“The move reinstates the Cuban Family Reunification Parole Program, which from 2007 to 2016 allowed up to 20,000 Cubans per year to come and stay in the U.S. while applying for permanent legal resident status. It also removes the $1,000-per-quarter restriction on how much money Americans can send to family, friends, and private entities across the Florida Straits.”
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“Lifting government prohibitions on the movement and trade of Americans is a good policy in and of itself, regardless of impact on captive peoples abroad. But is the impact of increased travel and remittances on balance good or bad for Cubans?
Menendez argues that “nothing changed” as a result of Barack Obama’s decision to ease restrictions. By the unreasonable standard of regime change or even significant liberalization, the senator is correct. But by the standard of measurable differences in living conditions and relationship with the government, things indeed changed. As I wrote after visiting the island in 2016 for the first time in 18 years:
“A noticeable segment of the population has gained at least some financial and experiential independence from the police state. They are not, in my observation, spending that extra money on flower arrangements for the Revolution. As Sen. Jeff Flake (R–Arizona) told us during our visit, “You have about 25 percent of Cubans who work fully in the private sector….The big change is the number of Cubans being able to not have to rely on government and therefore can hold their government more accountable.”””
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“Menendez’s statement nods toward the potential universality of his foreign policy vision: “Today is another reminder that we must ground our policy in that reality, reaffirm our nation’s indiscriminate commitment to fight for democracy from Kyiv to Havana, and make clear we will measure our success in freedom and human rights and not money and commerce.”
That logic, applied evenly, suggests at minimum the dismantling of the World Trade Organization and the imposition of travel restrictions on Americans seeking to visit not just Havana but the more than 60 countries categorized by Freedom House as “not free.” Menendez would never openly advocate such an approach, because that approach would be both politically suicidal and logically insane.
Cuba has long been the crystallization of America’s worst foreign policy instincts. Good on the Biden administration for easing that somewhat.”
“The country’s ongoing shortage of infant formula has been exacerbated and prolonged by a long list of counterproductive government interventions: from tariffs and trade restrictions to price-distorting subsidies and nonsensical labeling requirements.
New York City Mayor Eric Adams has decided to throw one more log on the fire by issuing an emergency order limiting price increases on infant formula.
“The nationwide infant formula shortage has caused unimaginable pain and anxiety for families across New York—and we must act with urgency,” said Adams on Sunday. “This emergency executive order will help us to crack down on any retailer looking to capitalize on this crisis by jacking up prices on this essential good.”
The mayor’s order invokes city rules that prohibit merchants from raising prices more than 10 percent from where they were 30–60 days preceding the emergency. Adams urged people to report potential gouging to the city’s Department of Consumer and Worker Protection.”
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“sudden price hikes discourage people from engaging in harmful and unproductive hoarding.”
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“Higher prices make once unprofitable activities suddenly lucrative. For example, it’s usually not profitable to drive 100 miles to sell people bags of ice. That calculation changes when a hurricane drives up the price of ice to $15 a bag.
Conversely, if price gouging laws force a bag of ice to be sold at $1, hurricane or not, a lot fewer potential suppliers are going to be induced to take that trip. The result is more people go without ice.
Adams’s order will similarly deprive New Yorkers of much-needed formula. Out-of-city suppliers who might have incurred higher transportation costs to reap the rewards of higher prices in the Big Apple will instead sell off closer to home. That’ll be particularly true if they’re located in a jurisdiction that hasn’t banned market prices on baby formula.
The federal policies driving the formula shortage—whether that’s prohibitive tariffs on baby formula or labeling rules that keep European products off the market—are outside the control of local officials like Adams, who are nevertheless expected by their constituents to do something.
The least the mayor could do, however, is not make the formula problem worse. His emergency order shows he can’t even clear that bar.”
“The uproar over infant formula shortages is prompting lawmakers to confront how a federal nutrition program may be helping a small handful of formula manufacturers dominate the U.S. market.
The federal government’s widely-used nutrition program for women, infants and children, known as WIC, is by far the largest purchaser of formula in the U.S., with more than half of infant formula in the U.S. going through the program. And just two companies serve close to 90 percent of the infants who receive benefits through the program, in part because of the way WIC awards its contracts.”
