Economist explains why Europeans are getting poorer… and happier
Economist explains why Europeans are getting poorer… and happier
https://www.youtube.com/watch?v=5YAaeOonFRI
Tag: economy
China’s “Balance Sheet Recession” Has Already Started | Richard Koo
The U.S. trade deficit is a problem, and the best way to solve it is by a weaker dollar. Free trade is good, broad tariffs are bad, and the trade deficit is best dealt with by a weaker dollar.
https://www.youtube.com/watch?v=KRSpfG6hRTQ
Trump’s Deportation Plan Would Cost Nearly $1 Trillion
“Former President Donald Trump’s promise to carry out “the largest domestic deportation operation in American history” would not only be a moral calamity requiring an enormous expansion of government—it would also be hugely expensive and ruinous to the American economy.
The governmental infrastructure required to arrest, process, and remove 13 million undocumented immigrants would cost nearly $1 trillion over 10 years and would deal a “devastating” hit to economic growth, according to a report published last week by the American Immigration Council (AIC). The think tank estimates that a mass deportation plan would shrink America’s gross domestic product by at least 4.2 percent, due to the loss of workers in industries already struggling to find enough labor.”
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“The costs of mass deportation would rebound into the economy in several ways. The economy would shrink and federal tax revenues would decline. The construction industry, where an estimated 14 percent of workers are undocumented migrants, would be particularly hard hit, but the effects would be felt throughout the economy.”
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“Immigration restrictionists often assume that deporting millions of undocumented workers would allow more Americans to fill those jobs, but the economy is not a zero-sum game. A shrinking economy would be bad news for many workers who aren’t directly impacted by Trump’s deportation plan.”
https://reason.com/2024/10/07/trumps-deportation-plan-would-cost-nearly-1-trillion/
I Did Business With China, and America Won
“The Chinese factory charged me $10 for a cart that cost them $9 to manufacture. U.S. retailers bought it from me for $15, then sold it to consumers for $30.
To recap: The factory made $1, I made $5, and retailers made $15, minus freight and U.S. tariffs.
The freight costs went to shipping lines, U.S. railroads, truckers, warehouses, and America’s highest-paid union workers—longshoremen at the Port of Los Angeles. As for those tariffs: Do the Chinese actually pay them, as former President Donald Trump claims? That would be illegal, as U.S. Customs charges tariffs only to the “importer of record,” which must be a U.S. entity. The monies collected go directly to Uncle Sam and retailers add them to their cost of goods, as with any other expense.
So each Magna Cart created $21 in profits, of which 95 percent went into American pockets. Selling 5 million carts meant a $100 million gain to the U.S. economy. Yet the official trade statistics framed that as a $75 million addition to the trade deficit.”
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“Wouldn’t American profits be even higher if these things were made in the U.S.A? That’s a big no, because many products simply wouldn’t exist. My original plan had been to manufacture in the United States. Then I saw the factory quotes, and I realized my babies would have to retail for more than $100. Thanks to China, tens of millions of Americans can now carry their chairs and gear to the beach with ease, and move heavy loads without tweaking their backs for under $40. (It used to be $30. Sigh.)
So why can’t we move all that manufacturing to other low-wage countries? Because only China has the massive workforce (800 million strong), the infrastructure, and the natural resources to supply 380 million Americans (plus 7.6 billion others globally) with every gizmo and gadget imaginable.
The nearly $500 billion that America imports annually from China enriches our economy by trillions. The math is so simple, you’d think even politicians could understand it.”
https://reason.com/2024/10/08/i-did-business-with-china-and-america-won/
Trump’s Destructive Tariff Proposals Will Make Us All Poorer
“”Former President Donald Trump’s proposals to impose a universal tariff of 20 percent and an additional tariff on Chinese imports of at least 60 percent would spike the average tariff rate on all imports to highs not seen since the Great Depression,” warns Erica York of the Tax Foundation.
Trump has actually been a little vague on the size of his universal tariff, first floating it at 10 percent while allowing “it may be more than that,” and then upping the ante to 20 percent. Either way, it’s a cost that ends up being largely paid by Americans in terms of higher retail prices and more expensive imported parts and materials for domestic manufacturing.
The Trump administration’s 2018 “tariffs resulted in higher prices for a wide variety of goods that U.S. consumers and businesses purchase,” the Tax Foundation’s Alex Durante and Alex Muresianu concluded.
