said this tax bill would “cost” the Treasury $1.5 trillion to $2 trillion in most revenues over the next decade. If the higher growth rate Trump has already accomplished remains in place, then the impact will be well over $3 trillion of more revenue and thus lower debt levels over the decade.

Putting people back to work is the best way to balance the budget. Period.

The article concludes:

No one thought that Trump could ramp up the growth rate to 3 percent or that his policies would boost federal revenues. But he is doing just that — which is why all that the Democrats and the media want to talk about these days is Russia and Stormy Daniels.

I want to go back to the original Democrat statements about the damage the tax cuts would do to the economy. Did they really believe that or do they simply want more of our money under their control? Either way, it doesn’t say good things about them–either they don’t understand economics (see the Laffer Curve) or they lied. Obviously they have to continue lying if they want to use the tax cuts as part of their mid-term election campaign–they have already stated that they want to rescind many of the tax breaks that have resulted in the recent economic growth.

If you are inclined to vote on pocketbook issues, the only choice in November is to vote for Republican candidates for Congress.

Both Sets Of Jobs Numbers For January 2013

Yesterday CNS News reported that the number of Americans not in the labor force grew by 169,000 in January. Meanwhile, aol.com reports that 157,000 new jobs were added in January 2013.

The article at aol.com reported:

Federal Reserve officials said on Wednesday that economic activity had “paused,” but they signaled optimism the recovery would regain speed with continued monetary policy support. The Fed left in place a monthly $85 billion bond-buying stimulus plan. Economists polled by Reuters had expected employers to add 160,000 jobs and the unemployment rate to hold steady at 7.8 percent last month.

…Job growth in 2012 averaged 181,000 a month, but not enough to significantly reduce unemployment. Economists say employment gains in excess of 250,000 a month over a sustained period are needed.

We are losing jobs as fast as we are gaining them. This really does not look like a strong economic recovery.

The Unemployment Numbers

The truth behind the unemployment numbers from the Bureau of Labor Statistics:

Labor Force Statistics from the Current Population Survey

 

The bottom line here is simple. The only reason the unemployment number is below 9 percent is that the number of people in the labor force is less than it has been. There are two ways to lower the unemployment rate–employ more people or remove people from the labor force so that the percentage of unemployed people is lower. As you can see, the number of people in the labor force is decreasing–not increasing. We are moving in the wrong direction.
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