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 Richmans' Trade and Taxes Blog



Global Trade down 9% since 2014
Howard Richman, 5/25/2016

Robert Romano, writing on Net Right Daily, Americans for Limited Government's website, reports that global trade is down about 9% since 2014. He begins:

Global trade is collapsing. In March, the U.S. trade deficit took a big hit, dropping 13.8 percent amid an $8 billion contraction in imports and a $2 billion shrinking of exports, according to data compiled by the U.S. Census Bureau.

Most economists think that global trade collapses during global economic recessions due to the fact that countries often raise their tariff rates during those recessions. But the causation is different. First trade becomes imbalanced. Then the trade deficit countries get into financial problems and can no longer buy as many imports from the trade surplus countries. Then trade collapses and world growth stagnates. Finally, trade deficit countries impose balancing-trade tariffs upon the products of the trade surplus countries which allows them to get out of the recession. So the economic recession itself causes both the decline in world trade and the rising tariffs.

We are not the first economists to understand that imbalanced trade leads to global economic slowdowns. We attributed that understanding to John Maynard Keynes in our journal article about our Scaled Tariff when we wrote:...

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Jesse was interviewed by Fox News on Saturday
Howard Richman, 5/3/2016

Here's the link:

https://www.youtube.com/watch?v=KVvWWEwZtug&app=desktop

 

 

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Noted Liberal Economists, Krugman and Blinder, Espouse Free Trade, a Policy That Is Not Supported By Economics At ALL
Raymond Richman, 4/25/2016

Paul Krugman, a Nobel Prize winner and a former Princeton University Professor of Economics in an opinion piece entitled “Trade, Labor and Politics” in the New York Times (3/28/2016) and Alan Blinder, currently a Professor of Economics and Public Affairs at Princeton in an opinion piece entitled “Five Big Truths about Trade” in the Wall Street Journal (4/22/2016), urge doing nothing to eliminate the trade deficits the U.S. has been experiencing for over two decades. Princeton was the home of Woodrow Wilson, who created the League of Nations, the beginning of globalization, which is relevant because both are globalists which may explain why they wrote the nonsense we criticize. It is to be hoped that they are not representative of the economics faculty at Princeton.

Krugman begins by writing that the “Republicans, who claim to stand for free markets, are likely to nominate a crude protectionist…”  Donald Trump is hardly a crude protectionist. He has said he wants to end the huge chronic trade surplus China has had with us for nearly two decades and will take action to prevent American firms moving their factories abroad. That makes him a wise protectionist because these are actions we need to take. Was Keynes a crude protectionist when he said decades ago that Britain should take retaliatory action against mercantilist “beggar-thy-neighbor” policies pursued by its trading partners? And am I, a University of Chicago Ph. D. in Economics, a crude protectionist for pointing out that economics as a science does not justify “free” trade at all. All that economics has to say is that balanced trade is always beneficial to trading partners. Trade does not need to be balanced with every country but a country’s trade should be balanced overall with its many trading partners. Free trade as a policy could only be recommended by economists when the trading partners 1) have a common currency, 2) there is free movement of labor and capital between them, and 3) neither partner can impose barriers to trade, restrictions imposed on the States by our Constitution. The European Union has similar conditions.

Krugman admits that  “for the past few decades globalization has probably been, on net, a depressing force for the majority of U.S. workers.” What an understatement! Millions of American workers have lost good jobs in manufacturing which is the cause of the economic malaise afflicting this country. But Krugman talks about “globalization” as the cause. It was not globalization but the ideology of free trade and the trade treaties that accompanied globalization that produced the unintended consequence of U.S. trade deficits. The United Nations, the World Bank, the International Monetary Fund, the International Labor Organization, the World Health Organization, and hundreds of other agencies were created in the process of globalization but none of them have had a depressing effect on American workers. Only the trade deficits have done that. Krugman ought to stick to economics. Globalization is not economics, trade deficits are. ...