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“The Abbott recall and resulting shortages were especially disruptive for WIC recipients. About half of all babies born in the U.S. qualify for WIC, which serves low-income families. Many of these households don’t have the time or resources to drive around looking for alternative formula brands or scour the internet for available stocks. Even if parents and caregivers could find alternative formulas, their WIC benefits might not have covered the specific brand they could find when the shortages first hit.
For the past three decades, WIC has used what’s called sole-source contracting, which is designed to save the program money by allowing the states to buy formula far below retail prices. The National WIC Association estimates that state rebates save about $1.7 billion in costs each year. When a state contracts with a company, all WIC participants in the state use that same manufacturer. Just three companies have been awarded contracts during this time: Abbott Nutrition; Mead Johnson, which makes Enfamil; and Nestle, which makes Gerber.”
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““The dirty secret about WIC is these formula companies actually lose money on formula that they sell through WIC,” because the lowest bidder ends up winning the state contracts, explained a former Democratic Senate aide. “But what happens is… if you give birth in a hospital and you request formula, you’re going to get the formula that is whoever has the WIC contract,” allowing the formula makers to reach a massive pool of new customers. Getting a state WIC contract can also mean more favorable shelf space at retailers across the state and more brand loyalty.
Not everyone agrees about the extent to which sole-source contracting has driven consolidation in the formula industry, versus other factors, like overall consolidation across the food sector and high food safety regulatory costs, since infant formula is more highly regulated than most other foods.”
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” But the USDA’s Economic Research Service in 2011 found that switching a state WIC contract gave the new manufacturer about a 74 percent bump up in market share in the state. Most of that is the result of WIC participants switching — since they make up more than half the market — but the rest is the result of more preferential treatment at the retail level.”
“After a month of intense civilian-led protests over Sri Lanka’s deteriorating economy, President Gotabaya Rajapaksa agreed to appoint a new council on Friday to lead the formation of an interim government. The resolution would create a coalition made up of all parties in Parliament and would remove the grip of the Rajapaksa family dynasty currently ruling the country. At issue is the country’s economic future, which is in shambles after defaulting on payments on its mountain of foreign loans — estimated to be worth $50 billion — for the first time since the country gained independence from the British in 1948.
Signs of Sri Lanka’s impending economic crisis became increasingly apparent over the last two years of the Covid-19 pandemic as food prices soared and power blackouts increased in frequency. Sri Lanka currently has about $7 billion in total debt due this year.
Many attribute Sri Lanka’s economic crisis to the mishandling of its finances by successive governments through mounting foreign debt and continued infrastructure investments. The Rajapaksa administration also implemented sweeping tax cuts in 2019, slashing the value-added tax (VAT) rate — the tax applied to imports and domestic supplies — from 15 percent to 8 percent, which contributed to a decrease in the country’s revenue.”
“The implication of Philippon’s paper is as simple as it is disturbing: We should expect economic growth to slow down in the long run, and the big leaps forward of the last couple centuries may be an aberration.
This conclusion is far from certain, and it goes against decades of assumptions on how to model economic growth. But Philippon brings a lot of data to bear on his thesis, which makes some intuitive sense, and even the possibility of it being true should alarm us.”
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“What Philippon does is attempt to assess whether TFP actually does, in practice, grow exponentially. He first looks at two datasets covering TFP in the US and finds, instead, linear growth since World War II: TFP does not increase by a set percentage each year, but a set amount (0.0245 points, if you’re curious) each year. It doesn’t compound; it just gradually, steadily grows. You’re getting $2 a year, not 2 percent of an ever-increasing pile.
Extending the data back to 1890, he finds linear growth, but with a break: slower growth from 1890 to 1933, and faster after 1933, but steady and non-exponential in each period. He then extends the analysis to 23 relatively wealthy countries, from Japan to Germany to Spain. A linear model fits better here, too.”
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“The US and other rich countries have experienced a well-documented decline in productivity growth, especially TFP growth, since 2004 or so. Philippon’s findings could help explain why that is. The slowdown is only there if you assume TFP should be growing exponentially. If you assume mere linear growth, it’s not that things have gotten worse in recent decades. It’s just that they were never that good.
