Category Archives: Economics

Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs, by Tyler Durden

For we anti-statists, this is a truly heartwarming story. From Tyler Durden at zerohedge.com:

When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases.

According to Philly.com reports, two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and – adding insult to injury – are now planning for layoffs.

One of the city’s largest distributors told the Philadelphia website it would cut 20% of its workforce in March, and an owner of six ShopRite stores in Philadelphia says he expects to shed 300 workers this spring. “People are seeing sales decline larger than anything they’ve seen up to this point in the city,” said Alex Baloga, vice president of external relations at the Pennsylvania Food Merchants Association.

Since all of this is taking place as previewed in a recent post: “The ‘Soda Police’ Just Learned A Valuable Lesson About Taxes”, we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.

Sure enough, in response instead of admitting the tax was a bad decision, the city lashed out by launching the latest “fake news” campaign, when it questioned the legitimacy of the early figures and predicted that customers responding to the initial sticker shock by shopping outside the city would return. “We have no way of knowing if their sales figures and predicted job losses are anything more than fear-mongering to prevent this from happening in other cities,” said city spokesman Mike Dunn.

To continue reading: Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs

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He Said That? 2/19/17

Hat tip to The Burning Platform for today’s quote, from Henry Hazlitt (1894-1993), American financial journalist, author, and editor:

The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploitation, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weakness, or that the failure of anyone else may be due to his own defects – his laziness, incompetence, improvidence, or stupidity.

Why Debt Is Not Money, by Doug Casey

Doug Casey makes the same case SLL made in “Real Money.” From Casey at caseyresearch.com:

Gold’s main use, contrary to the belief of some, isn’t in jewelry or dentistry—although those uses are important. Its main use has almost always been as money. But gold’s ancillary uses are growing in importance because, given its physical characteristics, it’s a high-tech metal. It’s one of the most resistant to chemical reaction, one of the most ductile, the most malleable of all the elements, and it’s an exceptional electrical conductor.

There are lots of other advantages to gold as money. It’s by far the most private kind of money; gold coins, unlike paper currency, don’t even carry serial numbers. That makes it truly untraceable. At current prices, it’s more portable than cash, even in the form of $100 bills. It doesn’t retain traces of drugs, as does currency, which makes it less liable to arbitrary confiscation. Although efforts have been made to counterfeit gold bars, with tungsten filler and such, it’s much easier to authenticate than currency.

Until quite recently, 90% of the world’s people were either flat-out prohibited from owning gold (Russia, China, and the rest of the ex-communist world) or simply too poor to consider it (most Indians and other residents of the Third World). But these people are now allowed to own gold and have a fast-increasing ability to buy it. And they’re rapidly doing so. Their cultures have long histories with the metal and recent histories of living in a police state; they understand the value of real money. Although common people are now the biggest gold buyers, their governments and central banks are accumulating it as well.

To continue reading: Why Debt Is Not Money

 

Riptide, by Robert Gore

If President Trump is to put America first, he must end its offensive wars.

For most of human history, the costs of waging offensive war have been roughly equivalent to the costs of defending against it. Since World War II, costs have shifted dramatically in favor of defense. Ironically, during this time the US has waged more offensive wars than any other nation. Although members of the military recognize the shift, it is seldom acknowledged by the civilian command structure. Even those who understand generally assume that greater US resources and wealth make up for the cost disparity.

In football or basketball, if your team has the ball, you are the offense. In warfare, if you are in another country, you are the offense. An invasion, difficult as it may be, is invariably the easy part. Anyone who knew military history winced when President George W. Bush gave his 2003 Iraq victory speech, Mission Accomplished banner stretched behind him on an upper deck of an aircraft carrier. If, to give the neoconservatives their stated case, the mission was to convert Iraq to a thriving, peaceful, multicultural democracy, fourteen years later that mission remains unaccomplished, the prospect just as remote as it was before the US invaded Iraq and deposed Saddam Hussein.

