Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Government Interference in the Economy Has Been an Unmitigated Disaster
Raymond Richman, 2/11/2015
Few Americans know the economic harm that government mismanagement of the economy has caused. And government intervention in the economy continues to cause untold economic harm. The mere growth of government slows down the rate of economic growth. But the trend is exacerbated by numerous government interventions in the economy such as bad taxes, subsidies to favored businesses, fixing prices, levying tariffs that favor those businesses, fixing prices as in the case of the minimum wage law, building low rental but high cost housing for the poor, and encouraging loans to unqualified home buyers, ineffective projects to delay global warming, tuition loans to students whose studies do not prepare them for high-paying jobs. The list goes on and on. Here are some of the major government prograns that adversely affect the economy:.
- First and foremost, the Corporate Income Tax which was originally enacted to appease anti-big-business sentiment is the worst big revenue producing tax. Its proponents unknowingly created a tax that violates all the criteria of a good tax; it is regressive, placing a higher tax burden on middle income workers than on the really rich and it encourages corporation to engage in bad economic practices, and it places American manufacturers at a competitive disadvantage in international trade. The corporation as an artificial entity bears none of the burden of the tax. The burden falls on shareholders not all of whom are rich. Many workers and moderate income families have their pension funds and IRAs invested in corporate shares and their dividends are taxed at 35% when their maximum rate of personal income tax is 15, 20, or 25%. In addition, the corporate income tax encourages such bad economic practices as debt instead of equity financing and buybacks by corporations of their own shares. An egregious example of the incentives of the corporate income tax is the decision of Apple Corporation, which has billions of cash reserves abroad, to borrow a huge sum from Swiss banks to finance the buyback of its stock. Interest it pays on the loan will be tax deductible as a business expense! There is an easy solution. Integrate the corporate and personal income taxes by treating the earnings of corporations as we do partnerships. After all, a corporation is just like a partnership except it issues shares of stock instead of partnership shares.
- US commitment to free trade instead of balanced trade damaged the US economy perhaps permanently. The US continues to support free trade notwithstanding the fact that some of our trading partners impose policies that have stolen millions of American jobs and whole industries. Another cause of the size of the trade deficit is that American exporting corporations are saddled with the highest rate of corporate taxation of every large manufacturing country in the world making it harder to compete with their competitors abroad. It is the cause of the out-sourcing of manufactures, the movement of factories to foreign countries, and corporate inversions, moving corporate headquarters abroad. My colleagues and I have proposed a scaled tariff, a single country variable tariff, to bring trade into balance with any country which for whatever the reason legal or illegal, we have a chronic trade deficit. In this instance where government action is essential to protect the jobs of American workers, our government has chosen not to intervene. Another benefit, the scaled tariff makes the World Trade Organization unnecessary, a saving to the entire world. Every country has the power to enact the scaled tariff.
- The minimum wage. The US imposition of a minimum wage has create an “army of unemployed” and damaged the social fabric of low income families, particularly blacks, with all sorts of bad consequences. The minimum wage law has denied employment to millions of unskilled workers. Government tampering with price controls, and the minimum is a price control, has always had dreadful consequences. When government sets a maximum price on any important good, black markets are an inevitable consequence. When it sets a minimum price, much of the product remains unsold. The minimum wage makes it difficult for the unskilled, regardless of race, to find initial jobs so essential to acquire skills paying higher wages. Some state minimum wage laws exempt the employment of teenagers, which is a step in the right direction. In 2012, the unemployment of black male teenagers reached a scandalous 42%.Yet the minimum wage is very popular. Why? Because all but a small fraction of workers are paid more than the minimum wage and perhaps they believe erroneously that high wages are due to the minimum wage when they are due to the fact that they have the necessary skills to produce more value than the minimum wage for their employers. In addition to its negative economic consequences, the minimum wage has caused a multitude of negative social effects. It has led to a proliferation of single parent families which returned many blacks to conditions they had not experienced since slavery: complete dependence on handouts, high crime rates, poor educational achievement, and so on. Prior to passage of the minimum wage, the black unemployment rate was less than that of whites. The ideal solution is to end the minimum wage. Less ideal would be to exempt teen-agers and all those who have never held a job for as long as, say, three month, from the minimum wage..