That’s an alarming conclusion, mostly because from the standpoint of human history, the past few centuries have been very good. Before the 17th to 18th century or so, human economies grew extremely slowly. Agriculture showed little productivity growth, meaning there was a fixed population that farming societies could support. Living standards varied mostly based on how many people were around; when the population suddenly shrank (as in the Black Death in Europe) people grew richer on a per capita basis, and when the population swelled the opposite occurred. This is known as the “Malthusian trap.”
“Until about 1800, the vast bulk of people on this planet were poor,” Joel Mokyr, an economic historian at Northwestern, once noted. “And when I say poor, I mean they were on the brink of physical starvation for most of their lives.”
That pattern started to break down in the 17th through 19th centuries, a process sometimes shorthanded as the “Industrial Revolution,” but including a wide variety of cultural, scientific, technological, and economic changes. Long story short: productivity sustainably grew for the first time in human history. And it grew, by historical standards, quite rapidly, such that a far lower share of people alive in 2022 are on the brink of starvation than were in 1800, even though the population needing food has never been greater.”
“Making chips is an intricate process, but building a factory that can do this type of manufacturing is even more complicated. For one thing, fabs can’t go just anywhere. They need to be close to a reliable source of electricity, since they can use as much energy as 50,000 homes in a single year (they release a lot of carbon emissions, too). These factories also need to be near a large body of water, which they use to clean and cool down their equipment, which, in turn, produces wastewater that needs to be treated. And it’s better if they’re not particularly close to any airports or geological fault lines; seismic activity can disrupt the incredibly precise machinery they use.
Then there’s the matter of the supply chain. Beyond the fab, making a chip can involve 70 different border crossings and more than 1,000 steps, and a single disruption in one country or during a particular step can throw the entire process off course. That’s because there are usually very few, if any, other options for supplies when something goes wrong. For example, just one company in the Netherlands, ASML, makes the specialized, $200 million lithography tools that many advanced chip fabs rely on. And just two firms, both based in Ukraine, supply about half of the specialized neon gas that fabs throughout the world use to control these lasers. Of course, securing all this equipment has gotten even more difficult during the pandemic.”
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“concern is based, in part, on fears that China may invade Taiwan at some point and attempt to take control of its chip-manufacturing capacity. But there are other reasons to be worried about the state of US semiconductors. The US doesn’t currently make very many of the most basic, or legacy, chips, which are typically produced where they can be made for less. These are the chips that became unavailable during the pandemic, and that made lots of technology hard to find and drove up car prices. The US will also need to manufacture more chips to maintain its hold on the auto industry, since EVs will likely need at least twice as many chips as their gas-powered counterparts do.”
“an economy the magnitude of Russia’s, the 11th largest in the world, has never been sanctioned so comprehensively. Going after a central bank of this size, a major economy’s connections to international banking systems, and many of its sectors, is indeed unprecedented. And to target an economy that large unleashes unintended consequences on Russia, the US, and the globe.
Russia is a major energy exporter, and energy prices are rising and sending inflation even higher. Russia also exports significant amounts of grains, cooking oils, and fertilizer. So sanctioning the country — even with carve-outs and waivers for humanitarian purposes — could have a devastating impact on vulnerable people in poor countries. The United Nations says that economic sanctions will impact Russian and Ukrainian food production, which is exacerbated by the war and Russia’s blockade of Ukrainian ports. One possible outcome, the UN reports, is that “the global number of undernourished people could increase by 8 to 13 million people in 2022/23.””
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““We all worry about the overuse of sanctions, but I think that this is clearly not a case of overuse,” an administration official who spoke on condition of anonymity told me. “This is a case of responding to a clear and egregious violation of basic tenets of international law and human rights. I think this is a case of indisputable agreement that the world needs to respond and sanctions are an appropriate tool.””
“Writing in The Wall Street Journal, the president outlined three policy choices to deal with an inflation caused, he seems to believe, largely by pandemic-related supply-chain obstructions and intensified by the war in Ukraine. His plan is simple: Continue to trust that one of the main architects of our current inflation, Federal Reserve Chairman Jerome Powell, will raise interest rates fast and high enough to tame inflation without crashing the economy, dispense more subsidies and tax credits, and let the deficit melt away—by some miracle—without cutting spending.