THE FOLLY OF WAR

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The US “victory” in Iraq created winners and losers. Previously marginalized Shiites who formed the new government were the winners. Ousted Sunni Ba’athists who had stocked Hussein’s government and military were the losers, and set about upending the new order. In their war against the US and its newly installed Iraqi government, they had every advantage defenders have playing on their home territory. They knew the territory and the language, drew on local Sunni support, blended in with the “civilian” population, and used women and children operationally, pages straight from the Viet Cong playbook.

Which brings up “asymmetric warfare,” modern code for the perpetual invader lament that the other side doesn’t play by the rules. (Dating back to at least the American revolution, when British formations were decimated by “terrorist” revolutionaries hiding behind trees.) In the Middle East there are no enemy tank brigades, regular combat units, air forces, or navies in which the US can engage decisive battles a la World War II. It’s guerrilla warfare: the enemy plants IEDs or land mines; shoots down expensive tanks and helicopters with shoulder-fired missiles; inflicts random terror and mayhem; petrifies opponents with beheadings and torture; amasses for battles in which they fiercely fight and often inflict costly losses, and if they ultimately lose, a month or two later return to contest the same territory with the same ferocity.

Finally, and perhaps most importantly, the home field defenders have staying power; it’s their country and they aren’t going anywhere. As Vietnam and the Middle East demonstrate, invaders get tired of wasting blood and treasure. Their populations reject the government’s tired assurances of just-around-the-corner victory and political support evaporates. A substantial portion of the population the invaders are supposedly liberating doesn’t support them. The governments that host the invaders are invariably corrupt puppets. The guerrillas may never win a straight-up battle (the US has batted a thousand in straight-up battles in Vietnam and the Middle East), but if they inflict enough pain, the invaders eventually leave.

It is a mistake to assume the outcomes of US interventions are different from the real, as opposed to the stated, intentions of their proponents. The military and intelligence sector has become the biggest annex of the welfare state, enjoying the advantage that most people don’t even realize it feeds from that trough. US military and intelligence budgets are huge in comparison to other nations’, far in excess of what would be necessary if the “defense” function was limited to defense of our country, and President Trump has vowed to increase them. Long-lasting offensive wars are the ultimate crony socialist boondoggle and jobs program.

Then there are the lucrative opportunities interventions present for corruption, extortion, theft, and other criminal enterprises (US drug dealing was rife during the Vietnam war). That the military-industrial-intelligence complex is willing to sacrifice the lives of US soldiers and innocent civilian populations to line their own pockets tells you all you need to know about its morality. That’s an ethic compatible with residence on Death Row, not a free, peaceful, and just society.

In his first few days in office, President Trump has perhaps avoided one interventionist pitfall, but not another.

First, as I wrote about in my last column, the initial draft of the executive order entitled “Protecting the Nation From Attacks From Foreign Nationals” contained a section raising the possibility of creating “safe zones” in Syria. The final version omits this dangerous plan. This is significant: what it means is that the Trump administration is going to resist calls by the interventionist media to “do something” about the Syrian civil war and is opting instead to keep its footprint in the region lighter than the War Party would prefer. “Safe zones” are off the table, at least for now.

Justin Raimondo, “Spare Us the Theatrics,” (1/30/17, antiwar.com

This is encouraging, but if Trump does disengage from the Middle East, it’s likely to be two steps forward, one step back. The administration has still not entirely renounced the Syrian safe zone idea. And the first US soldier killed on Trump’s watch was with a special forces commando team in Yemen, on an operation Trump authorized. What are special forces doing in Yemen? It’s a country of no strategic importance to the US embroiled in essentially a Shiite-Sunni sectarian war, the local factions serving as proxies for Shiite Iran and Sunni Saudi Arabia (to which the US has supplied billions worth of armaments). The US is grabbing the same tar baby on which it’s stuck in Afghanistan, Iraq, Syria, Sudan, Libya, and Somalia

