Despite the United States having the most progressive income tax system in the developed world, the Wall Street Journal reports that Mrs. Clinton’s tax proposals call for doubling down on a soak the rich strategy. Regardless of your politics, this is just bad policy. When you tax something you get less of it. What are you going to get less of in this instance? Taxable income. High-income earners are the most capable of hiring high-priced lawyers and accountants to help them avoid, dodge, and reduce taxes. You might think that would dawn on the folk making these proposals since these … [Read more...]
Are the Days of Walking into Your Local Bank Ending?
Swissinfo.ch warns readers that the days of over-the-counter banking are in permanent descent, and that other trends are quickly emerging. Being able to walk into a bank and speak to someone over a counter is a disappearing service in Switzerland. The number of branches has almost halved from around 4,500 at the beginning of the 1990s to some 2,500 today. The reason for the 20% annual drop in branches is that more and more people are using e-banking: paying bills and keeping track of their finances online. Geneva: doing business post-banking secrecy … [Read more...]
Government Investment in the Stock Market?
What do you do when after years of insisting that bigger stimulus and more government intervention for more time are the exact recipe for economic success, only to discover that your cherished theories have come up short? Cue the esteemed former Treasury Secretary (and possibly future Fed Chair) Mr. Lawrence Summers. This is the same Mr. Summers who contends that the disappointing rate of economic growth for the last number of years is a problem of secular stagnation and not a problem of poor policy and burdensome regulation. Seems a little convenient coming from one of President Obama’s … [Read more...]
America’s Annual Trade Surplus from 1870 to 1970
What kind of government structure would allow our country to outsource its future? Exactly what has happened to turn America into a world trade banana republic? Pat Buchanan offers gory details: America’s allies are cheating and robbing her blind on trade. According to the WTO, Britain, France, Spain, Germany, and the EU pumped $22 billion in illegal subsidies into Airbus to swindle Boeing out of the sale of 375 commercial jets. Subsidies to the A320 caused lost sales of 271 Boeing 737s, writes journalist Alan Boyle. Yet even as Europeans collude and cheat to capture America’s … [Read more...]
Should the Colossal Dodd-Frank Law be Repealed this Minute?
Viewers watching yesterday's Congressional hearings featuring Janet Yellen were met with fireworks as Congressman Sean Duffy excoriated the Federal Reserve Chairwoman for failing to end "too big to fail." Duffy's implication was that, despite the massive costs and burdens the Dodd-Frank legislation mandating the end of "too big to fail," America is still burdened by the bad policy. Mark Calabria, who I have met with and listened to at the Cato Institute, suggests that the failed Dodd-Frank be repealed altogether. After the bank bailouts of 2008, the public was promised “never again.” … [Read more...]
Millennials: Home is Where the Heart Is
I've often encouraged Millennials to be entrepreneurial and to take chances in order to build successful lives for themselves (see here, and here). But the Great Recession, and other factors like extended lifespans, are changing how young people, and society, think about living with parents in adulthood. In America, 32% of 18-34 year olds live with a parent. In the EU it's 48.1%! Gone are the days when age 18 struck and you expected to move out of the house. You may think it isn't the best way for young adults to live, but the WSJ writes that it's not only the desire to mooch from Mom and Dad … [Read more...]
Detroit—Five Straight Years of Job Growth
Jonathan Coppage, writing at The American Conservative, unfolds the near miraculous story of powerful job growth in previously forlorn Detroit and Wayne County, Michigan. Here’s how it happened. In the 1950s, on a per capita basis, Detroit was the richest city in America. The Broadway-Capitol Theatre offered showings of Casablanca in palatial Renaissance décor. The Detroit Institute of Arts Museum boasted one of the world’s greatest collections, including works by Picasso, van Gogh, and Matisse. The city’s vibrant downtown was populated by soaring Art Deco skyscrapers, burnished with sculpted … [Read more...]
What Janet Yellen Should have said during her Q&A
If you have been a long-time reader of this site you know what the Fed did at its policy meeting yesterday even before you read it here. They did what they always do. They delayed a hike yet again and for the umpteenth time during this recovery they moved the goal posts on when the next hike would come. For the financial economists who follow these things closely, the Bernanke/Yellen Fed has become a joke. So rather than offering any serious commentary on the Fed’s decision, let’s have some fun. Below are some of the questions Yellen was asked yesterday and how I imagine a more candid … [Read more...]
Massachusetts 3.9% Unemployment not Helpful
Yesterday, The Boston Globe headlined the 3.9% unemployment rate for Massachusetts. The participation rate, which is the percentage of the entire population of an area that is either working or wants to work, tells the real story. … [Read more...]
Ready for the Cycle of Decay?
In an extensive op-ed in Financial Times, Bill Gross details how today's low yields threaten to cause a cycle of stagnation and decay. Gross and I agree that the low yields will have a detrimental effect on pension funds (read here, here and here). Gross takes it a step further to the knock on effects of what poor pension fund performance will mean for corporate profitability and ultimately the economy. There are other obvious drawbacks to near-zero yields and interest rates. Historic business models with long-term liabilities — such as insurance companies and pension funds — are increasingly … [Read more...]
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