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Journalists and Their Economic Illiteracy I.
Raymond Richman, 4/19/2016

The editorial page of the Trib-Review in its Saturday edition 4/16/1016 illustrates what is wrong with the media today. First, the editorial on the page criticizes the Republican Party for not opposing the Export-Import Bank created by the Truman administration in 1945. The editorial calls the X-Im Bank crony capitalism because the bulk of its loans go to large companies like Boeing and GE, but in 2015 the bank made more than 2,300 transactions that helped U.S. small businesses export their products.  The Ex-Im bank guarantees to keep U.S. banks harmless on loans they make to foreigners to purchase U.S. goods but requires them to use sound economic criteria when they make such loans. The Ex-Im Bank has been entirely self-funded since 2007 and cost the government very little over its life as a bank. It adds nothing to the budget deficit at all. Surely there are better things to cut. There are, according to the EX-Im Bank 85 foreign countries that have export credit agencies. It is not an example of “Crony capitalism”. The latter is evidenced by government grants, subsidies, and tax breaks to favored companies. Examples are the huge subsidies and guarantees given companies producing electricity from wind and solar sources and the tax credits given to buyers of hybrid and electric vehicles which line the pockets of the companies that produce such vehicles. Given the fact that the U.S. imported $500 billion worth of goods and services in 2015 than it exported, there is good reason for its continued existence.  The editorial would have been more appropriate when the U.S. was the leading creditor nation in the 1950s and 1960s but today it is the leading debtor nation.

Second, in a column on the editorial page John Stossell,

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The Law of Diminishing Returns; How we Escaped Its Consequences  
Raymond Richman, 4/14/2016

Most of us do not understand the economic Law of Diminishing Returns. Parson Malthus, who gave economics its reputation as the dismal science, postulated that given the fact that the earth’s surface is limited, as population grows the product that each additional worker adds to land’s output of productive land would eventually begin to diminish and that if growth of population were left unchecked, earnings in agriculture per person would diminish to below the level needed to sustain the population. What Malthus and all the classical economists, including Karl Marx, failed to realize was that land was not the only resource employing labor. Most of our labor is employed in producing non-agricultural products and services, combining labor not with land alone but will growing amounts of physical capital. Since the time when Malthus wrote, the end of the 18th century, the U.S. and Europe have experienced rising wage rates as capital per worker increased. But there is some evidence that we have begun to experience diminishing returns again, the result of forgetting that for wages to rise wage-increasing capital investment must grow relative to labor input.

Not many decades ago, after World War II, Japan began to experience rapid economic growth so rapid in fact that a colleague of mine at the University of Pittsburgh predicted it would catch up to the U.S., just as many have been predicting that China’s rapid growth would make it the number one economic power exceeding the U.S. But even economic growth is subject to the law of diminishing returns.ot surprising to economists familiar with the law of diminishing marginal productivity, China’s rate of growth slowed down just as Japan’s had before it. The returns to capital are high when there are lots of new investment opportunities. But new investment opportunities often grow slower that savings, the source of investment capital. Marx thought that savings would always rise faster than investment opportunities. Marx was the real economic pessimist. Marxism is the real dismal science.

Knowledgeable readers may have already guessed that the law of diminishing marginal productivity is merely an application of the economic Law of Supply and Demand. The supply of land being relatively fixed combining it with an ever-increasing supply of labor reduces the amount of product eventually that each additional unit of labor produces, hence the law of diminishing returns.  But Malthus did not anticipate the extensive growth of non-agricultural industries over the next two centuries. The production of new products increases the demand for labor causing wages to rise. He never expected the incredible rise in productivity in the industrial and commercial sectors. ...

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Recent polling data on trade
Jesse Richman, 4/13/2016

Public opinion on trade policy continues to be at substantial odds with most U.S. public policy.  

A mid-March Bloomberg poll asked the following question:  "Turning now to trade, generally speaking, do you think U.S. trade policy should have more restrictions on imported foreign goods to protect American jobs, or have fewer restrictions to enable American consumers to have the most choices and the lowest prices?"  65 percent supported more restrictions.  22 percent supported fewer restrictions. 

Another question asked "Overall, do you think NAFTA, the North American Free Trade Agreement, has been good or bad for the U.S. economy?"  44 percent said it had been bad for the U.S. economy, and 29 percent said it had been good. 

Bloomberg's analysis of the poll can be found here.  They titled it "Free-Trade Opposition Unites Political Parties...

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Who's got the trade policy delusions?
Jesse Richman, 4/12/2016

The counter-attack by the "free-traders" is under way.  It's unfortunate for them that they have little more to sell than lies, distortions, and delusions. 

Case in point is a recent piece on trade in The Daily Beast by Will Marshal and Ed Gerwin (http://www.thedailybeast.com/articles/2016/04/11/donald-trump-and-bernie-sanders-are-delusional-on-trade-policy.html).

"Take Trump’s chest-thumping threats to slap tariffs of 45 percent and 35 percent on imports from China and Mexico, respectively. These crushing duties would immediately jack up production costs for U.S. manufacturers, such as Ford, that source engines and parts from these countries, seriously undercutting their ability to compete globally."

