“many Russian banks, including some key ones involved in energy transactions, have not been barred from SWIFT. According to the Atlantic Council, “most of Russia’s regional and smaller banks, over 300, still have access to SWIFT, enabling Russia to conduct cross-border payments and transactions for imports and exports.”
“The fact that the shut out was not universal has left ample scope for Russian banks to continue to benefit from SWIFT messaging services,” said Keatinge of RUSI Europe.”
“The modern presidency has tremendous powers, of course, but this is still quite the stretch. Hawley is asking the White House to engage in central planning at an absurdly micro-level—and there is, thankfully, no law that actually allows the president to order a factory to continue producing aluminum if its owners have decided to stop.
Even so, the fact that Hawley is even making this request illustrates something important about how Republicans now view the relationship between government and business. It also says something about how the failures of protectionism will spur calls for more protectionism. And, finally, about how the phrase “national security” has become warped beyond recognition to justify further governmental intrusions into the economy.”
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“It might shock Hawley and some of his colleagues to learn that the Defense Production Act is not a set of magic words that allow presidents to do whatever they’d like. In fact, all the law does is require that businesses fulfill orders from the government before other orders from private customers.
That’s because it is a law meant to be used during wartime. Here’s how it works: Let’s say there’s a war going on and the U.S. military desperately needs 10,000 widgets to ensure victory, lasting peace, and blah blah blah. The Pentagon sends a guy to the widget factory in Albuquerque to request those 10,000 widgets, but the owner of the factory says the 10,000 widgets sitting on his lot have already been purchased by his friend Bob and that the government will have to wait until the factory can produce another 10,000 widgets—so come back in two weeks.
Ah, but wait! The president just signed an order invoking the Defense Production Act for widgets, so now the guy from the Pentagon gets to cut the line. He can buy those 10,000 widgets, and Bob has to wait for the next set to come off the assembly line.
That’s what the Defense Production Act allows. It can’t conjure up new solar panels or additional supplies of insulation out of thin air. It doesn’t allow the government to put a gun to anyone’s head and force them to make baby formula or to keep an aluminum smelter running.”
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“Remember those 10 percent tariffs on imported aluminum imposed by then-President Donald Trump in 2018? That was naked protectionism, and the announced closure of this Missouri smelter seems like pretty good evidence that it failed. There’s other evidence too: As Hawley points out in his letter, this is the third aluminum smelter in the U.S. to announce plans to downsize in recent months. Unfortunately, the failures of protectionism only ever seem to spur calls for more protectionism.”
“Both the populist right and left are protectionist when it comes to trade. While the right advocates for protectionism to support national security, preserve manufacturing, and maintain national sovereignty, the left supports tariffs and other trade restraints to protect workers’ rights, prevent exploitation in developing countries, and reduce environmental impact. Both sides, if for different reasons, favor trade barriers and are skeptical of free-trade agreements. The best evidence is that President Joe Biden has retained most of former President Donald Trump’s tariffs.
Similarly, under the misguided excuse of strengthening our economy, both sides now practice an industrial policy that dispenses massive subsidies, tax credits, and other government-granted corporate privileges. For instance, the Biden administration’s $52 billion in federal tax breaks and subsidies through the CHIPS Act to prop up the semiconductor industry, including reports of $40 billion—77 percent of the funds—benefiting giant companies like Intel, GlobalFoundries, Samsung, and Taiwan Semiconductor Manufacturing Corp., was passed in a bipartisan way.
Utterly inconsistently, both sides also express serious distrust in mega-corporations. The New Right often views large corporations as part of a “global elite” disconnected from the average citizen and influencing government policies for its own benefit. Meanwhile, the left criticizes these entities for their alleged role in increasing income inequality, opposing workers’ rights and degrading the environment.
As a result, despite throwing money at big businesses with one hand, both sides are bogging down corporations—especially the ones that successfully earn a lot of customers—with the other hand, stacking up regulations, or even threatening to break them up with antitrust cases.
Both the New Right and the left reject talks of fiscal discipline. No side wants to reform entitlement programs like Medicare and Social Security even though these programs are becoming insolvent. Both groups support expensive, often excessive, and politically popular redistribution to families, including rich ones, in the form of paid leave programs, child care subsidies, or expanded child tax credits.”
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“This shift bodes poorly for the economy, as populism has a track record of producing results opposite what their proponents promise.”
“the Swedes feature partial privatization in their pension system, tie benefits to contributions, and vote each year on supplemental benefits based on demographic and economic conditions, all while balancing their budget.