Absent from the piece is any acknowledgement of what readers of this column know all too well: that inflation was fueled by Biden’s own reckless spending policies, especially the $1.9 trillion American Rescue Plan passed in March 2021. Half a dozen or so studies have shown that fiscal policies implemented during COVID-19 are a main culprit behind today’s inflation. Biden also fails to mention the Fed’s overly accommodating monetary policy and its current slow response to inflation.
In other words, the president’s argument is amazing for its tone-deafness, inconsistent thinking, and sheer economic ignorance.”
“members of the infamous Blob, America’s foreign policy establishment, are urging Biden to do a full kowtow to Riyadh (and presumably Abu Dhabi as well), doing the royals’ bidding as before. After all, the relationship always has been about them. Years ago Defense Secretary Robert Gates observed that the Saudis were ever ready to “fight the Iranians to the last American.” Nothing has changed.
For example, Washington Post columnist Fareed Zakaria backed the idea of a “grand bargain,” which would trade security guarantees for Saudi concessions: “There is a way for Washington to forge a new security umbrella in the region that includes Israel, Egypt and the gulf states. It would stabilize the security environment, foreclose the prospects of a nuclear arms race in the region and provide access to energy for the industrialized world. But that path would have to include making up with Mohammed bin Salman.”
Bloomberg’s Bobby Ghosh views the problem as personal and political immaturity: “The most important partnership in the Middle East has been put in jeopardy by the peevishness of a prince and political opportunism of a president. Repairing the Saudi‐American relationship will require the first to behave like a grown‐up, the other like a statesman.”
Although Tufts University’s Daniel Drezner was more skeptical that a satisfactory accommodation could be reached, he intoned: “I hope the Biden administration is conducting internal deliberations about what concessions it would be willing to make to engage in some transactional diplomacy with Saudi Arabia. As bad as Saudi behavior has been, Russia’s bad behavior has been worse and merits a priority of focus.”
This approach, which treats murderous wars and grievous human rights violations as minor inconveniences, is a terrible idea. To start, fulfilling demands by dependent regimes would undermine Washington’s credibility. The Washington War Party has routinely insisted that the US should intervene militarily everywhere for the most spurious reasons to convince the world that it is prepared to go to war anywhere at any time for anything. Hence nonsensical claims that failing to bomb Syria over chemical weapons or stay in Afghanistan for a 21st year would trigger major power aggression around the globe. In fact, America’s adversaries distinguish between serious and peripheral issues, and act accordingly. (Which is why Moscow withdrew from Afghanistan after only ten years compared to America’s astounding two decades.)
However, US credibility really would be at stake if the administration submitted to Riyadh’s and Abu Dhabi’s demands, acting as if it was a weak Third World state rather than global superpower. Again, putting royal interests first would encourage other defense dependents to make similarly inflated and malign demands. Washington would be playing the supplicant and would be expected to do the same elsewhere.
Moreover, Saudi Arabia, in particular, and UAE are not normal countries, either liberal democratic or even moderately authoritarian allies. The Kingdom earned a rating of just seven out of 100 by Freedom House, making it one of the world’s baker’s dozen most repressive nations and territories, dwelling in the human rights cellar along with Equatorial Guinea, North Korea, Eritrea, Turkmenistan, and Tajikistan. Riyadh is much worse than Russia, at least prior to that latter’s internal crackdown to suppress any antiwar dissent, which made the latter much more like the KSA.
Those celebrating MbS’s recent social liberalization are merely highlighting how until recently the Kingdom was a true totalitarian state, in some ways more absolute than Mao Zedong’s China and Kim Il-sung’s North Korea. Thankfully, those who face prison for dissent now can attend a movie before being locked up! Alas, a free society that does not make.”
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“Riyadh is, despite Drezner’s claim, a more malign actor internationally than Russia. The royal regime’s alleged friendship with America never meant respecting America’s interests. Especially once MbS took effective control of the government. The regime tolerated substantial financial public support for al‐Qaeda until the group attacked the royals. Saudi Arabia also kidnapped a head of government (Lebanon), blockaded and made plans to invade another friendly state (Qatar), used money and troops to enforce brutal dictatorships (Bahrain, Egypt), and subsidized jihadist forces (Libya, Syria).