The U.S. exports half as many cars as it imports.  Imposing tariffs on countries like China and Japan that have worked hard to exclude U.S. made cars from their markets might well move trade toward balance.  Tariffs on imports from Mexico would perhaps change Ford's calculus about its newest shipment of U.S. auto-production to that country. 

"The Trump Tariff also would be in essence a giant tax hike on U.S. consumers, amounting to $250 billion by one estimate. At current import levels, a 45 percent duty on imports from China would, for example, translate into a tax of $18 billion on cellphones, $16 billion on laptops, and $15 billion on clothing. Similarly, Sanders’s commitment to “reversing” tariff-cutting U.S. trade agreements and normal trade relations with China would lead to higher duties on a wide range of imports from 21 countries—including America’s top three trading partners—and higher costs for working Americans."

Such a tariff would also provide valuable incentives for some re-shoring of production to the US if maintained.... 

"China and Mexico would surely retaliate by raising barriers to U.S. exports. China—America’s number three export destination—could, for example, impose stiff duties on such leading U.S. exports as aircraft, autos, electronics, soybeans, and corn, as well as new limits on high-value U.S. services. The tit for tat would lead to shutdowns and layoffs in all three countries, and could tip an already shaky global economy into recession."

If the tariffs were imposed by means of the balanced trade "scaled tariff" then retaliation would only further hurt these country's exports.  Their better policy would be to begin taking down trade barriers, stop manipulating their currencies, and start finding ways to buy more U.S. products....

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The People are Right: It's Time to Balance Trade -- we're published in the American Thinker this morning
Howard Richman, 4/5/2016

Here's how we begin:

Although Donald Trump (Republican) and Bernie Sanders (Democrat) have both made opposition to U.S. trade policy a major plank of their surprisingly successful presidential campaigns, most elite “opinion leaders” in the media and politics continue to at-best condescend to these messages as a working-class phenomenon -- a movement by the “losers” in trade that fails to recognize the counterbalancing winners.

Few in the elite have yet begun to question their faith in free trade. And, as a result, it is unlikely that Congress, the executive branch, and other power centers will engage in the important rethink of U.S. trade policy that the public is calling for. Like Hillary Clinton and Ted Cruz in the current campaign, Mitt Romney in 2012, and Barack Obama in 2008, they give lip service to trade concerns, while planning to continue “free trade” policy once elected. But the voters are right, the elites are wrong. The trade jobs ‘winners’ are vastly outnumbered by those who lost millions of jobs. Why the mismatch? Our massive trade deficits.

If there is a single statistic that shows the major cause of the current malaise -- and surely it has many causes -- the trade deficit is foremost. It has worsened since 1975, as shown in the following graph:

To read it, go to:

http://www.americanthinker.com/articles/2016/04/the_people_are_right_its_time_to_balance_trade.html

 

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Trade Agreements Have Been an Economic Disaster for the USA
Raymond Richman, 3/29/2016

When the U.S. began negotiating the General Agreement on Tariffs and Trade (GATT) in 1947, it was the world’s leading creditor. By the time the ninth round of negotiations was concluded in 1994, it had become the world’s leading debtor nation, millions of well-paid manufacturing workers lost their jobs, and the U.S. suffered two recessions in less than ten years, in 2000-01 and 2008-09. No wonder the malaise that led to what is clearly a popular revolt in the 2016 primaries. If there is a single statistic that shows the cause of the malaise—and surely it has many causes all associated with government intervention in the economy!—it is the growth of our international trade deficit in the following table.

The  table shows that U.S. Gross National Product, GDP, the total output of goods and services, which equals C+I+G+(X-M), ie., total private consumption expenditures, C,  plus gross private domestic investment expenditures, I, plus government consumption and investment expenditures, G, plus exports minus imports (X-M). It shows the GDP for selected years 1960 to 2015. It shows that the U.S. had a trade surplus of $4 billion in 1960, which made a contribution to GDP of 0.74 percent, less than one percent but at least positive.  As a result of GATT trade agreements from 1947 to 1994 and subsequent agreements with China, Korea, and Mexico, the U.S. experienced growing trade deficits which exploded after 1994.

In 1980 the trade deficit was $13 billion or about 0.45 percent of GDP, less than one-half of one percent. As a result of the successive GATT trade agreements, it grew enormously reaching $376 billion in the year 2000, diminishing GDP by 3.7 percent and contributing to the 2000-01 recession. The U.S. trade deficit grew to a record level reaching $723 billion in 2008 diminishing GDP by a record 4.9 percent and helping to precipitate the Great Recession of 2008-09. As a result of the Great Recession, the trade deficit fell, recovering to $530 billion in 2015, reducing  GDP by about 3 percent. In other words, had our trade been in balance in 2015, our GDP would have been $18.5 trillion instead of $17.9 trillion. ...