By rejecting socialism and embracing privatization as well as mechanisms to prevent overspending, the Swedes demonstrated that reforming entitlement programs in a fiscally prudent way is not a pipe dream after all.
Conversely, U.S. Social Security benefits are guaranteed regardless of economic or demographic conditions. Social Security, among other programs, is deliberately excluded from our government’s normal budgetary process. Social Security and other entitlement programs are considered “mandatory spending,” in which funding is provided without congressional debate or action.
Putting entitlement spending on autopilot means the federal debt, currently standing at $34 trillion, will only grow. Mandatory spending, which includes, but is not limited to, Social Security, accounts for about two-thirds of government spending. The annual total dollar amount of mandatory spending increases by an average of about 10 percent per year.
The level of automatic mandatory funding demonstrates the staggering extent of the federal government’s spending problem. Last year’s tax revenue, about $4.4 trillion, just barely pays for mandatory entitlement spending. Therefore, much of the remaining $1.7 trillion we spend on our military and other programs is funded with borrowed money.”
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“Sweden previously promised a socialist pension program similar to Social Security. Under that retirement system, Swedish citizens were, subject to certain requirements, entitled to a universal basic and supplemental income.
Facing alarming projections of insolvency in the 1980s, Sweden established a commission to review the pension program’s fiscal sustainability and develop options for reform.
Sweden’s efforts were not immediately successful. The pension commission presented its recommendations during an economic downturn in 1990, which the Swedish parliament rejected. But Sweden continued to seek a solution. A new working group, comprised of representatives of each of the seven political parties, found that the aging Swedish population, inflation, and rising unemployment eroded the sustainability of the Swedish pension system. The working group also found that, barring reforms, the payroll tax would need to rise from 18 percent to 30 percent to support the program. The Swedes rejected both an initial set of reforms and a confiscatory tax increase.
So how did the Scandinavian country get back on the path to a sustainable pension system?
The Swedes’ pension reforms worked because they abandoned many of the socialistic aspects of its previous system. Sweden rejected Social Security–like defined benefits in favor of a defined contribution rate. Sweden also introduced some privatization into the system, which empowers beneficiaries to determine how to invest their retirement funds and take an active role in planning for their own future.
Critically, the new system features a mechanism called the “brake,” which is designed to prevent overspending by automatically preventing benefits from growing quicker than contributions.
The new Swedish system was fully implemented in 2003, and it has withstood the test of time. Swedish benefits have consistently increased, and their pension program has featured a surplus in all but three of the last 20 years. For the last 10 years, the program experienced a consistently growing surplus. Even during the 2008 financial crisis and the COVID-19 pandemic, the Swedish pension system remained strong. Conversely, the nonpartisan Congressional Budget Office projects that the Social Security’s retirement account will be depleted in 2032.
Today, the Swedish system consistently ranks among the world’s best-performing retirement income programs. This feat was accomplished because Sweden recognized the most socialistic aspects of the program were failing and implemented reforms to avoid the same problems that plague Social Security: unsustainability and passing the costs of overspending to future generations.
America’s officials should act like adults and acknowledge that Social Security can only be strengthened by ending the problem of uncontrolled costs. In this sense, maybe America should be more like Sweden.”
“California’s attempt at forcing gig workers to become traditional employees backfired by driving many of those workers out of their jobs.
In the wake of a new law (Assembly Bill 5) that was intended to reclassify many independent contractors as regular employees, self-employment in California fell by 10.5 percent and overall employment tumbled by 4.4 percent, according to a study released Thursday by the Mercatus Center, a free market think tank housed at George Mason University. In professions where self-employment was more common, the effects were more dramatic, and in some fields employment declined by as much as 28 percent after A.B. 5’s implementation.”
“Companies rushed to break ground on new factories in hopes of winning those federal incentives, driving industry spending on construction to record heights. And politically, Democratic advisers said, the building frenzy provides signs of progress that Biden can point to in nearly every state.
“By the end of the election, every voter in battleground states is going to hear this story about what he’s done to invest in America’s economic future,” said John Anzalone, the founder of Impact Research and a longtime Biden pollster. “That is just not a message that Trump has.”
Yet central to Biden’s story of a manufacturing comeback is the prospect of thousands of new jobs spurred by his new laws — and so far, those have been slow to materialize. While Biden often touts the nearly 800,000 manufacturing jobs created during his presidency, the vast majority came prior to passage of the IRA and CHIPS, when Americans’ surging demand for goods during the pandemic drove a rapid industry recovery.