Even when tariffs don’t directly affect the cost of imported goods purchased by consumers, they still drive up the prices of many things made in the U.S. The Cato Institute’s Pierre Lemieux points out that “a tariff on an input (say, steel) is paid by the American importer who will typically pass it down the supply chain to his customers and eventually to the consumers of the final good (say, a car).” Instead of boosting domestic production, that can do harm, instead.
“For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs,” Federal Reserve Board economists found when they researched the 2018 tariffs.”
https://reason.com/2024/10/09/trumps-destructive-tariff-proposals-will-make-us-all-poorer/
Trump’s Proposed Tariffs Would Add Nearly $250 to the Price of New Gaming Consoles
“The Republican presidential nominee’s threat to impose new tariffs on nearly all imports into the United States would make video game consoles 40 percent more expensive, according to an analysis published this month by the Consumer Technology Association (CTA), an industry group best known for its annual Las Vegas conference showcasing the latest tech for home and personal use.
The report assumes that Trump can carry out his threat to hit all imports from China with a 60 percent tariff, along with a baseline tariff of 10 percent or 20 percent on all other imports. (Trump has been unclear about which level he’d prefer, and recently suggested a “thousand percent tariff.”)
If that happens, the retail price of video game consoles will increase by nearly $250, according to the CTA. Retail price would also grow for laptops (up $357), tablets (up $201), smartphones (up $213), and televisions (up $48).”
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“The theory behind Trump’s push for more tariffs is that making imports more expensive will spur more domestic manufacturing. Instead of importing Xboxes and PlayStations from China, those products would be made in the United States, his supporters claim.
But hold on. If Trump’s tariffs are sufficient to drive consumer technology manufacturing out of China, those jobs won’t all shift to the United States—they’ll go to other countries instead. If that happens, consumers in the U.S. will still bear the cost of the universal tariffs on their game consoles and smartphones.
CTA does project a 31 percent increase in domestic production of video game consoles—but that would not be enough to offset the other consequences. Ultimately, the group comcludes, the economy would shrink by an estimated $4.9 billion, due to the combination of higher costs and lower consumer spending power.
The vastly increased availability and affordability of tech like TVs and video game systems shows what free trade can achieve. Americans should be cautious about taking it for granted.”
https://reason.com/2024/10/14/trumps-proposed-tariffs-would-add-nearly-250-to-the-price-of-a-new-video-game-console/
Donald Trump and Kamala Harris Keep Making Economically Illiterate Promises
“Trump fans applauded when he said he’ll eliminate taxes on tips. Then Harris proposed that, too. Her audience applauded. Trump then proposed not taxing overtime. More applause.
But narrow tax exemptions are bad policy.
In my new video, economist Allison Schrager explains how they create nasty, unintended consequences.
“No one likes tipping,” says Schrager, “but all of a sudden, you’ll have to pay tips for everything.…More people will be paid in tips.””
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“Trump’s proposal to eliminate tax on overtime would reduce hiring.
“Employers may hire fewer people so they can give more overtime to employees they have already,” says Schrager.”
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“rent control is destructive. “Sounds really good,” says Schrager. “But all it means is that people are less inclined to rent to you.”
“Why would you enter a market where it seems like the government is actively trying to hurt you?” Adds Mercatus Center economist Salim Furth. “You’re providing an essential service, something human beings need to live, and the government views you as a hostile outsider. I wouldn’t want to bring any service into a market like that.”
Argentina’s new libertarian president just scrapped rent controls. The supply of rental apartments doubled, and prices declined by 40 percent! That’s good policy.
But Harris proposes the opposite!”
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“Trump’s (and Joe Biden’s) tariffs don’t just punish China, they reduce choice and raise prices in America.
“Free trade is good!” says Schrager. “It brings lower prices, making our own industries more dynamic, raising our income.”
“But trade does take away some Americans’ jobs,” I point out.
“But it creates a lot of other new jobs,” she replies.
It sure does. More and better jobs than those lost through trade.”
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“She proposes giving “first-time homebuyers” $25,000. Again, her fans applaud.
Schrager explains, “free” money from government doesn’t increase the supply of homes. When every buyer has $25,000 more, “they just bid up prices even higher!””
https://reason.com/2024/10/16/donald-trump-and-kamala-harris-keep-making-economically-illiterate-promises/
Leave U.S. Steel Alone
“the four most prominent politicians in the country (sorry, Tim Walz) agree: U.S. Steel, a private company, should not be allowed to conduct a transaction with another private company unless the federal government agrees.
This is absurd—particularly because the deal is obviously in the best interest of U.S. Steel.
