Thursday, March 2, 2017

The Good, the Bad, and the Ugly from Trump's Speech

President Trump gave his first address to a joint session of Congress last night.
The one thing I can say with great confidence, based on applause patterns, is that it didn’t generate the same spirit of bipartisan good will as the Pope’s address back in 2015.
But let’s set aside the Republican-vs-Democrat silliness and focus on public policy.
What was good in Trump’s speech? Overall, there were nine things that seemed positive.
These are the three things that got my blood pumping.
  1. Lower corporate tax rate – Trump didn’t specifically reference the 15-percent rate he mentioned in the campaign, but he aggressively argued for a big drop in America’s punitive corporate tax rate.
  2. Obamacare repeal – The president effectively outlined how Obamacare is a disaster for taxpayers, for consumers, for the economy, and for the healthcare system.
  3. Food and Drug Administration – Trump correctly criticized the bureaucrats at the FDA for stifling medical progress. I think it’s safe to assume that bureaucracy will be better behaved for the next four years. Maybe we’ll even get rid of the milk police.

Medicaid is a Growing Mess

The United States is going to become another Greece, and it’s largely because of poorly designed entitlement programs. As the old saying goes, demography is destiny.
Let’s look at just one piece of that puzzle. James Capretta of the American Enterprise Institute has a very sobering summary of how Medicaid has metastasized into one of the largest and fastest-growing entitlement programs.
You should read the entire article, but if you’re pressed for time, I’m going to share two grim charts that tell you what you need to know.
Medicaid Spending
First, we have a look at how the burden of Medicaid spending, measured as a share of national output, has increased over time.

California Prohibition Could Finally End

On his Facebook page, California State Senator Scott Wiener announced he will be introducing legislation that would allow cities to establish the hour of “last call” for local bars and restaurants.
Under current California law, it is illegal for bars and restaurants to serve alcohol past 2 a.m. Wiener insisted that local communities deserve “more flexibility” from the “one-size-fits-all 2 a.m.” last call. “Nightlife matters a lot, culturally and economically,” Wiener said.
Cognitive dissonance, thy name is government.
Culture and Economics
Wiener is right. This would bring economic benefits to businesses in major cities like San Francisco and Los Angeles. For many bars and nightclubs, late night is peak business hours, and alcohol is a top seller.
The reason we say “it’s 5 o’clock somewhere” whenever we drink before 5 p.m. is because we identify drinking as an evening ritual.
It is culture plus economics that is driving all this.

Lowering Taxes Would Actually Increase Tax Revenue

For more than 30 years, I’ve been trying to educate my leftist friends about supply-side economics and the Laffer Curve.
Why is it so hard for them to recognize, I endlessly wonder, that when you tax something, you get less of it? And why don’t they realize that when you tax something at high rates, the effect is even larger?
And if the tax is high and the affected economic activity is sufficiently discouraged, why won’t they admit that this will have an impact on tax revenue?
Don’t they understand the basic economics of supply and demand?
But I’m not giving up, which means I’m either a fool or an optimist.
In this Skype interview with the Blaze’s Dana Loesch, I pontificate about the economy and tax policy.

Now Trump Wants to Use "Alternative Statistics"

In an article for the Washington Post, Charles Lane discusses the Trump administration's recent attempts to manipulate trade data to bolster its case for protectionism. Not only does he expose the radical-left-wing origins of the Trump administration’s proposal to change the way that goods transshipped through the U.S. are accounted for in trade statistics, Mr. Lane also reveals the utter meaninglessness of bilateral trade ‘imbalances’ – such as America’s trade ‘deficit’ with Mexico (“Trump’s attempt to massage economic data isn’t new. But there’s a better way.Foreign exporters transship their goods through the U.S. because it is valuable for them to do so.