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Cruz' tax plan -- analysis by Tax Policy Center
Howard Richman, 3/17/2016

Tax Policy Center has put together an analysis of Senator Cruz' tax plan. Here are some quotes from an article about it that appeared in Dow Jones Business News:...

 

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An Analysis of the Proposals of the Republican Candidates for President
Raymond Richman, 3/15/2016

Following are the proposals and views of the Donald Trump. Sen Cruz, Sen. Rubio, and Gov. Kasich and my comments on their proposals:

Donald Trump, a businessman and graduate of the Wharton School at the University of Pennsylvania, makes the following proposals. Trump

  1. would deport illegal immigrants. No other candidate approves this suggestion.
  2. build a fence between the U.S. and Mexico. No other candidate makes this suggestion.
  3. believes that marriage is a state not a federal concern. All the candidates except Kasich agree.
  4. proposes to cut income taxes, corporate and personal. Cruz and Rubio suggest changes in corporate and personal income taxes. (See below.) We have our own proposals which differ from those of all the candidates.
  5. suggests there is little man-made global warning and measures to reduce global warming are ineffective, costly, and damaging to the economy. Cruz is the only one who agrees.
  6. urges balancing trade with China, Japan, Mexico, and other large trading partners. No other candidate appears to agree.
  7. wants to prevent American firms from moving their factories abroad. None of the others mention this.
  8. would impose a ban on travel of Muslims to the U.S. No other candidates agree.
  9. opposes government financing abortions but otherwise approves Planned Parenthood. Cruz and Rubio have similar but not identical views.
  10. Promises to reduce the national debt. All the candidates promise the same.

 Ted Cruz, a lawyer, graduate of Princeton University, received a law degree from Harvard University makes the following proposals: ...

 

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Rubio, Cruz and Kasich pretended they hadn't backed Obamatrade in yesterday's debate
Howard Richman, 3/11/2016

Julia Hahn of Breitbart is on the story (Rubio, Cruz, Kasich All Backed Obamatrade, Pretend They Didn’t at Miami Debate). Here are some selections. First, Marco Rubio:...

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Would Trump's Trade Policy Really Cause a Recession? -- Ray and I are published in American Thinker this morning
Howard Richman, 3/8/2016

Here's a selection:

In short, Romney doesn't appear to understand the economics of trade. Economic research about the "tariff-growth paradox," including one of our own academic papers, has found that tariffs hurt economic growth only when trade is relatively balanced.  But periods of history during which world trade has been relatively balanced (such as 1840-1865 and 1950-1973) have been followed by periods during which world trade became more and more unbalanced.  The world is once again experiencing a period of high trade imbalances (like the 1890s and the 1930s) in which trade-deficit countries can grow more rapidly simply by increasing their tariff rates.  Anything that Trump does to balance the enormous U.S. trade deficits will be economically beneficial. 

Follow the following link to read it:

http://www.americanthinker.com/articles/2016/03/would_trumps_trade_policy_really_cause_a_recession.html

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Memo to Media: Stop the Idiocy -- Focus on the Delegate Counts
Jesse Richman, 3/3/2016

The vast majority of the media coverage of the March 1st Super Tuesday primaries had a fundamentally mistaken focus.  Most journalistic coverage obsessed about absolutely the WRONG facts and stats.  In both parties, all of the states voting on Super Tuesday used some form of proportional allocation of the delegates, with subtly and very importantly different formulas across the states.  Because the delegates are allocated semi-proportionately, the right statistics to focus on are not how many states a particular candidate has 'won' but how many delegates.  

A close second place finish can net the same number of delegates as a weak first-place finish.  For instance, Trump and Kasich tied in the delegate count in Vermont.  On the other hand, a blow-out first place finish can yield a very large delegate lead.  Sanders ran the table on Clinton in Vermont, taking every single delegate despite proportional rules.  The delegate math doesn't conflate these two.  Simple-minded coverage that highlights states won does...