Those last five countries (and Yemen and Iran), are on Trump’s executive order banning travel by their citizens to the US. In the weird world of John McCain and his neoconservative cohorts, the ban will stoke terrorism against the US, but commando raids, bombs, and drone strikes are met with no-blowback equanimity by the raided, bombed, and droned. The thousands protesting the ban have shown a similar unconcern for all the non-immigrating victims, alive or dead, of US offensive wars. These wars were perhaps questioned by some of the protestors when they were Bush’s, but endorsed or silently acquiesced to when they were Obama’s. They have left the US caught in the riptide of a historic shift in the relative costs of offensive and defensive warfare.

The only way to avoid being carried further out to sea is to quit waging offensive wars. The marker of his foreign policy success will be the extent to which President Trump frees the US from its many tar babies and avoids getting stuck on new ones. If he fails and adds to the blood and treasure the US has already lost, he will have failed to put America first.

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What is this ‘Crisis’ of Modernity? by Alastair Crooke

There may be plenty of oil left, but if it takes as much energy to discover, extract, refine, transport, and sell that oil as the oil itself has, we have a problem. From Alastair Crooke at Conflicts Forum via theautomaticearth.com:

Alastair Crooke: We have an economic crisis – centred on the persistent elusiveness of real growth, rather than just monetised debt masquerading as ‘growth’ – and a political crisis, in which even ‘Davos man’, it seems, according to their own World Economic Forum polls,is anxious; losing his faith in ‘the system’ itself, and casting around for an explanation for what is occurring, or what exactly to do about it. Klaus Schwab, the founder of the WEF at Davos remarked before this year’s session, “People have become very emotionalized, this silent fear of what the new world will bring, we have populists here and we want to listen …”.

Dmitry Orlov, a Russian who was taken by his parents to the US at an early age, but who has returned regularly to his birthplace, draws on the Russian experience for his book, The Five Stages of Collapse. Orlov suggests that we not just entering a transient moment of multiple political discontents, but rather that we are already in the early stages of something rather more profound. From his perspective that fuses his American experience with that of post Cold War Russia, he argues, that the five stages would tend to play out in sequence based on the breaching of particular boundaries of consensual faith and trust that groups of human beings vest in the institutions and systems they depend on for daily life. These boundaries run from the least personal (e.g. trust in banks and governments) to the most personal (faith in your local community, neighbours, and kin). It would be hard to avoid the thought – so evident at Davos – that even the elites now accept that Orlov’s first boundary has been breached.

To continue reading: What is this ‘Crisis’ of Modernity?

 

Germany Slams Trump Criticism: Urges US To “Build Better Cars”, Accuses Washington Of Causing Refugee Crisis, by Tyler Durden

Hard to argue that America makes better cars than Germany, and impossible not to acknowledge that America’s disastrous forays into the Middle East and Northern Africa aren’t at least partially responsible for the European refugee crisis. From Tyler Durden at zerohedge.com:

An angry Berlin has responded with a staunch defense of its policies after President-elect Donald Trump criticized German Chancellor Angela Merkel in two separate Sunday interviews, one with Germany’s Bild and one with the Sunday Times, for her stance during the refugee crisis while threatening a 35% tariff on BMW cars imported into the US.

Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, said on Monday morning that a tax on German imports would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains. “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina],” Gabriel, leader of the centre-left Social Democratic party, told the Bild newspaper in a video interview.

“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive.” Playing Trump’s threat off Congress, Gabriel added that he “would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump” as quoted by The Guardian.

In his interviews with Bild and the Times, the US president-elect had indicated that he would aim to realign the “out of balance” car trade between Germany and the US. “If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”

So, when asked what Trump could do to make sure German customers bought more American cars, Gabriel had a simple suggestion: “Build better cars.”

To continue reading: Germany Slams Trump Criticism: Urges US To “Build Better Cars”, Accuses Washington Of Causing Refugee Crisis