- The Community Investment Act—still in force—was the principal cause of the housing bubble that led to the Great Recession, whose effects we are still experiencing. It induced banks to make loans to unqualified buyers. The Fed was put in charge and did nothing to prevent such loans but indeed facilitated them.
- Public low rental housing. While public housing rentals are low, the average cost of building such units is astronomical. We’ve witnessed dozens of apartment buildings built to house the poor end up having to be razed after a short span of a few decades. By contrast, privately built apartment buildings hardly ever have to be razed. No one has ever been held accountable for this fiasco of the razing of thousands of high-rise public housing apartment buildings in Chicago, St. Louis, Pittsburgh and other cities. To the contrary, the annual budget of the federal Department of Housing and Urban Development has increased year after year for decades. Americans are willing to provide low-rental housing for the poor but are unaware that while rentals are low, the cost per unit is astronomical. An unintended consequence has been the ghettoization of blacks and keeping them in the cities where there are few job opportunities.
- Americans are unaware that the federal government (and some state governments) sacrificed billions of taxpayers’ money in subsidies, loans, and tax credits. At the same time, it conducted a war on fossil fuels in the name of preventing global warming. Scientists are in disagreement as to how much of the global warming is caused by the burning of fossil fuels but they are unanimous in acknowledging that the hundreds of billions spent to date have had no effect whatsoever on climate change. The dynamic oil and natural gas industry has been the major contributor to employment growth during the past six years and is reducing our chronic trade deficits which have cost Americans millions of jobs.
- Tuition loans have enabled colleges and universities to raise tuition and create huge educational bureaucracies and enabled textbook publishers to raise prices to unjustified levels. Moreover it has had unintended social consequences including fewer marriages and a declining birth rate among educated women.
- For more than two decades, federal and state governments spent hundreds of billions of dollars subsidizing alternative energy sources by grants, tax credits, policies like “junkers”, subsidies to the purchase of hybrid and electric autos, etc., subsidies to producers of wind and solar energy, etc. There is no evidence whatsoever that these expenditures have reduced global warming at all. Onerous environmental regulations have inflicted great costs on utilities, on coal producers, on the auto industry raising costs to consumers on almost everything they buy. The solution is to let nature take its course and rely on market forces to find alternative energy sources as sources of fossil fuels get exhausted. We may even find eventually that the period of global warming may be short-lived. Many scientists have raised doubts that the burning of fossil fuels is a major determinant of climate change. In any case, we know from geological evidence that the earth was much warmer at various periods in its history.
Our New Book - Balanced Trade
Buy Trading Away Our Future
Read Trading Away Our Future
ITA Working Papers
ITA on Facebook
Capital Gains Taxation
Corporate Income Tax
Economy - Long Term
Economy - Short Term
- Trump's Tariffs are keeping the US out of a Recession - We're published in this morning's American Thinker blog
- Trump's Tariffs helping keep US out of a Recession
- The Proposed Border Tax Would Derail President's Proposals to Reduce Trade Deficits
- Prof. Martin Feldstein Makes a Poor Case For the Border Fax
- Free Trade Has Been a Disastrous Policy for the USA
- The Border Tax and the Value-Added Tax Are Bad Proposals
- Answer to Prof. D. J. Boudreaux’s Questions for Trump’s Supporters
- Time to End the “Free Trade” Ideology and Substitute “Balanced Trade” Economics Instead
- Bubbles are popping - a recession is coming!
- How Trump could get the Economy Going -- we were published in the American Thinker this morning
- An Economist's Plan to Increase Economic Growth And Create Jobs
- The Economics of the Greek Crisis and Its Economic Solution
- Is it 1929 again? - reposted from August 29, 2003
- The Negative Consequences of a Free Trade Policy in an Unfree Trade World
- Government Interference in the Economy Has Been an Unmitigated Disaster
- Chinese Firms Particularly Vulnerable?