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Peter Morici: Trump's Edge over Clinton
Howard Richman, 3/2/2016

Morici had a another great column a few days ago: Trump's Edge over Clinton. He laid out the economic case, citing economic statistics, that a Trump economy would be much better than a Hillary Clinton economy. After pointing to the decline in median family income during Obama's presidency, the recession in U.S. manufacturing, currency manipulations by China, and other similar factors. Here's his comparison between the candidates:

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Book Review: Henry M. Paulson, Dealing With CHINA (NY, Hachette Books, 2015)
Raymond Richman, 2/29/2016

The book shows that Henry Paulson, former Goldman Sachs president, is a fabulous salesman, a friend of the Chinese oligarchy and helped create China as an efficient economic power. As he writes in his preface: “Today’s China is a land of superlatives. It is home to the world’s fastest supercomputer, the biggest wind-power base, the longest sea bridge. It produces and uses nearly half of the world’s coal, cement, iron ores, and steel; it consumes 40 percent of the aluminum and copper. Forty years ago most  Americans wouldn’t have imagined owing China one red cent. Now it is the U.S.’s biggest creditor, owning just under $13 trillion of our government’s debt.” And “The  Chinese are formidable competitors. But we should not fear competition or shrink from it.”

The first part of his book is devoted to Goldman Sachs' successful attempt to give key Chinese industries access to international capital markets.  He describes his meetings with an important Chinese leader, Zhu Rongji, in charge of directing China’s economy, former Mayor of Shanghai and a protegé of Deng Xiaoping the leader of China whose reforms beginning in 1978 led to the spectacular double-digit growth of the Chinese economy during the succeeding decades. The meeting led to Goldman Sachs being appointed to take the nations’s telecom business private, and Goldman Sachs became well-known in China and the rest of Asia.

He deals with the efforts to privatize China’s state-owned oil company which was a conglomerate, including petro-chemicals, gas stations, and many other business activities, and had responsibilities for workers’ housing, health and other social services for several hundred thousand employees. It was an enormous task to create a company that met SEC requirements for an IPO. An optimist, he believed that China’s embrace of markets over central planning would inevitably lead to more economic and political freedom there.  He wrote in an op-ed article published in the New York Times, “The case for permanent normal trade relations with China is the story of PetroChina repeated a hundred-fold or a thousand fold.... The individual freedom, initiative, and responsibility inherent in free markets are, by their very nature, at odds with authoritarian rule.”  Time will tell. He does not mention that the U.S. and China seem to be on a collision course in the Spratlys. He writes in Ch. 6.  Cleaning the Stables in Guangdong, that China had embarked on reforms but the reforms required changes that led to “waste, mismanagement, fraud, and corruption on a massive scale.”...

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Sierra Raynes: Half of Republicans see foreign trade as threat to United States
Howard Richman, 2/29/2016

Sierra Raynes had a great blog posting on the American Thinker website about a poll result showing Republican voters souring on trade and also showing the correlation between trade volume and U.S. GDP growth. Here's what she said about the poll:

Newly released polling data from Gallup shows that half of all Republicans see foreign trade as mainly a threat to the United States.

This level of skepticism toward international trade has remained high among the GOP base since Gallup started collecting polling data on the topic.  By comparison, Democrats and independents both have much lower levels of concern about foreign trade, with each group at 37% of its membership viewing foreign trade as mainly a national threat.

And here is an excellent graph that she put together showing the correlation between trade volume (exports plus imports as a percentage of GDP) and U.S. per capita growth. It shows that the higher the trade volume, the lower the U.S. GDP growth:

She is definitely correct. But trade volume is not the culprit; trade deficits are the problem. When trade is balanced, trade volumes correlate positively with economic growth. The problem is that the U.S. trade deficit has been growing. But Raynes is also aware of this. She includes another graph which shows that U.S. trade deficits have been growing. And she writes:...

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Wealth and Income Inequality Is Not as Bad as You Think - Ray was published in the American Thinker on Saturday
Howard Richman, 2/29/2016

He began:

Sen. Bernie Sanders says, “There is something profoundly wrong when the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.” He writes: “The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of our time.” The trouble is that none of it is true except the fact that it is a political issue because leftists like Sanders make it so. The propaganda is based on calculations of the inequality of wealth which do not tell the whole story. They exclude the value of pensions, annuities, and social security. They also exclude the value of government wealth -- national, state, and city parks, and other land and buildings, including schools, libraries, stadiums, vehicles, streets and roads, and public transit facilities which are owned by everyone equally.