“We’ll admit that the competition for the dumbest economic policy is fierce these days—with prices controls on food, a 10% across-the-board tariff, and national rent control on the table,” opined The Wall Street Journal’s editorial board this week. “But opposition to the Nippon deal deserves careful consideration for this distinct dishonor given the deal’s manifest benefits and nonexistent harm.”
Indeed, Nippon’s plan to buy U.S. Steel gives the legacy steelmaker something that Trump’s tariffs and Biden’s blather about blue-collar jobs never could: A chance to actually become more competitive in the global marketplace. Among other things, Nippon has promised to invest $2.7 billion in revamping U.S. Steel’s plants.”
https://reason.com/2024/09/04/leave-u-s-steel-alone/
The Government’s Permitting Regime Is Choking the Economy
“Permitting reform isn’t just bureaucratic minutiae; it’s a critical, deeply moral issue for anyone who believes in free markets, individual liberty, and economic progress. Our permitting regime is a web of red tape that stifles innovation, slows growth, and leaves Americans poorer, less free, and increasingly frustrated with a government more interested in regulating than enabling prosperity.
This isn’t some esoteric topic for policy wonks; it’s about the real, tangible effects of overregulation on Americans’ daily lives. Housing costs, job availability, energy prices, and technological advancement all hinge on how our government handles permits. And right now, it’s failing miserably.
Take housing. Some areas like California and New York City face a crisis largely due to onerous permitting processes. Builders must navigate a Kafkaesque labyrinth of regulations just to break ground, assuming they are even allowed to build. These delays add years to construction and inflate costs by tens of thousands per unit.
This isn’t mere inconvenience; it’s a genuine disaster for middle- and low-income families priced out of the market. The American dream of homeownership is being strangled by red tape. Worse yet, Americans are priced out of lucrative labor markets because rents are so artificially inflated in job-rich cities.
But that’s just the beginning. Permitting processes are choking the energy sector. Important infrastructure—pipelines, wind farms, grid modernization—is being held up for years by endless environmental reviews, public comments, and lawsuits. Now, two judges have signaled to developers that permits which took years to obtain could be canceled on a whim if subjected to pressure from the climate activists.
This isn’t just bad policy; it’s economic sabotage resulting in higher prices, less reliable supply, and missed opportunities for cleaner, more efficient energy.
What about other infrastructure? Roads, bridges, and transit systems fail to get fixed when approval for repairs takes years or sometimes decades. An outdated, bloated process prioritizes procedure over results, making some projects obsolete before they begin. Meanwhile, the government wastes massive amounts of money on infrastructure subsidies when all we need is to allow people to build.
The free market thrives on innovation and speed, allowing swift responses to societal needs. The current system is its antithesis—slow, cumbersome, and designed to prevent change rather than facilitate it.
It’s not just harming businesses; it’s harming everyone. Imagine what we could achieve with reform: affordable housing, more jobs, lower energy prices, modernized infrastructure. We could unleash a new wave of American innovation and growth. Yet these reforms are repeatedly blocked by bureaucrats protecting their turf, politicians appeasing special interests, or activists who believe halting progress is virtuous.”
https://reason.com/2024/09/05/the-governments-permitting-regime-is-choking-the-economy/
Are Teachers Really Underpaid?
“For the 2023–24 school year, the average public school teacher salary was just under $70,000—well over the average for bachelor’s degree graduates ages 25 to 34 (though many teachers have master’s degrees).
West Virginia paid teachers the least, at around $52,000 per year, while California paid them the most, with an average salary of over $95,000. According to the National Education Association, teacher salaries top out at over $100,000 in 16.6 percent of districts. However, salaries have generally stagnated. From 2002 to 2020, inflation-adjusted teacher salaries declined by 0.6 percent while as per-pupil spending increased.
The reality is that teacher salaries vary widely between states and districts, especially when looking at pay adjusted for the cost of living, making it difficult to make generalizations. Adding to the murkiness, pay doesn’t seem to motivate teachers as much as many people think.
According to a December 2023 report from the National Center for Education Statistics, when public school teachers were asked why they decided to leave the profession, only 9.2 percent said it was because they needed higher pay.
A study from earlier this year also concluded that, among teachers who choose to leave their jobs, most don’t earn more in their new position.”
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“”The biggest relative growth has been in ‘instructional aids’ who assist teachers in the classroom. While teachers were 53.4 percent of all public school system employees in 1990, they were only 47.5 percent in 2022. Aides rose from 8.8 percent of employees to 13.3 percent. It’s not clear why this occurred, but it could be teachers asking for help, regulations requiring more services for kids, or lots of other possible factors.””
https://reason.com/2024/09/10/are-teachers-really-underpaid/