Since then, hiring has stalled as the economy evened out, with manufacturing-centric swing states like Michigan, Wisconsin and Pennsylvania actually losing factory jobs in 2023.
Those conditions have left Biden selling a manufacturing jobs boom that may not arrive in full force until well after November. Most companies that broke ground after Biden’s economic bills became law in August 2022 won’t have their new plants up and running until later this year — at the earliest. In high-profile setbacks for the White House, chipmakers TSMC and Intel have both signaled plans to delay production at their newest U.S. factories until 2025.”
“Piketty, Saez, and Zucman estimate that the top 1 percent earned 9.1 percent of national income in 1960, rising dramatically to 15.1 percent by 2019. Auten and Splinter, by contrast, show a very small increase: 8.1 percent in 1960 to 8.8 in 2019. The share is now actually lower, they find, than it was in the mid-1960s.
Auten and Splinter reach similar conclusions about the top 10 and top 0.1 percent: per their estimates, the former grew from 29.2 to 29.7 percent from 1960 to 2019, the latter from 2.5 to 3 percent.
How can two research teams, both looking directly at US tax data, reach such different conclusions? It’s not that one group are craven “inequality deniers,” to borrow an ugly term that Piketty has slurred Auten and Splinter with, or that the other group is “thoroughly discredited,” as billionaire libertarian economist Cliff Asness has described Piketty, Saez, and Zucman. The disagreement is, at root, about how to deal with the limitations of tax data, by far the best source of information on who earns what in America.
Neither side has a monopoly on truth. On some issues, Auten and Splinter made judgment calls that seem more reasonable to me; on others, Piketty, Saez, and Zucman do; on still more, it’s wildly unclear which assumptions are most appropriate to make.”
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“No one factor explains more than 1.6 points of this disagreement, and even those are offset by a couple of areas (like dealing with owner-occupied housing and Social Security) where Auten and Splinter make decisions that show a larger increase in the top 1 percent’s share than PSZ.”
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“Both teams show that income inequality has increased in the US in the past half-century. While Auten and Splinter show at most modest increases in the top 1 percent’s share of income after taxes, they do find substantial increases before taxes. Moreover, that’s only one way to measure inequality. The most comprehensive measure is something called the Gini coefficient, which attempts to summarize the whole scale of inequality across the income spectrum, not just at the very top. An increase in the coefficient means that inequality has risen.
Before taxes and government safety net programs, Auten and Splinter estimate that the Gini coefficient for the US grew 25 percent since 1962 and 23 percent since 1979. After taxes and transfer programs, the increases are 10 percent since 1962 and 16 percent since 1979. More progressive tax and spending policy reversed some of the increase, but the increase is real and significant.
To give a sense of the scale here, the after-tax/transfer figure grew from 0.355 in 1979 to 0.417 in 2019, a 0.062 increase. If that number means nothing to you (it means nothing to me!) then consider that this increase is akin to the gap between the US and countries like Australia, Spain, and Switzerland today. That is, if this increase in inequality hadn’t happened, the US would be close to many other rich countries as opposed to the rather unequal outlier it is today.
You can also see signs of a general increase in inequality across some other measures. Take wealth, for instance. A recent rigorous attempt by economists Matt Smith, Owen Zidar, and Eric Zwick to track wealth inequality (that is, the gap in net worth, rather than income, between rich and poor) in the US over recent decades shows a pronounced increase”
“Toy makers grappling with surging costs in China are finding no easy options when it comes to shifting production to cheaper centres elsewhere.
Six years ago, monopoly maker Hasbro approached Indian durable goods and aerospace supplier Aequs to sub-contract.
“They said if you can get into toy manufacturing, now we’re looking to shift millions of dollars worth of product from China to India,” Rohit Hegde, Aequs’ head of consumer verticals, told Reuters. “We said: as long as we can get at least about $100 million of business in the next few years, we can definitely invest in it.”
Fast forward to today and Aequs makes dozens of types of toys for Hasbro and others including Spin Master in two 350,000-square-foot facilities in Belgaum, India.
But Hegde and other manufacturers acknowledge that India and other countries cannot match China for efficiency”
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“Still, for toy manufacturers including Hasbro and Barbie doll maker Mattel, the risks of relying on China for most of their production were highlighted during the COVID-19 pandemic, when Chinese ports struggled to export goods and were periodically shut down, leaving shipments stranded.
Soaring labour costs in China had already been driving manufacturers across industries to diversify production geographically.”
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“setting up to source from other countries can take 18 months if a company is buying product from a contract manufacturer, and up to three years if a firm is building a new factory from scratch, Rogers said.”