To read the rest, go to:

http://www.americanthinker.com/articles/2016/02/wealth_and_income_inequality_is_not_as_bad_as_you_think_.html

 

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Trade imbalances, inequality, and the political pressure cooker
Jesse Richman, 2/29/2016

Michael Hirsh has an interesting analysis in the most recent  Politico entitled "Why Trump and Sanders Were Inevitable."  His argument is that failed US globalization policies (I would say trade policies), rising inequality, and increasing insecurity are at the root of the rise of Trump and Sanders. A few choice quotes:

"Both Democratic and Republican leaders, meanwhile, are still kidding themselves that their respective bases are … basically OK with their economic agendas, when plainly the numbers show they aren’t. On the GOP side, there were those who thought the tea party was libertarian, but nothing could have been further from the truth, as Rand Paul discovered when his presidential bid crashed and burned. Even a conservative in the maltreated middle class doesn’t want less help from government; instead the tea party backlash was anti-immigrant and anti-Obama—not so much opposed to government per se as to how government redistributes wealth. The Democratic establishment from Obama to Hillary Clinton has been continually surprised by the anger and sense of betrayal within its progressive wing, which is why so few people took Sanders seriously at first (including the Clintons).

"Thus what we have now is an emerging ideology with no party to speak for it." 

Read more: http://www.politico.com/magazine/story/2016/02/why-donald-trump-and-bernie-sanders-were-inevitable-213685#ixzz41X0fDwaF

Rubio, and many establishment Republicans, are currently in the midst of an all out war to stop Donald Trump.  Whether they succeed or not remains to be seen.  Clinton seems to be consolidating support versus Sanders.  But not matter what the Super Tuesday returns reveal, one thing is certain.  This isn't the last round of the struggle to reshape America's catastrophically bad trade policies towards something more likely to promote the general prosperity of its citizens, their security, and their freedom.  

On this blog we have been attempting to promote and develop such policies for a number of years.  Our 2008 book "Trading Away Our Future" outlined our thinking at that point in its final chapter: "A Program For a Strong America."  Since then we have added the Scaled Tariff idea promoted in our second book "Balanced Trade". 

It has become fashionable to dismiss the emerging "ideology" Hirsh refers to as populist.  But there is room in the real response to these rising problems for effective, reasoned policies that promote prosperity, diminish inequality, and begin to restore balance to the U.S. economy.  Whatever his faults and failings, Trump is right that the US must take steps to balance its trade with China.  And with the rest of the world.  And flawed though some of his prescriptions (and budget projections) are, Sanders is right that inequality is a problem that US leaders must begin to take more seriously.    

Unfortunately, we are arguably now in an era Ray, Howard, and I predicted in our 2008 book, one in which polarization and radicalism are rising: "If Republicans were in power during the crash," we wrote...

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Wealth and Income Inequality Is Not As Bad As You Think
Raymond Richman, 2/27/2016

Sen. Bernie Sanders says, “There is something profoundly wrong when the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.” He writes: “The issue of wealth and income inequality is the great moral issue of our time, it is the great economic issue of our time, and it is the great political issue of our time.” The trouble is that none of it is true except the fact that it is a political issue because leftists like Sanders make it so. The propaganda is based on calculations of the inequality of wealth which do not tell the whole story. They exclude the value of pensions, annuities, and social security. They also exclude the value of government wealth – national, state, and city parks and other land and buildings, including schools, libraries, stadiums, vehicles, streets and roads, and public transit facilities which are owned by everyone equally.

Wealth used in the measure of inequality includes the value of the assets owned by a household including stocks, bonds, and real estate, including the net value of homes. Income used in measures of equality is defined as the return one receives in the form of wages and salaries, rents, interest, profits, and returns from past savings and investments, including dividends, annuities, pensions, and social security benefits.  The income measured is income before income taxes. Income after income tax as we shall note is considerably more equal than income before tax. Moreover, not all income is consumed. Consumption is a measure of what households take out of the economy, whereas income before income tax and wealth are measures of what the household has contributed to the economy. Obviously income after tax and consumption are much more equal that the distribution of household wealth.

One of the myths propagated by the left is that the inequality of wealth and income are constantly rising. In fact both rise and fall over decades they have been studied. Profs. Emmanuel Saez (UC Berkeley) and Gabriel Zucman (LSE) studied wealth inequality and produced the graph below which shows that the share of total household wealth owned by the top 0.1 percent was 25% in 1916, then it fell to 15% in 1923, rose to 25% in 1929, then began a downward trend reaching 7 percent in 1978 and rose to 22 percent in 2013. It continued to rise until 2015. The degree of inequality depends largely on the level of prices of corporate stock and real estate. The rise since 2009 can be attributed to the Federal Reserve policy of artificially causing low interest rates. The prices of corporate stock and of real estate are determined by the capitalization of their net incomes which depends on the level of interest rates. Their values increase as interest rates fall and fall as interest rates rise. And that was the FED’s policy beginning in 2009, the FED hoping that increased values of real estate and securities would cause their owners to increase consumption and investment. Unfortunately, the FED’s expectations turned out to be wrong; neither consumption nor investment increased as much as they expected, so the recovery languished. ...