Worst was the invasion of Yemen. To reinstate a pliable regime in its desperately poor neighbor, Riyadh and Abu Dhabi joined in a “coalition,” hiring countries dependent on their financial largesse, such as Sudan, which deployed ground forces in the conflict. Total deaths are estimated at roughly 400,000, 60 percent of them young children, who are particularly vulnerable to disease and malnutrition. Human rights group report that coalition activity, both air attacks and de facto blockade, is responsible for the vast majority of civilian deaths.”
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“In short, rewarding Saudi Arabia to further punish Russia would be a bad trade‐off, for moral as well as practical reasons. Especially since the Saudis likely would undercut any promises to increase production — cheating by OPEC members always has been systemic and endemic. Nor would increasing the flow of Mideast oil necessarily significantly intensify pressure on Russia or affect Moscow’s behavior. US economic sanctions have rarely forced regimes to act against what they viewed as fundamental political interests. The costs of such a policy would be substantial and real. The benefits would be speculative at most.
The better strategy would be for the administration to demonstrate that US officials will no longer be docile retainers for the Saudi and Emirati royals. For instance, the administration should stop helping them slaughter their poor neighbors. The US sold the aircraft, for a time refueled them, and still services the planes, supplies the munitions, and provides the intelligence. Washington should effectively ground the royal fleets by ending support services and weapons resupply. That would encourage the Saudi king to take the president’s next call.
Moreover, the administration should indicate that the well‐armed Gulf regimes are vulnerable to attack mostly because they lack domestic political legitimacy — who wants to die defending Crown Prince “Slice n’ Dice” so can he murder another critic or build another palace? US military personnel should not be treated as mercenary bodyguards, the equivalent of the civilian expatriate labor used to do most of the “dirty work” in those societies. It is past time for the Saudis and Emiratis to earn their people’s support. The KSA’s uncertainty about America’s continuing military commitment already has spurred the regime’s talks with Iran, which could ease the region’s dangerous Sunni‐Shia split. Ultimately Riyadh and Abu Dhabi should take over responsibility for their security.”
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“Foreign policy sometimes requires difficult compromises. Thankfully, the Cold War is over. Russia is far less dangerous than the Soviet Union; today’s united Europe is far more able to contain Moscow than yesterday’s Western Europe. If Washington officials are going to confront Russia over domestic oppression and foreign aggression, they cannot excuse Saudi Arabia for the same.”
“Musk’s income puts him in the top federal income-tax bracket, where income is currently taxed at 37 percent.
According to ProPublica, Musk’s average effective federal income tax rate between 2013 and 2018 was 27 percent.
And the tax on exercising his Tesla stock options was much higher. “Since the options are taxed as an employee benefit or compensation, they will be taxed at top ordinary-income levels, or 37% plus the 3.8% net investment tax,” notes CNBC. “He will also have to pay the 13.3% top tax rate in California since the options were granted and mostly earned while he was a California tax resident. Combined, the state and federal tax rate will be 54.1%.”
Jayapal seems to have reached her “alternative facts” (to use a vintage Trump-administration term) by calculating Musk’s tax rate based on a system she wishes we used rather than the calculation system we actually use.
As it stands, Americans do not pay taxes on unrealized gains—that is, appreciations in investments that exist only on paper. If you own a stock worth $5 per share and its worth increases to $6 per share over the course of a tax year, you have an unrealized gain of $1 per share. You aren’t expected to pay taxes on that gain until you sell your shares—which makes sense, since 1) you don’t actually have that money yet and 2) the stock’s worth could drop again before you sell. Maybe next year the stock decreases to $4 per share.
Jayapal appears to have come up with the alleged 3.27 percent tax rate for Musk by including unrealized gains in the amount she thinks he owes taxes on (while using the standard method for calculating the average income tax rate). However, unrealized gains are, by definition, gains that Musk doesn’t yet have. When he actually realizes the gains, he will be required to pay taxes on them. That’s how it works.”