Taxes and Hauser’s Law

Hauser's Curve

Hauser’s Curve           Image Credit: Wikimedia commons/Sugar-Baby-Love

With a Republican tax bill  having passed both houses of Congress and certain to be signed by the President, taxes and tax rates are the universal subject of the day. A critical empirical fact to consider in the debate is Hauser’s Law, as illustrated by Hauser’s curve above. Continue Reading…

The Divisive Issue of Foreign Trade

Container shipping has revolutionized foreign trade by greatly reducing costs of transportation by ship, rail, and truck.

Container shipping has revolutionized foreign trade by greatly reducing costs of transportation by ship, rail, and truck.
Wikimedia Commons / Hafiz343

I have written several times  about why foreign trade is always a win-win proposition when the selling country has a comparative advantage of producing the traded good. Yet, the issue of foreign trade is becoming increasingly divisive, and the costs of unintended consequences of repressing foreign trade are becoming more apparent. In addition, the foreign trade issue might well cause proposals for corporate and middle class tax cuts to be scuttled through congressional quarrels over the federal government’s increasingly desperate financial condition. This is an excellent time to reconsider this divisive issue.

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Federal Expenditure and Revenue Realities

Rep. Kevin Brady (R-Texas), Chairman of the House Ways and Means Committee

Rep. Kevin Brady (R-Texas), Chairman of the House Ways and Means Committee. Brady’s controversial plan for “border adjustment” taxes are being fiercely opposed.
Wikimedia Commons / Office of Congressman Kevin Brady

The Republicans in Congress  are absorbed in a quandary. As for many of the rest of us with our own budgets, when congressmen find themselves in real financial trouble, many complications get in the way of finding a solution. As I have explored before in the post The Federal Government’s Projected Bankruptcy, the federal government is on the track to total insolvency within one to two decades. Yet, at the same time the Obama administration left national security problems that demand increased expenditures just to ensure the continued existence of the United States. Simultaneously, tax reform including large tax cuts both for the middle class and for American corporations are absolutely required to wake up our moribund economy. How can the Republicans reconcile these contradictions?

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The Federal Government’s Projected Bankruptcy

Which Way Can We go!

Which Way Can We go!
(c) Can Stock Photo / svanhorn

There is no doubt about it!  Unless the federal government drastically reduces mandatory entitlement expenditures in the near future, it will soon be bankrupt . What can be meant by “bankrupt” in terms of a nation? In terms of a person or a private organization, the dictionary meaning of the word is that the person or organization is declared in a court of law unable to pay outstanding debts. Whether or not a court will ever declare the United States government as being incapable of paying outstanding debts, I would settle for the definition that the U.S, government in fact can not pay its outstanding debts. And the time when that will be true may be a lot sooner than you think.

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President Trump Faces a Divided People

Donald Trump's Victory Speech 11/9/2016

Donald Trump giving his victory speech early this morning
YouTube /

Donald J. Trump’s victory yesterday to become the President-elect of the United States is a fitting surprise for this country’s elites in this most surprising of campaign seasons. Our elites, who have become overwhelmingly dirigiste, needed this rebellion by the American electorate to force a reconsideration of their ideology. As is often the case with victory speeches, but which with Trump was very surprising, his victory speech early this morning was a model of magnanimity.   Continue Reading…

The Consequences of a Hillary Clinton Presidency

The Oval Office in the West Wing of the White House during the Administration of William Jefferson Clinton

Imagine Hillary Clinton here. The Oval Office during the administration of William Jefferson Clinton
Wikimedia Commons/National Archives and Records Administration

I hate to say it, but it sure looks like Hillary Clinton will be our new president. Of course if the shoe were on the other foot and Trump looked like he were increasingly likely to win, I would be saying “I hate to say it, but … “.      Continue Reading…

How Is the Weather Like a Country’s Economy?