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Who Is a Conservative and What Are Conservative Policies?  
Raymond Richman, 2/8/2016

The National Review is considered to be a politically conservative magazine. Recently (January, 2016), It published a special issue that includes 20 pieces by persons it deems are proven conservatives. I am a fan and admirer of a number of them. But none of them defines what a conservative is. In my view, a political conservative is one who believes in a limited role for government, a strict construction of the constitution, fiscal discipline, and in the free enterprise system. All political conservatives are also social conservatives to some degree. Social conservatives oppose abortion, homosexuality, sexual promiscuity, consider marriage to be between a man and a woman, and to hold some religious beliefs. Some believe that abortion is permissible early in a pregnancy, some believe that persons can be homosexuals but disapprove public manifestations of such relationships, some believe in divorce and others not, and some are atheists but hold some ethical values religions advocate. One can be politically conservative without being an ardent social conservative. Let’s take a look at why the following persons deemed to be conservative by the editors of the National Review do not consider Donald Trump to be conservative. Trump has never held public office so the views attributable to him are views he expressed as a private citizen. Let us analyze the reasons the writers give for believing Trump is not a Conservative. We believe that Trump is sufficiently conservative to be President....

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Is Trump a True Conservative? -- we're published in American Thinker this morning
Howard Richman, 2/8/2016

We begin:

During Saturday’s Republican presidential candidate debate in New Hampshire, Donald Trump was asked:

Mr. Trump, you've heard the argument from many of the candidates on this stage that you're not a true conservative. Tell the voters watching tonight why you are.

He replied:

Well, I think I am, and to me, I view the word conservative as a derivative of the word “conserve.” We want to conserve our money. We want to conserve our wealth. We want to conserve. We want to be smart. We want to be smart where we go, where we spend, how we spend. We want to conserve our country. We want to save our country. And we have people that have no idea how to do that, and they are not doing it, and it's a very important word and it's something I believe in very, very strongly.

Trump gave a general definition of conservative, which is valid. But there are more specific definitions as well. A political conservative is one who believes in a limited role for government, a strict construction of the constitution, fiscal discipline, rule of law and free enterprise. Social conservatives support the traditional family and oppose abortion, pornography, sexual promiscuity and redefinition of marriage. One can be politically conservative without being socially conservative and vice versa. We are not experts on social conservatism, but we do know something about economics, so we will examine whether Trump is a political conservative.

To read the rest, go to:

http://www.americanthinker.com/articles/2016/02/is_trump_a_true_conservative.html

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Peter Morici: Trump's Got It Right on Trade
Howard Richman, 1/30/2016

U. of Maryland economist Peter Morici, former chief economist at the USTR, endorsed Trump's trade plans, in a commentary this week. Here's how he begins:

Donald Trump has been savaged by economists and media aligned with establishment candidates for tough positions on trade — including a 45 percent tariff on imports to force China to the negotiating table.

Actually, he’s got it right.

Establishment Democrats and Republicans embrace free trade because it puts free markets first with benefits any decently trained economist should extoll. Unfortunately, trade with China and many nations is hardly market-driven.

It hurts U.S. growth and victimizes America’s families.

He estimates that just this year, the growth in the U.S. trade deficit with China cost by $25 billion cost an additional 200,000 U.S. jobs:...

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How to remove moderator bias from the presidential debates -- we're published in American Thinker this morning
Howard Richman, 1/29/2016

We begin:

The 2016 presidential primary debates are arguably at a breaking point.  Donald Trump's refusal to participate in Thursday night's Fox News/Google debate raises to a new level expressions of candidate dissatisfaction with debate questions and debate format. 