- China's imports up just 0.6% in 2014
- China pulls December trade statistics
- November trade report suggests that a worldwide recession is starting
- US Economic Growth 2.7% over last year. China about same.
- Why are oil prices falling?
- Conservatives Want to Eliminate the Ex-Im Bank Which Creates Jobs While Costing the Taxpayer Nothing
- Inversions Are Not a Problem; the Real Problem Is Outsourcing
- The Unemployment Claims Filed Last Week Were Even Worse than the Week Before Reported Below
- How is the Economy Doing? The Weekly Unemployment Insurance Claims Say "Not So Good"
- Is the U.S. stock market going up because of Central Bank Purchases?
- Obamacare Slowdown: Economy Shrank at 1% rate in first quarter
- Fiscal and Monetary Policies Are Ineffective in an Economy Characterized by Monopolistic Competition
- Why Stock Markets Boomed While Economic Growth and Employment Stagnated
- Where Is the Economy Going? Sideways, Mostly.
- How the Corporate Income Tax Contributes to Income Inequality
- Rising Initial Unemployment Insurance Claims Bodes an Economic Downturn
- Initial Claims for Unemployment Insurance Are a Wake Up Call Again
- Turkey in free fall
- Are We About to Experience the Obama Recession?
- Jobless Claims Up -- Ray and I were published on the American Thinker blog this morning
- The Media Silence on the Explosion in Unemployment Insurance Claims
- World Economic Growth is Slowing -- we were published in today's American Thinker
- World Economic Growth is Slowing
- Obamacare is a Classic Case of Bad Economics From Conception to Implementation
- The US Did Not Create 205,000 New Jobs in October, 2013 -- Jobs Fell by 499,000
- Weekly Unemployment Insurance Claims Week Ending October 26
- How the Republicans Could Have "Won" the Partial Government Shutdown
- Is it 1929 again?
- US long term interest rate up due to sales of dollars by foreign investors
- Rise in Initial Unemployment Claims Shows Lack of Economic Recovery
- Rise in Initial Unemployment Claims Portends Another Recession
- Why U.S. long-term interest rates have been rising since May 1
- Manufacturing Employment Down for Third Month in a Row
- Household Consumption Falls and the Market Plunges
- Shale gas, not government, fueling our recovery - Ray was published in the Tribune Review on Friday
- Book Review of David A. Stockman, The Great Deformation: The Corruption of Capitalism in America (Public Affairs, New York, 2013)
- Shale Natural Gas Stimulates Economy As Federal Government Weakens the Recovery
- Morici predicts manufacturing and house price slumps
- ALERT: Good or Bad Economic News, Report of Initial Unemployment Claims
- At Last, There Are Signs of a Beginning to Recovery From the Recession
- The Unemployment Rate Is Closer to 15% Than 7.7%
- Trade Deficits Increase U.S. Debt Vulnerability
- The economy is really growing at about a 1.5% rate
- Ray was right -- the Obama Recession Begins!
- New Unemployment Claims still far above 2007 levels
- Half way through - Obama's first 5-year plan is a failure
- Obama Recession Begins? Unemployment Claims Escalate
- It Is "Across-the-Board" and a Tax Increase; It Is NOT "Over-the-Cliff"
- Obama Wants to Continue the Discredited Keynesian Policies of the Past
- Profiles of Courage on the Fiscal Cliff
- Rise in Initial Unemployment Claims Shows Lack of Economic Recovery
- The Real Fiscal Cliff
- Approaching the Fiscal Cliff Intelligently
- Nonsense Proposals by Pres. Obama and the Republican Leaders Are Over-the-Cliff
- $260 billion in budget cuts is not enough
- The Going Over-the-Cliff nonsense. What we need to do.
- CBO is Wrong about the fiscal cliff. House Republicans should Stand Strong.
- Employment Data Show No Economic Growth
- Environmental Fanatics and Governments That Do Their Bidding Are Preventing Economic Recovery
- Ray was right! The latest jobless claims were phony. A Labor Department economist blows the whistle on the phony report.
