Free markets are not the solution to scarcity. They are just the best solution to scarcity.--Tess Roark
Mom has really been busy. So has Liz.
Ned's back is hurt but manageable.
Theresa May said she would quit as British prime minister once her party chooses a successor, following her repeated failure to win approval for a Brexit deal almost three years after the U.K. voted to leave the European Union.
A great quote from Pinker: Homo sapiens is a species that lives by its wits, concocting and pooling notions of how the world works and how its members can best lead their lives. There can be no better proof of the power of ideas than the ironic influence of the political philosopher who most insisted on the power of vested interests, the man who wrote that “the ruling ideas of each age have ever been the ideas of the ruling class.” Karl Marx possessed no wealth and commanded no army, but the ideas he scribbled in the reading room of the British Museum shaped the course of the 20th century and beyond, wrenching the lives of billions.
The average white score on the 2018 SAT (1,123 out of a possible 1,600) was 177 points higher than the average black score (946), approximately a standard deviation of difference. This gap has persisted for decades. It is not explained by socioeconomic disparities.
Trade should be peace. It is the ultimate in arbitration. Trade wars are truly bizarre. The goal of each government in harming its own citizens with tariffs is to pressure the other government into stop harming its own citizens with tariffs. From a conflict viewpoint, it's more like a suicide bomber who targets his own people.
Net investment by the nonfinancial business sector has collapsed since 2000. The companies that use to make the products and provide the services now look more like banks, with an increasing share of profits coming from financial assets. Ford went from a company that earned its money making cars to a company that earns its money making car loans.
Here are a few of these complaints that heard on a regular basis: “Everyone should have more access to low-cost health care at low cost!” “All small businesses should be better able to find low-interest loans!” “Wages aren’t growing fast enough!” “College shouldn’t cost so much!” In view of these problems, the market must be failing, and we need the government to fix the problems.
Markets are desirable not because they don’t fail, but because they are better able than government to respond when they do fail.
NBER Paper on Tariffs
This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.
Here’s the paper’s conclusion (italics added):
Mom has really been busy. So has Liz.
Ned's back is hurt but manageable.
Theresa May said she would quit as British prime minister once her party chooses a successor, following her repeated failure to win approval for a Brexit deal almost three years after the U.K. voted to leave the European Union.
A great quote from Pinker: Homo sapiens is a species that lives by its wits, concocting and pooling notions of how the world works and how its members can best lead their lives. There can be no better proof of the power of ideas than the ironic influence of the political philosopher who most insisted on the power of vested interests, the man who wrote that “the ruling ideas of each age have ever been the ideas of the ruling class.” Karl Marx possessed no wealth and commanded no army, but the ideas he scribbled in the reading room of the British Museum shaped the course of the 20th century and beyond, wrenching the lives of billions.
The average white score on the 2018 SAT (1,123 out of a possible 1,600) was 177 points higher than the average black score (946), approximately a standard deviation of difference. This gap has persisted for decades. It is not explained by socioeconomic disparities.
Trade should be peace. It is the ultimate in arbitration. Trade wars are truly bizarre. The goal of each government in harming its own citizens with tariffs is to pressure the other government into stop harming its own citizens with tariffs. From a conflict viewpoint, it's more like a suicide bomber who targets his own people.
The SECURE Act was passed overwhelmingly by the House and I could find only a single mention of the one really significant change it created: "Perhaps the most onerous is the proposed elimination of the stretch IRA rule for inherited IRAs. Instead of the beneficiary being able to stretch distributions from her inherited IRA over her remaining lifetime, the new law would require that all inherited IRAs be distributed by the end of the tenth year following the death of the IRA creator." What that does is contract down the time of distribution to heirs--and the tax period. It is a huge transfusion of taxes out of the inheritance to the government.
Net investment by the nonfinancial business sector has collapsed since 2000. The companies that use to make the products and provide the services now look more like banks, with an increasing share of profits coming from financial assets. Ford went from a company that earned its money making cars to a company that earns its money making car loans.
Here are a few of these complaints that heard on a regular basis: “Everyone should have more access to low-cost health care at low cost!” “All small businesses should be better able to find low-interest loans!” “Wages aren’t growing fast enough!” “College shouldn’t cost so much!” In view of these problems, the market must be failing, and we need the government to fix the problems.
Markets are desirable not because they don’t fail, but because they are better able than government to respond when they do fail.
NBER Paper on Tariffs
From The National Bureau of Economic Research Working Paper “The Impact of the 2018 Trade War on U.S. Prices and Welfare” by Mary Amiti (Federal Reserve Bank of New York), Stephen J. Redding (Princeton) and David Weinstein (Columbia):
Here’s the paper’s abstract (italics added):
This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.
Here’s the paper’s conclusion (italics added):
Economists have long argued that there are real income losses from import protection. Using the evidence to date from the 2018 trade war, we find empirical support for these arguments. We estimate the cumulative deadweight welfare cost (reduction in real income) from the U.S. tariffs to be around $6.9 billion during the first 11 months of 2018, with an additional cost of $12.3 billion to domestic consumers and importers in the form of tariff revenue transferred to the government. The deadweight welfare costs alone reached $1.4 billion per month by November of 2018.
The trade war also caused dramatic adjustments in international supply chains, as approximately $165 billion dollars of trade ($136 billion of imports and $29 billion of exports) is lost or redirected in 23 order to avoid the tariffs. We find that the U.S. tariffs were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters. We also find that U.S. producers responded to reduced import competition by raising their prices.
Perry's summary of the paper: a) China has not been “paying tariffs to the USA,” b) the trade war has reduced US real income and has not been responsible for “great economic results,” c) the tariffs have had a very noticeable impact measured in billions of dollars, not a “little impact,” on product costs in the USA, and d) the burden of the tariffs been borne almost completely by the USA, not China and other foreign exporters.
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