Hurricane Isabel, a category 5 hurricane, seen from the International Space Station in  September 2003. This deadly storm had many of the same system characteristics in the planet’s weather that a government Keynesian “stimulus” program has on an economy.
Photo Credits: Wikimedia Commons/Image Courtesy of Mike Trenchard, Earth Sciences & Image Analysis Laboratory , Johnson Space Center.

Organized. Deadly. Destructive. Those were major qualitative characteristics of Hurricane Isabel in September 2003, and they are much like some of the qualitative characteristics of a government’s Keynesian “stimulus” program in an economy. In fact, the analogy goes far deeper than mere metaphor, as they are closely related mathematically in their descriptions inside their respective systems: in the planet’s weather system in the one case, and in a country’s economy in the second.

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Hillary and The Donald On the Economy

Our sad choices: Hillary Clinton and Donald Trump

Our sad choices: Hillary Clinton and Donald Trump
Photo Credits Left to Right: WikiMedia Commons/Voice of America,  Wikimedia Commons/Michael Vadon

On the day when Hillary Clinton and Donald Trump are to be locked in verbal combat, we should take a look at how they differ in the issue of greatest interest to the people: the economy, and how to bring it back to health.   Continue Reading…

The U.S. Federal Government Budget

Total U.S. Federal Government Debt and its share of GDP

Total U.S. Federal Government Debt in millions of dollars (blue curve with scale on the left), and its share of GDP in percent (maroon curve with scale on the right).
St. Louis Federal Reserve District Bank/FRED

The total U.S. federal government debt is beginning to look very scary. It terrifies me, and it should at least frighten you!   Continue Reading…

Economic Freedom in the United States

World Map Of WSj/Heritage Foundation Index of Economic Freedom for 2016

World Map of the WSJ/Heritage Foundation Index of Economic Freedom
Image Credit: Heritage Foundation

It would distress many Americans to learn the United States does not have the greatest economic freedom in the world. Indeed, in the latest 2016 rankings by the Wall Street Journal/Heritage Foundation Index of Economic Freedom, the U.S. ranks eleventh behind tenth rank United Kingdom. In fact, the U.S. is currently declining in economic freedom, having fallen 0.8 points from the previous year’s ranking.

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The U.S. Economy and Stock Markets, June 2016

Real GDP growth Rate

Real quarterly, annualized GDP growth rate in percent from Q1 of 2008 to Q1 of 2016
Image Credit: St. Louis Federal Reserve District Bank/FRED

Having just updated my Leading Economic Indicators and Coincident Economic Indicators pages, now is an appropriate time to do one of my periodic reviews of the health of the U.S. economy. In addition, I shall puzzle some more on the historically anomalous behavior of the stock markets.      Continue Reading…

The Thoughts that Haunt Me

A profligate spending your money!

A profligate government bureaucrat with you behind him!
(c) Can Stock Photo

More and more, the words haunting me are the ones I wrote in the final sentence of my last post:

The federal debt may be the single biggest threat to national security — bigger even than Russia, China, Iran, or North Korea.

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The Decay of U.S. Armed Forces

U.S. soldiers in Ramadi, Iraq, 16 August 2006

U.S. Army soldiers in Ramadi, August 2006
Wikimedia Commons/Air Force Tech Sgt. Jeremy T. Lock

One of the major reasons for the weakening of U.S. alliances has been the decay of U.S. armed forces throughout President Obama’s administration. Indeed, if the U.S. ends up with insufficient strength to honor treaty commitments, there is no point to the alliances anyway.  Continue Reading…

Donald Trump’s Lack of Knowledge

Sweeping up Hungarian banknotes after the Hungarian pengö was replaced in 1946.

Sweeping up Hungarian banknotes after the Hungarian pengö was replaced in 1946.
Wikimedia Commons/Mizerák István – Magyar Nemzeti Múzeum Történeti Fényképtára, Budapest

Donald Trump’s loose lips could sink a whole fleet of ships, and might just do that! Among the positions the Donald has put out there in the air and had to walk back (e.g. his thoughts on taxing the rich and raising the minimum wage) is the idea the United States government could default on its debt.      Continue Reading…

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