- U.S. Department of Labor Reports Implausible Employment Data
- The Shrinking Labor Force – More Important Than 7.8% Unemployment
- Free Trade With China? No, Fair Trade. No Artificial Barriers to Trade
- Investors Should Keep an Eye on Initial Unemployment Insurance Claims Data
- Getting the Fiscal Cliff Backwards
- Manufacturing Declines Continue
- The End of the Housing Bubble
- How the Federal Reserve Under Greenspan and Bernanke Caused the Housing Bubble and the Recession
- Again! Failure of the Media to Report Actual Claims for Unemployment Insurance
- Obama's Economic Stimulus Plans Are Actually Retarding Recovery
- Europe Is Committing Economic Suicide and So Is the United States
- Distinguished Economist Attacks Free Trade as Bankrupting the U.S.
- Eurozone experiment proves that imbalanced trade leads to disaster
- Wasting a Trillion Dollars to "Prevent" Global Warming Is Stifling Economic Recovery
- Pres. Obama Appoints Non-Economists to Key Economic Positions
- Bernanke needs to get with the program
- Rules vs. Authorities -- Listen to Ray's Feb. 18 radio interview
- David Stockman: The statistics coming out of the BLS and BEA are "The Economists' Truman Show"
- Jobs gain in January partly due to warm winter in U.S.
- Initial Unemployment Compensation Claims Exceeded 400,000 Week Ending January 28, 2012
- Morici: 8.5% unemployment may be as good as it gets
- CNBC TV, Bloomberg TV, Fox Business Channel, the Wall Street Journal and the New York Times Mislead Investors on Initial Claims for Unemployment Compensation
- Investors Are Entitled to Better Reporting of Unemployment Insurance Claims
- Payroll tax cut -- a new entitlement?
- United Kingdom's Prince Phillip Calls Wind Farms "Useless and a Disgrace"
- Bad Reporting of Initial Unemployment Insurance Claims Data Continues
- Economics of Greek, Italian, and U.S. Sovereign Debt Defaults
- Bernanke trying to hide the rise
- Bernanke: China's currency policy is causing the slow growth in the advanced industrial countries
- Pres. Obama's Job Act Ignores the Jobs Lost as a Result of the Trade Deficits, Environmental Foolishness, and His Opposition to Oil and Gas Drilling
- Lazy Analysts at CNBC, Bloomberg, and the Wall St. Journal
- The Jobs Act Is the Recovery ACT of 2009 Redux and If Possible Even Worse
- Mr. President, Here Are Some Ways to Create Millions of Jobs That Require No Increase in Government Expenditures
- Unemployment claims Have Fallen But the Economy is Stagnating. What we need to do.
- Unemployment Claims Fell and Did Not Rise As Reported. Did the Misinformation Help Cause the Fall in the Stock Markets?
- Prof. Feldstein Has No Recovery Policy
- Double the Dip?
- How Misleading Unemployment Claims Data Can Cause the Double Dip Recession
- The Depression Continues
- Can We Trust BEA's Quarterly Reports on the GDP?
- Prof. Boudreaux's Simplistic Ideology of Free Trade
- Make the Current Debt Limit Permanent
- Is the U.S. Bureau of Labor Statisics "Lying" About Unemployment Claims?
- Are the Media Massaging the Unemployment Data?
- Why President Obama's Economic Stimulus Plan Was a Failure
- Inflation climbs to 3.6% in May. Palin was Right -- We're published in today's American Thinker
- The Unanticipated Costs of the Wars In Iraq, Afghanistan, and Libya
- Inflation climbs to 3.57% in May
- Where is Housing Going? That Depends on Where You are Looking
- In Praise of Inflation
- Inflation reaches 3.16% in April
- 9% Unemployment is Strike 3 for QE2
- Congress Fools Around and Does Nothing to Create Jobs. Here Is What It Should Do.
- GDP growth was just 1.8% in first quarter. New Depression not Over.
- Rand Paul: We need to cut spending. The American dream is at stake.
- Exports down. Imports down. Growth estimates down.
