The year almost past saw the ascendence of some uncommonly stupid ideas. From Max Gulker at aier.com:
At first glance 2019 was a rough year for anyone in favor of an economy and society guided from the bottom up by people with the freedom to exchange, cooperate, and think as they choose. The highly visible left flank of the Democratic Party, fully embracing socialism in name and approach, erupted with proposals that would drastically change the country in ways they intend and many more in ways they do not. Meanwhile, the Republican Party’s debt from its Faustian bargain with President Donald Trump began to come due.
What can we learn from bad ideas? Plenty, if we approach them with curiosity rather than assumed intellectual or moral deficiency on the part of those trafficking in them. The truth, that people have a really hard time understanding the benefits of free markets and bottom-up organization, is both difficult and galvanizing. Free-market ideas don’t really have a place in the current incarnation of our two-party system. We’re free agents and that can open a world of new possibilities if we let it.
Posted in Business, Capitalism, Economics, Economy, Governments, Politics, Technology, Trade
Tagged Big Tech, Elizabeth Warren, Green New Deal, protectionism
China doesn’t bring as many weapons to the trade war as many people think. From Daniel Lacalle at dlacalle.com:
In these weeks we have read a lot about the so-called trade war. However, this is better described as a negotiation between the largest consumer and the largest supplier with important political and even moral ramifications. This is also a dispute between two economic models.
Nobody wins in a trade war, and tariffs are always a bad idea, but let’s not forget that they are just a weapon.
Why right now?
For many years China has been allowed to maintain a mercantilist dictatorship and protectionist model under the excuse that its high growth made it attractive.
Shortly before the US launched its set of tariffs, the Chinese government accelerated two dangerous policies that we cannot ignore: intensifying capital controls , limiting the outflow of dollars from the country, and increasing the list of banned companies and sites, two measures that proved that the Chinese government was unlikely to open its economy, rather the opposite. These measures intensified in the last year and a half. Two other factors show China’s decision to halt the opening of its system. The “Made In China 2025 Plan” and the removal of the two-term limit on the presidency, effectively allowing Xi Jinping to remain in power for life.
Between 2004 and 2018, the United States filed 41 complaints against China at the World Trade Organization, focused on 27 different areas. The vast majority of these WTO resolutions are not enforced (“Paper Compliance: How China Implements WTO Decisions.” The previous strategy of looking the other way and expecting the Chinese economy to open up little by little met the reality of increased interventionism.
Posted in Business, Currencies, Debt, Economics, Economy, Foreign Policy, Geopolitics, Governments, Trade
Tagged China, protectionism, Trade War
Government gets bigger and more powerful at home and abroad. From Ron Paul at ronpaulinstitute.org:
One of the most insidious ways politicians expand government is by creating new programs to “solve” problems created by politicians. For example, government interference in health care increased health care costs, making it difficult or even impossible for many to obtain affordable, quality care. The effects of these prior interventions were used to justify Obamacare.
Now, the failures of Obamacare are being used to justify further government intervention in health care. This does not just include the renewed push for socialized medicine. It also includes supporting new laws mandating price transparency. The lack of transparency in health care pricing is a direct result of government policies encouraging overreliance on third-party payers.
This phenomenon is also observed in foreign policy. American military interventions result in blowback that is used to justify more military intervention. The result is an ever-expanding warfare state and curtailments on our liberty in the name of security.
Another example of this is related to the reaction to President Trump’s tariffs. Many of America’s leading trading partners have imposed “retaliatory” tariffs on US goods. Many of these tariffs target agriculture exports. These tariffs could be devastating for American farmers, since exports compose as much as 20 percent of the average farmer’s income.
President Trump has responded to the hardships imposed on farmers by these retaliatory tariffs with a 12 billion dollars farm bailout program. The program has three elements: direct payments to farmers, use of federal funds to buy surplus crops and distribute them to food banks and nutrition programs, and a new federal effort to promote American agriculture overseas.
This program will not fix the problems caused by Tramp’s tariffs. For one thing, the payments are unlikely to equal the money farmers will lose from this trade war. Also, government marketing programs benefit large agribusiness but do nothing to help small farmers. In fact, by giving another advantage to large agribusiness, the program may make it more difficult for small farmers to compete in the global marketplace.
To continue reading: Protectionism Abroad and Socialism at Home