The problem is that the current format gives moderators and the news organizations that they represent way too much power.  They engineer the questions to be asked.  They control which candidates have an opportunity to answer what question, and for how long, and at what time.  They even pick members of the public to ask biased questions.  As a result, debates have gotten quite unfair.  For example:

  • Donald Trump.  The leading candidate in the Republican race pulled out of Thursday's debate after Fox News included Megyn Kelly as a questioner over Trump's objections, which stemmed from the question that she asked at the outset of the first debate.  In addition, some argue THAT Fox News and Google stacked the deck against Trump in advance of this week's debate with questions to be asked by an illegal immigrant U.S. Army veteran and by a Muslim-American – both young women.
  • Jim Webb.  The lone moderate in the Democratic Party's race dropped out of the Democratic campaign almost immediately after a frustrating first Democratic debate in which he felt he was ignored and poorly treated. 
  • Bernie Sanders.  According to Dick Morris, the format of CNN's final Democratic primary debate kept Bernie Sanders from challenging Hillary Clinton's lies.  And one of the "town hall" questioners revealed that he had been told to ask the softball question for Hillary that he asked.
  • Mitt Romney.  CNN moderator Candy Crowley and President Obama enacted what appeared to be a prepared script to get Obama off the hook for misleading the American people about the terrorist nature of the Benghazi attack, which left several dead Americans.
As these examples demonstrate, moderators and the organizations that they represent use their power over the process to tip the scales in favor of one candidate or the other.  Anti-establishment candidates appear to get targeted during the primary election debates, while Republicans get targeted in the general election debates. 

To read the rest, follow the following link:

http://www.americanthinker.com/blog/2016/01/how_to_remove_moderator_bias_from_the_presidential_debates.html

 

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Climate change commitments to be added to NAFTA not TPP
Howard Richman, 1/25/2016

An article from IBTimes quotes the top U.S. trade official saying that the Paris climate commitments would not be added to TPP, because doing so could kill TPP:

U.S. Trade Representative Michael Froman said Friday an embattled 12-nation trade deal was not an appropriate vehicle for fighting climate change.

But it then quotes the top Canadian trade official saying that, instead, strong North American commitments on climate would be added to NAFTA:...

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US-China Trade: National Review is the "buffoon" not Trump -- Ray and I are published in the American Thinker this morning
Howard Richman, 1/25/2016

We begin:

In one of National Review’s hit pieces against Republican presidential frontrunner Donald Trump (What Trump Doesn’t Understand – It’s a lot about our Trade with China), correspondent Kevin D. Williamson called Trump a “dangerous buffoon” because he would threaten tariffs upon China’s products, and thus risk a trade war with China. But it’s not Trump that is the buffoon on trade; it is the National Review!

Trump plans to take on the huge U.S. trade deficit with the world, and especially with China. He threatens to place upon Chinese products a tariff that is like the 45% tariff that China recently placed upon some U.S. cars. Such a threat could lead to negotiations between the U.S. and China about balancing trade, and Trump wrote the book on negotiations.

When an article tears into a candidate for having his facts wrong, the magazine that prints it probably should check to make sure that the candidate is actually wrong. But National Review failed to fact-check this piece. Its correspondent Kevin D. Williamson wrote:

China did put a punitive retaliatory tariff on some cars made by GM and Chrysler…. That was a 12.9 percent tariff, incidentally, nothing like the 45 percent that Trump imagines, and it is being withdrawn. Chinese buyers in fact love American cars — a Buick is a much bigger status symbol in China than in New Jersey.

But Chinese tariffs on big-engine American-made cars were in addition to China’s already existing 25% tariff on all U.S.-made vehicles. The Guardian, a British newspaper, got it right when the new tariff was announced. It reported on December 14, 2011:

General Motors faces the greatest impact, almost 22% extra on some sports utility vehicles (SUVs) and other cars with engine capacities above 2.5 litres. Chrysler faces a 15% penalty, while a 2% levy will be imposed on BMW, whose US plants make many of the cars it exports to China.

Existing taxes and duties already push up the cost of US imports by 25%, and the new levies make it even more expensive for Chinese consumers to buy American.

Let’s add up the numbers. China’s base tariff on American vehicles is 25%. In 2011 it announced that it would add an extra 22% on some cars. If you add 22% to 25%, the total is 47%, which is much closer to the 45% that Trump stated than to the 12.9% claimed by the National Review.

The U.S.-China Trade Relationship

The unwritten rule of U.S.-China trade is simple. The U.S. buys Chinese products, but China won’t buy American products unless they can’t be produced in China. As a result, the U.S. trade deficit (goods and services) with China has been growing, ever since President Bill Clinton gave China “most favored-nation” status and WTO membership in 2001, in return for reductions in China’s tariff rates.

During the year from October 2014 to September 2015, as shown by the right-most line in the graph below, the U.S. trade deficit with China was a record $338 billion:

To read the rest, go to:

http://www.americanthinker.com/blog/2016/01/uschina_trade_national_review_is_the_buffoon_not_trump.html

 

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Comments: 1





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    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]