- Consumer confidence is tumbling - economic growth will likely slow during 2nd Quarter
- Why Obama's $8billion Recovery Act Did Not Stimulate the Economy
- German and Chinese Surpluses and Growth; PIIGS and the U.S. Deficits and No Growth
- Money Supply during the Great Depression
- Pat Buchanan Gets the Trade Deficits Right But the Solution Wrong
- Will 2011 be another 1938 or another 1941?
- How to Create Productive Jobs and Avoid Global Warming Bankruptcy
- A Quick Economic Recovery With Jobs, Jobs, Jobs
- American output increased at a 3.2% rate in the fourth quarter, but real American income only increased at a 1.3% rate!
- U.S. Manufacturing Employment Rose in January
- How is QE2 doing so far?
- Sperling, a Poor Choice for Director of National Economic Council
- Government Wimps Masquerading as Economists
- A Scaled Tariff would Help Balance the 2011 Budget - we're published in today's American Thinker
- With No Program for Economic Recovery, the Republlicans Will Lose in 2012
- Not "Free Trade". Let's Have Balanced Trade
- The Employment Report Portrays a Dismal Outlook For the Economy
- Growing Trade Deficit continues U.S. Depression
- Sound Monetary Policy Is Necessary But More Is Needed
- Achieving Reasonably Balanced Trade Is an Act of Self Preservation
- Why Pres. Obama's Economic Stimulus Has Failed
- Only the USA's Leaders Are Foolish Enough to Embrace Unilateral Free Trade
- Being Deaf, Dumb, and Blind on Our Huge Trade Deficits!
- We Are Out of the Recession But Mired In a Depression
- Prof. Gomory Urges a National Policy of Balanced Trade Not Free Trade
- A Conservative Proposal for Economic Recovery That Won't Work
- Boeckh Nails It, but Opposes the Solution
- Reducing the Trade Deficits Is Essential for Economic Recovery
- The Housing Bust Redux
- Economists Don't Know How to Recover From the Recession
- U.S. Growth Slows Due to Trade Deficit -- we were published in the American Thinker this morning
- Krugman: G-20 summit will continue the depression
- Bush and Obama's Economic Stimulus Attempts
- Geithner and Summers Make Their Economic Mistakes Transparent
- Congress Is Responsible for This Recession; Not the Banks, Not Wall Street
- How the False Doctrine of "Free Trade" is Crippling the U.S. Economy.
- After the Euro, Fluctuating Currencies
- Bernanke optimistic that stagnation will continue
- G-20 Foreign Ministers give up on stimulus spending
- Employment report shows that the recovery is losing its thrust
- Dramatic Changes Needed to Recover From This Depression, Not Earmarks
- Evans-Pritchard: Summers call for yet another stimulus package is a tacit admission that the economy is losing thrust
- Congress Is Responsible For This Recession; Not the Banks, Not Wall Street
- Michael Pettis predicts Europe will be moving toward a trade surplus
- Wishful Thinking on House Prices and the Economy
- "Le Tarpe" will not work any better than did TARP
- Construction Employment has first uptick since June 2007
- US Manufacturing Employment is Rising
- Obama administration is impoverishing the U.S. middle class
- The Greek and the American Financial Crisis -- Similarities and Differences.
- Rogoff predicts high interest rates will force budget balancing
- Morici expects good jobs report on Friday
- Prof. Ralph Gomory on Thomas Friedman's Innovation Delusion
- How not to export your way out of a recession
- The Costly Obama Stimulus Is Not Working
- Bernanke starting to raise interest rates
- Is the U.S. Economy Growing?
- 4th Quarter GDP Shows Economy Heading Upward
- Jobs, Jobs, Jobs - We were published in American Thinker this morning
- Ambrose Pritchard: America Slides Deeper into Depression
- Manufacturing employment continued to decline in December
Last 100 Years
Real Estate Taxation
American Economic Alert
American Jobs Alliance
Angry Bear Blog
Economy in Crisis
Emmanuel Goldstein's Blog
Levy Economics Institute
Michael Pettis Blog
Natural Born Conservative
Science & Public Policy Inst.
Watt's Up With That
[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]