Governments Need Inflation, Economies Don’t

In an article in the UK’s Telegraph on October 10, veteran economic correspondent Ambrose Evans-Pritchard laid bare the essential truth of the nearly universal current embrace of inflation as an economic panacea. While politicians, CEOs and economists talk about demand stimulus and the avoidance of a deflationary trap, Evans-Pritchard reminds us that inflation is all, and always, about debt
Every year the levels of government debt as a percentage of GDP, for both emerging market and developed economies, continue to go higher and higher. As the ratios push out into uncharted territories, particularly in Europe’s southern tier, the ability to “inflate away” debt through monetization remains the only means available to postpone default. Evans-Pritchard quotes a Bank of America analyst as saying that even “low inflation” (not to mention actual deflation) is the “biggest threat to the dynamics of public debt.” IMF Managing Director Christine Lagarde ramped up the rhetoric further when she recently told the Washington Press Club that “deflation is the ogre that must be fought decisively.” In other words, governments need inflation to remain viable. It’s the drug they just can’t do without.

Switzerland Wins As Its Central Bank Surrenders

If anyone had any doubt how severely the global economy has been distorted by the actions of central bankers, the “surprise” announcement last week by the Swiss National Bank (SNB) to no longer peg the Swiss franc to the euro should provide a moment of crystal clarity. The decision sent the franc up almost 30% in intraday trading, a scale of movement that is unprecedented for a major currency in the modern era. Although very few in the media or on Wall Street fully understand the ramifications, the situation that forced the Swiss to abandon the peg will soon be faced by bankers of much larger countries in the coming years, the implications of which can have more profound implications for global financial markets.

Politicians’ Words: The Rich, Fair Share and Taxes

At the recent televised debate among candidates for the Democrats’ nomination for president, Hillary Clinton declared that “the wealthy pay too little” in taxes and “the middle class pays too much.”
Some people might wish to argue about whether that is true or not, but no rational argument can be made on either side of this issue, because the words used are completely undefined. Nor is Hillary Clinton the only one who talks this way.
It is one of the many signs of the mindlessness of our times that all sorts of people declare that “the rich” are not paying their “fair share” in taxes, without telling us concretely what they mean by either “the rich” or “fair share.”

What Is the “Fair Share” of Taxes?

Presidential hopefuls Hillary Clinton and Sen. Bernie Sanders, along with President Obama, say they want high-income earners, otherwise known as the rich, to pay their fair share of income taxes. None of these people, as well as the uninformed in the media and our campus intellectual elites, will say precisely what is the “fair share” of taxes. That is because they would look ignorant and silly, so they stick with simply saying that the rich should pay more. Let’s you and I take a peek at who pays what in federal income taxes.

Top 1%


Top 5%


Top 10%


Bottom 50%

Above: Percentage Paid in Federal Income Taxes By Income Bracket
The following represents 2012 income tax data recently released by the Internal Revenue Service, compiled by the Tax Foundation ( The top 1 percent, 1.37 million taxpayers earning $434,682 and more, paid 38 percent of all federal income taxes. The top 5 percent, those earning $175,817 and more, paid 59 percent. The top 10 percent of income earners, those earning $125,195 and up, paid 70 percent of all federal income taxes. The top 25 percent, those earning $73,354 and up, paid 86 percent. The bottom 50 percent, people earning $36,055 and less, paid a little less than 3 percent of federal income taxes. According to estimates by the Tax Policy Center, slightly over 45 percent of American households have no federal income tax liability.

Tax Avoidance is Moral

The recent leak of the Panama Papers—which consist of confidential banking documents that report names of thousands of offshore corporations and their shareholders—created a media storm around the world. Many of these corporations are shells that serve as “tax havens:” they allow corporations and individuals to avoid paying taxes in their home jurisdictions. Although most of the money invested in these shell companies is not criminally ‘laundered’ but obtained legally, media commentators have been lamenting that tax avoiders are immoral because they are not paying “their fair share” of taxes. They accuse those investing in offshore shell companies of “ripping off the middle class” by shifting the tax burden to it.
Why is there such a moral indignation—and why should we defend tax avoiders instead? To answer these questions, we must first ask: Why do these lamenters think paying the maximum amount of taxes is a moral duty?

An Unappreciated Tax on the Poor: The Cost of High Crime Communities

A few years ago, BET had a commentary titled “Where Are the Grocery Stores in Black Neighborhoods?” One wonders whether anyone thinks that the absence of supermarkets in predominantly black neighborhoods means that white merchants do not like dollars coming out of black hands. Racial discrimination cannot explain the absence of supermarkets in black communities.
Compare the operation of a supermarket in a low-crime neighborhood with that of one in a high-crime neighborhood. You will see differences in how they operate. Supermarkets in low-crime neighborhoods often have merchandise on display near entrances. They may have merchandise left unattended outside the store, such as plants and gardening material. Often these items are left out overnight. Supermarket managers’ profit maximizing objective is to maximize merchandise turnover per square foot of leased space. The economic significance of being able to have merchandise located at entrances and outside is the supermarket manager can use all of the space he leases.

Why Regressive Leftists Cry Racism

Why the fixation on racism from the left? What does racism have to with your positions on taxation, trade policy, immigration policy, socialized medicine or just about anything else?
A racist is someone who elevates race as the most important factor in human affairs. When operating in the realm of government and politics, a racist wants to use government agencies, laws or the general rule of force to impose rights and standards according to race.
I am not aware of Donald Trump proposing anything like this. I’m not saying I always agree with Donald Trump. But if he were an advocate of racism, as in violating the individual rights of people based on their race, I would not want him anywhere near the White House.

Economic Fallacies Surrounding The Issue of Immigration

There are many economic fallacies that surround the issue of freer or open immigration into the United States, and few of them can stand up to serious critical examination.
The Fallacy that Immigrants “Steal” Jobs from Americans.
Opponents of more open immigration sometimes argue that the arrival of more immigrants means the threatened loss of jobs for those already living in the country.
The often-implicit assumption behind this argument is that there are a fixed number of jobs in the country, and if more workers enter the labor market, by definition any work gained by one of the new arrivals must mean lost employment for someone else already there.
As long as there are unsatisfied wants that more production could gratify, then there is always more work for more hands to do. An increased number of workers within a country means that there can occur what economists call both more extensive and more intensive use of labor. By more extensive use of labor is meant that things that could not be done before because there were not enough hands to do them can now be undertaken.

No Robot Tax: Bill Gates and Justin Trudeau’s Misguided Inequality Crusade

It is one thing for Bill Gates to advocate the evil idea of sacrificing producers and all the rest of us who benefit from the products and wealth they create. For politicians like prime minister Trudeau, who have the power to actually sacrifice the producers through government force, such as bans, taxes and  other wealth distribution schemes, it is doubly immoral.

Bill Gates, the co-founder of Microsoft and a strong technology advocate, and Justin Trudeau, prime minister of Canada and a former high school teacher, do not seem to have that much in common. Generally, businessmen produce wealth and politicians redistribute it. But Bill Gates and Justin Trudeau share a bond: both are crusaders against inequality of income and wealth (rather paradoxically for the world’s richest man and a very well-off prime minister).

America Needs a Leader Like George Washington

On President’s Day, Americans have an opportunity to reflect on its Presidents–past and present–and particularly on those who have been great leaders. History is replete with examples of charismatic power-lusting “leaders” directing mindless and obedient legions on campaigns of suppression and destruction. But America’s great leaders have been different.
America has often been blessed, in times of crisis, with principled, moral leaders, directing this nation against history’s tyrants and in pursuit of freedom and the rights of man.
Now, once again facing a crisis, America searches for great leadership. Awash in a morass of moral compromise, poll-taking, and hesitation to offend world opinion, Americans desperately seize on any hint of strength, of moral certainty, of a refusal to swim with others in the swamp of compromise, empty rhetoric and threats that now passes for “leadership” in Washington, D.C.

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